    [House Report 108-82]
    [From the U.S. Government Publishing Office]

    108th Congress                                                   Report
                            HOUSE OF REPRESENTATIVES
     1st Session                                                     108-82
    ======================================================================

             WORKFORCE REINVESTMENT AND ADULT EDUCATION ACT OF 2
                                    _______

      May 1, 2003.--Committed to the Committee of the Whole House on the
                  State of the Union and ordered to be printed

                                    _______

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

                                  R E P O R T

                                 together with

                                 MINORITY VIEWS

                            [To accompany H.R. 1261]

          [Including cost estimate of the Congressional Budget Office]

      The Committee on Education and the Workforce, to whom was
    referred the bill (H.R. 1261) to enhance the workforce
    investment system of the Nation by strengthening one-stop
    career centers, providing for more effective governance
    arrangements, promoting access to a more comprehensive array of
    employment, training, and related services, establishing a
    targeted approach to serving youth, and improving performance
    accountability, and for other purposes, having considered the
    same, report favorably thereon with an amendment and recommend
    that the bill as amended do pass.
      The amendment is as follows:
      Strike all after the enacting clause and insert the
    following:

    SECTION 1. SHORT TITLE.

      This Act may be cited as the ``Workforce Reinvestment and Adult
    Education Act of 2003''.

    SEC. 2. TABLE OF CONTENTS.

      The table of contents for this Act is as follows:

    Sec. 1. Short title.
    Sec. 2. Table of contents.
    Sec. 3. References.

     TITLE I--AMENDMENTS TO TITLE I OF THE WORKFORCE INVESTMENT ACT OF 1998

    Sec. 101. Definitions.
    Sec. 102. Purpose.
    Sec. 103. State workforce investment boards.
    Sec. 104. State plan.
    Sec. 105. Local workforce investment areas.
    Sec. 106. Local workforce investment boards.
    Sec. 107. Local plan.
    Sec. 108. Establishment of one-stop delivery systems.
    Sec. 109. Eligible providers of training services.
    Sec. 110. Eligible providers of youth activities.
    Sec. 111. Youth activities.
    Sec. 112. Comprehensive program for adults.
    Sec. 113. Performance accountability system.
    Sec. 114. Authorization of appropriations.
    Sec. 115. Job Corps.
    Sec. 116. Native American programs.
    Sec. 117. Youth challenge grants.
    Sec. 118. Technical assistance.
    Sec. 119. Demonstration, pilot, multiservice, research and multistate
    projects.
    Sec. 120. Evaluations.
    Sec. 121. Authorization of appropriations for national activities.
    Sec. 122. Requirements and restrictions.
    Sec. 123. Nondiscrimination.
    Sec. 124. Administrative provisions.
    Sec. 125. General program requirements.

                           Title II--ADULT EDUCATION

            Part A--Adult Basic Skills and Family Literacy Education

    Sec. 201. Table of contents.
    Sec. 202. Amendment.

                    Part B--National Institute for Literacy

    Sec. 211. Short title; purpose.
    Sec. 212. Establishment.
    Sec. 213. Administration.
    Sec. 214. Duties.
    Sec. 215. Leadership in scientifically based reading instruction.
    Sec. 216. National Institute for Literacy Advisory Board.
    Sec. 217. Gifts, bequests, and devises.
    Sec. 218. Mails.
    Sec. 219. Applicability of certain civil service laws.
    Sec. 220. Experts and consultants.
    Sec. 221. Report.
    Sec. 222. Definitions.
    Sec. 223. Authorization of appropriations.
    Sec. 224. Reservation.
    Sec. 225. Authority to publish.

                 Title III--AMENDMENTS TO THE WAGNER-PEYSER ACT

    Sec. 301. Amendments to the Wagner-Peyser Act.

             Title IV--AMENDMENTS TO THE REHABILITATION ACT OF 1973

    Sec. 401. Chairperson.
    Sec. 402. Rehabilitation Services Administration.
    Sec. 403. Director.
    Sec. 404. State goals.
    Sec. 405. Authorizations of appropriations.
    Sec. 406. Helen Keller National Center Act.

                     Title V--TRANSITION AND EFFECTIVE DATE

    Sec. 501. Transition provisions.
    Sec. 502. Effective date.

    SEC. 3. REFERENCES.

      Except as otherwise expressly provided, wherever in this Act an
    amendment or repeal is expressed in terms of an amendment to, or repeal
    of, a section or other provision, the amendment or repeal shall be
    considered to be made to a section or other provision of the Workforce
    Investment Act of 1998 (20 U.S.C. 9201 et seq.).

     TITLE I--AMENDMENTS TO TITLE I OF THE WORKFORCE INVESTMENT ACT OF 1998

    SEC. 101. DEFINITIONS.

      Section 101 (29 U.S.C. 2801) is amended--
              (1) in paragraph (8)(C), by striking ``not less than 50
            percent of the cost of the training'' and inserting ``a
            significant portion of the cost of training, as determined by
            the local board'';
              (2) by striking paragraph (13) and redesignating paragraphs
            (1) through (12) as paragraphs (2) through (13) respectively;
              (3) by inserting the following new paragraph after ``In this
            title:'':
              ``(1) Accrued expenditures.--The term `accrued expenditures'
            includes the sum of actual cash disbursements for direct
            charges for goods and services, the net increase or decrease in
            the amounts owed by recipients, goods and other property
            received for services performed by employees, contractors,
            subgrantees, or other payees, and other amounts becoming owned
            for which no current service or performance is required.'';
              (4) by striking paragraph (24) and redesignating paragraphs
            (25) through (32) as paragraphs (24) through (31),
            respectively;
              (5) in paragraph (24) (as so redesignated)--
                      (A) in subparagraph (B), by striking ``higher of--''
                    and all that follows through such subparagraph and
                    inserting ``poverty line for an equivalent period;'';
                    and
                      (B) by redesignating subparagraphs (D) through (F) as
                    subparagraph (E) through (G), respectively, and
                    inserting after subparagraph (C) the following:
                      ``(D) receives or is eligible to receive free or
                    reduced price lunch;''; and
              (6) by striking paragraph (33) and redesignating paragraphs
            (34) through (53) as paragraphs (32) through (51),
            respectively.

    SEC. 102. PURPOSE.

      Section 106 (29 U.S.C. 2811) is amended by inserting at the end the
    following: ``It is also the purpose of this subtitle to provide
    workforce investment activities in a manner that promotes the informed
    choice of participants and actively involves participants in decisions
    affecting their participation in such activities.''.

    SEC. 103. STATE WORKFORCE INVESTMENT BOARDS.

      (a) Membership.--
              (1) In general.--Section 111(b) (29 U.S.C. 2821(b)) is
            amended--
                      (A) by amending paragraph (1)(C) to read as follows:
                      ``(C) representatives appointed by the Governor, who
                    are--
                              ``(i)(I) the lead State agency officials with
                            responsibility for the programs and activities
                            that are described in section 121(b) and
                            carried out by one-stop partners;
                              ``(II) in any case in which no lead State
                            agency official has responsibility for such a
                            program or activity, a representative in the
                            State with expertise relating to such program
                            or activity; and
                              ``(III) if not included under subclause (I),
                            the director of the designated State entity
                            responsible for carrying out title I of the
                            Rehabilitation Act (29 U.S.C. 701 et seq.);
                              ``(ii) the State agency officials responsible
                            for economic development;
                              ``(iii) representatives of business in the
                            State who--
                                      ``(I) are owners of businesses, chief
                                    executive or operating officers of
                                    businesses, and other business
                                    executives or employers with optimum
                                    policy making or hiring authority,
                                    including members of local boards
                                    described in section 117(b)(2)(A)(i);
                                      ``(II) represent businesses with
                                    employment opportunities that reflect
                                    employment opportunities in the State;
                                    and
                                      ``(III) are appointed from among
                                    individuals nominated by State business
                                    organizations and business trade
                                    associations;
                              ``(iv) chief elected officials (representing
                            both cities and counties, where appropriate);
                              ``(v) representatives of labor organizations,
                            who have been nominated by State labor
                            federations; and
                              ``(vi) such other representatives and State
                            agency officials as the Governor may
                            designate.''; and
                      (B) in paragraph (3), by striking ``paragraph
                    (1)(C)(i)'' and inserting ``paragraph (1)(C)(iii)''.
              (2) Conforming amendment.--Section 111(c) (29 U.S.C 2811(c))
            is amended by striking ``subsection (b)(1)(C)(i)'' and
            inserting ``subsection (b)(1)(C)(iii)''.
      (b) Functions.--Section 111(d) (29 U.S.C. 2811(d)) is amended--
              (1) by amending paragraph (3) to read as follows:
              ``(3) development and review of statewide policies affecting
            the integrated provision of services through the one-stop
            delivery system described in section 121, including--
                      ``(A) the development of criteria for, and the
                    issuance of, certifications of one-stop centers;
                      ``(B) the criteria for the allocation of one-stop
                    center infrastructure funding under section 121(h), and
                    oversight of the use of such funds;
                      ``(C) approaches to facilitating equitable and
                    efficient cost allocation in one-stop delivery systems;
                    and
                      ``(D) such other matters that may promote statewide
                    objectives for, and enhance the performance of, one-
                    stop delivery systems within the State;'';
              (2) in paragraph (4), by inserting ``and the development of
            State criteria relating to the appointment and certification of
            local boards under section 117'' after ``section 116'';
              (3) in paragraph (5), by striking ``sections 128(b)(3)(B) and
            133(b)(3)(B)'' and inserting ``sections 128(b)(3) and
            133(b)(3)''; and
              (4) in paragraph (9), by striking ``section 503'' and
            inserting ``section 136(i)''.
      (c) Elimination of Alternative Entity and Provision of Authority to
    Hire Staff.--Section 111(e) (29 U.S.C. 2821(e)) is amended to read as
    follows:
      ``(e) Authority to Hire Staff.--The State board may hire staff to
    assist in carrying out the functions described in subsection (d).''.

    SEC. 104. STATE PLAN.

      (a) Planning Cycle.--Section 112(a) (29 U.S.C. 2822(a)) is amended by
    striking ``5-year strategy'' and inserting ``2-year strategy''.
      (b) Contents.--Section 112(b)(17)(A) (29 U.S.C. 2822(b)(17)(A)) is
    amended--
              (1) in clause (iii) by striking ``and'';
              (2) by amending clause (iv) to read as follows:
                              ``(iv) how the State will serve the
                            employment and training needs of dislocated
                            workers (including displaced homemakers and
                            formerly self-employed and transitioning
                            farmers, ranchers, and fisherman) low income
                            individuals (including recipients of public
                            assistance), homeless individuals, ex-
                            offenders, individuals training for
                            nontraditional employment, and other
                            individuals with multiple barriers to
                            employment (including older individuals);'';
                            and
              (3) by adding the following new clause after clause (iv):
                              ``(v) how the State will serve the employment
                            and training needs of individuals with
                            disabilities, consistent with section 188 and
                            Executive Order 13217 (relating to community-
                            based alternatives for individuals with
                            disabilities) including the provision of
                            outreach, intake, assessments, and service
                            delivery, the development of performance
                            measures, and the training of staff; and''.
      (c) Modification to Plan.--Section 112(d) (29 U.S.C. 2822(d)) is
    amended by striking ``5-year period'' and inserting ``2-year period''.

    SEC. 105. LOCAL WORKFORCE INVESTMENT AREAS.

      (a) Designation of Areas.--
              (1) Considerations.--Section 116(a)(1)(B) (29 U.S.C.
            2831(a)(1)(B)) is amended by adding at the end the following
            clause:
                              ``(vi) The extent to which such local areas
                            will promote efficiency in the administration
                            and provision of services.''.
              (2) Automatic designation.--Section 116(a)(2) (29 U.S.C.
            2831(a)(2)) is amended to read as follows:
              ``(2) Automatic designation.--
                      ``(A) In general.--Except as provided in subparagraph
                    (B) of this paragraph and subsection (b), the Governor
                    shall approve a request for designation as a local area
                    from--
                              ``(i) any unit of general local government
                            with a population of 500,000 or more; and
                              ``(ii) an area served by a rural concentrated
                            employment program grant recipient that served
                            as a service delivery area or substate area
                            under the Job training Partnership Act (29
                            U.S.C. 1501 et seq.),
                    for the 2-year period covered by a State plan under
                    section 112 if such request is made not later than the
                    date of the submission of the State plan.
                      ``(B) Continued designation based on performance.--
                    The Governor may deny a request for designation
                    submitted pursuant to subparagraph (A) if such unit of
                    government was designated as a local area for the
                    preceding 2-year period covered by a State plan and the
                    Governor determines that such local area did not
                    perform successfully during such period.''.
      (b) Regional Planning.--Section 116(c)(1) (29 U.S.C. 2831(c)(1)) is
    amended by adding at the end the following: ``The State may require the
    local boards for the designated region to prepare a single regional
    plan that incorporates the elements of the local plan under section 118
    and that is submitted and approved in lieu of separate local plans
    under such section.''.

    SEC. 106. LOCAL WORKFORCE INVESTMENT BOARDS.

      (a) Composition.--Section 117(b)(2)(A) (29 U.S.C. 2832(b)(2)(A)) is
    amended--
              (1) in clause (i)(II), by inserting ``, businesses that are
            in the leading industries in the local area, and large and
            small businesses in the local area'' after ``local area'';
              (2) by amending clause (ii) to read as follows:
                              ``(ii) superintendents of the local secondary
                            school systems and the presidents or chief
                            executive officers of postsecondary educational
                            institutions (including community colleges,
                            where such entities exist);'';
              (3) in clause (iv), by striking the semicolon and inserting
            ``and faith-based organizations; and''; and
              (4) by striking clause (vi).
      (b) Authority of Board Members.--Section 117(b)(3) (29 U.S.C. 2832(b)
    is amended--
              (1) in the heading, by inserting ``and representation'' after
            ``members''; and
              (2) by adding at the end the following: ``The members of the
            board shall represent diverse geographic sections within the
            local area.''.
      (c) Functions.--Section 117(d) (29 U.S.C. 2832(d)) is amended--
              (1) in paragraph (2)(B), by striking ``local area'' and all
            that follows and inserting ``local area.''; and
              (2) in paragraph (4) by inserting ``and ensure the
            appropriate use and management of the funds provided under this
            title for such programs, activities, and system'' after
            ``area''.
      (d) Authority to Establish Councils and Elimination of Requirement
    for Youth Councils.--Section 117(h) (29 U.S.C. 2832(h)) is amended to
    read as follows:
      ``(h) Establishment of Councils.--The local board may establish
    councils to provide information and advice to assist the local board in
    carrying out activities under this title. Such councils may include a
    council composed of one-stop partners to advise the local board on the
    operation of the one-stop delivery system, a youth council composed of
    experts and stakeholders in youth programs to advise the local board on
    activities for youth, and such other councils as the local board
    determines are appropriate.''.
      (e) Repeal of Alternative Entity Provision.--Section 117 (29 U.S.C.
    2832) is further amended by striking subsection (i).

    SEC. 107. LOCAL PLAN.

      (a) Planning Cycle.--Section 118(a) (29 U.S.C. 2833(a)) is amended by
    striking ``5-year'' and inserting ``2-year''.
      (b) Contents.--Section 118(b) (29 U.S.C. 2833(b)) is amended--
              (1) by amending paragraph (2) to read as follows:
              ``(2) a description of the one-stop delivery system to be
            established or designated in the local area, including a
            description of how the local board will ensure the continuous
            improvement of eligible providers of services through the
            system and ensure that such providers meets the employment
            needs of local employers and participants.''; and
              (2) in paragraph (4), by striking ``and dislocated worker''.

    SEC. 108. ESTABLISHMENT OF ONE-STOP DELIVERY SYSTEMS.

      (a) One-Stop Partners.--Section 121(b)(2)(B) (29 U.S.C.
    2841(b)(2)(B)) is amended--
              (1) in clause (iv) by striking ``and'' at the end;
              (2) in clause (v) by striking the period and inserting a
            semicolon; and
              (3) by adding at the end the following new clauses:
                              ``(vi) employment and training programs
                            administered by the Social Security
                            Administration, including the Ticket to Work
                            program (established by Public Law 106-170);
                              ``(vii) programs under part D of title IV of
                            the Social Security Act (42 U.S.C. 451 et seq.)
                            (relating to child support enforcement); and
                              ``(viii) programs carried out in the local
                            area for individuals with disabilities,
                            including programs carried out by State
                            agencies relating to mental health, mental
                            retardation, and developmental disabilities,
                            State Medicaid agencies, State Independent
                            Living Councils, and Independent Living
                            Centers.''.
      (b) Provision of Services.--Subtitle B of title I is amended--
              (1) by striking subsection (e) of section 121;
              (2) by moving subsection (c) of section 134 from section 134,
            redesignating such subsection as subsection (e), and inserting
            such subsection (as so redesignated) after subsection (d) of
            section 121; and
              (3) by amending subsection (e) (as moved and redesignated by
            paragraph (2))--
                      (A) in paragraph (1)(A), by striking ``subsection
                    (d)(2)'' and inserting ``section 134(c)(2)'';
                      (B) in paragraph (1)(B)--
                              (i) by striking ``subsection (d)'' and
                            inserting ``section 134(c)''; and
                              (ii) by striking ``subsection (d)(4)(G)'' and
                            inserting ``section 134(c)(4)(G)'';
                      (C) in paragraph (1)(C), by striking ``subsection
                    (e)'' and inserting ``section 134(d)'';
                      (D) in paragraph (1)(D)--
                              (i) by striking ``section 121(b)'' and
                            inserting ``subsection (b)''; and
                              (ii) by striking ``and'' at the end; and
                      (E) by amending paragraph (1)(E) to read as follows:
                      ``(E) shall provide access to the information
                    described in section 15(e) of the Wagner-Peyser Act (29
                    U.S.C. 49l-2(e)).''.
      (c) Certification and Funding of One-Stop Centers.--Section 121 (as
    amended by subsection (b)) is further amended by adding at the end the
    following new subsections:
      ``(g) Certification of One-Stop Centers.--
              ``(1) In general.--The State board shall establish procedures
            and criteria for periodically certifying one-stop center for
            the purpose of awarding the one-stop infrastructure funding
            described in subsection (h).
              ``(2) Criteria.--The criteria for certification under this
            subsection shall include minimum standards relating to the
            scope and degree of service integration achieved by the centers
            involving the programs provided by the one-stop partners.
              ``(3) Effect of certification.--One-stop centers certified
            under this subsection shall be eligible to receive the
            infrastructure grants authorized under subsection (h).
      ``(h) One-Stop Infrastructure Funding.--
              ``(1) Partner contributions.--
                      ``(A) Provision of funds.--Notwithstanding any other
                    provision of law, as determined under subparagraph (B),
                    a portion of the Federal funds provided to the State
                    and areas within the State under the Federal laws
                    authorizing the one-stop partner programs described in
                    subsection (b) for a fiscal year shall be provided to
                    the Governor by such programs to carry out this
                    subsection.
                      ``(B) Determination.--The portion of funds to be
                    provided under subparagraph (A) by each one-stop
                    partner shall be determined by the Governor, after
                    consultation with the State board.
              ``(2) Allocation by governor.--From the funds provided under
            paragraph (1), the Governor shall allocate funds to local areas
            for the purposes of assisting in paying the costs of the
            infrastructure of One-Stop centers certified under subsection
            (g).
              ``(3) Allocation formula.--The State board shall develop a
            formula to be used by the Governor to allocate the funds
            described in paragraph (1). The formula shall include such
            factors as the State board determines are appropriate, which
            may include factors such as the number of centers in the local
            area that have been certified, the population served by such
            centers, and the performance of such centers.
              ``(4) Costs of infrastructure.--For purposes of this
            subsection, the term `costs of infrastructure' means the
            nonpersonnel costs that are necessary for the general operation
            of a one-stop center, including the rental costs of the
            facilities, the costs of utilities and maintenance, equipment
            (including adaptive technology for individuals with
            disabilities), strategic planning activities for the center,
            and common outreach activities.
      ``(i) Other Funds.--
              ``(1) In general.--In addition to the funds provided to carry
            out subsection (h), a portion of funds made available under
            Federal law authorizing the one-stop partner programs described
            in subsection (b) shall be used to pay the costs relating to
            the operation of the one-stop delivery system that are not paid
            for from the funds provided under subsection (h), to the extent
            not inconsistent with the Federal law involved including--
                      ``(A) infrastructure costs that are in excess of the
                    funds provided under subsection (h);
                      ``(B) common costs that are in addition to the costs
                    of infrastructure; and
                      ``(C) the costs of the provision of core services
                    applicable to each program.
              ``(2) Determination and guidance.--The method for determining
            the appropriate portion of funds to be provided by each program
            under paragraph (1) shall be determined as part of the
            memorandum of understanding under subsection (c). The State
            board shall provide guidance to facilitate the determination of
            appropriate funding allocation in local areas.''.

    SEC. 109. ELIGIBLE PROVIDERS OF TRAINING SERVICES.

      Section 122 (29 U.S.C. 2842) is amended to read as follows:

    ``SEC. 122. IDENTIFICATION OF ELIGIBLE PROVIDERS OF TRAINING SERVICES.

      ``(a) In General.--The Governor shall establish criteria and
    procedures regarding the eligibility of providers of training services
    described in section 134(c)(4) to receive funds provided under section
    133(b) for the provision of such training services.
      ``(b) Criteria.--
              ``(1) In general.--The criteria established pursuant to
            subsection (a) shall take into account the performance of
            providers of training services with respect to the indicators
            described in section 136 or other appropriate indicators
            (taking into consideration the characteristics of the
            population served and relevant economic conditions), and such
            other factors as the Governor determines are appropriate to
            ensure the quality of services, the accountability of
            providers, and the informed choice of participants under
            chapter 5. Such criteria shall require that the provider submit
            appropriate, accurate and timely information to the State for
            purposes of carrying out subsection (d). The criteria shall
            also provide for periodic review and renewal of eligibility
            under this section for providers of training services. The
            Governor may authorize local areas in the State to establish
            additional criteria or to modify the criteria established by
            the Governor under this section for purposes of determining the
            eligibility of providers of training services to provide such
            services in the local area.
              ``(2) Limitation.--In carrying out the requirements of this
            subsection, no personally identifiable information regarding a
            student, including Social Security number, student
            identification number, or other identifier, may be disclosed
            without the prior written consent of the parent or eligible
            student in compliance with section 444 of the General Education
            Provisions Act (20 U.S.C. 1232g).
      ``(c) Procedures.--The procedures established under subsection (a)
    shall identify the application process for a provider of training
    services to become eligible to receive funds under section 133(b), and
    identify the respective roles of the State and local areas in receiving
    and reviewing applications and in making determinations of eligibility
    based on the criteria established under this section. The procedures
    shall also establish a process for a provider of training services to
    appeal a denial or termination of eligibility under this section that
    includes an opportunity for a hearing and prescribes appropriate time
    limits to ensure prompt resolution of the appeal.
      ``(d) Information to Assist Participants in Choosing Providers.--In
    order to facilitate and assist participants under chapter 5 in choosing
    providers of training services, the Governor shall ensure that an
    appropriate list or lists of providers determined eligible under this
    section in the State, accompanied by such information as the Governor
    determines is appropriate, is provided to the local boards in the State
    to be made available to such participants and to members of the public
    through the one-stop delivery system in the State.
      ``(e) Agreements With Other States.--States may enter into
    agreements, on a reciprocal basis, to permit eligible providers of
    training services to accept individual training accounts provided in
    another State.
      ``(f) Recommendations.--In developing the criteria, procedures, and
    information required under this section, the Governor shall solicit and
    take into consideration the recommendations of local boards and
    providers of training services within the State.
      ``(g) Opportunity to Submit Comments.--During the development of the
    criteria, procedures, and information required under this section, the
    Governor shall provide an opportunity for interested members of the
    public, including representatives of business and labor organizations,
    to submit comments regarding such criteria, procedures, and
    information.''.

    SEC. 110. ELIGIBLE PROVIDERS OF YOUTH ACTIVITIES.

      Section 123 (29 U.S.C. 2843) and the item relating to such section in
    the table of contents are repealed.

    SEC. 111. YOUTH ACTIVITIES.

      (a) State Allotments.--
              (1) In general.--Section 127(a) (29 U.S.C. 2852(a)) is
            amended to read as follows:
      ``(a) Allotment Among States.--
              ``(1) Youth activities.--
                      ``(A) Youth challenge grants.--
                              ``(i) Reservation of funds.--Of the amount
                            appropriated under section 137(a) for each
                            fiscal year, the Secretary shall reserve 25
                            percent to provide youth challenge grants under
                            section 169.
                              ``(ii) Limitation.--Notwithstanding clause
                            (i), if the amount appropriated under section
                            137(a) for a fiscal year exceeds
                            $1,000,000,000, the Secretary shall reserve
                            $250,000,000 to provide youth challenge grants
                            under section 169.
                      ``(B) Outlying areas and native americans.--After
                    determining the amount to be reserved under
                    subparagraph (A), of the remainder of the amount
                    appropriated under section 137(a) for each fiscal year
                    the Secretary shall--
                              ``(i) reserve not more than \1/4\ of one
                            percent of such amount to provide assistance to
                            the outlying areas to carry out youth
                            activities and statewide workforce investment
                            activities; and
                              ``(ii) reserve not more than 1 and \1/2\
                            percent of such amount to provide youth
                            activities under section 166 (relating to
                            Native Americans).
                      ``(C) States.--
                              ``(i) In general.--After determining the
                            amounts to be reserved under subparagraphs (A)
                            and (B), the Secretary shall allot the
                            remainder of the amount appropriated under
                            section 137(a) for each fiscal year to the
                            States pursuant to clause (ii) for youth
                            activities and statewide workforce investment
                            activities.
                              ``(ii) Formula.--Subject to clauses (iii) and
                            (iv), of the remainder--
                                      ``(I) 33 and \1/3\ percent shall be
                                    allotted on the basis of the relative
                                    number of high school dropouts who are
                                    ages 16 through 21 in the State,
                                    compared to the total number of high
                                    school dropouts who are ages 16 through
                                    21 in all States;
                                      ``(II) 33 and \1/3\ percent shall be
                                    allotted on the basis of the relative
                                    number of jobless out-of-school youth
                                    who are ages 16 through 21 in the
                                    State, compared to the total number of
                                    jobless out-of-school youth who are
                                    ages 16 through 21 in all States; and
                                      ``(III) 33 and \1/3\ percent shall be
                                    allotted on the basis of the relative
                                    number of disadvantaged youth who are
                                    ages 16 through 21 in the State,
                                    compared to the total number of
                                    disadvantaged youth who are ages 16
                                    through 21 in all States.
                              ``(iii) Minimum and maximum percentages.--The
                            Secretary shall ensure that no State shall
                            receive an allotment for a fiscal year that is
                            less than 90 percent or greater than 130
                            percent of the allotment percentage of that
                            State for the preceding fiscal year.
                              ``(iv) Small state minimum allotment.--
                            Subject to clause (iii), the Secretary shall
                            ensure that no State shall receive an allotment
                            under this paragraph that is less than \3/10\
                            of 1 percent of the amount available under
                            subparagraph (A).
              ``(2) Definitions.--For the purposes of paragraph (1), the
            following definitions apply:
                      ``(A) Allotment percentage.--The term `allotment
                    percentage', used with respect to fiscal year 2004 or a
                    subsequent fiscal year, means a percentage of the
                    remainder described in paragraph (1)(C)(i) that is
                    received through an allotment made under this
                    subsection for the fiscal year. The term, with respect
                    to fiscal year 2003, means the percentage of the
                    amounts allotted to States under this chapter (as in
                    effect on the day before the date of enactment of the
                    Workforce Reinvestment and Adult Education Act of 2003)
                    that is received by the State involved for fiscal year
                    2003.
                      ``(B) Disadvantaged youth.--The term `disadvantaged
                    youth' means an individual who is age 16 through 21 who
                    received an income, or is a member of a family that
                    received a total family income, that, in relation to
                    family size, does not exceed the poverty line.
                      ``(C) Number of high school dropouts.--The term
                    `number of high school dropouts' means the number of
                    high school dropouts as is determined by the Secretary
                    based on the Current Population Survey.
                      ``(D) Number of jobless out-of-school youth.--The
                    term `number of jobless out-of-school youth' means the
                    number of jobless out-of-school youth as is determined
                    by the Secretary based on the Current Population
                    Survey.
              ``(3) Special rule.--For purposes of the formula specified in
            paragraph (1)(C), the Secretary shall, as appropriate and to
            the extent practicable, exclude college students and members of
            the Armed Forces from the determination of the number of
            disadvantaged youth.
              ``(4) Minimum allotment.--Notwithstanding any other provision
            of this section, no State shall receive an allotment under this
            section that is less than the amount received by such State for
            fiscal year 2003.''.
              (2) Reallotment.--Section 127 (29 U.S.C. 2552) is further
            amended--
                      (A) by striking subsection (b);
                      (B) by redesignating subsection (c) as subsection
                    (b);
                      (C) in subsection (b) (as so redesignated)
                              (i) by amending paragraph (2) to read as
                            follows:
              ``(2) Amount.--The amount available for reallotment for a
            program year is equal to the amount by which the unexpended
            balance, excluding accrued expenditures, at the end of such
            program year of the total amount of funds available to the
            State under this section during such program year (including
            amounts allotted to the State in prior program years that
            remain available during the program year for which the
            determination is made) exceeds 30 percent of such total
            amount.'';
                              (ii) in paragraph (3)--
                                      (I) by striking ``for the prior
                                    program year'' and inserting ``for the
                                    program year in which the determination
                                    is made''; and
                                      (II) by striking ``such prior program
                                    year'' and inserting ``such program
                                    year'';
                      (iii) by amending paragraph (4) to read as follows:
              ``(4) Eligibility.--For purposes of this subsection, an
            eligible State means a State which does not have an amount
            available for reallotment under paragraph (2) for the program
            year for which the determination under paragraph (2) is
            made.''.
      (b) Within State Allocations.--
              (1) Reservation for statewide activities.--Section 128(a) is
            amended to read as follows:
      ``(a) Reservation for Statewide Activities.--
              ``(1) In general.--The Governor of a State shall reserve not
            more than 10 percent of the amount allotted to the State under
            section 127(a)(1)(C) for a fiscal year for statewide
            activities.
              ``(2) Use of funds.--Regardless of whether the amounts are
            allotted under section 127(a)(1)(C) and reserved under
            paragraph (1) or allotted under section 132 and reserved under
            section 133(a), the Governor may use the reserved amounts to
            carry out statewide youth activities under section 129(b) or
            statewide employment and training activities under section
            133.''.
              (2) Within state allocation.--Section 128(b) is amended to
            read as follows:
      ``(b) Within State Allocation.--
              ``(1) In general.--Of the amounts allotted to the State under
            section 127(a)(1)(C) and not reserved under subsection (a)(1)--
                      ``(A) 80 percent of such amounts shall be allocated
                    by the Governor to local areas in accordance with
                    paragraph (2); and
                      ``(B) 20 percent of such amounts shall be allocated
                    by the Governor to local areas in accordance with
                    paragraph (3).
              ``(2) Established formula.--
                      ``(A) In general.--Of the amounts described in
                    paragraph (1)(A), the Governor shall allocate--
                              ``(i) 33 and \1/3\ percent on the basis of
                            the relative number of high school dropouts who
                            are ages 16 through 21 in each local area,
                            compared to the total number of high school
                            dropouts who are ages 16 through 21 in all
                            local areas in the State;
                              ``(ii) 33 and \1/3\ percent on the basis of
                            the relative number of jobless out-of-school
                            youth who are ages 16 through 21 in each local
                            area, compared to the total number of jobless
                            out-of-school youth who are ages 16 through 21
                            in all local areas in the State; and
                              ``(iii) 33 and \1/3\ percent on the basis of
                            the relative number of disadvantaged youth who
                            are ages 16 through 21 in each local area,
                            compared to the total number of disadvantaged
                            youth who are ages 16 through 21 in all local
                            areas in the State.
                      ``(B) Minimum and maximum percentages.--The Governor
                    shall ensure that no local area shall receive an
                    allocation for a fiscal year under this paragraph that
                    is less than 90 percent or greater than 130 percent of
                    the allocation percentage of the local area for the
                    preceding fiscal year.
                      ``(C) Definitions.--
                              ``(i) Allocation percentage.--For purposes of
                            this paragraph, the term `allocation
                            percentage', used with respect to fiscal year
                            2004 or a subsequent fiscal year, means a
                            percentage of amount described in
                            paragraph(1)(A) that is received through an
                            allocation made under this paragraph for the
                            fiscal year. The term, with respect to fiscal
                            year 2003, means the percentage of the amounts
                            allocated to local areas under this chapter (as
                            in effect on the day before the date of
                            enactment of the Workforce Investment Act
                            Amendments of 2003) that is received by the
                            local area involved for fiscal year 2003.
                              ``(ii) Other terms.--For purposes of this
                            paragraph, all other terms shall have the
                            meaning given such terms in section 127(a)(2).
              ``(3) Youth discretionary allocation.--The Governor shall
            allocate to local areas the amounts described in paragraph
            (1)(B) in accordance with such demographic and economic factors
            as the Governor, after consultation with the State board and
            local boards, determines are appropriate.
              ``(4) Local administrative cost limit.--
                      ``(A) In general.--Of the amounts allocated to a
                    local area under this subsection and section 133(b) for
                    a fiscal year, not more than 10 percent of the amount
                    may be used by the local boards for the administrative
                    costs of carrying out local workforce investment
                    activities under this chapter or chapter 5.
                      ``(B) Use of funds.--Funds made available for
                    administrative costs under subparagraph (A) may be used
                    for the administrative costs of any of the local
                    workforce investment activities described in this
                    chapter or chapter 5, regardless of whether the funds
                    were allocated under this subsection or section
                    133(b).''.
              (3) Reallocation.--Section 128(c) (29 U.S.C. 2853(c)) is
            amended--
                      (A) in paragraph (1), by striking ``paragraph (2)(A)
                    or (3) of'';
                      (B) by amending paragraph (2) to read as follows:
              ``(2) Amount.--The amount available for reallocation for a
            program year is equal to the amount by which the unexpended
            balance, excluding accrued expenditures, at the end of such
            program year of the total amount of funds available to the
            local area under this section during such program year
            (including amounts allotted to the local area in prior program
            years that remain available during the program year for which
            the determination is made) exceeds 30 percent of such total
            amount.'';
                      (C) by amending paragraph (3)--
                              (i) by striking ``subsection (b)(3)'' each
                            place it appears and inserting ``subsection
                            (b)'';
                              (ii) by striking ``the prior program year''
                            and inserting ``the program year in which the
                            determination is made'';
                              (iii) by striking ``such prior program year''
                            and inserting ``such program year''; and
                              (iv) by striking the last sentence; and
                      (D) by amending paragraph (4) to read as follows:
              ``(4) Eligibility.--For purposes of this subsection, an
            eligible local area means a local area which does not have an
            amount available for reallocation under paragraph (2) for the
            program year for which the determination under paragraph (2) is
            made.''.
      (c) Youth Participant Eligibility.--Section 129(a) (29 U.S.C.
    2854(a)) is amended to read as follows:
      ``(a) Youth Participant Eligibility.--
              ``(1) In general.--The individuals participating in
            activities carried out under this chapter by a local area
            during any program year shall be individuals who, at the time
            the eligibility determination is made, are--
                      ``(A) not younger than age 16 or older than age 21;
                    and
                      ``(B) one or more of the following:
                              ``(i) school dropouts;
                              ``(ii) recipients of a secondary school
                            diploma or the General Equivalency Diploma
                            (GED) (including recognized alternative
                            standards for individuals with disabilities);
                              ``(iii) court-involved youth attending an
                            alternative school;
                              ``(iv) youth in foster care or who have been
                            in foster care; or
                              ``(v) in school youth who are low-income
                            individuals and one or more of the following:
                                      ``(I) Deficient in literacy skills.
                                      ``(II) Homeless, runaway, or foster
                                    children.
                                      ``(III) Pregnant or parents.
                                      ``(IV) Offenders.
                                      ``(V) Individuals who require
                                    additional assistance to complete an
                                    educational program, or to secure and
                                    hold employment.
              ``(2) Priority for school dropouts.--A priority in the
            provision of services under this chapter shall be given to
            individuals who are school dropouts.
              ``(3) Limitations on activities for in-school youth.--
                      ``(A) Percentage of funds.--For any program year, not
                    more than 30 percent of the funds available for
                    statewide activities under subsection (b), and not more
                    than 30 percent of funds available to local areas under
                    subsection (c), may be used to provide activities for
                    in-school youth meeting the requirements of paragraph
                    (1)(B)(v).
                      ``(B) Non-school hours required.--Activities carried
                    out under this chapter for in-school youth meeting the
                    requirements of paragraph (1)(B)(v) shall only be
                    carried out in non-school hours or periods when school
                    is not in session (such as before and after school or
                    during summer recess.''.
      (d) Statewide Youth Activities.--Section 129(b) (29 U.S.C. 2854(b))
    is amended to read as follows:
      ``(b) Statewide Activities.--
              ``(1) In general.--Funds reserved by a Governor for a State
            as described in sections 128(a) and 133(a)(1) may be used for
            statewide activities including--
                      ``(A) additional assistance to local areas that have
                    high concentrations of eligible youth;
                      ``(B) supporting the provision of core services
                    described in section 134(c)(2) in the one-stop delivery
                    system;
                      ``(C) conducting evaluations under section 136(e) of
                    activities authorized under this chapter and chapter 5
                    in coordination with evaluations carried out by the
                    Secretary under section 172, research, and
                    demonstration projects;
                      ``(D) providing incentive grants to local areas for
                    regional cooperation among local boards (including
                    local boards in a designated region as described in
                    section 116(c)), for local coordination of activities
                    carried out under this Act, and for exemplary
                    performance by local areas on the local performance
                    measures;
                      ``(E) providing technical assistance and capacity
                    building to local areas, one-stop operators, one-stop
                    partners, and eligible providers, including the
                    development and training of staff, the development of
                    exemplary program activities, and the provision of
                    technical assistance to local areas that fail to meet
                    local performance measures;
                      ``(F) operating a fiscal and management
                    accountability system under section 136(f); and
                      ``(G) carrying out monitoring and oversight of
                    activities under this chapter and chapter 5.
              ``(2) Limitation.--Not more than 5 percent of the funds
            allotted under section 127(b) shall be used by the State for
            administrative activities carried out under this subsection and
            section 133(a).
              ``(3) Prohibition.--No funds described in this subsection or
            in section 134(a) may be used to develop or implement education
            curricula for school systems in the State.''.
      (e) Local Elements and Requirements.----
              (1) Program design.--Section 129(c)(1) (29 U.S.C. 2854(c)
            (1)) is amended--
                      (A) in the matter preceding subparagraph (A), by
                    striking ``paragraph (2)(A) or (3), as appropriate,
                    of'';
                      (B) in subparagraph (B), by inserting ``are directly
                    linked to one or more of the performance outcomes
                    relating to this chapter under section 136, and that''
                    after ``for each participant that''; and
                      (C) in subparagraph (C)--
                              (i) by redesignating clauses (i) through (iv)
                            as clauses (ii) through (v), respectively;
                              (ii) by inserting before clause (ii) (as so
                            redesignated) the following:
                              ``(i) activities leading to the attainment of
                            a secondary school diploma or the General
                            Equivalency Diploma (GED) (including recognized
                            alternative standards for individuals with
                            disabilities);'';
                              (iii) in clause (ii) (as redesignated by this
                            subparagraph), by inserting ``and advanced
                            training'' after ``opportunities'';
                              (iv) in clause (iii) (as redesignated by this
                            subparagraph), by inserting ``that lead to the
                            attainment of recognized credentials'' after
                            ``learning''; and
                              (v) by amending clause (v) (as redesignated
                            by this subparagraph) to read as follows:
                              ``(v) effective connections to employers in
                            sectors of the local labor market experiencing
                            high growth in employment opportunities.''.
              (2) Program elements.--Section 129(c)(2) (29 U.S.C.
            2854(c)(2)) is amended--
                      (A) in subparagraph (A), by striking ``secondary
                    school, including dropout prevention strategies'' and
                    inserting ``secondary school diploma or the General
                    Equivalency Diploma (GED) (including recognized
                    alternative standards for individuals with
                    disabilities), including dropout prevention
                    strategies'';
                      (B) in subparagraph (I), by striking ``and'' at the
                    end;
                      (C) in subparagraph (J), by striking the period at
                    the end and inserting a semicolon; and
                      (D) by adding at the end the following:
                      ``(K) on-the-job training opportunities; and
                      ``(L) financial literacy skills.''.
              (3) Additional requirements.--Section 129(c)(3)(A) (29 U.S.C.
            2854(c)(3)(A)) is amended in the matter preceding clause (i) by
            striking ``or applicant who meets the minimum income criteria
            to be considered an eligible youth'';
              (4) Priority and exceptions.--Section 129(c) (29 U.S.C.
            2854(c)) is further amended--
                      (A) by striking paragraphs (4) and (5);
                      (B) by redesignating paragraph (6) as paragraph (4);
                      (C) by redesignating paragraph (7) as paragraph (5),
                    and in such redesignated paragraph (5) by striking
                    ``youth councils'' and inserting ``local boards''; and
                      (D) by redesignating paragraph (8) as paragraph (6).

    SEC. 112. COMPREHENSIVE PROGRAM FOR ADULTS.

      (a) Title of Chapter 5.--
              (1) The title heading of chapter 5 is amended to read as
            follows:

       ``CHAPTER 5--COMPREHENSIVE EMPLOYMENT AND TRAINING ACTIVITIES FOR
                                   ADULTS''.

              (2) Conforming amendment.--Table of contents in section 1(b)
            is amended by amending the item related to the heading for
            chapter 5 to read as follows:

       ``Chapter 5--Comprehensive Employment and Training Activities for
                                   Adults''.

      (b) General Authorization.--Section 131 (29 U.S.C. 2861) is amended--
              (1) by striking ``paragraphs (1)(B) and (2)(B) of ''; and
              (2) by striking ``, and dislocated workers,''.
      (c) State Allotments.--
              (1) In general.--Section 132(a) (29 U.S.C. 2862(a)) is
            amended to read as follows:
      ``(a) In General.--The Secretary shall--
              ``(1) reserve 10 percent of the amount appropriated under
            section 137(b) for a fiscal year, of which--
                      ``(A) not less than 75 percent shall be used for
                    national dislocated worker grants under section 173;
                      ``(B) not more than 20 percent may be used for
                    demonstration projects under section 171; and
                      ``(C) not more than 5 percent may be used to provide
                    technical assistance under section 170; and
              ``(2) make allotments from 90 percent of the amount
            appropriated under section 137(b) for a fiscal year in
            accordance with subsection (b).''.
              (2) Allotment among states.--Section 132(b) (29 U.S.C.
            2862(b)) is amended to read as follows:
      ``(b) Allotment Among States for Adult Employment and Training
    Activities.--
              ``(1) Reservation for outlying areas.--From the amount made
            available under subsection (a)(2) for a fiscal year, the
            Secretary shall reserve not more than \1/4\ of 1 percent to
            provide assistance to outlying areas to carry out employment
            and training activities for adults and statewide workforce
            investment activities.
              ``(2) States.--
                      ``(A) In general.--After determining the amount to be
                    reserved under paragraph (1), the Secretary shall allot
                    the remainder of the amount referred to under
                    subsection (a)(2) for a fiscal year to the States
                    pursuant to subparagraph (B) for employment and
                    training activities for adults and statewide workforce
                    investment activities.
                      ``(B) Formula.--Subject to subparagraphs (C) and (D),
                    of the remainder--
                              ``(i) 60 percent shall be allotted on the
                            basis of the relative number of unemployed
                            individuals in each State, compared to the
                            total number of unemployed individuals in all
                            States;
                              ``(ii) 15 percent shall be allotted on the
                            basis of the relative excess number of
                            unemployed individuals in each State, compared
                            to the total excess number of unemployed
                            individuals in all States;
                              ``(iii) 15 percent shall be allotted on the
                            basis of the relative number of individuals in
                            the civilian labor force in each State,
                            compared to the total number of individuals in
                            the civilian labor force in all States; and
                              ``(iv) 10 percent shall be allotted on the
                            basis of the relative number of disadvantaged
                            adults in each State, compared to the total
                            number of disadvantaged adults in all States.
                      ``(C) Minimum and maximum percentages.--The Secretary
                    shall ensure that no State shall receive an allotment
                    for a fiscal year that is less than 90 percent or
                    greater than 130 percent of the allotment percentage of
                    the State for the preceding fiscal year.
                      ``(D) Minimum allotment.--Notwithstanding any other
                    provision of this section, no State shall receive an
                    allotment under this section that is less than the
                    amount received by such State for fiscal year 2003.
                      ``(E) Small state minimum allotment.--Subject to
                    subparagraph (C), the Secretary shall ensure that no
                    State shall receive an allotment under this paragraph
                    that is less than \3/10\ of 1 percent of the amount
                    available under subparagraph (A).
                      ``(F) Definitions.--For the purposes of this
                    paragraph, the following definitions apply:
                              ``(i) Allotment percentage.--The term
                            `allotment percentage', used with respect to
                            fiscal year 2004 or a subsequent fiscal year,
                            means a percentage of the remainder described
                            in subparagraph (A) that is received through an
                            allotment made under this paragraph for the
                            fiscal year. The term, with respect to fiscal
                            year 2003, means the percentage of the amounts
                            allotted to States under this chapter (as in
                            effect on the day before the date of enactment
                            of the Workforce Reinvestment and Adult
                            Education Act of 2003) and under section 6 of
                            the Wagner-Peyser Act that is received by the
                            State involved for fiscal year 2003.
                              ``(ii) Disadvantaged adult.--The term
                            `disadvantaged adult' means an individual who
                            is age 22 through 72 who received an income, or
                            is a member of a family that received a total
                            family income, that, in relation to family
                            size, does not exceed the poverty line.
                              ``(iii) Excess number.--The term `excess
                            number' means, used with respect to the excess
                            number of unemployed individuals within a
                            State, the number that represents the number of
                            unemployed individuals in excess of 4.5 percent
                            of the civilian labor force in the State.''.
              (3) Reallotment.--Section 132(c) (29 U.S.C. 2862(c)) is
            amended--
                      (A) by amending paragraph (2) to read as follows:
              ``(2) Amount.--The amount available for reallotment for a
            program year is equal to the amount by which the unexpended
            balance, excluding accrued expenditures, at the end of such
            program year of the total amount of funds available to the
            State under this section during such program year (including
            amounts allotted to the State in prior program years that
            remain available during the program year for which the
            determination is made) exceeds 30 percent of such total
            amount.'';
                      (B) in paragraph (3)--
                              (i) by striking ``for the prior program
                            year'' and inserting ``for the program year in
                            which the determination is made''; and
                              (ii) by striking ``such prior program year''
                            and inserting ``such program year''; and
                      (C) by amending paragraph (4) to read as follows:
              ``(4) Eligibility.--For purposes of this subsection, an
            eligible State means a State that does not have an amount
            available for reallotment under paragraph (2) for the program
            year for which the determination under paragraph (2) is
            made.''.
      (d) Within State Allocations.--
              (1) Reservation for state activities.--Section 133(a) (29
            U.S.C. 2863(a)) is amended to read as follows:
      ``(a) Reservation for Statewide Activities.--The Governor of a State
    may reserve up to 50 percent of the total amount allotted to the State
    under section 132 for a fiscal year to carry out the statewide
    activities described in section 134(a).''.
              (2) Allocations to local areas.--Section 133(b) (29 U.S.C.
            2863(b)) is amended to read as follows:
      ``(b) Allocations to Local Areas.--
              ``(1) In general.--Of the amounts allotted to the State under
            section 132(b)(2) and not reserved under subsection (a)--
                      ``(A) 80 percent of such amounts shall be allocated
                    by the Governor to local areas in accordance with
                    paragraph (2); and
                      ``(B) 20 percent of such amounts shall be allocated
                    by the Governor to local areas in accordance with
                    paragraph (3).
              ``(2) Established formula.--
                      ``(A) In general.--Of the amounts described in
                    paragraph (1)(A), the Governor shall allocate--
                              ``(i) 60 percent on the basis of the relative
                            number of unemployed individuals in each local
                            area, compared to the total number of
                            unemployed individuals in all local areas in
                            the State;
                              ``(ii) 15 percent on the basis of the
                            relative excess number of unemployed
                            individuals in each local area, compared to the
                            total excess number of unemployed individuals
                            in all local areas in the State;
                              ``(iii) 15 percent on the basis of the
                            relative number of individuals in the civilian
                            labor force in each local area, compared to the
                            total number of individuals in the civilian
                            labor force in all local areas in the State;
                            and
                              ``(iv) 10 percent shall be allotted on the
                            basis of the relative number of disadvantaged
                            adults in each local area, compared to the
                            total number of disadvantaged adults in all
                            local areas in the State.
                      ``(B) Minimum and maximum percentages.--The Governor
                    shall ensure that no local area shall receive an
                    allocation for a fiscal year under this paragraph that
                    is less than 90 percent or greater than 130 percent of
                    the allocation percentage of the local area for the
                    preceding fiscal year.
                      ``(C) Definitions.--
                              ``(i) Allocation percentage.--The term
                            `allocation percentage', used with respect to
                            fiscal year 2004 or a subsequent fiscal year,
                            means a percentage of amount described in
                            paragraph (1)(A) that is received through an
                            allocation made under this paragraph for the
                            fiscal year. The term, with respect to fiscal
                            year 2003, means the percentage of the amounts
                            allocated to local areas under this chapter (as
                            in effect on the day before the date of
                            enactment of the Workforce Reinvestment and
                            Adult Education Act of 2003) that is received
                            by the local area involved for fiscal year
                            2003.
                              ``(ii) Disadvantaged adult.--The term
                            `disadvantaged adult' means an individual who
                            is age 22 through 72 who received an income, or
                            is a member of a family that received a total
                            family income, that, in relation to family
                            size, does not exceed the poverty line.
                              ``(iii) Excess number.--The term `excess
                            number' means, used with respect to the excess
                            number of unemployed individuals within a local
                            area, the number that represents the number of
                            unemployed individuals in excess of 4.5 percent
                            of the civilian labor force in the local area.
              ``(3) Discretionary allocation.--The Governor shall allocate
            to local areas the amounts described in paragraph (1)(B) based
            on a formula developed in consultation with the State board and
            local boards. Such formula shall be objective and
            geographically equitable and may include such demographic and
            economic factors as the Governor, after consultation with the
            State board and local boards, determines are appropriate.
              ``(4) Local administrative cost limit.--
                      ``(A) In general.--Of the amounts allocated to a
                    local area under this subsection and section 128(b) for
                    a fiscal year, not more than 10 percent of the amount
                    may be used by the local boards for the administrative
                    costs of carrying out local workforce investment
                    activities under this chapter or chapter 4.
                      ``(B) Use of funds.--Funds made available for
                    administrative costs under subparagraph (A) may be used
                    for the administrative costs of any of the local
                    workforce investment activities described in this
                    chapter or chapter 4, regardless of whether the funds
                    were allocated under this subsection or section
                    128(b).''.
              (3) Reallocation among local areas.--Section 133(c) (29
            U.S.C. 2863(c)) is amended--
                      (A) in paragraph (1), by striking ``paragraph (2)(A)
                    or (3) of'';
                      (B) by amending paragraph (2) to read as follows:
              ``(2) Amount.--The amount available for reallocation for a
            program year is equal to the amount by which the unexpended
            balance, excluding accrued expenditures, at the end of such
            program year of the total amount of funds available to the
            local area under this section during such program year
            (including amounts allotted to the local area in prior program
            years that remain available during the program year for which
            the determination is made) exceeds 30 percent of such total
            amount.'';
                      (C) by amending paragraph (3)--
                              (i) by striking ``subsection (b)(3)'' each
                            place it appears and inserting ``subsection
                            (b)'';
                              (ii) by striking ``the prior program year''
                            and inserting ``the program year in which the
                            determination is made'';
                              (iii) by striking ``such prior program year''
                            and inserting ``such program year''; and
                              (iv) by striking the last sentence; and
                      (D) by amending paragraph (4) to read as follows:
              ``(4) Eligibility.--For purposes of this subsection, an
            eligible local area means a local area which does not have an
            amount available for reallocation under paragraph (2) for the
            program year for which the determination under paragraph (2) is
            made.''.
      (e) Use of Funds for Employment and Training Activities.--
              (1) Statewide employment and training activities.--
                      (A) In general.--Section 134(a)(1) (29 U.S.C.
                    2864(a)(1) is amended to read as follows:
              ``(1) In general.--
                      ``(A) Required use of funds.--Not less than 50
                    percent of the funds reserved by a Governor under
                    section 133(a) shall be used to support the provision
                    of core services in local areas, consistent with the
                    local plan, through one-stop delivery systems by
                    distributing funds to local areas in accordance with
                    subparagraph (B). Such funds may be used by States to
                    employ State personnel to provide such services in
                    designated local areas in consultation with local
                    boards.
                      ``(B) Method of distributing funds.--The method of
                    distributing funds under this paragraph shall be
                    developed in consultation with the State board and
                    local boards. Such method of distribution, which may
                    include the formula established under section
                    121(h)(3), shall be objective and geographically
                    equitable, and may include factors such as the number
                    of centers in the local area that have been certified,
                    the population served by such centers, and the
                    performance of such centers.
                      ``(C) Other use of funds.--Funds reserved by a
                    Governor for a State--
                              ``(i) under section 133(a) and not used under
                            subparagraph (A), may be used for statewide
                            activities described in paragraph (2); and
                              ``(ii) under section 133(a) and not used
                            under subparagraph (A), and under section
                            128(a) may be used to carry out any of the
                            statewide employment and training activities
                            described in paragraph (3).''.
                      (B) Statewide rapid response activities.--Section
                    134(a)(2) (29 U.S.C. 2864(a)(2)) is amended to read as
                    follows:
              ``(2) Statewide rapid response activities.--A State shall
            carry out statewide rapid response activities using funds
            reserved as described in section 133(a). Such activities shall
            include--
                      ``(A) provision of rapid response activities, carried
                    out in local areas by the State or by an entity
                    designated by the State, working in conjunction with
                    the local boards and the chief elected officials in the
                    local areas; and
                      ``(B) provision of additional assistance to local
                    areas that experience disasters, mass layoffs or plant
                    closings, or other events that precipitate substantial
                    increases in the number of unemployed individuals,
                    carried out in local areas by the State, working in
                    conjunction with the local boards and the chief elected
                    officials in the local areas.''.
                      (C) Statewide employment and training activities.--
                    Section 134(a)(3) (29 U.S.C. 2864(a)(3)) is amended to
                    read as follows:
              ``(3) Statewide activities.--Funds reserved by a Governor for
            a State as described in sections 133(a) and 128(a) may be used
            for statewide activities including--
                      ``(A) supporting the provision of core services
                    described in section 134(c)(2) in the one-stop delivery
                    system;
                      ``(B) conducting evaluations under section 136(e) of
                    activities authorized under this chapter and chapter 4
                    in coordination with evaluations carried out by the
                    Secretary under section 172, research, and
                    demonstration projects;
                      ``(C) providing incentive grants to local areas for
                    regional cooperation among local boards (including
                    local boards in a designated region as described in
                    section 116(c)), for local coordination of activities
                    carried out under this Act, and for exemplary
                    performance by local areas on the local performance
                    measures;
                      ``(D) providing technical assistance and capacity
                    building to local areas, one-stop operators, one-stop
                    partners, and eligible providers, including the
                    development and training of staff, the development of
                    exemplary program activities, and the provision of
                    technical assistance to local areas that fail to meet
                    local performance measures;
                      ``(E) operating a fiscal and management
                    accountability system under section 136(f);
                      ``(F) carrying out monitoring and oversight of
                    activities carried out under this chapter and chapter
                    4;
                      ``(G) implementing innovative programs, such as
                    incumbent worker training programs, programs serving
                    individuals with disabilities consistent with section
                    188;
                      ``(H) developing strategies for effectively serving
                    hard-to-serve populations and for integrating programs
                    and services among one-stop partners;
                      ``(I) implementing innovative programs for displaced
                    homemakers, which for purposes of this subparagraph may
                    include an individual who is receiving public
                    assistance and is within 2 years of exhausting lifetime
                    eligibility under Part A of title IV of the Social
                    Security Act (42 U.S.C. 601 et seq.); and
                      ``(J) implementing programs to increase the number of
                    individuals training for and placed in nontraditional
                    employment.''.
                      (D) Limitation on state administrative
                    expenditures.--Section 134(a) is further amended by
                    adding the following new paragraph:
              ``(4) Limitation.--Not more than 5 percent of the funds
            allotted under section 132(b) shall be used by the State for
            administrative activities carried out under this subsection and
            section 128(a).''.
              (2) Local employment and training activities.-- Section
            134(b) (29 U.S.C. 2864(b)) is amended--
                      (A) by striking ``under paragraph (2)(A)'' and all
                    that follows through ``section 133(b)(2)(B)'' and
                    inserting ``under section 133(b)'';
                      (B) in paragraphs (1) and (2), by striking ``or
                    dislocated workers, respectively'' both places it
                    appears; and
                      (C) by redesignating subsections (d) and (e) as
                    subsections (c) and (d), respectively.
              (3) Required local employment and training activities.--
                      (A) Allocated funds.--Section 134(c)(1) (29 U.S.C.
                    2864(c)(1)) (as redesignated by paragraph (2)) is
                    amended to read as follows:
              ``(1) In general.--Funds allocated to a local area for adults
            under section 133(b) shall be used--
                      ``(A) to establish a one-stop delivery system as
                    described in section 121(e);
                      ``(B) to provide the core services described in
                    paragraph (2) through the one-stop delivery system in
                    accordance with such paragraph;
                      ``(C) to provide the intensive services described in
                    paragraph (3) to adults described in such paragraph;
                    and
                      ``(D) to provide training services described in
                    paragraph (4) to adults described in such paragraph.''.
                      (B) Core services.--Section 134(c)(2) (29 U.S.C.
                    2864(c)(2)) (as redesignated by paragraph (2)) is
                    amended--
                              (i) by striking ``who are adults or
                            dislocated workers'';
                              (ii) in subparagraph (A), by striking ``under
                            this subtitle'' and inserting ``under the one-
                            stop partner programs described in section
                            121(b)'';
                              (iii) by amending subparagraph (D) to read as
                            follows:
                      ``(D) labor exchange services, including--
                              ``(i) job search and placement assistance,
                            and where appropriate career counseling; and
                              ``(ii) appropriate recruitment services for
                            employers;''
                              (iv) in subparagraph (I), by inserting ``and
                            the administration of the work test for the
                            unemployment compensation system'' after
                            ``compensation''; and
                              (v) by amending subparagraph (J) to read as
                            follows:
                      ``(J) assistance in establishing eligibility for
                    programs of financial aid assistance for training and
                    education programs that are not funded under this Act
                    and are available in the local area; and''.
                      (C) Intensive services.--Section 134(c)(3) (29 U.S.C.
                    2864(c)(3) (as redesignated by paragraph (2) of this
                    subsection) is amended--
                              (i) by amending subparagraph (A) to read as
                            follows:
                      ``(A) In general.--
                              ``(i) Eligibility.--Funds allocated to a
                            local area under section 133(b) shall be used
                            to provide intensive services for adults who--
                                      ``(I) are unemployed and who have
                                    been determined by the one-stop
                                    operator to be--
                                              ``(aa) unlikely or unable to
                                            obtain suitable employment
                                            through core services; and
                                              ``(bb) in need of intensive
                                            services in order to obtain
                                            suitable employment; or
                                      ``(II) are employed, but who are
                                    determined by a one-stop operator to be
                                    in need of intensive services to obtain
                                    or retain suitable employment.
                              ``(ii) Definition.--The Governor shall define
                            the term `suitable employment' for purposes of
                            this subparagraph.''; and
                              (ii) in subparagraph (C)--
                                      (I) in clause (v), by striking ``for
                                    participants seeking training services
                                    under paragraph (4)''; and
                                      (II) by adding the following clauses
                                    after clause (vi):
                              ``(vii) Internships and work experience.
                              ``(viii) Literacy activities relating to
                            basic work readiness, and financial literacy
                            activities.
                              ``(ix) Out-of-area job search assistance and
                            relocation assistance.''.
                      (D) Training services.--Section 134(c)(4) (as
                    redesignated by paragraph (2) of this subsection) is
                    amended--
                              (i) by amending subparagraph (A) to read as
                            follows:
                      ``(A) In general.--
                              ``(i) Eligibility.--Funds allocated to a
                            local area under section 133(b) shall be used
                            to provide training services to adults who--
                                      ``(I) after an interview, evaluation,
                                    or assessment, and case management,
                                    have been determined by a one-stop
                                    operator or one-stop partner, as
                                    appropriate, to--
                                              ``(aa) be unlikely or unable
                                            to obtain or retain suitable
                                            employment through intensive
                                            services under paragraph
                                            (3)(A);
                                              ``(bb) be in need of training
                                            services to obtain or retain
                                            suitable employment; and
                                              ``(cc) have the skills and
                                            qualifications to successfully
                                            participate in the selected
                                            program of training services;
                                      ``(II) select programs of training
                                    services that are directly linked to
                                    the employment opportunities in the
                                    local area involved or in another area
                                    in which the adults receiving such
                                    services are willing to commute or
                                    relocate;
                                      ``(III) who meet the requirements of
                                    subparagraph (B); and
                                      ``(IV) who are determined eligible in
                                    accordance with the priority system in
                                    effect under subparagraph (E).
                              ``(ii) The Governor shall define the term
                            `suitable employment' for purposes of this
                            subparagraph.'';
                              (ii) in subparagraph (B)(i), by striking
                            ``Except'' and inserting ``Notwithstanding
                            section 479B of the Higher Education Act of
                            1965 (20 U.S.C. 1087uu) and except'';
                              (iii) by amending subparagraph (E) to read as
                            follows:
                      ``(E) Priority.--
                              ``(i) In general.--A priority shall be given
                            to unemployed individuals for the provision of
                            intensive and training services under this
                            subsection.
                              ``(ii) Additional priority.--If the funds in
                            the local area, including the funds allocated
                            under section 133(b), for serving recipients of
                            public assistance and other low-income
                            individuals is limited, the priority for the
                            provision of intensive and training services
                            under this subsection shall include such
                            recipients and individuals.
                              ``(iii) Determinations.--The Governor and the
                            appropriate local board shall direct the one-
                            stop operators in the local area with regard to
                            making determinations with respect to the
                            priority of service under this subparagraph.'';
                              (iv) in subparagraph (F), by adding the
                            following clause after clause (iii):
                              ``(iv) Enhanced individual training
                            accounts.--Each local board may, through one-
                            stop centers, assist individuals receiving
                            individual training accounts through the
                            establishment of such accounts that include, in
                            addition to the funds provided under this
                            paragraph, funds from other programs and
                            sources that will assist the individual in
                            obtaining training services.''; and
                              (v) in subparagraph (G)(iv), by redesignating
                            subclause (IV) as subclause (V) and inserting
                            after subclause (III) the following:
                                      ``(IV) Individuals with
                                    disabilities.''.
              (4) Permissible activities.--Section 134(d) (as redesignated
            by paragraph (2)) is amended--
                      (A) by amending paragraph (1) to read as follows:
              ``(1) Discretionary one-stop delivery activities.--
                      ``(A) In general.--Funds allocated to a local area
                    under section 133(b) may be used to provide, through
                    the one-stop delivery system--
                              ``(i) customized screening and referral of
                            qualified participants in training services to
                            employers;
                              ``(ii) customized employment-related services
                            to employers on a fee-for-service basis;
                              ``(iii) customer support to navigate among
                            multiple services and activities for special
                            participant populations that face multiple
                            barriers to employment, including individuals
                            with disabilities; and
                              ``(iv) employment and training assistance
                            provided in coordination with child support
                            enforcement activities of the State agency
                            carrying out subtitle D of title IV of the
                            Social Security Act.
                      ``(B) Work support activities for low-wage workers.--
                              ``(i) In general.-- Funds allocated to a
                            local area under 133(b) may be used to provide,
                            through the one-stop delivery system and in
                            collaboration with the appropriate programs and
                            resources of the one-stop partners, work
                            support activities designed to assist low-wage
                            workers in retaining and enhancing employment.
                              ``(ii) Activities.--The activities described
                            in clause (i) may include assistance in
                            accessing financial supports for which such
                            workers may be eligible and the provision of
                            activities available through the one-stop
                            delivery system in a manner that enhances the
                            opportunities of such workers to participate,
                            such as the provision of employment and
                            training activities during nontraditional hours
                            and the provision of on-site child care while
                            such activities are being provided.''; and
                      (B) by adding after paragraph (3) the following new
                    paragraph:
              ``(4) Incumbent worker training programs.--
                      ``(A) In general.--The local board may use up to 10
                    percent of the funds allocated to a local area under
                    section 133(b) to carry out incumbent worker training
                    programs in accordance with this paragraph.
                      ``(B) Training activities.--The training programs for
                    incumbent workers under this paragraph shall be carried
                    out by the local area in conjunction with the employers
                    of such workers for the purpose of assisting such
                    workers in obtaining the skills necessary to retain
                    employment and avert layoffs.
                      ``(C) Employer match required.--
                              ``(i) In general.--Employers participating in
                            programs under this paragraph shall be required
                            to pay a proportion of the costs of providing
                            the training to the incumbent workers. The
                            Governor shall establish, or may authorize the
                            local board to establish, the required portion
                            of such costs, which shall not be less than--
                                      ``(I) 10 percent of the costs, for
                                    employers with 50 or fewer employees;
                                      ``(II) 25 percent of the costs, for
                                    employers with more than 50 employees
                                    but fewer than 100 employees; and
                                      ``(III) 50 percent of the costs, for
                                    employers with 100 or more employees.
                              ``(ii) Calculation of match.--The wages paid
                            by an employer to a worker while they are
                            attending training may be included as part of
                            the requirement payment of the employer.''.

    SEC. 113. PERFORMANCE ACCOUNTABILITY SYSTEM.

      (a) State Performance Measures.--
              (1) In general.--Section 136(b)(1) (29 U.S.C. 2871(b)(1)) is
            amended--
                      (A) in subparagraph (A)(i), by striking ``and the
                    customer satisfaction indicator of performance
                    described in paragraph (2)(B)''; and
                      (B) in subparagraph (A)(ii), by striking ``paragraph
                    (2)(C)'' and inserting ``paragraph (2)(B)''.
              (2) Indicators of performance.--Section 136(b)(2) (29 U.S.C.
            2871(b)(2)) is amended--
                      (A) in subparagraph (A)(i), by striking ``(except for
                    self-service and information activities) and (for
                    participants who are eligible youth age 19 through 21)
                    for youth activities authorized under section 129'';
                      (B) by amending subparagraph (A)(i)(IV) to read as
                    follows:
                                      ``(IV) the efficiency of the program
                                    in obtaining the outcomes described in
                                    subclauses (I) through (III).'';
                      (C) by amending subparagraph (A)(ii) to read as
                    follows:
                              ``(ii) Core indicators for eligible youth.--
                            The core indicators of performance for youth
                            activities authorized under section 129 shall
                            consist of--
                                      ``(I) entry into employment,
                                    education or advanced training, or
                                    military service;
                                      ``(II) attainment of secondary school
                                    diplomas or the General Equivalency
                                    Diploma (GED) (including recognized
                                    alternative standards for individuals
                                    with disabilities);
                                      ``(III) attainment of literacy or
                                    numeracy skills; and
                                      ``(IV) the efficiency of the program
                                    in obtaining the outcomes described in
                                    subclauses (I) through (III).'';
                      (D) by striking subparagraph (B);
                      (E) by redesignating subparagraph (C) as subparagraph
                    (B), and by adding at the end of such subparagraph (as
                    so redesignated) the following new sentence: ``Such
                    indicators may include customer satisfaction of
                    employers and participants with services received from
                    the workforce investment activities authorized under
                    this subtitle.''.
              (3) Levels of performance.--Section 136(b)(3)(A) (29 U.S.C.
            2871(b)(3)(A)) is amended--
                      (A) in clause (i), by striking ``and the customer
                    satisfaction indicator described in paragraph (2)(B)'';
                      (B) in clause (ii), by striking ``and the customer
                    satisfaction indicator of performance, for the first
                    3'' and inserting ``for the 2'';
                      (C) in clause (iii)--
                              (i) in the heading, by striking ``for first 3
                            years''; and
                              (ii) by striking ``and the customer
                            satisfaction indicator of performance, for the
                            first 3'' and inserting ``for the 2'';
                      (D) in clause (iv)--
                              (i) by striking subclause (I);
                              (ii) by redesignating subclauses (II) and
                            (III) as subclauses (I) and (II), respectively;
                            and
                              (iii) in subclause (I) (as so redesignated)--
                                      (I) by striking ``taking into
                                    account'' and inserting ``which shall
                                    be adjusted based on'';
                                      (II) by inserting ``such as
                                    unemployment rates and job losses or
                                    gains in particular industries'' after
                                    ``economic conditions''; and
                                      (III) by inserting ``such as
                                    indicators of poor work history, lack
                                    of work experience, low levels of
                                    literacy or English proficiency,
                                    disability status, and welfare
                                    dependency'' after ``program'';
                      (E) by striking clause (v); and
                      (F) by redesignating clause (vi) as clause (v).
              (4) Additional indicators.--Section 136(b)(3)(B) is amended
            by striking ``paragraph (2)(C)'' and inserting ``paragraph
            (2)(B)''.
      (b) Local Performance Measures.--Section 136(c) (29 U.S.C 2871(c)) is
    amended--
              (1) in paragraph (1)(A)(i), by striking ``, and the customer
            satisfaction indicator of performance described in subsection
            (b)(2)(B),'';
              (2) in paragraph (1)(A)(ii), by striking ``subsection
            (b)(2)(C)'' and inserting ``subsection (b)(2)(B)''; and
              (3) by amending paragraph (3) to read as follows:
              ``(3) Determinations.--In determining such local levels of
            performance, the local board, the chief elected official, and
            the Governor shall ensure such levels are adjusted based on the
            specific economic characteristics (such as unemployment rates
            and job losses or gains in particular industries), demographic
            characteristics, or other characteristics of the population to
            be served in the local area, such as poor work history, lack of
            work experience, low levels of literacy or English proficiency,
            disability status, and welfare dependency.''.
      (c) Report.--Section 136(d) (29 U.S.C. 2871(d)) is amended--
              (1) in paragraph (1), by striking ``and the customer
            satisfaction indicator'' in both places that it appears;
              (2) in paragraph (2)(E), by striking ``(excluding
            participants who received only self-service and informational
            activities)''; and
              (3) by adding at the end the following:
              ``(4) Data validation.--In preparing the reports described in
            this subsection, the States shall establish procedures,
            consistent with guidelines issued by the Secretary, to ensure
            the information contained in the report is valid and
            reliable.''.
      (d) Sanctions for State.--Section 136(g) (29 U.S.C. 2871(g)) is
    amended--
              (1) in paragraph (1)(A), by striking ``or (B)''; and
              (2) in paragraph (2), by striking ``section 503'' and
            inserting ``section 136(i)''.
      (e) Sanctions for Local Areas.--Section 136(h) (29 U.S.C. 2871(h)) is
    amended--
              (1) in paragraph (1), by striking ``or (B)''; and
              (2) by amending paragraph (2)(B) to read as follows:
                      ``(B) Appeal to governor.--A local area that is
                    subject to a reorganization plan under subparagraph (A)
                    may, not later than 30 days after receiving notice of
                    the reorganization plan, appeal to the Governor to
                    rescind or revise such plan. In such case, the Governor
                    shall make a final decision not later than 30 days
                    after the receipt of the appeal.''.
      (f) Incentive Grants.--Section 136(i) (29 U.S.C. 2871(i)) is amended
    to read as follows:
      ``(i) Incentive Grants for States and Local Areas.--
              ``(1) Incentive grants for states.--
                      ``(A) In general.--From funds appropriated under
                    section 174, the Secretary may award grants to States
                    for exemplary performance in carrying programs under
                    this chapters 4 and 5 of this title. Such awards may be
                    based on States meeting or exceeding the performance
                    measures established under this section, on the
                    performance of the State in serving special
                    populations, including the levels of service provided
                    and the performance outcomes, and such other factors
                    relating to the performance of the State under this
                    title as the Secretary determines is appropriate.
                      ``(B) Use of funds.--The funds awarded to a State
                    under this paragraph may be used to carry out any
                    activities authorized under chapters 4 and 5 of this
                    title, including demonstrations and innovative programs
                    for special populations.
              ``(2) Incentive grants for local areas.--
                      ``(A) In general.--From funds reserved under sections
                    128(a) and 133(a), the Governor may award incentive
                    grants to local areas for exemplary performance with
                    respect to the measures established under this section
                    and with the performance of the local area in serving
                    special populations, including the levels of service
                    and the performance outcomes.
                      ``(B) Use of funds.--The funds awarded to a local
                    area may be used to carry out activities authorized for
                    local areas under chapters 4 and 5 of this title, and
                    such demonstration or other innovative programs to
                    serve special populations as may be approved by the
                    Governor.''.
      (g) Repeal of Definitions.--Sections 502 and 503 (and the items
    related to such sections in the table of contents) are repealed.

    SEC. 114. AUTHORIZATION OF APPROPRIATIONS.

      (a) Youth Activities.-- Section 137(a) (29 U.S.C. 2872(a)) is amended
    by striking ``such sums as may be necessary for each of fiscal years
    1999 through 2003'' and inserting ``$1,001,000,000 for fiscal year 2004
    and such sums as may be necessary for each of fiscal years 2005 through
    2009''.
      (b) Adult Employment and Training Activities.--Section 137(b) (29
    U.S.C. 2872(b)) is amended by striking ``section 132(a)(1), such sums
    as may be necessary for each of fiscal years 1999 through 2003'' and
    inserting ``132(a), $3,079,800,000 for fiscal year 2004 and such sums
    as may be necessary for each of fiscal years 2005 through 2009''.
      (c) Dislocated Worker Employment and Training Activities.--Section
    137 is further amended by striking subsection (c).

    SEC. 115. JOB CORPS.

      (a) Community Participation.-- Section 153 (29 U.S.C. 2893) is
    amended--
              (1) by amending subsection (a) to read as follows:
      ``(a) Business and Community Participation.--The director of each Job
    Corps center shall ensure the establishment and development of the
    business and community relationships and networks described in
    subsection (b) in order to enhance the effectiveness of such center.'';
              (2) in subsection (b)--
                      (A) in the heading, by striking ``Responsibilities''
                    and inserting ``Networks''; and
                      (B) by striking ``The responsibilities of the
                    Liaison'' and inserting ``The activities carried out by
                    each Job Corps center under this section''; and
              (3) in subsection (c), by striking ``The Liaison for'' and
            inserting ``The director of''.
      (b) Industry Councils.--Section 154(b) (29 U.S.C. 2894(b)) is
    amended--
              (1) in paragraph (1)(A), by striking ``local and distant'';
            and
              (2) by adding after paragraph (2) the following:
              ``(3) Employers outside of local areas.--The industry council
            may include, or otherwise provide for consultation with,
            employers from outside the local area who are likely to hire a
            significant number of enrollees from the Job Corps center.''.
      (c) Indicators of Performance and Additional Information.--Section
    159(c) (29 U.S.C. 2893(c)) is amended--
              (1) by amending paragraph (1) to read as follows:
              ``(1) Core indicators.--The Secretary shall annually
            establish expected levels of performance for Job Corps centers
            and the Job Corps program relating to each of the core
            indicators for youth identified in section 136(b)(2)(A)(ii).'';
            and
              (2) in paragraph (2), by striking ``measures'' each place it
            appears and inserting ``indicators''.

    SEC. 116. NATIVE AMERICAN PROGRAMS.

      (a) Authorized Activities.--Section 166(d)(2) (29 U.S.C. 2911(d)(2))
    is amended to read as follows:
              ``(2) Workforce investment activities and supplemental
            services.--Funds made available under subsection (c) shall be
            used for--
                      ``(A) comprehensive workforce investment activities
                    for Indians or Native Hawaiians; or
                      ``(B) supplemental services for Indian or Native
                    Hawaiian youth on or near Indian reservations and in
                    Oklahoma, Alaska, or Hawaii.''.
      (b) Advisory Council.--Section 166(h)(4)(C) (29 U.S.C. 2911(h)(4)(C))
    is amended to read as follows:
                      ``(C) Duties.--The Council shall advise the Secretary
                    on the operation and administration of the programs
                    assisted under this section.''.
      (c) Assistance to American Samoans in Hawaii.--Section 166 (29 U.S.C.
    2911) is further amended by striking subsection (j).

    SEC. 117. YOUTH CHALLENGE GRANTS.

      Section 169 (29 U.S.C. 2914) is amended to read as follows:

    ``SEC. 169 YOUTH CHALLENGE GRANTS.

      ``(a) In General.--Of the amounts reserved by the Secretary under
    section 127(a)(1)(A) for a fiscal year--
              ``(1) the Secretary shall use not less than 80 percent to
            award competitive grants under subsection (b); and
              ``(2) the Secretary may use not more than 20 percent to award
            discretionary grants under subsection (c).
      ``(b) Competitive Grants to States and Local Areas.--
              ``(1) Establishment.--From the funds described in subsection
            (a)(1), the Secretary shall award competitive grants to
            eligible entities to carry out activities authorized under this
            section to assist eligible youth in acquiring the skills,
            credentials and employment experience necessary to succeed in
            the labor market.
              ``(2) Eligible entities.--Grants under this subsection may be
            awarded to States, local boards, recipients of grants under
            section 166 (relating to Native American programs), and public
            or private entities (including consortia of such entities)
            applying in conjunction with local boards.
              ``(3) Grant period.--The Secretary may make a grant under
            this section for a period of 1 year and may renew the grants
            for each of the 4 succeeding years.
              ``(4) Authority to require match.--The Secretary may require
            that grantees under this subsection provide a non-Federal share
            of the cost of activities carried out under a grant awarded
            under this subsection.
              ``(5) Participant eligibility.--Youth ages 14 through 19 as
            of the time the eligibility determination is made may be
            eligible to participate in activities provided under this
            subsection.
              ``(6) Use of funds.--Funds under this subsection may be used
            for activities that are designed to assist youth in acquiring
            the skills, credentials and employment experience that are
            necessary to succeed in the labor market, including the
            activities identified in section 129. The activities may
            include activities such as--
                      ``(A) training and internships for out-of-school
                    youth in sectors of economy experiencing or projected
                    to experience high growth;
                      ``(B) after-school dropout prevention activities for
                    in-school youth;
                      ``(C) activities designed to assist special youth
                    populations, such as court-involved youth and youth
                    with disabilities; and
                      ``(D) activities combining remediation of academic
                    skills, work readiness training, and work experience,
                    and including linkages to postsecondary education,
                    apprenticeships, and career-ladder employment.
              ``(7) Applications.--To be eligible to receive a grant under
            this subsection, an eligible entity shall submit an application
            to the Secretary at such time, in such manner, and containing
            such information as the Secretary may require, including--
                      ``(A) a description of the activities the eligible
                    entity will provide to eligible youth under this
                    subsection;
                      ``(B) a description of the programs of demonstrated
                    effectiveness on which the provision of the activities
                    under subparagraph (A) are based, and a description of
                    how such activities will expand the base of knowledge
                    relating to the provision of activities for youth;
                      ``(C) a description of the private and public, and
                    local and State resources that will be leveraged to
                    provide the activities described under subparagraph (A)
                    in addition the funds provided under this subsection;
                    and
                      ``(D) the levels of performance the eligible entity
                    expects to achieve with respect to the indicators of
                    performance for youth specified in section
                    136(b)(2)(A)(ii).
              ``(8) Factors for award.--In awarding grants under this
            subsection the Secretary may consider the quality of the
            proposed project, the goals to be achieved, the likelihood of
            successful implementation, the extent to which the project is
            based on proven strategies or the extent to which the project
            will expand the knowledge base on activities for youth, and the
            additional State, local or private resources that will be
            provided.
              ``(9) Evaluation.--The Secretary may reserve up to 5 percent
            of the funds described in subsection(a)(1) to provide technical
            assistance to, and conduct evaluations of the projects funded
            under this subsection (using appropriate techniques as
            described in section 172(c)).
      ``(c) Discretionary Grants for Youth Activities.--
              ``(1) In general.--From the funds described in
            subsection(a)(2), the Secretary may award grants to eligible
            entities to provide activities that will assist youth in
            preparing for, and entering and retaining, employment.
              ``(2) Eligible entities.--Grants under this subsection may be
            awarded to public or private entities that the Secretary
            determines would effectively carry out activities relating to
            youth under this subsection.
              ``(3) Participant eligibility.--Youth ages 14 through 19 at
            the time the eligibility determination is made may be eligible
            to participate in activities under this subsection.
              ``(4) Use of funds.--Funds provided under this subsection may
            be used for activities that will assist youth in preparing for,
            and entering and retaining, employment, including the
            activities described in section 129 for out-of-school youth,
            activities designed to assist in-school youth to stay in school
            and gain work experience, and such other activities that the
            Secretary determines are appropriate.
              ``(5) Applications.--To be eligible to receive a grant under
            this subsection, an eligible entity shall submit an application
            to the Secretary at such time, in such manner, and containing
            such information as the Secretary may require.
              ``(6) Additional requirements.--The Secretary may require the
            provision of a non-Federal share for projects funded under this
            subsection and may require participation of grantees in
            evaluations of such projects, including evaluations using the
            techniques as described in section 172(c).''.

    SEC. 118. TECHNICAL ASSISTANCE.

      Section 170 (29 U.S.C. 2915) is amended--
              (1) by striking subsection (b);
              (2) by striking ``(a) General Technical Assistance.--'';
              (3) by redesignating paragraphs (1), (2), and (3) as
            subsections (a), (b), and (c) respectively, and moving such
            subsections 2 ems to the left; and
              (4) in subsection (a) (as redesignated by paragraph (3))--
                      (A) by inserting ``the training of staff providing
                    rapid response services, the training of other staff of
                    recipients of funds under this title, peer review
                    activities under this title,'' after ``localities,'';
                    and
                      (B) by striking ``from carrying out activities'' and
                    all that follows up to the period and inserting ``to
                    implement the amendments made by the Workforce
                    Reinvestment and Adult Education Act of 2003''.

    SEC. 119. DEMONSTRATION, PILOT, MULTISERVICE, RESEARCH AND MULTISTATE
                        PROJECTS.

      (a) Demonstration and Pilot Projects.--Section 171(b) (29 U.S.C.
    2916(b)) is amended--
              (1) in paragraph (1)--
                      (A) by striking ``Under a'' and inserting
                    ``Consistent with the priorities specified in the'';
                      (B) by amending subparagraphs (A) through (D) to read
                    as follows:
                      ``(A) projects that assist national employers in
                    connecting with the workforce investment system
                    established under this title in order to facilitate the
                    recruitment and employment of needed workers and to
                    provide information to such system on skills and
                    occupations in demand;
                      ``(B) projects that promote the development of
                    systems that will improve the effectiveness and
                    efficiency of programs carried out under this title;
                      ``(C) projects that focus on opportunities for
                    employment in industries and sectors of industries that
                    are experiencing or are likely to experience high rates
                    of growth;
                      ``(D) projects carried out by States and local areas
                    to test innovative approaches to delivering employment-
                    related services;'';
                      (C) by striking subparagraph (E);
                      (D) by redesignating subparagraphs (F) and (G) as
                    subparagraphs (E) and (F), respectively;
                      (E) by inserting after subparagraph (F) (as so
                    redesignated) the following:
                      ``(G) projects that provide retention grants to
                    qualified job training programs upon placement or
                    retention of a low-income individual trained by that
                    program in employment with a single employer for a
                    period of 1 year, provided that such employment is
                    providing to the low-income individual an income not
                    less than twice the poverty line for that
                    individual.''; and
                      (F) by striking subparagraph (H); and
              (2) in paragraph (2)--
                      (A) by striking subparagraph (B); and
                      (B) by redesignating subparagraph (C) as subparagraph
                    (B).
      (b) Multiservice Projects.--Section 171(c)(2)(B) (29 U.S.C.
    2916(c)(2)(B)) is amended to read as follows:
                      ``(B) Net impact studies and reports.--The Secretary
                    shall conduct studies to determine the net impacts of
                    programs, services, and activities carried out under
                    this title. The Secretary shall prepare and disseminate
                    to the public reports containing the results of such
                    studies.''.
      (c) Waiver Authority to Carry Out Demonstrations and Evaluations.--
    Section 171 (29 U.S.C. 2916(d)) is further amended by striking
    subsection (d).

    SEC. 120. EVALUATIONS.

      (a) In General.--Section 173 (29 U.S.C. 2916) is amended--
              (1) by amending the designation and heading to read as
            follows:

    ``SEC. 173. NATIONAL DISLOCATED WORKER GRANTS.'';

              and
              (2) in subsection (a)--
                      (A) by striking ``national emergency grants'' in the
                    matter preceding paragraph (1) and inserting ``national
                    dislocated worker grants''; and
                      (B) in paragraph (1), by striking ``subsection (c)''
                    and inserting ``subsection (b)''.
      (b) Administration.--Section 173 (29 U.S.C. 2918) is further
    amended--
              (1) by striking subsection (b) and redesignating subsections
            (c) and (d) as subsections (b) and (c), respectively; and
              (2) by striking subsection (e) and redesignating subsections
            (f) and (g) as subsection (d) and (e), respectively.
      (c) Eligible Entities.--Section 173(b)(1)(B) (29 U.S.C.2918(b)(1)(B))
    (as redesignated by subsection (b) of this section) is amended by
    striking ``, and other entities'' and all that follows and inserting a
    period.
      (d) Conforming Amendment.--The table of contents in section 1(b) is
    amended by amending the item related to section 173 to read as follows:

    ``Sec. 173. National dislocated worker grants.''.

    SEC. 121. AUTHORIZATION OF APPROPRIATIONS FOR NATIONAL ACTIVITIES.

      (a) In General.--Section 174(a)(1) (29 U.S.C. 2919(a)(1)) is amended
    by striking ``1999 through 2003'' and inserting ``2004 through 2009''.
      (b) Reservations.--Section 174(b) is amended to read as follows:
      ``(b) Technical Assistance; Demonstration and Pilot Projects;
    Evaluations; Incentive Grants.--There are authorized to be appropriated
    to carry out sections 170 through 172 and section 136 such sums as may
    be necessary for each of fiscal years 2004 through 2009.''.

    SEC. 122. REQUIREMENTS AND RESTRICTIONS.

      (a) In General.--Section 181(c)(2)(A) (29 U.S.C. 2931(c)(2)(A)) is
    amended in the matter preceding clause (i) by striking ``shall'' and
    inserting ``may''.
      (b) Limitations.--Section 181(e) is amended by striking the first
    sentence.

    SEC. 123. NONDISCRIMINATION.

      Section 188(a)(2) (29 U.S.C. 2931(a)(2)) is amended--
              (1) by striking ``employment.--No'' and inserting
            ``employment.--
                      ``(A) In general.--Except as provided in subparagraph
                    (B), no''; and
              (2) by adding at the end the following subparagraph:
                      ``(B) Exemption for religious organizations.--
                    Subparagraph (A) shall not apply to recipients of
                    financial assistance under this title that is a
                    religious corporation, association, educational
                    institution, or society, with respect to the employment
                    of individuals of a particular religion to perform work
                    connected with the carrying on by such corporation,
                    association, educational institution, or society of its
                    activities Such recipients shall comply with the other
                    requirements contained in subparagraph (A).''.

    SEC. 124. ADMINISTRATIVE PROVISIONS.

      (a) Program Year.--Section 189(g)(1) (29 U.S.C. 2939(g)(1)) is
    amended to read as follows:
              ``(1) In general.--Appropriations for any fiscal year for
            programs and activities carried out under this title shall be
            available for obligation only on the basis of a program year.
            The program year shall begin on July 1 in the fiscal year for
            which the appropriation is made.''.
      (b) Availability.--Section 189(g)(2) (29 U.S.C. 2939(g)(2)) is
    amended by striking ``each State'' and inserting ``each recipient''.
      (c) General Waivers.--Section 189(i)(4) (29 U.S.C. 2939(i)(4)) is
    amended--
              (1) in subparagraph (A), in the matter preceding clause (i),
            by inserting ``, or in accordance with subparagraph (D),''
            after ``subparagraph (B)''; and
              (2) by adding the following subparagraph:
                      ``(D) Expedited process for extending approved
                    waivers to additional states.--In lieu of the
                    requirements of subparagraphs (B) and (C), the
                    Secretary may establish an expedited procedure for the
                    purpose of extending to additional States the waiver of
                    statutory or regulatory requirements that have been
                    approved for a State pursuant to a request under
                    subparagraph (B). Such procedure shall ensure that the
                    extension of such waivers to additional States are
                    accompanied by appropriate conditions relating the
                    implementation of such waivers.''.

    SEC. 125. GENERAL PROGRAM REQUIREMENTS.

      Section 195 (29 U.S.C. 2945) is amended by adding at the end the
    following new paragraph:
              ``(14) Funds provided under this title shall not be used to
            establish or operate stand-alone fee-for-service enterprises
            that compete with private sector employment agencies within the
            meaning of section 701(c) of the Civil Rights Act of 1964 (42
            U.S.C. 2000e(c)). For purposes of this paragraph, such an
            enterprise does not include one-stop centers.''.

                           TITLE II--ADULT EDUCATION

            PART A--ADULT BASIC SKILLS AND FAMILY LITERACY EDUCATION

    SEC. 201. TABLE OF CONTENTS.

      The table of contents in section 1(b) is amended by amending the
    items relating to title II to read as follows:

          ``TITLE II--ADULT BASIC SKILLS AND FAMILY LITERACY EDUCATION

    ``Sec. 201. Short title.
    ``Sec. 202. Purpose.
    ``Sec. 203. Definitions.
    ``Sec. 204. Home schools.
    ``Sec. 205. Authorization of appropriations.

                        ``Chapter 1--Federal Provisions

    ``Sec. 211. Reservation of funds; grants to eligible agencies;
    allotments.
    ``Sec. 212. Performance accountability system.
    ``Sec. 213. Incentive grants for states.

                         ``Chapter 2--State Provisions

    ``Sec. 221. State administration.
    ``Sec. 222. State distribution of funds; matching requirement.
    ``Sec. 223. State leadership activities.
    ``Sec. 224. State plan.
    ``Sec. 225. Programs for corrections education and other
    institutionalized individuals.

                         ``Chapter 3--Local Provisions

    ``Sec. 231. Grants and contracts for eligible providers.
    ``Sec. 232. Local application.
    ``Sec. 233. Local administrative cost limits.

                        ``Chapter 4--General Provisions

    ``Sec. 241. Administrative provisions.
    ``Sec. 242. National leadership activities.''.

    SEC. 202. AMENDMENT.

      Title II is amended to read as follows:

          ``TITLE II--ADULT BASIC SKILLS AND FAMILY LITERACY EDUCATION

    ``SEC. 201. SHORT TITLE.

      ``This title may be cited as the `Adult Basic Skills and Family
    Literacy Education Act'.

    ``SEC. 202. PURPOSE.

      ``It is the purpose of this title to provide instructional
    opportunities for adults seeking to improve their basic reading,
    writing, speaking, and math skills, and support States and local
    communities in providing, on a voluntary basis, adult basic skills and
    family literacy programs, in order to--
              ``(1) increase the basic reading, writing, speaking, and math
            skills necessary for adults to obtain employment and self-
            sufficiency and to successfully advance in the workforce;
              ``(2) assist adults in the completion of a secondary school
            education (or its equivalent) and the transition to a
            postsecondary educational institution;
              ``(3) increase the basic reading, writing, speaking, and math
            skills of parents to enable them to support the educational
            development of their children and make informed choices
            regarding their children's education; and
              ``(4) assist immigrants who are not proficient in English in
            improving their reading, writing, speaking, and math skills and
            acquiring an understanding of the American free enterprise
            system, individual freedom, and the responsibilities of
            citizenship.

    ``SEC. 203. DEFINITIONS.

      ``In this title:
              ``(1) Adult basic skills and family literacy education
            programs.--The term `adult basic skills and family literacy
            education programs' means a sequence of academic instruction
            and educational services below the postsecondary level that
            increase an individual's ability to read, write, and speak in
            English and perform mathematical computations leading to a
            level of proficiency equivalent to secondary school completion
            that is provided for individuals--
                      ``(A) who are at least 16 years of age;
                      ``(B) who are not enrolled or required to be enrolled
                    in secondary school under State law; and
                      ``(C) who--
                              ``(i) lack sufficient mastery of basic
                            reading, writing, speaking, and math skills to
                            enable the individuals to function effectively
                            in society;
                              ``(ii) do not have a secondary school diploma
                            or the General Equivalency Diploma (GED)
                            (including recognized alternative standards for
                            individuals with disabilities), and have not
                            achieved an equivalent level of education; or
                              ``(iii) are unable to read, write, or speak
                            the English language.
              ``(2) Eligible agency.--The term `eligible agency'--
                      ``(A) means the sole entity or agency in a State or
                    an outlying area responsible for administering or
                    supervising policy for adult basic skills and family
                    literacy education programs in the State or outlying
                    area, respectively, consistent with the law of the
                    State or outlying area, respectively; and
                      ``(B) may be the State educational agency, the State
                    agency responsible for administering workforce
                    investment activities, or the State agency responsible
                    for administering community or technical colleges.
              ``(3) Eligible provider.--The term `eligible provider'
            means--
                      ``(A) a local educational agency;
                      ``(B) a community-based or faith-based organization
                    of demonstrated effectiveness;
                      ``(C) a volunteer literacy organization of
                    demonstrated effectiveness;
                      ``(D) an institution of higher education;
                      ``(E) a public or private educational agency;
                      ``(F) a library;
                      ``(G) a public housing authority;
                      ``(H) an institution that is not described in any of
                    subparagraphs (A) through (G) and has the ability to
                    provide adult basic skills and family literacy
                    education programs to adults and families; or
                      ``(I) a consortium of the agencies, organizations,
                    institutions, libraries, or authorities described in
                    any of subparagraphs (A) through (H).
              ``(4) English language acquisition program.--The term
            `English language acquisition program' means a program of
            instruction designed to help individuals with limited English
            proficiency achieve competence in reading, writing, and
            speaking the English language.
              ``(5) Essential components of reading instruction.--The term
            `essential components of reading instruction' has the meaning
            given to that term in section 1208 of the Elementary and
            Secondary Education Act of 1965 (20 U.S.C. 6368).
              ``(6) Family literacy education programs.--The term `family
            literacy education programs' means educational programs that--
                      ``(A) assist parents and students, on a voluntary
                    basis, in achieving the purposes of this title as
                    described in section 202; and
                      ``(B) are of sufficient intensity in terms of hours
                    and of sufficient duration to make sustainable changes
                    in a family, are based upon scientific research-based
                    principles, and for the purpose of substantially
                    increasing the ability of parents and children to read,
                    write, and speak English integrate--
                              ``(i) interactive literacy activities between
                            parents and their children;
                              ``(ii) training for parents regarding how to
                            be the primary teacher for their children and
                            full partners in the education of their
                            children;
                              ``(iii) parent literacy training that leads
                            to economic self-sufficiency; and
                              ``(iv) an age-appropriate education to
                            prepare children for success in school and life
                            experiences.
              ``(7) Governor.--The term `Governor' means the chief
            executive officer of a State or outlying area.
              ``(8) Individual with a disability.--
                      ``(A) In general.--The term `individual with a
                    disability' means an individual with any disability (as
                    defined in section 3 of the Americans with Disabilities
                    Act of 1990 (42 U.S.C. 12102)).
                      ``(B) Individuals with disabilities.--The term
                    `individuals with disabilities' means more than one
                    individual with a disability.
              ``(9) Individual with limited english proficiency.--The term
            `individual with limited English proficiency' means an adult or
            out-of-school youth who has limited ability in reading,
            writing, speaking, or understanding the English language, and--
                      ``(A) whose native language is a language other than
                    English; or
                      ``(B) who lives in a family or community environment
                    where a language other than English is the dominant
                    language.
              ``(10) Institution of higher education.--The term
            `institution of higher education' has the meaning given to that
            term in section 101 of the Higher Education Act of 1965 (20
            U.S.C. 1001).
              ``(11) Literacy.--The term `literacy' means the ability to
            read, write, and speak the English language with competence,
            knowledge, and comprehension.
              ``(12) Local educational agency.--The term `local educational
            agency' has the meaning given to that term in section 9101 of
            the Elementary and Secondary Education Act of 1965 (20 U.S.C.
            7801).
              ``(13) Outlying area.--The term `outlying area' has the
            meaning given to that term in section 101 of this Act.
              ``(14) Postsecondary educational institution.--The term
            `postsecondary educational institution' means--
                      ``(A) an institution of higher education that
                    provides not less than a 2-year program of instruction
                    that is acceptable for credit toward a bachelor's
                    degree;
                      ``(B) a tribally controlled community college; or
                      ``(C) a nonprofit educational institution offering
                    certificate or apprenticeship programs at the
                    postsecondary level.
              ``(15) Reading.--The term `reading' has the meaning given to
            that term in section 1208 of the Elementary and Secondary
            Education Act of 1965 (20 U.S.C. 6368).
              ``(16) Scientifically based reading research.--The term
            `scientifically based reading research' has the meaning given
            to that term in section 1208 of the Elementary and Secondary
            Education Act of 1965 (20 U.S.C. 6368).
              ``(17) Secretary.--The term `Secretary' means the Secretary
            of Education.
              ``(18) State.--The term `State' means each of the several
            States of the United States, the District of Columbia, and the
            Commonwealth of Puerto Rico.
              ``(19) State educational agency.--The term `State educational
            agency' has the meaning given to that term in section 9101 of
            the Elementary and Secondary Education Act of 1965 (20 U.S.C.
            7801).
              ``(20) Workplace literacy program.--The term `workplace
            literacy program' means an educational program that is offered
            in collaboration between eligible providers and employers or
            employee organizations for the purpose of improving the
            productivity of the workforce through the improvement of
            reading, writing, speaking, and math skills.

    ``SEC. 204. HOME SCHOOLS.

      ``Nothing in this title shall be construed to affect home schools,
    whether or not a home school is treated as a home school or a private
    school under State law, or to compel a parent engaged in home schooling
    to participate in an English language acquisition program, a family
    literacy education program, or an adult basic skills and family
    literacy education program.

    ``SEC. 205. AUTHORIZATION OF APPROPRIATIONS.

      ``There are authorized to be appropriated to carry out this title
    $584,300,000 for fiscal year 2004 and such sums as may be necessary for
    fiscal years 2005 through 2009.

                        ``CHAPTER 1--FEDERAL PROVISIONS

    ``SEC. 211. RESERVATION OF FUNDS; GRANTS TO ELIGIBLE AGENCIES;
                        ALLOTMENTS.

      ``(a) Reservation of Funds.--From the sums appropriated under section
    205 for a fiscal year, the Secretary--
              ``(1) shall reserve 1.75 percent to carry out the National
            Institute for Literacy Establishment Act;
              ``(2) shall reserve up to 1.72 percent for incentive grants
            under section 213; and
              ``(3) shall reserve up to 1.55 percent to carry out section
            242.
      ``(b) Grants to Eligible Agencies.--
              ``(1) In general.--From the sums appropriated under section
            205 and not reserved under subsection (a) for a fiscal year,
            the Secretary shall award a grant to each eligible agency
            having a State plan approved under section 224 in an amount
            equal to the sum of the initial allotment under subsection
            (c)(1) and the additional allotment under subsection (c)(2) for
            the eligible agency for the fiscal year, subject to subsections
            (f) and (g).
              ``(2) Purpose of grants.--The Secretary may award a grant
            under paragraph (1) only if the eligible agency involved agrees
            to expend the grant in accordance with the provisions of this
            title.
      ``(c) Allotments.--
              ``(1) Initial allotments.--From the sums appropriated under
            section 205 and not reserved under subsection (a) for a fiscal
            year, the Secretary shall allot to each eligible agency having
            a State plan approved under section 224--
                      ``(A) $100,000, in the case of an eligible agency
                    serving an outlying area; and
                      ``(B) $250,000, in the case of any other eligible
                    agency.
              ``(2) Additional allotments.--From the sums appropriated
            under section 205, not reserved under subsection (a), and not
            allotted under paragraph (1), for a fiscal year, the Secretary
            shall allot to each eligible agency that receives an initial
            allotment under paragraph (1) an additional amount that bears
            the same relationship to such sums as the number of qualifying
            adults in the State or outlying area served by the eligible
            agency bears to the number of such adults in all States and
            outlying areas.
      ``(d) Qualifying Adult.--For the purpose of subsection (c)(2), the
    term `qualifying adult' means an adult who--
              ``(1) is at least 16 years of age;
              ``(2) is beyond the age of compulsory school attendance under
            the law of the State or outlying area;
              ``(3) does not have a secondary school diploma or the General
            Equivalency Diploma (GED) (including recognized alternative
            standards for individuals with disabilities); and
              ``(4) is not enrolled in secondary school.
      ``(e) Special Rule.--
              ``(1) In general.--From amounts made available under
            subsection (c) for the Republic of the Marshall Islands, the
            Federated States of Micronesia, and the Republic of Palau, the
            Secretary shall award grants to Guam, American Samoa, the
            Commonwealth of the Northern Mariana Islands, the Republic of
            the Marshall Islands, the Federated States of Micronesia, or
            the Republic of Palau to carry out activities described in this
            title in accordance with the provisions of this title as
            determined by the Secretary.
              ``(2) Termination of eligibility.--Notwithstanding any other
            provision of law, the Republic of the Marshall Islands, the
            Federated States of Micronesia, and the Republic of Palau shall
            be eligible to receive a grant under this title until an
            agreement for the extension of United States education
            assistance under the Compact of Free Association for each of
            the Freely Associated States becomes effective.
              ``(3) Administrative costs.--The Secretary may provide not
            more than 5 percent of the funds made available for grants
            under this subsection to pay the administrative costs of the
            Pacific Region Educational Laboratory regarding activities
            assisted under this subsection.
      ``(f) Hold-Harmless Provisions.--
              ``(1) In general.--Notwithstanding subsection (c), and
            subject to paragraphs (2) and (3), for fiscal year 2004 and
            each succeeding fiscal year, no eligible agency shall receive
            an allotment under this title that is less than 90 percent of
            the allotment the eligible agency received for the preceding
            fiscal year under this title.
              ``(2) Exception.--An eligible agency that receives for the
            preceding fiscal year only an initial allotment under
            subsection 211(c)(1) (and no additional allotment under
            211(c)(2)) shall receive an allotment equal to 100 percent of
            the initial allotment.
              ``(3) Ratable reduction.--If for any fiscal year the amount
            available for allotment under this title is insufficient to
            satisfy the provisions of paragraph (1), the Secretary shall
            ratably reduce the payments to all eligible agencies, as
            necessary.
      ``(g) Reallotment.--The portion of any eligible agency's allotment
    under this title for a fiscal year that the Secretary determines will
    not be required for the period such allotment is available for carrying
    out activities under this title, shall be available for reallotment
    from time to time, on such dates during such period as the Secretary
    shall fix, to other eligible agencies in proportion to the original
    allotments to such agencies under this title for such year.

    ``SEC. 212. PERFORMANCE ACCOUNTABILITY SYSTEM.

      ``(a) Purpose.--The purpose of this section is to establish a
    comprehensive performance accountability system, composed of the
    activities described in this section, to assess the effectiveness of
    eligible agencies in achieving continuous improvement of adult basic
    skills and family literacy education programs funded under this title,
    in order to optimize the return on investment of Federal funds in adult
    basic skills and family literacy education programs.
      ``(b) Eligible Agency Performance Measures.--
              ``(1) In general.--For each eligible agency, the eligible
            agency performance measures shall consist of--
                      ``(A)(i) the core indicators of performance described
                    in paragraph (2)(A); and
                      ``(ii) employment performance indicators identified
                    by the eligible agency under paragraph (2)(B); and
                      ``(B) an eligible agency adjusted level of
                    performance for each indicator described in
                    subparagraph (A).
              ``(2) Indicators of performance.--
                      ``(A) Core indicators of performance.--The core
                    indicators of performance shall include the following:
                              ``(i) Measurable improvements in basic skill
                            levels in reading, writing, and speaking the
                            English language and math, and English language
                            acquisition leading to proficiency in each
                            skill.
                              ``(ii) Receipt of a secondary school diploma
                            or the General Equivalency Diploma (GED)
                            (including recognized alternative standards for
                            individuals with disabilities).
                              ``(iii) Placement in postsecondary education
                            or other training programs.
                      ``(B) Employment performance indicators.--Consistent
                    with applicable Federal and State privacy laws, an
                    eligible agency shall identify in the State plan the
                    following individual participant employment performance
                    indicators--
                              ``(i) entry into employment;
                              ``(ii) retention in employment; and
                              ``(iii) increase in earnings.
              ``(3) Levels of performance.--
                      ``(A) Eligible agency adjusted levels of performance
                    for core indicators.--
                              ``(i) In general.--For each eligible agency
                            submitting a State plan, there shall be
                            established, in accordance with this
                            subparagraph, levels of performance for each of
                            the core indicators of performance described in
                            paragraph (2)(A) for adult basic skills and
                            family literacy education programs authorized
                            under this title. The levels of performance
                            established under this subparagraph shall, at a
                            minimum--
                                      ``(I) be expressed in an objective,
                                    quantifiable, and measurable form; and
                                      ``(II) show the progress of the
                                    eligible agency toward continuously and
                                    significantly improving the agency's
                                    performance outcomes in an objective,
                                    quantifiable, and measurable form.
                              ``(ii) Identification in state plan.--Each
                            eligible agency shall identify, in the State
                            plan submitted under section 224, expected
                            levels of performance for each of the core
                            indicators of performance for the first 3
                            program years covered by the State plan.
                              ``(iii) Agreement on eligible agency adjusted
                            levels of performance for first 3 years.--In
                            order to ensure an optimal return on the
                            investment of Federal funds in adult basic
                            skills and family literacy education programs
                            authorized under this title, the Secretary and
                            each eligible agency shall reach agreement on
                            levels of student proficiency for each of the
                            core indicators of performance, for the first 3
                            program years covered by the State plan, taking
                            into account the levels identified in the State
                            plan under clause (ii) and the factors
                            described in clause (iv). The levels agreed to
                            under this clause shall be considered to be the
                            eligible agency adjusted levels of performance
                            for the eligible agency for such years and
                            shall be incorporated into the State plan prior
                            to the approval of such plan.
                              ``(iv) Factors.--The agreement described in
                            clause (iii) or (v) shall take into account--
                                      ``(I) how the levels involved compare
                                    with the eligible agency's adjusted
                                    levels of performance, taking into
                                    account factors including the
                                    characteristics of participants when
                                    the participants entered the program;
                                    and
                                      ``(II) the extent to which such
                                    levels promote continuous and
                                    significant improvement in performance
                                    on the student proficiency measures
                                    used by such eligible agency and ensure
                                    optimal return on the investment of
                                    Federal funds.
                              ``(v) Agreement on eligible agency adjusted
                            levels of performance for second 3 years.--
                            Prior to the fourth program year covered by the
                            State plan, the Secretary and each eligible
                            agency shall reach agreement on levels of
                            student proficiency for each of the core
                            indicators of performance for the fourth,
                            fifth, and sixth program years covered by the
                            State plan, taking into account the factors
                            described in clause (iv). The levels agreed to
                            under this clause shall be considered to be the
                            eligible agency adjusted levels of performance
                            for the eligible agency for such years and
                            shall be incorporated into the State plan.
                              ``(vi) Revisions.--If unanticipated
                            circumstances arise in a State resulting in a
                            significant change in the factors described in
                            clause (iv)(I), the eligible agency may request
                            that the eligible agency adjusted levels of
                            performance agreed to under clause (iii) or (v)
                            be revised.
                      ``(B) Levels of employment performance.--The eligible
                    agency shall identify, in the State plan, eligible
                    agency levels of performance for each of the employment
                    performance indicators described in paragraph (2)(B).
                    Such levels shall be considered to be eligible agency
                    adjusted levels of performance for purposes of this
                    title.
      ``(c) Report.--
              ``(1) In general.--Each eligible agency that receives a grant
            under section 211(b) shall annually prepare and submit to the
            Secretary, the Governor, the State legislature, eligible
            providers, and the general public within the State, a report on
            the progress of the eligible agency in achieving eligible
            agency performance measures, including the following:
                      ``(A) Information on the levels of performance
                    achieved by the eligible agency with respect to the
                    core indicators of performance and employment
                    performance indicators.
                      ``(B) The number and type of each eligible provider
                    that receives funding under such grant.
              ``(2) Information dissemination.--The Secretary--
                      ``(A) shall make the information contained in such
                    reports available to the general public through
                    publication and other appropriate methods;
                      ``(B) shall disseminate State-by-State comparisons of
                    the information; and
                      ``(C) shall provide the appropriate committees of the
                    Congress with copies of such reports.

    ``SEC. 213. INCENTIVE GRANTS FOR STATES.

      ``(a) In General.--From funds appropriated under section 211(a)(2),
    the Secretary may award grants to States for exemplary performance in
    carrying out programs under this title. Such awards shall be based on
    States meeting or exceeding the core indicators of performance
    established under section 212(b)(2)(A) and may be based on the
    performance of the State in serving populations, such as those
    described in section 224(b)(10), including the levels of service
    provided and the performance outcomes, and such other factors relating
    to the performance of the State under this title as the Secretary
    determines appropriate.
      ``(b) Use of Funds.--The funds awarded to a State under this
    paragraph may be used to carry out any activities authorized under this
    title, including demonstrations and innovative programs for hard-to-
    serve populations.

                         ``CHAPTER 2--STATE PROVISIONS

    ``SEC. 221. STATE ADMINISTRATION.

      ``Each eligible agency shall be responsible for the following
    activities under this title:
              ``(1) The development, submission, implementation, and
            monitoring of the State plan.
              ``(2) Consultation with other appropriate agencies, groups,
            and individuals that are involved in, or interested in, the
            development and implementation of activities assisted under
            this title.
              ``(3) Coordination and avoidance of duplication with other
            Federal and State education, training, corrections, public
            housing, and social service programs.

    ``SEC. 222. STATE DISTRIBUTION OF FUNDS; MATCHING REQUIREMENT.

      ``(a) State Distribution of Funds.--Each eligible agency receiving a
    grant under this title for a fiscal year--
              ``(1) shall use an amount not less than 82.5 percent of the
            grant funds to award grants and contracts under section 231 and
            to carry out section 225, of which not more than 10 percent of
            such amount shall be available to carry out section 225;
              ``(2) shall use not more than 12.5 percent of the grant funds
            to carry out State leadership activities under section 223; and
              ``(3) shall use not more than 5 percent of the grant funds,
            or $75,000, whichever is greater, for the administrative
            expenses of the eligible agency.
      ``(b) Matching Requirement.--
              ``(1) In general.--In order to receive a grant from the
            Secretary under section 211(b), each eligible agency shall
            provide, for the costs to be incurred by the eligible agency in
            carrying out the adult basic skills and family literacy
            education programs for which the grant is awarded, a non-
            Federal contribution in an amount at least equal to--
                      ``(A) in the case of an eligible agency serving an
                    outlying area, 12 percent of the total amount of funds
                    expended for adult basic skills and family literacy
                    education programs in the outlying area, except that
                    the Secretary may decrease the amount of funds required
                    under this subparagraph for an eligible agency; and
                      ``(B) in the case of an eligible agency serving a
                    State, 25 percent of the total amount of funds expended
                    for adult basic skills and family literacy education
                    programs in the State.
              ``(2) Non-federal contribution.--An eligible agency's non-
            Federal contribution required under paragraph (1) may be
            provided in cash or in kind, fairly evaluated, and shall
            include only non-Federal funds that are used for adult basic
            skills and family literacy education programs in a manner that
            is consistent with the purpose of this title.

    ``SEC. 223. STATE LEADERSHIP ACTIVITIES.

      ``(a) In General.--Each eligible agency may use funds made available
    under section 222(a)(2) for any of the following adult basic skills and
    family literacy education programs:
              ``(1) The establishment or operation of professional
            development programs to improve the quality of instruction
            provided pursuant to local activities required under section
            231(b), including instruction incorporating the essential
            components of reading instruction and instruction provided by
            volunteers or by personnel of a State or outlying area.
              ``(2) The provision of technical assistance to eligible
            providers of adult basic skills and family literacy education
            programs for development and dissemination of scientific
            research-based instructional practices in reading, writing,
            speaking, math, and English language acquisition programs.
              ``(3) The provision of assistance to eligible providers in
            developing, implementing, and reporting measurable progress in
            achieving the objectives of this title.
              ``(4) The provision of technology assistance, including staff
            training, to eligible providers of adult basic skills and
            family literacy education programs, including distance learning
            activities, to enable the eligible providers to improve the
            quality of such activities.
              ``(5) The development and implementation of technology
            applications or distance learning, including professional
            development to support the use of instructional technology.
              ``(6) Coordination with other public programs, including
            welfare-to-work, workforce development, and job training
            programs.
              ``(7) Coordination with existing support services, such as
            transportation, child care, and other assistance designed to
            increase rates of enrollment in, and successful completion of,
            adult basic skills and family literacy education programs, for
            adults enrolled in such activities.
              ``(8) The development and implementation of a system to
            assist in the transition from adult basic education to
            postsecondary education.
              ``(9) Activities to promote workplace literacy programs.
              ``(10) Activities to promote and complement local outreach
            initiatives described in section 242(7).
              ``(11) Other activities of statewide significance, including
            assisting eligible agencies in achieving progress in improving
            the skill levels of adults who participate in programs under
            this title.
      ``(b) Coordination.--In carrying out this section, eligible agencies
    shall coordinate where possible, and avoid duplicating efforts, in
    order to maximize the impact of the activities described in subsection
    (a).
      ``(c) State-Imposed Requirements.--Whenever a State or outlying area
    implements any rule or policy relating to the administration or
    operation of a program authorized under this title that has the effect
    of imposing a requirement that is not imposed under Federal law
    (including any rule or policy based on a State or outlying area
    interpretation of a Federal statute, regulation, or guideline), the
    State or outlying area shall identify, to eligible providers, the rule
    or policy as being imposed by the State or outlying area.

    ``SEC. 224. STATE PLAN.

      ``(a) 6-Year Plans.--
              ``(1) In general.--Each eligible agency desiring a grant
            under this title for any fiscal year shall submit to, or have
            on file with, the Secretary a 6-year State plan.
              ``(2) Comprehensive plan or application.--The eligible agency
            may submit the State plan as part of a comprehensive plan or
            application for Federal education assistance.
      ``(b) Plan Contents.--The eligible agency shall include in the State
    plan or any revisions to the State plan--
              ``(1) an objective assessment of the needs of individuals in
            the State or outlying area for adult basic skills and family
            literacy education programs, including individuals most in need
            or hardest to serve;
              ``(2) a description of the adult basic skills and family
            literacy education programs that will be carried out with funds
            received under this title;
              ``(3) a description of how the eligible agency will evaluate
            and measure annually the effectiveness and improvement of the
            adult basic skills and family literacy education programs based
            on the performance measures described in section 212
            including--
                      ``(A) how the eligible agency will evaluate and
                    measure annually such effectiveness on a grant-by-grant
                    basis; and
                      ``(B) how the eligible agency--
                              ``(i) will hold eligible providers
                            accountable regarding the progress of such
                            providers in improving the academic achievement
                            of participants in adult education programs
                            under this title and regarding the core
                            indicators of performance described in section
                            212(b)(2)(A); and
                              ``(ii) will use technical assistance,
                            sanctions, and rewards (including allocation of
                            grant funds based on performance and
                            termination of grant funds based on
                            nonperformance);
              ``(4) a description of the performance measures described in
            section 212 and how such performance measures have
            significantly improved adult basic skills and family literacy
            education programs in the State or outlying area;
              ``(5) an assurance that the eligible agency will, in addition
            to meeting all of the other requirements of this title, award
            not less than one grant under this title to an eligible
            provider that--
                      ``(A) offers flexible schedules and necessary support
                    services (such as child care and transportation) to
                    enable individuals, including individuals with
                    disabilities, or individuals with other special needs,
                    to participate in adult basic skills and family
                    literacy education programs; and
                      ``(B) attempts to coordinate with support services
                    that are not provided under this title prior to using
                    funds for adult basic skills and family literacy
                    education programs provided under this title for
                    support services;
              ``(6) an assurance that the funds received under this title
            will not be expended for any purpose other than for activities
            under this title;
              ``(7) a description of how the eligible agency will fund
            local activities in accordance with the measurable goals
            described in section 231(d);
              ``(8) an assurance that the eligible agency will expend the
            funds under this title only in a manner consistent with fiscal
            requirements in section 241;
              ``(9) a description of the process that will be used for
            public participation and comment with respect to the State
            plan, which process--
                      ``(A) shall include consultation with the State
                    workforce investment board, the State board responsible
                    for administering community or technical colleges, the
                    Governor, the State educational agency, the State board
                    or agency responsible for administering block grants
                    for temporary assistance to needy families under title
                    IV of the Social Security Act, the State council on
                    disabilities, the State vocational rehabilitation
                    agency, other State agencies that promote the
                    improvement of adult basic skills and family literacy
                    education programs, and direct providers of such
                    programs; and
                      ``(B) may include consultation with the State agency
                    on higher education, institutions responsible for
                    professional development of adult basic skills and
                    family literacy education programs instructors,
                    representatives of business and industry, refugee
                    assistance programs, and faith-based organizations;
              ``(10) a description of the eligible agency's strategies for
            serving populations that include, at a minimum--
                      ``(A) low-income individuals;
                      ``(B) individuals with disabilities;
                      ``(C) the unemployed;
                      ``(D) the underemployed; and
                      ``(E) individuals with multiple barriers to
                    educational enhancement, including individuals with
                    limited English proficiency;
              ``(11) a description of how the adult basic skills and family
            literacy education programs that will be carried out with any
            funds received under this title will be integrated with other
            adult education, career development, and employment and
            training activities in the State or outlying area served by the
            eligible agency;
              ``(12) a description of the steps the eligible agency will
            take to ensure direct and equitable access, as required in
            section 231(c)(1), including--
                      ``(A) how the State will build the capacity of
                    community-based and faith-based organizations to
                    provide adult basic skills and family literacy
                    education programs; and
                      ``(B) how the State will increase the participation
                    of business and industry in adult basic skills and
                    family literacy education programs; and
              ``(13) a description of how the eligible agency will consult
            with any State agency responsible for postsecondary education
            to develop adult education that prepares students to enter
            postsecondary education without the need for remediation upon
            completion of secondary school equivalency programs.
      ``(c) Plan Revisions.--When changes in conditions or other factors
    require substantial revisions to an approved State plan, the eligible
    agency shall submit the revisions of the State plan to the Secretary.
      ``(d) Consultation.--The eligible agency shall--
              ``(1) submit the State plan, and any revisions to the State
            plan, to the Governor, the chief State school officer, or the
            State officer responsible for administering community or
            technical colleges, or outlying area for review and comment;
            and
              ``(2) ensure that any comments regarding the State plan by
            the Governor, the chief State school officer, or the State
            officer responsible for administering community or technical
            colleges, and any revision to the State plan, are submitted to
            the Secretary.
      ``(e) Plan Approval.--A State plan submitted to the Secretary shall
    be approved by the Secretary only if the plan is consistent with the
    specific provisions of this title.

    ``SEC. 225. PROGRAMS FOR CORRECTIONS EDUCATION AND OTHER
                        INSTITUTIONALIZED INDIVIDUALS.

      ``(a) Program Authorized.--From funds made available under section
    222(a)(1) for a fiscal year, each eligible agency shall carry out
    corrections education and education for other institutionalized
    individuals.
      ``(b) Uses of Funds.--The funds described in subsection (a) shall be
    used for the cost of educational programs for criminal offenders in
    correctional institutions and for other institutionalized individuals,
    including academic programs for--
              ``(1) basic skills education;
              ``(2) special education programs as determined by the
            eligible agency;
              ``(3) reading, writing, speaking, and math programs; and
              ``(4) secondary school credit or diploma programs or their
            recognized equivalent.
      ``(c) Priority.--Each eligible agency that is using assistance
    provided under this section to carry out a program for criminal
    offenders within a correctional institution shall give priority to
    serving individuals who are likely to leave the correctional
    institution within 5 years of participation in the program.
      ``(d) Definition of Criminal Offender.--For purposes of this section:
              ``(1) Correctional institution.--The term `correctional
            institution' means any--
                      ``(A) prison;
                      ``(B) jail;
                      ``(C) reformatory;
                      ``(D) work farm;
                      ``(E) detention center; or
                      ``(F) halfway house, community-based rehabilitation
                    center, or any other similar institution designed for
                    the confinement or rehabilitation of criminal
                    offenders.
              ``(2) Criminal offender.--The term `criminal offender' means
            any individual who is charged with, or convicted of, any
            criminal offense.

                         ``CHAPTER 3--LOCAL PROVISIONS

    ``SEC. 231. GRANTS AND CONTRACTS FOR ELIGIBLE PROVIDERS.

      ``(a) Grants and Contracts.--From grant funds made available under
    section 211(b), each eligible agency shall award multiyear grants or
    contracts, on a competitive basis, to eligible providers within the
    State or outlying area that meet the conditions and requirements of
    this title to enable the eligible providers to develop, implement, and
    improve adult basic skills and family literacy education programs
    within the State.
      ``(b) Local Activities.--The eligible agency shall require eligible
    providers receiving a grant or contract under subsection (a) to
    establish or operate one or more programs of instruction that provide
    services or instruction in one or more of the following categories:
              ``(1) Adult basic skills and family literacy education
            programs, including essential workplace skills (including
            proficiency in reading, writing, speaking, and math).
              ``(2) Workplace literacy programs.
              ``(3) English language acquisition programs.
              ``(4) family literacy education programs.
      ``(c) Direct and Equitable Access; Same Process.--Each eligible
    agency receiving funds under this title shall ensure that--
              ``(1) all eligible providers have direct and equitable access
            to apply for grants or contracts under this section; and
              ``(2) the same grant or contract announcement process and
            application process is used for all eligible providers in the
            State or outlying area.
      ``(d) Measurable Goals.--The eligible agency shall require eligible
    providers receiving a grant or contract under subsection (a) to
    demonstrate--
              ``(1) the eligible provider's measurable goals for
            participant outcomes to be achieved annually on the core
            indicators of performance and employment performance indicators
            described in section 212(b)(2);
              ``(2) the past effectiveness of the eligible provider in
            improving the basic academic skills of adults and, for eligible
            providers receiving grants in the prior year, the success of
            the eligible provider receiving funding under this title in
            meeting or exceeding its performance goals in the prior year;
              ``(3) the commitment of the eligible provider to serve
            individuals in the community who are the most in need of basic
            academic skills instruction services, including individuals who
            are low-income or have minimal reading, writing, speaking, and
            math skills, or limited English proficiency.
              ``(4) whether or not the program--
                      ``(A) is of sufficient intensity and duration for
                    participants to achieve substantial learning gains; and
                      ``(B) uses instructional practices that include the
                    essential components of reading instruction;
              ``(5) whether educational practices are based on
            scientifically based research;
              ``(6) whether the activities of the eligible provider
            effectively employ advances in technology, as appropriate,
            including the use of computers;
              ``(7) whether the activities provide instruction in real-life
            contexts, to ensure that an individual has the skills needed to
            compete in the workplace and exercise the rights and
            responsibilities of citizenship;
              ``(8) whether the activities are staffed by well-trained
            instructors, counselors, and administrators;
              ``(9) whether the activities are coordinated with other
            available resources in the community, such as through strong
            links with elementary schools and secondary schools,
            postsecondary educational institutions, one-stop centers, job
            training programs, community-based and faith-based
            organizations, and social service agencies;
              ``(10) whether the activities offer flexible schedules and
            support services (such as child care and transportation) that
            are necessary to enable individuals, including individuals with
            disabilities or other special needs, to attend and complete
            programs;
              ``(11) whether the activities include a high-quality
            information management system that has the capacity to report
            measurable participant outcomes and to monitor program
            performance against the performance measures established by the
            eligible agency;
              ``(12) whether the local communities have a demonstrated need
            for additional English language acquisition programs;
              ``(13) the capacity of the eligible provider to produce valid
            information on performance results, including enrollments and
            measurable participant outcomes;
              ``(14) whether adult basic skills and family literacy
            education programs offer rigorous reading, writing, speaking,
            and math content that are based on scientific research; and
              ``(15) whether applications of technology, and services to be
            provided by the eligible providers, is of sufficient intensity
            and duration to increase the amount and quality of learning and
            lead to measurable learning gains within specified time
            periods.

    ``SEC. 232. LOCAL APPLICATION.

      ``Each eligible provider desiring a grant or contract under this
    title shall submit an application to the eligible agency containing
    such information and assurances as the eligible agency may require,
    including--
              ``(1) a description of how funds awarded under this title
            will be spent consistent with the requirements of this title;
              ``(2) a description of any cooperative arrangements the
            eligible provider has with other agencies, institutions, or
            organizations for the delivery of adult basic skills and family
            literacy education programs; and
              ``(3) each of the demonstrations required by section 231(d).

    ``SEC. 233. LOCAL ADMINISTRATIVE COST LIMITS.

      ``(a) In General.--Subject to subsection (b), of the amount that is
    made available under this title to an eligible provider--
              ``(1) at least 95 percent shall be expended for carrying out
            adult basic skills and family literacy education programs; and
              ``(2) the remaining amount shall be used for planning,
            administration, personnel and professional development,
            development of measurable goals in reading, writing, speaking,
            and math, and interagency coordination.
      ``(b) Special Rule.--In cases where the cost limits described in
    subsection (a) are too restrictive to allow for adequate planning,
    administration, personnel development, and interagency coordination,
    the eligible provider may negotiate with the eligible agency in order
    to determine an adequate level of funds to be used for noninstructional
    purposes.

                        ``CHAPTER 4--GENERAL PROVISIONS

    ``SEC. 241. ADMINISTRATIVE PROVISIONS.

      ``(a) Supplement Not Supplant.--Funds made available for adult basic
    skills and family literacy education programs under this title shall
    supplement and not supplant other State or local public funds expended
    for adult basic skills and family literacy education programs.
      ``(b) Maintenance of Effort.--
              ``(1) In general.--
                      ``(A) Determination.--An eligible agency may receive
                    funds under this title for any fiscal year if the
                    Secretary finds that the fiscal effort per student or
                    the aggregate expenditures of such eligible agency for
                    activities under this title, in the second preceding
                    fiscal year, were not less than 90 percent of the
                    fiscal effort per student or the aggregate expenditures
                    of such eligible agency for adult basic skills and
                    family literacy education programs, in the third
                    preceding fiscal year.
                      ``(B) Proportionate reduction.--Subject to paragraphs
                    (2), (3), and (4), for any fiscal year with respect to
                    which the Secretary determines under subparagraph (A)
                    that the fiscal effort or the aggregate expenditures of
                    an eligible agency for the preceding program year were
                    less than such effort or expenditures for the second
                    preceding program year, the Secretary--
                              ``(i) shall determine the percentage
                            decreases in such effort or in such
                            expenditures; and
                              ``(ii) shall decrease the payment made under
                            this title for such program year to the agency
                            for adult basic skills and family literacy
                            education programs by the lesser of such
                            percentages.
              ``(2) Computation.--In computing the fiscal effort and
            aggregate expenditures under paragraph (1), the Secretary shall
            exclude capital expenditures and special one-time project
            costs.
              ``(3) Decrease in federal support.--If the amount made
            available for adult basic skills and family literacy education
            programs under this title for a fiscal year is less than the
            amount made available for adult basic skills and family
            literacy education programs under this title for the preceding
            fiscal year, then the fiscal effort per student and the
            aggregate expenditures of an eligible agency required in order
            to avoid a reduction under paragraph (1)(B) shall be decreased
            by the same percentage as the percentage decrease in the amount
            so made available.
              ``(4) Waiver.--The Secretary may waive the requirements of
            this subsection for not more than 1 fiscal year, if the
            Secretary determines that a waiver would be equitable due to
            exceptional or uncontrollable circumstances, such as a natural
            disaster or an unforeseen and precipitous decline in the
            financial resources of the State or outlying area of the
            eligible agency. If the Secretary grants a waiver under the
            preceding sentence for a fiscal year, the level of effort
            required under paragraph (1) shall not be reduced in the
            subsequent fiscal year because of the waiver.

    ``SEC. 242. NATIONAL LEADERSHIP ACTIVITIES.

      ``The Secretary shall establish and carry out a program of national
    leadership activities that may include the following:
              ``(1) Technical assistance, on request, including
            assistance--
                      ``(A) on requests to volunteer community- and faith-
                    based organizations, including but not limited to,
                    improving their fiscal management, research-based
                    instruction, and reporting requirements, and the
                    development of measurable objectives to carry out the
                    requirements of this title;
                      ``(B) in developing valid, measurable, and reliable
                    performance data, and using performance information for
                    the improvement of adult basic skills and family
                    literacy education programs;
                      ``(C) on adult education professional development;
                    and
                      ``(D) in using distance learning and improving the
                    application of technology in the classroom.
              ``(2) Providing for the conduct of research on national
            literacy basic skill acquisition levels among adults, including
            the number of adults functioning at different levels of reading
            proficiency.
              ``(3) Improving the coordination, efficiency, and
            effectiveness of adult education and workforce development
            services at the national, State, and local levels.
              ``(4) Determining how participation in adult basic skills and
            family literacy education programs prepares individuals for
            entry into and success in postsecondary education and
            employment, and in the case of prison-based services, the
            effect on recidivism.
              ``(5) Evaluating how different types of providers, including
            community and faith-based organizations or private for-profit
            agencies measurably improve the skills of participants in adult
            basic skills and family literacy education programs.
              ``(6) Identifying model integrated basic and workplace skills
            education programs, coordinated literacy and employment
            services, and effective strategies for serving adults with
            disabilities.
              ``(7) Supporting the development of an entity that would
            produce and distribute technology-based programs and materials
            for adult basic skills and family literacy education programs
            using an intercommunication system, as that term is defined in
            section 397 of the Communications Act of 1934 (47 U.S.C. 397),
            and expand the effective outreach and use of such programs and
            materials to adult education eligible providers.
              ``(8) Initiating other activities designed to improve the
            measurable quality and effectiveness of adult basic skills and
            family literacy education programs nationwide.''.

                    PART B--NATIONAL INSTITUTE FOR LITERACY

    SEC. 211. SHORT TITLE; PURPOSE.

      (a) Short Title.--This part may be cited as the ``National Institute
    for Literacy Establishment Act''.
      (b) Purpose.--The purpose of this part is to establish a National
    Institute for Literacy to provide national leadership in promoting
    reading research, reading instruction, and professional development in
    reading based on scientifically based research by--
              (1) disseminating widely information on scientifically based
            reading research to improve academic achievement for children,
            youth, and adults;
              (2) identifying and disseminating information about schools,
            local educational agencies, and State educational agencies that
            have effectively developed and implemented classroom reading
            programs that meet the requirements of subpart 1 of part B of
            title I of the Elementary and Secondary Education Act of 1965
            (20 U.S.C. 6361 et seq.), including those State educational
            agencies, local educational agencies, and schools that are
            identified as effective through the External Evaluation of
            Reading First under section 1205 of the Elementary and
            Secondary Education Act of 1965 (20 U.S.C. 6365);
              (3) serving as a national resource for information on reading
            instruction programs that contain the essential components of
            reading instruction as supported by scientifically based
            reading research, and that can lead to improved reading
            outcomes for children, youth, and adults;
              (4) developing print and electronic materials that describe
            and model the application of scientifically based reading
            research;
              (5) providing national and regional reading leadership for
            State and local personnel for the application and
            implementation of scientifically based reading research;
              (6) coordinating efforts among Federal agencies, especially
            the Department of Labor, the Department of Health and Human
            Services, and the National Institute of Child Health and Human
            Development, that provide reading programs, conduct research,
            and provide services to recipients of Federal financial
            assistance under titles I and III of the Elementary and
            Secondary Education Act of 1965, the Head Start Act, the
            Individuals with Disabilities Education Act, and the Adult
            Basic Skills and Family Literacy Education Act, and each Bureau
            funded school (as defined in title XI of the Education
            Amendments of 1978 (25 U.S.C. 2001 et seq.)); and
              (7) informing the Congress, Federal departments and agencies,
            schools of education, and the public of successful local,
            State, and Federal program activities in reading instruction
            that are determined to be effective based on the findings of
            scientifically based reading research.

    SEC. 212. ESTABLISHMENT.

      (a) In General.--There is established within the executive branch an
    independent establishment (as defined in title 104 of title 5, United
    States Code) to be known as the ``National Institute for Literacy''.
    The Institute shall be administered, in accordance with this part,
    under the supervision and direction of a Director in consultation with
    the Board, and subject to all fiscal and ethical requirements of an
    executive branch agency.
      (b) Director.--
              (1) Appointment.--The Board (established under section 216 of
            this part), in consultation with the Secretary of Education,
            shall appoint a Director of the Institute, who has an
            understanding of, supports, and is familiar with scientifically
            based reading research, instruction, and professional
            development applicable to children, youth, and adults.
              (2) Pay.--The Director of the Institute shall receive the
            rate of basic pay for level IV of the Executive Schedule.
              (3) Term.--The Director of the Institute shall be appointed
            for an initial term of 3 years and, if approved by the Board,
            may serve not more than 1 additional term of 3 years.

    SEC. 213. ADMINISTRATION.

      (a) In General.--The Institute shall be administered by the Director
    of the Institute in consultation with the Board.
      (b) Authority.--Subject to the general policies, decisions, findings,
    and determinations of the Board, the Director of the Institute shall be
    responsible for administering the Institute. The Director may delegate
    the powers granted under this paragraph to an officer, employee, or
    office of the Institute. The Director shall--
              (1) provide leadership for the Institute, consistent with the
            purposes defined in section 211;
              (2) appoint and supervise all employees in the Institute,
            including attorneys, to provide legal aid and service to the
            Board and the Institute, and to represent the Board and the
            Institute in any case in court;
              (3) appoint the heads of offices in the Institute with the
            approval of the Board;
              (4) assign responsibility to carry out the duties of the
            Institute among officers and employees, and offices of the
            Institute;
              (5) prepare requests for appropriations for the Institute and
            submit those requests to the President and the Congress with
            the prior approval of the Board;
              (6) oversee the expenditure of all funds allocated for the
            Institute to carry out the purposes under section 211; and
              (7) confer regularly with the Board on matters of policy,
            personnel, and progress in carrying out the mission of the
            Institute.
      (c) Agency Designation.--For purposes of section 552b of title 5,
    United States Code, the Institute is deemed to be an agency.
      (d) Budget Requests.--In each annual request for appropriations by
    the President, the Director of the Institute, in consultation with the
    Board, shall submit a budget to carry out the mission of the Institute
    including--
              (1) the amount requested by the Institute in its budgetary
            presentation to the Office of Management and Budget; and
              (2) an assessment of the budgetary needs of the Institute.
      (e) Budget Transmittal to Congress.--The Institute shall transmit to
    the Congress copies of budget estimates, requests, and information
    (including personnel needs), legislative recommendations, prepared
    testimony for congressional hearings, and comments on legislation.
      (f) Offices.--The Institute shall have offices separate from the
    offices of the Department of Education.
      (g) Administrative Support.--
              (1) In general.--The Secretary of Education shall provide
            administrative support for the Institute, including the
            administration of grants, contracts and cooperative agreements,
            personnel, legal counsel, and payroll after the Office of
            Management and Budget has approved the Institute's budget.
              (2) Other departments and agencies.--In addition to any
            support obtained under paragraph (1) from the Secretary of
            Education, the Institute may obtain administrative support
            services from other departments and agencies within the
            executive branch if determined by the Director of the
            Institute, in consultation with the Board, to be in the best
            interest of the Institute.

    SEC. 214. DUTIES.

      (a) In General.--In order to provide leadership for the improvement
    and expansion of the system for delivery of scientifically based
    reading instructional practices, the Institute shall--
              (1) establish a national electronic database of effective
            reading programs for children, youth, and adults that include
            the essential components of reading instruction, and
            disseminate such information to parents, teachers, State and
            Federal elected officials, and the public;
              (2) develop print and electronic materials for professional
            development that provide applications of scientifically based
            reading research, and instructional practices in reading for
            children, youth, and adults;
              (3) provide, when requested, policy and technical assistance
            to the Congress, school Boards, Federal agencies, State
            departments of education, adult education programs, local
            school districts, local public and private schools, and schools
            of education, on scientifically based reading instructional
            practices including diagnostic and assessment instruments and
            instructional materials;
              (4) collaborate and support Federal research programs in
            reading instruction, including, where appropriate, those areas
            of study addressed by the National Institute of Child Health
            and Human Development, the Institute for Education Sciences,
            the National Science Foundation, the Department of Labor, and
            the National Research Council;
              (5) coordinate with the Department of Education, the
            Department of Labor, the Department of Health and Human
            Services, and the National Institute of Child Health and Human
            Development on all programs that include improving reading
            instructional practices for children, youth, and adults, and
            teacher training in reading instructional practices;
              (6) use and support the collection of the best possible
            information in carrying out this section, and where
            appropriate, including reviews of research on instruction using
            the criteria for quality identified by the Institute for
            Education Sciences; and
              (7) conduct reviews of research, including randomized field
            trials, on reading programs, and conduct reviews of Federal
            reading policies and reading program implementation using a
            board of visitors as described in subchapter 300 of the
            National Science Foundation Administrative Manual.
      (b) Grants, Contracts, and Cooperative Agreements.--The Institute may
    award grants to, or enter into contracts or cooperative agreements
    with, individuals, public or private institutions, agencies,
    organizations, or other legal entities to carry out the activities of
    the Institute.
      (c) Relation to Other Laws.--The duties and powers of the Institute
    under this part are in addition to the duties and powers of the
    Institute under subparts 1, 2, and 3 of part B of the Elementary and
    Secondary Education Act of 1965 (20 U.S.C. 1201 et seq.) (commonly
    referred to as Reading First, Early Reading First, and the William F.
    Goodling Even Start Family Literacy Programs, respectively).

    SEC. 215. LEADERSHIP IN SCIENTIFICALLY BASED READING INSTRUCTION.

      (a) In General.--The Institute, in consultation with the Board, may
    award fellowships, with such stipends and allowances as the Director of
    the Institute considers necessary, to outstanding individuals who are
    pursuing careers in scientifically based research in reading
    instruction or pre-service or in-service training in reading
    instruction, including teaching children and adults to read.
      (b) Fellowships.--Fellowships awarded under this subsection shall be
    used, under the auspices of the Institute, to engage in research,
    education training, technical assistance, or other activities to
    advance the field of scientifically based reading instruction for
    children, youth, and adults, including the training of volunteers in
    such reading skills instruction.
      (c) Interns and Volunteers.--The Institute, in consultation with the
    Board, may award paid and unpaid internships to individuals seeking to
    assist the Institute in carrying out its mission. Notwithstanding
    section 1342 of title 31, United States Code, the Institute may accept
    and use voluntary and uncompensated services as the Institute deems
    necessary.

    SEC. 216. NATIONAL INSTITUTE FOR LITERACY ADVISORY BOARD.

      (a) Establishment.--
              (1) In general.--There shall be a National Institute for
            Literacy Advisory Board, which shall consist of 10 individuals
            appointed by the President with the advice and consent of the
            Senate.
              (2) Composition.--The Board shall be comprised of individuals
            who are not otherwise officers or employees of the Federal
            Government and who are knowledgeable about scientifically based
            reading instruction, and the findings of scientifically based
            reading research. The members of the Board may include--
                      (A) representatives from teacher training
                    institutions where scientifically based reading
                    instruction is a major component of pre-service
                    training;
                      (B) teachers who have been successful in teaching
                    children to read proficiently;
                      (C) members of the business community who have
                    developed successful employee reading instruction
                    programs;
                      (D) volunteer tutors in reading who are using
                    scientifically based reading instruction;
                      (E) reading researchers who have conducted
                    scientifically based research; and
                      (F) other qualified individuals knowledgeable about
                    scientifically based reading instruction, including
                    adult education.
      (b) Duties.--The Board shall--
              (1) work closely with the Director of the Institute to ensure
            that the purposes of the Institute under section 211 are
            carried out effectively;
              (2) approve the annual report to the Congress;
              (3) provide policy guidance and advice to the Director of the
            Institute in the administration of the Institute; and
              (4) appoint the Director of the Institute, in consultation
            with the Secretary.
      (c) Federal Advisory Committee Act.--Except as otherwise provided in
    this part, the Board established by this section shall be subject to
    the provisions of the Federal Advisory Committee Act (5 U.S.C. App.).
      (d) Appointments.--
              (1) In general.--Each member of the Board shall be appointed
            for a term of 3 years, except that the initial terms for
            members may be 1, 2, or 3 years in order to establish a
            rotation, in which \1/3\ of the members are selected each year.
            Any such member may be appointed for not more than 2
            consecutive terms.
              (2) Vacancies.--Any member appointed to fill a vacancy
            occurring before the expiration of the term for which the
            member's predecessor was appointed shall be appointed only for
            the remainder of that term. A member may serve after the
            expiration of that member's term until a successor has taken
            office.
      (e) Quorum.--A majority of the members of the Board shall constitute
    a quorum, but a lesser number may hold hearings. Any recommendation of
    the Board may be passed only by a majority of the Board members
    present.
      (f) Election of Officers.--The Chairperson and Vice Chairperson of
    the Board shall be elected by the members of the Board. The term of
    office of the Chairperson and Vice Chairperson shall be 2 years.
      (g) Meetings.--The Board shall meet at the call of the Chairperson,
    or a majority of the members of the Board, but not less than quarterly.

    SEC. 217. GIFTS, BEQUESTS, AND DEVISES.

      (a) In General.--The Institute may accept, administer, and use gifts
    or donations of services, money, or property, whether real or personal,
    tangible or intangible.
      (b) Rules.--The Board, in consultation with the Director of the
    Institute, shall establish written rules setting forth the criteria to
    be used by the Institute in determining whether the acceptance of
    contributions of services, money, or property whether real or personal,
    tangible or intangible, would reflect unfavorably upon the ability of
    the Institute or any employee to carry out the responsibilities of the
    Institute or employee, or official duties, in a fair and objective
    manner, or would compromise the integrity or the appearance of the
    integrity of the Institute's programs or any official involved in those
    programs.

    SEC. 218. MAILS.

      The Board and the Institute may use the United States mails in the
    same manner and under the same conditions as other departments and
    agencies of the United States.

    SEC. 219. APPLICABILITY OF CERTAIN CIVIL SERVICE LAWS.

      The Director of the Institute and the staff of the Institute may be
    appointed without regard to the provisions of title 5, United States
    Code, governing appointments in the competitive service, and may be
    paid without regard to the provisions of chapter 51 and subchapter III
    of chapter 53 of that title relating to classification and General
    Schedule pay rates, except that an individual so appointed may not
    receive pay in excess of the annual rate of basic pay payable for level
    IV of the Executive Schedule.

    SEC. 220. EXPERTS AND CONSULTANTS.

      The Institute may procure temporary and intermittent services under
    section 3109(b) of title 5, United States Code.

    SEC. 221. REPORT.

      (a) In General.--The Institute shall submit a biennial report to the
    Committee on Education and the Workforce of the House of
    Representatives and the Committee on Labor and Human Resources of the
    Senate. Each report submitted under this section shall include--
              (1) a comprehensive and detailed description of the
            Institute's operations, activities, financial condition, and
            accomplishments in carrying out the purposes of the Institute
            as specified in section 211, for the period covered by the
            report; and
              (2) a summary description of how the Institute will advance
            the purposes of the Institute for the next biennium.
      (b) First Report.--The Institute shall submit a report under this
    section not later than 1 year after the date of enactment of this part.

    SEC. 222. DEFINITIONS.

      For purposes of this part--
              (1) the term ``Board'' means the National Institute for
            Literacy Advisory Board;
              (2) the term ``Institute'' means the National Institute for
            Literacy; and
              (3) the terms ``reading'', ``scientifically based reading
            research'', and ``essential components of reading instruction''
            have the meanings given those terms in section 1208 of part B
            of title I of the Elementary and Secondary Education Act of
            1965 (20 U.S.C. 6368).

    SEC. 223. AUTHORIZATION OF APPROPRIATIONS.

      There are authorized to be appropriated to administer and carry out
    this part $6,700,000 for fiscal year 2004 and such sums as may be
    necessary for each of the 5 succeeding fiscal years.

    SEC. 224. RESERVATION.

      From amounts appropriated to the Institute, the Director of the
    Institute may use not more than 5 percent of such amounts for
    information dissemination under section 1207 of the Elementary and
    Secondary Education Act of 1965 (20 U.S.C. 6367).

    SEC. 225. AUTHORITY TO PUBLISH.

      The Institute, including the Board, may prepare, publish, and present
    (including through oral presentations) such research-based information
    and research reports as needed to carry out the purposes and mission of
    the Institute.

                 TITLE III--AMENDMENTS TO THE WAGNER-PEYSER ACT

    SEC. 301. AMENDMENTS TO THE WAGNER-PEYSER ACT.

      The Wagner-Peyser Act (29 U.S.C. 49 et. seq.) is amended--
              (1) by striking sections 1 through 13;
              (2) in section 14 by inserting ``of Labor'' after
            ``Secretary''; and
              (3) by amending section 15 to read as follows:

    ``SEC. 15. WORKFORCE AND LABOR MARKET INFORMATION SYSTEM.

      ``(a) System Content.--
              ``(1) In general.--The Secretary of Labor, in accordance with
            the provisions of this section, shall oversee the development,
            maintenance, and continuous improvement of a nationwide
            workforce and labor market information system that includes--
                      ``(A) statistical data from cooperative statistical
                    survey and projection programs and data from
                    administrative reporting systems that, taken together,
                    enumerate, estimate, and project employment
                    opportunities and conditions at national, State, and
                    local levels in a timely manner, including statistics
                    on--
                              ``(i) employment and unemployment status of
                            national, State, and local populations,
                            including self-employed, part-time, and
                            seasonal workers;
                              ``(ii) industrial distribution of
                            occupations, as well as current and projected
                            employment opportunities, wages, benefits
                            (where data is available), and skill trends by
                            occupation and industry, with particular
                            attention paid to State and local conditions;
                              ``(iii) the incidence of, industrial and
                            geographical location of, and number of workers
                            displaced by, permanent layoffs and plant
                            closings; and
                              ``(iv) employment and earnings information
                            maintained in a longitudinal manner to be used
                            for research and program evaluation;
                      ``(B) information on State and local employment
                    opportunities, and other appropriate statistical data
                    related to labor market dynamics, which--
                              ``(i) shall be current and comprehensive;
                              ``(ii) shall meet the needs identified
                            through the consultations described in
                            subparagraphs (A) and (B) of subsection (e)(2);
                            and
                              ``(iii) shall meet the needs for the
                            information identified in section 134(d);
                      ``(C) technical standards (which the Secretary shall
                    publish annually) for data and information described in
                    subparagraphs (A) and (B) that, at a minimum, meet the
                    criteria of chapter 35 of title 44, United States Code;
                      ``(D) procedures to ensure compatibility and
                    additivity of the data and information described in
                    subparagraphs (A) and (B) from national, State, and
                    local levels;
                      ``(E) procedures to support standardization and
                    aggregation of data from administrative reporting
                    systems described in subparagraph (A) of employment-
                    related programs;
                      ``(F) analysis of data and information described in
                    subparagraphs (A) and (B) for uses such as--
                              ``(i) national, State, and local
                            policymaking;
                              ``(ii) implementation of Federal policies
                            (including allocation formulas);
                              ``(iii) program planning and evaluation; and
                              ``(iv) researching labor market dynamics;
                      ``(G) wide dissemination of such data, information,
                    and analysis in a user-friendly manner and voluntary
                    technical standards for dissemination mechanisms; and
                      ``(H) programs of--
                              ``(i) training for effective data
                            dissemination;
                              ``(ii) research and demonstration; and
                              ``(iii) programs and technical assistance.
              ``(2) Information to be confidential.--
                      ``(A) In general.--No officer or employee of the
                    Federal Government or agent of the Federal Government
                    may--
                              ``(i) use any submission that is furnished
                            for exclusively statistical purposes under the
                            provisions of this section for any purpose
                            other than the statistical purposes for which
                            the submission is furnished;
                              ``(ii) make any publication or media
                            transmittal of the data contained in the
                            submission described in clause (i) that permits
                            information concerning individual subjects to
                            be reasonably inferred by either direct or
                            indirect means; or
                              ``(iii) permit anyone other than a sworn
                            officer, employee, or agent of any Federal
                            department or agency, or a contractor
                            (including an employee of a contractor) of such
                            department or agency, to examine an individual
                            submission described in clause (i);
                    without the consent of the individual, agency, or other
                    person who is the subject of the submission or provides
                    that submission.
                      ``(B) Immunity from legal process.--Any submission
                    (including any data derived from the submission) that
                    is collected and retained by a Federal department or
                    agency, or an officer, employee, agent, or contractor
                    of such a department or agency, for exclusively
                    statistical purposes under this section shall be immune
                    from the legal process and shall not, without the
                    consent of the individual, agency, or other person who
                    is the subject of the submission or provides that
                    submission, be admitted as evidence or used for any
                    purpose in any action, suit, or other judicial or
                    administrative proceeding.
                      ``(C) Rule of construction.--Nothing in this section
                    shall be construed to provide immunity from the legal
                    process for such submission (including any data derived
                    from the submission) if the submission is in the
                    possession of any person, agency, or entity other than
                    the Federal Government or an officer, employee, agent,
                    or contractor of the Federal Government, or if the
                    submission is independently collected, retained, or
                    produced for purposes other than the purposes of this
                    Act.
      ``(b) System Responsibilities.--
              ``(1) In general.--The workforce and labor market information
            system described in subsection (a) shall be planned,
            administered, overseen, and evaluated through a cooperative
            governance structure involving the Federal Government and
            States.
              ``(2) Duties.--The Secretary, with respect to data
            collection, analysis, and dissemination of labor employment
            statistics for the system, shall carry out the following
            duties:
                      ``(A) Assign responsibilities within the Department
                    of Labor for elements of the workforce and labor market
                    information system described in subsection (a) to
                    ensure that all statistical and administrative data
                    collected is consistent with appropriate Bureau of
                    Labor Statistics standards and definitions.
                      ``(B) Actively seek the cooperation of other Federal
                    agencies to establish and maintain mechanisms for
                    ensuring complementarity and nonduplication in the
                    development and operation of statistical and
                    administrative data collection activities.
                      ``(C) Eliminate gaps and duplication in statistical
                    undertakings, with the systemization of wage surveys as
                    an early priority.
                      ``(D) In collaboration with the Bureau of Labor
                    Statistics and States, develop and maintain the
                    elements of the workforce and labor market information
                    system described in subsection (a), including the
                    development of consistent procedures and definitions
                    for use by the States in collecting the data and
                    information described in subparagraphs (A) and (B) of
                    subsection (a)(1).
                      ``(E) Establish procedures for the system to ensure
                    that--
                              ``(i) such data and information are timely;
                              ``(ii) paperwork and reporting for the system
                            are reduced to a minimum; and
                              ``(iii) States and localities are fully
                            involved in the development and continuous
                            improvement of the system at all levels,
                            including ensuring the provision, to such
                            States and localities, of budget information
                            necessary for carrying out their
                            responsibilities under subsection (e).
      ``(c) National Electronic Tools to Provide Services.--The Secretary
    is authorized to assist in the development of national electronic tools
    that may be used to facilitate the delivery of core services described
    in section 134 and to provide workforce information to individuals
    through the one-stop delivery systems descried in section 121 and
    through other appropriate delivery systems.
      ``(d) Coordination With the States.--
              ``(1) In general.--The Secretary, working through the Bureau
            of Labor Statistics and the Employment and Training
            Administration, shall regularly consult with representatives of
            State agencies carrying out workforce information activities
            regarding strategies for improving the workforce and labor
            market information system.
              ``(2) Formal consultations.--At least twice each year, the
            Secretary, working through the Bureau of Labor Statistics,
            shall conduct formal consultations regarding programs carried
            out by the Bureau of Labor Statistics with representatives of
            each of the 10 Federal regions of the Department of Labor,
            elected from the State directors affiliated with State agencies
            that perform the duties described in subsection (e)(2).
      ``(e) State Responsibilities.--
              ``(1) Designation of state agency.--In order to receive
            Federal financial assistance under this section, the Governor
            of a State shall--
                      ``(A) designate a single State agency to be
                    responsible for the management of the portions of the
                    workforce and labor market information system described
                    in subsection (a) that comprise a statewide workforce
                    and labor market information system and for the State's
                    participation in the development of the annual plan;
                    and
                      ``(B) establish a process for the oversight of such
                    system.
              ``(2) Duties.--In order to receive Federal financial
            assistance under this section, the State agency shall--
                      ``(A) consult with State and local employers,
                    participants, and local workforce investment boards
                    about the labor market relevance of the data to be
                    collected and disseminated through the statewide
                    workforce and labor market information system;
                      ``(B) consult with State educational agencies and
                    local educational agencies concerning the provision of
                    employment statistics in order to meet the needs of
                    secondary school and postsecondary school students who
                    seek such information;
                      ``(C) collect and disseminate for the system, on
                    behalf of the State and localities in the State, the
                    information and data described in subparagraphs (A) and
                    (B) of subsection (a)(1);
                      ``(D) maintain and continuously improve the statewide
                    workforce and labor market information system in
                    accordance with this section;
                      ``(E) perform contract and grant responsibilities for
                    data collection, analysis, and dissemination for such
                    system;
                      ``(F) conduct such other data collection, analysis,
                    and dissemination activities as will ensure an
                    effective statewide workforce and labor market
                    information system;
                      ``(G) actively seek the participation of other State
                    and local agencies in data collection, analysis, and
                    dissemination activities in order to ensure
                    complementarity, compatibility, and usefulness of data;
                      ``(H) participate in the development of the annual
                    plan described in subsection (c); and
                      ``(I) utilize the quarterly records described in
                    section 136(f )(2) of the Workforce Investment Act of
                    1998 to assist the State and other States in measuring
                    State progress on State performance measures.
              ``(3) Rule of construction.--Nothing in this section shall be
            construed as limiting the ability of a State agency to conduct
            additional data collection, analysis, and dissemination
            activities with State funds or with Federal funds from sources
            other than this section.
      ``(f) Nonduplication Requirement.--None of the functions and
    activities carried out pursuant to this section shall duplicate the
    functions and activities carried out under the Carl D. Perkins
    Vocational and Applied Technology Education Act (20 U.S.C. 2301 et
    seq.).
      ``(g) Authorization of Appropriations.--There are authorized to be
    appropriated to carry out this section such sums as may be necessary
    for each of the fiscal years 2004 through 2009.
      ``(h) Definition.--In this section, the term `local area' means the
    smallest geographical area for which data can be produced with
    statistical reliability.''.

             TITLE IV--AMENDMENTS TO THE REHABILITATION ACT OF 1973

    SEC. 401. CHAIRPERSON.

      Section 705(b)(5) of the Rehabilitation Act of 1973 (29 U.S.C.
    796d(b)(5)) is amended to read as follows:
              ``(5) Chairperson.--The Council shall select a chairperson
            from among the voting membership of the Council.''.

    SEC. 402. REHABILITATION SERVICES ADMINISTRATION.

      Section 3(a) of the Rehabilitation Act of 1973 (29 U.S.C. 702(a)) is
    amended--
              (1) by striking ``Office of the Secretary'' and inserting
            ``Department of Education'';
              (2) by striking ``President by and with the advice and
            consent of the Senate'' and inserting ``Secretary, except that
            the current Commissioner appointed under the authority existing
            on the day prior to the date of enactment of this Act may
            continue to serve in the former capacity''; and
              (3) by striking ``, and the Commissioner shall be the
            principal officer,''.

    SEC. 403. DIRECTOR.

      (a) In General.--The Rehabilitation Act of 1973 (29 U.S.C. 701 et
    seq.) is amended by striking ``Commissioner'' each place it appears,
    except in section 21, and inserting ``Director''.
      (b) Exception.--Section 21 of the Rehabilitation Act of 1973 (29
    U.S.C. 718) is amended--
              (1) in subsection (b)(1)--
                      (A) by striking ``Commissioner'' the first place it
                    appears and inserting ``Director of the Rehabilitation
                    Services Administration''; and
                      (B) by striking ``(referred to in this subsection as
                    the `Director') ''; and
              (2) by striking ``Commissioner and the Director'' each place
            it appears and inserting ``both such Directors''.

    SEC. 404. STATE GOALS.

      Section 101(a) of the Rehabilitation Act of 1973 (29 U.S.C. 721(a))
    is amended--
              (1) in paragraph (11)(D)(i) by inserting ``, which may be
            provided using alternative means of meeting participation (such
            as video conferences and conference calls)'' before the
            semicolon; and
              (2) in paragraph (15)--
                      (A) in subparagraph (A), by redesignating clauses
                    (ii) and (iii) as clauses (iii) and (iv), respectively,
                    and inserting after clause (i) the following:
                              ``(ii) include an assessment of the
                            transition services provided under this Act,
                            and coordinated with transition services under
                            the Individuals with Disabilities Education
                            Act, as to those services meeting the needs of
                            individuals with disabilities.''; and
                      (B) by amending subparagraph (D)(i) to read as
                    follows:
                              ``(i) the methods to be used to expand and
                            improve the services to individuals with
                            disabilities including--
                                      ``(I) how a broad range of assistive
                                    technology services and assistive
                                    technology devices will be provided to
                                    such individuals at each stage of the
                                    rehabilitative process and how such
                                    services and devices will be provided
                                    to such individuals on a statewide
                                    basis; and
                                      ``(II) how transition services will
                                    be better coordinated with those
                                    services under the Individuals with
                                    Disabilities Education Act in order to
                                    improve transition services for
                                    individuals with disabilities served
                                    under this Act;''.

    SEC. 405. AUTHORIZATIONS OF APPROPRIATIONS.

      The Rehabilitation Act of 1973 is further amended--
              (1) in section 100(b)(1) by striking ``fiscal years 1999
            through 2003'' and inserting ``fiscal years 2004 through
            2009'';
              (2) in section 100(d)(1)(B) by striking ``fiscal year 2003''
            and inserting ``fiscal year 2009'';
              (3) in section 110(c) by amending paragraph (2) to read as
            follows:
              ``(2) The sum referred to in paragraph (1) shall be, as
            determined by the Secretary, not less than 1 percent and not
            more than 1.5 percent of the amount referred to in paragraph
            (1) for each of fiscal years 2003 through 2009.'';
              (4) in section 112(h) by striking ``fiscal years 1999 through
            2003'' and inserting ``fiscal years 2004 through 2009'';
              (5) in section 201(a) by striking ``fiscal years 1999 through
            2003'' each place it appears and inserting ``fiscal years 2004
            through 2009'';
              (6) in section 302(i) by striking ``fiscal years 1999 through
            2003'' and inserting ``fiscal years 2004 through 2009'';
              (7) in section 303(e) by striking ``fiscal years 1999 through
            2003'' and inserting ``fiscal years 2004 through 2009'';
              (8) in section 304(b) by striking ``fiscal years 1999 through
            2003'' and inserting ``fiscal years 2004 through 2009'';
              (9) in section 305(b) by striking ``fiscal years 1999 through
            2003'' and insert ``fiscal years 2004 through 2009'';
              (10) in section 405 by striking ``fiscal years 1999 through
            2003'' and inserting ``fiscal years 2004 through 2009'';
              (11) in section 502(j) by striking ``fiscal years 1999
            through 2003'' and inserting ``fiscal years 2004 through
            2009'';
              (12) in section 509(l) by striking ``fiscal years 1999
            through 2003'' and inserting ``fiscal years 2004 through
            2009'';
              (13) in section 612 by striking ``fiscal years 1999 through
            2003'' and inserting ``fiscal years 2004 through 2009'';
              (14) in section 628 by striking ``fiscal years 1999 through
            2003'' and inserting ``fiscal years 2004 through 2009'';
              (15) in section 714 by striking ``fiscal years 1999 through
            2003'' and inserting ``fiscal years 2004 through 2009'';
              (16) in section 727 by striking ``fiscal years 1999 through
            2003'' and inserting ``fiscal years 2004 through 2009''; and
              (17) in section 753 by striking ``fiscal years 1999 through
            2003'' and inserting ``fiscal years 2004 through 2009''.

    SEC. 406. HELEN KELLER NATIONAL CENTER ACT.

      (a) General Authorization of Appropriations.--The first sentence of
    section 205(a) of the Helen Keller National Center Act (29 U.S.C.
    1904(a)) is amended by striking ``1999 through 2003'' and inserting
    ``2004 through 2009''.
      (b) Helen Keller National Center Federal Endowment Fund.--The first
    sentence of section 208(h) of such Act (29 U.S.C. 1907(h)) is amended
    by striking ``1999 through 2003'' and inserting ``2004 through 2009''.

                     TITLE V--TRANSITION AND EFFECTIVE DATE

    SEC. 501. TRANSITION PROVISIONS.

      The Secretary of Labor shall take such actions as the Secretary
    determines to be appropriate to provide for the orderly implementation
    of this Act.

    SEC. 502. EFFECTIVE DATE.

      Except as otherwise provided in this Act, this Act and the amendments
    made by this Act, shall take effect on the date of enactment of this
    Act.

                                    Purpose

        H.R. 1261, the Workforce Reinvestment and Adult Education
    Act of 2003, enhances the workforce investment system created
    under the Workforce Investment Act of 1998 by strengthening
    one-stop career centers, providing for more effective
    governance arrangements, promoting consumer choice,
    establishing a more targeted approach to serving youth, and
    improving performance accountability. The bill also improves
    our nation's adult education system using practices based on
    scientific research, and enhances vocational rehabilitation
    services for individuals with disabilities seeking to return to
    or enter the integrated workplace.

                                Committee Action

                           107TH AND 108TH CONGRESSES

    Subcommittee hearings

        On Tuesday, March 12, 2002, the Committee on Education and
    the Workforce, Subcommittee on 21st Century Competitiveness,
    held a hearing in Washington D.C. on ``Welfare to Work: Ties
    Between Temporary Assistance for Needy Families (TANF) and
    Workforce Development.'' The purpose of the hearing was to
    learn about the interaction between the TANF block grant and
    the workforce investment system created through the Workforce
    Investment Act (WIA). Sigurd Nilsen, Ph.D., Director of Health,
    Education, and Human Services Division, General Accounting
    Office (GAO), Washington, D.C. testified before the Committee
    about the GAO study regarding an increased coordination between
    the TANF programs and the One-Stop Centers. Mr. John B.
    O'Reilly, Jr., Executive Director, Southeast Michigan Community
    Alliance, Taylor, Michigan; Ms. Barbara Gault, Ph.D., Director
    of Research, Institute for Women's Policy Research, Washington,
    D.C.; Mr. Greg Gardner, Acting Director, Utah Department of
    Workforce Services, Salt Lake City, Utah; and Ms. Erika Kates,
    Ph.D., Executive Director, Welfare Education Training Access
    Coalition Center for Youth and Communities, Brandeis
    University, Boston, Massachusetts, also testified before the
    Committee.
        On Thursday, September 12, 2002, the Committee on Education
    and the Workforce, Subcommittee on 21st Century
    Competitiveness, held a hearing in Washington D.C. on the
    ``Implementation of the Workforce Investment Act: Promising
    Practices in Workforce Development.'' The purpose of the
    hearing was to encourage and promote a seamless system that
    improves services to job seekers and employers. Testifying
    before the Committee were Mr. Bruce Stenslie, Director, Ventura
    County Workforce Investment Board, Ventura, California; Ms.
    Diane D. Rath, Chair, Texas Workforce Commission, Austin,
    Texas; Mr. Danny Wegman, President, Wegmans Food Markets,
    Rochester, New York; and Mr. Timothy Barnicle, Co-Director,
    Workforce Development Program, National Center on Education and
    the Economy, Washington, D.C.
        On Tuesday, March 4, 2003, the Committee on Education and
    the Workforce, Subcommittee on 21st Century Competitiveness,
    held a hearing in Washington, D.C. on ``Improving Adult
    Education for the 21st Century.'' The purpose of the hearing
    was to learn about pertinent issues to be addressed in the
    reauthorization of the Adult Education and Family Literacy Act,
    Title II of the Workforce Investment Act. The Honorable Carol
    D'Amico, Assistant Secretary, U.S. Department of Education,
    Washington, D.C. testified before the Committee on the first
    panel on methods to improve accountability for academic results
    while ensuring the flexibility necessary to help adult
    education participants receive the services they need. Dr. Beth
    Buelmann, Executive Director, Center for Workforce Preparation
    for the U.S. Chamber of Commerce, Washington, D.C.; Dr. Randy
    Whitfield, Associate Vice President of Academic and Student
    Services, North Carolina Community College System, Raleigh,
    North Carolina; Ms. Ann-Marie Panella, Director of Human
    Resources, MCS Industries, Inc., Easton, Pennsylvania; and Ms.
    Hermelinda Morales Herrera, Adult Education Participant,
    Aurora, Colorado, testified before the Committee on the second
    panel.
        On Tuesday, March 11, 2003, the Committee on Education and
    the Workforce, Subcommittee on 21st Century Competitiveness,
    held a hearing in Washington D.C. on ``Workforce Investment and
    Rehabilitation Acts: Improving Services and Empowering
    Individuals.'' The purpose of the hearing was to learn about
    methods to strengthen and improve current programs and results
    for both job seekers and employers. The Honorable Emily
    DeRocco, Assistant Secretary, U.S. Department of Labor,
    Washington, D.C., and the Honorable Robert Pasternack,
    Assistant Secretary, U.S. Department of Education, Washington,
    D.C., testified before the Committee on the first panel about
    the potential benefits of streamlining programs and funding to
    better serve populations as well as the need to improve
    coordination between vocational rehabilitation services and WIA
    programs to better serve individuals with disabilities. Mr.
    Thomas J. White, President and CEO, Greater Durham Chamber of
    Commerce, Durham, North Carolina; Mr. Steven Savner, Senior
    Staff Attorney, Center for Law and Social Policy, Washington,
    D.C.; Mr. John Twomey, President, National Workforce
    Association, Washington, D.C.; and Ms. Bettie Shaw-Henderson,
    District Manager, Michigan Department of Vocational
    Rehabilitation, Grand Rapids, Michigan, testified before the
    Committee on the second panel.

    Full committee hearing

        On Wednesday, February 12, 2003, the Committee on Education
    and the Workforce, Subcommittee on 21st Century
    Competitiveness, held a hearing in Washington D.C. on ``Back to
    Work: The Administration's Plan for Economic Recovery and the
    Workforce Investment Act.'' The purpose of the hearing was to
    learn about the Administration's proposal to speed the
    country's economic recovery, a component of which includes Back
    to Work accounts that provide assistance to help unemployed
    Americans who are struggling to return to work, and to learn
    about the Administration's proposal for the Workforce
    Investment Act reauthorization. The Honorable Elaine Chao,
    Secretary of Labor, Washington, D.C., testified before the
    Committee on the first panel. Mr. Kenneth Mayfield, President,
    National Association of Counties, Washington, D.C., and Dr.
    Lawrence Mishel, President, Economic Policy Institute,
    Washington, D.C. testified before the Committee on the second
    panel.

    Legislative action

        On March 13, 2003, 21st Century Competitiveness
    Subcommittee Chairman Howard P. ``Buck'' McKeon (R-CA) and
    Chairman John Boehner (R-OH) introduced H.R. 1261, the
    Workforce Reinvestment and Adult Education Act of 2003, a bill
    to amend the Workforce Investment Act of 1998 to provide for
    the nation's One-Stop workforce development system. The
    legislation also contains the Adult Basic Education Skills Act,
    which reauthorizes State programs for adult education, and the
    provision reauthorizing the Rehabilitation Act of 1973, which
    provides services to help individuals with disabilities become
    employable and achieve full integration into society.
        On March 20, 2003, the Subcommittee on 21st Century
    Competitiveness considered H.R. 1261 in legislative session and
    reported it favorably, as amended, to the Committee on
    Education and the Workforce by a vote of 15-12. The
    Subcommittee considered accepted amendments:
         The Subcommittee adopted, by voice vote, a
    substitute amendment offered by Subcommittee Chairman McKeon
    (R-CA). The substitute amendment clarifies the distribution of
    adult funding within states, allows some youth funding to be
    used to serve in-school youth, addresses the problem of
    determining system expenditures, adds adult education incentive
    grants, reinstates the National Institute for Literacy, and
    makes other technical changes.
         The Subcommittee adopted by unanimous consent a
    technical amendment offered by Representative Isakson (R-GA).
        On March 27, 2003, the Committee on Education and the
    Workforce considered H.R. 1261 in legislative session and
    reported it favorably, as amended, to the House of
    Representatives by a vote of 26-21. The Committee considered 19
    amendments and adopted the following 9 amendments:
         The Committee adopted, by voice vote, a substitute
    amendment offered by Subcommittee Chairman McKeon (R-CA). The
    substitute amendment ensures confidentiality of student
    records, allows states to measure customer satisfaction, amends
    the provisions relating to in-school youth, adds Family
    Literacy to the adult education program, reauthorizes the Helen
    Keller National Center Act, and makes additional technical
    changes. The amendment also removes Back to Work accounts from
    the bill, which had already been approved by the full Committee
    as a stand-alone bill (H.R. 444). The Back to Work Accounts was
    temporarily removed pending negotiations on the FY 2004 Budget
    Resolution.
         The Committee also adopted, by voice vote, an en
    bloc technical amendment offered by Mr. Isakson (R-GA).
         The Committee adopted, by unanimous consent, an
    amendment to require states to specify how they will address
    the needs of ex-offenders, offered by Mr. Davis (D-IL).
         The Committee adopted by a vote of 24-23, an
    amendment offered by Mr. Osborne (R-NE), which provides that
    the Commissioner of the Rehabilitation Services Administration
    will no longer be a Presidential appointment following the
    service by the current Commissioner.
         The Committee adopted, by unanimous consent, an
    amendment offered by Ms. Woolsey (D-CA) to allow states to
    provide programs for displaced homemakers using statewide
    employment and training funds.
         The Committee adopted, by unanimous consent, an
    amendment offered by Ms. McCollum (D-MN) that authorizes the
    Secretary of Labor to provide demonstration retention grants to
    qualified job training programs upon placement or retention of
    a low-income individual.
         The Committee adopted, by unanimous consent, an
    amendment offered by Mr. Andrews (D-NJ) to allow
    entrepreneurial training to eligible individuals.
         The Committee adopted, by unanimous consent, an
    amendment offered by Mr. Kind (D-WI) that requires states to
    specify how they will serve the employment and training needs
    of dislocated farmers, ranchers, and fishermen.
         The Committee adopted, by unanimous consent, an
    amendment offered by Ms. McCarthy (D-NY), which includes a
    ``hold harmless'' funding provision at 2003 levels pending
    amended allocation levels.

                                    Summary

        H.R. 1261, The Workforce Reinvestment and Adult Education
    Act of 2003, reauthorizes and amends the Workforce Investment
    Act of 1998 (WIA), which provides for the nation's One-Stop
    workforce development system. The legislation also contains the
    Adult Basic Education Skills Act, which reauthorizes State
    programs for adult education, and the provision reauthorizing
    the Rehabilitation Act of 1973, which provides services to
    assist individuals with disabilities become employable and
    achieve full integration into society.

                              WORKFORCE INVESTMENT

        H.R. 1261 provides workforce investment services and
    programs through state and local One-Stop Career Center
    systems. The goals of the legislation are to provide (1)
    enhanced employment, retention, and earnings of individuals;
    (2) increased occupational skills attainment; and (3) improved
    national economic growth through increased productivity and
    competitiveness.
        The bill streamlines current WIA funding in order to
    provide more efficient and results-oriented services and
    programs to strengthen the coordinating infrastructure,
    eliminate duplication, strengthen resource allocation, improve
    accountability, enhance the role of employers, and increase
    state flexibility. H.R. 1261 provides enhanced improvements to
    the WIA system to effectively address the changing needs of
    both workers and employers and further address the needs of
    special populations by promoting a more productive workforce
    and youth development programs connected to the private sector,
    postsecondary education and training, social services, and
    economic development systems.

                  STATE AND LOCAL WORKFORCE INVESTMENT BOARDS

        H.R. 1261 strengthens the membership requirements and the
    role of the State Workforce Investment Boards. Required
    membership includes: (1) state agencies responsible
    foradministering the One-Stop partner programs; (2) the state economic
    development agency; (3) business representatives; (4) local elected
    officials; (5) worker advocates; and (6) state legislators. The bill
    continues to require a business majority on the board, and a member of
    the business community must chair the board. Furthermore, State boards
    will be responsible for setting policies and priorities affecting the
    integration of services at the One-Stop Career Center systems to
    increase support for partner usage and create a more coordinated
    approach to addressing the workforce needs of each community.
        Local Workforce Investment Board membership is streamlined
    to ensure greater responsiveness to local area needs by
    appropriately reflecting leading industry sectors and
    geographical areas and removing the requirement that One-Stop
    partner programs have a seat on the local boards. Local boards
    will have the option of creating advisory committees comprised
    of One-Stop partners and other key parties to provide advice on
    operational issues. State and local area requirements to submit
    strategic plans are reduced from five to two years to reflect
    economic conditions or state/local priorities.

                         ONE-STOP CAREER CENTER SYSTEM

        The bill streamlines the operational cost of the One-Stop
    system through One-Stop infrastructure funding to alleviate
    current local negotiation issues. Each mandatory partner
    program will contribute funds for infrastructure grants. In
    addition, the State board will establish criteria for and issue
    certifications of one-stop career centers to ensure appropriate
    integration of services and consistency across states. Only
    certified centers are eligible for infrastructure grants.

                   CONSOLIDATED ADULT EMPLOYMENT AND TRAINING

        H.R. 1261 combines the funding streams of the WIA Adult,
    WIA Dislocated Worker and Wagner-Peyser programs into one
    funding structure to reduce current duplication and
    inefficiency. H.R. 1261 authorizes this program at $3.08
    billion for FY 04 and such sums as necessary for 2005 through
    2009. The bill reserves 10 percent of the funds for the
    Secretary for national activities. State funding is held
    harmless at 2003 levels. Fifty percent of the funds are
    allocated to the local areas and 50 percent is retained by
    states. Of the State portion, 50 percent is required to go to
    the local areas for the delivery of core services. In addition,
    the bill defines ``accrued expenditures'' and bases the re-
    allotment of funds on expenditures, minus accrued expenditures,
    rather than obligations to effectively redistribute unspent,
    available funds between areas with greater needs.
        H.R. 1261 also provides greater flexibility in the delivery
    of services. Individuals are no longer required to spend a
    specific amount of time in one tier of service. Individuals are
    now able to receive the services that are most appropriate for
    their needs. A priority is placed on unemployed workers, and if
    funds are determined by a State to be limited, a second-tier
    priority is placed on low-income individuals. Faith-based
    providers are added as eligible service providers. In addition,
    the bill gives States the authority to determine the standards,
    information, and data required for eligible training providers
    to offer services to individuals.

                              PERFORMANCE MEASURES

        H.R. 1261 reduces the number of required performance
    measures from seventeen to eight, four for adult outcomes and
    four for youth outcomes, to effectively evaluate the system. As
    provided under current law, the performance indicators are
    negotiated between each State and the Department of Labor.
    State-specific performance targets shall reflect appropriate
    economic and demographic factors of the population served so as
    not to create a disincentive to serve hard-to-serve
    populations. Governors have the authority to add additional
    measures for use within their State.

                                 YOUTH PROGRAM

        H.R. 1261 allows state and local areas to use up to 30
    percent of local youth funds for the Youth Program to be spent
    on in-school youth during non-school hours; however, the bill
    targets funds on out-of-school youth. H.R. 1261 authorizes this
    program at $1 billion for FY 04. The distribution formula for
    the Youth Program includes \1/3\ distributed based on the
    number of high school dropouts, \1/3\ on the number of jobless
    out-of-school youth, and \1/3\ on the number of disadvantaged
    youth. Furthermore, 25 percent of youth funding is available
    for competitive challenge grant targeted funding. The bill also
    eliminates the requirement for local Youth Councils, which have
    generally proven inefficient and ineffective in enhancing local
    system efforts.

                          ADULT EDUCATION AND LITERACY

        Title II Part A of H.R. 1262 maintains the structure and
    purpose of the 1998 consolidation of adult education programs
    as reflected in P.L. 105-220. The funding formula remains the
    same, however accountability measures have been strengthened,
    and faith-based providers are allowed to compete to be local
    providers of adult education services. Because of the
    increasing number of individuals needing basic skills education
    in reading, writing, English language acquisition, and math,
    there is more focus on providing courses in these areas.
    Programs offered by local providers should include a sequence
    of rigorous, academic courses and activities leading to
    proficiency in the basic skills and family literacy. Part B of
    Title II modifies the mission of the National Institute for
    Literacy to include all levels of instruction in reading for
    children, youth and adults, improving the management structure
    by streamlining the decision making process, and aligning the
    activities with the objectives of the No Child Left Behind Act
    in areas of reading instruction and scientifically based
    research.

                           VOCATIONAL REHABILITATION

        H.R. 1261 contains the vocational rehabilitation state
    grants program, which is the primary federal program to assist
    individuals with disabilities prepare for, obtain, and retain
    employment in order to achieve full integration into society.
    The bill reauthorizes through 2009 a variety of vocational
    rehabilitation services, research, training, and advocacy
    programs designed to assist individuals with disabilities
    obtain employment. H.R. 1261 also includes transition
    improvements, state plan strategies used to address the needs
    identified in an assessment of transition services, and
    coordination with the Individuals with DisabilitiesEducation
    Act (IDEA) services, including authorizing the use of alternative means
    of communication when participating in meetings under IDEA.
        The bill also reauthorizes the Helen Keller National Center
    Act through 2009.

                                 EFFECTIVE DATE

        The Workforce Reinvestment and Adult Education Act of 2003
    shall be effective immediately upon enactment.

                                Committee Views

              TITLE I--AMENDMENTS TO THE WORKFORCE INVESTMENT ACT

        The Workforce Reinvestment and Adult Education Act of 2003
    builds upon the historic Workforce Investment Act (WIA). In
    1998, under this Committee's leadership, Congress passed WIA to
    reform the nation's job training system that formerly was
    fragmented, contained overlapping programs, and did not serve
    either job seekers or employers well. WIA consolidated and
    integrated employment and training services at the local level
    in a more unified workforce development system.
        The WIA system contains the federal government's primary
    programs for investment in our nation's workforce preparation.
    Even though the system is still maturing since its full
    implementation in July 2000, states and local areas have
    created effective one-stop delivery systems.
        Emily DeRocco, Assistant Secretary for the Employment and
    Training Administration at the Department of Labor, testified
    before the Subcommittee on 21st Century Competitiveness
    regarding the successes of the system to date. During program
    year 2001, 1.1 million people were assisted through WIA funds.
    (This figure captures only those individuals who receive
    intensive or training services. Millions of additional
    individuals accessed self-service job listings and placement
    assistance through the one-stop centers.) The outcomes for
    adults, mostly low-income individuals, demonstrated an
    increased employment rate between program years 2000 and 2001
    from 69 percent to 76 percent. Overall, 82 percent of
    dislocated workers gained employment, up from 76 percent in
    2000. Further, individuals replaced at least 100 percent of
    their pre-dislocation earnings during both program years 2000
    and 2001. In addition, the diploma attainment rate for youth
    increased significantly (from 35 percent to 54 percent) during
    the same time period.
        Yet, more work remains to be completed. Strengthening and
    improving programs that help Americans get back to work is
    essential in this time of war and economic recovery. Hundreds
    of thousands of Americans are searching for good, stable new
    jobs. The U.S. economy lost 308,000 jobs in February 2003, one
    of the sharpest drops in recent memory. As of March 2003, the
    unemployment rate is 5.8 percent. While this is relatively low
    by historical standards, the unemployment rate was only 4
    percent as recently as 2000.
        This legislation builds upon and improves the innovative
    system created in WIA. The Committee believes it is essential
    that Congress remove barriers in current law that hamper
    Americans in their efforts to take full advantage of the
    assistance WIA offers.
        The Committee has worked closely with the Bush
    Administration and the U.S. Department of Labor to incorporate
    the Administrations' priorities for reauthorization of the
    Workforce Investment Act, where possible.
        In addition to hearings on these issues, the Committee also
    solicited comments via the Committee web page. As of March 31,
    2003, the Committee has received 390 comments, most from
    individuals rather than associations, which has helped inform
    the Committee's debate and development of legislation. The
    Department of Labor also sought comments on WIA reauthorization
    through a Federal Resister notice published on February 28,
    2002. Over 370 comments were received in response to this
    announcement. The Department also held twelve general public
    forums throughout the country to seek input on the issues. Over
    1,400 people attended the forums, and more than 240 individuals
    presented oral remarks. Additional forums were held to discuss
    one-stop services to persons with disabilities and Native
    American programs.
        Local elected officials, who are accountable for
    implementation at the local level, support H.R. 1261. Larry E.
    Naake, Executive Director of the National Association of
    Counties, wrote Subcommittee Chairman McKeon on March 20, 2003
    to express the Association's support:

              NACo is very pleased to offer its support for a bill
            that we believe will substantially enhance the nation's
            workforce development system while retaining strong
            roles for local elected officials and local workforce
            investment boards. Such enhancements as expanding and
            enhancing the role of business representatives on the
            local workforce boards, establishing a single block
            grant for adult programs, clarifying the definition of
            expenditures to include accruals as well as actual
            expenditures and developing strategies for direct
            funding of locally established and locally run one-
            stops will dramatically improve the policymaking and
            program implementation aspects of the Workforce
            Investment Act.

    Purpose

        The Committee believes that all individuals should be able
    to participate actively in the decisions that will affect his
    or her employment and training choices. Therefore, the
    Committee has added as an additional purpose of WIA ``to
    provide workforce investment activities in a manner that
    promotes the informed choice of participants and actively
    involves participants in decisions affecting their
    participation in such activities.''

    State workforce investment boards

        The bill amends the membership requirements and required
    functions of state workforce investment boards. To better focus
    the state board on statewide labor market and economic issues,
    H.R. 1261 streamlines membership requirements. Members include
    the state agenciesresponsible for administering the one-stop
    partner programs; the state economic development agency; business
    representatives; labor representatives; chief local elected officials;
    and, state legislators. As under current law, governors would retain
    the right to expand board membership. In addition, the Committee has
    maintained the requirements that a majority of board members be
    business representatives and the chairperson of the board be a business
    representative in order to emphasize the importance of the role of
    business in the system.
        The Committee notes that, while strategic planning and
    delivery of services most appropriately belongs with the local
    delivery system, the one-stop delivery system created through
    WIA would be improved with greater continuity of services
    within states. As a result, H.R. 1261 includes new functions
    for the state board regarding statewide policies for the one-
    stop career center system. These include the development of
    criteria for and issuance of certifications on one-stop
    centers, allocation of one-stop infrastructure funding, and
    approaches to facilitating equitable and efficient cost
    allocation in the one-stop delivery system. The establishment
    of state-level criteria for one-stop centers should lead to
    more consistent and better performance within states. In
    addition, through the functions of the state board, the state-
    level administrators of the one-stop partner programs will have
    greater involvement in setting policies regarding the
    integration of services within the one-stop centers. The
    Committee asserts that new role should result in increasing
    their participation in the one-stop system.
        H.R. 1261 eliminates the grandfathering provisions that
    give authority for states to use entities that were in
    existence prior to the enactment of WIA in place of state
    workforce investment boards. The Committee notes that the state
    boards are an important component of the reforms underlying
    WIA, and this change is intended to ensure state boards, with
    their enhanced functions, are established. Without enforcing
    the new board membership, one-stop partner programs may not
    have appropriate involvement in the workforce development
    system. The bill also allows the state board to hire staff to
    assist in carrying out its functions.
        H.R. 1261 also revises the WIA planning cycle to require
    that state plans be submitted every two years instead of every
    five years. This is intended to ensure that the state plans are
    dynamic documents that are regularly updated to reflect
    changing economic situations and reflect state and local
    priorities.
        The Committee wants to ensure that the workforce
    development needs of certain populations are addressed.
    Therefore, H.R. 1261 adds additional groups to those for which
    the states already must include a description in their state
    plans of how the states will address their needs. The new
    groups are homeless individuals; ex-offenders; and displaced
    farmers, ranchers and fishermen. Added emphasis is placed on
    serving individuals with disabilities by requiring states to
    assure that services for such individuals are consistent with
    President Bush's Executive Order 13217, which promotes
    community-based alternatives for assisting individuals with
    disabilities.

    Local workforce investment boards

        Currently, a unit of local government with a population of
    500,000 or more, or an area served by a rural concentrated
    employment program grant recipient, receives an automatic
    designation as a local workforce investment area, if so
    desired. H.R. 1261 retains this requirement but limits the
    duration of such designation to each two-year planning cycle
    and provides that continued automatic designation may be denied
    if the local area did not perform successfully during the
    preceding two-year period. The bill retains other provisions
    regarding the designation of local areas so as not to disrupt
    the operations of local areas.
        Current law also permits states to require regional
    planning and cooperation among local areas that serve a single
    labor market area, economic development region, or other
    appropriate contiguous sub-area of a state. H.R. 1261 enhances
    this authority by allowing states to require a regional plan
    from such local areas in lieu of separate local plans.
        The Committee acknowledges that the large size of the local
    workforce investment boards under current law have been
    unwieldy, making the decision making more difficult and
    deterring the participation of business representatives, in
    particular. The General Accounting Office (GAO), in its October
    2001 report entitled ``Workforce Investment Act: Better
    Guidance Needed to Address Concerns Over New Requirements,''
    observed:

              Private-sector representatives we spoke with are
            frustrated with the operations of the workforce
            investment boards under WIA, believing that the boards
            are too large to effectively address their concerns * *
            * We were told that the size of the boards makes it
            difficult to recruit the necessary private-sector board
            members for several reasons * * * because private-
            sector representatives must make up the majority of
            board membership, the larger the board, the greater the
            requirement for private-sector members, which increases
            the difficulty of recruiting the requisite number of
            private-sector members.

        The Committee believes that streamlined local board
    membership will provide greater representation and influence by
    local business representatives, education officials
    (particularly community colleges), community groups, and
    representatives of employees who frequently are frustrated that
    they are not able to connect with or access resources from the
    local boards.
        To facilitate a more manageable board size, the requirement
    that each of the one-stop partner programs have a seat on the
    board is eliminated. The partners would retain significant
    opportunities to affect local policy, including as a part to
    the local memoranda of understanding (MOU) establishing one-
    stop arrangements. In addition, the partner programs have new
    authority as members of the state boards. The bill also permits
    the creation of specialized advisory councils as necessary,
    such as a council of one-stop partners.
        Local leaders support the changes to the local workforce
    investment boards. In a letter to Subcommittee Chairman McKeon,
    dated March 20, 2003, Stephanie Powers, Chief Executive Officer
    of the National Association of Workforce Boards (which
    represents the nation's local business-led boards), said, ``We
    support the changes you have proposed in H.R. 1261 for local
    WIBs (workforce investment boards), especially the emphasis on
    private sector leadership and increased local flexibility
    regarding size and membership.''
        To increase the effectiveness of the local boards further,
    the bill provides additional guidance on the type of
    representatives from business (including representatives from
    leading industries and large and small businesses), education
    (including the local secondary school superintendents and
    presidents or chief executive officers of postsecondary
    education institutions), and community-based organizations
    (including faith-based organizations) that are to be appointed.
    In addition, board members must represent diverse geographic
    sections within each local area.
        The Committee recognizes that the economy is dynamic and
    the types of growing industries are changing. No longer are the
    majority of new jobs in manufacturing. Rather, many new jobs
    are in technology-based industries and services industries,
    such as health care.
        In recognition of the growing importance of the Information
    Technology (IT) industry, the Committee believes greater
    involvement of IT industry representatives is needed on the
    local and state workforce investment boards. Although there
    remains significant demand for certified IT workers in many
    parts of the country, many workforce investment boards have
    failed to adequately address the needs of the IT industry and
    the need for IT skilled workers by employers across the board.
    There needs to be greater awareness within workforce investment
    boards on the importance of investing training funds in IT-
    training. Once a determination is made for the need for IT
    skilled workers, matches can be made between workers selecting
    IT training, or dislocated IT workers, and employers.
        Current law requires each local area to have a youth
    council to advise the local board on activities related to
    youth. The Committee understands that these councils have been
    ineffective in some areas and burdensome to create and operate.
    Maintaining participation by parents, youth, educators, and
    other groups has proven difficult. However, local areas should
    have the option to create such councils if they add value and
    benefit services to youth in the area. Therefore, H.R. 1261
    eliminates the requirement that local boards establish a youth
    council component, but permits a local board to maintain a
    youth council if it chooses.
        Under WIA, states were given authority to use entities that
    were in existence prior to the enactment of WIA in place of
    local boards. This grandfathering provision is eliminated to
    ensure that the most effective local boards are in place.
    Further, the local workforce investment plan planning cycle is
    reduced from five years to two years to be consistent with the
    state planning cycle and to promote the use of the plan to
    address changing economic circumstances and priorities.

    One-stop delivery system

        One of the hallmarks of WIA is that, in order to encourage
    the development of comprehensive efforts that improve services
    to both employers and job seekers, local services are provided
    through a one-stop delivery system. The one-stop delivery
    system is a methodology for service delivery. It is an effort
    to increase access to federal and state resources available to
    help individuals obtain training of their choice. While the WIA
    funding streams are available for occupational training, there
    are numerous other federal programs that provide employment and
    training services. WIA created one-stop career centers to
    provide a single point of access for individuals desiring
    services through these programs.
        Currently, 19 federal programs operate as mandatory partner
    programs within the one-stop delivery system. The programs
    include vocational education, veterans' employment and
    training, welfare-to-work, employment services, vocational
    rehabilitation, trade adjustment assistance, and adult
    education, just to name a few. These programs must make their
    services available through the one-stop centers. In addition,
    optional partner programs may provide their services through
    the system if the local board and the chief elected official
    for the area permit the inclusion and the partner program
    agrees to such participation. H.R. 1261 includes additional
    option partner programs, which are child support enforcement
    programs and programs serving individuals with disabilities.
    The addition of these programs will provide enhanced
    opportunities to coordinate employment and training services
    for special populations.
        The Temporary Assistance for Needy Families (TANF) program
    remains an optional partner program under the bill. However,
    the Committee strongly encourages states to include TANF in the
    one-stop delivery system. In many States, the TANF system and
    the workforce development systems are overseen by different
    entities at the State and local levels. Yet, both operate work
    programs. Operating TANF in the One-Stop system could reduce
    the stigma associated with accessing welfare services. In
    addition, it would encourage a continuum of services for low-
    income families that may become unemployed after leaving
    welfare, or may need additional training to move up the career
    ladder. Creating a formal connection to the WIA system would
    ensure TANF clients have access to labor market information and
    job listings maintained at the One-Stops and should enhance
    connections to the business community. It also could eliminate
    some duplication at the State level.
        The Committee believes that mandatory partnership creates
    benefits for the partner programs, in addition to improving
    service delivery for consumers. For example, Dr. Robert
    Pasternack, Assistant Secretary for Special Education and
    Rehabilitative Services at the Department of Education,
    testified before the 21st Century Competitiveness Subcommittee
    on March 11, 2003 regarding the value of including state
    vocational rehabilitation programs as a mandatory partner in
    the one-stop delivery system:

              As partners in the one-stop center, State VR programs
            have contributed significantly to the enhancement of
            the one-stop system and the expansion of its
            capabilities. State VR agencies provide expertise
            relating to the needs of people with disabilities in
            many of the local workforce areas. Participation of VR
            agencies has also been instrumental in creating an
            awareness of its consumer population among other
            partners * * * Our partnership in WIA allows greater
            access to the traditional employment and training
            resource of one-stop centers for those individuals with
            less significant disabilities who might otherwise be
            forced to wait for services, or not receive any
            services. The VR program has also benefited from closer
            coordination and collaboration among related workforce
            programs and services and from increased exposure to an
            array of additional service providers and resources
            (such as the Individual Training Accounts).

        Under H.R. 1261, the current provisions regarding the
    establishment of one-stop delivery systems is moved from
    Chapter 5 (Comprehensive Adult Employment and Training
    Activities) to Chapter 3 (Workforce Investment Activities
    Providers) so as to reinforce the creation of a one-stop
    delivery system that is independent of WIA employment and
    training funds. Incorporating these provisions in the general
    one-stop delivery system chapter is intended to clarify the
    requirements applicable to the one-stop delivery system.
        As previously stated in the description of the state
    boards' functions, the one-stop centers across states have not
    provided consistent services to consumers, both job seekers and
    employers. Therefore, H.R. 1261 provides that the state board
    is to establish procedures and criteria for certifying one-stop
    centers and to issue certifications based on those procedures
    and criteria. The criteria are to include state-developed
    minimum standards relating to the scope and degree of service
    integration achieved by the centers involving the programs
    provided by the one-stop partners. The effect of certification
    would be to make one-stop centers eligible for infrastructure
    grants. The intent of the certification process is to promote
    consistency and quality in the services provided by one-stop
    centers in a state. No one-stop is required to obtain
    certification, and local boards retain authority over the
    identification of one-stop operators.
        Under current law, one stop centers must provide access to
    the programs and activities carried out by the partner
    programs. In addition, each partner must make available to
    clients the core services that are applicable to their program.
    There must be at least one comprehensive one-stop center in
    each local area, which can be supplemented through a network of
    affiliated sites if the mandatory partners do not want to fully
    co-locate. One-stop partner programs are required to contribute
    a portion of their funds for the operation of the one-stop
    delivery system. The appropriate portion is to be determined
    through the MOU development process at the local level.
    However, this process has resulted in uncertainty of funding
    and contention among program operators and has forced the WIA
    funding streams paying for a large share of infrastructure
    costs, thus reducing the funds available for training. This
    concern was highlighted by Bruce Stenslie, Director of the
    Ventura County, CA, Workforce Investment Board who testified
    before the 21st Century Competitiveness Subcommittee on
    September 12, 2002, when he said, ``Currently, local Boards and
    administrators have little to no leverage to require local
    participation, and few incentives to offer those who do engage.
    The result of this non-participation is that WIA dollars pay an
    extraordinary share of One-Stop infrastructure costs for core
    services, leaving little revenue for training.''
        In order to provide a stable source of infrastructure
    funding on a statewide basis, H.R. 1261 provides that each of
    the one-stop partner programs provide a portion of program
    funds to the governor, who then will allocate such funds to the
    local areas for the certified one-stop centers in the state.
    The formula for allocating these funds to the local areas will
    be developed by the state board. The portion of funds to be
    provided by each one-stop partner will be determined by the
    governor in consultation with the state board. Therefore, the
    directors of each mandatory partner program will have input
    into the appropriate amount to contribute. The Committee
    expects the portion of the funds provided for infrastructure
    costs will be a very small percentage of the programs' funds,
    proportionate to the programs' contribution to and use of the
    one-stop system. The Committee believes the decision on the
    amount of such funding is best determined within each state
    depending on each state's needs and delivery systems.
        While the infrastructure funding provided through these
    grants will address the primary common costs of operating one-
    stop centers, some common costs that would not be covered by
    these funds would remain. Thus, partner programs and the local
    boards would continue to develop MOUs to specify how such costs
    would be paid. Remaining common costs include personnel and the
    costs of providing the core services that are applicable to
    participants for each program. Since the basic infrastructure
    costs would already be addressed, these remaining costs items
    should be easier to resolve.
        H.R. 1261 significantly changes the requirements relating
    to the certification of eligible providers of training
    services. WIA created an eligible training provider list to
    allow customers flexibility in selecting a provider that meets
    their individual training needs. (Under the law preceding WIA,
    the Job Training Partnership Act, training participants could
    only receive services through contracted providers.) However,
    current eligible training provider provisions include
    requirements that have proven to be overly burdensome with
    respect to the specific information required and the scope of
    the reporting (i.e. reporting performance outcomes for all
    students in a training program and not just WIA-funded
    students). Rather than increasing consumer choice as intended,
    the current requirements have had the unintended effect of
    reducing customer choice as many qualified providers choose not
    to participate in the system. Community colleges, in
    particular, have chosen in many areas not to participate in the
    system.
        H.R. 1261 gives states the authority to determine what
    provider information and data will be required to establish a
    list of eligible training providers. This will allow for
    flexibility to design procedures that respond to the needs of
    each state. To ensure the quality of providers, states must
    establish criteria including the performance of providers with
    respect to WIA's performance indicators. A state may include
    other factors appropriate to ensure the quality of services and
    the accountability of providers. In addition, the state shall
    require that the provider submit appropriate information to
    assist consumers in selecting a training program. Such state-
    developed criteria will be developed with the input of local
    areas and training providers.
        The intent is to ensure the retention of key elements
    promoting consumer choice and provider accountability while
    allowing states to simplify the process so that more qualified
    training providers will participate.
        The Committee remains committed to protecting the
    confidentiality of all personally identifiable information
    about students, and believes such information must not be
    released without permission of the students or their parents,
    as appropriate. Therefore, H.R. 1261 specifies that the new
    training provider eligibility criteria must comply with the
    Family Educational Rights and Privacy Act (FERPA).
        Current law requires local areas to determine eligible
    providers of youth services using a competitive process. The
    Committee notes that this has proven overly prescriptive and
    difficult in areas with few providers, particularly rural
    areas. This requirement is eliminated to allow state and local
    flexibility in using their own procurement systems to determine
    eligible youth providers.

    Youth activities

        H.R. 1261 refocuses the current youth development program
    under Chapter 4 of WIA by targeting activities to out-of-school
    youth. These youth are currently underserved and face
    significant challenges to successful employment. No other
    funding stream is dedicated toward addressing the needs of the
    out-of-school youth population.
        However, there are numerous programs that serve in-school
    youth, largely through the Department of Education. These
    include: Title I grants to improve education for the
    disadvantaged, Reading First, Neglected and Delinquent grants
    to local educational agencies, Safe and Drug Free state grants,
    bilingual education instructional services, dropout prevention,
    special education grants to states through the Individuals with
    Disabilities Education Act, vocational education, and tech prep
    education.
        H.R. 1261 revises the allotment of funds to the states for
    youth programs. The Secretary will reserve 25 percent of the
    appropriation for any fiscal year (up to a maximum amount of
    $250 million) to provide Youth Challenge Grants. These new
    grants will replace the expiring Youth Opportunity Grant
    program.
        Of the remaining 75 percent of the appropriated funds,
    current law reservations of funds for youth activities in
    outlying areas and Native American programs would be retained.
    The remainder will be allotted to states on the basis of three
    factors: 33\1/3\ percent on the relative number of high school
    dropouts who are ages 16-21 in the state; 33\1/3\ percent on
    the relative number of jobless out-of-school youth who are ages
    16-21 in the state; and 33\1/3\ on the relative number of
    disadvantaged youth who are ages 16-21 in the state. The new
    formula would target funds based on the youth population that
    is to be served by the amended program.
        No state may receive an allotment that is less than 90
    percent of the allotment percentage of the state for the
    preceding fiscal year (as under current law), nor can a state
    receive an allotment that is more than 130 percent of the
    allotment percentage of the state for the previous fiscal year
    (which is new). The Committee intends these stop-loss and stop-
    gain measures to promote funding stability and enhance
    planning. In addition, the bill contains a small-state minimum
    of at least \3/10\ of one percent of the amount available for
    allotment to the states to ensure that all states have
    sufficient resources to administer a viable program.
        Under current law, the formula for distribution of funds to
    states for youth activities is based on factors that do not
    reflect the number of at-risk youth in states. Two-thirds of
    the allocation is based on the relative number of unemployed
    individuals in the state and the relative number of excess
    unemployed individuals in the state, only one-third is based on
    the relative number of disadvantaged youth in the state.
        The formula generates significant shifts in funding among
    states because the formula factors are changing. The Committee
    asserts that basing the distribution of funds on factors that
    best reflect the population to be served is most appropriate as
    it will target resources to areas with the greatest need.
    However, in order to minimize the disruption to state and local
    areas, the Committee added a provision to H.R. 1261 that
    specifies no state shall receive an allocation less than what
    the state received in 2003. The Committee intends to continue
    to review the formula to ensure minimum disruption to state and
    local areas as it is implemented.
        States are permitted to retain up to 10 percent of the
    youth funds for statewide activities (down from 15 percent
    under current law) to ensure that more funds are distributed by
    formula to local areas. Eighty percent of the remaining funds
    will be distributed to local areas based on the same allocation
    formula for distributing funds to states. The remaining 20
    percent of the funds will be allocated using a formula
    determined by the governor in consultation with the state board
    and local boards. The formula is to reflect appropriate
    demographic and economic factors. The discretionary
    distribution will allow the states to address state-specific
    issues.
        H.R. 1261 establishes new eligibility criteria for the
    revised youth program. These criteria target services to out-
    of-school youth. The age for eligibility is changed from 14
    through 21 years old to 16 through 21 years old. The exclusion
    of 14 and 15 year olds reflects a shift to serve out-of-school
    youth. To be eligible, youths must be one or more of the
    following: school dropouts; recipients of a secondary diploma
    or GED or its equivalent, but who are basic skills deficient;
    court-involved youth; or youth in or formerly in foster care.
    Priority in the provision of services would be given to school
    dropouts.
        While the primary focus will be on serving out-of-school
    youth, the Committee recognizes that low-income, at-risk in-
    school youth can be served effectively with WIA funds, largely
    through summer employment programs and dropout prevention
    programs. Therefore, H.R. 1261 continues to allow state and
    local areas to use up to 30 percent of their youth funds to
    serve in-school youth if they choose. Services may be provided
    on school grounds, as appropriate, but only during non-school
    hours (such as before and after school, or during the summer).
    To help ease eligibility determinations for in-school youth,
    those eligible to receive or are receiving free or reduced
    price school lunch will meet the definition of ``low-income''
    for purposes of this program.
        H.R. 1261 establishes a revised list of discretionary
    statewide activities that includes: assistance to local areas
    that have a high concentration of eligible youth; supporting
    the provision of core services in the one-stop delivery system;
    conducting evaluations of youth activities (in coordination
    with evaluations carried out by the Department of Labor);
    providing incentive grants to local areas; providing technical
    assistance and capacity building to local areas, one-stop
    operators, one-stop partners, and eligible providers; operating
    a fiscal and management accountability system; and carrying out
    monitoring and oversight. Not more than five percent of the
    youth funds allotted to the state may be used by the state for
    administrative activities related to youth and adult programs.
        Local program design requirements are revised to require
    that service strategies developed for each participant be
    directly linked to one or more of the performance outcomes
    relating to youth activities.
        Additions to the program design requirements include
    activities leading to the attainment of a secondary school
    diploma or GED (including recognized alternative standards for
    individuals with disabilities); preparation for advanced
    training; and effective connections toemployers in sectors of
    the local labor market experiencing high growth in employment
    opportunities. The Committee notes that some States and local areas
    have interpreted the phrase ``secondary school diploma or its
    recognized equivalent'' to include skill credentials other than a
    diploma or GED, contrary to Congressional intent. Therefore, in all
    areas of the legislation, such language is replaced with ``secondary
    school diploma or the General Equivalency Diploma (GED) (including
    recognized alternative standards for individuals with disabilities).''
        The Committee added on-the-job training opportunities and
    financial literacy skills to the program elements that youth
    service providers may offer.
        H.R. 1261 maintains current law safeguards against using
    WIA youth funds in schools. These protections include
    prohibitions against federal control over education, the use of
    the funds for the School-to-Work Opportunities Act,
    interference with or replacement of regular academic
    requirements, and development of curricula.

    Re-allotment and reallocation of funds

        For both the youth and adult programs, current law re-
    allots states' unobligated funds that at the end of a program
    year are in excess of 20 percent of the prior year's allotment
    and re-allots the funds in accordance with the prior year's
    formula distribution. The amended provision would re-allot
    unexpended funds that are in excess of 30 percent of all funds
    available to the state during the program year, including funds
    carried-over from previous allotments, and re-allot the funds
    based on the most recent formula distribution. Since
    expenditures indicate the funds have actually been used by the
    program, while obligations only indicate commitment to some
    future use, the change to unexpended funds as the basis for re-
    allotment provides a better indicator of whether the state is
    using the resources provided. However, H.R. 1261 excludes
    accrued expenditures from the amount considered to be
    unexpended. Such accrued costs may include overhead costs and
    unpaid bills for training contracts or services rendered. In
    practice, local areas must set aside funds for accrued costs
    and therefore such funds truly are not available for other
    expenditures. The bill defines accrued expenditures.
        To accommodate these tighter standards, the required level
    of use is reduced from 80 percent to 70 percent. However, the
    overall effect of these changes would be to better identify
    those states with a significant percentage of unused funds. As
    under current law, only those states that do not have funds
    that are being re-allotted are eligible to receive re-allotted
    funds.
        Similar language is included in both the youth and adult
    programs for re-allotment among state and reallocation among
    local areas within states.
        This revised re-allotment and reallocation language
    addresses a need to identify accurately the amount of funds
    available in State and local areas. The Administration has
    argued that states are carrying over significant amounts of
    funding from year to year, yet states and local areas respond
    that these funds have been obligated, meaning the funds have
    been committed on behalf of WIA customers. Unfortunately, no
    uniform definition for obligation exists, so the Department of
    Labor has considered such information unreliable. Therefore,
    the Department has been using only expenditure data to gauge
    budgetary need. For the Committee, the GAO examined states'
    levels of spending and determined that currently, ``Labor does
    not take into account longer-term commitments made to customers
    and service providers and, as a result, overestimates available
    funds. Budget decisions based on underestimated spending levels
    contribute to funding instability in the system and impair the
    ability of State and local officials to plan.'' \1\ GAO's
    analysis shows that states have spent an average of 90 percent
    of program year funding within two years, and the law allows
    states three years to spend the funds.
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        \1\ WORKFORCE INVESTMENT ACT: State's Spending Is on Track, but
    Better Guidance Would Improve Financial Reporting, page 30.
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        In addition, the GAO suggests that the Department needs to
    communicate spending benchmarks that States should meet. The
    revised re-allotment provisions for youth and adult funding do
    just that. H.R. 1261 makes clear the expectation that States
    should spend at least 70 percent of their available funds each
    year, while maintaining the ability to carry-forward some funds
    to address unexpected future needs.

    Comprehensive employment and training activities for adults

        H.R. 1261 amends Chapter 5 of WIA to establish a
    comprehensive program of employment and training activities for
    adults. The Committee consolidates three separate funding
    streams currently providing overlapping employment-related
    services to adults into a single, more flexible, comprehensive
    and effective program. The three current funding streams are
    the adult employment and training funding stream and the
    dislocated worker employment and training funding stream
    authorized under Chapter 5 of WIA and the Wagner-Peyser Act
    funding for State-administered employment services. These three
    programs have separate funding formulas, eligibility criteria,
    performance measures, reporting requirements and other separate
    elements, although they largely serve the same populations.
    Employment services are to be co-located with the one-stop
    centers now. However, contrary to the intent of WIA, some areas
    have retained separate employment services offices.
    Consequently, unnecessary duplication of services and confusion
    for customers (both job seekers and employers) has resulted.
    Consistent with the principles of program integration
    underlying WIA, this consolidation will simplify and enhance
    the delivery of services to adults.
        Consolidated funding will allow states and local areas to
    tailor services to meet the needs of their local communities.
    Diane Rath, Chair of the Texas Workforce Commission, testified
    before the 21st Century Competitiveness Subcommittee on
    September 12, 2002 on the need for additional flexibility:

              The restrictive formula allocations in WIA, however,
            limit the assistance that states and local workforce
            areas can provide * * * one-size-fits-all truly does
            not fit in a large and diverse state such as Texas * *
            * in the Rio Grande Valley, the unemployment rate in
            the McAllen-Edinburg-Mission MSA stood at 13.3 percent
            in July 2002, the state's highest. Despite this high
            rate, the area does not need additional Dislocated
            Worker funding or Youth funds, but instead needs
            funding to upgrade the skills of Adult residents in the
            area to enable them to meet employers' needs. Similarly
            in the Dallas area, with unemployment at 7.2 percent,
            the local workforce board does not need Adult funds,
            but it desperatelyneeds Dislocated Worker funding in
    order to respond to the needs of the employers and residents in the
    area.

        The Committee also believes that the consolidated grant
    will help facilitate further coordination with the welfare
    system authorized under the Temporary Assistance for Needy
    Families (TANF) program. In areas where TANF is provided
    through the one-stop delivery system, TANF funds could be used
    for low-income individuals and WIA funds would be available to
    assist unemployed workers and those seeking better jobs or new
    careers.
        H.R. 1261 changes the title of chapter 5 of WIA from
    ``Adult and Dislocated Worker Employment and Training
    Activities'' to ``Comprehensive Employment and Training
    Activities for Adults.'' Throughout the bill, references to the
    separate dislocated worker funding, which is being
    consolidated, are eliminated.
        The bill revises the allotment of funds to states and
    reservations for national activities. Under current law, the
    Secretary of Labor reserves 20 percent of the dislocated worker
    funding stream to fund national activities. H.R. 1261 allows
    the Secretary to reserve ten percent of the amount appropriated
    for the consolidated adult program, with not less than 75
    percent of that amount to be used for national dislocated
    worker grants (currently referred to as national emergency
    grants) to assist workers displaced by mass layoffs and natural
    disasters. In addition, not more than 20 percent of the
    Secretary's reserved funds are to be used for demonstration
    projects, and not more than 5 percent are to be used to provide
    technical assistance. Given the recent economic instability,
    the national reservation will provide some additional resources
    to serve dislocated workers. These grants (currently called
    national emergency grants) have proven to be invaluable in
    providing additional, targeted assistance to states and local
    areas responding to large worker dislocations. The remaining 90
    percent of the appropriated amount would be allotted to the
    states.
        Under current law, the funds are distributed on three
    separate formulas for the three adult programs. H.R. 1261
    revises the allotment formula to the States to reflect the more
    relevant criteria from the funding streams that are being
    consolidated. The reservation for outlying areas is retained at
    the current WIA level. The new formula for allotments to the
    states is based on four factors: 60 percent would be allotted
    based on each State's relative share of unemployed individuals
    (a factor currently used for the dislocated worker and Wagner-
    Peyser funding streams); 15 percent would be allotted based on
    each State's relative share of excess numbers of unemployed
    individuals (a factor currently used by both the adult and
    dislocated worker funding streams); 15 percent would be
    allotted based on each State's relative share of individuals in
    the civilian labor force (the primary factor currently used by
    the Wagner-Peyser funding stream); and 10 percent would be
    allotted based on each State's relative share of disadvantaged
    adults (a factor used in the current adult funding stream).
    These factors are intended to promote funding stability and to
    reflect the population to be served, and are weighted in
    accordance with the purposes of the new program.
        The allotment formula includes a minimum percentage that
    would ensure states receive an allotment percentage not less
    than 90 percent of the previous year's allotment percentage
    (for FY 2004 the previous year's percentage would be based on
    the percentage of funds allotted to States under the three
    separate funding streams). The Adult and Wagner-Peyser funding
    streams currently include this 90-percent hold harmless. The
    allotment formula also includes a maximum percentage of 130
    percent of the previous year's allotment percentage, which is
    part of the current adult formula. The Committee notes that
    these protections should create more stability in funding for
    states. Currently, the dislocated worker funding stream has no
    stop-loss or stop-gain protections. While the current formula
    was designed to allow funds to flow to those states most in
    need, there have been significant shifts in funding from year
    to year. As a result, states have been unable to plan their
    programs effectively. The new provisions should address this
    instability.
        The formula also includes a small State minimum allotment
    to ensure small States have sufficient resources to operate a
    viable program. Currently, both the adult and Wagner-Peyser
    formulas include small state minimums.
        The Committee notes that, as the new formula is
    implemented, some states will experience decreases in funding.
    Therefore, the Committee has specified that, at a minimum, each
    state will receive a grant that is not less than the amount the
    state received for the three adult programs in 2003. The
    Committee intends to continue to examine the adult formula to
    ensure that funds are distributed appropriately with minimum
    disruption to states.
        H.R. 1261 further specifies within state allocation of
    funding. A governor may reserve up to 50 percent of the state's
    allotment for statewide activities. The adult program under WIA
    currently allows the Governor to reserve up to 15 percent for
    statewide activities, the dislocated worker program allows the
    Governor to reserve up to 40 percent (including 25 percent for
    rapid response, which will continue to be a statewide
    activity), and employment services under the Wagner-Peyser Act
    are entirely State administered. The 50 percent reserve allows
    the State to retain a comparable level of resources to what is
    currently administered at the State level under the three
    programs.
        However, the Committee notes that funds currently received
    by states to operate the employment services system largely are
    administered at the local level through the one-stop career
    centers or in separate employment services offices. The
    Committee aims to provide funding for the provision of local
    employment and training services at least equivalent to current
    funding. Therefore, governors are required to use at least 50
    percent of each state's share of the adult funding to support
    ``core'' services in local areas, consistent with local plans,
    through one-stop delivery systems. The governor of each state
    will distribute such funds to local areas through a method of
    distribution developed in consultation with the state board and
    local boards. The method of distribution shall be objective and
    geographically equitable. The funds may be used by states to
    employ state personnel to provide core services in designated
    local areas in consultation with local boards.
        The remaining 50 percent of the overall state allotment is
    to be allocated to the local areas within the state. The
    separate formulas for adults and dislocated workers are
    eliminated. Under the bill, 80 percent of the funds are to be
    allocated in accordance with an established formula that uses
    the same factors and weights as the national allotment formula
    (i.e., 60 percent on each local area's relative share of
    unemployment, 15 percent on excess unemployment, 15 percent
    onthe civilian labor force, and 10 percent on disadvantaged adults) and
    also include stop-loss and stop-gain provisions to stabilize funding.
        The remaining 20 percent of funds are to be allocated to
    local areas based on a state-developed formula. Currently, the
    WIA adult program permits States an option of using a
    discretionary formula under which 70 percent of the formula is
    based on established factors and 30 percent may be based on
    factors that relate to excess unemployment or excess poverty.
    The dislocated worker program allows the Governor to establish
    a formula that includes certain prescribed factors. Under the
    bill, the Governor is to determine, after consultation with the
    state board and local boards, the appropriate economic and
    demographic factors to be used to allocate this portion of the
    funds. The formula must be objective and geographically
    equitable. This provision gives state and local areas the
    ability to target funds as necessary to address unique state or
    local factors.
        H.R. 1261 also retains the current local administrative
    cost limit under which local areas may not expend more than 10
    of the allocation for administrative costs. As under current
    law, these funds may be used for the administrative costs of
    both the adult and youth programs (as may youth administrative
    funds).
        The bill also specifies statewide employment and training
    activities. Under current law, rapid response services to
    assist dislocated workers are a required statewide activity
    with a specific reserve of 25 percent of the state's dislocated
    worker allotment. The bill would retain the requirement that
    these services be provided by the state, but eliminates a
    specific reserve amount. The intent is to allow the Governor to
    manage the portion of the state reserve that is not spent to
    support core services in accordance with the needs of the
    State.
        This bill, similar to the provisions relating to statewide
    activities for youth, removes the remaining categories
    distinguishing allowable and required statewide activities to
    allow greater administrative flexibility. The developing of
    strategies for effectively serving hard-to-serve populations
    and for integrating one-stop partner programs are added as
    allowable statewide activities. The other identified
    activities, including incumbent worker training projects and
    services to displaced homemakers, are retained from current
    law. Also retained is the current law limitation on State
    administrative expenses, which are not to exceed 5 percent of
    the allotment.
        With the consolidation of the three adult funding streams,
    the Committee expects that all former employment services
    functions will be maintained through the provision of core
    services within the one-stop delivery system. Under current
    law, both WIA and the Wagner-Peyser Act provide funds for
    services to connect job seekers with available jobs, including
    job search and placement assistance. Regardless of income, all
    adults are eligible to receive these services. Many one-stop
    career centers offer such services through self-serve computer
    stations where individuals may access job listings, write a
    resume, and more. Under WIA, these are called ``core services''
    while under Wagner-Peyser they are called ``labor exchange
    services.'' Although each law has a different term, the
    services are essentially the same.
        H.R. 1261 incorporates as core services two functions
    specifically identified in the Wagner-Peyser Act that are not
    specified as core services in current law: appropriate
    recruitment services for employers and the administration of
    the work test for the unemployment compensation system.
        Through the consolidation of the three adult funding
    streams, the Committee aims to provide states and local areas
    flexibility to provide core services without the bureaucratic
    headache of administering three funding streams that provide
    the same services under current law. H.R. 1261 also includes a
    sub-state allocation that provides local areas with adequate
    funding to maintain services, while also assuring that state
    funds that formerly supported employment services flow locally
    to support core services. Governors have the option of either
    providing the funds to the local areas or utilizing the talents
    of state employees to provide the services locally in the one-
    stop centers. Therefore, the expertise of current state
    employees will be maintained and will continue to benefit
    individuals and employers seeking services through the one-stop
    centers.
        Under current WIA law, one-stop operations can be
    competitively bid with services typically being provided by
    government employees. Under Wagner-Peyser, there is a
    regulatory requirement that labor exchange services be provided
    by state merit staff employees. However, there is a
    demonstration operating in Colorado, Michigan and Massachusetts
    through which the three states are relieved of this burdensome
    requirement. Having local government staff provide all core and
    labor exchange services in these three states has worked well,
    and the Committee believes all states should be afforded this
    same flexibility.
        Through WIA, two other levels of services also are
    provided. ``Intensive'' services include comprehensive
    assessments, case management and one-on-one career counseling,
    short-term prevocational services, and more. ``Training''
    services include occupational skills training, on-the-job
    training, entrepreneurial training, customized training, and
    more. Under current law, one must utilize at least one service
    in each level before moving on to the next level of service,
    but there is no federally required minimum time period for
    participation in core and intensive services before one can
    access training assistance. However, some states have
    interpreted current law as requiring that all participants must
    participate in core services for a specified period of time
    before being eligible for intensive services, and likewise
    requiring intensive services before training. This has
    sometimes resulted in services being denied or delayed, and
    limited the flexibility of States and local areas in tailoring
    services to meet individual needs. There have also been
    questions as to what sort of employment is the appropriate goal
    in assessing whether an individual can obtain employment
    through particular services. Current law simply refers to the
    term ``employment'' in reference to unemployed individuals and
    uses the term ``employment that leads to self-sufficiency'' for
    employed workers.
        To address these issues regarding the ``sequencing of
    services,'' H.R. 1261 amends the eligibility requirements for
    intensive services to provide that if an individual is
    ``unlikely or unable to obtain suitable employment'' through
    core services, and, as in current law, is determined to be in
    need of those services, he or she would be eligible. This
    provision also provides that the Governor is to define the term
    ``suitable employment.'' Adding the language ``unlikely or''
    clarifies that the determination of whether core services will
    be sufficient to obtainemployment may be made prospectively,
    not only after a time period has elapsed. Therefore, if an assessment
    indicates that intensive services will be needed in addition to core
    services, those services could be provided. In addition, by identifying
    the employment for purposes of this determination to be ``suitable
    employment,'' as defined by the governor, the particular circumstances
    of the participant could be taken into account. For example, while one
    might be able to find a job it may not be comparable to the person's
    previous employment or consistent with the individual's employment
    goals, and therefore it would not be suitable employment. Similar
    provisions apply to individuals' eligibility for training services.
    These amendments, therefore, provide important flexibility to states
    and local areas in the provision of core, intensive, and training
    services.
        Tim Barnicle, Co-Director of the Workforce Development
    Program at the National Center on Education and the Economy,
    who testified before the 21st Century Competitiveness
    Subcommittee on September 12, 2002, explained how the required
    sequencing of services may have resulted in individuals failing
    to receive some necessary training when he said, ``While
    training is increasingly being provided to individuals in need
    of such services throughout the workforce system, there was
    some confusion in the initial implementation of the Act. Many
    states and localities interpreted WIA as encouraging a ``work-
    first'' only approach to service delivery resulting in a
    reduction in the provision of training services.''
        Three services are added to the list of allowable intensive
    services: internships and work experience; literacy activities
    relating to basic work readiness and financial literacy
    activities; and out-of-area job search assistance and
    relocation assistance. The Committee believes that allowing
    literacy activities to be provided as an intensive service, and
    not just as a training service, will increase access to such
    services for those who need them.
        The Committee notes that private-sector employment agencies
    play an important role in providing employment opportunities to
    America's workforce. The Committee encourages local boards and
    one-stop operators to refer to and contract with such firms.
    This would enhance the ability of local boards and one-stop
    operators to make job placements, especially to businesses that
    do not traditionally use one-stop services to fill vacancies.
        Since H.R. 1261 consolidates three funding streams, a new
    priority of service delivery must be included. Under current
    law, the dislocated worker funding stream serves primarily
    unemployed workers, and the adult funding stream has a priority
    for low-income individuals. The revised provision would create
    a priority of service for unemployed individuals in the
    provision of intensive and training services under the
    comprehensive adult program. In addition, if funds in the local
    area for serving recipients of public assistance and other low-
    income individuals are limited, then the priority for intensive
    and training services is to be extended to such recipients and
    low-income individuals.
        Training currently is provided primarily through
    ``individual training accounts,'' or ITAs. Individuals that
    receive an ITA voucher can choose training courses available
    through eligible training providers.
        The Committee believes that local areas should have the
    flexibility to combine funds available for training under WIA
    with other training resources. Therefore, H.R. 1261 authorizes
    local areas to assist participants in enhancing these accounts
    so that funds from sources other than the adult program may be
    included. This is intended to facilitate the acquisition of
    training and maximize the number of individuals that can be
    assisted through training.
        H.R. 1261 adds new activities to the current list of
    permissible activities that local areas may carry out. The
    first activity is customer support to navigate among multiple
    services and activities for special participant populations
    that face multiple barriers to employment, including
    individuals with disabilities. These ``navigators'' are
    intended to facilitate the access of special populations to the
    services and activities available through the one-stop system.
    The Committee has heard that such populations, especially
    individuals with disabilities, have not been as well served
    through the one-stop system as Congress intended. The Committee
    anticipates this additional assistance to such individuals will
    increase their utilization of the one-stop delivery system and
    improve the quality of services they receive.
        The second new permissible activity is employment and
    training assistance provided in coordination with child support
    enforcement activities of the State agency carrying out title
    IV-D of the Social Security Act. This coordination is intended
    to facilitate the employment of unemployed or underemployed
    non-custodial parents, thus enabling them to pay child support.
        Program operators continue to search for ways to ``make
    work pay'' for low-income families. Work supports, such as
    child care, often contribute to job retention. In addition,
    many low-income workers need and desire advancement services.
    Therefore, H.R. 1261 authorizes the provision of work support
    activities for low-wage workers. Specifically, the adult
    program, in collaboration with appropriate one-stop partners,
    is authorized to provide work support activities designed to
    assist low-wage workers in retaining and enhancing employment.
    These activities may include assistance in accessing financial
    supports. In addition, these activities may include the
    provision of services through the one-stop delivery system in a
    manner that makes it easier for these workers to participate in
    the one-stop activities, such as employment and training
    activities during non-traditional hours, and on-site child
    care.
        An additional permissible activity for local areas will be
    incumbent worker training programs. Under current law incumbent
    worker programs are only authorized at the State level. Under
    this provision, the local board may use up to ten percent of
    funds allocated to a local area for incumbent worker training.
    The training must be carried out in conjunction with the
    workers' employers for the purpose of helping the workers in
    obtaining the skills necessary to retain employment and avert
    layoffs. Employers participating in incumbent worker training
    programs would be required to pay a portion of the costs of
    training the incumbent workers. The governor may establish the
    portion or delegate this responsibility to the local board, but
    the portion may not be less than 10 percent for employers of 50
    or fewer employees, 25 percent for employers with 51-99
    employees, and 50 percent for employers with 100 or more
    employees. The wages paid by an employer may be included in the
    calculation of the match.
        This provision is intended to provide some flexibility for
    the one-stop system to respond to the needs in the local area
    and assist in avoiding potential layoffs. The matching
    requirement is intended to ensure there is appropriate employer
    commitment to the training program.
        Bruce Stenslie, Director of the Ventura County, CA,
    Workforce Investment Board, testified before the Subcommittee
    on 21st Century Competitiveness on September 12, 2002 that
    incumbent worker training is valuable for several reasons:

              Our work doesn't stop when a welfare recipient or any
            worker is employed, but rather continues to help
            clients attain self-sufficiency and to become full
            participating members of the labor force. This requires
            a continuing engagement with employers * * *. We have
            documented the prevention of layoffs by investing in
            business through employed and incumbent worker
            training, to improve their skills and to keep them
            employed.

    Performance accountability system

        Since implementation of WIA, states and local areas have
    raised concerns regarding the seventeen statutory performance
    measures applicable to the formula programs. The current
    performance measures have been perceived as too numerous and
    overly burdensome. In addition, the utility of some of the
    measures (such as customer satisfaction) as federally required
    measures has been raised. In order to promote consistency in
    the measures applicable to Federal employment and job training,
    the Bush Administration has undertaken a common measures
    initiative for all employment and training programs. In
    response to the concerns raised and in furtherance of the
    common measures objectives presented by the Administration, the
    Committee reduced the number of performance measures from
    seventeen to eight (four for adults and four for youth).
        The Committee believes that the customer satisfaction
    measure does not provide a uniform measurement by which to
    evaluate the program on a national level. Therefore, the bill
    strikes references to the customer satisfaction measure.
    However, states are explicitly permitted to utilize customer
    satisfaction measures, and the Committee encourages states to
    utilize such measures to determine the effectiveness of their
    programs and to engage in continuous improvement.
        Currently, outcomes data only is collected for those
    individuals that register for intensive or training services.
    Individuals accessing core services only are not required to
    register for such services and little information is available
    regarding the employment status of such individuals and the
    impact of one-stop services. Therefore, performance data is
    collected only on a small percentage of individuals utilizing
    the one-stop delivery system. For instance, according to the
    U.S. Conference of Mayors, in San Diego County 30,000
    individuals were served in the county's six one-stop centers
    during program year 2001. Of those individuals, 1,200 received
    training through WIA. The Committee believes that it is
    critical to capture performance information about all those
    that the system serves and not just those receiving training.
    H.R. 1261 drops the exclusion of those receiving self-service
    and information activities from the measures. Therefore, all
    participants would be included in the performance measures.
    This change is intended to ensure accountability in the
    provision of basic core services, which is a significant
    component of the one-stop delivery system. The Committee notes
    that this new requirement should not create a new burden on
    local areas as most local areas already have the technology
    (such as swipe cards) to capture information about those that
    are using the system.
        The bill also replaces the current adult program
    performance indicator of the attainment of a credential with
    the indicator of the efficiency of the program in achieving
    outcomes relating to the other three adult indicators. The
    other indicators, which are retained from current law, are
    entered employment, earnings, and retention in employment.
        In addition, H.R. 1261 amends the youth performance
    indicators to establish the following four indicators: entry
    into employment, education or advanced training, or military
    service; attainment of a secondary school diploma or GED
    (including a recognized alternative standard for individuals
    with disabilities); attainment of literacy or numeracy skills;
    and the efficiency of the program in achieving outcomes
    relating to the three indicators. The efficiency indicator is
    new, while the other indicators are similar to current law.
        Under current law, the levels of performance for each
    indicator are negotiated between the Secretary and each State.
    One concern that has been raised is that these negotiations do
    not sufficiently take into account economic conditions and the
    characteristics of the population to be served, thus
    discouraging services to special populations. H.R. 1261 would
    revise the current language requiring that such factors shall
    be taken into account by the Secretary and replace it with the
    requirement that levels be adjusted based on those factors. The
    bill also identifies the kinds of economic (unemployment rates
    and job losses in particular industries) and participant
    characteristics (indicators of poor work history, lack of work
    experience, low levels of literacy, and welfare dependency)
    that may be considered.
        Local performance measures parallel the amendments made
    regarding the State performance measures. The same performance
    indicators are applied to local areas and the requirement that
    the levels of performance negotiated between the Governor and
    local areas be adjusted based on economic conditions and the
    characteristics of the population served is incorporated.
        Under current law, performance incentives are only
    available to states that meet or exceed performance measures
    for all of the following three programs: WIA, adult literacy
    and vocational education. This approach has the effect of
    separating the incentives from the performance of a particular
    program, and thus reduces the incentive effect. H.R. 1261 links
    the funding and process for awarding incentives specifically to
    WIA Title I performance measures. The Secretary may use funds
    appropriated for national activities to award grants to states
    for exemplary performance. The Secretary may base the award on
    performance of states with respect to the performance measures
    or the performance of the state in serving special populations
    (which includes individuals with disabilities). The States may
    use these funds to carry out any youth or adult activities
    authorized under chapters 4 or 5 of WIA, including
    demonstrations and innovative programs for special populations.
        The bill contains parallel language for rewarding local
    areas' performance. The governor may use state reserve funds
    under chapters 4 and 5 toward grants for exemplary performance,
    which may be tied to the performance measures or services to
    special populations. Local areas may use the funds for
    authorized youth or adult activities.

    Authorized appropriations

        H.R. 1261 authorizes appropriations for the youth and adult
    funding streams for fiscal years 2004 through 2009. The
    Committee authorizes $1,001,000,000 for fiscal year 2004 and
    such sums as may be necessary for each of fiscal years 2005
    through 2009 for youth activities. The Committee authorizes
    $3,079,800,000 for fiscal year 2004 and such sums as may be
    necessary for each of fiscal years 2005 through 2009 for adult
    activities. The Committee notes that this is the same funding
    for 2004 that was provided through the three separate adult
    funding streams in 2003. The separate authorization for a
    dislocated worker funding stream is deleted.

    Job Corps

        Under current law, each Job Corps center must have a
    business and community liaison. H.R. 1261 strikes the
    requirement that the director of the center designate a
    specific community and business liaison, but retains the
    requirement that the liaison activities be carried out. This is
    intended to provide new flexibility in the operation of Job
    Corps centers.
        Current law requires that each Job Corps center establish
    an industry council responsible for such activities as
    reviewing labor market information to determine the employment
    opportunities in the local areas for Job Corps students. The
    bill removes the requirement that the majority of industry
    council members be ``local and distant'' employers and instead
    adds language that encourages the participation of employers
    outside of the local area who are likely to hire a large
    portion of Job Corps students. In addition, the Committee
    specifies that the same performance indicators applicable to
    the WIA formula youth program are applicable to the Job Corps
    program. This is consistent with the Bush Administration's
    initiative to apply common performance indicators to federal
    job training programs.

    National activities

        H.R. 1261 removes language that was necessary to help
    programs transition from the former Job Training Partnership
    Act (JTPA) to WIA, since it no longer is needed. In addition,
    the bill clarifies the duties of the Native American Employment
    and Training Council.
        The Committee has maintained authorization for the Migrant
    and Seasonal Farmworker Programs. However, the Committee
    encourages one-stops to improve services to the population
    served through this separate program and further notes that the
    allowance for one-stop centers to provide access to social and
    supportive services, housing and other assistance available
    through partner programs should increase services for such
    populations in one-stop centers.
        As noted previously, 25 percent of the youth activities
    appropriation, up to $250 million, is reserved for the
    Secretary to provide Youth Challenge Grants. Of the funds
    available for the grants, 80 percent would be available for
    competitive grants and 20 percent would be available for
    discretionary grants.
        The purpose of the competitive grants is to promote
    collaboration and innovation in providing activities to assist
    youth in acquiring the skills and employment experience
    necessary for employment. The competitive grants may be awarded
    to States, local boards, recipients of Native American program
    grants, and public or private entities (including consortia of
    such entities) applying in conjunction with local boards.
    Initial awards would be made for one year, with four option
    years available depending upon satisfactory progress and
    availability of funds. The Secretary is authorized to require
    that grantees provide a nonfederal share of the cost of
    activities carried out under a grant.
        Funds would be used for the activities described in the
    youth formula program to states and other activities designed
    to assist youth in acquiring skills and employment experience,
    including training and internships in high-growth sectors for
    out-of-school youth; after-school dropout prevention programs
    for in-school youth; activities to assist special youth
    populations, such as court-involved youth and youth with
    disabilities; and activities combining remediation of academic
    skills, work readiness training, and work experience.
        To be eligible to receive a Youth Challenge Grant, an
    entity must submit an application to the Secretary that
    includes a description of the activities the eligible entity
    will provide to eligible youth; a description of the programs
    of demonstrated effectiveness on which the provision of the
    activities are based; a description of how such activities will
    expand the base of knowledge relating to the provision of
    activities for youth; a description of the private and public
    local and state resources that will be leveraged to provide the
    activities described; and the levels of performance the
    eligible entity expects to achieve with respect to the
    indicators of performance for youth.
        Factors to be considered in awarding Youth Challenge Grants
    include the quality of the proposed project, the goals to be
    achieved, the likelihood of successful implementation, the
    extent to which the project is based on proven strategies or
    the extent to which the project will expand the knowledge base
    on activities for youth, and the additional state, local or
    private resources that will be provided. The Secretary may
    reserve up to five percent of the Youth Challenge Grant funds
    to conduct evaluations of the projects.
        The Secretary is encouraged to consider the economic and
    demographic factors of local areas when determining whether to
    approve a Youth Challenge Grant application. The Committee
    expects such funds will be targeted toward at risk areas, such
    as those previously served through the youth opportunity
    grants, particularly rural areas. In addition, the Committee
    encourages the Secretary to provide technical assistance to
    such rural areas to assist them in competing for the grants.
        Discretionary Youth Challenge Grants for youth activities
    are intended to provide the flexibility to assist a variety of
    entities and organizations in providing innovative and
    effective activities for eligible youth, including special
    populations. The Secretary may award discretionary grants to
    public or private entities that the Secretary determines would
    effectivelycarry out activities relating to youth.
    Discretionary grant funds may be used for activities that will assist
    youth in preparing for, and entering and retaining, employment,
    including the activities described in the youth formula program for
    out-of-school youth, activities designed to assist in-school youth to
    stay in school, and other activities the Secretary determines are
    appropriate. To be eligible to receive a discretionary grant, an
    eligible entity must submit an application to the Secretary. The
    Secretary may require the provision of a nonfederal share for
    discretionary projects, and may require participation of grantees in
    evaluations of such projects.
        H.R. 1261 amends the current provisions authorizing the
    Secretary of Labor to provide, coordinate and support training,
    technical assistance, and other activities. Current law
    establishing separate technical assistance activities under the
    dislocated worker funding stream would be deleted. However, the
    staff training activities for rapid response are retained.
    Funding for peer review activities and training of recipient
    staff also is authorized as an allowable use of technical
    assistance funds.
        Current law relating to demonstration, pilot, multi-
    service, research and multi-state projects is amended in order
    to better align requirements with current priorities and the
    new overall direction of the workforce investment system.
    Allowable projects include: projects that assist national
    employers to enhance connections with the workforce investment
    system; systems development activities that benefit recipients
    under this title and improve the effectiveness and efficiency
    of programs; projects focused on high-growth industry sectors;
    and projects that promote states and local areas to test
    innovative approaches to delivering workforce services. The
    list of entities eligible to carry out demonstration and pilot
    programs is removed in order to allow a broader array of
    entities to carry out these programs, promoting greater
    innovation.
        Currently the Secretary can provide supplemental funds,
    upon request of a state, to assist states and local areas in
    addressing the needs of dislocated workers through national
    emergency grants. H.R. 1261 changes the name of ``National
    Emergency Grants'' to ``National Dislocated Worker Grants'' to
    better reflect the population that is to be served through the
    grants. Current law that requires the Secretary to designate a
    dislocated worker office to coordinate the functions of the
    Secretary under title I of WIA relating to employment and
    training activities for dislocated workers, including
    activities carried out under the national emergency grants, is
    repealed to allow the Secretary the discretion to determine how
    the grants could best be administered within the Department of
    Labor.
        The separate funding authorization for the grants that were
    authorized under the Trade Act of 2002 to provide assistance in
    providing health insurance coverage to certain participants in
    the Trade Adjustment Assistance (TAA) program and certain
    beneficiaries of the Pension Benefit Guaranty Corporation are
    maintained.
        Current law permits ``other entities that demonstrate to
    the Secretary the capability to effectively respond to the
    circumstances relating to particular dislocations'' to apply
    for a national emergency grant. This provision is deleted,
    since the appropriate entities to carry out these grants are
    the grantees in the workforce investment system and entities
    approved by the Governor. No entity in this deleted category
    has received these grants under WIA.
        In general, the authorization for the national activities
    is extended from fiscal years 2004 through 2009. Specific
    reserve percentages for technical assistance, demonstration and
    pilot projects, evaluations and incentive grants are deleted.
    The Committee believes that eliminating these reservations will
    provide the Secretary with greater flexibility in determining
    how funds will be utilized.

    Administration

        Under current law, the Secretary must investigate each
    allegation of violations of the requirements of title I of WIA.
    This provision is amended to authorize investigations of such
    allegations since it may not be necessary or appropriate to
    conduct an investigation of each one.
        Current law prohibits use of WIA funds for employment
    generating activities, economic development activities and
    similar activities that are not directly related to training
    for eligible title I participants. The bill would remove this
    prohibition to encourage closer ties between workforce
    development and economic development activities. The current
    restriction on foreign travel would be maintained.
        The nondiscrimination provisions of WIA are amended to
    provide an exemption for religious organizations with respect
    to the employment of individuals of a particular religion to
    perform work connected with the carrying on of its activities.
    This incorporates the exemption in hiring by religious
    organizations contained in Title 7 of the Civil Rights Act.
    Currently under federal law, religious organizations may hire
    on a religious basis, and any federal legislation governing
    federal social service funds should continue to protect the
    rights of religious organizations to hire on a religious basis
    when they take part in federal social services (in this case,
    job training) efforts. However, often these faith-based
    organizations have been excluded from delivering services for
    which the federal government commits substantial resources--
    most simply because they have a religious name or identity.
    President Bush has called on his Administration and Congress to
    remove these barriers.
        Faith-based organizations cannot be expected to sustain
    their religious mission without the ability to employ
    individuals who share the tenets and practices of their faith
    because it is that faith that motivates them to serve their
    neighbors in trouble. In Bowen v. Kendrick the United States
    Supreme Court upheld a program allowing federal funds to be
    given to faith-based organizations for family counseling,
    including faith-based organizations that required their
    employees to follow religious directives. Without the right to
    continue to hire on a religious basis, religious organizations
    are likely to simply withdraw from federal social service
    efforts altogether, to the detriment of people in need
    everywhere.
        The Committee believes that members of faith-based
    organizations should enjoy the same right to associate with
    those sharing their unique vision, as other, non-religious but
    certainly ideological groups currently enjoy. For example,
    Planned Parenthood may refuse to hire those who do not share
    its view about abortion. Planned Parenthood Federation of
    America received over $100 million in federal funds to support
    reproductive health activities in each of federal fiscal years
    1997 through 2000. Equal treatment requires that churches,
    mosques, and synagogues have the same right to discriminate on
    ideological grounds.
        Under current law, funds under title I of WIA are to be
    made available for obligation only on the basis of a program
    year beginning on July 1 in the fiscal year for which the
    appropriation is made. Youth funds were made available on April
    1 of any fiscal year. The bill would delete this exception.
    This provision was important when summer employment
    opportunities were a key part of the youth strategy. Having the
    funds available on April 1 allowed local areas to plan their
    summer activities. Since the youth program now will be focused
    on services to out-of-school youth, the funds should be made
    available on July 1, the same date as are the funds for the
    consolidated adult program. This change will also reduce
    planning and reporting burdens on states and local areas.
        Under current law, states have three years to spend each
    year's allotment. H.R. 1261 clarifies that this allowance also
    applies to Native American grantees.
        H.R. 1261 provides new waiver authority for the Secretary
    of Labor. The Department of Labor will establish an expedited
    process for extending waivers approved for one State to
    additional States, provided they meet other applicable
    requirements. In administering the waiver process it has been
    found that some waivers to address particular issues appear to
    be appropriate for all States, but under current authority each
    State must go through a detailed application process to have a
    waiver extended to their State. This provision would allow the
    Secretary to expedite that process.
        In addition, H.R. 1261 prohibits using funds provided under
    WIA from being used to establish or operate stand-alone fee-
    for-service enterprises that compete with private sector
    employment agencies. Such an enterprise does not include one-
    stop centers. The Committee understands that in some local
    areas, local boards have established free-standing enterprises
    specifically designed to compete with private sector employment
    agencies. This is contrary to the intent of WIA.

                           TITLE II--ADULT EDUCATION

        In her March 4, 2003 testimony before the Subcommittee on
    21st Century Competitiveness, Assistant Secretary for
    Vocational and Adult Education, Carol D'Amico, summarized the
    purpose of the federal adult education program as, ``The vision
    for the proposed Adult Basic and Literacy Education Act is that
    eligible adults have opportunities to improve their basic and
    literacy skills in high-quality research-based programs that
    will equip them to succeed in the next step of their education
    and employment.''
        As we begin the 21st Century, the need for an educated
    populace is critical to our success in maintaining our place in
    the knowledge-based economy, and providing opportunities for
    all our citizens to reach their highest potential. But there
    are major challenges ahead of us. In 2001, English as a Second
    Language (ESL) enrollment was 42 percent of the total
    enrollment in state-administered adult education programs. The
    U.S. Census Bureau data from 1999 show that full-time workers,
    18 years and older, who have not completed high school earn an
    average of $23,447 per year. The average for all workers is
    $43,396. Those without a high school diploma or its equivalent
    on average earn almost half the salary of the average worker.
    Employers searching for qualified employees over the past five
    years have noticed an increasing trend in the number of
    employees lacking the basic skills needed in the workplace.
    Increasing numbers of beginning college students are required
    to take basic skills courses in reading and math before moving
    into the standard college program.
        Currently the federal adult education program serves 2.7
    million adults in more than 5,000 federally sponsored centers
    with 53,000 part time teachers and 10,000 full time teachers.
        The 21st Century Workforce Commission reported that, ``As
    never before, there is a premium on American workers who are
    able to read and understand complex material, think
    analytically, and use technology efficiently. To stay
    competitive in the knowledge-based economy employers will need
    workers who can read, write, compute, solve problems, and
    communicate well.''
        In reauthorizing Title II, the Adult Basic Skills and
    Family Literacy Education section of the Workforce Investment
    Act, the Committee has placed additional emphasis on ensuring
    that States and local providers offer research validated basic
    skills instruction in reading, writing, English language
    acquisition, and math. Making sure that these skills are
    solidly in place for all students is a priority, whether it is
    those with limited English proficiency, high school dropouts
    who have not mastered these vital skills, or even high school
    graduates who have slipped through the cracks in the system and
    need additional instruction in the basics.

    Purpose

        In revising the purpose of Title II the Committee believes
    that clearly defining the skills that are necessary for an
    adult to become educated enough to compete in a knowledge-based
    economy is essential. Reading with comprehension, writing with
    clarity and purpose, speaking the English language proficiently
    and fluently, and mastering the basic computational math skills
    remain essential if an individual is to move on to higher
    levels of education and employment. To make sure that States
    and local providers clearly understand the terms included in
    this reauthorization the definitions section has been expanded,
    or modified to correspond with those in the No Child Left
    Behind Act. The Committee specifically added definitions for
    the ``essential components of reading instruction,''
    ``reading,'' ``scientifically based reading research'' and
    ``literacy.''

    Measuring success

        The Committee has expanded the accountability provisions
    for both State and local providers. The requirement for
    measuring improvement in ``basic skills levels in reading,
    writing, English language acquisition, and math, leading to
    proficiency in each skill'' have been added to the ``eligible
    agency performance measures'' that are in current law. Course
    offerings in the basic skills must include ``sufficiently
    rigorous instructional practices'' as to assure continuous and
    significant improvement. Progress in these skills must be
    ``objective, quantifiable, and measurable'' if the purposes of
    this title are to be achieved.
        The Committee also has provided funds for States to use in
    offering eligible providers of adult education technical
    assistance and professional development training on ways to
    ``develop, implement and report measurable progress in
    achieving the objectives of this title.'' States are required
    to include in their State plans ``how they will evaluate and
    measure annually such effectiveness on a grant-by-grant
    basis,'' and how they will hold eligible providers accountable
    in ``improving the academic achievement of participants in
    adult education programs.'' The Committee believes that
    cooperation and coordination between State and local providers
    in offering research based instructional programs in reading,
    writing, English Language Acquisition and math will insure that
    participants will reach their goals. States are authorized to
    ``use technical assistance, sanctions, and rewards (including
    allocation of grant funds based on performance and termination
    of grant funds based on nonperformance'' to hold local adult
    education providers accountable.

    Coordination between adult educators, employers, and providers of
            higher education

        The Committee believes that it is essential that adult
    educators work closely with ``State Workforce Investment
    Boards, State agencies on higher education, representatives of
    business and industry, immigrant assistance organizations,
    including community-based and faith based organizations'' in
    providing appropriate skill development programs for eligible
    adults.

    National leadership activities

        The Committee has authorized national activities to assist
    States and local providers in developing valid, measurable, and
    reliable performance data, and in using such performance
    information for the improvement of adult basic skills and
    family literacy education programs. The development of model
    basic and workplace skills education programs, and their
    effective integration with employment services are important
    components of improving the delivery of adult education
    programs. In addition, the Committee has encouraged support for
    the development of a more efficient delivery system of
    technology-based, basic skills programs and materials for adult
    reading, writing, English language acquisition, math, and
    family literacy education.

    Appropriations

        The appropriations for Title II (A) for fiscal year 2004
    are $584.7 million and such sums as are necessary for fiscal
    years 2005--2009.

                  Part B--The National Institute for Literacy

        The Committee has expressed concern that the National
    Institute for Literacy (NIFL) has not achieved the objectives
    required in current law. NIFL was established in 1991, and its
    mission was primarily focused on disseminating information on
    adult literacy. In 1998, the mission was expanded to include
    dissemination on scientifically based reading research on K--3
    programs as identified through the Reading Excellence Act and
    the Even Start Act. More than $90 million has been appropriated
    for NIFL since 1991, and although reports to Congress have been
    required, none has even been transmitted. Thus, the Committee
    has no way of making a determination on what products have been
    developed, or what impact NIFL has had over the twelve years it
    has been authorized. The NIFL section of Title II was not
    included in the introduced bill (H.R.1261). However, a
    significantly revised version of NIFL was included in the Full
    Committee substitute that passed on March 27, 2003.

    Purpose

        The mission of NIFL has been modified to be consistent with
    the provisions of the No Child Left Behind Act (NCLB) for
    national leadership in ``promoting reading research, reading
    instruction, and professional development in reading based on
    scientifically based research.'' In addition to the $6.7
    million currently authorized for NIFL an additional $7 million
    is authorized under Part B of NCLB and the Even Start Family
    literacy program for NIFL. The Committee has modified the
    mission to focus on widely disseminating ``information on
    scientifically based reading research to improve academic
    achievement for children, youth, and adults.'' Since learning
    to read is the gateway skill that opens the door to all other
    learning, the Committee believes that the most effective way to
    reduce the number of illiterate adults is to educate children
    and youth before they graduate from high school. That process
    will take time, and thus the Committee is committed to insuring
    that adults receive the most effective instruction in reading
    that is available.

    Establishment

        NIFL is established as an independent agency, to be
    administered under the supervision of a Board appointed by the
    President and confirmed by the Senate. A Director, appointed by
    the board, in consultation with the Secretary of Education
    manages the day-to-day activities of the Institute. The
    Committee has ensured that there will be coordination between
    other federal agencies, such as the Departments of Labor,
    Health and Human Services, and the National Institute for Child
    Health and Human Development, but has removed the current
    Interagency Group management arrangement because it has been
    confusing and inefficient. The Director's term is three years
    and may be extended for an additional three years should the
    Board approve such an extension.

    Administration and accountability

        The Committee has clarified and expanded the duties of the
    Board to provide policy guidance and advice to the Director in
    administering the Institute. The annual budget request is to be
    transmitted to both the Office of Management and Budget and the
    Congress annually. A biennial report is to be submitted to the
    Committee on Education and the Workforce in the House, and the
    Committee on Health, Education, Labor and Pensions in the
    Senate providing a comprehensive and detailed description of
    the Institute's operations, activities, financial condition,
    and accomplishments in carrying out the purposes of the
    Institute, along with a summary description of how the
    Institute will advance its mission in the next biennium.

    National leadership

        It is the intent of the Committee that the Institute will
    work closely with the Secretary of Education, in particular
    with the Reading First Director, the Director of the Institute
    for Education Sciences, the Director of the National Institute
    for Child Health and Human Development, and the National
    Research Council in advancing scientifically based reading
    instruction for children, youth and adults. For decades reading
    scores for children, youth and adults have been inadequate for
    a nation with more resources and programs dedicated to
    improving reading instruction than any other nation on earth.
    In NCLB the budget for reading instruction was tripled, and the
    Committee believes it is essential to provide the currently
    available information on scientifically based reading
    instruction for teachers, parents, school boards, state
    legislators, Members of Congress, and Federal agencies. The
    Institute will ``establish a national electronic database of
    effective reading programs for children, youth, and adults that
    include the essential components of reading instruction, and
    disseminate such information to parents, teachers, State and
    Federal elected officials, and the public.'' The Committee
    expects the Institute to conduct periodic reviews of research,
    including randomized field trials, on reading programs, federal
    reading policies, and reading program implementation using a
    board of visitors similar to that being currently used by the
    National Science Foundation. Widely disseminating objective,
    unbiased information on reading instruction is the best and
    most effective way to provide the American public with the
    tools to reduce and ultimately eliminate the scourge of
    illiteracy.

    Definitions

        The Committee has included the definitions of
    ``scientifically based reading research,'' ``reading'' and the
    ``essential components of reading instruction'' that have the
    meanings given to those terms in NCLB. It is important to have
    definitions that are consistent throughout federal law so that
    States and local providers understand the intent of Congress in
    federal reading policy.

    Appropriations

        The appropriations for the Title II (B) are at $6.7 million
    for fiscal year 2004, and such sums as necessary in fiscal
    years 2005--2009.

                 TITLE III--AMENDMENTS TO THE WAGNER-PEYSER ACT

        The Wagner-Peyser Act authorizes the current employment
    services system and the employment statistics system. Because
    the employment services funding is part of the consolidated
    adult grant under WIA, and because the employment services
    functions are being assumed into the one-stop delivery system,
    H.R. 1261 repeals sections one through thirteen of the Wagner-
    Peyser Act. These sections authorize the stand-alone employment
    services system.
        H.R. 1261 amends the current employment statistics system
    authorized under the Wagner-Peyser Act and renames the system
    the Workforce and Labor Market Information System. The
    requirement for the Secretary to prepare an annual plan for
    management of the nationwide employment statistics system is
    eliminated. This plan has not proven useful. In place of the
    plan requirement is an authorization for the Secretary to
    assist in the development of national electronic tools that may
    be used to facilitate the delivery of core services and provide
    workforce information to individuals through the one-stop and
    other appropriate delivery systems.
        The current law provisions relating to consultations
    between the Secretary and state employment statistics officials
    would be simplified to provide that the Secretary, working
    through the Bureau of Labor Statistics (BLS) and the Employment
    and Training Administration, must regularly consult with
    representatives from the designated state agencies on
    strategies for improving the workforce and labor market
    information system. At least twice each year, the Secretary,
    working through BLS, would conduct formal consultations on BLS
    programs with representatives, elected by and from state
    directors affiliated with the designated state agencies, from
    each of the ten Department of Labor regions. This formal
    consultation and election process is similar to current law.
        The authorization for appropriation for the Workforce and
    Labor Market Information System is extended to 2004 through
    2009.

             TITLE IV--AMENDMENTS TO THE REHABILITATION ACT OF 1973

        The Rehabilitation Act of 1973 is the nation's major
    program providing comprehensive vocational rehabilitation (VR)
    services to help persons with disabilities become employable
    and achieve full integration into society. The primary program
    within the Act is the state grant VR program under Title I. It
    provides formula grant funds to states for VR services to
    assist persons with significant disabilities to become employed
    in integrated work settings.
        The 1998 reauthorization of this Act simplified certain
    aspects for VR consumers, expanded consumer choice of services
    and providers, and required that the VR system be coordinated
    with the WIA system. The last reauthorization also required VR
    consumers to be involved in their VR planning process, giving
    them more choice in the development of their individualized
    plans for employment. The Committee believes these changes are
    impacting the VR system positively and are resulting in
    improved outcomes for clients. As a result, few changes are
    deemed necessary in this Act.
        The Department of Education's Commission examining the
    Individuals with Disabilities Education Act (IDEA) suggested
    that the transition from IDEA services to postsecondary
    activities needs improvement. Therefore, H.R. 1261 contains new
    language requiring states to set clear goals about improving
    the alignment of transition services in both vocational
    rehabilitation and special education. There is also new
    language directing states to conduct an assessment of
    transition services and how those services are coordinated with
    services under IDEA. The bill provides additional coordination
    with IDEA services by clarifying that rehabilitation counselors
    (under VR) may use alternative means of communication (such as
    video conferencing and conference calls) when participating in
    Individualized Education Program meetings under IDEA. While
    recognizing the importance of transition services, the primary
    problem seems to be a lack of coordination and consultation
    between the two systems, not necessarily a lack of programs.
    The new language in the bill will help improve the coordination
    of transition services and improve collaboration between the
    two systems.
        The bill also changes the position that heads the
    Rehabilitation Services Administration within the Department of
    Education from a Commissioner appointed by the President and
    approved by the Senate to a Director appointed by the
    Secretary. The Committee notes that this is a simple and
    important change to the administrative functioning of the
    Department of Education to help make the Department operate
    more effectively and ensure that there is a consistent policy
    view over all the Department's programs that deal with
    disability policy. This change is consistent with President
    Bush's Management Agenda, through which the President is
    calling on agencies to reduce the number of managers and
    organizational layers thereby reducing the time it takes to
    make a decision and ensuring there is one unified voice
    speaking for the Department on disability policy.
        The Assistant Secretary of Special Education and
    Rehabilitation Services oversees the Director of the Office of
    Special Education Programs and the Director of the National
    Institute of Disability Research and Rehabilitation. This
    proposal places the Rehabilitation Services Administration on
    equal footing with those two important offices, and reaffirms
    the importance of coordinating federal policy across these
    three vital offices though the office of the Assistant
    Secretary.
        Administration after Administration has struggled with
    having two individuals appointed by the President and confirmed
    by the Senate working within the same office. Providing this
    clarity will establish a clear sense of purpose to these
    offices, enabling the Department to focus more on providing
    high-quality services to individuals with disabilities.
        The bill authorizes programs under the Rehabilitation Act
    of 1973 through 2009. H.R. 1261 also reauthorizes the Helen
    Keller National Center Act through 2009.

                     TITLE V--TRANSITION AND EFFECTIVE DATE

        Title III contains transition provisions and the effective
    date. The Secretary shall take such actions as the Secretary
    determines to be appropriate for the orderly implementation of
    this Act. Except as otherwise provided by this Act, the
    amendments made by this Act are to take effect upon enactment.

                          Section-by-Section Analysis

        Section 1. Designated the short title of this act as the
    ``Workforce Reinvestment and Adult Education Act of 2003.''
        Section 2. Establishes the table of contents for the Act.
        Section 3. Specifies that, if there is an amendment or a
    repeal in the Act, unless otherwise specified it is considered
    made to the Workforce Investment Act of 1998.

     TITLE I. AMENDMENTS TO TITLE I OF THE WORKFORCE INVESTMENT ACT OF 1998

        Section 101. Modifies and adds definitions under this
    Title.
        Section 102. Amends the purposes of the Workforce
    Investment Act of 1998 (WIA).
        Section 103. Amends section 111(b) to stipulate the members
    of the State Workforce Investment Boards and authorizes the
    State board to hire the necessary staff to carry out this
    mandate.
        Section 104. Changes the state planning cycle from a 5-year
    strategy, to a 2-year strategy.
        Section 105. Amends the automatic designation of local
    areas and allows regional planning in lieu of separate local
    plans.
        Section 106. Amends section 117 of WIA to specify the
    composition and functions of the Local Workforce Investment
    Boards. Eliminates the requirement for Youth Councils.
        Section 107. Amends section 118 to change the local
    planning cycle from 5-years to 2-years and promote continuous
    improvement in service delivery.
        Section 108. Amends section 121 to add Ticket to Work,
    child support, and programs for individuals with disabilities
    as new optional partner programs within the one-stop delivery
    system. Moves the creation of the one-stop delivery system from
    section 134 to section 121, requires State boards to certify
    one-stop centers for the purposes of awarding infrastructure
    funds, and requires one-stop partners to contribute funds for
    infrastructure grants.
        Section 109. Amends section 122 to allow Governors to
    identify eligible providers of training services.
        Section 110. Repeals requirement for the competitive
    process to determine eligible providers of youth services.
        Section 111. Amends chapter 4 of WIA to target out-of-
    school youth, while allowing States and local areas to serve
    some in-school youth. Allots 25% of the appropriation for any
    fiscal year for national Youth Challenge Grants. Amends the
    allotment of funds to states and local areas, youth participant
    eligibility, and youth activities.
        Section 112. Amends chapter 5 of WIA to establish a
    comprehensive program of employment and training activities for
    adults. The section amends the allotment of funds to states,
    changes the allotment formula for states and local areas,
    amends the reallotmment provisions, retains current local
    administrative cost limit, and removes references to separate
    dislocated work funding stream. The section also amends the use
    of funds for employment and training activities and the State
    and local level and removes the current sequencing of services
    requirements.
        Section 113. Simplifies the performance accountability
    system established in section 136.
        Section 114. Amends section 137 to authorize appropriations
    for all programs in the legislation for 2004 through 2009.
        Section 115. Amends subtitle C to clarify the business and
    community participation under the Job Corps program.
        Section 116. Amends the Native American Programs authorized
    under section 166.
        Section 117. Amends section 169 to authorize Youth
    Challenge Grants to assist youth in acquiring skills,
    credentials, and employment experience.
        Section 118. Provides technical assistance and support
    training to dislocated workers.
        Section 119. Amends the Workforce Investment Act in order
    to realign requirements with current priorities for the
    Workforce Investment System.
        Section 120. Changes the program entitled ``National
    Emergency Grants'' to ``National Dislocated Worker Grants''.
        Section 121. Extends the authorization of appropriations in
    the Workforce Investment Act for national activities through
    2009.
        Section 122. Amends the limitations in section 181(e).
        Section 123. Applies current law exemption for Faith Based
    Organizations with respect to hiring people of a particular
    religion.
        Section 124. Expands the Secretary's waiver authority.
        Section 125. Clarifies that no funds under this act shall
    be used to establish fee-for-service agencies that compete with
    private sector employment agencies.

                     TITLE II. ADULT BASIC SKILLS EDUCATION

        Section 201. Establishes the table of contents of Title II.
        Section 202. Amends Title II to read as follows:

          ``TITLE II. ADULT BASIC AND FAMILY LITERACY SKILLS EDUCATION

        ``Section 201. States the short title as the ``Adult Basic
    Skills and Family Literacy Education Act.''
        ``Section 202. Sets forth the purpose of this Title.
        ``Section 203. Modifies and adds definitions under this
    Title.
        ``Section 204. Sets forth provisions exempting home schools
    from requirements of this Act.
        ``Section 205. Contains provisions pertaining to the
    authorization of appropriations.

                        ``CHAPTER 1. FEDERAL PROVISIONS

        ``Section 211. Contains provisions pertaining to
    reservation of funds; sets forth provisions regarding grant
    eligibility, purpose, and allotment of funds, states the
    definition of a qualifying adult; and contains provisions
    regarding eligibility for the Freely Associated States.
        ``Section 212. Establishes a performance accountability
    system; sets forth performance measures and indicators; and
    contains provisions regarding the submission of an annual
    report by eligible agencies and requirement on its
    dissemination by the Secretary.
        ``Section 213. Sets forth provisions regarding incentive
    grants for states.

                         ``CHAPTER 2. STATE PROVISIONS

        ``Section 221. Sets forth provisions regarding state
    administration and state-imposed requirements.
        ``Section 222. Contains provisions regarding state
    distribution of funds and sets forth requirements regarding
    non-federal matching contributions for eligible agencies.
        ``Section 223. Contains provisions regarding allowable
    state leadership activities.
        ``Section 224. Requires the submission of a six-year state
    plan by grant applicants and sets forth requirements for six-
    year state plans, plan revisions, and plan approval.
        ``Section 225. Authorizes a program for corrections
    education and education for institutionalized individuals; and
    states definitions of criminal offender and correctional
    institution.

                         ``CHAPTER 3. LOCAL PROVISIONS

        ``Section 231. Contains provisions regarding grants and
    contracts for local providers and local activities; sets forth
    provisions regarding direct and equitable access for eligible
    providers; and requires eligible providers to establish a set
    of measurable goals.
        ``Section 232. Sets forth provisions regarding requirements
    for local grant and contract applications.
        ``Section 233. Contains provisions regarding local
    administrative cost limits.

                        ``CHAPTER 4. GENERAL PROVISIONS

        ``Section 241. Requires that federal funds supplement not
    supplant state or local funds expended and contains provisions
    regarding the maintenance of effort.
        ``Section 242. Requires the Secretary to establish and
    carry out a national leadership activities program and contains
    provisions regarding allowable activities.''

                    Part B. National Institute for Literacy

        Section 211. States the short title as the ``National
    Institute for Literacy Establishment Act'' and contains
    provisions with regard to the purpose of this Part.
        Section 212. Establishes the National Institute for
    Literacy to be administered by a Director and sets forth
    provisions regarding the Office of the Director, including the
    Director's appointment, qualifications, term, and salary.
        Section 213. States that the Institute is an agency and
    will be administered by the Director in consultation with the
    Board; contains provisions regarding the Office of the Director
    including the Director's authority and duties; requires the
    Institute to transmit budget documents to Congress; and
    requires the Secretary to provide administrative support for
    the Institute.
        Section 214. Sets forth provisions regarding duties and
    responsibilities of the Institute.
        Section 215. Contains provisions regarding fellowships and
    internships granted to individuals pursuing careers in
    scientifically based reading instruction.
        Section 216.Establishes a National Institute for Literacy
    Advisory Board and contains provisions regarding the Board's
    composition, appointments, vacancies, and meeting procedures.
        Section 217. Sets forth rules for accepting gifts and in
    kind services.
        Section 218. Sets forth provisions regarding mails.
        Section 219. Contains provisions regarding the
    applicability of certain civil service laws
        Section 220. Contains provisions pertaining to experts and
    consultants.
        Section 221. Requires the Institute to submit a biennial
    report to Congress, sets forth requirements of report
    components, and states that the Institute shall submit a report
    no later than one year after the date of enactment of this
    Part.
        Section 222. Contains definitions.
        Section 223. Contains provisions pertaining to the
    authorization of appropriations.
        Section 224. Contains a provision regarding reservation of
    funds.
        Section 225. Grants the Institute the authority to publish.

                TITLE III. AMENDMENTS TO OTHER PROVISIONS OF LAW

        Section 301. Amends the Wagner-Peyser Act by striking
    Sections 1 through 13 (29 U.S.C. 49 et. seq.). Also amends
    section 15 of the Act to require the Secretary of Labor to
    oversee a nationwide workforce and labor market information
    system; sets forth provisions with regard to system content,
    confidentiality of information, system responsibilities, and
    immunity from legal process; authorizes the Secretary to assist
    in the development of national electronic tools to provide
    services; and requires the Secretary to consult with
    representatives of State agencies involved in carrying out
    workforce information strategies.

             TITLE IV. AMENDMENTS TO THE REHABILITATION ACT OF 1973

        Section 401. Makes changes to Section 705(b)(5) of the
    Rehabilitation Act of 1973 (29 U.S.C. 796d(b)(5)) regarding the
    selection of the chairperson.
        Section 402. Amends Section 3(a) of the Rehabilitation Act
    of 1973 (29 U.S.C. 702(a)) with regard to the Commissioner of
    the rehabilitation services administration.
        Section 403. Amends The Rehabilitation Act of 1973 (29
    U.S.C. 701 et seq.) for a technical change.
        Section 404. Amends Section 101(a) (29 U.S.C. 721(a)) by
    allowing alternative means of meeting participation.
        Section 405. Amends The Rehabilitation Act of 1973 with
    regard to the authorization of appropriations.
        Section 406. Authorizes appropriations for the Helen Keller
    National Center Act for 2004 through 2009.

                     TITLE V. TRANSITION AND EFFECTIVE DATE

        Section 501. Grants the Secretary of Labor authority to
    take appropriate action to provide for the orderly
    implementation of this Act.
        Section 502. States that this Act and the amendments made
    by this Act shall take effect on the date of its enactment.

                           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. The purpose of H.R. 1261 is enhance the workforce
    investment system created under the Workforce Investment Act of
    1998 by strengthening one-stop career centers, providing for
    more effective governance arrangements, promoting consumer
    choice, establishing a more targeted approach to serving youth,
    and improving performance accountability. The bill also
    improves our nation's adult education system using practices
    based on scientific research, and enhances vocational
    rehabilitation services for individuals with disabilities
    seeking to return to or enter the integrated workplace. 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 (as amended by Section 101(a)(2) of the Unfunded
    Mandates Reform Act, P.L. 104-4) requires a statement of
    whether the provisions of the reported bill include unfunded
    mandates. H.R. 1261 amends the Workforce Investment Act and the
    Vocation Rehabilitation Act. As such, the bill does not contain
    any unfunded mandates.

                                 Correspondence

                         Congress of the United States,
                                      House of Representatives,
                                         Washington, DC, April 8, 2003.
    Hon. John Boehner,
    Chairman, Committee on Education and the Workforce,
    Rayburn House Office Building, Washington, DC.
        Dear Mr. Chairman: Due to other legislative duties, I was
    unavoidably detained during Committee consideration of H.R.
    1261, the ``Workforce Reinvestment and Adult Education Act of
    2003.'' Consequently, I missed roll call number four on the
    fourth amendment offered by Representative Chris Van Hollen.
    Had I been present, I would have voted against the amendment.
        I would appreciate your including this letter in the
    Committee Report to accompany H.R. 1261. Thank you for your
    attention to this matter.
                Sincerely,
                                             Michael N. Castle,
                                                    Member of Congress.

      Statement of Oversight Findings and Recommendations of the Committee

        In compliance with clause 3(c)(1) of rule XIII 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.

       New Budget Authority and Congressional Budget Office Cost Estimate

        With respect to the requirements of clause 3(c)(2) of rule
    XIII of the House of Representatives and section 308(a) of the
    Congressional Budget Act of 1974 and with respect to
    requirements of 3(c)(3) of rule XIII of the House of
    Representatives and section 402 of the Congressional Budget Act
    of 1974, the Committee has received the following cost estimate
    for H.R. 1261 from the Director of the Congressional Budget
    Office:

                                         U.S. Congress,
                                   Congressional Budget Office,
                                         Washington, DC, April 8, 2003.
    Hon. John A. Boehner,
    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. 1261, the
    Workforce Reinvestment and Adult Education Act of 2003.
        If you wish further details on this estimate, we will be
    pleased to provide them. The CBO staff contact is Christina
    Hawley Sadoti.
                Sincerely,
                                           Douglas Holtz-Eakin,
                                                              Director.
        Enclosure.

    H.R. 1261--Workforce Reinvestment and Adult Education Act of 2003

        Summary: H.R. 1261 would make numerous changes to the
    Workforce Investment Act of 1998 (WIA), amend the Wagner-Peyser
    Act, and extend the authorization for programs under the
    Rehabilitation Act of 1973 (RA). These programs, which received
    discretionary funding of $7.1 billion and mandatory funding of
    $2.5 billion for fiscal year 2003, provide a framework for
    adult education, job training, and employment service
    assistance. Some of the affected programs are permanently
    authorized under Wagner-Peyser, but others are currently
    authorized through 2003, 2004, or 2005.
        H.R. 1261 would extend, through 2011, the existing
    mandatory program of state grants for vocational rehabilitation
    services, which is currently authorized through 2005 (including
    automatic extensions for two years provided by law). By law,
    that program is assumed to be extended indefinitely in CBO's
    baseline, so its extension would add no costs relative to the
    baseline. CBO estimates that outlays for that program over the
    2006-2011 period would total about $17 billion.
        CBO estimates that enacting H.R. 1261 would increase
    discretionary authorizations by $5.1 billion in 2004, and by
    $31.2 billion over the 2004-2008 period. Assuming appropriation
    of the necessary amounts, outlays would increase by $51 million
    in 2004 and by $21.3 billion over the 2004-2008 period.
        H.R. 1261 contains no intergovernmental or private-sector
    mandates as defined in the Unfunded Mandates Reform Act (UMRA).
    Any costs incurred by state, local, or tribal governments would
    result from complying with conditions of federal aid.
        Estimated cost to the Federal Government: The estimated
    budgetary impact of H.R. 1261 is shown in the following table.
    The costs of this legislation would fall within budget function
    500 (education, employment, training, and social services).

    ----------------------------------------------------------------------------------------------------------------
                                                                      By fiscal year, in millions of dollars--
                                                               -----------------------------------------------------
                                                                  2003     2004     2005     2006     2007     2008
    ----------------------------------------------------------------------------------------------------------------
                                            SPENDING SUBJECT TO APPROPRIATION

    Authorizations Under Current Law:
        Estimated Authorization Level \1\.....................    7,083    4,387      840      859      879      901
        Estimated Outlays.....................................    7,537    6,717    3,339    1,660      985      888
    Proposed Changes:
        Title I: Amendments to the Workforce Investment Act of
         1998:
            Estimated Authorization Level \2\.................        0    5,917    6,041    6,172    6,302    6,450
        Estimated Outlays.....................................        0      401    3,733    5,245    5,934    6,241
        Title II: Adult Education:
            Estimated Authorization Level.....................        0        3      603      615      628      642
            Estimated Outlays.................................        0      (*)       32      453      583      635
        Title III: Amendments to the Wagner-Peyser Act:
            Estimated Authorization Level.....................        0     -824     -736     -753     -771     -790
            Estimated Outlays.................................        0     -356     -808     -804     -772     -781
        Title IV: Amendments to the Rehabilitation Act of
         1973:
            Estimated Authorization Level.....................        0        8      416      425      434      443
            Estimated Outlays.................................        0        6      293      410      431      440
        Total Changes:
            Estimated Authorization Level.....................        0    5,105    6,324    6,459    6,593    6,744
            Estimated Outlays.................................        0       51    3,250    5,304    6,175    6,525
    Authorizations Under H.R. 1261:
        Estimated Authorization Level \1\.....................    7,083    9,491    7,164    7,318    7,472    7,645
        Estimated Outlays.....................................    7,537    6,768    6,589    6,964    7,160    7,413
    ----------------------------------------------------------------------------------------------------------------
    \1\ The figure for fiscal year 2003 is the amount appropriated for that year. The 2004 level includes advance
      appropriations of $2.5 billion for job training for the program year beginning July 1, 2003.
    \2\ Authorization levels are for program years beginning July 1 and do not assume any advance appropriations.

    Notes.--*=Less than $500,000.
    The estimated costs shown above assume that ``such sums'' authorizations increase each year for inflation. If,
      instead, costs were assumed to remain level over time, outlays over the 2004-2008 period would be about $700
      million less.

        Basis of estimate: This estimate assumes enactment of H.R.
    1261 during fiscal year 2003, and appropriation of the
    necessary sums for each subsequent fiscal year.

    Direct spending

        Grants to states for vocational rehabilitation services,
    authorized under title I of the RA, are currently authorized
    through fiscal year 2005, assuming both the automatic one-year
    extension in the RA law and the automatic one-year extension
    under the General Education Provisions Act (GEPA), which
    provides an automatic extension for all programs in the
    Department of Education. H.R. 1261 would extend the
    authorization for the state grants through 2011, assuming the
    automatic extensions in law. Although the authorization for RA
    state grants expires, the Balanced Budget and Emergency Deficit
    Control Act requires that baseline spending projections assume
    extension of any mandatory programs with outlays in excess of
    $50 million. Because H.R. 1261 makes no substantive changes to
    RA state grants, the bill would not affect direct spending
    relative to the CBO's baseline.
        Funding for the mandatory state grants is determined by a
    formula. It is set at the previous year's funding level
    adjusted by the year-over-year change in the consumer price
    index as of October 15 of the second preceding year. In fiscal
    year 2003, RA state grants were funded at $2.5 billion; by 2011
    state grants would cost an estimated $3.1 billion. CBO
    estimates that outlays over the 2006-2011 period would total
    about $17 billion.

    Discretionary spending

        H.R. 1261 would reauthorize the Workforce Investment Act of
    1998 and the Adult Education and Family Literacy Act, amend
    provisions of the Wagner-Peyser Act, and reauthorize the
    Rehabilitation Act of 1973. Under H.R. 1261, authorizations for
    these programs would be increased by $5.1 billion, bringing the
    total authorized level to $9.5 billion in 2004.
        Title I: Amendments to the Workforce Investment Act. H.R.
    1261 would revise and reauthorize the Workforce Investment Act
    of 1998, which is currently authorized through 2003. These
    programs, which received appropriations totaling $5.2 billion
    in fiscal year 2003, would be authorized for fiscal years 2004
    through 2009. CBO estimates that authorizations under title I
    would total $5.9 billion in fiscal year 2004, about $30.9
    billion over the 2004-2008 period, and $37.5 billion over the
    2004-2013 period.
        The bill would consolidate the funding streams for job
    training block grants for youth and adults into two main
    grants--one for youth and one for adults. The bill would
    authorize appropriations of $1 billion for grants for youth
    activities, and $3.1 billion for job training grants for
    adults. The block grant for adult training also would provide
    grants to states for employment service operations. Under
    current law, grants to states for employment service operations
    are funded under the Wagner-Peyser Act. Appropriations for the
    employment service grants total about $0.8 billion in fiscal
    year 2003.
        In addition, the bill would authorize such sums as may be
    necessary for fiscal years 2004 through 2009 for ongoing
    national activities including the Job Corps and job training
    programs for Native Americans and for migrant and seasonal
    workers. Based on the fiscal year 2003 appropriations for these
    programs (adjusted for inflation), CBO estimates that these
    programs would be authorized at $1.7 billion for fiscal year
    2004 and would grow to $1.9 billion by 2009.
        Finally, title I of the bill would authorize such sums as
    may be necessary for fiscal years 2004 through 2009 for other
    activities associated with workforce investment, including
    technical assistance grants, demonstration and pilot programs,
    and evaluations. Based on the appropriations for these programs
    in fiscal year 2003 (adjusted for inflation), CBO estimates
    that they would be authorized at $102 million in fiscal year
    2004 and would grow to $114 million by 2009.
        Title II: Adult Education. Title II of H.R. 1261 would
    revise and reauthorize the Adult Education State Grant program
    and the National Institute for Literacy, both of which are
    currently authorized through 2004 by GEPA. H.R. 1261 would
    authorize an additional $3 million in 2004 (for a total of $591
    million in 2004) for programs under title II. CBO estimates the
    total funding for title II for the 2004-2008 period would be
    about $2.5 billion, assuming adjustments for inflation, with
    resulting outlays of $1.7 billion.
        Adult Basic and Literacy Education State Grants. H.R. 1261
    would authorize an additional appropriation of $3 million (for
    a total of $584.3 million) in 2004 for the Adult Basic and
    Literacy Education program and extend the authorization for the
    whole program at such sums as may be necessary from 2005
    through 2009. The revised program would continue to provide
    formula grants to states but would focus more on basic literacy
    and math skills than the current program. The current Adult
    Education program is funded at $571 million in 2003. Assuming
    appropriations at the authorized level for 2004, adjusted for
    inflation in subsequent years, CBO estimates that outlays would
    total $1.7 billion over the 2004-2008 period.
        The bill also would reserve a portion of the total
    appropriation for national activities focused on helping states
    and local communities address adult literacy through activities
    such as technical assistance and evaluation. The National
    Leadership Activities program is funded at $9.4 million in
    2003.
        National Institute for Literacy. H.R. 1261 would authorize
    $6.7 million in 2004 and such sums as may be necessary from
    2005 through 2009 for the National Institute for Literacy. The
    National Institute for Literacy would provide national
    leadership in promoting reading research, instruction, and
    professional development by disseminating reading research
    information. The program is funded at $6.5 million in 2003. CBO
    estimates that additional outlays would total about $19 million
    over the 2004-2008 period.
        Title III: Amendments to the Wagner-Peyser Act. Title III
    of H.R. 1261 would repeal significant portions of the Wagner-
    Peyser Act, which provide permanent authority for employment
    service operations and work incentive grants, and authorizes
    provisions for compiling data on labor markets through fiscal
    year 2004. These activities received appropriations for fiscal
    year 2003 of about $0.9 billion--$0.8 billion for employment
    service operations and $0.1 billion for work incentive grants
    and labor market information functions.
        Title III would repeal the sections of Wagner-Peyser that
    authorize grants to states for employment service operations
    and work incentive grants, because, under title I of their
    bill, these functions would be funded under the WIA. The labor
    market information authorization, however, would remain under
    Wagner-Peyser authority. For that activity, H.R. 1261 would
    authorize such sums as may be necessary for fiscal years 2004
    through 2009. CBO estimates this authorization would amount to
    $102 million in fiscal year 2004, and $532 million over the
    2004-2008 period. The net effect of the amendments to the
    Wagner-Peyser Act would be to reduce outlays over the 2004-2008
    period by about $3.5 billion.
        Title IV: Amendments to the Rehabilitation Act. H.R. 1261
    would extend the current ``such sums'' authorizations for
    existing discretionary grant programs under the RA as well as
    for the Helen Keller National Center. Most of these programs
    are authorized through 2004 under GEPA and would be extended
    through 2010 under this bill. There are, however, a few
    exceptions--the authorizations for the National Council on
    Disability, funded in 2003 at $3 million, and the Architectural
    and Transportation Barriers Compliance Board, funded in 2003 at
    $5 million, expire at the end of 2003 and would be extended
    through 2009.
        Based on appropriations for 2003 (adjusted for inflation),
    discretionary grant authorization levels are estimated to total
    $407 million in 2005 and $1.7 billion over the 2005-2008
    period. In addition, the authorization for the Helen Keller
    National Center is estimated to total $9 million in 2005 and
    $57 million over the authorization period. Estimated outlays
    reflect the current program spending patterns and total $1.6
    billion through 2008.
        Effects on direct spending and revenues: H.R. 1261 would
    not affect estimated direct spending or receipts because the
    reauthorization of the mandatory state grants under RA is
    already assumed in the CBO baseline.
        Intergovernmental and private-sector impact: H.R. 1261
    contains no intergovernmental or private-sector mandates as
    defined in UMRA. The bill would reauthorize funding for adult
    and youth job training and literacy activities administered by
    state and local agencies. Along with the conditions of federal
    aid, states' job training programs would be guaranteed minimum
    allotments for subsequent fiscal years that equal fiscal year
    2003 funding, subject to the availability of appropriations.
    Any costs incurred by state, local, and tribal governments
    would result from complying with conditions of federal aid, and
    would thus be voluntary.
        Estimate prepared by: Federal Spending: Workforce
    Investment Act and Wagner-Peyser: Christina Hawley Sadoti;
    Adult Education and National Institute for Literacy: Donna
    Wong; and Rehabilitation Act: Deborah Kalcevic.
        Impact on State, Local, and Tribal Governments: Greg
    Waring.
        Impact on the Private Sector: Ralph Smith.
        Estimate approved by: Robert A. Sunshine, Assistant
    Director for Budget Analysis.

             Statement of General Performance Goals and Objectives

        In accordance with Clause (3)(c) of House Rule XIII, the
    goal of H.R. 1261 is to enhance the workforce investment system
    created under the Workforce Investment Act of 1998 by
    strengthening one-stop career centers, providing for more
    effective governance arrangements, promoting consumer choice,
    establishing a more targeted approach to serving youth, and
    improving performance accountability. The bill also improves
    our nation's adult education system using practices based on
    scientific research, and enhances vocational rehabilitation
    services for individuals with disabilities seeking to return to
    or enter the integrated workplace. The Committee expects the
    Department of Labor and Department of Education to comply with
    H.R. 1261 and implement the changes to the law in accordance
    with the changes.

                       Constitutional Authority Statement

        Under clause 3(d)(1) of rule XIII of the Rules of the House
    of Representatives, the Committee must include a statement
    citing the specific powers granted to Congress in the
    Constitution to enact the law proposed by H.R. 1261. The
    Committee believes that the amendments made by this bill, which
    authorize appropriations for the Workforce Investment Act, are
    within Congress' authority under Article I, section 8, clause 1
    of the Constitution.

                               Committee Estimate

        Clauses 3(d)(2) 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. 1261. However, clause 3(d)(3)(B) 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 402 of the Congressional Budget Act.

             Changes in Existing Law Made by the Bill, as Reported

      In compliance with clause 3(e) 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):

                        WORKFORCE INVESTMENT ACT OF 1998

    SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

      (a) * * *
      (b) Table of Contents.--The table of contents for this Act is
    as follows:

    Sec. 1. Short title; table of contents.

                      TITLE I--WORKFORCE INVESTMENT SYSTEMS

         * * * * * * *

          Subtitle B--Statewide and Local Workforce Investment Systems

         * * * * * * *

              Chapter 3--Workforce Investment Activities Providers

    Sec. 121. Establishment of one-stop delivery systems.
         * * * * * * *
    [Sec. 123. Identification of eligible providers of youth activities.]
         * * * * * * *

        [Chapter 5--Adult and Dislocated Worker Employment and Training
                                   Activities]

     Chapter 5--Comprehensive Employment and Training Activities for Adults

         * * * * * * *

                          Subtitle D--National Programs

         * * * * * * *
    [Sec. 173. National emergency grants.]
    Sec. 173. National dislocated worker grants.
         * * * * * * *

                     [TITLE II--ADULT EDUCATION AND LITERACY

    [Sec. 201. Short title.
    [Sec. 202. Purpose.
    [Sec. 203. Definitions.
    [Sec. 204. Home schools.
    [Sec. 205. Authorization of appropriations.

               [Subtitle A--Adult Education and Literacy Programs

                         [Chapter 1--Federal Provisions

    [Sec. 211. Reservation; grants to eligible agencies; allotments.
    [Sec. 212. Performance accountability system.

                          [Chapter 2--State Provisions

    [Sec. 221. State administration.
    [Sec. 222. State distribution of funds; matching requirement.
    [Sec. 223. State leadership activities.
    [Sec. 224. State plan.
    [Sec. 225. Programs for corrections education and other
              institutionalized individuals.

                          [Chapter 3--Local Provisions

    [Sec. 231. Grants and contracts for eligible providers.
    [Sec. 232. Local application.
    [Sec. 233. Local administrative cost limits.

                         [Chapter 4--General Provisions

    [Sec. 241. Administrative provisions.
    [Sec. 242. National Institute for Literacy.
    [Sec. 243. National leadership activities.

                              [Subtitle B--Repeals

    [Sec. 251. Repeals.]

           TITLE II--ADULT BASIC SKILLS AND FAMILY LITERACY EDUCATION

    Sec. 201. Short title.
    Sec. 202. Purpose.
    Sec. 203. Definitions.
    Sec. 204. Home schools.
    Sec. 205. Authorization of appropriations.

                          Chapter 1--Federal Provisions

    Sec. 211. Reservation of funds; grants to eligible agencies; allotments.
    Sec. 212. Performance accountability system.
    Sec. 213. Incentive grants for states.

                           Chapter 2--State Provisions

    Sec. 221. State administration.
    Sec. 222. State distribution of funds; matching requirement.
    Sec. 223. State leadership activities.
    Sec. 224. State plan.
    Sec. 225. Programs for corrections education and other institutionalized
              individuals.

                           Chapter 3--Local Provisions

    Sec. 231. Grants and contracts for eligible providers.
    Sec. 232. Local application.
    Sec. 233. Local administrative cost limits.

                          Chapter 4--General Provisions

    Sec. 241. Administrative provisions.
    Sec. 242. National leadership activities.
         * * * * * * *

                           TITLE V--GENERAL PROVISIONS

    Sec. 501. State unified plan.
    [Sec. 502. Definitions for indicators of performance.
    [Sec. 503. Incentive grants.]

         * * * * * * *

                     TITLE I--WORKFORCE INVESTMENT SYSTEMS

                  Subtitle A--Workforce Investment Definitions

    SEC. 101. DEFINITIONS.

      In this title:
              (1) Accrued expenditures.--The term ``accrued
            expenditures'' includes the sum of actual cash
            disbursements for direct charges for goods and
            services, the net increase or decrease in the amounts
            owed by recipients, goods and other property received
            for services performed by employees, contractors,
            subgrantees, or other payees, and other amounts
            becoming owned for which no current service or
            performance is required.
              [(1)] (2) Adult.--Except in sections 127 and 132, the
            term ``adult'' means an individual who is age 18 or
            older.
              [(2)] (3) Adult education; adult education and
            literacy activities.--The terms ``adult education'' and
            ``adult education and literacy activities'' have the
            meanings given the terms in section 203.
              [(3)] (4) Area vocational education school.--The term
            ``area vocational education school'' has the meaning
            given the term in section 3 of the Carl D. Perkins
            Vocational and Technical Education Act of 1998.
              [(4)] (5) Basic skills deficient.--The term ``basic
            skills deficient'' means, with respect to an
            individual, that the individual has English reading,
            writing, or computing skills at or below the 8th grade
            level on a generally accepted standardized test or a
            comparable score on a criterion-referenced test.
              [(5)] (6) Case management.--The term ``case
            management'' means the provision of a client-centered
            approach in the
            delivery of services, designed--
                      (A) * * *

               *       *       *       *       *       *       *

              [(6)] (7) Chief elected official.--The term ``chief
            elected
            official'' means--
                      (A) * * *

               *       *       *       *       *       *       *

              [(7)] (8) Community-based organization.--The term
            ``community-based organization'' means a private
            nonprofit organization that is representative of a
            community or a significant segment of a community and
            that has demonstrated expertise and effectiveness in
            the field of workforce investment.
              [(8)] (9) Customized training.--The term ``customized

            training '' means training--
                      (A) * * *

               *       *       *       *       *       *       *

                      (C) for which the employer pays for [not less
                    than 50 percent of the cost of the training] a
                    significant portion of the cost of training, as
                    determined by the local board.
              [(9)] (10) Dislocated worker.--The term ``dislocated
            worker'' means an individual who--
                      (A) * * *

               *       *       *       *       *       *       *

              [(10)] (11) Displaced homemaker.--The term
            ``displaced homemaker'' means an individual who has
            been providing unpaid services to family members in the
            home and who--
                      (A) * * *

               *       *       *       *       *       *       *

              [(11)] (12) Economic development agencies.--The term
            ``economic development agencies'' includes local
            planning and zoning commissions or boards, community
            development agencies, and other local agencies and
            institutions responsible for regulating, promoting, or
            assisting in local economic development.
              [(12)] (13) Eligible provider.--The term ``eligible
            provider'', used with respect to--
                      (A) * * *

               *       *       *       *       *       *       *

              [(13)  Eligible youth.--Except as provided in
            subtitles C and D, the term ``eligible youth'' means an
            individual who--
                      [(A) is not less than age 14 and not more
                    than
                    age 21;
                      [(B) is a low-income individual; and
                      [(C) is an individual who is one or more of
                    the following:
                              [(i) Deficient in basic literacy
                            skills.
                              [(ii) A school dropout.
                              [(iii) Homeless, a runaway, or a
                            foster child.
                              [(iv) Pregnant or a parent.
                              [(v) An offender.
                              [(vi) An individual who requires
                            additional assistance to complete an
                            educational program, or to secure and
                            hold employment.]

               *       *       *       *       *       *       *

              [(24) Lower living standard income level.--The term
            ``lower living standard income level'' means that
            income level (adjusted for regional, metropolitan,
            urban, and rural differences and family size)
            determined annually by the Secretary based on the most
            recent lower living family budget issued by the
            Secretary.]
              [(25)] (24) Low-income individual.--The term ``low-
            income individual'' means an individual who--
                      (A) * * *
                      (B) received an income, or is a member of a
                    family that received a total family income, for
                    the 6-month period prior to application for the
                    program involved (exclusive of unemployment
                    compensation, child support payments, payments
                    described in subparagraph (A), and old-age and
                    survivors insurance benefits received under
                    section 202 of the Social Security Act (42
                    U.S.C. 402)) that, in relation to family size,
                    does not exceed the [higher of--
                              [(i) the poverty line, for an
                            equivalent period; or
                              [(ii) 70 percent of the lower living
                            standard income level, for an
                            equivalent period;] poverty line for an
                            equivalent period;

               *       *       *       *       *       *       *

                      (D) receives or is eligible to receive free
                    or reduced price lunch;
                      [(D)] (E) qualifies as a homeless individual,
                    as defined in subsections (a) and (c) of
                    section 103 of the Stewart B. McKinney Homeless
                    Assistance Act (42 U.S.C. 11302);
                      [(E)] (F) is a foster child on behalf of whom
                    State or local government payments are made; or
                      [(F)] (G) in cases permitted by regulations
                    promulgated by the Secretary of Labor, is an
                    individual with a disability whose own income
                    meets the requirements of a program described
                    in subparagraph (A) or of subparagraph (B), but
                    who is a member of a family whose income does
                    not meet such requirements.
              [(26)] (25) Nontraditional employment.--The term
            ``nontraditional employment'' refers to occupations or
            fields of work for which individuals from one gender
            comprise less than 25 percent of the individuals
            employed in each such occupation or field of work.
              [(27)] (26) Offender.--The term ``offender'' means
            any adult or juvenile--
                      (A) * * *

               *       *       *       *       *       *       *

              [(28)] (27) Older individual.--The term ``older
            individual'' means an individual age 55 or older.
              [(29)] (28) One-stop operator.--The term ``one-stop
            operator'' means 1 or more entities designated or
            certified under section 121(d).
              [(30)] (29) One-stop partner.--The term ``one-stop
            partner'' means--
                      (A) * * *

               *       *       *       *       *       *       *

              [(31)] (30) On-the-job training.--The term ``on-the-
            job training '' means training by an employer that is
            provided to a paid participant while engaged in
            productive work in a job that--
                      (A) * * *

               *       *       *       *       *       *       *

              [(32)] (31) Outlying area.--The term ``outlying
            area'' means the United States Virgin Islands, Guam,
            American Samoa, the Commonwealth of the Northern
            Mariana Islands, the Republic of the Marshall Islands,
            the Federated States of Micronesia, and the Republic of
            Palau.
              [(33) Out-of-school youth.--The term ``out-of-school
            youth'' means--
                      [(A) an eligible youth who is a school
                    dropout; or
                      [(B) an eligible youth who has received a
                    secondary school diploma or its equivalent but
                    is basic skills deficient, unemployed, or
                    underemployed.]
              [(34)] (32) Participant.--The term ``participant''
            means an individual who has been determined to be
            eligible to participate in and who is receiving
            services (except followup services authorized under
            this title) under a program authorized by this title.
            Participation shall be deemed to commence on the first
            day, following determination of eligibility, on which
            the individual began receiving subsidized employment,
            training, or other services provided under this title.
              [(35)] (33) Postsecondary educational institution.--
            The term ``postsecondary educational institution''
            means an institution of higher education, as defined in
            section 102 of the Higher Education Act of 1965.
              [(36)] (34) Poverty line.--The term ``poverty line''
            means the poverty line (as defined by the Office of
            Management and Budget, and revised annually in
            accordance with section 673(2) of the Community
            Services Block Grant Act (42 U.S.C. 9902(2)))
            applicable to a family of the size involved.
              [(37)] (35) Public assistance.--The term ``public
            assistance'' means Federal, State, or local government
            cash payments for which eligibility is determined by a
            needs or income test.
              [(38)] (36) Rapid response activity.--The term
            ``rapid response activity'' means an activity provided
            by a State, or by an entity designated by a State, with
            funds provided by the State under section 134(a)(1)(A),
            in the case of a permanent closure or mass layoff at a
            plant, facility, or enterprise, or a natural or other
            disaster, that results in mass job dislocation, in
            order to assist dislocated workers in obtaining
            reemployment as soon as possible, with services
            including--
                      (A) * * *

               *       *       *       *       *       *       *

              [(39)] (37) School dropout.--The term ``school
            dropout'' means an individual who is no longer
            attending any school and who has not received a
            secondary school diploma or its recognized equivalent.
              [(40)] (38) Secondary school.--The term ``secondary
            school'' has the meaning given the term in section 9101
            of the Elementary and Secondary Education Act of 1965.
              [(41)] (39) Secretary.--The term ``Secretary'' means
            the Secretary of Labor, and the term means such
            Secretary for purposes of section 503.
              [(42)] (40) State.--The term ``State'' means each of
            the several States of the United States, the District
            of Columbia, and the Commonwealth of Puerto Rico.
              [(43)] (41) State adjusted level of performance.--The
            term ``State adjusted level of performance'' means a
            level described in clause (iii) or (v) of section
            136(b)(3)(A).
              [(44)] (42) State board.--The term ``State board''
            means a State workforce investment board established
            under section 111.
              [(45)] (43) State performance measure.--The term
            ``State performance measure'' means a performance
            measure established under section 136(b).
              [(46)] (44) Supportive services.--The term
            ``supportive services'' means services such as
            transportation, child care, dependent care, housing,
            and needs-related payments, that are necessary to
            enable an individual to participate in activities
            authorized under this title, consistent with the
            provisions of this title.
              [(47)] (45) Unemployed individual.--The term
            ``unemployed individual'' means an individual who is
            without a job and who wants and is available for work.
            The determination of whether an individual is without a
            job shall be made in accordance with the criteria used
            by the Bureau of Labor Statistics of the Department of
            Labor in defining individuals as unemployed.
              [(48)] (46) Unit of general local government.--The
            term ``unit of general local government'' means any
            general purpose political subdivision of a State that
            has the power to levy taxes and spend funds, as well as
            general corporate and police powers.
              [(49)] (47) Veteran; related definition.--
                      (A) * * *

               *       *       *       *       *       *       *

              [(50)] (48) Vocational education.--The term
            ``vocational education'' has the meaning given the term
            in section 521 of the Carl D. Perkins Vocational and
            Applied Technology Education Act (20 U.S.C. 2471).
              [(51)] (49) Workforce investment activity.--The term
            ``workforce investment activity'' means an employment
            and training activity, and a youth activity.
              [(52)] (50) Youth activity.--The term ``youth
            activity'' means an activity described in section 129
            that is carried out for eligible youth (or as described
            in section 129(c)(5)).
              [(53)] (51) Youth council.--The term ``youth
            council'' means a council established under section
            117(h).

          Subtitle B--Statewide and Local Workforce Investment Systems

    SEC. 106. PURPOSE.

      The purpose of this subtitle is to provide workforce
    investment activities, through statewide and local workforce
    investment systems, that increase the employment, retention,
    and earnings of participants, and increase occupational skill
    attainment by participants, and, as a result, improve the
    quality of the workforce, reduce welfare dependency, and
    enhance the productivity and competitiveness of the Nation. It
    is also the purpose of this subtitle to provide workforce
    investment activities in a manner that promotes the informed
    choice of participants and actively involves participants in
    decisions affecting their participation in such activities.

                          CHAPTER 1--STATE PROVISIONS

    SEC. 111. STATE WORKFORCE INVESTMENT BOARDS.

      (a) * * *
      (b) Membership.--
              (1) In general.--The State Board shall include--
                      (A) * * *

               *       *       *       *       *       *       *

                      [(C) representatives appointed by the
                    Governor, who are--
                              [(i) representatives of business in
                            the State, who--
                                      [(I) are owners of
                                    businesses, chief executives or
                                    operating officers of
                                    businesses, and other business
                                    executives or employers with
                                    optimum policymaking or hiring
                                    authority, including members of
                                    local boards described in
                                    section 117(b)(2)(A)(i);
                                      [(II) represent businesses
                                    with employment opportunities
                                    that reflect the employment
                                    opportunities of the State; and
                                      [(III) are appointed from
                                    among individuals nominated by
                                    State business organizations
                                    and business trade
                                    associations;
                              [(ii) chief elected officials
                            (representing both cities and counties,
                            where appropriate);
                              [(iii) representatives of labor
                            organizations, who have been nominated
                            by State labor federations;
                              [(iv) representatives of individuals
                            and organizations that have experience
                            with respect to youth activities;
                              [(v) representatives of individuals
                            and organizations that have experience
                            and expertise in the delivery of
                            workforce investment activities,
                            including chief executive officers of
                            community colleges and community-based
                            organizations within the State;
                              [(vi)(I) the lead State agency
                            officials with responsibility for the
                            programs and activities that are
                            described in section 121(b) and carried
                            out by one-stop partners; and
                              [(II) in any case in which no lead
                            State agency official has
                            responsibility for such a program,
                            service, or activity, a representative
                            in the State with expertise relating to
                            such program, service, or activity; and
                              [(vii) such other representatives and
                            State agency officials as the Governor
                            may designate, such as the State agency
                            officials responsible for economic
                            development and juvenile justice
                            programs in the State.]
                      (C) representatives appointed by the
                    Governor, who are--
                              (i)(I) the lead State agency
                            officials with responsibility for the
                            programs and activities that are
                            described in section 121(b) and carried
                            out by one-stop partners;
                              (II) in any case in which no lead
                            State agency official has
                            responsibility for such a program or
                            activity, a representative in the State
                            with expertise relating to such program
                            or activity; and
                              (III) if not included under subclause
                            (I), the director of the designated
                            State entity responsible for carrying
                            out title I of the Rehabilitation Act
                            (29 U.S.C. 701 et seq.);
                              (ii) the State agency officials
                            responsible for economic development;
                              (iii) representatives of business in
                            the State who--
                                      (I) are owners of businesses,
                                    chief executive or operating
                                    officers of businesses, and
                                    other business executives or
                                    employers with optimum policy
                                    making or hiring authority,
                                    including members of local
                                    boards described in section
                                    117(b)(2)(A)(i);
                                      (II) represent businesses
                                    with employment opportunities
                                    that reflect employment
                                    opportunities in the State; and
                                      (III) are appointed from
                                    among individuals nominated by
                                    State business organizations
                                    and business trade
                                    associations;
                              (iv) chief elected officials
                            (representing both cities and counties,
                            where appropriate);
                              (v) representatives of labor
                            organizations, who have been nominated
                            by State labor federations; and
                              (vi) such other representatives and
                            State agency officials as the Governor
                            may designate.

               *       *       *       *       *       *       *

              (3) Majority.--A majority of the members of the State
            Board shall be representatives described in paragraph
            [(1)(C)(i)] (1)(C)(iii).
      (c) Chairperson.--The Governor shall select a chairperson for
    the State Board from among the representatives described in
    subsection [(b)(1)(C)(i)] (b)(1)(C)(iii).
      (d) Functions.--The State Board shall assist the Governor
    in--
              (1) * * *

               *       *       *       *       *       *       *

              [(3) commenting at least once annually on the
            measures taken pursuant to section 113(b)(14) of the
            Carl D. Perkins Vocational and Applied Technology
            Education Act (20 U.S.C 2323(b)(14));]
              (3) development and review of statewide policies
            affecting the integrated provision of services through
            the one-stop delivery system described in section 121,
            including--
                      (A) the development of criteria for, and the
                    issuance of, certifications of one-stop
                    centers;
                      (B) the criteria for the allocation of one-
                    stop center infrastructure funding under
                    section 121(h), and oversight of the use of
                    such funds;
                      (C) approaches to facilitating equitable and
                    efficient cost allocation in one-stop delivery
                    systems; and
                      (D) such other matters that may promote
                    statewide objectives for, and enhance the
                    performance of, one-stop delivery systems
                    within the State;
              (4) designation of local areas as required in section
            116 and the development of State criteria relating to
            the appointment and certification of local boards under
            section 117;
              (5) development of allocation formulas for the
            distribution of funds for adult employment and training
            activities and youth activities to local areas as
            permitted under [sections 128(b)(3)(B) and
            133(b)(3)(B)] sections 128(b)(3) and 133(b)(3);

               *       *       *       *       *       *       *

              (9) development of an application for an incentive
            grant under section [503] 136(i).
      [(e) Alternative Entity.--
              [(1) In general.--For purposes of complying with
            subsections (a), (b), and (c), a State may use any
            State entity (including a State council, State
            workforce development board, combination of regional
            workforce development boards, or similar entity) that--
                      [(A) was in existence on December 31, 1997;
                      [(B)(i) was established pursuant to section
                    122 or title VII of the Job Training
                    Partnership Act, as in effect on December 31,
                    1997; or
                      [(ii) is substantially similar to the State
                    board described in subsections (a), (b), and
                    (c); and
                      [(C) includes representatives of business in
                    the State and representatives of labor
                    organizations in the State.
              [(2) References.--References in this Act to a State
            board shall be considered to include such an entity.]
      (e) Authority to Hire Staff.--The State board may hire staff
    to assist in carrying out the functions described in subsection
    (d).

               *       *       *       *       *       *       *

    SEC. 112. STATE PLAN.

      (a) In General.--For a State to be eligible to receive an
    allotment under section 127 or 132, or to receive financial
    assistance under the Wagner-Peyser Act (29 U.S.C. 49 et seq.),
    the Governor of the State shall submit to the Secretary for
    consideration by the Secretary, a single State plan (referred
    to in this title as the ``State plan'') that outlines a [5-year
    strategy] 2-year strategy for the statewide workforce
    investment system of the State and that meets the requirements
    of section 111 and this section.
      (b) Contents.--The State plan shall include--
              (1) * * *

               *       *       *       *       *       *       *

              (17) with respect to the employment and training
            activities authorized in section 134--
                      (A) a description of--
                              (i) * * *

               *       *       *       *       *       *       *

                              (iii) the procedures the local boards
                            in the State will use to identify
                            eligible providers of training services
                            described in section 134(d)(4) (other
                            than on-the-job training or customized
                            training), as required under section
                            122; [and]
                              [(iv) how the State will serve the
                            employment and training needs of
                            dislocated workers (including displaced
                            homemakers), low-income individuals
                            (including recipients of public
                            assistance), individuals training for
                            nontraditional employment, and other
                            individuals with multiple barriers to
                            employment (including older individuals
                            and individuals with disabilities);
                            and]
                              (iv) how the State will serve the
                            employment and training needs of
                            dislocated workers (including displaced
                            homemakers and formerly self-employed
                            and transitioning farmers, ranchers,
                            and fisherman) low income individuals
                            (including recipients of public
                            assistance), homeless individuals, ex-
                            offenders, individuals training for
                            nontraditional employment, and other
                            individuals with multiple barriers to
                            employment (including older
                            individuals);
                              (v) how the State will serve the
                            employment and training needs of
                            individuals with disabilities,
                            consistent with section 188 and
                            Executive Order 13217 (relating to
                            community-based alternatives for
                            individuals with disabilities)
                            including the provision of outreach,
                            intake, assessments, and service
                            delivery, the development of
                            performance measures, and the training
                            of staff; and

               *       *       *       *       *       *       *

      (d) Modifications to Plan.--A State may submit modifications
    to a State plan in accordance with the requirements of this
    section and section 111 as necessary during the [5-year] 2-year
     period covered by the plan.

                          CHAPTER 2--LOCAL PROVISIONS

    SEC. 116. LOCAL WORKFORCE INVESTMENT AREAS.

      (a) Designation of Areas.--
              (1) In general.--
                      (A) * * *
                      (B) Considerations.--In making the
                    designation of local areas, the Governor shall
                    take into consideration the following:
                              (i) * * *

               *       *       *       *       *       *       *

                              (vi) The extent to which such local
                            areas will promote efficiency in the
                            administration and provision of
                            services.
              [(2) Automatic designation.--The Governor shall
            approve any request for designation as a local area--
                      [(A) from any unit of general local
                    government with a population of 500,000 or
                    more;
                      [(B) of the area served by a rural
                    concentrated employment program grant recipient
                    of demonstrated effectiveness that served as a
                    service delivery area or substate area under
                    the Job Training Partnership Act, if the grant
                    recipient has submitted the request; and
                      [(C) of an area that served as a service
                    delivery area under section 101(a)(4)(A)(ii) of
                    the Job Training Partnership Act (as in effect
                    on the day before the date of enactment of this
                    Act) in a State that has a population of not
                    more than 1,100,000 and a population density
                    greater than 900 persons per square mile.]
              (2) Automatic designation.--
                      (A) In general.--Except as provided in
                    subparagraph (B) of this paragraph and
                    subsection (b), the Governor shall approve a
                    request for designation as a local area from--
                              (i) any unit of general local
                            government with a population of 500,000
                            or more; and
                              (ii) an area served by a rural
                            concentrated employment program grant
                            recipient that served as a service
                            delivery area or substate area under
                            the Job training Partnership Act (29
                            U.S.C. 1501 et seq.),
                    for the 2-year period covered by a State plan
                    under section 112 if such request is made not
                    later than the date of the submission of the
                    State plan.
                      (B) Continued designation based on
                    performance.--The Governor may deny a request
                    for designation submitted pursuant to
                    subparagraph (A) if such unit of government was
                    designated as a local area for the preceding 2-
                    year period covered by a State plan and the
                    Governor determines that such local area did
                    not perform successfully during such period.
      (c) Regional Planning and Cooperation.--
              (1) Planning.--As part of the process for developing
            the State plan, a State may require regional planning
            by local boards for a designated region in the State.
            The State may require the local boards for a designated
            region to participate in a regional planning process
            that results in the establishment of regional
            performance measures for workforce investment
            activities authorized under this subtitle. The State
            may award regional incentive grants to the designated
            regions that meet or exceed the regional performance
            measures. The State may require the local boards for
            the designated region to prepare a single regional plan
            that incorporates the elements of the local plan under
            section 118 and that is submitted and approved in lieu
            of separate local plans under such section.

               *       *       *       *       *       *       *

    SEC. 117. LOCAL WORKFORCE INVESTMENT BOARDS.

      (a) * * *
      (b) Membership.--
              (1) * * *
              (2) Composition.--Such criteria shall require, at a
            minimum, that the membership of each local board--
                      (A) shall include--
                              (i) representatives of business in
                            the local area, who--
                                      (I) * * *
                                      (II) represent businesses
                                    with employment opportunities
                                    that reflect the employment
                                    opportunities of the local
                                    area, businesses that are in
                                    the leading industries in the
                                    local area, and large and small
                                    businesses in the local area;
                                    and

               *       *       *       *       *       *       *

                              [(ii) representatives of local
                            educational entities, including
                            representatives of local educational
                            agencies, local school boards, entities
                            providing adult education and literacy
                            activities, and postsecondary
                            educational institutions (including
                            representatives of community colleges,
                            where such entities exist), selected
                            from among individuals nominated by
                            regional or local educational agencies,
                            institutions, or organizations
                            representing such local educational
                            entities;]
                              (ii) superintendents of the local
                            secondary school systems and the
                            presidents or chief executive officers
                            of postsecondary educational
                            institutions (including community
                            colleges, where such entities exist);

               *       *       *       *       *       *       *

                              (iv) representatives of community-
                            based organizations (including
                            organizations representing individuals
                            with disabilities and veterans, for a
                            local area in which such organizations
                            are present)[;] and faith-based
                            organizations; and

               *       *       *       *       *       *       *

                              [(vi) representatives of each of the
                            one-stop
                            partners; and]
              (3) Authority of board members and representation.--
            Members of the board that represent organizations,
            agencies, or other entities shall be individuals with
            optimum policymaking authority within the
            organizations, agencies, or entities. The members of
            the board shall represent diverse geographic sections
            within the local area.

               *       *       *       *       *       *       *

      (d) Functions of Local Board.--The functions of the local
    board shall include the following:
              (1) * * *
              (2) Selection of operators and providers.--
                      (A) * * *
                      (B) Selection of youth providers.--Consistent
                    with section 123, the local board shall
                    identify eligible providers of youth activities
                    in the local area [by awarding grants or
                    contracts on a competitive basis, based on the
                    recommendations of the youth council].

               *       *       *       *       *       *       *

              (4) Program oversight.--The local board, in
            partnership with the chief elected official, shall
            conduct oversight with respect to local programs of
            youth activities authorized under section 129, local
            employment and training activities authorized under
            section 134, and the one-stop delivery system in the
            local area and ensure the appropriate use and
            management of the funds provided under this title for
            such programs, activities, and system.

               *       *       *       *       *       *       *

      [(h) Youth Council.--
              [(1) Establishment.--There shall be established, as a
            subgroup within each local board, a youth council
            appointed by the local board, in cooperation with the
            chief elected official for the local area.
              [(2) Membership.--The membership of each youth
            council--
                      [(A) shall include--
                              [(i) members of the local board
                            described in subparagraph (A) or (B) of
                            subsection (b)(2) with special interest
                            or expertise in youth policy;
                              [(ii) representatives of youth
                            service agencies, including juvenile
                            justice and local law enforcement
                            agencies;
                              [(iii) representatives of local
                            public housing authorities;
                              [(iv) parents of eligible youth
                            seeking assistance under this subtitle;
                              [(v) individuals, including former
                            participants, and representatives of
                            organizations, that have experience
                            relating to youth activities; and
                              [(vi) representatives of the Job
                            Corps, as appropriate; and
                      [(B) may include such other individuals as
                    the chairperson of the local board, in
                    cooperation with the chief elected official,
                    determines to be appropriate.
              [(3) Relationship to local board.--Members of the
            youth council who are not members of the local board
            described in subparagraphs (A) and (B) of subsection
            (b)(2) shall be voting members of the youth council and
            nonvoting members of the board.
              [(4) Duties.--The duties of the youth council
            include--
                      [(A) developing the portions of the local
                    plan relating to eligible youth, as determined
                    by the chairperson of the local board;
                      [(B) subject to the approval of the local
                    board and consistent with section 123--
                              [(i) recommending eligible providers
                            of youth activities, to be awarded
                            grants or contracts on a competitive
                            basis by the local board to carry out
                            the youth activities; and
                              [(ii) conducting oversight with
                            respect to the eligible providers of
                            youth activities, in the local area;
                      [(C) coordinating youth activities authorized
                    under
                    section 129 in the local area; and
                      [(D) other duties determined to be
                    appropriate by the chairperson of the local
                    board.
      [(i) Alternative Entity.--
              [(1) In general.--For purposes of complying with
            subsections (a), (b), and (c), and paragraphs (1) and
            (2) of subsection (h), a State may use any local entity
            (including a local council, regional workforce
            development board, or similar entity) that--
                      [(A) is established to serve the local area
                    (or the service delivery area that most closely
                    corresponds to the local area);
                      [(B) is in existence on December 31, 1997;
                      [(C)(i) is established pursuant to section
                    102 of the Job Training Partnership Act, as in
                    effect on December 31, 1997; or
                      [(ii) is substantially similar to the local
                    board described in subsections (a), (b), and
                    (c), and paragraphs (1) and (2) of subsection
                    (h); and
                      [(D) includes--
                              [(i) representatives of business in
                            the local area; and
                              [(ii)(I) representatives of labor
                            organizations (for a local area in
                            which employees are represented by
                            labor organizations), nominated by
                            local labor federations; or
                              [(II) other representatives of
                            employees in the local area (for a
                            local area in which no employees are
                            represented by such organizations).
              [(2) References.--References in this Act to a local
            board or a youth council shall be considered to include
            such an entity or a subgroup of such an entity,
            respectively.]
      (h) Establishment of Councils.--The local board may establish
    councils to provide information and advice to assist the local
    board in carrying out activities under this title. Such
    councils may include a council composed of one-stop partners to
    advise the local board on the operation of the one-stop
    delivery system, a youth council composed of experts and
    stakeholders in youth programs to advise the local board on
    activities for youth, and such other councils as the local
    board determines are appropriate.

    SEC. 118. LOCAL PLAN.

      (a) In General.--Each local board shall develop and submit to
    the Governor a comprehensive [5-year] 2-year local plan
    (referred to in this title as the ``local plan''), in
    partnership with the appropriate chief elected official. The
    plan shall be consistent with the State plan.
      (b) Contents.--The local plan shall include--
              (1) * * *
              [(2) a description of the one-stop delivery system to
            be established or designated in the local area,
            including--
                      [(A) a description of how the local board
                    will ensure the continuous improvement of
                    eligible providers of services through the
                    system and ensure that such providers meet the
                    employment needs of local employers and
                    participants; and
                      [(B) a copy of each memorandum of
                    understanding described in section 121(c)
                    (between the local board and each of the one-
                    stop partners) concerning the operation of the
                    one-stop delivery system in the local area;]
              (2) a description of the one-stop delivery system to
            be established or designated in the local area,
            including a description of how the local board will
            ensure the continuous improvement of eligible providers
            of services through the system and ensure that such
            providers meets the employment needs of local employers
            and participants.

               *       *       *       *       *       *       *

              (4) a description and assessment of the type and
            availability of adult [and dislocated worker]
            employment and training activities in the local area;

               *       *       *       *       *       *       *

              CHAPTER 3--WORKFORCE INVESTMENT ACTIVITIES PROVIDERS

    SEC. 121. ESTABLISHMENT OF ONE-STOP DELIVERY SYSTEMS.

      (a) * * *
      (b) One-Stop Partners.--
              (1) * * *
              (2) Additional partners.--
                      (A) * * *
                      (B) Programs.--The programs referred to in
                    subparagraph (A) may include--
                              (i) * * *

               *       *       *       *       *       *       *

                              (iv) programs authorized under the
                            National and Community Service Act of
                            1990 (42 U.S.C. 12501 et seq.); [and]
                              (v) other appropriate Federal, State,
                            or local
                            programs, including programs in the
                            private sector[.];
                              (vi) employment and training programs
                            administered by the Social Security
                            Administration, including the Ticket to
                            Work program (established by Public Law
                            106-170);
                              (vii) programs under part D of title
                            IV of the Social Security Act (42
                            U.S.C. 451 et seq.) (relating to child
                            support enforcement); and
                              (viii) programs carried out in the
                            local area for individuals with
                            disabilities, including programs
                            carried out by State agencies relating
                            to mental health, mental retardation,
                            and developmental disabilities, State
                            Medicaid agencies, State Independent
                            Living Councils, and Independent Living
                            Centers.

               *       *       *       *       *       *       *

      [(e) Established One-Stop Delivery System.--If a one-stop
    delivery system has been established in a local area prior to
    the date of enactment of this Act, the local board, the chief
    elected official, and the Governor involved may agree to
    certify an entity carrying out activities through the system as
    a one-stop operator for purposes of subsection (d), consistent
    with the requirements of subsection (b), of the memorandum of
    understanding, and of section 134(c).]
      [(c)] (e) Establishment of One-Stop Delivery System.--
              (1) In general.--There shall be established in a
            State that receives an allotment under section 132(b) a
            one-stop delivery system, which--
                      (A) shall provide the core services described
                    in [subsection (d)(2)] section 134(c)(2);
                      (B) shall provide access to intensive
                    services and training services as described in
                    paragraphs (3) and (4) of [subsection (d)]
                    section 134(c), including serving as the point
                    of access to individual training accounts for
                    training services to participants in accordance
                    with [subsection (d)(4)(G)] section
                    134(c)(4)(G);
                      (C) shall provide access to the activities
                    carried out under [subsection (e)] section
                    134(d), if any;
                      (D) shall provide access to programs and
                    activities carried out by one-stop partners and
                    described in [section 121(b)] subsection (b);
                    [and]
                      [(E) shall provide access to the information
                    described in section 15 of the Wagner-Peyser
                    Act and all job search, placement, recruitment,
                    and other labor exchange services authorized
                    under the Wagner-Peyser Act (29 U.S.C. 49 et
                    seq.).]
                      (E) shall provide access to the information
                    described in section 15(e) of the Wagner-Peyser
                    Act (29 U.S.C. 49l-2(e)).

               *       *       *       *       *       *       *

      (g) Certification of One-Stop Centers.--
              (1) In general.--The State board shall establish
            procedures and criteria for periodically certifying
            one-stop center for the purpose of awarding the one-
            stop infrastructure funding described in subsection
            (h).
              (2) Criteria.--The criteria for certification under
            this subsection shall include minimum standards
            relating to the scope and degree of service integration
            achieved by the centers involving the programs provided
            by the one-stop partners.
              (3) Effect of certification.--One-stop centers
            certified under this subsection shall be eligible to
            receive the infrastructure grants authorized under
            subsection (h).
      (h) One-Stop Infrastructure Funding.--
              (1) Partner contributions.--
                      (A) Provision of funds.--Notwithstanding any
                    other provision of law, as determined under
                    subparagraph (B), a portion of the Federal
                    funds provided to the State and areas within
                    the State under the Federal laws authorizing
                    the one-stop partner programs described in
                    subsection (b) for a fiscal year shall be
                    provided to the Governor by such programs to
                    carry out this subsection.
                      (B) Determination.--The portion of funds to
                    be provided under subparagraph (A) by each one-
                    stop partner shall be determined by the
                    Governor, after consultation with the State
                    board.
              (2) Allocation by governor.--From the funds provided
            under paragraph (1), the Governor shall allocate funds
            to local areas for the purposes of assisting in paying
            the costs of the infrastructure of One-Stop centers
            certified under subsection (g).
              (3) Allocation formula.--The State board shall
            develop a formula to be used by the Governor to
            allocate the funds described in paragraph (1). The
            formula shall include such factors as the State board
            determines are appropriate, which may include factors
            such as the number of centers in the local area that
            have been certified, the population served by such
            centers, and the performance of such centers.
              (4) Costs of infrastructure.--For purposes of this
            subsection, the term ``costs of infrastructure'' means
            the nonpersonnel costs that are necessary for the
            general operation of a one-stop center, including the
            rental costs of the facilities, the costs of utilities
            and maintenance, equipment (including adaptive
            technology for individuals with disabilities),
            strategic planning activities for the center, and
            common outreach activities.
      (i) Other Funds.--
              (1) In general.--In addition to the funds provided to
            carry out subsection (h), a portion of funds made
            available under Federal law authorizing the one-stop
            partner programs described in subsection (b) shall be
            used to pay the costs relating to the operation of the
            one-stop delivery system that are not paid for from the
            funds provided under subsection (h), to the extent not
            inconsistent with the Federal law involved including--
                      (A) infrastructure costs that are in excess
                    of the funds provided under subsection (h);
                      (B) common costs that are in addition to the
                    costs of infrastructure; and
                      (C) the costs of the provision of core
                    services applicable to each program.
              (2) Determination and guidance.--The method for
            determining the appropriate portion of funds to be
            provided by each program under paragraph (1) shall be
            determined as part of the memorandum of understanding
            under subsection (c). The State board shall provide
            guidance to facilitate the determination of appropriate
            funding allocation in local areas.

    [SEC. 122. IDENTIFICATION OF ELIGIBLE PROVIDERS OF TRAINING SERVICES.

      [(a) Eligibility Requirements.--
              [(1) In general.--Except as provided in subsection
            (h), to be identified as an eligible provider of
            training services described in section 134(d)(4)
            (referred to in this section as ``training services'')
            in a local area and to be eligible to receive funds
            made available under section 133(b) for the provision
            of training services, a provider of such services shall
            meet the requirements of this section.
              [(2) Providers.--Subject to the provisions of this
            section, to be eligible to receive the funds, the
            provider shall be--
                      [(A) a postsecondary educational institution
                    that--
                              [(i) is eligible to receive Federal
                            funds under title IV of the Higher
                            Education Act of 1965 (20 U.S.C. 1070
                            et seq.); and
                              [(ii) provides a program that leads
                            to an associate degree, baccalaureate
                            degree, or certificate;
                      [(B) an entity that carries out programs
                    under the Act of August 16, 1937 (commonly
                    known as the ``National Apprenticeship Act'';
                    50 Stat. 664, chapter 663; 29 U.S.C. 50 et
                    seq.); or
                      [(C) another public or private provider of a
                    program of training services.
      [(b) Initial Eligibility Determination.--
              [(1) Postsecondary educational institutions and
            entities carrying out apprenticeship programs.--To be
            initially eligible to receive funds as described in
            subsection (a) to carry out a program described in
            subparagraph (A) or (B) of subsection (a)(2), a
            provider described in subparagraph (A) or (B),
            respectively, of subsection (a)(2) shall submit an
            application, to the local board for the local area in
            which the provider desires to provide training
            services, at such time, in such manner, and containing
            such information as the local board may require.
              [(2) Other eligible providers.--
                      [(A) Procedure.--Each Governor of a State
                    shall establish a procedure for use by local
                    boards in the State in determining the initial
                    eligibility of a provider described in
                    subsection (a)(2)(C) to receive funds as
                    described in subsection (a) for a program of
                    training services, including the initial
                    eligibility of--
                              [(i) a postsecondary educational
                            institution to receive such funds for a
                            program not described in subsection
                            (a)(2)(A); and
                              [(ii) a provider described in
                            subsection (a)(2)(B) to receive such
                            funds for a program not described in
                            subsection (a)(2)(B).
                      [(B) Recommendations.--In developing such
                    procedure, the Governor shall solicit and take
                    into consideration the recommendations of local
                    boards and providers of training services
                    within the State.
                      [(C) Opportunity to submit comments.--The
                    Governor shall provide an opportunity, during
                    the development of the procedure, for
                    interested members of the public, including
                    representatives of business and labor
                    organizations, to submit comments on such
                    procedure.
                      [(D) Requirements.--In establishing the
                    procedure, the Governor shall require that, to
                    be initially eligible to receive funds as
                    described in subsection (a) for a program, a
                    provider described in subsection (a)(2)(C)--
                              [(i) shall submit an application, to
                            the local board for the local area in
                            which the provider desires to provide
                            training services, at such time and in
                            such manner as may be required, and
                            containing a description of the
                            program;
                              [(ii) if the provider provides
                            training services through a program on
                            the date of application, shall include
                            in the application an appropriate
                            portion of the performance information
                            and program cost information described
                            in subsection (d) for the program, as
                            specified in the procedure, and shall
                            meet appropriate levels of performance
                            for the program, as specified in the
                            procedure; and
                              [(iii) if the provider does not
                            provide training services on such date,
                            shall meet appropriate requirements, as
                            specified in the procedure.
      [(c) Subsequent Eligibility Determination.--
              [(1) Procedure.--Each Governor of a State shall
            establish a procedure for use by local boards in the
            State in determining the eligibility of a provider
            described in subsection (a)(2) to continue to receive
            funds as described in subsection (a) for a program
            after an initial period of eligibility under subsection
            (b) (referred to in this section as ``subsequent
            eligibility'').
              [(2) Recommendations.--In developing such procedure,
            the Governor shall solicit and take into consideration
            the recommendations of local boards and providers of
            training services within the State.
              [(3) Opportunity to submit comments.--The Governor
            shall provide an opportunity, during the development of
            the procedure, for interested members of the public,
            including representatives of business and labor
            organizations, to submit comments on such procedure.
              [(4) Considerations.--In developing such procedure,
            the Governor shall ensure that the procedure requires
            the local boards to take into consideration, in making
            the determinations of subsequent eligibility--
                      [(A) the specific economic, geographic, and
                    demographic factors in the local areas in which
                    providers seeking eligibility are located; and
                      [(B) the characteristics of the populations
                    served by providers seeking eligibility,
                    including the demonstrated difficulties in
                    serving such populations, where applicable.
              [(5) Requirements.--In establishing the procedure,
            the Governor shall require that, to be eligible to
            continue to receive funds as described in subsection
            (a) for a program after the initial period of
            eligibility, a provider described in subsection (a)(2)
            shall--
                      [(A) submit the performance information and
                    program cost information described in
                    subsection (d)(1) for the program and any
                    additional information required to be submitted
                    in accordance with subsection (d)(2) for the
                    program annually to the appropriate local board
                    at such time and in such manner as may be
                    required; and
                      [(B) annually meet the performance levels
                    described in paragraph (6) for the program, as
                    demonstrated utilizing quarterly records
                    described in section 136, in a manner
                    consistent with section 136.
              [(6) Levels of performance.--
                      [(A) In general.--At a minimum, the procedure
                    described in paragraph (1) shall require the
                    provider to meet minimum acceptable levels of
                    performance based on the performance
                    information referred to in paragraph (5)(A).
                      [(B) Higher levels of performance
                    eligibility.--The local board may require
                    higher levels of performance than the levels
                    referred to in subparagraph (A) for subsequent
                    eligibility to receive funds as described in
                    subsection (a).
      [(d) Performance and Cost Information.--
              [(1) Required information.--For a provider of
            training services to be determined to be subsequently
            eligible under subsection (c) to receive funds as
            described in subsection (a), such provider shall, under
            subsection (c), submit--
                      [(A) verifiable program-specific performance
                    information consisting of--
                              [(i) program information, including--
                                      [(I) the program completion
                                    rates for all individuals
                                    participating in the applicable
                                    program conducted by the
                                    provider;
                                      [(II) the percentage of all
                                    individuals participating in
                                    the applicable program who
                                    obtain unsubsidized employment,
                                    which may also include
                                    information specifying the
                                    percentage of the individuals
                                    who obtain unsubsidized
                                    employment in an occupation
                                    related to the program
                                    conducted; and
                                      [(III) the wages at placement
                                    in employment of all
                                    individuals participating in
                                    the applicable program; and
                              [(ii) training services information
                            for all participants who received
                            assistance under section 134 to
                            participate in the applicable program,
                            including--
                                      [(I) the percentage of
                                    participants who have completed
                                    the applicable program and who
                                    are placed in unsubsidized
                                    employment;
                                      [(II) the retention rates in
                                    unsubsidized employment of
                                    participants who have completed
                                    the applicable program, 6
                                    months after the first day of
                                    the employment;
                                      [(III) the wages received by
                                    participants who have completed
                                    the applicable program, 6
                                    months after the first day of
                                    the employment involved; and
                                      [(IV) where appropriate, the
                                    rates of licensure or
                                    certification, attainment of
                                    academic degrees or
                                    equivalents, or attainment of
                                    other measures of skills, of
                                    the graduates of the applicable
                                    program; and
                      [(B) information on program costs (such as
                    tuition and fees) for participants in the
                    applicable program.
              [(2) Additional information.--Subject to paragraph
            (3), in addition to the performance information
            described in paragraph (1)--
                      [(A) the Governor may require that a provider
                    submit, under subsection (c), such other
                    verifiable program-specific performance
                    information as the Governor determines to be
                    appropriate to obtain such subsequent
                    eligibility, which may include information
                    relating to--
                              [(i) retention rates in employment
                            and the subsequent wages of all
                            individuals who complete the applicable
                            program;
                              [(ii) where appropriate, the rates of
                            licensure or certification of all
                            individuals who complete the program;
                            and
                              [(iii) the percentage of individuals
                            who complete the program who attain
                            industry-recognized occupational skills
                            in the subject, occupation, or industry
                            for which training is provided through
                            the program, where applicable; and
                      [(B) the Governor, or the local board, may
                    require a provider to submit, under subsection
                    (c), other verifiable program-specific
                    performance information to obtain such
                    subsequent eligibility.
              [(3) Conditions.--
                      [(A) In general.--If the Governor or a local
                    board requests additional information under
                    paragraph (2) that imposes extraordinary costs
                    on providers, or if providers experience
                    extraordinary costs in the collection of
                    information required under paragraph
                    (1)(A)(ii), the Governor or the local board
                    shall provide access to cost-effective methods
                    for the collection of the information involved,
                    or the Governor shall provide additional
                    resources to assist providers in the collection
                    of such information from funds made available
                    as described in sections 128(a) and 133(a)(1),
                    as appropriate.
                      [(B) Higher education eligibility
                    requirements.--The local board and the
                    designated State agency described in subsection
                    (i) may accept program-specific performance
                    information consistent with the requirements
                    for eligibility under title IV of the Higher
                    Education Act of 1965 (20 U.S.C. 1070 et seq.)
                    from a provider for purposes of enabling the
                    provider to fulfill the applicable requirements
                    of this subsection, if such information is
                    substantially similar to the information
                    otherwise required under this subsection.
      [(e) Local Identification.--
              [(1) In general.--The local board shall place on a
            list providers submitting an application under
            subsection (b)(1) and providers determined to be
            initially eligible under subsection (b)(2), and retain
            on the list providers determined to be subsequently
            eligible under subsection (c), to receive funds as
            described in subsection (a) for the provision of
            training services in the local area served by the local
            board. The list of providers shall be accompanied by
            any performance information and program cost
            information submitted under subsection (b) or (c) by
            the provider.
              [(2) Submission to state agency.--On placing or
            retaining a provider on the list, the local board shall
            submit, to the designated State agency described in
            subsection (i), the list and the performance
            information and program cost information referred to in
            paragraph (1). If the agency determines, within 30 days
            after the date of the submission, that the provider
            does not meet the performance levels described in
            subsection (c)(6) for the program (where applicable),
            the agency may remove the provider from the list for
            the program. The agency may not remove from the list an
            agency submitting an application under subsection
            (b)(1).
              [(3) Identification of eligible providers.--A
            provider who is placed or retained on the list under
            paragraph (1), and is not removed by the designated
            State agency under paragraph (2), for a program, shall
            be considered to be identified as an eligible provider
            of training services for the program.
              [(4) Availability.--
                      [(A) State list.--The designated State agency
                    shall compile a single list of the providers
                    identified under paragraph (3) from all local
                    areas in the State and disseminate such list,
                    and the performance information and program
                    cost information described in paragraph (1), to
                    the one-stop delivery systems within the State.
                    Such list and information shall be made widely
                    available to participants in employment and
                    training activities authorized under section
                    134 and others through the one-stop delivery
                    system.
                      [(B) Selection from state list.--Individuals
                    eligible to receive training services under
                    section 134(d)(4) shall have the opportunity to
                    select any of the eligible providers, from any
                    of the local areas in the State, that are
                    included on the list described in subparagraph
                    (A) to provide the services, consistent with
                    the requirements of section 134.
              [(5) Acceptance of individual training accounts by
            other states.--States may enter into agreements, on a
            reciprocal basis, to permit eligible providers of
            training services in a State to accept individual
            training accounts provided in another State.
      [(f ) Enforcement.--
              [(1) Accuracy of information.--If the designated
            State agency, after consultation with the local board
            involved, determines that an eligible provider or
            individual supplying information on behalf of the
            provider intentionally supplies inaccurate information
            under this section, the agency shall terminate the
            eligibility of the provider to receive funds described
            in subsection (a) for any program for a period of time,
            but not less than 2 years.
              [(2) Noncompliance.--If the designated State agency,
            or the local board working with the State agency,
            determines that an eligible provider described in
            subsection (a) substantially violates any requirement
            under this Act, the agency, or the local board working
            with the State agency, may terminate the eligibility of
            such provider to receive funds described in subsection
            (a) for the program involved or take such other action
            as the agency or local board determines to be
            appropriate.
              [(3) Repayment.--A provider whose eligibility is
            terminated under paragraph (1) or (2) for a program
            shall be liable for repayment of all funds described in
            subsection (a) received for the program during any
            period of noncompliance described in such paragraph.
              [(4) Construction.--This subsection and subsection
            (g) shall be construed to provide remedies and
            penalties that supplement, but do not supplant, other
            civil and criminal remedies and penalties.
      [(g) Appeal.--The Governor shall establish procedures for
    providers of training services to appeal a denial of
    eligibility by the local board or the designated State agency
    under subsection (b), (c), or (e), a termination of eligibility
    or other action by the board or agency under subsection (f ),
    or a denial of eligibility by a one-stop operator under
    subsection (h). Such procedures shall provide an opportunity
    for a hearing and prescribe appropriate time limits to ensure
    prompt resolution of the appeal.
      [(h) On-the-Job Training or Customized Training Exception.--
              [(1) In general.--Providers of on-the-job training or
            customized training shall not be subject to the
            requirements of subsections (a) through (e).
              [(2) Collection and dissemination of information.--A
            one-stop operator in a local area shall collect such
            performance information from on-the-job training and
            customized training providers as the Governor may
            require, determine whether the providers meet such
            performance criteria as the Governor may require, and
            disseminate information identifying providers that meet
            the criteria as eligible providers, and the performance
            information, through the one-stop delivery system.
            Providers determined to meet the criteria shall be
            considered to be identified as eligible providers of
            training services.
      [(i) Administration.--The Governor shall designate a State
    agency to make the determinations described in subsection
    (e)(2), take the enforcement actions described in subsection (f
    ), and carry out other duties described in this section.

    [SEC. 123. IDENTIFICATION OF ELIGIBLE PROVIDERS OF YOUTH ACTIVITIES.

      [From funds allocated under paragraph (2)(A) or (3) of
    section 128(b) to a local area, the local board for such area
    shall identify eligible providers of youth activities by
    awarding grants or contracts on a competitive basis, based on
    the recommendations of the youth council and on the criteria
    contained in the State plan, to the providers to carry out the
    activities, and shall conduct oversight with respect to the
    providers, in the local area.]

    SEC. 122. IDENTIFICATION OF ELIGIBLE PROVIDERS OF TRAINING SERVICES.

      (a) In General.--The Governor shall establish criteria and
    procedures regarding the eligibility of providers of training
    services described in section 134(c)(4) to receive funds
    provided under section 133(b) for the provision of such
    training services.
      (b) Criteria.--
              (1) In general.--The criteria established pursuant to
            subsection (a) shall take into account the performance
            of providers of training services with respect to the
            indicators described in section 136 or other
            appropriate indicators (taking into consideration the
            characteristics of the population served and relevant
            economic conditions), and such other factors as the
            Governor determines are appropriate to ensure the
            quality of services, the accountability of providers,
            and the informed choice of participants under chapter
            5. Such criteria shall require that the provider submit
            appropriate, accurate and timely information to the
            State for purposes of carrying out subsection (d). The
            criteria shall also provide for periodic review and
            renewal of eligibility under this section for providers
            of training services. The Governor may authorize local
            areas in the State to establish additional criteria or
            to modify the criteria established by the Governor
            under this section for purposes of determining the
            eligibility of providers of training services to
            provide such services in the local area.
              (2) Limitation.--In carrying out the requirements of
            this subsection, no personally identifiable information
            regarding a student, including Social Security number,
            student identification number, or other identifier, may
            be disclosed without the prior written consent of the
            parent or eligible student in compliance with section
            444 of the General Education Provisions Act (20 U.S.C.
            1232g).
      (c) Procedures.--The procedures established under subsection
    (a) shall identify the application process for a provider of
    training services to become eligible to receive funds under
    section 133(b), and identify the respective roles of the State
    and local areas in receiving and reviewing applications and in
    making determinations of eligibility based on the criteria
    established under this section. The procedures shall also
    establish a process for a provider of training services to
    appeal a denial or termination of eligibility under this
    section that includes an opportunity for a hearing and
    prescribes appropriate time limits to ensure prompt resolution
    of the appeal.
      (d) Information to Assist Participants in Choosing
    Providers.--In order to facilitate and assist participants
    under chapter 5 in choosing providers of training services, the
    Governor shall ensure that an appropriate list or lists of
    providers determined eligible under this section in the State,
    accompanied by such information as the Governor determines is
    appropriate, is provided to the local boards in the State to be
    made available to such participants and to members of the
    public through the one-stop delivery system in the State.
      (e) Agreements With Other States.--States may enter into
    agreements, on a reciprocal basis, to permit eligible providers
    of training services to accept individual training accounts
    provided in another State.
      (f) Recommendations.--In developing the criteria, procedures,
    and information required under this section, the Governor shall
    solicit and take into consideration the recommendations of
    local boards and providers of training services within the
    State.
      (g) Opportunity to Submit Comments.--During the development
    of the criteria, procedures, and information required under
    this section, the Governor shall provide an opportunity for
    interested members of the public, including representatives of
    business and labor organizations, to submit comments regarding
    such criteria, procedures, and information.

    CHAPTER 4--YOUTH ACTIVITIES

               *       *       *       *       *       *       *

    SEC. 127. STATE ALLOTMENTS.

      [(a) In General.--The Secretary shall--
              [(1) for each fiscal year in which the amount
            appropriated under section 137(a) exceeds
            $1,000,000,000, reserve a portion determined under
            subsection (b)(1)(A) of the amount appropriated under
            section 137(a) for use under sections 167 (relating to
            migrant and seasonal farmworker programs) and 169
            (relating to youth opportunity grants); and
              [(2) use the remainder of the amount appropriated
            under section 137(a) for a fiscal year to make
            allotments and grants in accordance with subparagraphs
            (B) and (C) of subsection (b)(1) and make funds
            available for use under section 166 (relating to Native
            American programs).
      [(b) Allotment Among States.--
              [(1) Youth activities.--
                      [(A) Youth opportunity grants.--
                              [(i) In general.--For each fiscal
                            year in which the amount appropriated
                            under section 137(a) exceeds
                            $1,000,000,000, the Secretary shall
                            reserve a portion of the amount to
                            provide youth opportunity grants and
                            other activities under section 169
                            (relating to youth opportunity grants)
                            and provide youth activities under
                            section 167 (relating to migrant and
                            seasonal farmworker programs).
                              [(ii) Portion.--The portion referred
                            to in clause (i) shall equal, for a
                            fiscal year--
                                      [(I) except as provided in
                                    subclause (II), the difference
                                    obtained by subtracting
                                    $1,000,000,000 from the amount
                                    appropriated under section
                                    137(a) for the fiscal year; or
                                      [(II) for any fiscal year in
                                    which the amount is
                                    $1,250,000,000 or greater,
                                    $250,000,000.
                              [(iii) Youth activities for
                            farmworkers.--From the portion
                            described in clause (i) for a fiscal
                            year, the Secretary shall make
                            available 4 percent of such portion to
                            provide youth activities under section
                            167.
                              [(iv) Role model academy project.--
                            From the portion described in clause
                            (i) for fiscal year 1999, the Secretary
                            shall make available such sums as the
                            Secretary determines to be appropriate
                            to carry out section 169(g).
                      [(B) Outlying areas.--
                              [(i) In general.--From the amount
                            made available under subsection (a)(2)
                            for a fiscal year, the Secretary shall
                            reserve not more than \1/4\ of 1
                            percent of the amount appropriated
                            under section 137(a) for the fiscal
                            year--
                                      [(I) to provide assistance to
                                    the outlying areas to carry out
                                    youth activities and statewide
                                    workforce investment
                                    activities; and
                                      [(II) for each of fiscal
                                    years 1999, 2000, and 2001, to
                                    carry out the competition
                                    described in clause (ii),
                                    except that the funds reserved
                                    to carry out such clause for
                                    any such fiscal year shall not
                                    exceed the amount reserved for
                                    the Freely Associated States
                                    for fiscal year 1997, from
                                    amounts reserved under sections
                                    252(a) and 262(a)(1) of the Job
                                    Training Partnership Act (as in
                                    effect on the day before the
                                    date of enactment of this Act).
                              [(ii) Limitation for freely
                            associated states.--
                                      [(I) Competitive grants.--The
                                    Secretary shall use funds
                                    described in clause (i)(II) to
                                    award grants to Guam, American
                                    Samoa, the Commonwealth of the
                                    Northern Mariana Islands, and
                                    the Freely Associated States to
                                    carry out youth activities and
                                    statewide workforce investment
                                    activities.
                                      [(II) Award basis.--The
                                    Secretary shall award grants
                                    pursuant to subclause (I) on a
                                    competitive basis and pursuant
                                    to the recommendations of
                                    experts in the field of
                                    employment and training,
                                    working through the Pacific
                                    Region Educational Laboratory
                                    in Honolulu, Hawaii.
                                      [(III) Assistance
                                    requirements.--Any Freely
                                    Associated State that desires
                                    to receive assistance under
                                    this subparagraph shall submit
                                    an application to the Secretary
                                    and shall include in the
                                    application for assistance--
                                              [(aa) information
                                            demonstrating that the
                                            Freely Associated State
                                            will meet all
                                            conditions that apply
                                            to States under this
                                            title;
                                              [(bb) an assurance
                                            that, notwithstanding
                                            any other provision of
                                            this title, the Freely
                                            Associated State will
                                            use such assistance
                                            only for the direct
                                            provision of services;
                                            and
                                              [(cc) such other
                                            information and
                                            assurances as the
                                            Secretary may require.
                                      [(IV) Termination of
                                    eligibility.--Notwithstanding
                                    any other provision of law, the
                                    Freely Associated States shall
                                    not receive any assistance
                                    under this subparagraph for any
                                    program year that begins after
                                    September 30, 2001.
                                      [(V) Administrative costs.--
                                    The Secretary may provide not
                                    more than 5 percent of the
                                    funds made available for grants
                                    under subclause (I) to pay the
                                    administrative costs of the
                                    Pacific Region Educational
                                    Laboratory in Honolulu, Hawaii,
                                    regarding activities assisted
                                    under this clause.
                              [(iii) Additional requirement.--The
                            provisions of Public Law 95-134,
                            permitting the consolidation of grants
                            by the outlying areas, shall not apply
                            to assistance provided to those areas,
                            including the Freely Associated States,
                            under this subparagraph.
                      [(C) States.--
                              [(i) In general.--After determining
                            the amounts to be reserved under
                            subparagraph (A) (if any) and
                            subparagraph (B), the Secretary shall--
                                      [(I) from the amount referred
                                    to in subsection (a)(2) for a
                                    fiscal year, make available not
                                    more than 1.5 percent to
                                    provide youth activities under
                                    section 166 (relating to Native
                                    Americans); and
                                      [(II) allot the remainder of
                                    the amount referred to in
                                    subsection (a)(2) for a fiscal
                                    year to the States pursuant to
                                    clause (ii) for youth
                                    activities and statewide
                                    workforce investment
                                    activities.
                              [(ii) Formula.--Subject to clauses
                            (iii) and (iv), of the remainder--
                                      [(I) 33\1/3\ percent shall be
                                    allotted on the basis of the
                                    relative number of unemployed
                                    individuals in areas of
                                    substantial unemployment in
                                    each State, compared to the
                                    total number of unemployed
                                    individuals in areas of
                                    substantial unemployment in all
                                    States;
                                      [(II) 33\1/3\ percent shall
                                    be allotted on the basis of the
                                    relative excess number of
                                    unemployed individuals in each
                                    State, compared to the total
                                    excess number of unemployed
                                    individuals in all States; and
                                      [(III) 33\1/3\ percent shall
                                    be allotted on the basis of the
                                    relative number of
                                    disadvantaged youth in each
                                    State, compared to the total
                                    number of disadvantaged youth
                                    in all States, except as
                                    described in clause (iii).
                              [(iii) Calculation.--In determining
                            an allotment under clause (ii)(III) for
                            any State in which there is a local
                            area designated under section
                            116(a)(2)(B) (relating to the area
                            served by a rural concentrated
                            employment program grant recipient),
                            the allotment shall be based on the
                            higher of--
                                      [(I) the number of
                                    individuals who are age 16
                                    through 21 in families with an
                                    income below the low-income
                                    level in such area; or
                                      [(II) the number of
                                    disadvantaged youth in such
                                    area.
                              [(iv) Minimum and maximum percentages
                            and minimum allotments.--In making
                            allotments under this subparagraph, the
                            Secretary shall ensure the
                            following:
                                      [(I) Minimum percentage and
                                    allotment.--Subject to
                                    subclause (IV), the Secretary
                                    shall ensure that no State
                                    shall receive an allotment for
                                    a fiscal year that is less than
                                    the greater of--
                                              [(aa) an amount based
                                            on 90 percent of the
                                            allotment percentage of
                                            the State for the
                                            preceding fiscal year;
                                            or
                                              [(bb) 100 percent of
                                            the total of the
                                            allotments of the State
                                            under sections 252 and
                                            262 of the Job Training
                                            Partnership Act (as in
                                            effect on the day
                                            before the date of
                                            enactment of this Act)
                                            for fiscal year 1998.
                                      [(II) Small state minimum
                                    allotment.--
                                    Subject to subclauses (I),
                                    (III), and (IV), the Secretary
                                    shall ensure that no State
                                    shall receive an allotment
                                    under this subparagraph that is
                                    less than the total of--
                                              [(aa) \3/10\ of 1
                                            percent of
                                            $1,000,000,000 of the
                                            remainder described in
                                            clause (i)(II) for the
                                            fiscal year; and
                                              [(bb) if the
                                            remainder described in
                                            clause (i)(II) for the
                                            fiscal year exceeds
                                            $1,000,000,000, \2/5\
                                            of 1 percent of the
                                            excess.
                                      [(III) Maximum percentage.--
                                    Subject to subclause (I), the
                                    Secretary shall ensure that no
                                    State shall receive an
                                    allotment percentage for a
                                    fiscal year that is more than
                                    130 percent of the allotment
                                    percentage of the State for the
                                    preceding fiscal year.
                                      [(IV) Minimum funding.--In
                                    any fiscal year in which the
                                    remainder described in clause
                                    (i)(II) does not exceed
                                    $1,000,000,000, the minimum
                                    allotments under subclauses (I)
                                    and (II) shall be calculated by
                                    the methodology for calculating
                                    the corresponding allotments
                                    under parts B and C of title II
                                    of the Job Training Partnership
                                    Act, as in effect on July 1,
                                    1998.
              [(2) Definitions.--For the purpose of the formula
            specified in paragraph (1)(C):
                      [(A) Allotment percentage.--The term
                    ``allotment percentage'', used with respect to
                    fiscal year 2000 or a subsequent fiscal year,
                    means a percentage of the remainder described
                    in paragraph (1)(C)(i)(II) that is received
                    through an allotment made under paragraph
                    (1)(C) for the fiscal year. The term, used with
                    respect to fiscal year 1998 or 1999, means the
                    percentage of the amounts allotted to States
                    under sections 252(b) and 262(a) of the Job
                    Training Partnership Act (as in effect on the
                    day before the date of enactment of this Act)
                    that is received under such sections by the
                    State involved for fiscal year 1998 or 1999.
                      [(B) Area of substantial unemployment.--The
                    term ``area of substantial unemployment'' means
                    any area that is of sufficient size and scope
                    to sustain a program of workforce investment
                    activities carried out under this subtitle and
                    that has an average rate of unemployment of at
                    least 6.5 percent for the most recent 12
                    months, as determined by the Secretary. For
                    purposes of this subparagraph, determinations
                    of areas of substantial unemployment shall be
                    made once each fiscal year.
                      [(C) Disadvantaged youth.--Subject to
                    paragraph (3), the term ``disadvantaged youth''
                    means an individual who is age 16 through 21
                    who received an income, or is a member of a
                    family that received a total family income,
                    that, in relation to family size, does not
                    exceed the higher of--
                              [(i) the poverty line; or
                              [(ii) 70 percent of the lower living
                            standard income level.
                      [(D) Excess number.--The term ``excess
                    number'' means, used with respect to the excess
                    number of unemployed individuals within a
                    State, the higher of--
                              [(i) the number that represents the
                            number of unemployed individuals in
                            excess of 4.5 percent of the civilian
                            labor force in the State; or
                              [(ii) the number that represents the
                            number of unemployed individuals in
                            excess of 4.5 percent of the civilian
                            labor force in areas of substantial
                            unemployment in such State.
                      [(E) Low-income level.--The term ``low-income
                    level'' means $7,000 with respect to income in
                    1969, and for any later year means that amount
                    that bears the same relationship to $7,000 as
                    the Consumer Price Index for that year bears to
                    the Consumer Price Index for 1969, rounded to
                    the nearest $1,000.
              [(3) Special rule.--For the purpose of the formula
            specified in paragraph (1)(C), the Secretary shall, as
            appropriate and to the extent practicable, exclude
            college students and members of the Armed Forces from
            the determination of the number of disadvantaged youth.
              [(4) Definition.--In this subsection, the term
            ``Freely Associated State'' means the Republic of the
            Marshall Islands, the Federated States of Micronesia,
            and the Republic of Palau.]
      (a) Allotment Among States.--
              (1) Youth activities.--
                      (A) Youth challenge grants.--
                              (i) Reservation of funds.--Of the
                            amount appropriated under section
                            137(a) for each fiscal year, the
                            Secretary shall reserve 25 percent to
                            provide youth challenge grants under
                            section 169.
                              (ii) Limitation.--Notwithstanding
                            clause (i), if the amount appropriated
                            under section 137(a) for a fiscal year
                            exceeds $1,000,000,000, the Secretary
                            shall reserve $250,000,000 to provide
                            youth challenge grants under section
                            169.
                      (B) Outlying areas and native americans.--
                    After determining the amount to be reserved
                    under subparagraph (A), of the remainder of the
                    amount appropriated under section 137(a) for
                    each fiscal year the Secretary shall--
                              (i) reserve not more than \1/4\ of
                            one percent of such amount to provide
                            assistance to the outlying areas to
                            carry out youth activities and
                            statewide workforce investment
                            activities; and
                              (ii) reserve not more than 1 and \1/
                            2\ percent of such amount to provide
                            youth activities under section 166
                            (relating to Native Americans).
                      (C) States.--
                              (i) In general.--After determining
                            the amounts to be reserved under
                            subparagraphs (A) and (B), the
                            Secretary shall allot the remainder of
                            the amount appropriated under section
                            137(a) for each fiscal year to the
                            States pursuant to clause (ii) for
                            youth activities and statewide
                            workforce investment activities.
                              (ii) Formula.--Subject to clauses
                            (iii) and (iv), of the remainder--
                                      (I) 33 and \1/3\ percent
                                    shall be allotted on the basis
                                    of the relative number of high
                                    school dropouts who are ages 16
                                    through 21 in the State,
                                    compared to the total number of
                                    high school dropouts who are
                                    ages 16 through 21 in all
                                    States;
                                      (II) 33 and \1/3\ percent
                                    shall be allotted on the basis
                                    of the relative number of
                                    jobless out-of-school youth who
                                    are ages 16 through 21 in the
                                    State, compared to the total
                                    number of jobless out-of-school
                                    youth who are ages 16 through
                                    21 in all States; and
                                      (III) 33 and \1/3\ percent
                                    shall be allotted on the basis
                                    of the relative number of
                                    disadvantaged youth who are
                                    ages 16 through 21 in the
                                    State, compared to the total
                                    number of disadvantaged youth
                                    who are ages 16 through 21 in
                                    all States.
                              (iii) Minimum and maximum
                            percentages.--The Secretary shall
                            ensure that no State shall receive an
                            allotment for a fiscal year that is
                            less than 90 percent or greater than
                            130 percent of the allotment percentage
                            of that State for the preceding fiscal
                            year.
                              (iv) Small state minimum allotment.--
                            Subject to clause (iii), the Secretary
                            shall ensure that no State shall
                            receive an allotment under this
                            paragraph that is less than \3/10\ of 1
                            percent of the amount available under
                            subparagraph (A).
              (2) Definitions.--For the purposes of paragraph (1),
            the following definitions apply:
                      (A) Allotment percentage.--The term
                    ``allotment percentage'', used with respect to
                    fiscal year 2004 or a subsequent fiscal year,
                    means a percentage of the remainder described
                    in paragraph (1)(C)(i) that is received through
                    an allotment made under this subsection for the
                    fiscal year. The term, with respect to fiscal
                    year 2003, means the percentage of the amounts
                    allotted to States under this chapter (as in
                    effect on the day before the date of enactment
                    of the Workforce Reinvestment and Adult
                    Education Act of 2003) that is received by the
                    State involved for fiscal year 2003.
                      (B) Disadvantaged youth.--The term
                    ``disadvantaged youth'' means an individual who
                    is age 16 through 21 who received an income, or
                    is a member of a family that received a total
                    family income, that, in relation to family
                    size, does not exceed the poverty line.
                      (C) Number of high school dropouts.--The term
                    ``number of high school dropouts'' means the
                    number of high school dropouts as is determined
                    by the Secretary based on the Current
                    Population Survey.
                      (D) Number of jobless out-of-school youth.--
                    The term ``number of jobless out-of-school
                    youth'' means the number of jobless out-of-
                    school youth as is determined by the Secretary
                    based on the Current Population Survey.
              (3) Special rule.--For purposes of the formula
            specified in paragraph (1)(C), the Secretary shall, as
            appropriate and to the extent practicable, exclude
            college students and members of the Armed Forces from
            the determination of the number of disadvantaged youth.
              (4) Minimum allotment.--Notwithstanding any other
            provision of this section, no State shall receive an
            allotment under this section that is less than the
            amount received by such State for fiscal year 2003.
      [(c)] (b) Reallotment.--
              (1) * * *
              [(2) Amount.--The amount available for reallotment
            for a program year is equal to the amount by which the
            unobligated balance of the State allotment under this
            section for such activities, at the end of the program
            year prior to the program year for which the
            determination under this paragraph is made, exceeds 20
            percent of such allotment for the prior program year.]
              (2) Amount.--The amount available for reallotment for
            a program year is equal to the amount by which the
            unexpended balance, excluding accrued expenditures, at
            the end of such program year of the total amount of
            funds available to the State under this section during
            such program year (including amounts allotted to the
            State in prior program years that remain available
            during the program year for which the determination is
            made) exceeds 30 percent of such total amount.
              (3) Reallotment.--In making reallotments to eligible
            States of amounts available pursuant to paragraph (2)
            for a program year, the Secretary shall allot to each
            eligible State an amount based on the relative amount
            allotted to such State under this section for such
            activities [for the prior program year] for the program
            year in which the determination is made, as compared to
            the total amount allotted to all eligible States under
            this section for such activities for [such prior
            program year] such program year.
              [(4) Eligibility.--For purposes of this subsection,
            an eligible State means a State that has obligated at
            least 80 percent of the State allotment under this
            section for such activities for the program year prior
            to the program year for which the determination under
            paragraph (2) is made.]
              (4) Eligibility.--For purposes of this subsection, an
            eligible State means a State which does not have an
            amount available for reallotment under paragraph (2)
            for the program year for which the determination under
            paragraph (2) is made.

               *       *       *       *       *       *       *

    SEC. 128. WITHIN STATE ALLOCATIONS.

      [(a) Reservations for State Activities.--
              [(1) In general.--The Governor of a State shall
            reserve not more than 15 percent of each of the amounts
            allotted to the State under section 127(b)(1)(C) and
            paragraphs (1)(B) and (2)(B) of section 132(b) for a
            fiscal year for statewide workforce investment
            activities.
              [(2) Use of funds.--Regardless of whether the
            reserved amounts were allotted under section
            127(b)(1)(C), or under paragraph (1)(B) or (2)(B) of
            section 132(b), the Governor may use the reserved
            amounts to carry out statewide youth activities
            described in section 129(b) or statewide employment and
            training activities, for adults or for dislocated
            workers, described in paragraph (2)(B) or (3) of
            section 134(a).
      [(b) Within State Allocation.--
              [(1) Methods.--The Governor, acting in accordance
            with the State plan, and after consulting with chief
            elected officials in the local areas, shall allocate
            the funds that are allotted to the State for youth
            activities and statewide workforce investment
            activities under section 127(b)(1)(C) and are not
            reserved under subsection (a), in accordance with
            paragraph (2) or (3).
              [(2) Formula allocation.--
                      [(A) Youth activities.--
                              [(i) Allocation.--In allocating the
                            funds described in paragraph (1) to
                            local areas, a State may allocate--
                                      [(I) 33\1/3\ percent of the
                                    funds on the basis described in
                                    section 127(b)(1)(C)(ii)(I);
                                      [(II) 33\1/3\ percent of the
                                    funds on the basis described in
                                    section 127(b)(1)(C)(ii)(II);
                                    and
                                      [(III) 33\1/3\ percent of the
                                    funds on the basis described in
                                    clauses (ii)(III) and (iii) of
                                    section 127(b)(1)(C).
                              [(ii) Minimum percentage.--Effective
                            at the end of the second full fiscal
                            year after the date on which a local
                            area is designated under section 116,
                            the local area shall not receive an
                            allocation percentage for a fiscal year
                            that is less than 90 percent of the
                            average allocation percentage of the
                            local area for the 2 preceding fiscal
                            years. Amounts necessary for increasing
                            such allocations to local areas to
                            comply with the preceding sentence
                            shall be obtained by ratably reducing
                            the allocations to be made to other
                            local areas under this subparagraph.
                              [(iii) Definition.--The term
                            ``allocation percentage'', used with
                            respect to fiscal year 2000 or a
                            subsequent fiscal year, means a
                            percentage of the funds referred to in
                            clause (i), received through an
                            allocation made under this
                            subparagraph, for the fiscal year.
                      [(B) Application.--For purposes of carrying
                    out subparagraph (A)--
                              [(i) references in section 127(b) to
                            a State shall be deemed to be
                            references to a local area;
                              [(ii) references in section 127(b) to
                            all States shall be deemed to be
                            references to all local areas in the
                            State involved; and
                              [(iii) except as described in clause
                            (i), references in section 127(b)(1) to
                            the term ``excess number'' shall be
                            considered to be references to the term
                            as defined in section 127(b)(2).
              [(3) Youth discretionary allocation.--In lieu of
            making the allocation described in paragraph (2)(A), in
            allocating the funds described in paragraph (1) to
            local areas, a State may distribute--
                      [(A) a portion equal to not less than 70
                    percent of the funds in accordance with
                    paragraph (2)(A); and
                      [(B) the remaining portion of the funds on
                    the basis of a formula that--
                              [(i) incorporates additional factors
                            (other than the factors described in
                            paragraph (2)(A)) relating to--
                                      [(I) excess youth poverty in
                                    urban, rural, and suburban
                                    local areas; and
                                      [(II) excess unemployment
                                    above the State average in
                                    urban, rural, and suburban
                                    local areas; and
                              [(ii) was developed by the State
                            board and approved by the Secretary as
                            part of the State plan.
              [(4) Limitation.--
                      [(A) In general.--Of the amount allocated to
                    a local area under this subsection and section
                    133(b) for a fiscal year, not more than 10
                    percent of the amount may be used by the local
                    board for the administrative cost of carrying
                    out local workforce investment activities
                    described in subsection (d) or (e) of section
                    134 or in section 129(c).
                      [(B) Use of funds.--Funds made available for
                    administrative costs under subparagraph (A) may
                    be used for the administrative cost of any of
                    the local workforce investment activities
                    described in subsection (d) or (e) of section
                    134 or in section 129(c), regardless of whether
                    the funds were allocated under this subsection
                    or section 133(b).
                      [(C) Regulations.--The Secretary, after
                    consulting with the Governors, shall develop
                    and issue regulations that define the term
                    ``administrative cost'' for purposes of this
                    title. Such definition shall be consistent with
                    generally accepted accounting principles.]
      (a) Reservation for Statewide Activities.--
              (1) In general.--The Governor of a State shall
            reserve not more than 10 percent of the amount allotted
            to the State under section 127(a)(1)(C) for a fiscal
            year for statewide activities.
              (2) Use of funds.--Regardless of whether the amounts
            are allotted under section 127(a)(1)(C) and reserved
            under paragraph (1) or allotted under section 132 and
            reserved under section 133(a), the Governor may use the
            reserved amounts to carry out statewide youth
            activities under section 129(b) or statewide employment
            and training activities under section 133.
      (b) Within State Allocation.--
              (1) In general.--Of the amounts allotted to the State
            under section 127(a)(1)(C) and not reserved under
            subsection (a)(1)--
                      (A) 80 percent of such amounts shall be
                    allocated by the Governor to local areas in
                    accordance with paragraph (2); and
                      (B) 20 percent of such amounts shall be
                    allocated by the Governor to local areas in
                    accordance with paragraph (3).
              (2) Established formula.--
                      (A) In general.--Of the amounts described in
                    paragraph (1)(A), the Governor shall allocate--
                              (i) 33 and \1/3\ percent on the basis
                            of the relative number of high school
                            dropouts who are ages 16 through 21 in
                            each local area, compared to the total
                            number of high school dropouts who are
                            ages 16 through 21 in all local areas
                            in the State;
                              (ii) 33 and \1/3\ percent on the
                            basis of the relative number of jobless
                            out-of-school youth who are ages 16
                            through 21 in each local area, compared
                            to the total number of jobless out-of-
                            school youth who are ages 16 through 21
                            in all local areas in the State; and
                              (iii) 33 and \1/3\ percent on the
                            basis of the relative number of
                            disadvantaged youth who are ages 16
                            through 21 in each local area, compared
                            to the total number of disadvantaged
                            youth who are ages 16 through 21 in all
                            local areas in the State.
                      (B) Minimum and maximum percentages.--The
                    Governor shall ensure that no local area shall
                    receive an allocation for a fiscal year under
                    this paragraph that is less than 90 percent or
                    greater than 130 percent of the allocation
                    percentage of the local area for the preceding
                    fiscal year.
                      (C) Definitions.--
                              (i) Allocation percentage.--For
                            purposes of this paragraph, the term
                            ``allocation percentage'', used with
                            respect to fiscal year 2004 or a
                            subsequent fiscal year, means a
                            percentage of amount described in
                            paragraph(1)(A) that is received
                            through an allocation made under this
                            paragraph for the fiscal year. The
                            term, with respect to fiscal year 2003,
                            means the percentage of the amounts
                            allocated to local areas under this
                            chapter (as in effect on the day before
                            the date of enactment of the Workforce
                            Investment Act Amendments of 2003) that
                            is received by the local area involved
                            for fiscal year 2003.
                              (ii) Other terms.--For purposes of
                            this paragraph, all other terms shall
                            have the meaning given such terms in
                            section 127(a)(2).
              (3) Youth discretionary allocation.--The Governor
            shall allocate to local areas the amounts described in
            paragraph (1)(B) in accordance with such demographic
            and economic factors as the Governor, after
            consultation with the State board and local boards,
            determines are appropriate.
              (4) Local administrative cost limit.--
                      (A) In general.--Of the amounts allocated to
                    a local area under this subsection and section
                    133(b) for a fiscal year, not more than 10
                    percent of the amount may be used by the local
                    boards for the administrative costs of carrying
                    out local workforce investment activities under
                    this chapter or chapter 5.
                      (B) Use of funds.--Funds made available for
                    administrative costs under subparagraph (A) may
                    be used for the administrative costs of any of
                    the local workforce investment activities
                    described in this chapter or chapter 5,
                    regardless of whether the funds were allocated
                    under this subsection or section 133(b).
      (c) Reallocation Among Local Areas.--
              (1) In general.--The Governor may, in accordance with
            this subsection, reallocate to eligible local areas
            within the State amounts that are allocated under
            [paragraph (2)(A) or (3) of] subsection (b) for youth
            activities and that are available for reallocation.
              [(2) Amount.--The amount available for reallocation
            for a program year is equal to the amount by which the
            unobligated balance of the local area allocation under
            paragraph (2)(A) or (3) of subsection (b) for such
            activities, at the end of the program year prior to the
            program year for which the determination under this
            paragraph is made exceeds 20 percent of such allocation
            for the prior program year.]
              (2) Amount.--The amount available for reallocation
            for a program year is equal to the amount by which the
            unexpended balance, excluding accrued expenditures, at
            the end of such program year of the total amount of
            funds available to the local area under this section
            during such program year (including amounts allotted to
            the local area in prior program years that remain
            available during the program year for which the
            determination is made) exceeds 30 percent of such total
            amount.
              (3) Reallocation.--In making reallocations to
            eligible local areas of amounts available pursuant to
            paragraph (2) for a program year, the Governor shall
            allocate to each eligible local area within the State
            an amount based on the relative amount allocated to
            such local area under subsection (b)[(3)] for such
            activities for [the prior program year] the program
            year in which the determination is made, as compared to
            the total amount allocated to all eligible local areas
            in the State under subsection (b)[(3)] for such
            activities for [such prior program year] such program
            year. [For purposes of this paragraph, local areas that
            received allocations under subsection (b)(2)(A) for the
            prior program year shall be treated as if the local
            areas received allocations under subsection (b)(3) for
            such year.]
              [(4) Eligibility.--For purposes of this subsection,
            an eligible local area means a local area that has
            obligated at least 80 percent of the local area
            allocation under paragraph (2)(A) or (3) of subsection
            (b) for such activities, for the program year prior to
            the program year for which the determination under
            paragraph (2) is made.]
              (4) Eligibility.--For purposes of this subsection, an
            eligible local area means a local area which does not
            have an amount available for reallocation under
            paragraph (2) for the program year for which the
            determination under paragraph (2) is made.

    SEC. 129. USE OF FUNDS FOR YOUTH ACTIVITIES.

      [(a) Purposes.--The purposes of this section are--
              [(1) to provide, to eligible youth seeking assistance
            in achieving academic and employment success, effective
            and comprehensive activities, which shall include a
            variety of options for improving educational and skill
            competencies and provide effective connections to
            employers;
              [(2) to ensure on-going mentoring opportunities for
            eligible youth with adults committed to providing such
            opportunities;
              [(3) to provide opportunities for training to
            eligible youth;
              [(4) to provide continued supportive services for
            eligible youth;
              [(5) to provide incentives for recognition and
            achievement to eligible youth; and
              [(6) to provide opportunities for eligible youth in
            activities related to leadership, development,
            decisionmaking, citizenship, and community service.
      [(b) Statewide Youth Activities.--
              [(1) In general.--Funds reserved by a Governor for a
            State as described in sections 128(a) and 133(a)(1)--
                      [(A) shall be used to carry out the statewide
                    youth activities described in paragraph (2);
                    and
                      [(B) may be used to carry out any of the
                    statewide youth activities described in
                    paragraph (3),
            regardless of whether the funds were allotted to the
            State under section 127(b)(1) or under paragraph (1) or
            (2) of section 132(b).
              [(2) Required statewide youth activities.--A State
            shall use funds reserved as described in sections
            128(a) and 133(a)(1) (regardless of whether the funds
            were allotted to the State under section 127(b)(1) or
            paragraph (1) or (2) of section 132(b)) to carry out
            statewide youth activities, which shall include--
                      [(A) disseminating a list of eligible
                    providers of youth activities described in
                    section 123;
                      [(B) carrying out activities described in
                    clauses (ii) through (vi) of section
                    134(a)(2)(B), except that references in such
                    clauses to activities authorized under section
                    134 shall be considered to be references to
                    activities authorized under this section; and
                      [(C) providing additional assistance to local
                    areas that have high concentrations of eligible
                    youth to carry out the activities described in
                    subsection (c).
              [(3) Allowable statewide youth activities.--A State
            may use funds reserved as described in sections 128(a)
            and 133(a)(1) (regardless of whether the funds were
            allotted to the State under section 127(b)(1) or
            paragraph (1) or (2) of section 132(b)) to carry out
            additional statewide youth activities, which may
            include--
                      [(A) carrying out activities described in
                    clauses (i), (ii), (iii), (iv)(II), and
                    (vi)(II) of section 134(a)(3)(A), except that
                    references in such clauses to activities
                    authorized under section 134 shall be
                    considered to be references to activities
                    authorized under this section; and
                      [(B) carrying out, on a statewide basis,
                    activities described in subsection (c).
              [(4) Prohibition.--No funds described in this
            subsection or section 134(a) shall be used to develop
            or implement education curricula for school systems in
            the State.]
      (a) Youth Participant Eligibility.--
              (1) In general.--The individuals participating in
            activities carried out under this chapter by a local
            area during any program year shall be individuals who,
            at the time the eligibility determination is made,
            are--
                      (A) not younger than age 16 or older than age
                    21; and
                      (B) one or more of the following:
                              (i) school dropouts;
                              (ii) recipients of a secondary school
                            diploma or the General Equivalency
                            Diploma (GED) (including recognized
                            alternative standards for individuals
                            with disabilities);
                              (iii) court-involved youth attending
                            an alternative school;
                              (iv) youth in foster care or who have
                            been in foster care; or
                              (v) in school youth who are low-
                            income individuals and one or more of
                            the following:
                                      (I) Deficient in literacy
                                    skills.
                                      (II) Homeless, runaway, or
                                    foster children.
                                      (III) Pregnant or parents.
                                      (IV) Offenders.
                                      (V) Individuals who require
                                    additional assistance to
                                    complete an educational
                                    program, or to secure and hold
                                    employment.
              (2) Priority for school dropouts.--A priority in the
            provision of services under this chapter shall be given
            to individuals who are school dropouts.
              (3) Limitations on activities for in-school youth.--
                      (A) Percentage of funds.--For any program
                    year, not more than 30 percent of the funds
                    available for statewide activities under
                    subsection (b), and not more than 30 percent of
                    funds available to local areas under subsection
                    (c), may be used to provide activities for in-
                    school youth meeting the requirements of
                    paragraph (1)(B)(v).
                      (B) Non-school hours required.--Activities
                    carried out under this chapter for in-school
                    youth meeting the requirements of paragraph
                    (1)(B)(v) shall only be carried out in non-
                    school hours or periods when school is not in
                    session (such as before and after school or
                    during summer recess.
      (b) Statewide Activities.--
              (1) In general.--Funds reserved by a Governor for a
            State as described in sections 128(a) and 133(a)(1) may
            be used for statewide activities including--
                      (A) additional assistance to local areas that
                    have high concentrations of eligible youth;
                      (B) supporting the provision of core services
                    described in section 134(c)(2) in the one-stop
                    delivery system;
                      (C) conducting evaluations under section
                    136(e) of activities authorized under this
                    chapter and chapter 5 in coordination with
                    evaluations carried out by the Secretary under
                    section 172, research, and demonstration
                    projects;
                      (D) providing incentive grants to local areas
                    for regional cooperation among local boards
                    (including local boards in a designated region
                    as described in section 116(c)), for local
                    coordination of activities carried out under
                    this Act, and for exemplary performance by
                    local areas on the local performance measures;
                      (E) providing technical assistance and
                    capacity building to local areas, one-stop
                    operators, one-stop partners, and eligible
                    providers, including the development and
                    training of staff, the development of exemplary
                    program activities, and the provision of
                    technical assistance to local areas that fail
                    to meet local performance measures;
                      (F) operating a fiscal and management
                    accountability system under section 136(f); and
                      (G) carrying out monitoring and oversight of
                    activities under this chapter and chapter 5.
              (2) Limitation.--Not more than 5 percent of the funds
            allotted under section 127(b) shall be used by the
            State for administrative activities carried out under
            this subsection and section 133(a).
              (3) Prohibition.--No funds described in this
            subsection or in section 134(a) may be used to develop
            or implement education curricula for school systems in
            the State.
      (c) Local Elements and Requirements.--
              (1) Program design.--Funds allocated to a local area
            for eligible youth under [paragraph (2)(A) or (3), as
            appropriate, of] section 128(b) shall be used to carry
            out, for eligible youth, programs that--
                      (A) * * *
                      (B) develop service strategies for each
                    participant that are directly linked to one or
                    more of the performance outcomes relating to
                    this chapter under section 136, and that shall
                    identify an employment goal (including, in
                    appropriate circumstances, nontraditional
                    employment), appropriate achievement
                    objectives, and appropriate services for the
                    participant taking into account the assessment
                    conducted pursuant to subparagraph (A), except
                    that a new service strategy for a participant
                    is not required if the provider carrying out
                    such a program determines it is appropriate to
                    use a recent service strategy developed for the
                    participant under another education or training
                    program; and
                      (C) provide--
                              (i) activities leading to the
                            attainment of a secondary school
                            diploma or the General Equivalency
                            Diploma (GED) (including recognized
                            alternative standards for individuals
                            with disabilities);
                              [(i)] (ii) preparation for
                            postsecondary educational opportunities
                            and advanced training, in appropriate
                            cases;
                              [(ii)] (iii) strong linkages between
                            academic and occupational learning that
                            lead to the attainment of recognized
                            credentials;
                              [(iii)] (iv) preparation for
                            unsubsidized employment opportunities,
                            in appropriate cases; and
                              [(iv) effective connections to
                            intermediaries with strong links to--
                                      [(I) the job market; and
                                      [(II) local and regional
                                    employers.]
                              (v) effective connections to
                            employers in sectors of the local labor
                            market experiencing high growth in
                            employment opportunities.
              (2) Program elements.--The programs described in
            paragraph (1) shall provide elements consisting of--
                      (A) tutoring, study skills training, and
                    instruction, leading to completion of
                    [secondary school, including dropout prevention
                    strategies] secondary school diploma or the
                    General Equivalency Diploma (GED) (including
                    recognized alternative standards for
                    individuals with disabilities), including
                    dropout prevention strategies;

               *       *       *       *       *       *       *

                      (I) followup services for not less than 12
                    months after the completion of participation,
                    as appropriate; [and]
                      (J) comprehensive guidance and counseling,
                    which may include drug and alcohol abuse
                    counseling and referral, as appropriate[.];
                      (K) on-the-job training opportunities; and
                      (L) financial literacy skills.
              (3) Additional requirements.--
                      (A) Information and referrals.--Each local
                    board shall ensure that each participant [or
                    applicant who meets the minimum income criteria
                    to be considered an eligible youth] shall be
                    provided--
                              (i) * * *

               *       *       *       *       *       *       *

              [(4) Priority.--
                      [(A) In general.--At a minimum, 30 percent of
                    the funds described in paragraph (1) shall be
                    used to provide youth activities to out-of-
                    school youth.
                      [(B) Exception.--A State that receives a
                    minimum allotment under section 127(b)(1) in
                    accordance with section 127(b)(1)(C)(iv)(II) or
                    under section 132(b)(1) in accordance with
                    section 132(b)(1)(B)(iv)(II) may reduce the
                    percentage described in subparagraph (A) for a
                    local area in the State, if--
                              [(i) after an analysis of the
                            eligible youth population in the local
                            area, the State determines that the
                            local area will be unable to meet the
                            percentage described in subparagraph
                            (A) due to a low number of out-of-
                            school youth; and
                              [(ii)(I) the State submits to the
                            Secretary, for the local area, a
                            request including a proposed reduced
                            percentage for purposes of subparagraph
                            (A), and the summary of the eligible
                            youth population analysis; and
                              [(II) the request is approved by the
                            Secretary.
              [(5) Exceptions.--Not more than 5 percent of
            participants assisted under this section in each local
            area may be individuals who do not meet the minimum
            income criteria to be considered eligible youth, if
            such individuals are within one or more of the
            following categories:
                      [(A) Individuals who are school dropouts.
                      [(B) Individuals who are basic skills
                    deficient.
                      [(C) Individuals with educational attainment
                    that is one or more grade levels below the
                    grade level appropriate to the age of the
                    individuals.
                      [(D) Individuals who are pregnant or
                    parenting.
                      [(E) Individuals with disabilities, including
                    learning disabilities.
                      [(F) Individuals who are homeless or runaway
                    youth.
                      [(G) Individuals who are offenders.
                      [(H) Other eligible youth who face serious
                    barriers to employment as identified by the
                    local board.]
              [(6)] (4) Prohibitions.--
                      (A) * * *

               *       *       *       *       *       *       *

              [(7)] (5) Linkages.--In coordinating the programs
            authorized under this section, [youth councils] local
            boards shall establish linkages with educational
            agencies responsible for services to participants as
            appropriate.
              [(8)] (6) Volunteers.--The local board shall make
            opportunities available for individuals who have
            successfully participated in programs carried out under
            this section to volunteer assistance to participants in
            the form of mentoring, tutoring, and other activities.

        [CHAPTER 5--ADULT AND DISLOCATED WORKER EMPLOYMENT AND TRAINING
                                  ACTIVITIES]

     CHAPTER 5--COMPREHENSIVE EMPLOYMENT AND TRAINING ACTIVITIES FOR ADULTS

    SEC. 131. GENERAL AUTHORIZATION.

      The Secretary shall make allotments under [paragraphs (1)(B)
    and (2)(B) of] section 132(b) to each State that meets the
    requirements of section 112 and a grant to each outlying area
    that complies with the requirements of this title, to assist
    the State or outlying area, and to enable the State or outlying
    area to assist local areas, for the purpose of providing
    workforce investment activities for adults[, and dislocated
    workers,] in the State or outlying area and in the local areas.

    SEC. 132. STATE ALLOTMENTS.

      [(a) In General.--The Secretary shall--
              [(1) make allotments and grants from the total amount
            appropriated under section 137(b) for a fiscal year in
            accordance with subsection (b)(1); and
              [(2)(A) reserve 20 percent of the amount appropriated
            under section 137(c) for a fiscal year for use under
            subsection (b)(2)(A), and under sections 170(b)
            (relating to dislocated worker technical assistance),
            171(d) (relating to dislocated worker projects), and
            173 (relating to national emergency grants, other than
            under subsection (a)(4), (f), and (g)); and
              [(B) make allotments from 80 percent of the amount
            appropriated under section 137(c) for a fiscal year in
            accordance with subsection (b)(2)(B).
      [(b) Allotment Among States.--
              [(1) Adult employment and training activities.--
                      [(A) Reservation for outlying areas.--
                              [(i) In general.--From the amount
                            made available under subsection (a)(1)
                            for a fiscal year, the Secretary shall
                            reserve not more than \1/4\ of 1
                            percent to provide assistance to the
                            outlying areas.
                              [(ii) Applicability of additional
                            requirements.--From the amount reserved
                            under clause (i), the Secretary shall
                            provide assistance to the outlying
                            areas for adult employment and training
                            activities and statewide workforce
                            investment activities in accordance
                            with the requirements of section
                            127(b)(1)(B), except that the reference
                            in section 127(b)(1)(B)(i)(II) to
                            sections 252(d) and 262(a)(1) of the
                            Job Training Partnership Act shall be
                            deemed to be a reference to section
                            202(a)(1) of the Job Training
                            Partnership Act (as in effect on the
                            day before the date of enactment of
                            this Act).
                      [(B) States.--
                              [(i) In general.--After determining
                            the amount to be reserved under
                            subparagraph (A), the Secretary shall
                            allot the remainder of the amount
                            referred to in subsection (a)(1) for a
                            fiscal year to the States pursuant to
                            clause (ii) for adult employment and
                            training activities and statewide
                            workforce investment activities.
                              [(ii) Formula.--Subject to clauses
                            (iii) and (iv), of the remainder--
                                      [(I) 33\1/3\ percent shall be
                                    allotted on the basis of the
                                    relative number of unemployed
                                    individuals in areas of
                                    substantial unemployment in
                                    each State, compared to the
                                    total number of unemployed
                                    individuals in areas of
                                    substantial unemployment in all
                                    States;
                                      [(II) 33\1/3\ percent shall
                                    be allotted on the basis of the
                                    relative excess number of
                                    unemployed individuals in each
                                    State, compared to the total
                                    excess number of unemployed
                                    individuals in all States; and
                                      [(III) 33\1/3\ percent shall
                                    be allotted on the basis of the
                                    relative number of
                                    disadvantaged adults in each
                                    State, compared to the total
                                    number of disadvantaged adults
                                    in all States, except as
                                    described in clause (iii).
                              [(iii) Calculation.--In determining
                            an allotment under clause (ii)(III) for
                            any State in which there is a local
                            area designated under section
                            116(a)(2)(B), the allotment shall be
                            based on the higher of--
                                      [(I) the number of adults in
                                    families with an income below
                                    the low-income level in such
                                    area; or
                                      [(II) the number of
                                    disadvantaged adults in such
                                    area.
                              [(iv) Minimum and maximum percentages
                            and minimum allotments.--In making
                            allotments under this subparagraph, the
                            Secretary shall ensure the following:
                                      [(I) Minimum percentage and
                                    allotment.--Subject to
                                    subclause (IV), the Secretary
                                    shall ensure that no State
                                    shall receive an allotment for
                                    a fiscal year that is less than
                                    the greater of--
                                              [(aa) an amount based
                                            on 90 percent of the
                                            allotment percentage of
                                            the State for the
                                            preceding fiscal year;
                                            or
                                              [(bb) 100 percent of
                                            the allotment of the
                                            State under section 202
                                            of the Job Training
                                            Partnership Act (as in
                                            effect on the day
                                            before the date of
                                            enactment of this Act)
                                            for fiscal year 1998.
                                      [(II) Small state minimum
                                    allotment.--Subject to
                                    subclauses (I), (III), and
                                    (IV), the Secretary shall
                                    ensure that no State shall
                                    receive an allotment under this
                                    subparagraph that is less than
                                    the total of--
                                              [(aa) \3/10\ of 1
                                            percent of $960,000,000
                                            of the remainder
                                            described in clause (i)
                                            for the fiscal year;
                                            and
                                              [(bb) if the
                                            remainder described in
                                            clause (i) for the
                                            fiscal year exceeds
                                            $960,000,000, \2/5\ of
                                            1 percent of the
                                            excess.
                                      [(III) Maximum percentage.--
                                    Subject to subclause (I), the
                                    Secretary shall ensure that no
                                    State shall receive an
                                    allotment percentage for a
                                    fiscal year that is more than
                                    130 percent of the allotment
                                    percentage of the State for the
                                    preceding fiscal year.
                                      [(IV) Minimum funding.--In
                                    any fiscal year in which the
                                    remainder described in clause
                                    (i) does not exceed
                                    $960,000,000, the minimum
                                    allotments under subclauses (I)
                                    and (II) shall be calculated by
                                    the methodology for calculating
                                    the corresponding allotments
                                    under part A of title II of the
                                    Job Training Partnership Act,
                                    as in effect on July 1, 1998.
                              [(v) Definitions.--For the purpose of
                            the formula specified in this
                            subparagraph:
                                      [(I) Adult.--The term
                                    ``adult'' means an individual
                                    who is not less than age 22 and
                                    not more than age 72.
                                      [(II) Allotment percentage.--
                                    The term ``allotment
                                    percentage'', used with respect
                                    to fiscal year 2000 or a
                                    subsequent fiscal year, means a
                                    percentage of the remainder
                                    described in clause (i) that is
                                    received through an allotment
                                    made under this subparagraph
                                    for the fiscal year. The term,
                                    used with respect to fiscal
                                    year 1998 or 1999, means the
                                    percentage of the amounts
                                    allotted to States under
                                    section 202(a) of the Job
                                    Training Partnership Act (as in
                                    effect on the day before the
                                    date of enactment of this Act)
                                    that is received under such
                                    section by the State involved
                                    for fiscal year 1998 or 1999.
                                      [(III) Area of substantial
                                    unemployment.--The term ``area
                                    of substantial unemployment''
                                    means any area that is of
                                    sufficient size and scope to
                                    sustain a program of workforce
                                    investment activities carried
                                    out under this subtitle and
                                    that has an average rate of
                                    unemployment of at least 6.5
                                    percent for the most recent 12
                                    months, as determined by the
                                    Secretary. For purposes of this
                                    subclause, determinations of
                                    areas of substantial
                                    unemployment shall be made once
                                    each fiscal year.
                                      [(IV) Disadvantaged adult.--
                                    Subject to subclause (V), the
                                    term ``disadvantaged adult''
                                    means an adult who received an
                                    income, or is a member of a
                                    family that received a total
                                    family income, that, in
                                    relation to family size, does
                                    not exceed the higher of--
                                              [(aa) the poverty
                                            line; or
                                              [(bb) 70 percent of
                                            the lower living
                                            standard income level.
                                      [(V) Disadvantaged adult
                                    special rule.--The Secretary
                                    shall, as appropriate and to
                                    the extent practicable, exclude
                                    college students and members of
                                    the Armed Forces from the
                                    determination of the number of
                                    disadvantaged adults.
                                      [(VI) Excess number.--The
                                    term ``excess number'' means,
                                    used with respect to the excess
                                    number of unemployed
                                    individuals within a State, the
                                    higher of--
                                              [(aa) the number that
                                            represents the number
                                            of unemployed
                                            individuals in excess
                                            of 4.5 percent of the
                                            civilian labor force in
                                            the State; or
                                              [(bb) the number that
                                            represents the number
                                            of unemployed
                                            individuals in excess
                                            of 4.5 percent of the
                                            civilian labor force in
                                            areas of substantial
                                            unemployment in such
                                            State.
              [(2) Dislocated worker employment and training.--
                      [(A) Reservation for outlying areas.--
                              [(i) In general.--From the amount
                            made available under subsection
                            (a)(2)(A) for a fiscal year, the
                            Secretary shall reserve not more than
                            \1/4\ of 1 percent of the amount
                            appropriated under section 137(c) for
                            the fiscal year to provide assistance
                            to the outlying areas.
                              [(ii) Applicability of additional
                            requirements.--From the amount reserved
                            under clause (i), the Secretary shall
                            provide assistance to the outlying
                            areas for dislocated worker employment
                            and training activities and statewide
                            workforce investment activities in
                            accordance with the requirements of
                            section 127(b)(1)(B), except that the
                            reference in section
                            127(b)(1)(B)(i)(II) to sections 252(a)
                            and 262(a)(1) of the Job Training
                            Partnership Act shall be deemed to be a
                            reference to section 302(e) of the Job
                            Training Partnership Act (as in effect
                            on the day before the date of enactment
                            of this Act).
                      [(B) States.--
                              [(i) In general.--The Secretary shall
                            allot the amount referred to in
                            subsection (a)(2)(B) for a fiscal year
                            to the States pursuant to clause (ii)
                            for dislocated worker employment and
                            training activities and statewide
                            workforce investment activities.
                              [(ii) Formula.--Of the amount--
                                      [(I) 33\1/3\ percent shall be
                                    allotted on the basis of the
                                    relative number of unemployed
                                    individuals in each State,
                                    compared to the total number of
                                    unemployed individuals in all
                                    States;
                                      [(II) 33\1/3\ percent shall
                                    be allotted on the basis of the
                                    relative excess number of
                                    unemployed individuals in each
                                    State, compared to the total
                                    excess number of unemployed
                                    individuals in all States; and
                                      [(III) 33\1/3\ percent shall
                                    be allotted on the basis of the
                                    relative number of individuals
                                    in each State who have been
                                    unemployed for 15 weeks or
                                    more, compared to the total
                                    number of individuals in all
                                    States who have been unemployed
                                    for 15 weeks or more.
                              [(iii) Definition.--In this
                            subparagraph, the term ``excess
                            number'' means, used with respect to
                            the excess number of unemployed
                            individuals within a State, the number
                            that represents the number of
                            unemployed individuals in excess of 4.5
                            percent of the civilian labor force in
                            the State.
              [(3) Definitions.--For the purpose of the formulas
            specified in this subsection:
                      [(A) Freely associated states.--The term
                    ``Freely Associated States'' means the Republic
                    of the Marshall Islands, the Federated States
                    of Micronesia, and the Republic of Palau.
                      [(B) Low-income level.--The term ``low-income
                    level'' means $7,000 with respect to income in
                    1969, and for any later year means that amount
                    that bears the same relationship to $7,000 as
                    the Consumer Price Index for that year bears to
                    the Consumer Price Index for 1969, rounded to
                    the nearest $1,000.]
      (a) In General.--The Secretary shall--
              (1) reserve 10 percent of the amount appropriated
            under section 137(b) for a fiscal year, of which--
                      (A) not less than 75 percent shall be used
                    for national dislocated worker grants under
                    section 173;
                      (B) not more than 20 percent may be used for
                    demonstration projects under section 171; and
                      (C) not more than 5 percent may be used to
                    provide technical assistance under section 170;
                    and
              (2) make allotments from 90 percent of the amount
            appropriated under section 137(b) for a fiscal year in
            accordance with subsection (b).
      (b) Allotment Among States for Adult Employment and Training
    Activities.--
              (1) Reservation for outlying areas.--From the amount
            made available under subsection (a)(2) for a fiscal
            year, the Secretary shall reserve not more than \1/4\
            of 1 percent to provide assistance to outlying areas to
            carry out employment and training activities for adults
            and statewide workforce investment activities.
              (2) States.--
                      (A) In general.--After determining the amount
                    to be reserved under paragraph (1), the
                    Secretary shall allot the remainder of the
                    amount referred to under subsection (a)(2) for
                    a fiscal year to the States pursuant to
                    subparagraph (B) for employment and training
                    activities for adults and statewide workforce
                    investment activities.
                      (B) Formula.--Subject to subparagraphs (C)
                    and (D), of the remainder--
                              (i) 60 percent shall be allotted on
                            the basis of the relative number of
                            unemployed individuals in each State,
                            compared to the total number of
                            unemployed individuals in all States;
                              (ii) 15 percent shall be allotted on
                            the basis of the relative excess number
                            of unemployed individuals in each
                            State, compared to the total excess
                            number of unemployed individuals in all
                            States;
                              (iii) 15 percent shall be allotted on
                            the basis of the relative number of
                            individuals in the civilian labor force
                            in each State, compared to the total
                            number of individuals in the civilian
                            labor force in all States; and
                              (iv) 10 percent shall be allotted on
                            the basis of the relative number of
                            disadvantaged adults in each State,
                            compared to the total number of
                            disadvantaged adults in all States.
                      (C) Minimum and maximum percentages.--The
                    Secretary shall ensure that no State shall
                    receive an allotment for a fiscal year that is
                    less than 90 percent or greater than 130
                    percent of the allotment percentage of the
                    State for the preceding fiscal year.
                      (D) Minimum allotment.--Notwithstanding any
                    other provision of this section, no State shall
                    receive an allotment under this section that is
                    less than the amount received by such State for
                    fiscal year 2003.
                      (E) Small state minimum allotment.--Subject
                    to subparagraph (C), the Secretary shall ensure
                    that no State shall receive an allotment under
                    this paragraph that is less than \3/10\ of 1
                    percent of the amount available under
                    subparagraph (A).
                      (F) Definitions.--For the purposes of this
                    paragraph, the following definitions apply:
                              (i) Allotment percentage.--The term
                            ``allotment percentage'', used with
                            respect to fiscal year 2004 or a
                            subsequent fiscal year, means a
                            percentage of the remainder described
                            in subparagraph (A) that is received
                            through an allotment made under this
                            paragraph for the fiscal year. The
                            term, with respect to fiscal year 2003,
                            means the percentage of the amounts
                            allotted to States under this chapter
                            (as in effect on the day before the
                            date of enactment of the Workforce
                            Reinvestment and Adult Education Act of
                            2003) and under section 6 of the
                            Wagner-Peyser Act that is received by
                            the State involved for fiscal year
                            2003.
                              (ii) Disadvantaged adult.--The term
                            ``disadvantaged adult'' means an
                            individual who is age 22 through 72 who
                            received an income, or is a member of a
                            family that received a total family
                            income, that, in relation to family
                            size, does not exceed the poverty line.
                              (iii) Excess number.--The term
                            ``excess number'' means, used with
                            respect to the excess number of
                            unemployed individuals within a State,
                            the number that represents the number
                            of unemployed individuals in excess of
                            4.5 percent of the civilian labor force
                            in the State.
      (c) Reallotment.--
              (1) * * *
              [(2) Amount.--The amount available for reallotment
            for a program year is equal to the amount by which the
            unobligated balance of the State allotments under this
            section for such activities, at the end of the program
            year prior to the program year for which the
            determination under this paragraph is made, exceeds 20
            percent of such allotments for the prior program year.]
              (2) Amount.--The amount available for reallotment for
            a program year is equal to the amount by which the
            unexpended balance, excluding accrued expenditures, at
            the end of such program year of the total amount of
            funds available to the State under this section during
            such program year (including amounts allotted to the
            State in prior program years that remain available
            during the program year for which the determination is
            made) exceeds 30 percent of such total amount.
              (3) Reallotment.--In making reallotments to eligible
            States of amounts available pursuant to paragraph (2)
            for a program year, the Secretary shall allot to each
            eligible State an amount based on the relative amount
            allotted to such State under this section for such
            activities [for the prior program year] for the program
            year in which the determination is made, as compared to
            the total amount allotted to all eligible States under
            this section for such activities for [such prior
            program year] such program year.
              [(4) Eligibility.--For purposes of this subsection,
            an eligible State means a State that has obligated at
            least 80 percent of the State allotment under this
            section for such activities for the program year prior
            to the program year for which the determination under
            paragraph (2) is made.]
              (4) Eligibility.--For purposes of this subsection, an
            eligible State means a State that does not have an
            amount available for reallotment under paragraph (2)
            for the program year for which the determination under
            paragraph (2) is made.

               *       *       *       *       *       *       *

    SEC. 133. WITHIN STATE ALLOCATIONS.

      [(a) Reservations for State Activities.--
              [(1) Statewide workforce investment activities.--The
            Governor of a State shall make the reservation required
            under section 128(a).
              [(2) Statewide rapid response activities.--The
            Governor of the State shall reserve not more than 25
            percent of the total amount allotted to the State under
            section 132(b)(2)(B) for a fiscal year for statewide
            rapid response activities described in section
            134(a)(2)(A).
      [(b) Within State Allocation.--
              [(1) Methods.--The Governor, acting in accordance
            with the State plan, and after consulting with chief
            elected officials in the local areas, shall allocate--
                      [(A) the funds that are allotted to the State
                    for adult employment and training activities
                    and statewide workforce investment activities
                    under section 132(b)(1)(B) and are not reserved
                    under subsection (a)(1), in accordance with
                    paragraph (2) or (3); and
                      [(B) the funds that are allotted to the State
                    for dislocated worker employment and training
                    activities under section 132(b)(2)(B) and are
                    not reserved under paragraph (1) or (2) of
                    subsection (a), in accordance with paragraph
                    (2).
              [(2) Formula allocations.--
                      [(A) Adult employment and training
                    activities.--
                              [(i) Allocation.--In allocating the
                            funds described in paragraph (1)(A) to
                            local areas, a State may
                            allocate--
                                      [(I) 33\1/3\ percent of the
                                    funds on the basis described in
                                    section 132(b)(1)(B)(ii)(I);
                                      [(II) 33\1/3\ percent of the
                                    funds on the basis described in
                                    section 132(b)(1)(B)(ii)(II);
                                    and
                                      [(III) 33\1/3\ percent of the
                                    funds on the basis described in
                                    clauses (ii)(III) and (iii) of
                                    section 132(b)(1)(B).
                              [(ii) Minimum percentage.--Effective
                            at the end of the second full fiscal
                            year after the date on which a local
                            area is designated under section 116,
                            the local area shall not receive an
                            allocation percentage for a fiscal year
                            that is less than 90 percent of the
                            average allocation percentage of the
                            local area for the 2 preceding fiscal
                            years. Amounts necessary for increasing
                            such allocations to local areas to
                            comply with the preceding sentence
                            shall be obtained by ratably reducing
                            the allocations to be made to other
                            local areas under this subparagraph.
                              [(iii) Definition.--The term
                            ``allocation percentage'', used with
                            respect to fiscal year 2000 or a
                            subsequent fiscal year, means a
                            percentage of the funds referred to in
                            clause (i), received through an
                            allocation made under this
                            subparagraph, for the fiscal year.
                      [(B) Dislocated worker employment and
                    training activities.--
                              [(i) Formula.--In allocating the
                            funds described in paragraph (1)(B) to
                            local areas, a State shall allocate the
                            funds based on an allocation formula
                            prescribed by the Governor of the
                            State. Such formula may be amended by
                            the Governor not more than once for
                            each program year. Such formula shall
                            utilize the most appropriate
                            information available to the Governor
                            to distribute amounts to address the
                            State's worker readjustment assistance
                            needs.
                              [(ii) Information.--The information
                            described in clause (i) shall include
                            insured unemployment data, unemployment
                            concentrations, plant closing and mass
                            layoff data, declining industries data,
                            farmer-rancher economic hardship data,
                            and long-term unemployment data.
                      [(C) Application.--For purposes of carrying
                    out subparagraph (A)--
                              [(i) references in section 132(b) to
                            a State shall be deemed to be
                            references to a local area;
                              [(ii) references in section 132(b) to
                            all States shall be deemed to be
                            references to all local areas in the
                            State involved; and
                              [(iii) except as described in clause
                            (i), references in section 132(b)(1) to
                            the term ``excess number'' shall be
                            considered to be references to the term
                            as defined in section 132(b)(1).
              [(3) Adult employment and training discretionary
            allocations.--In lieu of making the allocation
            described in paragraph (2)(A), in allocating the funds
            described in paragraph (1)(A) to local areas, a State
            may distribute--
                      [(A) a portion equal to not less than 70
                    percent of the funds in accordance with
                    paragraph (2)(A); and
                      [(B) the remaining portion of the funds on
                    the basis of a formula that--
                              [(i) incorporates additional factors
                            (other than the factors described in
                            paragraph (2)(A)) relating to--
                                      [(I) excess poverty in urban,
                                    rural, and suburban local
                                    areas; and
                                      [(II) excess unemployment
                                    above the State average in
                                    urban, rural, and suburban
                                    local areas; and
                              [(ii) was developed by the State
                            board and approved by the Secretary as
                            part of the State plan.
              [(4) Transfer authority.--A local board may transfer,
            if such a transfer is approved by the Governor, not
            more than 20 percent of the funds allocated to the
            local area under paragraph (2)(A) or (3), and 20
            percent of the funds allocated to the local area under
            paragraph (2)(B), for a fiscal year between--
                      [(A) adult employment and training
                    activities; and
                      [(B) dislocated worker employment and
                    training
                    activities.
              [(5) Allocation.--
                      [(A) In general.--The Governor of the State
                    shall allocate the funds described in paragraph
                    (1) to local areas under paragraphs (2) and (3)
                    for the purpose of providing a single system of
                    employment and training activities for adults
                    and dislocated workers in accordance with
                    subsections (d) and (e) of section 134.
                      [(B) Additional requirements.--
                              [(i) Adults.--Funds allocated under
                            paragraph (2)(A) or (3) shall be used
                            by a local area to contribute
                            proportionately to the costs of the
                            one-stop delivery system described in
                            section 134(c) in the local area, and
                            to pay for employment and training
                            activities provided to adults in the
                            local area, consistent with section
                            134.
                              [(ii) Dislocated workers.--Funds
                            allocated under paragraph (2)(B) shall
                            be used by a local area to contribute
                            proportionately to the costs of the
                            one-stop delivery system described in
                            section 134(c) in the local area, and
                            to pay for employment and training
                            activities provided to dislocated
                            workers in the local area, consistent
                            with section 134.]
      (a) Reservation for Statewide Activities.--The Governor of a
    State may reserve up to 50 percent of the total amount allotted
    to the State under section 132 for a fiscal year to carry out
    the statewide activities described in section 134(a).
      (b) Allocations to Local Areas.--
              (1) In general.--Of the amounts allotted to the State
            under section 132(b)(2) and not reserved under
            subsection (a)--
                      (A) 80 percent of such amounts shall be
                    allocated by the Governor to local areas in
                    accordance with paragraph (2); and
                      (B) 20 percent of such amounts shall be
                    allocated by the Governor to local areas in
                    accordance with paragraph (3).
              (2) Established formula.--
                      (A) In general.--Of the amounts described in
                    paragraph (1)(A), the Governor shall allocate--
                              (i) 60 percent on the basis of the
                            relative number of unemployed
                            individuals in each local area,
                            compared to the total number of
                            unemployed individuals in all local
                            areas in the State;
                              (ii) 15 percent on the basis of the
                            relative excess number of unemployed
                            individuals in each local area,
                            compared to the total excess number of
                            unemployed individuals in all local
                            areas in the State;
                              (iii) 15 percent on the basis of the
                            relative number of individuals in the
                            civilian labor force in each local
                            area, compared to the total number of
                            individuals in the civilian labor force
                            in all local areas in the State; and
                              (iv) 10 percent shall be allotted on
                            the basis of the relative number of
                            disadvantaged adults in each local
                            area, compared to the total number of
                            disadvantaged adults in all local areas
                            in the State.
                      (B) Minimum and maximum percentages.--The
                    Governor shall ensure that no local area shall
                    receive an allocation for a fiscal year under
                    this paragraph that is less than 90 percent or
                    greater than 130 percent of the allocation
                    percentage of the local area for the preceding
                    fiscal year.
                      (C) Definitions.--
                              (i) Allocation percentage.--The term
                            ``allocation percentage'', used with
                            respect to fiscal year 2004 or a
                            subsequent fiscal year, means a
                            percentage of amount described in
                            paragraph (1)(A) that is received
                            through an allocation made under this
                            paragraph for the fiscal year. The
                            term, with respect to fiscal year 2003,
                            means the percentage of the amounts
                            allocated to local areas under this
                            chapter (as in effect on the day before
                            the date of enactment of the Workforce
                            Reinvestment and Adult Education Act of
                            2003) that is received by the local
                            area involved for fiscal year 2003.
                              (ii) Disadvantaged adult.--The term
                            ``disadvantaged adult'' means an
                            individual who is age 22 through 72 who
                            received an income, or is a member of a
                            family that received a total family
                            income, that, in relation to family
                            size, does not exceed the poverty line.
                              (iii) Excess number.--The term
                            ``excess number'' means, used with
                            respect to the excess number of
                            unemployed individuals within a local
                            area, the number that represents the
                            number of unemployed individuals in
                            excess of 4.5 percent of the civilian
                            labor force in the local area.
              (3) Discretionary allocation.--The Governor shall
            allocate to local areas the amounts described in
            paragraph (1)(B) based on a formula developed in
            consultation with the State board and local boards.
            Such formula shall be objective and geographically
            equitable and may include such demographic and economic
            factors as the Governor, after consultation with the
            State board and local boards, determines are
            appropriate.
              (4) Local administrative cost limit.--
                      (A) In general.--Of the amounts allocated to
                    a local area under this subsection and section
                    128(b) for a fiscal year, not more than 10
                    percent of the amount may be used by the local
                    boards for the administrative costs of carrying
                    out local workforce investment activities under
                    this chapter or chapter 4.
                      (B) Use of funds.--Funds made available for
                    administrative costs under subparagraph (A) may
                    be used for the administrative costs of any of
                    the local workforce investment activities
                    described in this chapter or chapter 4,
                    regardless of whether the funds were allocated
                    under this subsection or section 128(b).
      (c) Reallocation Among Local Areas.--
              (1) In general.--The Governor may, in accordance with
            this subsection, reallocate to eligible local areas
            within the State amounts that are allocated under
            [paragraph (2)(A) or (3) of] subsection (b) for adult
            employment and training activities and that are
            available for reallocation.
              [(2) Amount.--The amount available for reallocation
            for a program year is equal to the amount by which the
            unobligated balance of the local area allocation under
            paragraph (2)(A) or (3) of subsection (b) for such
            activities, at the end of the program year prior to the
            program year for which the determination under this
            paragraph is made exceeds 20 percent of such allocation
            for the prior program year.]
              (2) Amount.--The amount available for reallocation
            for a program year is equal to the amount by which the
            unexpended balance, excluding accrued expenditures, at
            the end of such program year of the total amount of
            funds available to the local area under this section
            during such program year (including amounts allotted to
            the local area in prior program years that remain
            available during the program year for which the
            determination is made) exceeds 30 percent of such total
            amount.
              (3) Reallocation.--In making reallocations to
            eligible local areas of amounts available pursuant to
            paragraph (2) for a program year, the Governor shall
            allocate to each eligible local area within the State
            an amount based on the relative amount allocated to
            such local area under subsection (b)[(3)] for such
            activities for [the prior program year] the program
            year in which the determination is made, as compared to
            the total amount allocated to all eligible local areas
            in the State under subsection (b)[(3)] for such
            activities for [such prior program year] such program
            year. [For purposes of this paragraph, local areas that
            received allocations under subsection (b)(2)(A) for the
            prior program year shall be treated as if the local
            areas received allocations under subsection (b)(3) for
            such year.]
              [(4) Eligibility.--For purposes of this subsection,
            an eligible local area means a local area that has
            obligated at least 80 percent of the local area
            allocation under paragraph (2)(A) or (3) of subsection
            (b) for such activities, for the program year prior to
            the program year for which the determination under
            paragraph (2) is made.]
              (4) Eligibility.--For purposes of this subsection, an
            eligible local area means a local area which does not
            have an amount available for reallocation under
            paragraph (2) for the program year for which the
            determination under paragraph (2) is made.

    SEC. 134. USE OF FUNDS FOR EMPLOYMENT AND TRAINING ACTIVITIES.

      (a) Statewide Employment and Training Activities.--
              [(1) In general.--Funds reserved by a Governor for a
            State--
                      [(A) as described in section 133(a)(2) shall
                    be used to carry out the statewide rapid
                    response activities described in paragraph
                    (2)(A); and
                      [(B) as described in sections 128(a) and
                    133(a)(1)--
                              [(i) shall be used to carry out the
                            statewide employment and training
                            activities described in paragraph
                            (2)(B); and
                              [(ii) may be used to carry out any of
                            the statewide employment and training
                            activities described in paragraph (3),
                    regardless of whether the funds were allotted
                    to the State under section 127(b)(1) or under
                    paragraph (1) or (2) of section 132(b).
              [(2) Required statewide employment and training
            activities.--
                      [(A) Statewide rapid response activities.--A
                    State shall use funds reserved as described in
                    section 133(a)(2) to carry out statewide rapid
                    response activities, which shall include--
                              [(i) provision of rapid response
                            activities, carried out in local areas
                            by the State or by an entity designated
                            by the State, working in conjunction
                            with the local boards and the chief
                            elected officials in the local areas;
                            and
                              [(ii) provision of additional
                            assistance to local areas that
                            experience disasters, mass layoffs or
                            plant closings, or other events that
                            precipitate substantial increases in
                            the number of unemployed individuals,
                            carried out in local areas by the State
                            or by an entity designated by the
                            State, working in conjunction with the
                            local boards and the chief elected
                            officials in the local areas.
                      [(B) Other required statewide employment and
                    training activities.--A State shall use funds
                    reserved as described in sections 128(a) and
                    133(a)(1) (regardless of whether the funds were
                    allotted to the State under section 127(b)(1)
                    or paragraph (1) or (2) of section 132(b)) to
                    carry out other statewide employment and
                    training activities, which shall include--
                              [(i) disseminating the State list of
                            eligible providers of training
                            services, including eligible providers
                            of nontraditional training services,
                            information identifying eligible
                            providers of on-the-job training and
                            customized training, and performance
                            information and program cost
                            information, as described in
                            subsections (e) and (h) of section 122;
                              [(ii) conducting evaluations, under
                            section 136(e), of activities
                            authorized in this section, in
                            coordination with the activities
                            carried out under section 172;
                              [(iii) providing incentive grants to
                            local areas for regional cooperation
                            among local boards (including local
                            boards for a designated region as
                            described in section 116(c)), for local
                            coordination of activities carried out
                            under this Act, and for exemplary
                            performance by local areas on the local
                            performance measures;
                              [(iv) providing technical assistance
                            to local areas that fail to meet local
                            performance measures;
                              [(v) assisting in the establishment
                            and operation of one-stop delivery
                            systems described in subsection (c);
                            and
                              [(vi) operating a fiscal and
                            management accountability information
                            system under section 136(f ).
              [(3) Allowable statewide employment and training
            activities.--
                      [(A) In general.--A State may use funds
                    reserved as described in sections 128(a) and
                    133(a)(1) (regardless of whether the funds were
                    allotted to the State under section 127(b)(1)
                    or paragraph (1) or (2) of section 132(b)) to
                    carry out additional statewide employment and
                    training activities, which may include--
                              [(i) subject to subparagraph (B),
                            administration by the State of the
                            activities authorized under this
                            section;
                              [(ii) provision of capacity building
                            and technical assistance to local
                            areas, one-stop operators, one-stop
                            partners, and eligible providers,
                            including the development and training
                            of staff and the development of
                            exemplary program activities;
                              [(iii) conduct of research and
                            demonstrations;
                              [(iv)(I) implementation of innovative
                            incumbent worker training programs,
                            which may include the establishment and
                            implementation of an employer loan
                            program to assist in skills upgrading;
                            and
                              [(II) the establishment and
                            implementation of programs targeted to
                            empowerment zones and enterprise
                            communities;
                              [(v) support for the identification
                            of eligible providers of training
                            services as required under section 122;
                              [(vi)(I) implementation of innovative
                            programs for displaced homemakers,
                            which for purposes of this
                            subclause may include an individual who
                            is receiving public assistance and is
                            within 2 years of exhausting lifetime
                            eligibility under part A of title IV of
                            the Social Security Act (42 U.S.C. 601
                            et seq.); and
                              [(II) implementation of programs to
                            increase the number of individuals
                            training for and placed in
                            nontraditional employment; and
                              [(vii) carrying out other activities
                            authorized in this section that the
                            State determines to be necessary to
                            assist local areas in carrying out
                            activities described in subsection (d)
                            or (e) through the statewide workforce
                            investment system.
                      [(B) Limitation.--
                              [(i) In general.--Of the funds
                            allotted to a State under sections
                            127(b) and 132(b) and reserved as
                            described in sections 128(a) and
                            133(a)(1) for a fiscal year--
                                      [(I) not more than 5 percent
                                    of the amount allotted under
                                    section 127(b)(1);
                                      [(II) not more than 5 percent
                                    of the amount allotted under
                                    section 132(b)(1); and
                                      [(III) not more than 5
                                    percent of the amount allotted
                                    under section 132(b)(2),
                            may be used by the State for the
                            administration of youth activities
                            carried out under section 129 and
                            employment and training activities
                            carried out under this section.
                              [(ii) Use of funds.--Funds made
                            available for administrative costs
                            under clause (i) may be used for the
                            administrative cost of any of the
                            statewide youth activities or statewide
                            employment and training activities,
                            regardless of whether the funds were
                            allotted to the State under section
                            127(b)(1) or paragraph (1) or (2) of
                            section 132(b).]
              (1) In general.--
                      (A) Required use of funds.--Not less than 50
                    percent of the funds reserved by a Governor
                    under section 133(a) shall be used to support
                    the provision of core services in local areas,
                    consistent with the local plan, through one-
                    stop delivery systems by distributing funds to
                    local areas in accordance with subparagraph
                    (B). Such funds may be used by States to employ
                    State personnel to provide such services in
                    designated local areas in consultation with
                    local boards.
                      (B) Method of distributing funds.--The method
                    of distributing funds under this paragraph
                    shall be developed in consultation with the
                    State board and local boards. Such method of
                    distribution, which may include the formula
                    established under section 121(h)(3), shall be
                    objective and geographically equitable, and may
                    include factors such as the number of centers
                    in the local area that have been certified, the
                    population served by such centers, and the
                    performance of such centers.
                      (C) Other use of funds.--Funds reserved by a
                    Governor for a State--
                              (i) under section 133(a) and not used
                            under subparagraph (A), may be used for
                            statewide activities described in
                            paragraph (2); and
                              (ii) under section 133(a) and not
                            used under subparagraph (A), and under
                            section 128(a) may be used to carry out
                            any of the statewide employment and
                            training activities described in
                            paragraph (3).
              (2) Statewide rapid response activities.--A State
            shall carry out statewide rapid response activities
            using funds reserved as described in section 133(a).
            Such activities shall include--
                      (A) provision of rapid response activities,
                    carried out in local areas by the State or by
                    an entity designated by the State, working in
                    conjunction with the local boards and the chief
                    elected officials in the local areas; and
                      (B) provision of additional assistance to
                    local areas that experience disasters, mass
                    layoffs or plant closings, or other events that
                    precipitate substantial increases in the number
                    of unemployed individuals, carried out in local
                    areas by the State, working in conjunction with
                    the local boards and the chief elected
                    officials in the local areas.
              (3) Statewide activities.--Funds reserved by a
            Governor for a State as described in sections 133(a)
            and 128(a) may be used for statewide activities
            including--
                      (A) supporting the provision of core services
                    described in section 134(c)(2) in the one-stop
                    delivery system;
                      (B) conducting evaluations under section
                    136(e) of activities authorized under this
                    chapter and chapter 4 in coordination with
                    evaluations carried out by the Secretary under
                    section 172, research, and demonstration
                    projects;
                      (C) providing incentive grants to local areas
                    for regional cooperation among local boards
                    (including local boards in a designated region
                    as described in section 116(c)), for local
                    coordination of activities carried out under
                    this Act, and for exemplary performance by
                    local areas on the local performance measures;
                      (D) providing technical assistance and
                    capacity building to local areas, one-stop
                    operators, one-stop partners, and eligible
                    providers, including the development and
                    training of staff, the development of exemplary
                    program activities, and the provision of
                    technical assistance to local areas that fail
                    to meet local performance measures;
                      (E) operating a fiscal and management
                    accountability system under section 136(f);
                      (F) carrying out monitoring and oversight of
                    activities carried out under this chapter and
                    chapter 4;
                      (G) implementing innovative programs, such as
                    incumbent worker training programs, programs
                    serving individuals with disabilities
                    consistent with section 188;
                      (H) developing strategies for effectively
                    serving hard-to-serve populations and for
                    integrating programs and services among one-
                    stop partners;
                      (I) implementing innovative programs for
                    displaced homemakers, which for purposes of
                    this subparagraph may include an individual who
                    is receiving public assistance and is within 2
                    years of exhausting lifetime eligibility under
                    Part A of title IV of the Social Security Act
                    (42 U.S.C. 601 et seq.); and
                      (J) implementing programs to increase the
                    number of individuals training for and placed
                    in nontraditional employment.
              (4) Limitation.--Not more than 5 percent of the funds
            allotted under section 132(b) shall be used by the
            State for administrative activities carried out under
            this subsection and section 128(a).
      (b) Local Employment and Training Activities.--Funds
    allocated to a local area for adults [under paragraph (2)(A) or
    (3), as appropriate, of section 133(b), and funds allocated to
    a local area for dislocated workers under section 133(b)(2)(B)]
    under section 133(b)--
              (1) shall be used to carry out employment and
            training activities described in subsection (d) for
            adults [or dislocated workers, respectively]; and
              (2) may be used to carry out employment and training
            activities described in subsection (e) for adults [or
            dislocated workers, respectively].
      [(c) Establishment of One-Stop Delivery System.--
              [(1) In general.--There shall be established in a
            State that receives an allotment under section 132(b) a
            one-stop delivery system, which--
                      [(A) shall provide the core services
                    described in
                    subsection (d)(2);
                      [(B) shall provide access to intensive
                    services and training services as described in
                    paragraphs (3) and (4) of subsection (d),
                    including serving as the point of access to
                    individual training accounts for training
                    services to participants in accordance with
                    subsection (d)(4)(G);
                      [(C) shall provide access to the activities
                    carried out under subsection (e), if any;
                      [(D) shall provide access to programs and
                    activities carried out by one-stop partners and
                    described in section 121(b); and
                      [(E) shall provide access to the information
                    described in section 15 of the Wagner-Peyser
                    Act and all job search, placement, recruitment,
                    and other labor exchange services authorized
                    under the Wagner-Peyser Act (29 U.S.C. 49 et
                    seq.).
              [(2) One-stop delivery.--At a minimum, the one-stop
            delivery system--
                      [(A) shall make each of the programs,
                    services, and activities described in paragraph
                    (1) accessible at not less than one physical
                    center in each local area of the State; and
                      [(B) may also make programs, services, and
                    activities described in paragraph (1)
                    available--
                              [(i) through a network of affiliated
                            sites that can provide one or more of
                            the programs, services, and activities
                            to individuals; and
                              [(ii) through a network of eligible
                            one-stop
                            partners--
                                      [(I) in which each partner
                                    provides one or more of the
                                    programs, services, and
                                    activities to such individuals
                                    and is accessible at an
                                    affiliated site that consists
                                    of a physical location or an
                                    electronically or
                                    technologically linked access
                                    point; and
                                      [(II) that assures
                                    individuals that information on
                                    the availability of the core
                                    services will be available
                                    regardless of where the
                                    individuals initially enter the
                                    statewide workforce investment
                                    system, including information
                                    made available through an
                                    access point described in
                                    subclause (I).
              [(3) Specialized centers.--The centers and sites
            described in paragraph (2) may have a specialization in
            addressing special needs, such as the needs of
            dislocated workers.]
      [(d)] (c) Required Local Employment and Training
    Activities.--
              [(1) In general.--
                      [(A) Allocated funds.--Funds allocated to a
                    local area for adults under paragraph (2)(A) or
                    (3), as appropriate, of section 133(b), and
                    funds allocated to the local area for
                    dislocated workers under section 133(b)(2)(B),
                    shall be used--
                              [(i) to establish a one-stop delivery
                            system described in subsection (c);
                              [(ii) to provide the core services
                            described in paragraph (2) to adults
                            and dislocated workers, respectively,
                            through the one-stop delivery system in
                            accordance with such paragraph;
                              [(iii) to provide the intensive
                            services described in paragraph (3) to
                            adults and dislocated workers,
                            respectively, described in such
                            paragraph; and
                              [(iv) to provide training services
                            described in paragraph (4) to adults
                            and dislocated workers, respectively,
                            described in such paragraph.
                      [(B) Other funds.--A portion of the funds
                    made available under Federal law authorizing
                    the programs and activities described in
                    section 121(b)(1)(B), including the Wagner-
                    Peyser Act (29 U.S.C. 49 et seq.), shall be
                    used as described in clauses (i) and (ii) of
                    subparagraph (A), to the extent not
                    inconsistent with the Federal law involved.]
              (1) In general.--Funds allocated to a local area for
            adults under section 133(b) shall be used--
                      (A) to establish a one-stop delivery system
                    as described in section 121(e);
                      (B) to provide the core services described in
                    paragraph (2) through the one-stop delivery
                    system in accordance with such paragraph;
                      (C) to provide the intensive services
                    described in paragraph (3) to adults described
                    in such paragraph; and
                      (D) to provide training services described in
                    paragraph (4) to adults described in such
                    paragraph.
              (2) Core services.--Funds described in paragraph
            (1)(A) shall be used to provide core services, which
            shall be available to individuals [who are adults or
            dislocated workers] through the one-stop delivery
            system and shall, at a minimum, include--
                      (A) determinations of whether the individuals
                    are eligible to receive assistance [under this
                    subtitle] under the one-stop partner programs
                    described in section 121(b);

               *       *       *       *       *       *       *

                      [(D) job search and placement assistance, and
                    where appropriate, career counseling;]
                      (D) labor exchange services, including--
                              (i) job search and placement
                            assistance, and where appropriate
                            career counseling; and
                              (ii) appropriate recruitment services
                            for employers;

               *       *       *       *       *       *       *

                      (I) provision of information regarding filing
                    claims for unemployment compensation and the
                    administration of the work test for the
                    unemployment compensation system;
                      [(J) assistance in establishing eligibility
                    for--
                              [(i) welfare-to-work activities
                            authorized under section 403(a)(5) of
                            the Social Security Act (as added by
                            section 5001 of the Balanced Budget Act
                            of 1997) available in the local area;
                            and
                              [(ii) programs of financial aid
                            assistance for training and education
                            programs that are not funded under this
                            Act and are available in the local
                            area; and]
                      (J) assistance in establishing eligibility
                    for programs of financial aid assistance for
                    training and education programs that are not
                    funded under this Act and are available in the
                    local area; and

               *       *       *       *       *       *       *

              (3) Intensive services.--
                      [(A) In general.--Funds allocated to a local
                    area for adults under paragraph (2)(A) or (3),
                    as appropriate, of section 133(b), and funds
                    allocated to the local area for dislocated
                    workers under section 133(b)(2)(B), shall be
                    used to provide intensive services to adults
                    and dislocated workers, respectively--
                              [(i)(I) who are unemployed and are
                            unable to obtain employment through
                            core services provided under paragraph
                            (2); and
                              [(II) who have been determined by a
                            one-stop operator to be in need of more
                            intensive services in order to obtain
                            employment; or
                              [(ii) who are employed, but who are
                            determined by a one-stop operator to be
                            in need of such intensive services in
                            order to obtain or retain employment
                            that allows for self-sufficiency.]
                      (A) In general.--
                              (i) Eligibility.--Funds allocated to
                            a local area under section 133(b) shall
                            be used to provide intensive services
                            for adults who--
                                      (I) are unemployed and who
                                    have been determined by the
                                    one-stop operator to be--
                                              (aa) unlikely or
                                            unable to obtain
                                            suitable employment
                                            through core services;
                                            and
                                              (bb) in need of
                                            intensive services in
                                            order to obtain
                                            suitable employment; or
                                      (II) are employed, but who
                                    are determined by a one-stop
                                    operator to be in need of
                                    intensive services to obtain or
                                    retain suitable employment.
                              (ii) Definition.--The Governor shall
                            define the term ``suitable employment''
                            for purposes of this subparagraph.

               *       *       *       *       *       *       *

                      (C) Types of services.--Such intensive
                    services may include the following:
                              (i) * * *

               *       *       *       *       *       *       *

                              (v) Case management [for participants
                            seeking training services under
                            paragraph (4)].

               *       *       *       *       *       *       *

                              (vii) Internships and work
                            experience.
                              (viii) Literacy activities relating
                            to basic work readiness, and financial
                            literacy activities.
                              (ix) Out-of-area job search
                            assistance and relocation assistance.
              (4) Training services.--
                      [(A) In general.--Funds allocated to a local
                    area for adults under paragraph (2)(A) or (3),
                    as appropriate, of section 133(b), and funds
                    allocated to a local area for dislocated
                    workers under section 133(b)(2)(B) shall be
                    used to provide training services to adults and
                    dislocated workers, respectively--
                              [(i) who have met the eligibility
                            requirements for intensive services
                            under paragraph (3)(A) and who are
                            unable to obtain or retain employment
                            through such services;
                              [(ii) who after an interview,
                            evaluation, or assessment, and case
                            management, have been determined by a
                            one-stop operator or one-stop partner,
                            as appropriate, to be in need of
                            training services and to have the
                            skills and qualifications to
                            successfully participate in the
                            selected program of training services;
                              [(iii) who select programs of
                            training services that are directly
                            linked to the employment opportunities
                            in the local area involved or in
                            another area in which the adults or
                            dislocated workers receiving such
                            services are willing to relocate;
                              [(iv) who meet the requirements of
                            subparagraph (B); and
                              [(v) who are determined to be
                            eligible in accordance with the
                            priority system, if any, in effect
                            under subparagraph (E).]
                      (A) In general.--
                              (i) Eligibility.--Funds allocated to
                            a local area under section 133(b) shall
                            be used to provide training services to
                            adults who--
                                      (I) after an interview,
                                    evaluation, or assessment, and
                                    case management, have been
                                    determined by a one-stop
                                    operator or one-stop partner,
                                    as appropriate, to--
                                              (aa) be unlikely or
                                            unable to obtain or
                                            retain suitable
                                            employment through
                                            intensive services
                                            under paragraph (3)(A);
                                              (bb) be in need of
                                            training services to
                                            obtain or retain
                                            suitable employment;
                                            and
                                              (cc) have the skills
                                            and qualifications to
                                            successfully
                                            participate in the
                                            selected program of
                                            training services;
                                      (II) select programs of
                                    training services that are
                                    directly linked to the
                                    employment opportunities in the
                                    local area involved or in
                                    another area in which the
                                    adults receiving such services
                                    are willing to commute or
                                    relocate;
                                      (III) who meet the
                                    requirements of subparagraph
                                    (B); and
                                      (IV) who are determined
                                    eligible in accordance with the
                                    priority system in effect under
                                    subparagraph (E).
                              (ii) The Governor shall define the
                            term ``suitable employment'' for
                            purposes of this subparagraph.
                      (B) Qualification.--
                              (i) Requirement.--[Except]
                            Notwithstanding section 479B of the
                            Higher Education Act of 1965 (20 U.S.C.
                            1087uu) and except as provided in
                            clause (ii), provision of such training
                            services shall be limited to
                            individuals who--
                                      (I) * * *

               *       *       *       *       *       *       *

                      [(E) Priority.--In the event that funds
                    allocated to a local area for adult employment
                    and training activities under paragraph (2)(A)
                    or (3) of section 133(b) are limited, priority
                    shall be given to recipients of public
                    assistance and other low-income individuals for
                    intensive services and training services. The
                    appropriate local board and the Governor shall
                    direct the one-stop operators in the local area
                    with regard to making determinations related to
                    such priority.]
                      (E) Priority.--
                              (i) In general.--A priority shall be
                            given to unemployed individuals for the
                            provision of intensive and training
                            services under this subsection.
                              (ii) Additional priority.--If the
                            funds in the local area, including the
                            funds allocated under section 133(b),
                            for serving recipients of public
                            assistance and other low-income
                            individuals is limited, the priority
                            for the provision of intensive and
                            training services under this subsection
                            shall include such recipients and
                            individuals.
                              (iii) Determinations.--The Governor
                            and the appropriate local board shall
                            direct the one-stop operators in the
                            local area with regard to making
                            determinations with respect to the
                            priority of service under this
                            subparagraph.
                      (F) Consumer choice requirements.--
                              (i) * * *

               *       *       *       *       *       *       *

                              (iv) Enhanced individual training
                            accounts.--Each local board may,
                            through one-stop centers, assist
                            individuals receiving individual
                            training accounts through the
                            establishment of such accounts that
                            include, in addition to the funds
                            provided under this paragraph, funds
                            from other programs and sources that
                            will assist the individual in obtaining
                            training services.
                      (G) Use of individual training accounts.--
                              (i) * * *

               *       *       *       *       *       *       *

                              (iv) Definition.--In this
                            subparagraph, the term ``special
                            participant population that faces
                            multiple barriers to employment'' means
                            a population of low-income individuals
                            that is included in one or more of the
                            following categories:
                                      (I) * * *

               *       *       *       *       *       *       *

                                      (IV) Individuals with
                                    disabilities.
                                      [(IV)] (V) Other hard-to-
                                    serve populations as defined by
                                    the Governor involved.
      [(e)] (d) Permissible Local Employment and Training
    Activities.--
              [(1) Discretionary one-stop delivery activities.--
            Funds allocated to a local area for adults under
            paragraph (2)(A) or (3), as appropriate, of section
            133(b), and funds allocated to the local area for
            dislocated workers under section 133(b)(2)(B), may be
            used to provide, through one-stop delivery described in
            subsection (c)(2)--
                      [(A) customized screening and referral of
                    qualified participants in training services
                    described in subsection (d)(4) to employment;
                    and
                      [(B) customized employment-related services
                    to employers on a fee-for-service basis.]
              (1) Discretionary one-stop delivery activities.--
                      (A) In general.--Funds allocated to a local
                    area under section 133(b) may be used to
                    provide, through the one-stop delivery system--
                              (i) customized screening and referral
                            of qualified participants in training
                            services to employers;
                              (ii) customized employment-related
                            services to employers on a fee-for-
                            service basis;
                              (iii) customer support to navigate
                            among multiple services and activities
                            for special participant populations
                            that face multiple barriers to
                            employment, including individuals with
                            disabilities; and
                              (iv) employment and training
                            assistance provided in coordination
                            with child support enforcement
                            activities of the State agency carrying
                            out subtitle D of title IV of the
                            Social Security Act.
                      (B) Work support activities for low-wage
                    workers.--
                              (i) In general.-- Funds allocated to
                            a local area under 133(b) may be used
                            to provide, through the one-stop
                            delivery system and in collaboration
                            with the appropriate programs and
                            resources of the one-stop partners,
                            work support activities designed to
                            assist low-wage workers in retaining
                            and enhancing employment.
                              (ii) Activities.--The activities
                            described in clause (i) may include
                            assistance in accessing financial
                            supports for which such workers may be
                            eligible and the provision of
                            activities available through the one-
                            stop delivery system in a manner that
                            enhances the opportunities of such
                            workers to participate, such as the
                            provision of employment and training
                            activities during nontraditional hours
                            and the provision of on-site child care
                            while such activities are being
                            provided.

               *       *       *       *       *       *       *

              (4) Incumbent worker training programs.--
                      (A) In general.--The local board may use up
                    to 10 percent of the funds allocated to a local
                    area under section 133(b) to carry out
                    incumbent worker training programs in
                    accordance with this paragraph.
                      (B) Training activities.--The training
                    programs for incumbent workers under this
                    paragraph shall be carried out by the local
                    area in conjunction with the employers of such
                    workers for the purpose of assisting such
                    workers in obtaining the skills necessary to
                    retain employment and avert layoffs.
                      (C) Employer match required.--
                              (i) In general.--Employers
                            participating in programs under this
                            paragraph shall be required to pay a
                            proportion of the costs of providing
                            the training to the incumbent workers.
                            The Governor shall establish, or may
                            authorize the local board to establish,
                            the required portion of such costs,
                            which shall not be less than--
                                      (I) 10 percent of the costs,
                                    for employers with 50 or fewer
                                    employees;
                                      (II) 25 percent of the costs,
                                    for employers with more than 50
                                    employees but fewer than 100
                                    employees; and
                                      (III) 50 percent of the
                                    costs, for employers with 100
                                    or more employees.
                              (ii) Calculation of match.--The wages
                            paid by an employer to a worker while
                            they are attending training may be
                            included as part of the requirement
                            payment of the employer.

                         CHAPTER 6--GENERAL PROVISIONS

    SEC. 136. PERFORMANCE ACCOUNTABILITY SYSTEM.

      (a) * * *
      (b) State Performance Measures.--
              (1) In general.--For each State, the State
            performance measures shall consist of--
                      (A)(i) the core indicators of performance
                    described in paragraph (2)(A) [and the customer
                    satisfaction indicator of performance described
                    in paragraph (2)(B)]; and
                      (ii) additional indicators of performance (if
                    any) identified by the State under paragraph
                    [(2)(C)] (2)(B); and

               *       *       *       *       *       *       *

              (2) Indicators of performance.--
                      (A) Core indicators of performance.--
                              (i) In general.--The core indicators
                            of performance for employment and
                            training activities authorized under
                            section 134 [(except for self-service
                            and informational activities) and (for
                            participants who are eligible youth age
                            19 through 21) for youth activities
                            authorized under section 129] shall
                            consist of--
                                      (I) * * *

               *       *       *       *       *       *       *

                                      [(IV) attainment of a
                                    recognized credential relating
                                    to achievement of educational
                                    skills, which may include
                                    attainment of a secondary
                                    school diploma or its
                                    recognized equivalent, or
                                    occupational skills, by
                                    participants who enter
                                    unsubsidized employment, or by
                                    participants who are eligible
                                    youth age 19 through 21 who
                                    enter postsecondary education,
                                    advanced training, or
                                    unsubsidized employment.
                              [(ii) Core indicators for eligible
                            youth.--The core indicators of
                            performance (for participants who are
                            eligible youth age 14 through 18) for
                            youth activities authorized under
                            section 129, shall include--
                                      [(I) attainment of basic
                                    skills and, as appropriate,
                                    work readiness or occupational
                                    skills;
                                      [(II) attainment of secondary
                                    school diplomas and their
                                    recognized equivalents; and
                                      [(III) placement and
                                    retention in postsecondary
                                    education or advanced training,
                                    or placement and retention in
                                    military service, employment,
                                    or qualified apprenticeships.
                      [(B) Customer satisfaction indicators.--The
                    customer satisfaction indicator of performance
                    shall consist of customer satisfaction of
                    employers and participants with services
                    received from the workforce investment
                    activities authorized under this subtitle.
                    Customer satisfaction may be measured through
                    surveys conducted after the conclusion of
                    participation in the workforce investment
                    activities.]
                                      (IV) the efficiency of the
                                    program in obtaining the
                                    outcomes described in
                                    subclauses (I) through (III).
                              (ii) Core indicators for eligible
                            youth.--The core indicators of
                            performance for youth activities
                            authorized under section 129 shall
                            consist of--
                                      (I) entry into employment,
                                    education or advanced training,
                                    or military service;
                                      (II) attainment of secondary
                                    school diplomas or the General
                                    Equivalency Diploma (GED)
                                    (including recognized
                                    alternative standards for
                                    individuals with disabilities);
                                      (III) attainment of literacy
                                    or numeracy skills; and
                                      (IV) the efficiency of the
                                    program in obtaining the
                                    outcomes described in
                                    subclauses (I) through (III).
                      [(C)] (B) Additional indicators.--A State may
                    identify in the State plan additional
                    indicators for workforce investment activities
                    authorized under this subtitle. Such indicators
                    may include customer satisfaction of employers
                    and participants with services received from
                    the workforce investment activities authorized
                    under this subtitle.
              (3) Levels of performance.--
                      (A) State adjusted levels of performance for
                    core indicators and customer satisfaction
                    indicator.--
                              (i) In general.--For each State
                            submitting a State plan, there shall be
                            established, in accordance with this
                            subparagraph, levels of performance for
                            each of the core indicators of
                            performance described in paragraph
                            (2)(A) [and the customer satisfaction
                            indicator described in paragraph
                            (2)(B)] for workforce investment
                            activities authorized under this
                            subtitle. The levels of performance
                            established under this subparagraph
                            shall, at a minimum--
                                      (I) * * *

               *       *       *       *       *       *       *

                              (ii) Identification in state plan.--
                            Each State shall identify, in the State
                            plan submitted under section 112,
                            expected levels of performance for each
                            of the core indicators of performance
                            [and the customer satisfaction
                            indicator of performance, for the first
                            3] for the 2 program years covered by
                            the State plan.
                              (iii) Agreement on state adjusted
                            levels of performance [for first 3
                            years].--In order to ensure an optimal
                            return on the investment of Federal
                            funds in workforce investment
                            activities authorized under this
                            subtitle, the Secretary and each
                            Governor shall reach agreement on
                            levels of performance for each of the
                            core indicators of performance [and the
                            customer satisfaction indicator of
                            performance, for the first 3] for the 2
                            program years covered by the State
                            plan, taking into account the levels
                            identified in the State plan under
                            clause (ii) and the factors described
                            in clause (iv). The levels agreed to
                            under this clause shall be considered
                            to be the State adjusted levels of
                            performance for the State for such
                            years and shall be incorporated into
                            the State plan prior to the approval of
                            such plan.
                              (iv) Factors.--The agreement
                            described in clause (iii) or (v) shall
                            take into account--
                                      [(I) the extent to which the
                                    levels involved will assist the
                                    State in attaining a high level
                                    of customer satisfaction;]
                                      [(II)] (I) how the levels
                                    involved compare with the State
                                    adjusted levels of performance
                                    established for other States,
                                    [taking into account] which
                                    shall be adjusted based on
                                    factors including differences
                                    in economic conditions such as
                                    unemployment rates and job
                                    losses or gains in particular
                                    industries, the characteristics
                                    of participants when the
                                    participants entered the
                                    program such as indicators of
                                    poor work history, lack of work
                                    experience, low levels of
                                    literacy or English
                                    proficiency, disability status,
                                    and welfare dependency, and the
                                    services to be provided; and
                                      [(III)] (II) the extent to
                                    which such levels involved
                                    promote continuous improvement
                                    in performance on the
                                    performance measures by such
                                    State and ensure optimal return
                                    on the investment of Federal
                                    funds.
                              [(v) Agreement on state adjusted
                            levels of performance for 4th and 5th
                            years.--Prior to the 4th program year
                            covered by the State plan, the
                            Secretary and each Governor shall reach
                            agreement on levels of performance for
                            each of the core indicators of
                            performance and the customer
                            satisfaction indicator of performance,
                            for the 4th and 5th program years
                            covered by the State plan, taking into
                            account the factors described in clause
                            (iv). The levels agreed to under this
                            clause shall be considered to be the
                            State adjusted levels of performance
                            for the State for such years and shall
                            be incorporated into the State plan.]
                              [(vi)] (v) Revisions.--If
                            unanticipated circumstances arise in a
                            State resulting in a significant change
                            in the factors described in clause
                            (iv)(II), the Governor may request that
                            the State adjusted levels of
                            performance agreed to under clause
                            (iii) or (v) be revised. The Secretary,
                            after collaboration with the
                            representatives described in subsection
                            (i), shall issue objective criteria and
                            methods for making such revisions.
                      (B) Levels of performance for additional
                    indicators.--The State may identify, in the
                    State plan, State levels of performance for
                    each of the additional indicators described in
                    paragraph [(2)(C)] (2)(B). Such levels shall be
                    considered to be State adjusted levels of
                    performance for purposes of this title.
      (c) Local Performance Measures.--
              (1) In general.--For each local area in a State, the
            local performance measures shall consist of--
                      (A)(i) the core indicators of performance
                    described in subsection (b)(2)(A)[, and the
                    customer satisfaction indicator of performance
                    described in subsection (b)(2)(B),] for
                    activities described in such subsections, other
                    than statewide workforce investment activities;
                    and
                      (ii) additional indicators of performance (if
                    any) identified by the State under subsection
                    [(b)(2)(C)] (b)(2)(B) for activities described
                    in such subsection, other than statewide
                    workforce investment activities; and

               *       *       *       *       *       *       *

              [(3) Determinations.--In determining such local
            levels of performance, the local board, the chief
            elected official, and the Governor shall take into
            account the specific economic, demographic, and other
            characteristics of the populations to be served in the
            local area.]
              (3) Determinations.--In determining such local levels
            of performance, the local board, the chief elected
            official, and the Governor shall ensure such levels are
            adjusted based on the specific economic characteristics
            (such as unemployment rates and job losses or gains in
            particular industries), demographic characteristics, or
            other characteristics of the population to be served in
            the local area, such as poor work history, lack of work
            experience, low levels of literacy or English
            proficiency, disability status, and welfare dependency.
      (d) Report.--
              (1) In general.--Each State that receives an
            allotment under section 127 or 132 shall annually
            prepare and submit to the Secretary a report on the
            progress of the State in achieving State performance
            measures, including information on the levels of
            performance achieved by the State with respect to the
            core indicators of performance [and the customer
            satisfaction indicator]. The annual report also shall
            include information regarding the progress of local
            areas in the State in achieving local performance
            measures, including information on the levels of
            performance achieved by the areas with respect to the
            core indicators of performance [and the customer
            satisfaction indicator]. The report also shall include
            information on the status of State evaluations of
            workforce investment activities described in subsection
            (e).
              (2) Additional information.--In preparing such
            report, the State shall include, at a minimum,
            information on participants in workforce investment
            activities authorized under this subtitle relating to--
                      (A) * * *

               *       *       *       *       *       *       *

                      (E) performance with respect to the
                    indicators of performance specified in
                    subsection (b)(2)(A) of participants in
                    workforce investment activities who received
                    the training services compared with the
                    performance of participants in workforce
                    investment activities who received only
                    services other than the training services
                    [(excluding participants who received only
                    self-service and informational activities)];
                    and

               *       *       *       *       *       *       *

              (4) Data validation.--In preparing the reports
            described in this subsection, the States shall
            establish procedures, consistent with guidelines issued
            by the Secretary, to ensure the information contained
            in the report is valid and reliable.

               *       *       *       *       *       *       *

      (g) Sanctions for State Failure To Meet State Performance
    Measures.--
              (1) States.--
                      (A) Technical assistance.--If a State fails
                    to meet State adjusted levels of performance
                    relating to indicators described in
                    subparagraph (A) [or (B)] of subsection (b)(2)
                    for a program for any program year, the
                    Secretary shall, upon request, provide
                    technical assistance in accordance with section
                    170, including assistance in the development of
                    a performance improvement plan.
              (2) Funds resulting from reduced allotments.--The
            Secretary shall use an amount retained, as a result of
            a reduction in an allotment to a State made under
            paragraph (1)(B), to provide incentive grants under
            section [503] 136(i).
      (h) Sanctions for Local Area Failure To Meet Local
    Performance Measures.--
              (1) Technical assistance.--If a local area fails to
            meet levels of performance relating to indicators
            described in subparagraph (A) [or (B)] of subsection
            (b)(2) for a program for any program year, the
            Governor, or upon request by the Governor, the
            Secretary, shall provide technical assistance, which
            may include assistance in the development of a
            performance improvement plan, or the development of a
            modified local plan.
              (2) Corrective actions.--
                      (A) * * *
                      [(B) Appeal by local area.--
                              [(i) Appeal to governor.--A local
                            area that is subject to a
                            reorganization plan under subparagraph
                            (A) may, not later than 30 days after
                            receiving notice of the reorganization
                            plan, appeal to the Governor to rescind
                            or revise such plan. In such case, the
                            Governor shall make a final decision
                            not later then 30 days after the
                            receipt of the appeal.
                              [(ii) Subsequent action.--The local
                            area may, not later than 30 days after
                            receiving a decision from the Governor
                            pursuant to clause (i), appeal such
                            decision to the Secretary. In such
                            case, the Secretary shall make a final
                            decision not later than 30 days after
                            the receipt of the appeal.]
                      (B) Appeal to governor.--A local area that is
                    subject to a reorganization plan under
                    subparagraph (A) may, not later than 30 days
                    after receiving notice of the reorganization
                    plan, appeal to the Governor to rescind or
                    revise such plan. In such case, the Governor
                    shall make a final decision not later than 30
                    days after the receipt of the appeal.

               *       *       *       *       *       *       *

      [(i) Other Measures and Terminology.--
              [(1) Responsibilities.--In order to ensure nationwide
            comparability of performance data, the Secretary, after
            collaboration with representatives of appropriate
            Federal agencies, and representatives of States and
            political subdivisions, business and industry,
            employees, eligible providers of employment and
            training activities, educators, and participants, with
            expertise regarding workforce investment policies and
            workforce investment activities, shall issue--
                      [(A) definitions for information required to
                    be reported under subsection (d)(2);
                      [(B) terms for a menu of additional
                    indicators of performance described in
                    subsection (b)(2)(C) to assist States in
                    assessing their progress toward State workforce
                    investment goals; and
                      [(C) objective criteria and methods described
                    in subsection (b)(3)(A)(vi) for making
                    revisions to levels of performance.
              [(2) Definitions for core indicators.--The Secretary
            and the representatives described in paragraph (1)
            shall participate in the activities described in
            section 502 concerning the issuance of definitions for
            indicators of performance described in subsection
            (b)(2)(A).
              [(3) Assistance.--The Secretary shall make the
            services of staff available to the representatives to
            assist the representatives in participating in the
            collaboration described in paragraph (1) and in the
            activities described in section 502.]
      (i) Incentive Grants for States and Local Areas.--
              (1) Incentive grants for states.--
                      (A) In general.--From funds appropriated
                    under section 174, the Secretary may award
                    grants to States for exemplary performance in
                    carrying programs under this chapters 4 and 5
                    of this title. Such awards may be based on
                    States meeting or exceeding the performance
                    measures established under this section, on the
                    performance of the State in serving special
                    populations, including the levels of service
                    provided and the performance outcomes, and such
                    other factors relating to the performance of
                    the State under this title as the Secretary
                    determines is appropriate.
                      (B) Use of funds.--The funds awarded to a
                    State under this paragraph may be used to carry
                    out any activities authorized under chapters 4
                    and 5 of this title, including demonstrations
                    and innovative programs for special
                    populations.
              (2) Incentive grants for local areas.--
                      (A) In general.--From funds reserved under
                    sections 128(a) and 133(a), the Governor may
                    award incentive grants to local areas for
                    exemplary performance with respect to the
                    measures established under this section and
                    with the performance of the local area in
                    serving special populations, including the
                    levels of service and the performance outcomes.
                      (B) Use of funds.--The funds awarded to a
                    local area may be used to carry out activities
                    authorized for local areas under chapters 4 and
                    5 of this title, and such demonstration or
                    other innovative programs to serve special
                    populations as may be approved by the Governor.

    SEC. 137. AUTHORIZATION OF APPROPRIATIONS.

      (a) Youth Activities.--There are authorized to be
    appropriated to carry out the activities described in section
    127(a), [such sums as may be necessary for each of fiscal years
    1999 through 2003] $1,001,000,000 for fiscal year 2004 and such
    sums as may be necessary for each of fiscal years 2005 through
    2009.
      (b) Adult Employment and Training Activities.--There are
    authorized to be appropriated to carry out the activities
    described in [section 132(a)(1), such sums as may be necessary
    for each of fiscal years 1999 through 2003] 132(a),
    $3,079,800,000 for fiscal year 2004 and such sums as may be
    necessary for each of fiscal years 2005 through 2009.
      [(c) Dislocated Worker Employment and Training Activities.--
    There are authorized to be appropriated to carry out the
    activities described in section 132(a)(2), such sums as may be
    necessary for each of fiscal years 1999 through 2003.]

    Subtitle C--Job Corps

               *       *       *       *       *       *       *

    SEC. 153. COMMUNITY PARTICIPATION.

      [(a) Business and Community Liaison.--Each Job Corps center
    shall have a Business and Community Liaison (referred to in
    this Act as a ``Liaison''), designated by the director of the
    center.]
      (a) Business and Community Participation.--The director of
    each Job Corps center shall ensure the establishment and
    development of the business and community relationships and
    networks described in subsection (b) in order to enhance the
    effectiveness of such center.
      (b) [Responsibilities.--The responsibilities of the Liaison]
    Networks.--The activities carried out by each Job Corps center
    under this section shall include--
              (1) * * *

               *       *       *       *       *       *       *

      (c) New Centers.--[The Liaison for] The director of a Job
    Corps center that is not yet operating shall establish and
    develop the relationships and networks described in subsection
    (b) at least 3 months prior to the date on which the center
    accepts the first enrollee at the center.

    SEC. 154. INDUSTRY COUNCILS.

      (a) * * *
      (b) Industry Council Composition.--
              (1) In general.--An industry council shall be
            comprised of--
                      (A) a majority of members who shall be [local
                    and distant] owners of business concerns, chief
                    executives or chief operating officers of
                    nongovernmental employers, or other private
                    sector employers, who--
                              (i) * * *

               *       *       *       *       *       *       *

              (3) Employers outside of local areas.--The industry
            council may include, or otherwise provide for
            consultation with, employers from outside the local
            area who are likely to hire a significant number of
            enrollees from the Job Corps center.

               *       *       *       *       *       *       *

    SEC. 159. MANAGEMENT INFORMATION.

      (a) * * *

               *       *       *       *       *       *       *

      (c) Information on Indicators of Performance.--
              [(1) Establishment.--The Secretary shall, with
            continuity and consistency from year to year, establish
            indicators of performance, and expected levels of
            performance for Job Corps centers and the Job Corps
            program, relating to--
                      [(A) the number of graduates and the rate of
                    such graduation, analyzed by type of vocational
                    training received through the Job Corps program
                    and by whether the vocational training was
                    provided by a local or national service
                    provider;
                      [(B) the number of graduates who entered
                    unsubsidized employment related to the
                    vocational training received through the Job
                    Corps program and the number who entered
                    unsubsidized employment not related to the
                    vocational training received, analyzed by
                    whether the vocational training was provided by
                    a local or national service provider and by
                    whether the placement in the employment was
                    conducted by a local or national service
                    provider;
                      [(C) the average wage received by graduates
                    who entered unsubsidized employment related to
                    the vocational training received through the
                    Job Corps program and the average wage received
                    by graduates who entered unsubsidized
                    employment unrelated to the vocational training
                    received;
                      [(D) the average wage received by graduates
                    placed in unsubsidized employment after
                    completion of the Job Corps program--
                              [(i) on the first day of the
                            employment;
                              [(ii) 6 months after the first day of
                            the employment; and
                              [(iii) 12 months after the first day
                            of the employment,
                    analyzed by type of vocational training
                    received through the Job Corps program;
                      [(E) the number of graduates who entered
                    unsubsidized employment and were retained in
                    the unsubsidized employment--
                              [(i) 6 months after the first day of
                            the employment; and
                              [(ii) 12 months after the first day
                            of the employment;
                      [(F) the number of graduates who entered
                    unsubsidized employment--
                              [(i) for 32 hours per week or more;
                              [(ii) for not less than 20 but less
                            than 32 hours per week; and
                              [(iii) for less than 20 hours per
                            week;
                      [(G) the number of graduates who entered
                    postsecondary education or advanced training
                    programs, including apprenticeship programs, as
                    appropriate; and
                      [(H) the number of graduates who attained job
                    readiness and employment skills.]
              (1) Core indicators.--The Secretary shall annually
            establish expected levels of performance for Job Corps
            centers and the Job Corps program relating to each of
            the core indicators for youth identified in section
            136(b)(2)(A)(ii).
              (2) Performance of recruiters.--The Secretary shall
            also establish performance [measures] indicators, and
            expected performance levels on the performance
            [measures] indicators, for local and national
            recruitment service providers serving the Job Corps
            program. The performance [measures] indicators shall
            relate to the number of enrollees retained in the Job
            Corps program for 30 days and for 60 days after initial
            placement in the program.

               *       *       *       *       *       *       *

                         Subtitle D--National Programs

    SEC. 166. NATIVE AMERICAN PROGRAMS.

      (a) * * *

               *       *       *       *       *       *       *

      (d) Authorized Activities.--
              (1) * * *
              [(2) Workforce investment activities and supplemental
            services.--
                      [(A) In general.--Funds made available under
                    subsection (c) shall be used for--
                              [(i) comprehensive workforce
                            investment activities for Indians or
                            Native Hawaiians; or
                              [(ii) supplemental services for
                            Indian or Native Hawaiian youth on or
                            near Indian reservations and in
                            Oklahoma, Alaska, or Hawaii.
                      [(B) Special rule.--Notwithstanding any other
                    provision of this section, individuals who were
                    eligible to participate in programs under
                    section 401 of the Job Training Partnership Act
                    (29 U.S.C. 1671) (as such section was in effect
                    on the day before the date of enactment of this
                    Act) shall be eligible to participate in an
                    activity assisted under this section.]
              (2) Workforce investment activities and supplemental
            services.--Funds made available under subsection (c)
            shall be used for--
                      (A) comprehensive workforce investment
                    activities for Indians or Native Hawaiians; or
                      (B) supplemental services for Indian or
                    Native Hawaiian youth on or near Indian
                    reservations and in Oklahoma, Alaska, or
                    Hawaii.

               *       *       *       *       *       *       *

      (h) Administrative Provisions.--
              (1) * * *

               *       *       *       *       *       *       *

              (4) Advisory council.--
                      (A) * * *

               *       *       *       *       *       *       *

                      [(C) Duties.--The Council shall advise the
                    Secretary on all aspects of the operation and
                    administration of the programs assisted under
                    this section, including the selection of the
                    individual appointed as the head of the unit
                    established under paragraph (1).]
                      (C) Duties.--The Council shall advise the
                    Secretary on the operation and administration
                    of the programs assisted under this section.

               *       *       *       *       *       *       *

      [( j) Assistance to American Samoans in Hawaii.--
              [(1) In general.--Notwithstanding any other provision
            of law, the Secretary is authorized to provide
            assistance to American Samoans who reside in Hawaii for
            the co-location of federally funded and State-funded
            workforce investment activities.
              [(2) Authorization of appropriations.--There are
            authorized to be appropriated for fiscal year 1999 such
            sums as may be necessary to carry out this subsection.]

               *       *       *       *       *       *       *

    [SEC. 169. YOUTH OPPORTUNITY GRANTS.

      [(a) Grants.--
              [(1) In general.--Using funds made available under
            section 127(b)(1)(A), the Secretary shall make grants
            to eligible local boards and eligible entities
            described in subsection (d) to provide activities
            described in subsection (b) for youth to increase the
            long-term employment of youth who live in empowerment
            zones, enterprise communities, and high poverty areas
            and who seek assistance.
              [(2) Definition.--In this section, the term ``youth''
            means an individual who is not less than age 14 and not
            more than age 21.
              [(3) Grant period.--The Secretary may make a grant
            under this section for a 1-year period, and may renew
            the grant for each of the 4 succeeding years.
              [(4) Grant awards.--In making grants under this
            section, the Secretary shall ensure that grants are
            distributed equitably among local boards and entities
            serving urban areas and local boards and entities
            serving rural areas, taking into consideration the
            poverty rate in such urban and rural areas, as
            described in subsection (c)(3)(B).
      [(b) Use of Funds.--
              [(1) In general.--A local board or entity that
            receives a grant under this section shall use the funds
            made available through the grant to provide activities
            that meet the requirements of section 129, except as
            provided in paragraph (2), as well as youth development
            activities such as activities relating to leadership
            development, citizenship, and community service, and
            recreation activities.
              [(2) Intensive placement and followup services.--In
            providing activities under this section, a local board
            or entity shall provide--
                      [(A) intensive placement services; and
                      [(B) followup services for not less than 24
                    months after the completion of participation in
                    the other activities described in this
                    subsection, as appropriate.
      [(c) Eligible Local Boards.--To be eligible to receive a
    grant under this section, a local board shall serve a community
    that--
              [(1) has been designated as an empowerment zone or
            enterprise community under section 1391 of the Internal
            Revenue Code of 1986;
              [(2)(A) is a State without a zone or community
            described in paragraph (1); and
              [(B) has been designated as a high poverty area by
            the Governor of the State; or
              [(3) is 1 of 2 areas in a State that--
                      [(A) have been designated by the Governor as
                    areas for which a local board may apply for a
                    grant under this section; and
                      [(B) meet the poverty rate criteria set forth
                    in subsections (a)(4), (b), and (d) of section
                    1392 of the Internal Revenue Code of 1986.
      [(d) Eligible Entities.--To be eligible to receive a grant
    under this section, an entity (other than a local board)
    shall--
              [(1) be a recipient of financial assistance under
            section 166; and
              [(2) serve a community that--
                      [(A) meets the poverty rate criteria set
                    forth in subsections (a)(4), (b), and (d) of
                    section 1392 of the Internal Revenue Code of
                    1986; and
                      [(B) is located on an Indian reservation or
                    serves Oklahoma Indians or Alaska Natives.
      [(e) Application.--To be eligible to receive a grant under
    this section, a local board or entity shall submit an
    application to the Secretary at such time, in such manner, and
    containing such information as the Secretary may require,
    including--
              [(1) a description of the activities that the local
            board or entity will provide under this section to
            youth in the community described in subsection (c);
              [(2) a description of the performance measures
            negotiated under subsection (f ), and the manner in
            which the local boards or entities will carry out the
            activities to meet the performance measures;
              [(3) a description of the manner in which the
            activities will be linked to activities described in
            section 129; and
              [(4) a description of the community support,
            including financial support through leveraging
            additional public and private resources, for the
            activities.
      [(f ) Performance Measures.--
              [(1) In general.--The Secretary shall negotiate and
            reach agreement with the local board or entity on
            performance measures for the indicators of performance
            referred to in subparagraphs (A) and (B) of section
            136(b)(2) that will be used to evaluate the performance
            of the local board or entity in carrying out the
            activities described in subsection (b). Each local
            performance measure shall consist of such a indicator
            of performance, and a performance level referred to in
            paragraph (2).
              [(2) Performance levels.--The Secretary shall
            negotiate and reach agreement with the local board or
            entity regarding the levels of performance expected to
            be achieved by the local board or entity on the
            indicators of performance.
      [(g) Role Model Academy Project.--
              [(1) In general.--Using the funds made available
            pursuant to section 127(b)(1)(A)(iv) for fiscal year
            1999, the Secretary shall provide assistance to an
            entity to carry out a project establishing a role model
            academy for out-of-school youth.
              [(2) Residential center.--The entity shall use the
            assistance to establish an academy that consists of a
            residential center located on the site of a military
            installation closed or realigned pursuant to a law
            providing for closures and realignments of such
            installations.
              [(3) Services.--The academy established pursuant to
            this subsection shall provide services that--
                      [(A) utilize a military style model that
                    emphasizes leadership skills and discipline, or
                    another model of demonstrated effectiveness;
                    and
                      [(B) include vocational training, secondary
                    school course work leading to a secondary
                    school diploma or recognized equivalent, and
                    the use of mentors who serve as role models and
                    who provide academic training and career
                    counseling to the youth.]

    SEC. 169. YOUTH CHALLENGE GRANTS.

      (a) In General.--Of the amounts reserved by the Secretary
    under section 127(a)(1)(A) for a fiscal year--
              (1) the Secretary shall use not less than 80 percent
            to award competitive grants under subsection (b); and
              (2) the Secretary may use not more than 20 percent to
            award discretionary grants under subsection (c).
      (b) Competitive Grants to States and Local Areas.--
              (1) Establishment.--From the funds described in
            subsection (a)(1), the Secretary shall award
            competitive grants to eligible entities to carry out
            activities authorized under this section to assist
            eligible youth in acquiring the skills, credentials and
            employment experience necessary to succeed in the labor
            market.
              (2) Eligible entities.--Grants under this subsection
            may be awarded to States, local boards, recipients of
            grants under section 166 (relating to Native American
            programs), and public or private entities (including
            consortia of such entities) applying in conjunction
            with local boards.
              (3) Grant period.--The Secretary may make a grant
            under this section for a period of 1 year and may renew
            the grants for each of the 4 succeeding years.
              (4) Authority to require match.--The Secretary may
            require that grantees under this subsection provide a
            non-Federal share of the cost of activities carried out
            under a grant awarded under this subsection.
              (5) Participant eligibility.--Youth ages 14 through
            19 as of the time the eligibility determination is made
            may be eligible to participate in activities provided
            under this subsection.
              (6) Use of funds.--Funds under this subsection may be
            used for activities that are designed to assist youth
            in acquiring the skills, credentials and employment
            experience that are necessary to succeed in the labor
            market, including the activities identified in section
            129. The activities may include activities such as--
                      (A) training and internships for out-of-
                    school youth in sectors of economy experiencing
                    or projected to experience high growth;
                      (B) after-school dropout prevention
                    activities for in-school youth;
                      (C) activities designed to assist special
                    youth populations, such as court-involved youth
                    and youth with disabilities; and
                      (D) activities combining remediation of
                    academic skills, work readiness training, and
                    work experience, and including linkages to
                    postsecondary education, apprenticeships, and
                    career-ladder employment.
              (7) Applications.--To be eligible to receive a grant
            under this subsection, an eligible entity shall submit
            an application to the Secretary at such time, in such
            manner, and containing such information as the
            Secretary may require, including--
                      (A) a description of the activities the
                    eligible entity will provide to eligible youth
                    under this subsection;
                      (B) a description of the programs of
                    demonstrated effectiveness on which the
                    provision of the activities under subparagraph
                    (A) are based, and a description of how such
                    activities will expand the base of knowledge
                    relating to the provision of activities for
                    youth;
                      (C) a description of the private and public,
                    and local and State resources that will be
                    leveraged to provide the activities described
                    under subparagraph (A) in addition the funds
                    provided under this subsection; and
                      (D) the levels of performance the eligible
                    entity expects to achieve with respect to the
                    indicators of performance for youth specified
                    in section 136(b)(2)(A)(ii).
              (8) Factors for award.--In awarding grants under this
            subsection the Secretary may consider the quality of
            the proposed project, the goals to be achieved, the
            likelihood of successful implementation, the extent to
            which the project is based on proven strategies or the
            extent to which the project will expand the knowledge
            base on activities for youth, and the additional State,
            local or private resources that will be provided.
              (9) Evaluation.--The Secretary may reserve up to 5
            percent of the funds described in subsection(a)(1) to
            provide technical assistance to, and conduct
            evaluations of the projects funded under this
            subsection (using appropriate techniques as described
            in section 172(c)).
      (c) Discretionary Grants for Youth Activities.--
              (1) In general.--From the funds described in
            subsection(a)(2), the Secretary may award grants to
            eligible entities to provide activities that will
            assist youth in preparing for, and entering and
            retaining, employment.
              (2) Eligible entities.--Grants under this subsection
            may be awarded to public or private entities that the
            Secretary determines would effectively carry out
            activities relating to youth under this subsection.
              (3) Participant eligibility.--Youth ages 14 through
            19 at the time the eligibility determination is made
            may be eligible to participate in activities under this
            subsection.
              (4) Use of funds.--Funds provided under this
            subsection may be used for activities that will assist
            youth in preparing for, and entering and retaining,
            employment, including the activities described in
            section 129 for out-of-school youth, activities
            designed to assist in-school youth to stay in school
            and gain work experience, and such other activities
            that the Secretary determines are appropriate.
              (5) Applications.--To be eligible to receive a grant
            under this subsection, an eligible entity shall submit
            an application to the Secretary at such time, in such
            manner, and containing such information as the
            Secretary may require.
              (6) Additional requirements.--The Secretary may
            require the provision of a non-Federal share for
            projects funded under this subsection and may require
            participation of grantees in evaluations of such
            projects, including evaluations using the techniques as
            described in section 172(c).

    SEC. 170. TECHNICAL ASSISTANCE.

      [(a) General Technical Assistance.--]
      [(1)] (a) In general.--The Secretary shall provide,
    coordinate, and support the development of, appropriate
    training, technical assistance, staff development, and other
    activities, including assistance in replicating programs of
    demonstrated effectiveness, to States and localities, the
    training of staff providing rapid response services, the
    training of other staff of recipients of funds under this
    title, peer review activities under this title, and, in
    particular, to assist States in making transitions [from
    carrying out activities under the provisions of law repealed
    under section 199 to carrying out activities under this title]
    to implement the amendments made by the Workforce Reinvestment
    and Adult Education Act of 2003.
      [(2)] (b) Form of assistance.--In carrying out paragraph (1)
    on behalf of a State, or recipient of financial assistance
    under any of sections 166 through 169, the Secretary, after
    consultation with the State or grant recipient, may award
    grants and enter into contracts and cooperative agreements.
      [(3)] (c) Limitation.--Grants or contracts awarded under
    paragraph (1) to entities other than States or local units of
    government that are for amounts in excess of $100,000 shall
    only be awarded on a competitive basis.
      [(b) Dislocated Worker Technical Assistance.--
              [(1) Authority.--Of the amounts available pursuant to
            section 132(a)(2), the Secretary shall reserve not more
            than 5 percent of such amounts to provide technical
            assistance to States that do not meet the State
            performance measures described in section 136 with
            respect to employment and training activities for
            dislocated workers. Using such reserved funds, the
            Secretary may provide such assistance to other States,
            local areas, and other entities involved in providing
            assistance to dislocated workers, to promote the
            continuous improvement of assistance provided to
            dislocated workers, under this title.
              [(2) Training.--Amounts reserved under this
            subsection may be used to provide for the training of
            staff, including specialists, who provide rapid
            response services. Such training shall include
            instruction in proven methods of promoting,
            establishing, and assisting labor-management
            committees. Such projects shall be administered through
            the dislocated worker office described in section
            173(b).]

    SEC. 171. DEMONSTRATION, PILOT, MULTISERVICE, RESEARCH, AND MULTISTATE
                        PROJECTS.

      (a) * * *
      (b) Demonstration and Pilot Projects.--
              (1) In general.--[Under a] Consistent with the
            priorities specified in the plan published under
            subsection (a), the Secretary shall, through grants or
            contracts, carry out demonstration and pilot projects
            for the purpose of developing and implementing
            techniques and approaches, and demonstrating the
            effectiveness of specialized methods, in addressing
            employment and training needs. Such projects shall
            include the provision of direct services to individuals
            to enhance employment opportunities and an evaluation
            component and may include--
                      [(A) the establishment of advanced
                    manufacturing technology skill centers
                    developed through local partnerships of
                    industry, labor, education, community-based
                    organizations, and economic development
                    organizations to meet unmet, high-tech skill
                    needs of local communities;
                      [(B) projects that provide training to
                    upgrade the skills of employed workers who
                    reside and are employed in enterprise
                    communities or empowerment zones;
                      [(C) programs conducted jointly with the
                    Department of Defense to develop training
                    programs utilizing computer-based and other
                    innovative learning technologies;
                      [(D) projects that promote the use of
                    distance learning, enabling students to take
                    courses through the use of media technology
                    such as videos, teleconferencing computers, and
                    the Internet;
                      [(E) projects that assist in providing
                    comprehensive services to increase the
                    employment rates of out-of-school youth
                    residing in targeted high poverty areas within
                    empowerment zones and enterprise communities;]
                      (A) projects that assist national employers
                    in connecting with the workforce investment
                    system established under this title in order to
                    facilitate the recruitment and employment of
                    needed workers and to provide information to
                    such system on skills and occupations in
                    demand;
                      (B) projects that promote the development of
                    systems that will improve the effectiveness and
                    efficiency of programs carried out under this
                    title;
                      (C) projects that focus on opportunities for
                    employment in industries and sectors of
                    industries that are experiencing or are likely
                    to experience high rates of growth;
                      (D) projects carried out by States and local
                    areas to test innovative approaches to
                    delivering employment-related services;
                      [(F)] (E) the establishment of partnerships
                    with national organizations with special
                    expertise in developing, organizing, and
                    administering employment and training services,
                    for individuals with disabilities, at the
                    national, State, and local levels;
                      [(G)] (F) projects to assist public housing
                    authorities that provide, to public housing
                    residents, job training programs that
                    demonstrate success in upgrading the job skills
                    and promoting employment of the residents; and
                      [(H) projects that assist local areas to
                    develop and implement local self-sufficiency
                    standards to evaluate the degree to which
                    participants in programs under this title are
                    achieving self-sufficiency.]
                      (G) projects that provide retention grants to
                    qualified job training programs upon placement
                    or retention of a low-income individual trained
                    by that program in employment with a single
                    employer for a period of 1 year, provided that
                    such employment is providing to the low-income
                    individual an income not less than twice the
                    poverty line for that individual.
              (2) Limitations.--
                      (A) * * *
                      [(B) Eligible entities.--Grants or contracts
                    may be awarded under this subsection only to--
                              [(i) entities with recognized
                            expertise in--
                                      [(I) conducting national
                                    demonstration projects;
                                      [(II) utilizing state-of-the-
                                    art demonstration methods; or
                                      [(III) conducting evaluations
                                    of workforce investment
                                    projects; or
                              [(ii) State and local entities with
                            expertise in operating or overseeing
                            workforce investment programs.]
                      [(C)] (B) Time limits.--The Secretary shall
                    establish appropriate time limits for carrying
                    out demonstration and pilot projects under this
                    subsection.
      (c) Multiservice Projects, Research Projects, and Multistate
    Projects.--
              (1) * * *
              (2) Research projects.--
                      (A) * * *
                      [(B) Formula improvement study and report.--
                              [(i) Study.--The Secretary shall
                            conduct a 2-year study concerning
                            improvements in the formulas described
                            in section 132(b)(1)(B) and paragraphs
                            (2)(A) and (3) of section 133(b)
                            (regarding distributing funds under
                            subtitle B to States and local areas
                            for adult employment and training
                            activities). In conducting the study,
                            the Secretary shall examine means of
                            improving the formulas by--
                                      [(I) developing formulas
                                    based on statistically reliable
                                    data;
                                      [(II) developing formulas
                                    that are consistent with the
                                    goals and objectives of this
                                    title; and
                                      [(III) developing formulas
                                    based on organizational and
                                    financial stability of State
                                    boards and local boards.
                              [(ii) Report.--The Secretary shall
                            prepare and submit to Congress a report
                            containing the results of the study,
                            including recommendations for improved
                            formulas.]
                      (B) Net impact studies and reports.--The
                    Secretary shall conduct studies to determine
                    the net impacts of programs, services, and
                    activities carried out under this title. The
                    Secretary shall prepare and disseminate to the
                    public reports containing the results of such
                    studies.

               *       *       *       *       *       *       *

      [(d) Dislocated Worker Projects.--Of the amount made
    available pursuant to section 132(a)(2)(A) for any program
    year, the Secretary shall use not more than 10 percent of such
    amount to carry out demonstration and pilot projects,
    multiservice projects, and multistate projects, relating to the
    employment and training needs of dislocated workers. Of the
    requirements of this section, such projects shall be subject
    only to the provisions relating to review and evaluation of
    applications under subsection (c)(4)(C). Such projects may
    include demonstration and pilot projects relating to promoting
    self-employment, promoting job creation, averting dislocations,
    assisting dislocated farmers, assisting dislocated fishermen,
    and promoting public works. Such projects shall be administered
    through the dislocated worker office described in section
    173(b).]

               *       *       *       *       *       *       *

    [SEC. 173. NATIONAL EMERGENCY GRANTS.]

    SEC. 173. NATIONAL DISLOCATED WORKER GRANTS.

      (a) In General.--The Secretary is authorized to award
    [national emergency grants] national dislocated worker grants
    in a timely manner--
              (1) to an entity described in subsection [(c)] (b) to
            provide employment and training assistance to workers
            affected by major economic dislocations, such as plant
            closures, mass layoffs, or closures and realignments of
            military installations;

               *       *       *       *       *       *       *

      [(b) Administration.--The Secretary shall designate a
    dislocated worker office to coordinate the functions of the
    Secretary under this title relating to employment and training
    activities for dislocated workers, including activities carried
    out under the national emergency grants.]
      [(c)] (b) Employment and Training Assistance Requirements.--
              (1) Grant recipient eligibility.--
                      (A) * * *
                      (B) Eligible entity.--In this paragraph, the
                    term ``entity'' means a State, a local board,
                    an entity described in section 166(c), entities
                    determined to be eligible by the Governor of
                    the State involved[, and other entities that
                    demonstrate to the Secretary the capability to
                    effectively respond to the circumstances
                    relating to particular dislocations.].

               *       *       *       *       *       *       *

      [(d)] (c) Disaster Relief Employment Assistance
    Requirements.--
              (1) * * *

               *       *       *       *       *       *       *

      [(e) Additional Assistance.--
              [(1) In general.--From the amount appropriated and
            made available to carry out this section for any
            program year, the Secretary shall use not more than
            $15,000,000 to make grants to not more than 8 States to
            provide employment and training activities under
            section 134, in accordance with subtitle B.
              [(2) Eligible states.--The Secretary shall make a
            grant under paragraph (1) to a State for a program year
            if--
                      [(A)(i) the amount of the allotment that
                    would be made to the State for the program year
                    under the formula specified in section 202(a)
                    of the Job Training Partnership Act, as in
                    effect on July 1, 1998; is greater than
                      [(ii) the amount of the allotment that would
                    be made to the State for the program year under
                    the formula specified in section 132(b)(1)(B);
                    and
                      [(B) the State is 1 of the 8 States with the
                    greatest quotient obtained by dividing--
                              [(i) the amount described in
                            subparagraph (A)(i); by
                              [(ii) the amount described in
                            subparagraph (A)(ii).
              [(3) Amount of grants.--Subject to paragraph (1), the
            amount of the grant made under paragraph (1) to a State
            for a program year shall be based on the difference
            between--
                      [(A) the amount of the allotment that would
                    be made to the State for the program year under
                    the formula specified in section 202(a) of the
                    Job Training Partnership Act, as in effect on
                    July 1, 1998; and
                      [(B) the amount of the allotment that would
                    be made to the State for the program year under
                    the formula specified in section 132(b)(1)(B).
              [(4) Allocation of funds.--A State that receives a
            grant under paragraph (1) for a program year--
                      [(A) shall allocate funds made available
                    through the grant on the basis of the formula
                    used by the State to allocate funds within the
                    State for that program year under--
                              [(i) paragraph (2)(A) or (3) of
                            section 133(b); or
                              [(ii) paragraph (2)(B) of section
                            133(b); and
                      [(B) shall use the funds in the same manner
                    as the State uses other funds allocated under
                    the appropriate paragraph of section 133(b).]
      [(f)] (d) Health Insurance Coverage Assistance for Eligible
    Individuals.--
              (1) * * *

               *       *       *       *       *       *       *

      [(g)] (e) Interim Health Insurance Coverage and Other
    Assistance.--
              (1) * * *

               *       *       *       *       *       *       *

    SEC. 174. AUTHORIZATION OF APPROPRIATIONS.

      (a) Native American Programs; Migrant and Seasonal Farmworker
    Programs; Veterans' Workforce Investment Programs.--
              (1) In general.--Subject to paragraph (2), there are
            authorized to be appropriated to carry out sections 166
            through 168 such sums as may be necessary for each of
            the fiscal years [1999 through 2003] 2004 through 2009.

               *       *       *       *       *       *       *

      [(b) Technical Assistance; Demonstration and Pilot Projects;
    Evaluations; Incentive Grants.--
              [(1) In general.--Subject to paragraph (2), there are
            authorized to be appropriated to carry out sections 170
            through 172 and section 503 such sums as may be
            necessary for each of the fiscal years 1999 through
            2003.
              [(2) Reservations.--Of the amount appropriated
            pursuant to the authorization of appropriations under
            paragraph (1) for a fiscal year, the Secretary shall--
                      [(A)(i) for fiscal year 1999, reserve up to
                    40 percent for carrying out section 170 (other
                    than subsection (b) of such section);
                      [(ii) for fiscal year 2000, reserve up to 25
                    percent for carrying out section 170 (other
                    than subsection (b) of such section); and
                      [(iii) for each of the fiscal years 2001
                    through 2003, reserve up to 20 percent for
                    carrying out section 170 (other than subsection
                    (b) of such section);
                      [(B)(i) for fiscal year 1999, reserve not
                    less than 50 percent for carrying out section
                    171; and
                      [(ii) for each of the fiscal years 2000
                    through 2003, reserve not less than 45 percent
                    for carrying out section 171;
                      [(C)(i) for fiscal year 1999, reserve not
                    less than 10 percent for carrying out section
                    172; and
                      [(ii) for each of the fiscal years 2000
                    through 2003, reserve not less than 10 percent
                    for carrying out section 172; and
                      [(D)(i) for fiscal year 1999, reserve no
                    funds for carrying out section 503;
                      [(ii) for fiscal year 2000, reserve up to 20
                    percent for carrying out section 503; and
                      [(iii) for each of the fiscal years 2001
                    through 2003, reserve up to 25 percent for
                    carrying out section 503.]
      (b) Technical Assistance; Demonstration and Pilot Projects;
    Evaluations; Incentive Grants.--There are authorized to be
    appropriated to carry out sections 170 through 172 and section
    136 such sums as may be necessary for each of fiscal years 2004
    through 2009.

               *       *       *       *       *       *       *

                           Subtitle E--Administration

    SEC. 181. REQUIREMENTS AND RESTRICTIONS.

      (a) * * *

               *       *       *       *       *       *       *

      (c) Grievance Procedure.--
              (1) * * *
              (2) Investigation.--
                      (A) In general.--The Secretary [shall] may
                    investigate an allegation of a violation
                    described in paragraph (1) if--
                              (i) * * *

               *       *       *       *       *       *       *

      (e) Limitation on Use of Funds.--[No funds available under
    this title shall be used for employment generating activities,
    economic development activities, investment in revolving loan
    funds, capitalization of businesses, investment in contract
    bidding resource centers, and similar activities that are not
    directly related to training for eligible individuals under
    this title.] No funds available under subtitle B shall be used
    for foreign travel.

               *       *       *       *       *       *       *

    SEC. 188. NONDISCRIMINATION.

      (a) In General.--
              (1) * * *
              (2) Prohibition of discrimination regarding
            participation, benefits, and [employment.--No]
            employment.--
                      (A) In general.--Except as provided in
                    subparagraph (B), no individual shall be
                    excluded from participation in, denied the
                    benefits of, subjected to discrimination under,
                    or denied employment in the administration of
                    or in connection with, any such program or
                    activity because of race, color, religion, sex
                    (except as otherwise permitted under title IX
                    of the Education Amendments of 1972), national
                    origin, age, disability, or political
                    affiliation or belief.
                      (B) Exemption for religious organizations.--
                    Subparagraph (A) shall not apply to recipients
                    of financial assistance under this title that
                    is a religious corporation, association,
                    educational institution, or society, with
                    respect to the employment of individuals of a
                    particular religion to perform work connected
                    with the carrying on by such corporation,
                    association, educational institution, or
                    society of its activities Such recipients shall
                    comply with the other requirements contained in
                    subparagraph (A).

               *       *       *       *       *       *       *

    SEC. 189. ADMINISTRATIVE PROVISIONS.

      (a) * * *

               *       *       *       *       *       *       *

      (g) Program Year.--
              [(1) In general.--
                      [(A) Program year.--Except as provided in
                    subparagraph (B), appropriations for any fiscal
                    year for programs and activities carried out
                    under this title shall be available for
                    obligation only on the basis of a program year.
                    The program year shall begin on July 1 in the
                    fiscal year for which the appropriation is
                    made.
                      [(B) Youth activities.--The Secretary may
                    make available for obligation, beginning April
                    1 of any fiscal year, funds appropriated for
                    such fiscal year to carry out youth activities
                    under subtitle B.]
              (1) In general.--Appropriations for any fiscal year
            for programs and activities carried out under this
            title shall be available for obligation only on the
            basis of a program year. The program year shall begin
            on July 1 in the fiscal year for which the
            appropriation is made.
              (2) Availability.--Funds obligated for any program
            year for a program or activity carried out under this
            title may be expended by [each State] each recipient
            receiving such funds during that program year and the 2
            succeeding program years. Funds obligated for any
            program year for a program or activity carried out
            under section 171 or 172 shall remain available until
            expended. Funds received by local areas from States
            under this title during a program year may be expended
            during that program year and the succeeding program
            year. No amount of the funds described in this
            paragraph shall be deobligated on account of a rate of
            expenditure that is consistent with a State plan, an
            operating plan described in section 151, or a plan,
            grant agreement, contract, application, or other
            agreement described in subtitle D, as appropriate.

               *       *       *       *       *       *       *

      (i) Waivers and Special Rules.--
              (1) * * *

               *       *       *       *       *       *       *

              (4) General waivers of statutory or regulatory
            requirements.--
                      (A) General authority.--Notwithstanding any
                    other provision of law, the Secretary may waive
                    for a State, or a local area in a State,
                    pursuant to a request submitted by the Governor
                    of the State (in consultation with appropriate
                    local elected officials) that meets the
                    requirements of subparagraph (B), or in
                    accordance with subparagraph (D),--
                              (i) * * *

               *       *       *       *       *       *       *

                      (D) Expedited process for extending approved
                    waivers to additional states.--In lieu of the
                    requirements of subparagraphs (B) and (C), the
                    Secretary may establish an expedited procedure
                    for the purpose of extending to additional
                    States the waiver of statutory or regulatory
                    requirements that have been approved for a
                    State pursuant to a request under subparagraph
                    (B). Such procedure shall ensure that the
                    extension of such waivers to additional States
                    are accompanied by appropriate conditions
                    relating the implementation of such waivers.

               *       *       *       *       *       *       *

    SEC. 195. GENERAL PROGRAM REQUIREMENTS.

      Except as otherwise provided in this title, the following
    conditions are applicable to all programs under this title:
              (1) * * *

               *       *       *       *       *       *       *

              (14) Funds provided under this title shall not be
            used to establish or operate stand-alone fee-for-
            service enterprises that compete with private sector
            employment agencies within the meaning of section
            701(c) of the Civil Rights Act of 1964 (42 U.S.C.
            2000e(c)). For purposes of this paragraph, such an
            enterprise does not include one-stop centers.

                    [TITLE II--ADULT EDUCATION AND LITERACY

    [SEC. 201. SHORT TITLE.

      [This title may be cited as the ``Adult Education and Family
    Literacy Act''.

    [SEC. 202. PURPOSE.

      [It is the purpose of this title to create a partnership
    among the Federal Government, States, and localities to
    provide, on a voluntary basis, adult education and literacy
    services, in order to--
              [(1) assist adults to become literate and obtain the
            knowledge and skills necessary for employment and self-
            sufficiency;
              [(2) assist adults who are parents to obtain the
            educational skills necessary to become full partners in
            the educational development of their children; and
              [(3) assist adults in the completion of a secondary
            school education.

    [SEC. 203. DEFINITIONS.

      [In this title:
              [(1) Adult education.--The term ``adult education''
            means services or instruction below the postsecondary
            level for individuals--
                      [(A) who have attained 16 years of age;
                      [(B) who are not enrolled or required to be
                    enrolled in secondary school under State law;
                    and
                      [(C) who--
                              [(i) lack sufficient mastery of basic
                            educational skills to enable the
                            individuals to function effectively in
                            society;
                              [(ii) do not have a secondary school
                            diploma or its recognized equivalent,
                            and have not achieved an equivalent
                            level of education; or
                              [(iii) are unable to speak, read, or
                            write the English language.
              [(2) Adult education and literacy activities.--The
            term ``adult education and literacy activities'' means
            activities described in section 231(b).
              [(3) Educational service agency.--The term
            ``educational service agency'' means a regional public
            multiservice agency authorized by State statute to
            develop and manage a service or program, and to provide
            the service or program to a local educational agency.
              [(4) Eligible agency.--The term ``eligible agency''
            means the sole entity or agency in a State or an
            outlying area responsible for administering or
            supervising policy for adult education and literacy in
            the State or outlying area, respectively, consistent
            with the law of the State or outlying area,
            respectively.
              [(5) Eligible provider.--The term ``eligible
            provider'' means--
                      [(A) a local educational agency;
                      [(B) a community-based organization of
                    demonstrated effectiveness;
                      [(C) a volunteer literacy organization of
                    demonstrated effectiveness;
                      [(D) an institution of higher education;
                      [(E) a public or private nonprofit agency;
                      [(F) a library;
                      [(G) a public housing authority;
                      [(H) a nonprofit institution that is not
                    described in any of subparagraphs (A) through
                    (G) and has the ability to provide literacy
                    services to adults and families; and
                      [(I) a consortium of the agencies,
                    organizations, institutions, libraries, or
                    authorities described in any of subparagraphs
                    (A) through (H).
              [(6) English literacy program.--The term ``English
            literacy program'' means a program of instruction
            designed to help individuals of limited English
            proficiency achieve competence in the English language.
              [(7) Family literacy services.--The term ``family
            literacy services'' means services that are of
            sufficient intensity in terms of hours, and of
            sufficient duration, to make sustainable changes in a
            family, and that integrate all of the following
            activities:
                      [(A) Interactive literacy activities between
                    parents and their children.
                      [(B) Training for parents regarding how to be
                    the primary teacher for their children and full
                    partners in the education of their children.
                      [(C) Parent literacy training that leads to
                    economic self-sufficiency.
                      [(D) An age-appropriate education to prepare
                    children for success in school and life
                    experiences.
              [(8) Governor.--The term ``Governor'' means the chief
            executive officer of a State or outlying area.
              [(9) Individual with a disability.--
                      [(A) In general.--The term ``individual with
                    a disability'' means an individual with any
                    disability (as defined in section 3 of the
                    Americans with Disabilities Act of 1990 (42
                    U.S.C. 12102)).
                      [(B) Individuals with disabilities.--The term
                    ``individuals with disabilities'' means more
                    than one individual with a disability.
              [(10) Individual of limited english proficiency.--The
            term ``individual of limited English proficiency''
            means an adult or out-of-school youth who has limited
            ability in speaking, reading, writing, or understanding
            the English language, and--
                      [(A) whose native language is a language
                    other than English; or
                      [(B) who lives in a family or community
                    environment where a language other than English
                    is the dominant language.
              [(11) Institution of higher education.--The term
            ``institution of higher education'' has the meaning
            given the term in section 101 of the Higher Education
            Act of 1965.
              [(12) Literacy.--The term ``literacy'' means an
            individual's ability to read, write, and speak in
            English, compute, and solve problems, at levels of
            proficiency necessary to function on the job, in the
            family of the individual, and in society.
              [(13) Local educational agency.--The term ``local
            educational agency'' has the meaning given the term in
            section 9101 of the Elementary and Secondary Education
            Act of 1965.
              [(14) Outlying area.--The term ``outlying area'' has
            the meaning given the term in section 101.
              [(15) Postsecondary educational institution.--The
            term ``postsecondary educational institution'' means--
                      [(A) an institution of higher education that
                    provides not less than a 2-year program of
                    instruction that is acceptable for credit
                    toward a bachelor's degree;
                      [(B) a tribally controlled community college;
                    or
                      [(C) a nonprofit educational institution
                    offering certificate or apprenticeship programs
                    at the postsecondary level.
              [(16) Secretary.--The term ``Secretary'' means the
            Secretary of Education.
              [(17) State.--The term ``State'' means each of the
            several States of the United States, the District of
            Columbia, and the Commonwealth of Puerto Rico.
              [(18) Workplace literacy services.--The term
            ``workplace literacy services'' means literacy services
            that are offered for the purpose of improving the
            productivity of the workforce through the improvement
            of literacy skills.

    [SEC. 204. HOME SCHOOLS.

      [Nothing in this title shall be construed to affect home
    schools, or to compel a parent engaged in home schooling to
    participate in an English literacy program, family literacy
    services, or adult education.

    [SEC. 205. AUTHORIZATION OF APPROPRIATIONS.

      [There is authorized to be appropriated to carry out this
    title such sums as may be necessary for each of the fiscal
    years 1999 through 2003.

               [Subtitle A--Adult Education and Literacy Programs

                         [CHAPTER 1--FEDERAL PROVISIONS

    [SEC. 211. RESERVATION OF FUNDS; GRANTS TO ELIGIBLE AGENCIES;
                        ALLOTMENTS.

      [(a) Reservation of Funds.--From the sum appropriated under
    section 205 for a fiscal year, the Secretary--
              [(1) shall reserve 1.5 percent to carry out section
            242, except that the amount so reserved shall not
            exceed $8,000,000;
              [(2) shall reserve 1.5 percent to carry out section
            243, except that the amount so reserved shall not
            exceed $8,000,000; and
              [(3) shall make available, to the Secretary of Labor,
            1.72 percent for incentive grants under section 503.
      [(b) Grants to Eligible Agencies.--
              [(1) In general.--From the sum appropriated under
            section 205 and not reserved under subsection (a) for a
            fiscal year, the Secretary shall award a grant to each
            eligible agency having a State plan approved under
            section 224 in an amount equal to the sum of the
            initial allotment under subsection (c)(1) and the
            additional allotment under subsection (c)(2) for the
            eligible agency for the fiscal year, subject to
            subsections (f ) and (g), to enable the eligible agency
            to carry out the activities assisted under this
            subtitle.
              [(2) Purpose of grants.--The Secretary may award a
            grant under paragraph (1) only if the eligible entity
            involved agrees to expend the grant for adult education
            and literacy activities in accordance with the
            provisions of this subtitle.
      [(c) Allotments.--
              [(1) Initial allotments.--From the sum appropriated
            under section 205 and not reserved under subsection (a)
            for a fiscal year, the Secretary shall allot to each
            eligible agency having a State plan approved under
            section 224(f )--
                      [(A) $100,000, in the case of an eligible
                    agency serving an outlying area; and
                      [(B) $250,000, in the case of any other
                    eligible agency.
              [(2) Additional allotments.--From the sum
            appropriated under section 205, not reserved under
            subsection (a), and not allotted under paragraph (1),
            for a fiscal year, the Secretary shall allot to each
            eligible agency that receives an initial allotment
            under paragraph (1) an additional amount that bears the
            same relationship to such sum as the number of
            qualifying adults in the State or outlying area served
            by the eligible agency bears to the number of such
            adults in all States and outlying areas.
      [(d) Qualifying Adult.--For the purpose of subsection (c)(2),
    the term ``qualifying adult'' means an adult who--
              [(1) is at least 16 years of age;
              [(2) is beyond the age of compulsory school
            attendance under the law of the State or outlying area;
              [(3) does not have a secondary school diploma or its
            recognized equivalent; and
              [(4) is not enrolled in secondary school.
      [(e) Special Rule.--
              [(1) In general.--From amounts made available under
            subsection (c) for the Republic of the Marshall
            Islands, the Federated States of Micronesia, and the
            Republic of Palau, the Secretary shall award grants to
            Guam, American Samoa, the Commonwealth of the Northern
            Mariana Islands, the Republic of the Marshall Islands,
            the Federated States of Micronesia, or the Republic of
            Palau to carry out activities described in this
            subtitle in accordance with the provisions of this
            subtitle that the Secretary determines are not
            inconsistent with this subsection.
              [(2) Award basis.--The Secretary shall award grants
            pursuant to paragraph (1) on a competitive basis and
            pursuant to recommendations from the Pacific Region
            Educational Laboratory in Honolulu, Hawaii.
              [(3) Termination of eligibility.--Notwithstanding any
            other provision of law, the Republic of the Marshall
            Islands, the Federated States of Micronesia, and the
            Republic of Palau shall not receive any funds under
            this subtitle for any fiscal year that begins after
            September 30, 2001.
              [(4) Administrative costs.--The Secretary may provide
            not more than 5 percent of the funds made available for
            grants under this subsection to pay the administrative
            costs of the Pacific Region Educational Laboratory
            regarding activities assisted under this subsection.
      [(f ) Hold-Harmless.--
              [(1) In general.--Notwithstanding subsection (c)--
                      [(A) for fiscal year 1999, no eligible agency
                    shall receive an allotment under this subtitle
                    that is less than 90 percent of the payments
                    made to the State or outlying area of the
                    eligible agency for fiscal year 1998 for
                    programs for which funds were authorized to be
                    appropriated under section 313 of the Adult
                    Education Act (as such Act was in effect on the
                    day before the date of the enactment of the
                    Workforce Investment Act of 1998); and
                      [(B) for fiscal year 2000 and each succeeding
                    fiscal year, no eligible agency shall receive
                    an allotment under this subtitle that is less
                    than 90 percent of the allotment the eligible
                    agency received for the preceding fiscal year
                    under this subtitle.
              [(2) Ratable reduction.--If for any fiscal year the
            amount available for allotment under this subtitle is
            insufficient to satisfy the provisions of paragraph
            (1), the Secretary shall ratably reduce the payments to
            all eligible agencies, as necessary.
      [(g) Reallotment.--The portion of any eligible agency's
    allotment under this subtitle for a fiscal year that the
    Secretary determines will not be required for the period such
    allotment is available for carrying out activities under this
    subtitle, shall be available for reallotment from time to time,
    on such dates during such period as the Secretary shall fix, to
    other eligible agencies in proportion to the original
    allotments to such agencies under this subtitle for such year.

    [SEC. 212. PERFORMANCE ACCOUNTABILITY SYSTEM.

      [(a) Purpose.--The purpose of this section is to establish a
    comprehensive performance accountability system, comprised of
    the activities described in this section, to assess the
    effectiveness of eligible agencies in achieving continuous
    improvement of adult education and literacy activities funded
    under this subtitle, in order to optimize the return on
    investment of Federal funds in adult education and literacy
    activities.
      [(b) Eligible Agency Performance Measures.--
              [(1) In general.--For each eligible agency, the
            eligible agency performance measures shall consist of--
                      [(A)(i) the core indicators of performance
                    described in paragraph (2)(A); and
                      [(ii) additional indicators of performance
                    (if any) identified by the eligible agency
                    under paragraph (2)(B); and
                      [(B) an eligible agency adjusted level of
                    performance for each indicator described in
                    subparagraph (A).
              [(2) Indicators of performance.--
                      [(A) Core indicators of performance.--The
                    core indicators of performance shall include
                    the following:
                              [(i) Demonstrated improvements in
                            literacy skill levels in reading,
                            writing, and speaking the English
                            language, numeracy, problem solving,
                            English language acquisition, and other
                            literacy skills.
                              [(ii) Placement in, retention in, or
                            completion of, postsecondary education,
                            training, unsubsidized employment or
                            career advancement.
                              [(iii) Receipt of a secondary school
                            diploma or its recognized equivalent.
                      [(B) Additional indicators.--An eligible
                    agency may identify in the State plan
                    additional indicators for adult education and
                    literacy activities authorized under this
                    subtitle.
              [(3) Levels of performance.--
                      [(A) Eligible agency adjusted levels of
                    performance for core indicators.--
                              [(i) In general.--For each eligible
                            agency submitting a State plan, there
                            shall be established, in accordance
                            with this subparagraph, levels of
                            performance for each of the core
                            indicators of performance described in
                            paragraph (2)(A) for adult education
                            and literacy activities authorized
                            under this subtitle. The levels of
                            performance established under this
                            subparagraph shall, at a minimum--
                                      [(I) be expressed in an
                                    objective, quantifiable, and
                                    measurable form; and
                                      [(II) show the progress of
                                    the eligible agency toward
                                    continuously improving in
                                    performance.
                              [(ii) Identification in state plan.--
                            Each eligible agency shall identify, in
                            the State plan submitted under section
                            224, expected levels of performance for
                            each of the core indicators of
                            performance for the first 3 program
                            years covered by the State plan.
                              [(iii) Agreement on eligible agency
                            adjusted levels of performance for
                            first 3 years.--In order to ensure an
                            optimal return on the investment of
                            Federal funds in adult education and
                            literacy activities authorized under
                            this subtitle, the Secretary and each
                            eligible agency shall reach agreement
                            on levels of performance for each of
                            the core indicators of performance, for
                            the first 3 program years covered by
                            the State plan, taking into account the
                            levels identified in the State plan
                            under clause (ii) and the factors
                            described in clause (iv). The levels
                            agreed to under this clause shall be
                            considered to be the eligible agency
                            adjusted levels of performance for the
                            eligible agency for such years and
                            shall be incorporated into the State
                            plan prior to the approval of such
                            plan.
                              [(iv) Factors.--The agreement
                            described in clause (iii) or (v) shall
                            take into account--
                                      [(I) how the levels involved
                                    compare with the eligible
                                    agency adjusted levels of
                                    performance established for
                                    other eligible agencies, taking
                                    into account factors including
                                    the characteristics of
                                    participants when the
                                    participants entered the
                                    program, and the services or
                                    instruction to be provided; and
                                      [(II) the extent to which
                                    such levels involved promote
                                    continuous improvement in
                                    performance on the performance
                                    measures by such eligible
                                    agency and ensure optimal
                                    return on the investment of
                                    Federal funds.
                              [(v) Agreement on eligible agency
                            adjusted levels of performance for 4th
                            and 5th years.--Prior to the fourth
                            program year covered by the State plan,
                            the Secretary and each eligible agency
                            shall reach agreement on levels of
                            performance for each of the core
                            indicators of performance for the
                            fourth and fifth program years covered
                            by the State plan, taking into account
                            the factors described in clause (iv).
                            The levels agreed to under this clause
                            shall be considered to be the eligible
                            agency adjusted levels of performance
                            for the eligible agency for such years
                            and shall be incorporated into the
                            State plan.
                              [(vi) Revisions.--If unanticipated
                            circumstances arise in a State
                            resulting in a significant change in
                            the factors described in clause
                            (iv)(II), the eligible agency may
                            request that the eligible agency
                            adjusted levels of performance agreed
                            to under clause (iii) or (v) be
                            revised. The Secretary, after
                            collaboration with the representatives
                            described in section 136(i)(1), shall
                            issue objective criteria and methods
                            for making such revisions.
                      [(B) Levels of performance for additional
                    indicators.--The eligible agency may identify,
                    in the State plan, eligible agency levels of
                    performance for each of the additional
                    indicators described in paragraph (2)(B). Such
                    levels shall be considered to be eligible
                    agency adjusted levels of performance for
                    purposes of this subtitle.
      [(c) Report.--
              [(1) In general.--Each eligible agency that receives
            a grant under section 211(b) shall annually prepare and
            submit to the Secretary a report on the progress of the
            eligible agency in achieving eligible agency
            performance measures, including information on the
            levels of performance achieved by the eligible agency
            with respect to the core indicators of performance.
              [(2) Information dissemination.--The Secretary--
                      [(A) shall make the information contained in
                    such reports available to the general public
                    through publication and other appropriate
                    methods;
                      [(B) shall disseminate State-by-State
                    comparisons of the information; and
                      [(C) shall provide the appropriate committees
                    of
                    Congress with copies of such reports.

                          [CHAPTER 2--STATE PROVISIONS

    [SEC. 221. STATE ADMINISTRATION.

      [Each eligible agency shall be responsible for the State or
    outlying area administration of activities under this subtitle,
    including--
              [(1) the development, submission, and implementation
            of the State plan;
              [(2) consultation with other appropriate agencies,
            groups, and individuals that are involved in, or
            interested in, the development and implementation of
            activities assisted under this subtitle; and
              [(3) coordination and nonduplication with other
            Federal and State education, training, corrections,
            public housing, and social service programs.

    [SEC. 222. STATE DISTRIBUTION OF FUNDS; MATCHING REQUIREMENT.

      [(a) State Distribution of Funds.--Each eligible agency
    receiving a grant under this subtitle for a fiscal year--
              [(1) shall use not less than 82.5 percent of the
            grant funds to award grants and contracts under section
            231 and to carry out section 225, of which not more
            than 10 percent of the 82.5 percent shall be available
            to carry out section 225;
              [(2) shall use not more than 12.5 percent of the
            grant funds to carry out State leadership activities
            under section 223; and
              [(3) shall use not more than 5 percent of the grant
            funds, or $65,000, whichever is greater, for the
            administrative expenses of the eligible agency.
      [(b) Matching Requirement.--
              [(1) In general.--In order to receive a grant from
            the Secretary under section 211(b) each eligible agency
            shall provide, for the costs to be incurred by the
            eligible agency in carrying out the adult education and
            literacy activities for which the grant is awarded, a
            non-Federal contribution in an amount equal to--
                      [(A) in the case of an eligible agency
                    serving an outlying area, 12 percent of the
                    total amount of funds expended for adult
                    education and literacy activities in the
                    outlying area, except that the Secretary may
                    decrease the amount of funds required under
                    this subparagraph for an eligible agency; and
                      [(B) in the case of an eligible agency
                    serving a State, 25 percent of the total amount
                    of funds expended for adult education and
                    literacy activities in the State.
              [(2) Non-Federal contribution.--An eligible agency's
            non-Federal contribution required under paragraph (1)
            may be provided in cash or in kind, fairly evaluated,
            and shall include only non-Federal funds that are used
            for adult education and literacy activities in a manner
            that is consistent with the purpose of this subtitle.

    [SEC. 223. STATE LEADERSHIP ACTIVITIES.

      [(a) In General.--Each eligible agency shall use funds made
    available under section 222(a)(2) for one or more of the
    following adult education and literacy activities:
              [(1) The establishment or operation of professional
            development programs to improve the quality of
            instruction provided pursuant to local activities
            required under section 231(b), including instruction
            incorporating phonemic awareness, systematic phonics,
            fluency, and reading comprehension, and instruction
            provided by volunteers or by personnel of a State or
            outlying area.
              [(2) The provision of technical assistance to
            eligible providers of adult education and literacy
            activities.
              [(3) The provision of technology assistance,
            including staff training, to eligible providers of
            adult education and literacy activities to enable the
            eligible providers to improve the quality of such
            activities.
              [(4) The support of State or regional networks of
            literacy resource centers.
              [(5) The monitoring and evaluation of the quality of,
            and the improvement in, adult education and literacy
            activities.
              [(6) Incentives for--
                      [(A) program coordination and integration;
                    and
                      [(B) performance awards.
              [(7) Developing and disseminating curricula,
            including curricula incorporating phonemic awareness,
            systematic phonics, fluency, and reading comprehension.
              [(8) Other activities of statewide significance that
            promote the purpose of this title.
              [(9) Coordination with existing support services,
            such as transportation, child care, and other
            assistance designed to increase rates of enrollment in,
            and successful completion of, adult education and
            literacy activities, to adults enrolled in such
            activities.
              [(10) Integration of literacy instruction and
            occupational skill training, and promoting linkages
            with employers.
              [(11) Linkages with postsecondary educational
            institutions.
      [(b) Collaboration.--In carrying out this section, eligible
    agencies shall collaborate where possible, and avoid
    duplicating efforts, in order to maximize the impact of the
    activities described in subsection (a).
      [(c) State-Imposed Requirements.--Whenever a State or
    outlying area implements any rule or policy relating to the
    administration or operation of a program authorized under this
    subtitle that has the effect of imposing a requirement that is
    not imposed under Federal law (including any rule or policy
    based on a State or outlying area interpretation of a Federal
    statute, regulation, or guideline), the State or outlying area
    shall identify, to eligible providers, the rule or policy as
    being State- or outlying area-imposed.

    [SEC. 224. STATE PLAN.

      [(a) 5-Year Plans.--
              [(1) In general.--Each eligible agency desiring a
            grant under this subtitle for any fiscal year shall
            submit to, or have on file with, the Secretary a 5-year
            State plan.
              [(2) Comprehensive plan or application.--The eligible
            agency may submit the State plan as part of a
            comprehensive plan or application for Federal education
            assistance.
      [(b) Plan Contents.--In developing the State plan, and any
    revisions to the State plan, the eligible agency shall include
    in the State plan or revisions--
              [(1) an objective assessment of the needs of
            individuals in the State or outlying area for adult
            education and literacy activities, including
            individuals most in need or hardest to serve;
              [(2) a description of the adult education and
            literacy activities that will be carried out with any
            funds received under this subtitle;
              [(3) a description of how the eligible agency will
            evaluate annually the effectiveness of the adult
            education and literacy activities based on the
            performance measures described in section 212;
              [(4) a description of the performance measures
            described in section 212 and how such performance
            measures will ensure the improvement of adult education
            and literacy activities in the State or outlying area;
              [(5) an assurance that the eligible agency will award
            not less than one grant under this subtitle to an
            eligible provider who offers flexible schedules and
            necessary support services (such as child care and
            transportation) to enable individuals, including
            individuals with disabilities, or individuals with
            other special needs, to participate in adult education
            and literacy activities, which eligible provider shall
            attempt to coordinate with support services that are
            not provided under this subtitle prior to using funds
            for adult education and literacy activities provided
            under this subtitle for support services;
              [(6) an assurance that the funds received under this
            subtitle will not be expended for any purpose other
            than for activities under this subtitle;
              [(7) a description of how the eligible agency will
            fund local activities in accordance with the
            considerations described in section 231(e);
              [(8) an assurance that the eligible agency will
            expend the funds under this subtitle only in a manner
            consistent with fiscal requirements in section 241;
              [(9) a description of the process that will be used
            for public participation and comment with respect to
            the State plan;
              [(10) a description of how the eligible agency will
            develop program strategies for populations that
            include, at a minimum--
                      [(A) low-income students;
                      [(B) individuals with disabilities;
                      [(C) single parents and displaced homemakers;
                    and
                      [(D) individuals with multiple barriers to
                    educational enhancement, including individuals
                    with limited English proficiency;
              [(11) a description of how the adult education and
            literacy activities that will be carried out with any
            funds received under this subtitle will be integrated
            with other adult education, career development, and
            employment and training activities in the State or
            outlying area served by the eligible agency; and
              [(12) a description of the steps the eligible agency
            will take to ensure direct and equitable access, as
            required in section 231(c)(1).
      [(c) Plan Revisions.--When changes in conditions or other
    factors require substantial revisions to an approved State
    plan, the eligible agency shall submit the revisions to the
    State plan to the Secretary.
      [(d) Consultation.--The eligible agency shall--
              [(1) submit the State plan, and any revisions to the
            State plan, to the Governor of the State or outlying
            area for review and comment; and
              [(2) ensure that any comments by the Governor
            regarding the State plan, and any revision to the State
            plan, are submitted to the Secretary.
      [(e) Peer Review.--The Secretary shall establish a peer
    review process to make recommendations regarding the approval
    of State plans.
      [(f ) Plan Approval.--A State plan submitted to the Secretary
    shall be approved by the Secretary unless the Secretary makes a
    written determination, within 90 days after receiving the plan,
    that the plan is inconsistent with the specific provisions of
    this subtitle.
      [(g) Transition.--The provisions of this section shall be
    subject to section 506(b).

    [SEC. 225. PROGRAMS FOR CORRECTIONS EDUCATION AND OTHER
                        INSTITUTIONALIZED INDIVIDUALS.

      [(a) Program Authorized.--From funds made available under
    section 222(a)(1) for a fiscal year, each eligible agency shall
    carry out corrections education and education for other
    institutionalized individuals.
      [(b) Uses of Funds.--The funds described in subsection (a)
    shall be used for the cost of educational programs for criminal
    offenders in correctional institutions and for other
    institutionalized individuals, including academic programs
    for--
              [(1) basic education;
              [(2) special education programs as determined by the
            eligible agency;
              [(3) English literacy programs; and
              [(4) secondary school credit programs.
      [(c) Priority.--Each eligible agency that is using assistance
    provided under this section to carry out a program for criminal
    offenders within a correctional institution shall give priority
    to serving individuals who are likely to leave the correctional
    institution within 5 years of participation in the program.
      [(d) Definition of Criminal Offender.--
              [(1) Criminal offender.--The term ``criminal
            offender'' means any individual who is charged with or
            convicted of any criminal offense.
              [(2) Correctional institution.--The term
            ``correctional institution'' means any--
                      [(A) prison;
                      [(B) jail;
                      [(C) reformatory;
                      [(D) work farm;
                      [(E) detention center; or
                      [(F) halfway house, community-based
                    rehabilitation
                    center, or any other similar institution
                    designed for the confinement or rehabilitation
                    of criminal offenders.

                          [CHAPTER 3--LOCAL PROVISIONS

    [SEC. 231. GRANTS AND CONTRACTS FOR ELIGIBLE PROVIDERS.

      [(a) Grants and Contracts.--From grant funds made available
    under section 211(b), each eligible agency shall award
    multiyear grants or contracts, on a competitive basis, to
    eligible providers within the State or outlying area to enable
    the eligible providers to develop, implement, and improve adult
    education and literacy activities within the State.
      [(b) Required Local Activities.--The eligible agency shall
    require that each eligible provider receiving a grant or
    contract under subsection (a) use the grant or contract to
    establish or operate one or more programs that provide services
    or instruction in one or more of the following categories:
              [(1) Adult education and literacy services, including
            workplace literacy services.
              [(2) Family literacy services.
              [(3) English literacy programs.
      [(c) Direct and Equitable Access; Same Process.--Each
    eligible agency receiving funds under this subtitle shall
    ensure that--
              [(1) all eligible providers have direct and equitable
            access to apply for grants or contracts under this
            section; and
              [(2) the same grant or contract announcement process
            and application process is used for all eligible
            providers in the State or outlying area.
      [(d) Special Rule.--Each eligible agency awarding a grant or
    contract under this section shall not use any funds made
    available under this subtitle for adult education and literacy
    activities for the purpose of supporting or providing programs,
    services, or activities for individuals who are not individuals
    described in subparagraphs (A) and (B) of section 203(1),
    except that such agency may use such funds for such purpose if
    such programs, services, or activities are related to family
    literacy services. In providing family literacy services under
    this subtitle, an eligible provider shall attempt to coordinate
    with programs and services that are not assisted under this
    subtitle prior to using funds for adult education and literacy
    activities under this subtitle for activities other than adult
    education activities.
      [(e) Considerations.--In awarding grants or contracts under
    this section, the eligible agency shall consider--
              [(1) the degree to which the eligible provider will
            establish measurable goals for participant outcomes;
              [(2) the past effectiveness of an eligible provider
            in improving the literacy skills of adults and
            families, and, after the 1-year period beginning with
            the adoption of an eligible agency's performance
            measures under section 212, the success of an eligible
            provider receiving funding under this subtitle in
            meeting or exceeding such performance measures,
            especially with respect to those adults with the lowest
            levels of literacy;
              [(3) the commitment of the eligible provider to serve
            individuals in the community who are most in need of
            literacy services, including individuals who are low-
            income or have minimal literacy skills;
              [(4) whether or not the program--
                      [(A) is of sufficient intensity and duration
                    for participants to achieve substantial
                    learning gains; and
                      [(B) uses instructional practices, such as
                    phonemic awareness, systematic phonics,
                    fluency, and reading comprehension that
                    research has proven to be effective in teaching
                    individuals to read;
              [(5) whether the activities are built on a strong
            foundation of research and effective educational
            practice;
              [(6) whether the activities effectively employ
            advances in technology, as appropriate, including the
            use of computers;
              [(7) whether the activities provide learning in real
            life contexts to ensure that an individual has the
            skills needed to compete in the workplace and exercise
            the rights and responsibilities of citizenship;
              [(8) whether the activities are staffed by well-
            trained instructors, counselors, and administrators;
              [(9) whether the activities coordinate with other
            available resources in the community, such as by
            establishing strong links with elementary schools and
            secondary schools, postsecondary educational
            institutions, one-stop centers, job training programs,
            and social service agencies;
              [(10) whether the activities offer flexible schedules
            and support services (such as child care and
            transportation) that are necessary to enable
            individuals, including individuals with disabilities or
            other special needs, to attend and complete programs;
              [(11) whether the activities maintain a high-quality
            information management system that has the capacity to
            report participant outcomes and to monitor program
            performance against the eligible agency performance
            measures; and
              [(12) whether the local communities have a
            demonstrated need for additional English literacy
            programs.

    [SEC. 232. LOCAL APPLICATION.

      [Each eligible provider desiring a grant or contract under
    this subtitle shall submit an application to the eligible
    agency containing such information and assurances as the
    eligible agency may require, including--
              [(1) a description of how funds awarded under this
            subtitle will be spent; and
              [(2) a description of any cooperative arrangements
            the eligible provider has with other agencies,
            institutions, or organizations for the delivery of
            adult education and literacy activities.

    [SEC. 233. LOCAL ADMINISTRATIVE COST LIMITS.

      [(a) In General.--Subject to subsection (b), of the amount
    that is made available under this subtitle to an eligible
    provider--
              [(1) not less than 95 percent shall be expended for
            carrying out adult education and literacy activities;
            and
              [(2) the remaining amount, not to exceed 5 percent,
            shall be used for planning, administration, personnel
            development, and interagency coordination.
      [(b) Special Rule.--In cases where the cost limits described
    in subsection (a) are too restrictive to allow for adequate
    planning, administration, personnel development, and
    interagency coordination, the eligible provider shall negotiate
    with the eligible agency in order to determine an adequate
    level of funds to be used for noninstructional purposes.

                         [CHAPTER 4--GENERAL PROVISIONS

    [SEC. 241. ADMINISTRATIVE PROVISIONS.

      [(a) Supplement Not Supplant.--Funds made available for adult
    education and literacy activities under this subtitle shall
    supplement and not supplant other State or local public funds
    expended for adult education and literacy activities.
      [(b) Maintenance of Effort.--
              [(1) In general.--
                      [(A) Determination.--An eligible agency may
                    receive funds under this subtitle for any
                    fiscal year if the Secretary finds that the
                    fiscal effort per student or the aggregate
                    expenditures of such eligible agency for adult
                    education and literacy activities, in the
                    second preceding fiscal year, was not less than
                    90 percent of the fiscal effort per student or
                    the aggregate expenditures of such eligible
                    agency for adult education and literacy
                    activities, in the third preceding fiscal year.
                      [(B) Proportionate reduction.--Subject to
                    paragraphs (2), (3), and (4), for any fiscal
                    year with respect to which the Secretary
                    determines under subparagraph (A) that the
                    fiscal effort or the aggregate expenditures of
                    an eligible agency for the preceding program
                    year were less than such effort or expenditures
                    for the second preceding program year, the
                    Secretary--
                              [(i) shall determine the percentage
                            decreases in such effort or in such
                            expenditures; and
                              [(ii) shall decrease the payment made
                            under this subtitle for such program
                            year to the agency for adult education
                            and literacy activities by the lesser
                            of such percentages.
              [(2) Computation.--In computing the fiscal effort and
            aggregate expenditures under paragraph (1), the
            Secretary shall exclude capital expenditures and
            special one-time project costs.
              [(3) Decrease in federal support.--If the amount made
            available for adult education and literacy activities
            under this subtitle for a fiscal year is less than the
            amount made available for adult education and literacy
            activities under this subtitle for the preceding fiscal
            year, then the fiscal effort per student and the
            aggregate expenditures of an eligible agency required
            in order to avoid a reduction under paragraph (1)(B)
            shall be decreased by the same percentage as the
            percentage decrease in the amount so made available.
              [(4) Waiver.--The Secretary may waive the
            requirements of this subsection for 1 fiscal year only,
            if the Secretary determines that a waiver would be
            equitable due to exceptional or uncontrollable
            circumstances, such as a natural disaster or an
            unforeseen and precipitous decline in the financial
            resources of the State or outlying area of the eligible
            agency. If the Secretary grants a waiver under the
            preceding sentence for a fiscal year, the level of
            effort required under paragraph (1) shall not be
            reduced in the subsequent fiscal year because of the
            waiver.

    [SEC. 242. NATIONAL INSTITUTE FOR LITERACY.

      [(a) Purpose.--The purpose of this section is to establish a
    National Institute for Literacy that--
              [(1) provides national leadership regarding literacy;
              [(2) coordinates literacy services and policy; and
              [(3) serves as a national resource for adult
            education and literacy programs by--
                      [(A) providing the best and most current
                    information available, including the work of
                    the National Institute of Child Health and
                    Human Development in the area of phonemic
                    awareness, systematic phonics, fluency, and
                    reading comprehension, to all recipients of
                    Federal assistance that focuses on reading,
                    including programs under titles I and VII of
                    the Elementary and Secondary Education Act of
                    1965 (20 U.S.C. 6301 et seq. and 7401 et seq.),
                    the Head Start Act (42 U.S.C. 9831 et seq.),
                    the Individuals with Disabilities Education Act
                    (20 U.S.C. 1400 et seq.), and this Act; and
                      [(B) supporting the creation of new ways to
                    offer services of proven effectiveness.
      [(b) Establishment.--
              [(1) In general.--There is established the National
            Institute for Literacy (in this section referred to as
            the ``Institute''). The Institute shall be administered
            under the terms of an interagency agreement entered
            into by the Secretary of Education with the Secretary
            of Labor and the Secretary of Health and Human Services
            (in this section referred to as the ``Interagency
            Group''). The Interagency Group may include in the
            Institute any research and development center,
            institute, or clearinghouse established within the
            Department of Education, the Department of Labor, or
            the Department of Health and Human Services the purpose
            of which is determined by the Interagency Group to be
            related to the purpose of the Institute.
              [(2) Offices.--The Institute shall have offices
            separate from the offices of the Department of
            Education, the Department of Labor, and the Department
            of Health and Human Services.
              [(3) Recommendations.--The Interagency Group shall
            consider the recommendations of the National Institute
            for Literacy Advisory Board (in this section referred
            to as the ``Board'') established under subsection (e)
            in planning the goals of the Institute and in the
            implementation of any programs to achieve the goals. If
            the Board's recommendations are not followed, the
            Interagency Group shall provide a written explanation
            to the Board concerning actions the Interagency Group
            takes that are inconsistent with the Board's
            recommendations, including the reasons for not
            following the Board's recommendations with respect to
            the actions. The Board may also request a meeting of
            the Interagency Group to discuss the Board's
            recommendations.
              [(4) Daily operations.--The daily operations of the
            Institute shall be administered by the Director of the
            Institute.
      [(c) Duties.--
              [(1) In general.--In order to provide leadership for
            the improvement and expansion of the system for
            delivery of
            literacy services, the Institute is authorized--
                      [(A) to establish a national electronic data
                    base of information that disseminates
                    information to the broadest possible audience
                    within the literacy and basic skills field, and
                    that includes--
                              [(i) effective practices in the
                            provision of literacy and basic skills
                            instruction, including instruction in
                            phonemic awareness, systematic phonics,
                            fluency, and reading comprehension, and
                            the integration of literacy and basic
                            skills instruction with occupational
                            skills training;
                              [(ii) public and private literacy and
                            basic skills programs, and Federal,
                            State, and local policies, affecting
                            the provision of literacy services at
                            the national, State, and local levels;
                              [(iii) opportunities for technical
                            assistance, meetings, conferences, and
                            other opportunities that lead to the
                            improvement of literacy and basic
                            skills services; and
                              [(iv) a communication network for
                            literacy programs, providers, social
                            service agencies, and students;
                      [(B) to coordinate support for the provision
                    of literacy and basic skills services across
                    Federal agencies and at the State and local
                    levels;
                      [(C) to coordinate the support of reliable
                    and replicable research and development on
                    literacy and basic skills in families and
                    adults across Federal agencies, especially with
                    the Office of Educational Research and
                    Improvement in the Department of Education, and
                    to carry out basic and applied research and
                    development on topics that are not being
                    investigated by other organizations or
                    agencies, such as the special literacy needs of
                    individuals with learning disabilities;
                      [(D) to collect and disseminate information
                    on methods of advancing literacy that show
                    great promise, including phonemic awareness,
                    systematic phonics, fluency, and reading
                    comprehension based on the work of the National
                    Institute of Child Health and Human
                    Development;
                      [(E) to provide policy and technical
                    assistance to Federal, State, and local
                    entities for the improvement of policy and
                    programs relating to literacy;
                      [(F) to fund a network of State or regional
                    adult literacy resource centers to assist State
                    and local public and private nonprofit efforts
                    to improve literacy by--
                              [(i) encouraging the coordination of
                            literacy
                            services;
                              [(ii) enhancing the capacity of State
                            and local organizations to provide
                            literacy services; and
                              [(iii) serving as a link between the
                            Institute and providers of adult
                            education and literacy activities for
                            the purpose of sharing information,
                            data, research, expertise, and literacy
                            resources;
                      [(G) to coordinate and share information with
                    national organizations and associations that
                    are interested in literacy and workforce
                    investment activities;
                      [(H) to advise Congress and Federal
                    departments and agencies regarding the
                    development of policy with respect to literacy
                    and basic skills; and
                      [(I) to undertake other activities that lead
                    to the improvement of the Nation's literacy
                    delivery system and that complement other such
                    efforts being undertaken by public and private
                    agencies and organizations.
              [(2) Grants, contracts, and cooperative agreements.--
            The Institute may award grants to, or enter into
            contracts or cooperative agreements with, individuals,
            public or private institutions, agencies,
            organizations, or consortia of such institutions,
            agencies, or organizations to carry out the activities
            of the Institute.
      [(d) Literacy Leadership.--
              [(1) In general.--The Institute, in consultation with
            the Board, may award fellowships, with such stipends
            and allowances that the Director considers necessary,
            to outstanding individuals pursuing careers in adult
            education or literacy in the areas of instruction,
            management, research, or innovation.
              [(2) Fellowships.--Fellowships awarded under this
            subsection shall be used, under the auspices of the
            Institute, to engage in research, education, training,
            technical assistance, or other activities to advance
            the field of adult education or literacy, including the
            training of volunteer literacy providers at the
            national, State, or local level.
              [(3) Interns and volunteers.--The Institute, in
            consultation with the Board, may award paid and unpaid
            internships to individuals seeking to assist the
            Institute in carrying out its mission. Notwithstanding
            section 1342 of title 31, United States Code, the
            Institute may accept and use voluntary and
            uncompensated services as the Institute determines
            necessary.
      [(e) National Institute for Literacy Advisory Board.--
              [(1) Establishment.--
                      [(A) In general.--There shall be a National
                    Institute for Literacy Advisory Board (in this
                    section referred to as the ``Board''), which
                    shall consist of 10 individuals appointed by
                    the President with the advice and consent of
                    the Senate.
                      [(B) Composition.--The Board shall be
                    comprised of individuals who are not otherwise
                    officers or employees of the Federal Government
                    and who are representative of entities such
                    as--
                              [(i) literacy organizations and
                            providers of literacy services,
                            including nonprofit providers,
                            providers of English literacy programs
                            and services, social service
                            organizations, and eligible providers
                            receiving assistance under this
                            subtitle;
                              [(ii) businesses that have
                            demonstrated interest in literacy
                            programs;
                              [(iii) literacy students, including
                            literacy students with disabilities;
                              [(iv) experts in the area of literacy
                            research;
                              [(v) State and local governments;
                              [(vi) State Directors of adult
                            education; and
                              [(vii) representatives of employees,
                            including
                            representatives of labor organizations.
              [(2) Duties.--The Board shall--
                      [(A) make recommendations concerning the
                    appointment of the Director and staff of the
                    Institute;
                      [(B) provide independent advice on the
                    operation of the Institute; and
                      [(C) receive reports from the Interagency
                    Group and the Director.
              [(3) Federal advisory committee act.--Except as
            otherwise provided, the Board established by this
            subsection shall be subject to the provisions of the
            Federal Advisory Committee Act (5 U.S.C. App.).
              [(4) Appointments.--
                      [(A) In general.--Each member of the Board
                    shall be appointed for a term of 3 years,
                    except that the initial terms for members may
                    be 1, 2, or 3 years in order to establish a
                    rotation in which one-third of the members are
                    selected each year. Any such member may be
                    appointed for not more than 2 consecutive
                    terms.
                      [(B) Vacancies.--Any member appointed to fill
                    a vacancy occurring before the expiration of
                    the term for which the member's predecessor was
                    appointed shall be appointed only for the
                    remainder of that term. A member may serve
                    after the expiration of that member's term
                    until a successor has taken office.
              [(5) Quorum.--A majority of the members of the Board
            shall constitute a quorum but a lesser number may hold
            hearings. Any recommendation of the Board may be passed
            only by a majority of the Board's members present.
              [(6) Election of officers.--The Chairperson and Vice
            Chairperson of the Board shall be elected by the
            members of the Board. The term of office of the
            Chairperson and Vice Chairperson shall be 2 years.
              [(7) Meetings.--The Board shall meet at the call of
            the Chairperson or a majority of the members of the
            Board.
      [(f ) Gifts, Bequests, and Devises.--
              [(1) In general.--The Institute may accept,
            administer, and use gifts or donations of services,
            money, or property, whether real or personal, tangible
            or intangible.
              [(2) Rules.--The Board shall establish written rules
            setting forth the criteria to be used by the Institute
            in determining whether the acceptance of contributions
            of services, money, or property whether real or
            personal, tangible or intangible, would reflect
            unfavorably upon the ability of the Institute or any
            employee to carry out the responsibilities of the
            Institute or employee, or official duties, in a fair
            and objective manner, or would compromise the integrity
            or the appearance of the integrity of the Institute's
            programs or any official involved in those programs.
      [(g) Mails.--The Board and the Institute may use the United
    States mails in the same manner and under the same conditions
    as other departments and agencies of the United States.
      [(h) Staff.--The Interagency Group, after considering
    recommendations made by the Board, shall appoint and fix the
    pay of a Director.
      [(i) Applicability of Certain Civil Service Laws.--The
    Director and staff of the Institute may be appointed without
    regard to the provisions of title 5, United States Code,
    governing appointments in the competitive service, and may be
    paid without regard to the provisions of chapter 51 and
    subchapter III of chapter 53 of that title relating to
    classification and General Schedule pay rates, except that an
    individual so appointed may not receive pay in excess of the
    annual rate of basic pay payable for level IV of the Executive
    Schedule.
      [( j) Experts and Consultants.--The Institute may procure
    temporary and intermittent services under section 3109(b) of
    title 5, United States Code.
      [(k) Report.--The Institute shall submit a report biennially
    to the Committee on Education and the Workforce of the House of
    Representatives and the Committee on Labor and Human Resources
    of the Senate. Each report submitted under this subsection
    shall include--
              [(1) a comprehensive and detailed description of the
            Institute's operations, activities, financial
            condition, and accomplishments in the field of literacy
            for the period covered by the report;
              [(2) a description of how plans for the operation of
            the Institute for the succeeding 2 fiscal years will
            facilitate achievement of the goals of the Institute
            and the goals of the literacy programs within the
            Department of Education, the Department of Labor, and
            the Department of Health and Human Services; and
              [(3) any additional minority, or dissenting views
            submitted by members of the Board.
      [(l) Funding.--Any amounts appropriated to the Secretary, the
    Secretary of Labor, the Secretary of Health and Human Services,
    or any other department that participates in the Institute for
    purposes that the Institute is authorized to perform under this
    section may be provided to the Institute for such purposes.

    [SEC. 243. NATIONAL LEADERSHIP ACTIVITIES.

      [The Secretary shall establish and carry out a program of
    national leadership activities to enhance the quality of adult
    education and literacy programs nationwide. Such activities may
    include the following:
              [(1) Technical assistance, including--
                      [(A) assistance provided to eligible
                    providers in developing and using performance
                    measures for the improvement of adult education
                    and literacy activities, including family
                    literacy services;
                      [(B) assistance related to professional
                    development activities, and assistance for the
                    purposes of developing, improving, identifying,
                    and disseminating the most successful methods
                    and techniques for providing adult education
                    and literacy activities, including family
                    literacy services, based on scientific evidence
                    where available; and
                      [(C) assistance in distance learning and
                    promoting and improving the use of technology
                    in the classroom.
              [(2) Funding national leadership activities that are
            not described in paragraph (1), either directly or
            through grants, contracts, or cooperative agreements
            awarded on a competitive basis to or with postsecondary
            educational institutions, public or private
            organizations or agencies, or consortia of such
            institutions, organizations, or agencies, such as--
                      [(A) developing, improving, and identifying
                    the most successful methods and techniques for
                    addressing the education needs of adults,
                    including instructional practices using
                    phonemic awareness, systematic phonics,
                    fluency, and reading comprehension, based on
                    the work of the National Institute of Child
                    Health and Human Development;
                      [(B) increasing the effectiveness of, and
                    improving the quality of, adult education and
                    literacy activities, including family literacy
                    services;
                      [(C) carrying out research, such as
                    estimating the number of adults functioning at
                    the lowest levels of literacy proficiency;
                      [(D)(i) carrying out demonstration programs;
                      [(ii) developing and replicating model and
                    innovative programs, such as the development of
                    models for basic skill certificates,
                    identification of effective strategies for
                    working with adults with learning disabilities
                    and with individuals with limited English
                    proficiency who are adults, and workplace
                    literacy programs; and
                      [(iii) disseminating best practices
                    information, including information regarding
                    promising practices resulting from federally
                    funded demonstration programs;
                      [(E) providing for the conduct of an
                    independent evaluation and assessment of adult
                    education and literacy activities through
                    studies and analyses conducted independently
                    through grants and contracts awarded on a
                    competitive basis, which evaluation and
                    assessment shall include descriptions of--
                              [(i) the effect of performance
                            measures and other measures of
                            accountability on the delivery of adult
                            education and literacy activities,
                            including family literacy services;
                              [(ii) the extent to which the adult
                            education and literacy activities,
                            including family literacy services,
                            increase the literacy skills of adults
                            (and of children, in the case of family
                            literacy services), lead the
                            participants in such activities to
                            involvement in further education and
                            training, enhance the employment and
                            earnings of such participants, and, if
                            applicable, lead to other positive
                            outcomes, such as reductions in
                            recidivism in the case of prison-based
                            adult education and literacy
                            activities;
                              [(iii) the extent to which the
                            provision of support services to adults
                            enrolled in adult education and family
                            literacy programs increase the rate of
                            enrollment in, and successful
                            completion of, such programs; and
                              [(iv) the extent to which eligible
                            agencies have distributed funds under
                            section 231 to meet the needs of adults
                            through community-based organizations;
                      [(F) supporting efforts aimed at capacity
                    building at the State and local levels, such as
                    technical assistance in program planning,
                    assessment, evaluation, and monitoring of
                    activities carried out under this subtitle;
                      [(G) collecting data, such as data regarding
                    the improvement of both local and State data
                    systems, through technical assistance and
                    development of model performance data
                    collection systems; and
                      [(H) other activities designed to enhance the
                    quality of adult education and literacy
                    activities nationwide.

                              [Subtitle B--Repeals

    [SEC. 251. REPEALS.

      [(a) Repeals.--
              [(1) Adult education act.--The Adult Education Act
            (20 U.S.C. 1201 et seq.) is repealed.
              [(2) National literacy act of 1991.--The National
            Literacy Act of 1991 (20 U.S.C. 1201 note) is repealed.
      [(b) Conforming Amendments.--
              [(1) Refugee education assistance act.--Subsection
            (b) of section 402 of the Refugee Education Assistance
            Act of 1980 (8 U.S.C. 1522 note) is repealed.
              [(2) Elementary and secondary education act of
            1965.--
                      [(A) Section 1202 of esea.--Section
                    1202(c)(1) of the Elementary and Secondary
                    Education Act of 1965 (20 U.S.C. 6362(c)(1)) is
                    amended by striking ``Adult Education Act'' and
                    inserting ``Adult Education and Family Literacy
                    Act''.
                      [(B) Section 1205 of esea.--Section
                    1205(8)(B) of such Act (20 U.S.C. 6365(8)(B))
                    is amended by striking ``Adult Education Act''
                    and inserting ``Adult Education and Family
                    Literacy Act''.
                      [(C) Section 1206 of esea.--Section
                    1206(a)(1)(A) of such Act (20 U.S.C.
                    6366(a)(1)(A)) is amended by striking ``an
                    adult basic education program under the Adult
                    Education Act'' and inserting ``adult education
                    and literacy activities under the Adult
                    Education and Family Literacy Act''.
                      [(D) Section 3113 of esea.--Section 3113(1)
                    of such Act (20 U.S.C. 6813(1)) is amended by
                    striking ``section 312 of the Adult Education
                    Act'' and inserting ``section 203 of the Adult
                    Education and Family Literacy Act''.
                      [(E) Section 9161 of esea.--Section 9161(2)
                    of such Act (20 U.S.C. 7881(2)) is amended by
                    striking ``section 312(2) of the Adult
                    Education Act'' and inserting ``section 203 of
                    the Adult Education and Family Literacy Act''.
              [(3) Older americans act of 1965.--Section 203(b)(8)
            of the Older Americans Act of 1965 (42 U.S.C.
            3013(b)(8)) is amended by striking ``Adult Education
            Act'' and inserting ``Adult Education and Family
            Literacy Act''.]

           TITLE II--ADULT BASIC SKILLS AND FAMILY LITERACY EDUCATION

    SEC. 201. SHORT TITLE.

      This title may be cited as the ``Adult Basic Skills and
    Family Literacy Education Act''.

    SEC. 202. PURPOSE.

      It is the purpose of this title to provide instructional
    opportunities for adults seeking to improve their basic
    reading, writing, speaking, and math skills, and support States
    and local communities in providing, on a voluntary basis, adult
    basic skills and family literacy programs, in order to--
              (1) increase the basic reading, writing, speaking,
            and math skills necessary for adults to obtain
            employment and self-sufficiency and to successfully
            advance in the workforce;
              (2) assist adults in the completion of a secondary
            school education (or its equivalent) and the transition
            to a postsecondary educational institution;
              (3) increase the basic reading, writing, speaking,
            and math skills of parents to enable them to support
            the educational development of their children and make
            informed choices regarding their children's education;
            and
              (4) assist immigrants who are not proficient in
            English in improving their reading, writing, speaking,
            and math skills and acquiring an understanding of the
            American free enterprise system, individual freedom,
            and the responsibilities of citizenship.

    SEC. 203. DEFINITIONS.

      In this title:
              (1) Adult basic skills and family literacy education
            programs.--The term ``adult basic skills and family
            literacy education programs'' means a sequence of
            academic instruction and educational services below the
            postsecondary level that increase an individual's
            ability to read, write, and speak in English and
            perform mathematical computations leading to a level of
            proficiency equivalent to secondary school completion
            that is provided for individuals--
                      (A) who are at least 16 years of age;
                      (B) who are not enrolled or required to be
                    enrolled in secondary school under State law;
                    and
                      (C) who--
                              (i) lack sufficient mastery of basic
                            reading, writing, speaking, and math
                            skills to enable the individuals to
                            function effectively in society;
                              (ii) do not have a secondary school
                            diploma or the General Equivalency
                            Diploma (GED) (including recognized
                            alternative standards for individuals
                            with disabilities), and have not
                            achieved an equivalent level of
                            education; or
                              (iii) are unable to read, write, or
                            speak the English language.
              (2) Eligible agency.--The term ``eligible agency''--
                      (A) means the sole entity or agency in a
                    State or an outlying area responsible for
                    administering or supervising policy for adult
                    basic skills and family literacy education
                    programs in the State or outlying area,
                    respectively, consistent with the law of the
                    State or outlying area, respectively; and
                      (B) may be the State educational agency, the
                    State agency responsible for administering
                    workforce investment activities, or the State
                    agency responsible for administering community
                    or technical colleges.
              (3) Eligible provider.--The term ``eligible
            provider'' means--
                      (A) a local educational agency;
                      (B) a community-based or faith-based
                    organization of demonstrated effectiveness;
                      (C) a volunteer literacy organization of
                    demonstrated effectiveness;
                      (D) an institution of higher education;
                      (E) a public or private educational agency;
                      (F) a library;
                      (G) a public housing authority;
                      (H) an institution that is not described in
                    any of subparagraphs (A) through (G) and has
                    the ability to provide adult basic skills and
                    family literacy education programs to adults
                    and families; or
                      (I) a consortium of the agencies,
                    organizations, institutions, libraries, or
                    authorities described in any of subparagraphs
                    (A) through (H).
              (4) English language acquisition program.--The term
            ``English language acquisition program'' means a
            program of instruction designed to help individuals
            with limited English proficiency achieve competence in
            reading, writing, and speaking the English language.
              (5) Essential components of reading instruction.--The
            term ``essential components of reading instruction''
            has the meaning given to that term in section 1208 of
            the Elementary and Secondary Education Act of 1965 (20
            U.S.C. 6368).
              (6) Family literacy education programs.--The term
            ``family literacy education programs'' means
            educational programs that--
                      (A) assist parents and students, on a
                    voluntary basis, in achieving the purposes of
                    this title as described in section 202; and
                      (B) are of sufficient intensity in terms of
                    hours and of sufficient duration to make
                    sustainable changes in a family, are based upon
                    scientific research-based principles, and for
                    the purpose of substantially increasing the
                    ability of parents and children to read, write,
                    and speak English integrate--
                              (i) interactive literacy activities
                            between parents and their children;
                              (ii) training for parents regarding
                            how to be the primary teacher for their
                            children and full partners in the
                            education of their children;
                              (iii) parent literacy training that
                            leads to economic self-sufficiency; and
                              (iv) an age-appropriate education to
                            prepare children for success in school
                            and life experiences.
              (7) Governor.--The term ``Governor'' means the chief
            executive officer of a State or outlying area.
              (8) Individual with a disability.--
                      (A) In general.--The term ``individual with a
                    disability'' means an individual with any
                    disability (as defined in section 3 of the
                    Americans with Disabilities Act of 1990 (42
                    U.S.C. 12102)).
                      (B) Individuals with disabilities.--The term
                    ``individuals with disabilities'' means more
                    than one individual with a disability.
              (9) Individual with limited english proficiency.--The
            term ``individual with limited English proficiency''
            means an adult or out-of-school youth who has limited
            ability in reading, writing, speaking, or understanding
            the English language, and--
                      (A) whose native language is a language other
                    than English; or
                      (B) who lives in a family or community
                    environment where a language other than English
                    is the dominant language.
              (10) Institution of higher education.--The term
            ``institution of higher education'' has the meaning
            given to that term in section 101 of the Higher
            Education Act of 1965 (20 U.S.C. 1001).
              (11) Literacy.--The term ``literacy'' means the
            ability to read, write, and speak the English language
            with competence, knowledge, and comprehension.
              (12) Local educational agency.--The term ``local
            educational agency'' has the meaning given to that term
            in section 9101 of the Elementary and Secondary
            Education Act of 1965 (20 U.S.C. 7801).
              (13) Outlying area.--The term ``outlying area'' has
            the meaning given to that term in section 101 of this
            Act.
              (14) Postsecondary educational institution.--The term
            ``postsecondary educational institution'' means--
                      (A) an institution of higher education that
                    provides not less than a 2-year program of
                    instruction that is acceptable for credit
                    toward a bachelor's degree;
                      (B) a tribally controlled community college;
                    or
                      (C) a nonprofit educational institution
                    offering certificate or apprenticeship programs
                    at the postsecondary level.
              (15) Reading.--The term ``reading'' has the meaning
            given to that term in section 1208 of the Elementary
            and Secondary Education Act of 1965 (20 U.S.C. 6368).
              (16) Scientifically based reading research.--The term
            ``scientifically based reading research'' has the
            meaning given to that term in section 1208 of the
            Elementary and Secondary Education Act of 1965 (20
            U.S.C. 6368).
              (17) Secretary.--The term ``Secretary'' means the
            Secretary of Education.
              (18) State.--The term ``State'' means each of the
            several States of the United States, the District of
            Columbia, and the Commonwealth of Puerto Rico.
              (19) State educational agency.--The term ``State
            educational agency'' has the meaning given to that term
            in section 9101 of the Elementary and Secondary
            Education Act of 1965 (20 U.S.C. 7801).
              (20) Workplace literacy program.--The term
            ``workplace literacy program'' means an educational
            program that is offered in collaboration between
            eligible providers and employers or employee
            organizations for the purpose of improving the
            productivity of the workforce through the improvement
            of reading, writing, speaking, and math skills.

    SEC. 204. HOME SCHOOLS.

      Nothing in this title shall be construed to affect home
    schools, whether or not a home school is treated as a home
    school or a private school under State law, or to compel a
    parent engaged in home schooling to participate in an English
    language acquisition program, a family literacy education
    program, or an adult basic skills and family literacy education
    program.

    SEC. 205. AUTHORIZATION OF APPROPRIATIONS.

      There are authorized to be appropriated to carry out this
    title $584,300,000 for fiscal year 2004 and such sums as may be
    necessary for fiscal years 2005 through 2009.

                         CHAPTER 1--FEDERAL PROVISIONS

    SEC. 211. RESERVATION OF FUNDS; GRANTS TO ELIGIBLE AGENCIES;
                        ALLOTMENTS.

      (a) Reservation of Funds.--From the sums appropriated under
    section 205 for a fiscal year, the Secretary--
              (1) shall reserve 1.75 percent to carry out the
            National Institute for Literacy Establishment Act;
              (2) shall reserve up to 1.72 percent for incentive
            grants under section 213; and
              (3) shall reserve up to 1.55 percent to carry out
            section 242.
      (b) Grants to Eligible Agencies.--
              (1) In general.--From the sums appropriated under
            section 205 and not reserved under subsection (a) for a
            fiscal year, the Secretary shall award a grant to each
            eligible agency having a State plan approved under
            section 224 in an amount equal to the sum of the
            initial allotment under subsection (c)(1) and the
            additional allotment under subsection (c)(2) for the
            eligible agency for the fiscal year, subject to
            subsections (f) and (g).
              (2) Purpose of grants.--The Secretary may award a
            grant under paragraph (1) only if the eligible agency
            involved agrees to expend the grant in accordance with
            the provisions of this title.
      (c) Allotments.--
              (1) Initial allotments.--From the sums appropriated
            under section 205 and not reserved under subsection (a)
            for a fiscal year, the Secretary shall allot to each
            eligible agency having a State plan approved under
            section 224--
                      (A) $100,000, in the case of an eligible
                    agency serving an outlying area; and
                      (B) $250,000, in the case of any other
                    eligible agency.
              (2) Additional allotments.--From the sums
            appropriated under section 205, not reserved under
            subsection (a), and not allotted under paragraph (1),
            for a fiscal year, the Secretary shall allot to each
            eligible agency that receives an initial allotment
            under paragraph (1) an additional amount that bears the
            same relationship to such sums as the number of
            qualifying adults in the State or outlying area served
            by the eligible agency bears to the number of such
            adults in all States and outlying areas.
      (d) Qualifying Adult.--For the purpose of subsection (c)(2),
    the term ``qualifying adult'' means an adult who--
              (1) is at least 16 years of age;
              (2) is beyond the age of compulsory school attendance
            under the law of the State or outlying area;
              (3) does not have a secondary school diploma or the
            General Equivalency Diploma (GED) (including recognized
            alternative standards for individuals with
            disabilities); and
              (4) is not enrolled in secondary school.
      (e) Special Rule.--
              (1) In general.--From amounts made available under
            subsection (c) for the Republic of the Marshall
            Islands, the Federated States of Micronesia, and the
            Republic of Palau, the Secretary shall award grants to
            Guam, American Samoa, the Commonwealth of the Northern
            Mariana Islands, the Republic of the Marshall Islands,
            the Federated States of Micronesia, or the Republic of
            Palau to carry out activities described in this title
            in accordance with the provisions of this title as
            determined by the Secretary.
              (2) Termination of eligibility.--Notwithstanding any
            other provision of law, the Republic of the Marshall
            Islands, the Federated States of Micronesia, and the
            Republic of Palau shall be eligible to receive a grant
            under this title until an agreement for the extension
            of United States education assistance under the Compact
            of Free Association for each of the Freely Associated
            States becomes effective.
              (3) Administrative costs.--The Secretary may provide
            not more than 5 percent of the funds made available for
            grants under this subsection to pay the administrative
            costs of the Pacific Region Educational Laboratory
            regarding activities assisted under this subsection.
      (f) Hold-Harmless Provisions.--
              (1) In general.--Notwithstanding subsection (c), and
            subject to paragraphs (2) and (3), for fiscal year 2004
            and each succeeding fiscal year, no eligible agency
            shall receive an allotment under this title that is
            less than 90 percent of the allotment the eligible
            agency received for the preceding fiscal year under
            this title.
              (2) Exception.--An eligible agency that receives for
            the preceding fiscal year only an initial allotment
            under subsection 211(c)(1) (and no additional allotment
            under 211(c)(2)) shall receive an allotment equal to
            100 percent of the initial allotment.
              (3) Ratable reduction.--If for any fiscal year the
            amount available for allotment under this title is
            insufficient to satisfy the provisions of paragraph
            (1), the Secretary shall ratably reduce the payments to
            all eligible agencies, as necessary.
      (g) Reallotment.--The portion of any eligible agency's
    allotment under this title for a fiscal year that the Secretary
    determines will not be required for the period such allotment
    is available for carrying out activities under this title,
    shall be available for reallotment from time to time, on such
    dates during such period as the Secretary shall fix, to other
    eligible agencies in proportion to the original allotments to
    such agencies under this title for such year.

    SEC. 212. PERFORMANCE ACCOUNTABILITY SYSTEM.

      (a) Purpose.--The purpose of this section is to establish a
    comprehensive performance accountability system, composed of
    the activities described in this section, to assess the
    effectiveness of eligible agencies in achieving continuous
    improvement of adult basic skills and family literacy education
    programs funded under this title, in order to optimize the
    return on investment of Federal funds in adult basic skills and
    family literacy education programs.
      (b) Eligible Agency Performance Measures.--
              (1) In general.--For each eligible agency, the
            eligible agency performance measures shall consist of--
                      (A)(i) the core indicators of performance
                    described in paragraph (2)(A); and
                      (ii) employment performance indicators
                    identified by the eligible agency under
                    paragraph (2)(B); and
                      (B) an eligible agency adjusted level of
                    performance for each indicator described in
                    subparagraph (A).
              (2) Indicators of performance.--
                      (A) Core indicators of performance.--The core
                    indicators of performance shall include the
                    following:
                              (i) Measurable improvements in basic
                            skill levels in reading, writing, and
                            speaking the English language and math,
                            and English language acquisition
                            leading to proficiency in each skill.
                              (ii) Receipt of a secondary school
                            diploma or the General Equivalency
                            Diploma (GED) (including recognized
                            alternative standards for individuals
                            with disabilities).
                              (iii) Placement in postsecondary
                            education or other training programs.
                      (B) Employment performance indicators.--
                    Consistent with applicable Federal and State
                    privacy laws, an eligible agency shall identify
                    in the State plan the following individual
                    participant employment performance indicators--
                              (i) entry into employment;
                              (ii) retention in employment; and
                              (iii) increase in earnings.
              (3) Levels of performance.--
                      (A) Eligible agency adjusted levels of
                    performance for core indicators.--
                              (i) In general.--For each eligible
                            agency submitting a State plan, there
                            shall be established, in accordance
                            with this subparagraph, levels of
                            performance for each of the core
                            indicators of performance described in
                            paragraph (2)(A) for adult basic skills
                            and family literacy education programs
                            authorized under this title. The levels
                            of performance established under this
                            subparagraph shall, at a minimum--
                                      (I) be expressed in an
                                    objective, quantifiable, and
                                    measurable form; and
                                      (II) show the progress of the
                                    eligible agency toward
                                    continuously and significantly
                                    improving the agency's
                                    performance outcomes in an
                                    objective, quantifiable, and
                                    measurable form.
                              (ii) Identification in state plan.--
                            Each eligible agency shall identify, in
                            the State plan submitted under section
                            224, expected levels of performance for
                            each of the core indicators of
                            performance for the first 3 program
                            years covered by the State plan.
                              (iii) Agreement on eligible agency
                            adjusted levels of performance for
                            first 3 years.--In order to ensure an
                            optimal return on the investment of
                            Federal funds in adult basic skills and
                            family literacy education programs
                            authorized under this title, the
                            Secretary and each eligible agency
                            shall reach agreement on levels of
                            student proficiency for each of the
                            core indicators of performance, for the
                            first 3 program years covered by the
                            State plan, taking into account the
                            levels identified in the State plan
                            under clause (ii) and the factors
                            described in clause (iv). The levels
                            agreed to under this clause shall be
                            considered to be the eligible agency
                            adjusted levels of performance for the
                            eligible agency for such years and
                            shall be incorporated into the State
                            plan prior to the approval of such
                            plan.
                              (iv) Factors.--The agreement
                            described in clause (iii) or (v) shall
                            take into account--
                                      (I) how the levels involved
                                    compare with the eligible
                                    agency's adjusted levels of
                                    performance, taking into
                                    account factors including the
                                    characteristics of participants
                                    when the participants entered
                                    the program; and
                                      (II) the extent to which such
                                    levels promote continuous and
                                    significant improvement in
                                    performance on the student
                                    proficiency measures used by
                                    such eligible agency and ensure
                                    optimal return on the
                                    investment of Federal funds.
                              (v) Agreement on eligible agency
                            adjusted levels of performance for
                            second 3 years.--Prior to the fourth
                            program year covered by the State plan,
                            the Secretary and each eligible agency
                            shall reach agreement on levels of
                            student proficiency for each of the
                            core indicators of performance for the
                            fourth, fifth, and sixth program years
                            covered by the State plan, taking into
                            account the factors described in clause
                            (iv). The levels agreed to under this
                            clause shall be considered to be the
                            eligible agency adjusted levels of
                            performance for the eligible agency for
                            such years and shall be incorporated
                            into the State plan.
                              (vi) Revisions.--If unanticipated
                            circumstances arise in a State
                            resulting in a significant change in
                            the factors described in clause
                            (iv)(I), the eligible agency may
                            request that the eligible agency
                            adjusted levels of performance agreed
                            to under clause (iii) or (v) be
                            revised.
                      (B) Levels of employment performance.--The
                    eligible agency shall identify, in the State
                    plan, eligible agency levels of performance for
                    each of the employment performance indicators
                    described in paragraph (2)(B). Such levels
                    shall be considered to be eligible agency
                    adjusted levels of performance for purposes of
                    this title.
      (c) Report.--
              (1) In general.--Each eligible agency that receives a
            grant under section 211(b) shall annually prepare and
            submit to the Secretary, the Governor, the State
            legislature, eligible providers, and the general public
            within the State, a report on the progress of the
            eligible agency in achieving eligible agency
            performance measures, including the following:
                      (A) Information on the levels of performance
                    achieved by the eligible agency with respect to
                    the core indicators of performance and
                    employment performance indicators.
                      (B) The number and type of each eligible
                    provider that receives funding under such
                    grant.
              (2) Information dissemination.--The Secretary--
                      (A) shall make the information contained in
                    such reports available to the general public
                    through publication and other appropriate
                    methods;
                      (B) shall disseminate State-by-State
                    comparisons of the information; and
                      (C) shall provide the appropriate committees
                    of the Congress with copies of such reports.

    SEC. 213. INCENTIVE GRANTS FOR STATES.

      (a) In General.--From funds appropriated under section
    211(a)(2), the Secretary may award grants to States for
    exemplary performance in carrying out programs under this
    title. Such awards shall be based on States meeting or
    exceeding the core indicators of performance established under
    section 212(b)(2)(A) and may be based on the performance of the
    State in serving populations, such as those described in
    section 224(b)(10), including the levels of service provided
    and the performance outcomes, and such other factors relating
    to the performance of the State under this title as the
    Secretary determines appropriate.
      (b) Use of Funds.--The funds awarded to a State under this
    paragraph may be used to carry out any activities authorized
    under this title, including demonstrations and innovative
    programs for hard-to-serve populations.

                          CHAPTER 2--STATE PROVISIONS

    SEC. 221. STATE ADMINISTRATION.

      Each eligible agency shall be responsible for the following
    activities under this title:
              (1) The development, submission, implementation, and
            monitoring of the State plan.
              (2) Consultation with other appropriate agencies,
            groups, and individuals that are involved in, or
            interested in, the development and implementation of
            activities assisted under this title.
              (3) Coordination and avoidance of duplication with
            other Federal and State education, training,
            corrections, public housing, and social service
            programs.

    SEC. 222. STATE DISTRIBUTION OF FUNDS; MATCHING REQUIREMENT.

      (a) State Distribution of Funds.--Each eligible agency
    receiving a grant under this title for a fiscal year--
              (1) shall use an amount not less than 82.5 percent of
            the grant funds to award grants and contracts under
            section 231 and to carry out section 225, of which not
            more than 10 percent of such amount shall be available
            to carry out section 225;
              (2) shall use not more than 12.5 percent of the grant
            funds to carry out State leadership activities under
            section 223; and
              (3) shall use not more than 5 percent of the grant
            funds, or $75,000, whichever is greater, for the
            administrative expenses of the eligible agency.
      (b) Matching Requirement.--
              (1) In general.--In order to receive a grant from the
            Secretary under section 211(b), each eligible agency
            shall provide, for the costs to be incurred by the
            eligible agency in carrying out the adult basic skills
            and family literacy education programs for which the
            grant is awarded, a non-Federal contribution in an
            amount at least equal to--
                      (A) in the case of an eligible agency serving
                    an outlying area, 12 percent of the total
                    amount of funds expended for adult basic skills
                    and family literacy education programs in the
                    outlying area, except that the Secretary may
                    decrease the amount of funds required under
                    this subparagraph for an eligible agency; and
                      (B) in the case of an eligible agency serving
                    a State, 25 percent of the total amount of
                    funds expended for adult basic skills and
                    family literacy education programs in the
                    State.
              (2) Non-federal contribution.--An eligible agency's
            non-Federal contribution required under paragraph (1)
            may be provided in cash or in kind, fairly evaluated,
            and shall include only non-Federal funds that are used
            for adult basic skills and family literacy education
            programs in a manner that is consistent with the
            purpose of this title.

    SEC. 223. STATE LEADERSHIP ACTIVITIES.

      (a) In General.--Each eligible agency may use funds made
    available under section 222(a)(2) for any of the following
    adult basic skills and family literacy education programs:
              (1) The establishment or operation of professional
            development programs to improve the quality of
            instruction provided pursuant to local activities
            required under section 231(b), including instruction
            incorporating the essential components of reading
            instruction and instruction provided by volunteers or
            by personnel of a State or outlying area.
              (2) The provision of technical assistance to eligible
            providers of adult basic skills and family literacy
            education programs for development and dissemination of
            scientific research-based instructional practices in
            reading, writing, speaking, math, and English language
            acquisition programs.
              (3) The provision of assistance to eligible providers
            in developing, implementing, and reporting measurable
            progress in achieving the objectives of this title.
              (4) The provision of technology assistance, including
            staff training, to eligible providers of adult basic
            skills and family literacy education programs,
            including distance learning activities, to enable the
            eligible providers to improve the quality of such
            activities.
              (5) The development and implementation of technology
            applications or distance learning, including
            professional development to support the use of
            instructional technology.
              (6) Coordination with other public programs,
            including welfare-to-work, workforce development, and
            job training programs.
              (7) Coordination with existing support services, such
            as transportation, child care, and other assistance
            designed to increase rates of enrollment in, and
            successful completion of, adult basic skills and family
            literacy education programs, for adults enrolled in
            such activities.
              (8) The development and implementation of a system to
            assist in the transition from adult basic education to
            postsecondary education.
              (9) Activities to promote workplace literacy
            programs.
              (10) Activities to promote and complement local
            outreach initiatives described in section 242(7).
              (11) Other activities of statewide significance,
            including assisting eligible agencies in achieving
            progress in improving the skill levels of adults who
            participate in programs under this title.
      (b) Coordination.--In carrying out this section, eligible
    agencies shall coordinate where possible, and avoid duplicating
    efforts, in order to maximize the impact of the activities
    described in subsection (a).
      (c) State-Imposed Requirements.--Whenever a State or outlying
    area implements any rule or policy relating to the
    administration or operation of a program authorized under this
    title that has the effect of imposing a requirement that is not
    imposed under Federal law (including any rule or policy based
    on a State or outlying area interpretation of a Federal
    statute, regulation, or guideline), the State or outlying area
    shall identify, to eligible providers, the rule or policy as
    being imposed by the State or outlying area.

    SEC. 224. STATE PLAN.

      (a) 6-Year Plans.--
              (1) In general.--Each eligible agency desiring a
            grant under this title for any fiscal year shall submit
            to, or have on file with, the Secretary a 6-year State
            plan.
              (2) Comprehensive plan or application.--The eligible
            agency may submit the State plan as part of a
            comprehensive plan or application for Federal education
            assistance.
      (b) Plan Contents.--The eligible agency shall include in the
    State plan or any revisions to the State plan--
              (1) an objective assessment of the needs of
            individuals in the State or outlying area for adult
            basic skills and family literacy education programs,
            including individuals most in need or hardest to serve;
              (2) a description of the adult basic skills and
            family literacy education programs that will be carried
            out with funds received under this title;
              (3) a description of how the eligible agency will
            evaluate and measure annually the effectiveness and
            improvement of the adult basic skills and family
            literacy education programs based on the performance
            measures described in section 212 including--
                      (A) how the eligible agency will evaluate and
                    measure annually such effectiveness on a grant-
                    by-grant basis; and
                      (B) how the eligible agency--
                              (i) will hold eligible providers
                            accountable regarding the progress of
                            such providers in improving the
                            academic achievement of participants in
                            adult education programs under this
                            title and regarding the core indicators
                            of performance described in section
                            212(b)(2)(A); and
                              (ii) will use technical assistance,
                            sanctions, and rewards (including
                            allocation of grant funds based on
                            performance and termination of grant
                            funds based on nonperformance);
              (4) a description of the performance measures
            described in section 212 and how such performance
            measures have significantly improved adult basic skills
            and family literacy education programs in the State or
            outlying area;
              (5) an assurance that the eligible agency will, in
            addition to meeting all of the other requirements of
            this title, award not less than one grant under this
            title to an eligible provider that--
                      (A) offers flexible schedules and necessary
                    support services (such as child care and
                    transportation) to enable individuals,
                    including individuals with disabilities, or
                    individuals with other special needs, to
                    participate in adult basic skills and family
                    literacy education programs; and
                      (B) attempts to coordinate with support
                    services that are not provided under this title
                    prior to using funds for adult basic skills and
                    family literacy education programs provided
                    under this title for support services;
              (6) an assurance that the funds received under this
            title will not be expended for any purpose other than
            for activities under this title;
              (7) a description of how the eligible agency will
            fund local activities in accordance with the measurable
            goals described in section 231(d);
              (8) an assurance that the eligible agency will expend
            the funds under this title only in a manner consistent
            with fiscal requirements in section 241;
              (9) a description of the process that will be used
            for public participation and comment with respect to
            the State plan, which process--
                      (A) shall include consultation with the State
                    workforce investment board, the State board
                    responsible for administering community or
                    technical colleges, the Governor, the State
                    educational agency, the State board or agency
                    responsible for administering block grants for
                    temporary assistance to needy families under
                    title IV of the Social Security Act, the State
                    council on disabilities, the State vocational
                    rehabilitation agency, other State agencies
                    that promote the improvement of adult basic
                    skills and family literacy education programs,
                    and direct providers of such programs; and
                      (B) may include consultation with the State
                    agency on higher education, institutions
                    responsible for professional development of
                    adult basic skills and family literacy
                    education programs instructors, representatives
                    of business and industry, refugee assistance
                    programs, and faith-based organizations;
              (10) a description of the eligible agency's
            strategies for serving populations that include, at a
            minimum--
                      (A) low-income individuals;
                      (B) individuals with disabilities;
                      (C) the unemployed;
                      (D) the underemployed; and
                      (E) individuals with multiple barriers to
                    educational enhancement, including individuals
                    with limited English proficiency;
              (11) a description of how the adult basic skills and
            family literacy education programs that will be carried
            out with any funds received under this title will be
            integrated with other adult education, career
            development, and employment and training activities in
            the State or outlying area served by the eligible
            agency;
              (12) a description of the steps the eligible agency
            will take to ensure direct and equitable access, as
            required in section 231(c)(1), including--
                      (A) how the State will build the capacity of
                    community-based and faith-based organizations
                    to provide adult basic skills and family
                    literacy education programs; and
                      (B) how the State will increase the
                    participation of business and industry in adult
                    basic skills and family literacy education
                    programs; and
              (13) a description of how the eligible agency will
            consult with any State agency responsible for
            postsecondary education to develop adult education that
            prepares students to enter postsecondary education
            without the need for remediation upon completion of
            secondary school equivalency programs.
      (c) Plan Revisions.--When changes in conditions or other
    factors require substantial revisions to an approved State
    plan, the eligible agency shall submit the revisions of the
    State plan to the Secretary.
      (d) Consultation.--The eligible agency shall--
              (1) submit the State plan, and any revisions to the
            State plan, to the Governor, the chief State school
            officer, or the State officer responsible for
            administering community or technical colleges, or
            outlying area for review and comment; and
              (2) ensure that any comments regarding the State plan
            by the Governor, the chief State school officer, or the
            State officer responsible for administering community
            or technical colleges, and any revision to the State
            plan, are submitted to the Secretary.
      (e) Plan Approval.--A State plan submitted to the Secretary
    shall be approved by the Secretary only if the plan is
    consistent with the specific provisions of this title.

    SEC. 225. PROGRAMS FOR CORRECTIONS EDUCATION AND OTHER
                        INSTITUTIONALIZED INDIVIDUALS.

      (a) Program Authorized.--From funds made available under
    section 222(a)(1) for a fiscal year, each eligible agency shall
    carry out corrections education and education for other
    institutionalized individuals.
      (b) Uses of Funds.--The funds described in subsection (a)
    shall be used for the cost of educational programs for criminal
    offenders in correctional institutions and for other
    institutionalized individuals, including academic programs
    for--
              (1) basic skills education;
              (2) special education programs as determined by the
            eligible agency;
              (3) reading, writing, speaking, and math programs;
            and
              (4) secondary school credit or diploma programs or
            their recognized equivalent.
      (c) Priority.--Each eligible agency that is using assistance
    provided under this section to carry out a program for criminal
    offenders within a correctional institution shall give priority
    to serving individuals who are likely to leave the correctional
    institution within 5 years of participation in the program.
      (d) Definition of Criminal Offender.--For purposes of this
    section:
              (1) Correctional institution.--The term
            ``correctional institution'' means any--
                      (A) prison;
                      (B) jail;
                      (C) reformatory;
                      (D) work farm;
                      (E) detention center; or
                      (F) halfway house, community-based
                    rehabilitation center, or any other similar
                    institution designed for the confinement or
                    rehabilitation of criminal offenders.
              (2) Criminal offender.--The term ``criminal
            offender'' means any individual who is charged with, or
            convicted of, any criminal offense.

                          CHAPTER 3--LOCAL PROVISIONS

    SEC. 231. GRANTS AND CONTRACTS FOR ELIGIBLE PROVIDERS.

      (a) Grants and Contracts.--From grant funds made available
    under section 211(b), each eligible agency shall award
    multiyear grants or contracts, on a competitive basis, to
    eligible providers within the State or outlying area that meet
    the conditions and requirements of this title to enable the
    eligible providers to develop, implement, and improve adult
    basic skills and family literacy education programs within the
    State.
      (b) Local Activities.--The eligible agency shall require
    eligible providers receiving a grant or contract under
    subsection (a) to establish or operate one or more programs of
    instruction that provide services or instruction in one or more
    of the following categories:
              (1) Adult basic skills and family literacy education
            programs, including essential workplace skills
            (including proficiency in reading, writing, speaking,
            and math).
              (2) Workplace literacy programs.
              (3) English language acquisition programs.
              (4) family literacy education programs.
      (c) Direct and Equitable Access; Same Process.--Each eligible
    agency receiving funds under this title shall ensure that--
              (1) all eligible providers have direct and equitable
            access to apply for grants or contracts under this
            section; and
              (2) the same grant or contract announcement process
            and application process is used for all eligible
            providers in the State or outlying area.
      (d) Measurable Goals.--The eligible agency shall require
    eligible providers receiving a grant or contract under
    subsection (a) to demonstrate--
              (1) the eligible provider's measurable goals for
            participant outcomes to be achieved annually on the
            core indicators of performance and employment
            performance indicators described in section 212(b)(2);
              (2) the past effectiveness of the eligible provider
            in improving the basic academic skills of adults and,
            for eligible providers receiving grants in the prior
            year, the success of the eligible provider receiving
            funding under this title in meeting or exceeding its
            performance goals in the prior year;
              (3) the commitment of the eligible provider to serve
            individuals in the community who are the most in need
            of basic academic skills instruction services,
            including individuals who are low-income or have
            minimal reading, writing, speaking, and math skills, or
            limited English proficiency.
              (4) whether or not the program--
                      (A) is of sufficient intensity and duration
                    for participants to achieve substantial
                    learning gains; and
                      (B) uses instructional practices that include
                    the essential components of reading
                    instruction;
              (5) whether educational practices are based on
            scientifically based research;
              (6) whether the activities of the eligible provider
            effectively employ advances in technology, as
            appropriate, including the use of computers;
              (7) whether the activities provide instruction in
            real-life contexts, to ensure that an individual has
            the skills needed to compete in the workplace and
            exercise the rights and responsibilities of
            citizenship;
              (8) whether the activities are staffed by well-
            trained instructors, counselors, and administrators;
              (9) whether the activities are coordinated with other
            available resources in the community, such as through
            strong links with elementary schools and secondary
            schools, postsecondary educational institutions, one-
            stop centers, job training programs, community-based
            and faith-based organizations, and social service
            agencies;
              (10) whether the activities offer flexible schedules
            and support services (such as child care and
            transportation) that are necessary to enable
            individuals, including individuals with disabilities or
            other special needs, to attend and complete programs;
              (11) whether the activities include a high-quality
            information management system that has the capacity to
            report measurable participant outcomes and to monitor
            program performance against the performance measures
            established by the eligible agency;
              (12) whether the local communities have a
            demonstrated need for additional English language
            acquisition programs;
              (13) the capacity of the eligible provider to produce
            valid information on performance results, including
            enrollments and measurable participant outcomes;
              (14) whether adult basic skills and family literacy
            education programs offer rigorous reading, writing,
            speaking, and math content that are based on scientific
            research; and
              (15) whether applications of technology, and services
            to be provided by the eligible providers, is of
            sufficient intensity and duration to increase the
            amount and quality of learning and lead to measurable
            learning gains within specified time periods.

    SEC. 232. LOCAL APPLICATION.

      Each eligible provider desiring a grant or contract under
    this title shall submit an application to the eligible agency
    containing such information and assurances as the eligible
    agency may require, including--
              (1) a description of how funds awarded under this
            title will be spent consistent with the requirements of
            this title;
              (2) a description of any cooperative arrangements the
            eligible provider has with other agencies,
            institutions, or organizations for the delivery of
            adult basic skills and family literacy education
            programs; and
              (3) each of the demonstrations required by section
            231(d).

    SEC. 233. LOCAL ADMINISTRATIVE COST LIMITS.

      (a) In General.--Subject to subsection (b), of the amount
    that is made available under this title to an eligible
    provider--
              (1) at least 95 percent shall be expended for
            carrying out adult basic skills and family literacy
            education programs; and
              (2) the remaining amount shall be used for planning,
            administration, personnel and professional development,
            development of measurable goals in reading, writing,
            speaking, and math, and interagency coordination.
      (b) Special Rule.--In cases where the cost limits described
    in subsection (a) are too restrictive to allow for adequate
    planning, administration, personnel development, and
    interagency coordination, the eligible provider may negotiate
    with the eligible agency in order to determine an adequate
    level of funds to be used for noninstructional purposes.

                         CHAPTER 4--GENERAL PROVISIONS

    SEC. 241. ADMINISTRATIVE PROVISIONS.

      (a) Supplement Not Supplant.--Funds made available for adult
    basic skills and family literacy education programs under this
    title shall supplement and not supplant other State or local
    public funds expended for adult basic skills and family
    literacy education programs.
      (b) Maintenance of Effort.--
              (1) In general.--
                      (A) Determination.--An eligible agency may
                    receive funds under this title for any fiscal
                    year if the Secretary finds that the fiscal
                    effort per student or the aggregate
                    expenditures of such eligible agency for
                    activities under this title, in the second
                    preceding fiscal year, were not less than 90
                    percent of the fiscal effort per student or the
                    aggregate expenditures of such eligible agency
                    for adult basic skills and family literacy
                    education programs, in the third preceding
                    fiscal year.
                      (B) Proportionate reduction.--Subject to
                    paragraphs (2), (3), and (4), for any fiscal
                    year with respect to which the Secretary
                    determines under subparagraph (A) that the
                    fiscal effort or the aggregate expenditures of
                    an eligible agency for the preceding program
                    year were less than such effort or expenditures
                    for the second preceding program year, the
                    Secretary--
                              (i) shall determine the percentage
                            decreases in such effort or in such
                            expenditures; and
                              (ii) shall decrease the payment made
                            under this title for such program year
                            to the agency for adult basic skills
                            and family literacy education programs
                            by the lesser of such percentages.
              (2) Computation.--In computing the fiscal effort and
            aggregate expenditures under paragraph (1), the
            Secretary shall exclude capital expenditures and
            special one-time project costs.
              (3) Decrease in federal support.--If the amount made
            available for adult basic skills and family literacy
            education programs under this title for a fiscal year
            is less than the amount made available for adult basic
            skills and family literacy education programs under
            this title for the preceding fiscal year, then the
            fiscal effort per student and the aggregate
            expenditures of an eligible agency required in order to
            avoid a reduction under paragraph (1)(B) shall be
            decreased by the same percentage as the percentage
            decrease in the amount so made available.
              (4) Waiver.--The Secretary may waive the requirements
            of this subsection for not more than 1 fiscal year, if
            the Secretary determines that a waiver would be
            equitable due to exceptional or uncontrollable
            circumstances, such as a natural disaster or an
            unforeseen and precipitous decline in the financial
            resources of the State or outlying area of the eligible
            agency. If the Secretary grants a waiver under the
            preceding sentence for a fiscal year, the level of
            effort required under paragraph (1) shall not be
            reduced in the subsequent fiscal year because of the
            waiver.

    SEC. 242. NATIONAL LEADERSHIP ACTIVITIES.

      The Secretary shall establish and carry out a program of
    national leadership activities that may include the following:
              (1) Technical assistance, on request, including
            assistance--
                      (A) on requests to volunteer community- and
                    faith-based organizations, including but not
                    limited to, improving their fiscal management,
                    research-based instruction, and reporting
                    requirements, and the development of measurable
                    objectives to carry out the requirements of
                    this title;
                      (B) in developing valid, measurable, and
                    reliable performance data, and using
                    performance information for the improvement of
                    adult basic skills and family literacy
                    education programs;
                      (C) on adult education professional
                    development; and
                      (D) in using distance learning and improving
                    the application of technology in the classroom.
              (2) Providing for the conduct of research on national
            literacy basic skill acquisition levels among adults,
            including the number of adults functioning at different
            levels of reading proficiency.
              (3) Improving the coordination, efficiency, and
            effectiveness of adult education and workforce
            development services at the national, State, and local
            levels.
              (4) Determining how participation in adult basic
            skills and family literacy education programs prepares
            individuals for entry into and success in postsecondary
            education and employment, and in the case of prison-
            based services, the effect on recidivism.
              (5) Evaluating how different types of providers,
            including community and faith-based organizations or
            private for-profit agencies measurably improve the
            skills of participants in adult basic skills and family
            literacy education programs.
              (6) Identifying model integrated basic and workplace
            skills education programs, coordinated literacy and
            employment services, and effective strategies for
            serving adults with disabilities.
              (7) Supporting the development of an entity that
            would produce and distribute technology-based programs
            and materials for adult basic skills and family
            literacy education programs using an intercommunication
            system, as that term is defined in section 397 of the
            Communications Act of 1934 (47 U.S.C. 397), and expand
            the effective outreach and use of such programs and
            materials to adult education eligible providers.
              (8) Initiating other activities designed to improve
            the measurable quality and effectiveness of adult basic
            skills and family literacy education programs
            nationwide.

               *       *       *       *       *       *       *

    TITLE V--GENERAL PROVISIONS

               *       *       *       *       *       *       *

    [SEC. 502. DEFINITIONS FOR INDICATORS OF PERFORMANCE.

      [(a) In General.--In order to ensure nationwide comparability
    of performance data, the Secretary of Labor and the Secretary
    of Education, after consultation with the representatives
    described in subsection (b), shall issue definitions for
    indicators of performance and levels of performance established
    under titles I and II.
      [(b) Representatives.--The representatives referred to in
    subsection (a) are representatives of States (as defined in
    section 101) and political subdivisions, business and industry,
    employees, eligible providers of employment and training
    activities (as defined in section 101), educators, participants
    in activities carried out under this Act, State Directors of
    adult education, providers of adult education, providers of
    literacy services, individuals with expertise in serving the
    employment and training needs of eligible youth (as defined in
    section 101), parents, and other interested parties, with
    expertise regarding activities authorized under this Act.

    [SEC. 503. INCENTIVE GRANTS.

      [(a) In General.--Beginning on July 1, 2000, the Secretary
    shall award a grant to each State that exceeds the State
    adjusted levels of performance for title I, the adjusted levels
    of performance for title II, and the levels of performance for
    programs under Public Law 105-332 (20 U.S.C. 2301 et seq.), for
    the purpose of carrying out an innovative program consistent
    with the requirements of any one or more of the programs within
    title I, title II, or such Public Law, respectively.
      [(b) Application.--
              [(1) In general.--The Secretary may provide a grant
            to a State under subsection (a) only if the State
            submits an application to the Secretary for the grant
            that meets the requirements of paragraph (2).
              [(2) Requirements.--The Secretary may review an
            application described in paragraph (1) only to ensure
            that the application contains the following assurances:
                      [(A) The legislature of the State was
                    consulted with respect to the development of
                    the application.
                      [(B) The application was approved by the
                    Governor, the eligible agency (as defined in
                    section 203), and the State agency responsible
                    for programs established under Public Law 105-
                    332 (20 U.S.C. 2301 et seq.).
                      [(C) The State and the eligible agency, as
                    appropriate, exceeded the State adjusted levels
                    of performance for title I, the expected levels
                    of performance for title II, and the levels of
                    performance for programs under Public Law 105-
                    332 (20 U.S.C. 2301 et seq.).
      [(c) Amount.--
              [(1) Minimum and maximum grant amounts.--Subject to
            paragraph (2), a grant provided to a State under
            subsection (a) shall be awarded in an amount that is
            not less than $750,000 and not more than $3,000,000.
              [(2) Proportionate reduction.--If the amount
            available for grants under this section for a fiscal
            year is insufficient to award a grant to each State or
            eligible agency that is eligible for a grant, the
            Secretary shall reduce the minimum and maximum grant
            amount by a uniform percentage.
      [(d) Notwithstanding any other provision of this section, for
    fiscal year 2000, the Secretary shall not consider the expected
    levels of performance under Public Law 105-332 (20 U.S.C. 2301
    et seq.) and shall not award a grant under subsection (a) based
    on the levels of performance for that Act.]

               *       *       *       *       *       *       *

                                  ----------

                               WAGNER-PEYSER ACT

      [Section 1. In order to promote the establishment and
    maintenance of a national system of public employment offices,
    the United States Employment Service shall be established and
    maintained within the Department of Labor.

      [Sec. 2. For purposes of this Act--
              [(1) the term ``chief elected official'' has the same
            meaning given that term under the Workforce Investment
            Act of 1998;
              [(2) the term ``local workforce investment board''
            means a local workforce investment board established
            under section 117 of the Workforce Investment Act of
            1998;
              [(3) the term ``one-stop delivery system'' means a
            one-stop delivery system described in section 134(c) of
            the Workforce Investment Act of 1998;
              [(4) the term ``Secretary'' means the Secretary of
            Labor; and
              [(5) the term ``State'' means any of the several
            States, the District of Columbia, the Commonwealth of
            Puerto Rico, Guam, and the Virgin Islands.

      [Sec. 3. (a) The Secretary shall assist in coordinating the
    State public employment services throughout the country and in
    increasing their usefulness by developing and prescribing
    minimum standards of efficiency, assisting them in meeting
    problems peculiar to their localities, promoting uniformity in
    their administrative and statistical procedure, furnishing and
    publishing information as to opportunities for employment and
    other information of value in the operation of the system, and
    maintaining a system for clearing labor between the States.
      [(b) It shall be the duty of the Secretary to assure that
    unemployment insurance and employment service offices in each
    State, as appropriate, upon request of a public agency
    administering or supervising the administration of a State
    program funded under part A of title IV of the Social Security
    Act, of a public agency charged with any duty or responsibility
    under any program or activity authorized or required under part
    D of title IV of such Act, or of a State agency charged with
    the administration of the food stamp program in a State under
    the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.), shall (and,
    notwithstanding any other provision of law, is authorized to)
    furnish to such agency making the request, from any data
    contained in the files of any such office, information with
    respect to any individual specified in the request as to (1)
    whether such individual is receiving, has received, or has made
    application for, unemployment compensation, and the amount of
    any such compensation being received by such individual, (2)
    the current (or most recent) home address of such individual,
    and (3) whether such individual has refused an offer of
    employment and, if so, a description of the employment so
    offered and the terms, conditions, and rate of pay therefor.
      [(c) The Secretary shall--
              [(1) assist in the coordination and development of a
            nationwide system of public labor exchange services,
            provided as part of the one-stop customer service
            systems of the States;
              [(2) assist in the development of continuous
            improvement models for such nationwide system that
            ensure private sector satisfaction with the system and
            meet the demands of jobseekers relating to the system;
            and
              [(3) ensure, for individuals otherwise eligible to
            receive unemployment compensation, the provision of
            reemployment services and other activities in which the
            individuals are required to participate to receive the
            compensation.

      [Sec. 4. In order to obtain the benefits of appropriations
    apportioned under section 5, a State shall, pursuant to State
    statute, accept the provisions of this Act and, in accordance
    with such State statute, the Governor shall designate or
    authorize the creation of a State agency vested with all powers
    necessary to cooperate with the Secretary under this Act.

      [Sec. 5. (a) There is authorized to be appropriated, out of
    any money in the Treasury not otherwise appropriated, such
    amounts from time to time as the Congress may deem necessary to
    carry out the purposes of this Act.
      [(b) The Secretary shall from time to time certify to the
    Secretary of the Treasury for payment to each State which--
              [(1) except in the case of Guam, has an unemployment
            compensation law approved by the Secretary under the
            Federal Unemployment Tax Act and is found to be in
            compliance with section 303 of the Social Security Act,
            as amended,
              [(2) is found to have coordinated the public
            employment services with the provision of unemployment
            insurance claimant services, and
              [(3) is found to be in compliance with this Act,
    such amounts as the Secretary determines to be necessary for
    allotment in accordance with section 6.
      [(c)(1) Beginning with fiscal year 1985 and thereafter
    appropriations for any fiscal year for programs and activities
    assisted or conducted under this Act shall be available for
    obligation only on the basis of a program year. The program
    year shall begin on July 1 in the fiscal year for which the
    appropriation is made.
      [(2) Funds obligated for any program year may be expended by
    the State during that program year and the two succeeding
    program years and no amount shall be deobligated on account of
    a rate of expenditure which is consistent with the program
    plan.
      [(3)(A) Appropriations for fiscal year 1984 shall be
    available both to fund activities for the period between
    October 1, 1983, and July 1, 1984, and for the program year
    beginning July 1, 1984.
      [(B) There are authorized to be appropriated such additional
    sums as may be necessary to carry out the provisions of this
    paragraph for the transition to program year funding.

      [Sec. 6. (a) From the amounts appropriated pursuant to
    section 5 for each fiscal year, the Secretary shall first allot
    to Guam and the Virgin Islands an amount which, in relation to
    the total amount available for the fiscal year, is equal to the
    allotment percentage which each received of amounts available
    under this Act in fiscal year 1983.
      [(b)(1) Subject to paragraphs (2), (3), and (4) of this
    subsection, the Secretary shall allot the remainder of the sums
    appropriated and certified pursuant to section 5 of this Act
    for each fiscal year among the States as follows:
              [(A) two-thirds of such sums shall be allotted on the
            basis of the relative number of individuals in the
            civilian labor force in each State as compared to the
            total number of such individuals in all States; and
              [(B) one-third of such sums shall be allotted on the
            basis of the relative number of unemployed individuals
            in each State as compared to the total number of such
            individuals in all States.
    For purposes of this paragraph, the number of individuals in
    the civilian labor force and the number of unemployed
    individuals shall be based on data for the most recent calendar
    year available, as determined by the Secretary.
      [(2) No State's allotment under this section for any fiscal
    year shall be less than 90 percent of its allotment percentage
    for the fiscal year preceding the fiscal year for which the
    determination is made. For the purpose of this section, the
    Secretary shall determine the allotment percentage for each
    State (including Guam and the Virgin Islands) for fiscal year
    1984 which is the percentage that the State received under this
    Act for fiscal year 1983 of the total amounts available for
    payments to all States for such fiscal year. For each
    succeeding fiscal year, the allotment percentage for each such
    State shall be the percentage that the State received under
    this Act for the preceding fiscal year of the total amounts
    available for allotments for all States for such fiscal year.
      [(3) For each fiscal year, no State shall receive a total
    allotment under paragraphs (1) and (2) which is less than 0.28
    percent of the total amount available for allotments for all
    States.
      [(4) The Secretary shall reserve such amount, not to exceed 3
    percent of the sums available for allotments under this section
    for each fiscal year, as shall be necessary to assure that each
    State will have a total allotment under this section sufficient
    to provide staff and other resources necessary to carry out
    employment service activities and related administrative and
    support functions on a statewide basis.
      [(5) The Secretary shall, not later than March 15 of fiscal
    year 1983 and each succeeding fiscal year, provide preliminary
    planning estimates and shall, not later than May 15 of each
    such fiscal year, provide final planning estimates, showing
    each State's projected allocation for the following year.

      [Sec. 7. (a) Ninety percent of the sums allotted to each
    State pursuant to section 6 may be used--
              [(1) for job search and placement services to job
            seekers including counseling, testing, occupational and
            labor market information, assessment, and referral to
            employers;
              [(2) for appropriate recruitment services and special
            technical services for employers; and
              [(3) for any of the following activities:
                      [(A) evaluation of programs;
                      [(B) developing linkages between services
                    funded under this Act and related Federal or
                    State legislation, including the provision of
                    labor exchange services at education sites;
                      [(C) providing services for workers who have
                    received notice of permanent layoff or
                    impending layoff, or workers in occupations
                    which are experiencing limited demand due to
                    technological change, impact of imports, or
                    plant closures;
                      [(D) developing and providing labor market
                    and occupational information;
                      [(E) developing a management information
                    system and compiling and analyzing reports
                    therefrom; and
                      [(F) administering the work test for the
                    State unemployment compensation system and
                    providing job finding and placement services
                    for unemployment insurance claimants.
      [(b) Ten percent of the sums allotted to each State pursuant
    to section 6 shall be reserved for use in accordance with this
    subsection by the Governor of each such State to provide--
              [(1) performance incentives for public employment
            service offices and programs, consistent with
            performance standards established by the Secretary,
            taking into account direct or indirect placements
            (including those resulting from self-directed job
            search or group job search activities assisted by such
            offices or programs), wages on entered employment,
            retention, and other appropriate factors;
              [(2) services for groups with special needs, carried
            out pursuant to joint agreements between the employment
            service and the appropriate local workforce investment
            board and chief elected official or officials or other
            public agencies or private nonprofit organizations; and
              [(3) the extra costs of exemplary models for
            delivering services of the types described in
            subsection (a).
      [(c)(1) Funds made available to States under this section may
    be used to provide additional funds under an applicable program
    if--
              [(A) such program otherwise meets the requirements of
            this Act and the requirements of the applicable
            program;
              [(B) such program serves the same individuals that
            are served under this Act;
              [(C) such program provides services in a coordinated
            manner with services provided under this Act; and
              [(D) such funds would be used to supplement, and not
            supplant, funds provided from non-Federal sources.
      [(2) For purposes of this subsection, the term ``applicable
    program'' means any workforce investment activity carried out
    under the Workforce Investment Act of 1998.
      [(d) In addition to the services and activities otherwise
    authorized by this Act, the Secretary or any State agency
    designated under this Act may perform such other services and
    activities as shall be specified in contracts for payment or
    reimbursement of the costs thereof made with the Secretary or
    with any Federal, State, or local public agency, or
    administrative entity under the Workforce Investment Act of
    1998, or private nonprofit organization.
      [(e) All job search, placement, recruitment, labor employment
    statistics, and other labor exchange services authorized under
    subsection (a) shall be provided, consistent with the other
    requirements of this Act, as part of the one-stop delivery
    system established by the State.

      [Sec. 8. (a) Any State desiring to receive assistance under
    this Act shall submit to the Secretary, as part of the State
    plan submitted under section 112 of the Workforce Investment
    Act of 1998, detailed plans for carrying out the provisions of
    this Act within such State.
      [(b) Such plans shall include provision for the promotion and
    development of employment opportunities for handicapped persons
    and for job counseling and placement of such persons, and for
    the designation of at least one person in each State or Federal
    employment office, whose duties shall include the effectuation
    of such purposes. In those States where a State board,
    department, or agency exists which is charged with the
    administration of State laws for vocational rehabilitation of
    physically handicapped persons, such plans shall include
    provision for cooperation between such board, department, or
    agency and the agency designated to cooperate with the United
    States Employment Service under this Act.
      [(c) The part of the State plan described in subsection (a)
    shall include the information described in paragraphs (8) and
    (14) of section 112(b) of the Workforce Investment Act of 1998.
      [(d) If such detailed plans are in conformity with the
    provisions of this Act and reasonably appropriate and adequate
    to carry out its purposes, they shall be approved by the
    Secretary of Labor and due notice of such approval shall be
    given to the State agency.

      [Sec. 9. (a)(1) Each State shall establish such fiscal
    control and fund accounting procedures as may be necessary to
    assure the proper disbursal of, and accounting for, Federal
    funds paid to the recipient under this Act. The Director of the
    Office of Management and Budget, in consultation with the
    Comptroller General of the United States, shall establish
    guidance for the proper performance of audits. Such guidance
    shall include a review of fiscal controls and fund accounting
    procedures established by States under this section.
      [(2) At least once every two years, the State shall prepare
    or have prepared an independent financial and compliance audit
    of funds received under this Act.
      [(3) Each audit shall be conducted in accordance with
    applicable auditing standards set forth in the financial and
    compliance element of the Standards for Audit of Governmental
    Organizations, Programs, Activities, and Functions issued by
    the Comptroller General of the United States.
      [(b)(1) The Comptroller General of the United States shall
    evaluate the expenditures by States of funds received under
    this Act in order to assure that expenditures are consistent
    with the provisions of this Act and to determine the
    effectiveness of the State in accomplishing the purposes of
    this Act. The Comptroller General shall conduct evaluations
    whenever determined necessary and shall periodically report to
    the Congress on the findings of such evaluations.
      [(2) Nothing in this Act shall be deemed to relieve the
    Inspector General of the Department of Labor of his
    responsibilities under the Inspector General Act.
      [(3) For the purpose of evaluating and reviewing programs
    established or provided for by this Act, the Comptroller
    General shall have access to and the right to copy any books,
    accounts, records, correspondence, or other documents pertinent
    to such programs that are in the possession, custody, or
    control of the State.
      [(c) Each State shall repay to the United States amounts
    found not to have been expended in accordance with this Act. No
    such finding shall be made except after notice and opportunity
    for a fair hearing. The Secretary may offset such amounts
    against any other amount to which the recipient is or may be
    entitled under this Act.

      [Sec. 10. (a) Each State shall keep records that are
    sufficient to permit the preparation of reports required by
    this Act and to permit the tracing of funds to a level of
    expenditure adequate to insure that the funds have not been
    spent unlawfully.
      [(b)(1) The Secretary may investigate such facts, conditions,
    practices, or other matters which the Secretary finds necessary
    to determine whether any State receiving funds under this Act
    or any official of such State has violated any provision of
    this Act.
      [(2)(A) In order to evaluate compliance with the provisions
    of this Act, the Secretary shall conduct investigations of the
    use of funds received by States under this Act.
      [(B) In order to insure compliance with the provisions of
    this Act, the Comptroller General of the United States may
    conduct investigations of the use of funds received under this
    Act by any State.
      [(3) In conducting any investigation under this Act, the
    Secretary or the Comptroller General of the United States may
    not request new compilation of information not readily
    available to such State.
      [(c) Each State receiving funds under this Act shall--
              [(1) make such reports concerning its operations and
            expenditures in such form and containing such
            information as shall be prescribed by the Secretary,
            and
              [(2) establish and maintain a management information
            system in accordance with guidelines established by the
            Secretary designed to facilitate the compilation and
            analysis of programmatic and financial data necessary
            for reporting, monitoring, and evaluating purposes.

      [Sec. 11. In carrying out the provisions of this Act the
    Secretary is authorized and directed to provide for the giving
    of notice of strikes or lockouts to applicants before they are
    referred to employment.

      [Sec. 12. The Secretary is hereby authorized to make such
    rules and regulations as may be necessary to carry out the
    provisions of this Act.
      [Sec. 13. (a) The Secretary is authorized to establish
    performance standards for activities under this Act which shall
    take into account the differences in priorities reflected in
    State plans.
      [(b)(1) Nothing in this Act shall be construed to prohibit
    the referral of any applicant to private agencies as long as
    the applicant is not charged a fee.
      [(2) No funds paid under this Act may be used by any State
    for advertising in newspapers for high paying jobs unless such
    State submits an annual report to the Secretary beginning in
    December 1984 concerning such advertising and the
    justifications therefor, and the justification may include that
    such jobs are part of a State industrial development effort.]

      Sec. 14. There are authorized to be appropriated such sums as
    may be necessary to enable the Secretary of Labor to provide
    funds through reimbursable agreements with the States to
    operate statistical programs which are essential for
    development of estimates of the gross national product and
    other national statistical series, including those related to
    employment and unemployment.

    [SEC. 15. EMPLOYMENT STATISTICS.

      [(a) System Content.--
              [(1) In general.--The Secretary, in accordance with
            the provisions of this section, shall oversee the
            development, maintenance, and continuous improvement of
            a nationwide employment statistics system of employment
            statistics that includes--
                      [(A) statistical data from cooperative
                    statistical survey and projection programs and
                    data from administrative reporting systems
                    that, taken together, enumerate, estimate, and
                    project employment opportunities and conditions
                    at national, State, and local levels in a
                    timely manner, including statistics on--
                              [(i) employment and unemployment
                            status of national, State, and local
                            populations, including self-employed,
                            part-time, and seasonal workers;
                              [(ii) industrial distribution of
                            occupations, as well as current and
                            projected employment opportunities,
                            wages, benefits (where data is
                            available), and skill trends by
                            occupation and industry, with
                            particular attention paid to State and
                            local conditions;
                              [(iii) the incidence of, industrial
                            and geographical location of, and
                            number of workers displaced by,
                            permanent layoffs and plant closings;
                            and
                              [(iv) employment and earnings
                            information maintained in a
                            longitudinal manner to be used for
                            research and program evaluation;
                      [(B) information on State and local
                    employment opportunities, and other appropriate
                    statistical data related to labor market
                    dynamics, which--
                              [(i) shall be current and
                            comprehensive;
                              [(ii) shall meet the needs identified
                            through the consultations described in
                            subparagraphs (A) and (B) of subsection
                            (e)(2); and
                              [(iii) shall meet the needs for the
                            information identified in section
                            134(d);
                      [(C) technical standards (which the Secretary
                    shall publish annually) for data and
                    information described in subparagraphs (A) and
                    (B) that, at a minimum, meet the criteria of
                    chapter 35 of title 44, United States Code;
                      [(D) procedures to ensure compatibility and
                    additivity of the data and information
                    described in subparagraphs (A) and (B) from
                    national, State, and local levels;
                      [(E) procedures to support standardization
                    and aggregation of data from administrative
                    reporting systems described in subparagraph (A)
                    of employment-related programs;
                      [(F) analysis of data and information
                    described in subparagraphs (A) and (B) for uses
                    such as--
                              [(i) national, State, and local
                            policymaking;
                              [(ii) implementation of Federal
                            policies (including allocation
                            formulas);
                              [(iii) program planning and
                            evaluation; and
                              [(iv) researching labor market
                            dynamics;
                      [(G) wide dissemination of such data,
                    information, and analysis in a user-friendly
                    manner and voluntary technical standards for
                    dissemination mechanisms; and
                      [(H) programs of--
                              [(i) training for effective data
                            dissemination;
                              [(ii) research and demonstration; and
                              [(iii) programs and technical
                            assistance.
              [(2) Information to be confidential.--
                      [(A) In general.--No officer or employee of
                    the Federal Government or agent of the Federal
                    Government may--
                              [(i) use any submission that is
                            furnished for exclusively statistical
                            purposes under the provisions of this
                            section for any purpose other than the
                            statistical purposes for which the
                            submission is furnished;
                              [(ii) make any publication or media
                            transmittal of the data contained in
                            the submission described in clause (i)
                            that permits information concerning
                            individual subjects to be reasonably
                            inferred by either direct or indirect
                            means; or
                              [(iii) permit anyone other than a
                            sworn officer, employee, or agent of
                            any Federal department or agency, or a
                            contractor (including an employee of a
                            contractor) of such department or
                            agency, to examine an individual
                            submission described in clause (i);
                    without the consent of the individual, agency,
                    or other person who is the subject of the
                    submission or provides that submission.
                      [(B) Immunity from legal process.--Any
                    submission (including any data derived from the
                    submission) that is collected and retained by a
                    Federal department or agency, or an officer,
                    employee, agent, or contractor of such a
                    department or agency, for exclusively
                    statistical purposes under this section shall
                    be immune from the legal process and shall not,
                    without the consent of the individual, agency,
                    or other person who is the subject of the
                    submission or provides that submission, be
                    admitted as evidence or used for any purpose in
                    any action, suit, or other judicial or
                    administrative proceeding.
                      [(C) Rule of construction.--Nothing in this
                    section shall be construed to provide immunity
                    from the legal process for such submission
                    (including any data derived from the
                    submission) if the submission is in the
                    possession of any person, agency, or entity
                    other than the Federal Government or an
                    officer, employee, agent, or contractor of the
                    Federal Government, or if the submission is
                    independently collected, retained, or produced
                    for purposes other than the purposes of this
                    Act.
      [(b) System Responsibilities.--
              [(1) In general.--The employment statistics system
            described in subsection (a) shall be planned,
            administered, overseen, and evaluated through a
            cooperative governance structure involving the Federal
            Government and States.
              [(2) Duties.--The Secretary, with respect to data
            collection, analysis, and dissemination of labor
            employment statistics for the system, shall carry out
            the following duties:
                      [(A) Assign responsibilities within the
                    Department of Labor for elements of the
                    employment statistics system described in
                    subsection (a) to ensure that all statistical
                    and administrative data collected is consistent
                    with appropriate Bureau of Labor Statistics
                    standards and definitions.
                      [(B) Actively seek the cooperation of other
                    Federal agencies to establish and maintain
                    mechanisms for ensuring complementarity and
                    nonduplication in the development and operation
                    of statistical and administrative data
                    collection activities.
                      [(C) Eliminate gaps and duplication in
                    statistical undertakings, with the
                    systemization of wage surveys as an early
                    priority.
                      [(D) In collaboration with the Bureau of
                    Labor Statistics and States, develop and
                    maintain the elements of the employment
                    statistics system described in subsection (a),
                    including the development of consistent
                    procedures and definitions for use by the
                    States in collecting the data and information
                    described in subparagraphs (A) and (B) of
                    subsection (a)(1).
                      [(E) Establish procedures for the system to
                    ensure that--
                              [(i) such data and information are
                            timely;
                              [(ii) paperwork and reporting for the
                            system are reduced to a minimum; and
                              [(iii) States and localities are
                            fully involved in the development and
                            continuous improvement of the system at
                            all levels, including ensuring the
                            provision, to such States and
                            localities, of budget information
                            necessary for carrying out their
                            responsibilities under subsection (e).
      [(c) Annual Plan.--The Secretary, working through the Bureau
    of Labor Statistics, and in cooperation with the States, and
    with the assistance of other appropriate Federal agencies,
    shall prepare an annual plan which shall be the mechanism for
    achieving cooperative management of the nationwide employment
    statistics system described in subsection (a) and the statewide
    employment statistics systems that comprise the nationwide
    system. The plan shall--
              [(1) describe the steps the Secretary has taken in
            the preceding year and will take in the following 5
            years to carry out the duties described in subsection
            (b)(2);
              [(2) include a report on the results of an annual
            consumer satisfaction review concerning the performance
            of the system, including the performance of the system
            in addressing the needs of Congress, States,
            localities, employers, jobseekers, and other consumers;
              [(3) evaluate the performance of the system and
            recommend needed improvements, taking into
            consideration the results of the consumer satisfaction
            review, with particular attention to the improvements
            needed at the State and local levels;
              [(4) justify the budget request for annual
            appropriations by describing priorities for the fiscal
            year succeeding the fiscal year in which the plan is
            developed and priorities for the 5 subsequent fiscal
            years for the system;
              [(5) describe current (as of the date of the
            submission of the plan) spending and spending needs to
            carry out activities under this section, including the
            costs to States and localities of meeting the
            requirements of subsection (e)(2); and
              [(6) describe the involvement of States in the
            development of the plan, through formal consultations
            conducted by the Secretary in cooperation with
            representatives of the Governors of every State, and
            with representatives of local workforce investment
            boards, pursuant to a process established by the
            Secretary in cooperation with the States.
      [(d) Coordination With the States.--The Secretary, working
    through the Bureau of Labor Statistics, and in cooperation with
    the States, shall--
              [(1) develop the annual plan described in subsection
            (c) and address other employment statistics issues by
            holding formal consultations, at least once each
            quarter (beginning with the calendar quarter in which
            the Workforce Investment Act of 1998 is enacted) on the
            products and administration of the nationwide
            employment statistics system; and
              [(2) hold the consultations with representatives from
            each of the 10 Federal regions of the Department of
            Labor, elected (pursuant to a process established by
            the Secretary) by and from the State employment
            statistics directors affiliated with the State agencies
            that perform the duties described in subsection (e)(2).
      [(e) State Responsibilities.--
              [(1) Designation of state agency.--In order to
            receive Federal financial assistance under this
            section, the Governor of a State shall--
                      [(A) designate a single State agency to be
                    responsible for the management of the portions
                    of the employment statistics system described
                    in subsection (a) that comprise a statewide
                    employment statistics system and for the
                    State's participation in the development of the
                    annual plan; and
                      [(B) establish a process for the oversight of
                    such system.
              [(2) Duties.--In order to receive Federal financial
            assistance under this section, the State agency shall--
                      [(A) consult with State and local employers,
                    participants, and local workforce investment
                    boards about the labor market relevance of the
                    data to be collected and disseminated through
                    the statewide employment statistics system;
                      [(B) consult with State educational agencies
                    and local educational agencies concerning the
                    provision of employment statistics in order to
                    meet the needs of secondary school and
                    postsecondary school students who seek such
                    information;
                      [(C) collect and disseminate for the system,
                    on behalf of the State and localities in the
                    State, the information and data described in
                    subparagraphs (A) and (B) of subsection (a)(1);
                      [(D) maintain and continuously improve the
                    statewide employment statistics system in
                    accordance with this section;
                      [(E) perform contract and grant
                    responsibilities for data collection, analysis,
                    and dissemination for such system;
                      [(F) conduct such other data collection,
                    analysis, and dissemination activities as will
                    ensure an effective statewide employment
                    statistics system;
                      [(G) actively seek the participation of other
                    State and local agencies in data collection,
                    analysis, and dissemination activities in order
                    to ensure complementarity, compatibility, and
                    usefulness of data;
                      [(H) participate in the development of the
                    annual plan described in subsection (c); and
                      [(I) utilize the quarterly records described
                    in section 136(f )(2) of the Workforce
                    Investment Act of 1998 to assist the State and
                    other States in measuring State progress on
                    State performance measures.
              [(3) Rule of construction.--Nothing in this section
            shall be construed as limiting the ability of a State
            agency to conduct additional data collection, analysis,
            and dissemination activities with State funds or with
            Federal funds from sources other than this section.
      [(f) Nonduplication Requirement.--None of the functions and
    activities carried out pursuant to this section shall duplicate
    the functions and activities carried out under the Carl D.
    Perkins Vocational and Applied Technology Education Act (20
    U.S.C. 2301 et seq.).
      [(g) Authorization of Appropriations.--There are authorized
    to be appropriated to carry out this section such sums as may
    be necessary for each of the fiscal years 1999 through 2004.
      [(h) Definition.--In this section, the term ``local area''
    means the smallest geographical area for which data can be
    produced with statistical reliability.]

    SEC. 15. WORKFORCE AND LABOR MARKET INFORMATION SYSTEM.

      (a) System Content.--
              (1) In general.--The Secretary of Labor, in
            accordance with the provisions of this section, shall
            oversee the development, maintenance, and continuous
            improvement of a nationwide workforce and labor market
            information system that includes--
                      (A) statistical data from cooperative
                    statistical survey and projection programs and
                    data from administrative reporting systems
                    that, taken together, enumerate, estimate, and
                    project employment opportunities and conditions
                    at national, State, and local levels in a
                    timely manner, including statistics on--
                              (i) employment and unemployment
                            status of national, State, and local
                            populations, including self-employed,
                            part-time, and seasonal workers;
                              (ii) industrial distribution of
                            occupations, as well as current and
                            projected employment opportunities,
                            wages, benefits (where data is
                            available), and skill trends by
                            occupation and industry, with
                            particular attention paid to State and
                            local conditions;
                              (iii) the incidence of, industrial
                            and geographical location of, and
                            number of workers displaced by,
                            permanent layoffs and plant closings;
                            and
                              (iv) employment and earnings
                            information maintained in a
                            longitudinal manner to be used for
                            research and program evaluation;
                      (B) information on State and local employment
                    opportunities, and other appropriate
                    statistical data related to labor market
                    dynamics, which--
                              (i) shall be current and
                            comprehensive;
                              (ii) shall meet the needs identified
                            through the consultations described in
                            subparagraphs (A) and (B) of subsection
                            (e)(2); and
                              (iii) shall meet the needs for the
                            information identified in section
                            134(d);
                      (C) technical standards (which the Secretary
                    shall publish annually) for data and
                    information described in subparagraphs (A) and
                    (B) that, at a minimum, meet the criteria of
                    chapter 35 of title 44, United States Code;
                      (D) procedures to ensure compatibility and
                    additivity of the data and information
                    described in subparagraphs (A) and (B) from
                    national, State, and local levels;
                      (E) procedures to support standardization and
                    aggregation of data from administrative
                    reporting systems described in subparagraph (A)
                    of employment-related programs;
                      (F) analysis of data and information
                    described in subparagraphs (A) and (B) for uses
                    such as--
                              (i) national, State, and local
                            policymaking;
                              (ii) implementation of Federal
                            policies (including allocation
                            formulas);
                              (iii) program planning and
                            evaluation; and
                              (iv) researching labor market
                            dynamics;
                      (G) wide dissemination of such data,
                    information, and analysis in a user-friendly
                    manner and voluntary technical standards for
                    dissemination mechanisms; and
                      (H) programs of--
                              (i) training for effective data
                            dissemination;
                              (ii) research and demonstration; and
                              (iii) programs and technical
                            assistance.
              (2) Information to be confidential.--
                      (A) In general.--No officer or employee of
                    the Federal Government or agent of the Federal
                    Government may--
                              (i) use any submission that is
                            furnished for exclusively statistical
                            purposes under the provisions of this
                            section for any purpose other than the
                            statistical purposes for which the
                            submission is furnished;
                              (ii) make any publication or media
                            transmittal of the data contained in
                            the submission described in clause (i)
                            that permits information concerning
                            individual subjects to be reasonably
                            inferred by either direct or indirect
                            means; or
                              (iii) permit anyone other than a
                            sworn officer, employee, or agent of
                            any Federal department or agency, or a
                            contractor (including an employee of a
                            contractor) of such department or
                            agency, to examine an individual
                            submission described in clause (i);
                    without the consent of the individual, agency,
                    or other person who is the subject of the
                    submission or provides that submission.
                      (B) Immunity from legal process.--Any
                    submission (including any data derived from the
                    submission) that is collected and retained by a
                    Federal department or agency, or an officer,
                    employee, agent, or contractor of such a
                    department or agency, for exclusively
                    statistical purposes under this section shall
                    be immune from the legal process and shall not,
                    without the consent of the individual, agency,
                    or other person who is the subject of the
                    submission or provides that submission, be
                    admitted as evidence or used for any purpose in
                    any action, suit, or other judicial or
                    administrative proceeding.
                      (C) Rule of construction.--Nothing in this
                    section shall be construed to provide immunity
                    from the legal process for such submission
                    (including any data derived from the
                    submission) if the submission is in the
                    possession of any person, agency, or entity
                    other than the Federal Government or an
                    officer, employee, agent, or contractor of the
                    Federal Government, or if the submission is
                    independently collected, retained, or produced
                    for purposes other than the purposes of this
                    Act.
      (b) System Responsibilities.--
              (1) In general.--The workforce and labor market
            information system described in subsection (a) shall be
            planned, administered, overseen, and evaluated through
            a cooperative governance structure involving the
            Federal Government and States.
              (2) Duties.--The Secretary, with respect to data
            collection, analysis, and dissemination of labor
            employment statistics for the system, shall carry out
            the following duties:
                      (A) Assign responsibilities within the
                    Department of Labor for elements of the
                    workforce and labor market information system
                    described in subsection (a) to ensure that all
                    statistical and administrative data collected
                    is consistent with appropriate Bureau of Labor
                    Statistics standards and definitions.
                      (B) Actively seek the cooperation of other
                    Federal agencies to establish and maintain
                    mechanisms for ensuring complementarity and
                    nonduplication in the development and operation
                    of statistical and administrative data
                    collection activities.
                      (C) Eliminate gaps and duplication in
                    statistical undertakings, with the
                    systemization of wage surveys as an early
                    priority.
                      (D) In collaboration with the Bureau of Labor
                    Statistics and States, develop and maintain the
                    elements of the workforce and labor market
                    information system described in subsection (a),
                    including the development of consistent
                    procedures and definitions for use by the
                    States in collecting the data and information
                    described in subparagraphs (A) and (B) of
                    subsection (a)(1).
                      (E) Establish procedures for the system to
                    ensure that--
                              (i) such data and information are
                            timely;
                              (ii) paperwork and reporting for the
                            system are reduced to a minimum; and
                              (iii) States and localities are fully
                            involved in the development and
                            continuous improvement of the system at
                            all levels, including ensuring the
                            provision, to such States and
                            localities, of budget information
                            necessary for carrying out their
                            responsibilities under subsection (e).
      (c) National Electronic Tools to Provide Services.--The
    Secretary is authorized to assist in the development of
    national electronic tools that may be used to facilitate the
    delivery of core services described in section 134 and to
    provide workforce information to individuals through the one-
    stop delivery systems descried in section 121 and through other
    appropriate delivery systems.
      (d) Coordination With the States.--
              (1) In general.--The Secretary, working through the
            Bureau of Labor Statistics and the Employment and
            Training Administration, shall regularly consult with
            representatives of State agencies carrying out
            workforce information activities regarding strategies
            for improving the workforce and labor market
            information system.
              (2) Formal consultations.--At least twice each year,
            the Secretary, working through the Bureau of Labor
            Statistics, shall conduct formal consultations
            regarding programs carried out by the Bureau of Labor
            Statistics with representatives of each of the 10
            Federal regions of the Department of Labor, elected
            from the State directors affiliated with State agencies
            that perform the duties described in subsection (e)(2).
      (e) State Responsibilities.--
              (1) Designation of state agency.--In order to receive
            Federal financial assistance under this section, the
            Governor of a State shall--
                      (A) designate a single State agency to be
                    responsible for the management of the portions
                    of the workforce and labor market information
                    system described in subsection (a) that
                    comprise a statewide workforce and labor market
                    information system and for the State's
                    participation in the development of the annual
                    plan; and
                      (B) establish a process for the oversight of
                    such system.
              (2) Duties.--In order to receive Federal financial
            assistance under this section, the State agency shall--
                      (A) consult with State and local employers,
                    participants, and local workforce investment
                    boards about the labor market relevance of the
                    data to be collected and disseminated through
                    the statewide workforce and labor market
                    information system;
                      (B) consult with State educational agencies
                    and local educational agencies concerning the
                    provision of employment statistics in order to
                    meet the needs of secondary school and
                    postsecondary school students who seek such
                    information;
                      (C) collect and disseminate for the system,
                    on behalf of the State and localities in the
                    State, the information and data described in
                    subparagraphs (A) and (B) of subsection (a)(1);
                      (D) maintain and continuously improve the
                    statewide workforce and labor market
                    information system in accordance with this
                    section;
                      (E) perform contract and grant
                    responsibilities for data collection, analysis,
                    and dissemination for such system;
                      (F) conduct such other data collection,
                    analysis, and dissemination activities as will
                    ensure an effective statewide workforce and
                    labor market information system;
                      (G) actively seek the participation of other
                    State and local agencies in data collection,
                    analysis, and dissemination activities in order
                    to ensure complementarity, compatibility, and
                    usefulness of data;
                      (H) participate in the development of the
                    annual plan described in subsection (c); and
                      (I) utilize the quarterly records described
                    in section 136(f )(2) of the Workforce
                    Investment Act of 1998 to assist the State and
                    other States in measuring State progress on
                    State performance measures.
              (3) Rule of construction.--Nothing in this section
            shall be construed as limiting the ability of a State
            agency to conduct additional data collection, analysis,
            and dissemination activities with State funds or with
            Federal funds from sources other than this section.
      (f) Nonduplication Requirement.--None of the functions and
    activities carried out pursuant to this section shall duplicate
    the functions and activities carried out under the Carl D.
    Perkins Vocational and Applied Technology Education Act (20
    U.S.C. 2301 et seq.).
      (g) Authorization of Appropriations.--There are authorized to
    be appropriated to carry out this section such sums as may be
    necessary for each of the fiscal years 2004 through 2009.
      (h) Definition.--In this section, the term ``local area''
    means the smallest geographical area for which data can be
    produced with statistical reliability.

               *       *       *       *       *       *       *

                                  ----------

                           REHABILITATION ACT OF 1973

    SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

      (a) Short Title.--This Act may be cited as the
    ``Rehabilitation Act of 1973''.
      (b) Table of Contents.--The table of contents for this Act is
    as follows:

    Sec. 1. Short title; table of contents.

       TITLE VII--INDEPENDENT LIVING SERVICES AND CENTERS FOR INDEPENDENT
                                     LIVING

              Chapter 1--Individuals With Significant Disabilities

                           Part A--General Provisions

    Sec. 701. Purpose.
         * * * * * * *
    Sec. 706. Responsibilities of the [Commissioner] Director.
         * * * * * * *

                     REHABILITATION SERVICES ADMINISTRATION

      Sec. 3. (a) There is established in the [Office of the
    Secretary] Department of Education a Rehabilitation Services
    Administration which shall be headed by a [Commissioner]
    Director (hereinafter in this Act referred to as the
    ``[Commissioner] Director'') appointed by the [President by and
    with the advice and consent of the Senate] Secretary, except
    that the current Commissioner appointed under the authority
    existing on the day prior to the date of enactment of this Act
    may continue to serve in the former capacity. Except for titles
    IV and V and as otherwise specifically provided in this Act,
    such Administration shall be the principal agency[, and the
    Commissioner shall be the principal officer,] of such
    Department for carrying out this Act. The [Commissioner]
    Director shall be an individual with substantial experience in
    rehabilitation and in rehabilitation program management. In the
    performance of the functions of the office, the [Commissioner]
    Director shall be directly responsible to the Secretary or to
    the Under Secretary or an appropriate Assistant Secretary of
    such Department, as designated by the Secretary. The functions
    of the [Commissioner] Director shall not be delegated to any
    officer not directly responsible, both with respect to program
    operation and administration, to the [Commissioner] Director.
    Any reference in this Act to duties to be carried out by the
    [Commissioner] Director shall be considered to be a reference
    to duties to be carried out by the Secretary acting through the
    [Commissioner] Director. In carrying out any of the functions
    of the office under this Act, the [Commissioner] Director shall
    be guided by general policies of the National Council on
    Disability established under title IV of this Act.

               *       *       *       *       *       *       *

    SEC. 7. DEFINITIONS.

      For the purposes of this Act:
              (1) * * *

               *       *       *       *       *       *       *

              (12) Establishment of a community rehabilitation
            program.--The term ``establishment of a community
            rehabilitation program'' includes the acquisition,
            expansion, remodeling, or alteration of existing
            buildings necessary to adapt them to community
            rehabilitation program purposes or to increase their
            effectiveness for such purposes (subject, however, to
            such limitations as the Secretary may determine, in
            accordance with regulations the Secretary shall
            prescribe, in order to prevent impairment of the
            objectives of, or duplication of, other Federal laws
            providing Federal assistance in the construction of
            facilities for community rehabilitation programs), and
            may include such additional equipment and staffing as
            the [Commissioner] Director considers appropriate.

               *       *       *       *       *       *       *

                           ADMINISTRATION OF THE ACT

      Sec. 12. (a) In carrying out the purposes of this Act, the
    [Commissioner] Director may--
              (1) * * *

               *       *       *       *       *       *       *

      (b)(1) In carrying out the duties under this Act, the
    [Commissioner] Director may utilize the services and facilities
    of any agency of the Federal Government and of any other public
    or nonprofit agency or organization, in accordance with
    agreements between the [Commissioner] Director and the head
    thereof, and may pay therefor, in advance or by way of
    reimbursement, as may be provided in the agreement.
      (2) In carrying out the provisions of this Act, the
    [Commissioner] Director shall appoint such task forces as may
    be necessary to collect and disseminate information in order to
    improve the ability of the [Commissioner] Director to carry out
    the provisions of this Act.
      (c) The [Commissioner] Director may promulgate such
    regulations as are considered appropriate to carry out the
    [Commissioner] Director's duties under this Act.

               *       *       *       *       *       *       *

                                    REPORTS

      Sec. 13. (a) Not later than one hundred and eighty days after
    the close of each fiscal year, the [Commissioner] Director
    shall prepare and submit to the President and to the Congress a
    full and complete report on the activities carried out under
    this Act, including the activities and staffing of the
    information clearinghouse under section 15.
      (b) The [Commissioner] Director shall collect information to
    determine whether the purposes of this Act are being met and to
    assess the performance of programs carried out under this Act.
    The [Commissioner] Director shall take whatever action is
    necessary to assure that the identity of each individual for
    which information is supplied under this section is kept
    confidential, except as otherwise required by law (including
    regulation).
      (c) In preparing the report, the [Commissioner] Director
    shall annually collect and include in the report information
    based on the information submitted by States in accordance with
    section 101(a)(10), including information on administrative
    costs as required by section 101(a)(10)(D). The [Commissioner]
    Director shall, to the maximum extent appropriate, include in
    the report all information that is required to be submitted in
    the reports described in section 136(d) of the Workforce
    Investment Act of 1998 and that pertains to the employment of
    individuals with disabilities.

                                   EVALUATION

      Sec. 14. (a) For the purpose of improving program management
    and effectiveness, the Secretary, in consultation with the
    [Commissioner] Director, shall evaluate all the programs
    authorized by this Act, their general effectiveness in relation
    to their cost, their impact on related programs, and their
    structure and mechanisms for delivery of services, using
    appropriate methodology and evaluative research designs. The
    Secretary shall establish and use standards for the evaluations
    required by this subsection. Such an evaluation shall be
    conducted by a person not immediately involved in the
    administration of the program evaluated.

               *       *       *       *       *       *       *

      (f)(1) The [Commissioner] Director shall identify and
    disseminate information on exemplary practices concerning
    vocational rehabilitation.
      (2) To facilitate compliance with paragraph (1), the
    [Commissioner] Director shall conduct studies and analyses that
    identify exemplary practices concerning vocational
    rehabilitation, including studies in areas relating to
    providing informed choice in the rehabilitation process,
    promoting consumer satisfaction, promoting job placement and
    retention, providing supported employment, providing services
    to particular disability populations, financing personal
    assistance services, providing assistive technology devices and
    assistive technology services, entering into cooperative
    agreements, establishing standards and certification for
    community rehabilitation programs, converting from
    nonintegrated to integrated employment, and providing caseload
    management.

                           INFORMATION CLEARINGHOUSE

      Sec. 15. (a) * * *
      (b) The [Commissioner] Director may assist the Secretary to
    develop within the Department of Education a coordinated system
    of information and data retrieval, which will have the capacity
    and responsibility to provide information regarding the
    information and data referred to in subsection (a) of this
    section to the Congress, public and private agencies and
    organizations, individuals with disabilities and their
    families, professionals in fields serving such individuals, and
    the general public.

               *       *       *       *       *       *       *

    SEC. 21. TRADITIONALLY UNDERSERVED POPULATIONS.

      (a) * * *
      (b) Outreach to Minorities.--
              (1) In general.--For each fiscal year, the
            [Commissioner] Director of the Rehabilitation Services
            Administration and the Director of the National
            Institute on Disability and Rehabilitation Research
            [(referred to in this subsection as the ``Director'')]
            shall reserve 1 percent of the funds appropriated for
            the fiscal year for programs authorized under titles
            II, III, VI, and VII to carry out this subsection. The
            [Commissioner] both such Directors and the Director
            shall use the reserved funds to carry out one or more
            of the activities described in paragraph (2) through a
            grant, contract, or cooperative agreement.
              (2) Activities.--The activities carried out by the
            [Commissioner] both such Directors and the Director
            shall include one or more of the following:
                      (A) * * *

               *       *       *       *       *       *       *

              (4) Report.--In each fiscal year, the [Commissioner]
            both such Directors and the Director shall prepare and
            submit to Congress a report that describes the
            activities funded under this subsection for the
            preceding fiscal year.
      (c) Demonstration.--In awarding grants, or entering into
    contracts or cooperative agreements under titles I, II, III,
    VI, and VII, and section 509, the [Commissioner] both such
    Directors and the Director, in appropriate cases, shall require
    applicants to demonstrate how the applicants will address, in
    whole or in part, the needs of individuals with disabilities
    from minority backgrounds.

                  TITLE I--VOCATIONAL REHABILITATION SERVICES

                           PART A--GENERAL PROVISIONS

    SEC. 100. DECLARATION OF POLICY; AUTHORIZATION OF APPROPRIATIONS.

      (a) * * *
      (b) Authorization of Appropriations.--
              (1) In general.--For the purpose of making grants to
            States under part B to assist States in meeting the
            costs of vocational rehabilitation services provided in
            accordance with State plans under section 101, there
            are authorized to be appropriated such sums as may be
            necessary for [fiscal years 1999 through 2003] fiscal
            years 2004 through 2009, except that the amount to be
            appropriated for a fiscal year shall not be less than
            the amount of the appropriation under this paragraph
            for the immediately preceding fiscal year, increased by
            the percentage change in the Consumer Price Index
            determined under subsection (c) for the immediately
            preceding fiscal year.

               *       *       *       *       *       *       *

      (d) Extension.--
              (1) In general.--
                      (A) * * *
                      (B) Calculation.--The amount authorized to be
                    appropriated for the additional fiscal year
                    described in subparagraph (A) shall be an
                    amount equal to the amount appropriated for
                    such program for fiscal year [2003] 2009,
                    increased by the percentage change in the
                    Consumer Price Index determined under
                    subsection (c) for the immediately preceding
                    fiscal year, if the percentage change indicates
                    an increase.
              (2) Construction.--
                      (A) * * *
                      (B) Acts or determinations of commissioner.--
                    In any case where the [Commissioner] Director
                    is required under an applicable statute to
                    carry out certain acts or make certain
                    determinations which are necessary for the
                    continuation of the program authorized by this
                    title, if such acts or determinations are
                    required during the terminal year of such
                    program, such acts and determinations shall be
                    required during any fiscal year in which the
                    extension described in that part of paragraph
                    (1) that follows clause (ii) of paragraph
                    (1)(A) is in effect.

    SEC. 101. STATE PLANS.

      (a) Plan Requirements.--
              (1) In general.--
                      (A) Submission.--To be eligible to
                    participate in programs under this title, a
                    State shall submit to the [Commissioner]
                    Director a State plan for vocational
                    rehabilitation services that meets the
                    requirements of this section, on the same date
                    that the State submits a State plan under
                    section 112 of the Workforce Investment Act of
                    1998.
                      (B) Nonduplication.--The State shall not be
                    required to submit, in the State plan for
                    vocational rehabilitation services, policies,
                    procedures, or descriptions required under this
                    title that have been previously submitted to
                    the [Commissioner] Director and that
                    demonstrate that such State meets the
                    requirements of this title, including any
                    policies, procedures, or descriptions submitted
                    under this title as in effect on the day before
                    the effective date of the Rehabilitation Act
                    Amendments of 1998.
                      (C) Duration.--The State plan shall remain in
                    effect subject to the submission of such
                    modifications as the State determines to be
                    necessary or as the [Commissioner] Director may
                    require based on a change in State policy, a
                    change in Federal law (including regulations),
                    an interpretation of this Act by a Federal
                    court or the highest court of the State, or a
                    finding by the [Commissioner] Director of State
                    noncompliance with the requirements of this
                    Act, until the State submits and receives
                    approval of a new State plan.
              (2) Designated state agency; designated state unit.--
                      (A) Designated state agency.--The State plan
                    shall designate a State agency as the sole
                    State agency to administer the plan, or to
                    supervise the administration of the plan by a
                    local agency, except that--
                              (i) * * *
                              (ii) the [Commissioner] Director, on
                            the request of a State, may authorize
                            the designated State agency to share
                            funding and administrative
                            responsibility with another agency of
                            the State or with a local agency in
                            order to permit the agencies to carry
                            out a joint program to provide services
                            to individuals with disabilities, and
                            may waive compliance, with respect to
                            vocational rehabilitation services
                            furnished under the joint program, with
                            the requirement of paragraph (4) that
                            the plan be in effect in all political
                            subdivisions of the State; and

               *       *       *       *       *       *       *

              (4) Statewideness.--The State plan shall provide that
            the plan shall be in effect in all political
            subdivisions of the State, except that--
                      (A) in the case of any activity that, in the
                    judgment of the [Commissioner] Director, is
                    likely to assist in promoting the vocational
                    rehabilitation of substantially larger numbers
                    of individuals with disabilities or groups of
                    individuals with disabilities, the
                    [Commissioner] Director may waive compliance
                    with the requirement that the plan be in effect
                    in all political subdivisions of the State to
                    the extent and for such period as may be
                    provided in accordance with regulations
                    prescribed by the [Commissioner] Director, but
                    only if the non-Federal share of the cost of
                    the vocational rehabilitation services involved
                    is met from funds made available by a local
                    agency (including funds contributed to such
                    agency by a private agency, organization, or
                    individual); and
                      (B) in a case in which earmarked funds are
                    used toward the non-Federal share and such
                    funds are earmarked for particular geographic
                    areas within the State, the earmarked funds may
                    be used in such areas if the State notifies the
                    [Commissioner] Director that the State cannot
                    provide the full non-Federal share without such
                    funds.

               *       *       *       *       *       *       *

              (6) Methods for administration.--
                      (A) In general.--The State plan shall provide
                    for such methods of administration as are found
                    by the [Commissioner] Director to be necessary
                    for the proper and efficient administration of
                    the plan.

               *       *       *       *       *       *       *

              (10) Reporting requirements.--
                      (A) In general.--The State plan shall include
                    an assurance that the designated State agency
                    will submit reports in the form and level of
                    detail and at the time required by the
                    [Commissioner] Director regarding applicants
                    for, and eligible individuals receiving,
                    services under this title.
                      (B) Annual reporting.--In specifying the
                    information to be submitted in the reports, the
                    [Commissioner] Director shall require annual
                    reporting on the eligible individuals receiving
                    the services, on those specific data elements
                    described in section 136(d)(2) of the Workforce
                    Investment Act of 1998 that are determined by
                    the Secretary to be relevant in assessing the
                    performance of designated State units in
                    carrying out the vocational rehabilitation
                    program established under this title.
                      (C) Additional data.--In specifying the
                    information required to be submitted in the
                    reports, the [Commissioner] Director shall
                    require additional data with regard to
                    applicants and eligible individuals related
                    to--
                              (i) * * *

               *       *       *       *       *       *       *

                              (iii) of those applicants and
                            eligible recipients who are individuals
                            with significant disabilities--
                                      (I) * * *

               *       *       *       *       *       *       *

                                      (II) the number who ended
                                    their participation in the
                                    program and who were employed 6
                                    months and 12 months after
                                    securing or regaining
                                    employment, or, in the case of
                                    individuals whose employment
                                    outcome was to retain or
                                    advance in employment, who were
                                    employed 6 months and 12 months
                                    after achieving their
                                    employment outcome, including--
                                              (aa) the number who
                                            earned the minimum wage
                                            rate specified in
                                            section 6(a)(1) of the
                                            Fair Labor Standards
                                            Act of 1938 (29 U.S.C.
                                            206(a)(1)) or another
                                            wage level set by the
                                            [Commissioner]
                                            Director, during such
                                            employment; and

               *       *       *       *       *       *       *

                      (D) Costs and results.--The [Commissioner]
                    Director shall also require that the designated
                    State agency include in the reports information
                    on--
                              (i) * * *

               *       *       *       *       *       *       *

                      (E) Additional information.--The
                    [Commissioner] Director shall require that each
                    designated State unit include in the reports
                    additional information related to the
                    applicants and eligible individuals, obtained
                    either through a complete count or sampling,
                    including--
                              (i) * * *

               *       *       *       *       *       *       *

              (11) Cooperation, collaboration, and coordination.--
                      (A) * * *

               *       *       *       *       *       *       *

                      (D) Coordination with education officials.--
                    The State plan shall contain plans, policies,
                    and procedures for coordination between the
                    designated State agency and education officials
                    responsible for the public education of
                    students with disabilities, that are designed
                    to facilitate the transition of the students
                    with disabilities from the receipt of
                    educational services in school to the receipt
                    of vocational rehabilitation services under
                    this title, including information on a formal
                    interagency agreement with the State
                    educational agency that, at a minimum, provides
                    for--
                              (i) consultation and technical
                            assistance to assist educational
                            agencies in planning for the transition
                            of students with disabilities from
                            school to post-school activities,
                            including vocational rehabilitation
                            services, which may be provided using
                            alternative means of meeting
                            participation (such as video
                            conferences and conference calls);

               *       *       *       *       *       *       *

              (15) Annual state goals and reports of progress.--
                      (A) Assessments and estimates.--The State
                    plan shall--
                              (i) * * *
                              (ii) include an assessment of the
                            transition services provided under this
                            Act, and coordinated with transition
                            services under the Individuals with
                            Disabilities Education Act, as to those
                            services meeting the needs of
                            individuals with disabilities.
                              [(ii)] (iii) include an assessment of
                            the need to establish, develop, or
                            improve community rehabilitation
                            programs within the State; and
                              [(iii)] (iv) provide that the State
                            shall submit to the [Commissioner]
                            Director a report containing
                            information regarding updates to the
                            assessments, for any year in which the
                            State updates the assessments.
                      (B) Annual estimates.--The State plan shall
                    include, and shall provide that the State shall
                    annually submit a report to the [Commissioner]
                    Director that includes, State estimates of--
                              (i) * * *

               *       *       *       *       *       *       *

                      (C) Goals and priorities.--
                              (i) In general.--The State plan shall
                            identify the goals and priorities of
                            the State in carrying out the program.
                            The goals and priorities shall be
                            jointly developed, agreed to, and
                            reviewed annually by the designated
                            State unit and the State Rehabilitation
                            Council, if the State has such a
                            Council. Any revisions to the goals and
                            priorities shall be jointly agreed to
                            by the designated State unit and the
                            State Rehabilitation Council, if the
                            State has such a Council. The State
                            plan shall provide that the State shall
                            submit to the [Commissioner] Director a
                            report containing information regarding
                            revisions in the goals and priorities,
                            for any year in which the State revises
                            the goals and priorities.

               *       *       *       *       *       *       *

                      (D) Strategies.--The State plan shall contain
                    a description of the strategies the State will
                    use to address the needs identified in the
                    assessment conducted under subparagraph (A) and
                    achieve the goals and priorities identified in
                    subparagraph (C), including--
                              [(i) the methods to be used to expand
                            and improve services to individuals
                            with disabilities, including how a
                            broad range of assistive technology
                            services and assistive technology
                            devices will be provided to such
                            individuals at each stage of the
                            rehabilitation process and how such
                            services and devices will be provided
                            to such individuals on a statewide
                            basis;]
                              (i) the methods to be used to expand
                            and improve the services to individuals
                            with disabilities including--
                                      (I) how a broad range of
                                    assistive technology services
                                    and assistive technology
                                    devices will be provided to
                                    such individuals at each stage
                                    of the rehabilitative process
                                    and how such services and
                                    devices will be provided to
                                    such individuals on a statewide
                                    basis; and
                                      (II) how transition services
                                    will be better coordinated with
                                    those services under the
                                    Individuals with Disabilities
                                    Education Act in order to
                                    improve transition services for
                                    individuals with disabilities
                                    served under this Act;

               *       *       *       *       *       *       *

                      (E) Evaluation and reports of progress.--The
                    State plan shall--
                              (i) include the results of an
                            evaluation of the effectiveness of the
                            vocational rehabilitation program, and
                            a joint report by the designated State
                            unit and the State Rehabilitation
                            Council, if the State has such a
                            Council, to the [Commissioner] Director
                            on the progress made in improving the
                            effectiveness from the previous year,
                            which evaluation and report shall
                            include--
                                      (I) * * *

               *       *       *       *       *       *       *

                              (ii) provide that the designated
                            State unit and the State Rehabilitation
                            Council, if the State has such a
                            Council, shall jointly submit to the
                            [Commissioner] Director an annual
                            report that contains the information
                            described in clause (i).

               *       *       *       *       *       *       *

              (17) Use of funds for construction of facilities.--
            The State plan shall provide that if, under special
            circumstances, the State plan includes provisions for
            the construction of facilities for community
            rehabilitation programs--
                      (A) * * *

               *       *       *       *       *       *       *

                      (C) there shall be compliance with
                    regulations the [Commissioner] Director shall
                    prescribe designed to assure that no State will
                    reduce its efforts in providing other
                    vocational rehabilitation services (other than
                    for the establishment of facilities for
                    community rehabilitation programs) because the
                    plan includes such provisions for construction.
              (18) Innovation and expansion activities.--The State
            plan shall--
                      (A) * * *

               *       *       *       *       *       *       *

                      (C) provide that the State shall submit to
                    the [Commissioner] Director an annual report
                    containing a description of how the reserved
                    funds were utilized during the preceding year.

               *       *       *       *       *       *       *

              (23) Annual updates.--The plan shall include an
            assurance that the State will submit to the
            [Commissioner] Director reports containing annual
            updates of the information required under paragraph (7)
            (relating to a comprehensive system of personnel
            development) and any other updates of the information
            required under this section that are requested by the
            [Commissioner] Director, and annual reports as provided
            in paragraphs (15) (relating to assessments, estimates,
            goals and priorities, and reports of progress) and (18)
            (relating to innovation and expansion), at such time
            and in such manner as the Secretary may determine to be
            appropriate.
      (b) Approval; Disapproval of the State Plan.--
              (1) Approval.--The [Commissioner] Director shall
            approve any plan that the [Commissioner] Director finds
            fulfills the conditions specified in this section, and
            shall disapprove any plan that does not fulfill such
            conditions.
              (2) Disapproval.--Prior to disapproval of the State
            plan, the [Commissioner] Director shall notify the
            State of the intention to disapprove the plan and shall
            afford the State reasonable notice and opportunity for
            a hearing.

    SEC. 102. ELIGIBILITY AND INDIVIDUALIZED PLAN FOR EMPLOYMENT.

      (a) * * *

               *       *       *       *       *       *       *

      (c) Procedures.--
              (1) * * *

               *       *       *       *       *       *       *

              (8) Information collection and report.--
                      (A) In general.--The Director of the
                    designated State unit shall collect information
                    described in subparagraph (B) and prepare and
                    submit to the [Commissioner] Director a report
                    containing such information. The [Commissioner]
                    Director shall prepare a summary of the
                    information furnished under this paragraph and
                    include the summary in the annual report
                    submitted under section 13. The [Commissioner]
                    Director shall also collect copies of the final
                    decisions of impartial hearing officers
                    conducting hearings under this subsection and
                    State officials conducting reviews under this
                    subsection.

               *       *       *       *       *       *       *

                      (C) Confidentiality.--The confidentiality of
                    records of applicants and eligible individuals
                    maintained by the designated State unit shall
                    not preclude the access of the [Commissioner]
                    Director to those records for the purposes
                    described in subparagraph (A).

               *       *       *       *       *       *       *

    SEC. 104. NON-FEDERAL SHARE FOR ESTABLISHMENT OF PROGRAM OR
                        CONSTRUCTION.

      For the purpose of determining the amount of payments to
    States for carrying out part B (or to an Indian tribe under
    part C), the non-Federal share, subject to such limitations and
    conditions as may be prescribed in regulations by the
    [Commissioner] Director, shall include contributions of funds
    made by any private agency, organization, or individual to a
    State or local agency to assist in meeting the costs of
    establishment of a community rehabilitation program or
    construction, under special circumstances, of a facility for
    such a program, which would be regarded as State or local funds
    except for the condition, imposed by the contributor, limiting
    use of such funds to establishment of such a program or
    construction of such a facility.

    SEC. 105. STATE REHABILITATION COUNCIL.

      (a) * * *

               *       *       *       *       *       *       *

      (c) Functions of Council.--The Council shall, after
    consulting with the State workforce investment board--
              (1) * * *
              (2) in partnership with the designated State unit--
                      (A) * * *
                      (B) evaluate the effectiveness of the
                    vocational rehabilitation program and submit
                    reports of progress to the [Commissioner]
                    Director in accordance with section
                    101(a)(15)(E);

               *       *       *       *       *       *       *

              (5) prepare and submit an annual report to the
            Governor and the [Commissioner] Director on the status
            of vocational rehabilitation programs operated within
            the State, and make the report available to the public;

               *       *       *       *       *       *       *

    SEC. 106. EVALUATION STANDARDS AND PERFORMANCE INDICATORS.

      (a) Establishment.--
              (1) In general.--
                      (A) Establishment of standards and
                    indicators.--The [Commissioner] Director shall,
                    not later than July 1, 1999, establish and
                    publish evaluation standards and performance
                    indicators for the vocational rehabilitation
                    program carried out under this title.
                      (B) Review and revision.--Effective July 1,
                    1999, the [Commissioner] Director shall review
                    and, if necessary, revise the evaluation
                    standards and performance indicators every 3
                    years. Any revisions of the standards and
                    indicators shall be developed with input from
                    State vocational rehabilitation agencies,
                    related professional and consumer
                    organizations, recipients of vocational
                    rehabilitation services, and other interested
                    parties. Any revisions of the standards and
                    indicators shall be subject to the publication,
                    review, and comment provisions of paragraph
                    (3).

               *       *       *       *       *       *       *

              (3) Comment.--The standards and indicators shall be
            developed with input from State vocational
            rehabilitation agencies, related professional and
            consumer organizations, recipients of vocational
            rehabilitation services, and other interested parties.
            The [Commissioner] Director shall publish in the
            Federal Register a notice of intent to regulate
            regarding the development of proposed standards and
            indicators. Proposed standards and indicators shall be
            published in the Federal Register for review and
            comment. Final standards and indicators shall be
            published in the Federal Register.
      (b) Compliance.--
              (1) State reports.--In accordance with regulations
            established by the Secretary, each State shall report
            to the [Commissioner] Director after the end of each
            fiscal year the extent to which the State is in
            compliance with the standards and indicators.
              (2) Program improvement.--
                      (A) Plan.--If the [Commissioner] Director
                    determines that the performance of any State is
                    below established standards, the [Commissioner]
                    Director shall provide technical assistance to
                    the State, and the State and the [Commissioner]
                    Director shall jointly develop a program
                    improvement plan outlining the specific actions
                    to be taken by the State to improve program
                    performance.
                      (B) Review.--The [Commissioner] Director
                    shall--
                              (i) * * *

               *       *       *       *       *       *       *

      (c) Withholding.--If the [Commissioner] Director determines
    that a State whose performance falls below the established
    standards has failed to enter into a program improvement plan,
    or is not complying substantially with the terms and conditions
    of such a program improvement plan, the [Commissioner] Director
    shall, consistent with subsections (c) and (d) of section 107,
    reduce or make no further payments to the State under this
    program, until the State has entered into an approved program
    improvement plan, or satisfies the [Commissioner] Director that
    the State is complying substantially with the terms and
    conditions of such a program improvement plan, as appropriate.
      (d) Report to Congress.--Beginning in fiscal year 1999, the
    [Commissioner] Director shall include in each annual report to
    the Congress under section 13 an analysis of program
    performance, including relative State performance, based on the
    standards and indicators.

    SEC. 107. MONITORING AND REVIEW.

      (a) In General.--
              (1) Duties.--In carrying out the duties of the
            [Commissioner] Director under this title, the
            [Commissioner] Director shall--
                      (A) * * *

               *       *       *       *       *       *       *

              (2) Procedures for reviews.--In conducting reviews
            under this section the [Commissioner] Director shall
            consider, at a minimum--
                      (A) * * *

               *       *       *       *       *       *       *

              (3) Procedures for monitoring.--In conducting
            monitoring under this section the [Commissioner]
            Director shall conduct--
                      (A) * * *

               *       *       *       *       *       *       *

              (4) Areas of inquiry.--In conducting the review and
            monitoring, the [Commissioner] Director shall examine--
                      (A) * * *

               *       *       *       *       *       *       *

                      (D) such other areas of inquiry as the
                    [Commissioner] Director may consider
                    appropriate.
              (5) Reports.--If the [Commissioner] Director issues a
            report detailing the findings of an annual review or
            onsite monitoring conducted under this section, the
            report shall be made available to the State
            Rehabilitation Council, if the State has such a
            Council, for use in the development and modification of
            the State plan described in section 101.
      (b) Technical Assistance.--The [Commissioner] Director
    shall--
              (1) * * *
              (2) provide technical assistance and establish a
            corrective action plan for a program under this title
            if the [Commissioner] Director finds that the program
            fails to comply substantially with the provisions of
            the State plan, or with evaluation standards or
            performance indicators established under section 106,
            in order to ensure that such failure is corrected as
            soon as practicable.
      (c) Failure To Comply With Plan.--
              (1) Withholding payments.--Whenever the
            [Commissioner] Director, after providing reasonable
            notice and an opportunity for a hearing to the State
            agency administering or supervising the administration
            of the State plan approved under section 101, finds
            that--
                      (A) * * *

               *       *       *       *       *       *       *

            the [Commissioner] Director shall notify such State
            agency that no further payments will be made to the
            State under this title (or, in the discretion of the
            [Commissioner] Director, that such further payments
            will be reduced, in accordance with regulations the
            [Commissioner] Director shall prescribe, or that
            further payments will not be made to the State only for
            the projects under the parts of the State plan affected
            by such failure), until the [Commissioner] Director is
            satisfied there is no longer any such failure.
              (2) Period.--Until the [Commissioner] Director is so
            satisfied, the [Commissioner] Director shall make no
            further payments to such State under this title (or
            shall reduce payments or limit payments to projects
            under those parts of the State plan in which there is
            no such failure).
              (3) Disbursal of withheld funds.--The [Commissioner]
            Director may, in accordance with regulations the
            Secretary shall prescribe, disburse any funds withheld
            from a State under paragraph (1) to any public or
            nonprofit private organization or agency within such
            State or to any political subdivision of such State
            submitting a plan meeting the requirements of section
            101(a). The [Commissioner] Director may not make any
            payment under this paragraph unless the entity to which
            such payment is made has provided assurances to the
            [Commissioner] Director that such entity will
            contribute, for purposes of carrying out such plan, the
            same amount as the State would have been obligated to
            contribute if the State received such payment.
      (d) Review.--
              (1) Petition.--Any State that is dissatisfied with a
            final determination of the [Commissioner] Director
            under section 101(b) or subsection (c) may file a
            petition for judicial review of such determination in
            the United States Court of Appeals for the circuit in
            which the State is located. Such a petition may be
            filed only within the 30-day period beginning on the
            date that notice of such final determination was
            received by the State. The clerk of the court shall
            transmit a copy of the petition to the [Commissioner]
            Director or to any officer designated by the
            [Commissioner] Director for that purpose. In accordance
            with section 2112 of title 28, United States Code, the
            [Commissioner] Director shall file with the court a
            record of the proceeding on which the [Commissioner]
            Director based the determination being appealed by the
            State. Until a record is so filed, the [Commissioner]
            Director may modify or set aside any determination made
            under such proceedings.
              (2) Submissions and determinations.--If, in an action
            under this subsection to review a final determination
            of the [Commissioner] Director under section 101(b) or
            subsection (c), the petitioner or the [Commissioner]
            Director applies to the court for leave to have
            additional oral submissions or written presentations
            made respecting such determination, the court may, for
            good cause shown, order the [Commissioner] Director to
            provide within 30 days an additional opportunity to
            make such submissions and presentations. Within such
            period, the [Commissioner] Director may revise any
            findings of fact, modify or set aside the determination
            being reviewed, or make a new determination by reason
            of the additional submissions and presentations, and
            shall file such modified or new determination, and any
            revised findings of fact, with the return of such
            submissions and presentations. The court shall
            thereafter review such new or modified determination.

               *       *       *       *       *       *       *

                Part B--Basic Vocational Rehabilitation Services

                                STATE ALLOTMENTS

      Sec. 110. (a) * * *
      (b)(1) Not later than 45 days prior to the end of the fiscal
    year, the [Commissioner] Director shall determine, after
    reasonable opportunity for the submission to the [Commissioner]
    Director of comments by the State agency administering or
    supervising the program established under this title, that any
    payment of an allotment to a State under section 111(a) for any
    fiscal year will not be utilized by such State in carrying out
    the purposes of this title.
      (2) As soon as practicable but not later than the end of the
    fiscal year, the [Commissioner] Director shall make such amount
    available for carrying out the purposes of this title to one or
    more other States to the extent the [Commissioner] Director
    determines such other State will be able to use such additional
    amount during that fiscal year or the subsequent fiscal year
    for carrying out such purposes. The [Commissioner] Director
    shall make such amount available only if such other State will
    be able to make sufficient payments from non-Federal sources to
    pay for the non-Federal share of the cost of vocational
    rehabilitation services under the State plan for the fiscal
    year for which the amount was appropriated.
      (c)(1) For fiscal year 1987 and for each subsequent fiscal
    year, the [Commissioner] Director shall reserve from the amount
    appropriated under section 100(b)(1) for allotment under this
    section a sum, determined under paragraph (2), to carry out the
    purposes of part C.
      [(2) The sum referred to in paragraph (1) shall be, as
    determined by the Secretary--
              [(A) not less than three-quarters of 1 percent and
            not more than 1.5 percent of the amount referred to in
            paragraph (1), for fiscal year 1999; and
              [(B) not less than 1 percent and not more than 1.5
            percent of the amount referred to in paragraph (1), for
            each of fiscal years 2000 through 2003.]
              (2) The sum referred to in paragraph (1) shall be, as
            determined by the Secretary, not less than 1 percent
            and not more than 1.5 percent of the amount referred to
            in paragraph (1) for each of fiscal years 2003 through
            2009.

                               PAYMENTS TO STATES

      Sec. 111. (a)(1) Except as provided in paragraph (2), from
    each State's allotment under this part for any fiscal year, the
    [Commissioner] Director shall pay to a State an amount equal to
    the Federal share of the cost of vocational rehabilitation
    services under the plan for that State approved under section
    101, including expenditures for the administration of the State
    plan.
      (2)(A) * * *

               *       *       *       *       *       *       *

      (C) The [Commissioner] Director may waive or modify any
    requirement or limitation under subparagraph (B) or section
    101(a)(17) if the [Commissioner] Director determines that a
    waiver or modification is an equitable response to exceptional
    or uncontrollable circumstances affecting the State.
      (3)(A) * * *
      (B) If the Federal share with respect to rehabilitation
    facilities in such State is determined pursuant to section
    645(b)(2) of such Act (42 U.S.C. 291o(b)(2)), the percentage of
    the cost for purposes of this section shall be determined in
    accordance with regulations prescribed by the [Commissioner]
    Director designed to achieve as nearly as practicable results
    comparable to the results obtained under such section.
      (b) The method of computing and paying amounts pursuant to
    subsection (a) shall be as follows:
              (1) The [Commissioner] Director shall, prior to the
            beginning of each calendar quarter or other period
            prescribed by the [Commissioner] Director, estimate the
            amount to be paid to each State under the provisions of
            such subsection for such period, such estimate to be
            based on such records of the State and information
            furnished by it, and such other investigation as the
            [Commissioner] Director may find necessary.
              (2) The [Commissioner] Director shall pay, from the
            allotment available therefor, the amount so estimated
            by the [Commissioner] Director for such period, reduced
            or increased, as the case may be, by any sum (not
            previously adjusted under this paragraph) by which the
            [Commissioner] Director finds that the estimate of the
            amount to be paid the State for any prior period under
            such subsection was greater or less than the amount
            which should have been paid to the State for such prior
            period under such subsection. Such payment shall be
            made prior to audit or settlement by the General
            Accounting Office, shall be made through the disbursing
            facilities of the Treasury Department, and shall be
            made in such installments as the [Commissioner]
            Director may determine.

                           CLIENT ASSISTANCE PROGRAM

      Sec. 112. (a) * * *

               *       *       *       *       *       *       *

      (c)(1)(A) * * *
      (B)(i) The Governor may not redesignate the agency designated
    under subparagraph (A) without good cause and unless--
              (I) * * *

               *       *       *       *       *       *       *

              (III) the agency has the opportunity to appeal to the
            [Commissioner] Director on the basis that the
            redesignation was not for good cause.

               *       *       *       *       *       *       *

      (h) There are authorized to be appropriated such sums as may
    be necessary for [fiscal years 1999 through 2003] fiscal years
    2004 through 2009 to carry out the provisions of this section.

               *       *       *       *       *       *       *

           Part C--American Indian Vocational Rehabilitation Services

                   VOCATIONAL REHABILITATION SERVICES GRANTS

      Sec. 121. (a) The [Commissioner] Director, in accordance with
    the provisions of this part, may make grants to the governing
    bodies of Indian tribes located on Federal and State
    reservations (and consortia of such governing bodies) to pay 90
    percent of the costs of vocational rehabilitation services for
    American Indians who are individuals with disabilities residing
    on or near such reservations. The non-Federal share of such
    costs may be in cash or in kind, fairly valued, and the
    [Commissioner] Director may waive such non-Federal share
    requirement in order to carry out the purposes of this Act.
      (b)(1) No grant may be made under this part for any fiscal
    year unless an application therefor has been submitted to and
    approved by the [Commissioner] Director. The [Commissioner]
    Director may not approve an application unless the
    application--
              (A) is made at such time, in such manner, and
            contains such information as the [Commissioner]
            Director may require;
      (2) The provisions of sections 5, 6, 7, and 102(a) of the
    Indian Self-Determination and Education Assistance Act shall be
    applicable to any application submitted under this part. For
    purposes of this paragraph, any reference in any such provision
    to the Secretary of Education or to the Secretary of the
    Interior shall be considered to be a reference to the
    [Commissioner] Director.
      (3) Any application approved under this part shall be
    effective for not more than 60 months, except as determined
    otherwise by the [Commissioner] Director pursuant to prescribed
    regulations. The State shall continue to provide vocational
    rehabilitation services under its State plan to American
    Indians residing on or near a reservation whenever such State
    includes any such American Indians in its State population
    under section 110(a)(1).

               *       *       *       *       *       *       *

         Part D--Vocational Rehabilitation Services Client Information

    SEC. 131. DATA SHARING.

      (a) In General.--
              (1) * * *
              (2) Employment statistics.--The Secretary of Labor
            shall provide the [Commissioner] Director with
            employment statistics specified in section 15 of the
            Wagner-Peyser Act, that facilitate evaluation by the
            [Commissioner] Director of the program carried out
            under part B, and allow the [Commissioner] Director to
            compare the progress of individuals with disabilities
            who are assisted under the program in securing,
            retaining, regaining, and advancing in employment with
            the progress made by individuals who are assisted under
            title I of the Workforce Investment Act of 1998.

               *       *       *       *       *       *       *

    TITLE II--RESEARCH AND TRAINING

               *       *       *       *       *       *       *

                        AUTHORIZATION OF APPROPRIATIONS

      Sec. 201. (a) There are authorized to be appropriated--
              (1) for the purpose of providing for the expenses of
            the National Institute on Disability and Rehabilitation
            Research under section 202, which shall include the
            expenses of the Rehabilitation Research Advisory
            Council under section 205, and shall not include the
            expenses of such Institute to carry out section 204,
            such sums as may be necessary for each of [fiscal years
            1999 through 2003] fiscal years 2004 through 2009; and
              (2) to carry out section 204, such sums as may be
            necessary for each of [fiscal years 1999 through 2003]
            fiscal years 2004 through 2009.

               *       *       *       *       *       *       *

          NATIONAL INSTITUTE ON DISABILITY AND REHABILITATION RESEARCH

      Sec. 202. (a)(1) * * *
      (2) In the performance of the functions of the office, the
    Director shall be directly responsible to the Secretary or to
    the same Under Secretary or Assistant Secretary of the
    Department of Education to whom the [Commissioner] Director is
    responsible under section 3(a).

               *       *       *       *       *       *       *

      (h)(1) The Director shall--
              (A) * * *

               *       *       *       *       *       *       *

              (D) be developed by the Director--
                      (i) after consultation with the
                    Rehabilitation Research Advisory Council
                    established under section 205;
                      (ii) in coordination with the [Commissioner]
                    Director;

               *       *       *       *       *       *       *

                             INTERAGENCY COMMITTEE

      Sec. 203. (a)(1) In order to promote coordination and
    cooperation among Federal departments and agencies conducting
    rehabilitation research programs, including programs relating
    to assistive technology research and research that incorporates
    the principles of universal design, there is established within
    the Federal Government an Interagency Committee on Disability
    Research (hereinafter in this section referred to as the
    ``Committee''), chaired by the Director and comprised of such
    members as the President may designate, including the following
    (or their designees): the Director, the [Commissioner] Director
    of the Rehabilitation Services Administration, the Assistant
    Secretary for Special Education and Rehabilitative Services,
    the Secretary of Education, the Secretary of Veterans Affairs,
    the Director of the National Institutes of Health, the Director
    of the National Institute of Mental Health, the Administrator
    of the National Aeronautics and Space Administration, the
    Secretary of Transportation, the Assistant Secretary of the
    Interior for Indian Affairs, the Director of the Indian Health
    Service, and the Director of the National Science Foundation.

               *       *       *       *       *       *       *

         TITLE III--PROFESSIONAL DEVELOPMENT AND SPECIAL PROJECTS AND
                                 DEMONSTRATIONS

    SEC. 302. TRAINING.

      (a) Grants and Contracts for Personnel Training.--
              (1) Authority.--The [Commissioner] Director shall
            make grants to, and enter into contracts with, States
            and public or nonprofit agencies and organizations
            (including institutions of higher education) to pay
            part of the cost of projects to provide training,
            traineeships, and related activities, including the
            provision of technical assistance, that are designed to
            assist in increasing the numbers of, and upgrading the
            skills of, qualified personnel (especially
            rehabilitation counselors) who are trained in providing
            vocational, medical, social, and psychological
            rehabilitation services, who are trained to assist
            individuals with communication and related disorders,
            who are trained to provide other services provided
            under this Act, to individuals with disabilities, and
            who may include--
                      (A) * * *

               *       *       *       *       *       *       *

              (3) Related federal statutes.--In carrying out this
            subsection, the [Commissioner] Director may make grants
            to and enter into contracts with States and public or
            nonprofit agencies and organizations, including
            institutions of higher education, to furnish training
            regarding provisions of Federal statutes, including
            section 504, title I of the Americans with Disabilities
            Act of 1990 (42 U.S.C. 12111 et seq.), and the
            provisions of titles II and XVI of the Social Security
            Act (42 U.S.C. 401 et seq. and 1381 et seq.), that are
            related to work incentives for individuals with
            disabilities.
              (4) Training for statewide workforce systems
            personnel.--The [Commissioner] Director may make grants
            to and enter into contracts under this subsection with
            States and public or nonprofit agencies and
            organizations, including institutions of higher
            education, to furnish training to personnel providing
            services to individuals with disabilities under title I
            of the Workforce Investment Act of 1998. Under this
            paragraph, personnel may be trained--
                      (A) * * *

               *       *       *       *       *       *       *

      (b) Grants and Contracts for Academic Degrees and
    Academic Certificate Granting Training Projects.--
              (1) Authority.--
                      (A) In general.--The [Commissioner] Director
                    may make grants to, and enter into contracts
                    with, States and public or nonprofit agencies
                    and organizations (including institutions of
                    higher education) to pay part of the costs of
                    academic training projects to provide training
                    that leads to an academic degree or academic
                    certificate. In making such grants or entering
                    into such contracts, the [Commissioner]
                    Director shall target funds to areas determined
                    under subsection (e) to have shortages of
                    qualified personnel.
              (2) Application.--No grant shall be awarded or
            contract entered into under this subsection unless the
            applicant has submitted to the [Commissioner] Director
            an application at such time, in such form, in
            accordance with such procedures, and including such
            information as the Secretary may require, including--
                      (A) * * *

               *       *       *       *       *       *       *

              (5) Agreements.--
                      (A) Contents.--A recipient of a grant or
                    contract under this subsection shall provide
                    assurances to the [Commissioner] Director that
                    each individual who receives a scholarship, for
                    any academic year beginning after June 1, 1992,
                    utilizing funds provided under such grant or
                    contract shall enter into an agreement with the
                    recipient under which the individual shall--
                              (i) * * *

               *       *       *       *       *       *       *

                    except as the [Commissioner] Director by
                    regulation may provide for repayment exceptions
                    and deferrals.
                      (B) Enforcement.--The [Commissioner] Director
                    shall be responsible for the enforcement of
                    each agreement entered into under subparagraph
                    (A) upon completion of the training involved
                    under such subparagraph.
      (c) Grants to Historically Black Colleges and Universities.--
    The [Commissioner] Director, in carrying out this section,
    shall make grants to historically Black colleges and
    universities and other institutions of higher education whose
    minority student enrollment is at least 50 percent of the total
    enrollment of the institution.
      (d) Application.--A grant may not be awarded to a State or
    other organization under this section unless the State or
    organization has submitted an application to the [Commissioner]
    Director at such time, in such form, in accordance with such
    procedures, and containing such information as the
    [Commissioner] Director may require. Any such application shall
    include a detailed description of strategies that will be
    utilized to recruit and train individuals so as to reflect the
    diverse populations of the United States as part of the effort
    to increase the number of individuals with disabilities, and
    individuals who are from linguistically and culturally diverse
    backgrounds, who are available to provide rehabilitation
    services.
      (e) Evaluation and Collection of Data.--The [Commissioner]
    Director shall evaluate the impact of the training programs
    conducted under this section, and collect information on the
    training needs of, and data on shortages of qualified personnel
    necessary to provide services to individuals with disabilities.
    The [Commissioner] Director shall prepare and submit to
    Congress, by September 30 of each fiscal year, a report setting
    forth and justifying in detail how the funds made available for
    training under this section for the fiscal year prior to such
    submission are allocated by professional discipline and other
    program areas. The report shall also contain findings on such
    personnel shortages, how funds proposed for the succeeding
    fiscal year will be allocated under the President's budget
    proposal, and how the findings on personnel shortages justify
    the allocations.
      (f) Grants for the Training of Interpreters.--
              (1) Authority.--
                      (A) In general.--For the purpose of training
                    a sufficient number of qualified interpreters
                    to meet the communications needs of individuals
                    who are deaf or hard of hearing, and
                    individuals who are deaf-blind, the
                    [Commissioner] Director, acting through a
                    Federal office responsible for deafness and
                    communicative disorders, may award grants to
                    public or private nonprofit agencies or
                    organizations to pay part of the costs--
                              (i) * * *

               *       *       *       *       *       *       *

                      (B) Geographic areas.--The [Commissioner]
                    Director shall award grants under this
                    subsection for programs in geographic areas
                    throughout the United States that the
                    [Commissioner] Director considers appropriate
                    to best carry out the objectives of this
                    section.
                      (C) Priority.--In awarding grants under this
                    subsection, the [Commissioner] Director shall
                    give priority to public or private nonprofit
                    agencies or organizations with existing
                    programs that have a demonstrated capacity for
                    providing interpreter training services.
                      (D) Funding.--The [Commissioner] Director may
                    award grants under this subsection through the
                    use of--
                              (i) * * *

               *       *       *       *       *       *       *

              (2) Application.--A grant may not be awarded to an
            agency or organization under paragraph (1) unless the
            agency or organization has submitted an application to
            the [Commissioner] Director at such time, in such form,
            in accordance with such procedures, and containing such
            information as the [Commissioner] Director may require,
            including--
                      (A) * * *

               *       *       *       *       *       *       *

                      (C) assurances that any interpreter trained
                    or retrained under a program funded under the
                    grant will meet such minimum standards of
                    competency as the [Commissioner] Director may
                    establish for purposes of this subsection; and
                      (D) such other information as the
                    [Commissioner] Director may require.
      (g) Technical Assistance and In-Service Training.--
              (1) Technical assistance.--The [Commissioner]
            Director is authorized to provide technical assistance
            to State designated agencies and community
            rehabilitation programs, directly or through contracts
            with State designated agencies or nonprofit
            organizations.
              (2) Compensation.--An expert or consultant appointed
            or serving under contract pursuant to this section
            shall be compensated at a rate, subject to approval of
            the [Commissioner] Director, that shall not exceed the
            daily equivalent of the rate of pay for level 4 of the
            Senior Executive Service Schedule under section 5382 of
            title 5, United States Code. Such an expert or
            consultant may be allowed travel and transportation
            expenses in accordance with section 5703 of title 5,
            United States Code.
              (3) In-service training of rehabilitation
            personnel.--
                      (A) * * *
                      (B) Limitation.--If the allocation to
                    designated State agencies required by
                    subparagraph (A) would result in a lower level
                    of funding for projects being carried out on
                    the date of enactment of the Rehabilitation Act
                    Amendments of 1998 by other recipients of funds
                    under this section, the [Commissioner] Director
                    may allocate less than 15 percent of the sums
                    described in subparagraph (A) to designated
                    State agencies for such in-service training.
      (h) Provision of Information.--The [Commissioner] Director,
    subject to the provisions of section 306, may require that
    recipients of grants or contracts under this section provide
    information, including data, with regard to the impact of
    activities funded under this section.
      (i) Authorization of Appropriations.--There are authorized to
    be appropriated to carry out this section such sums as may be
    necessary for each of the [fiscal years 1999 through 2003]
    fiscal years 2004 through 2009.

    SEC. 303. DEMONSTRATION AND TRAINING PROGRAMS.

      (a) Demonstration Projects To Increase Client Choice.--
              (1) Grants.--The [Commissioner] Director may make
            grants to States and public or nonprofit agencies and
            organizations to pay all or part of the costs of
            projects to demonstrate ways to increase client choice
            in the rehabilitation process, including the selection
            of providers of vocational rehabilitation services.

               *       *       *       *       *       *       *

              (3) Application.--Any eligible entity that desires to
            receive a grant under this subsection shall submit an
            application at such time, in such manner, and
            containing such information and assurances as the
            [Commissioner] Director may require, including--
                      (A) * * *

               *       *       *       *       *       *       *

              (4) Award of grants.--In selecting entities to
            receive grants under paragraph (1), the [Commissioner]
            Director shall take into consideration--
                      (A) * * *

               *       *       *       *       *       *       *

              (5) Records.--Entities that receive grants under
            paragraph (1) shall maintain such records as the
            [Commissioner] Director may require and comply with any
            request from the [Commissioner] Director for such
            records.

               *       *       *       *       *       *       *

              (7) Evaluation.--The [Commissioner] Director may
            conduct an evaluation of the demonstration projects
            with respect to the services provided, clients served,
            client outcomes obtained, implementation issues
            addressed, the cost-effectiveness of the project, and
            the effects of increased choice on clients and service
            providers. The [Commissioner] Director may reserve
            funds for the evaluation for a fiscal year from the
            amounts appropriated to carry out projects under this
            section for the fiscal year.

               *       *       *       *       *       *       *

      (b) Special Demonstration Programs.--
              (1) Grants; contracts.--The [Commissioner] Director,
            subject to the provisions of section 306, may provide
            grants to, or enter into contracts with, eligible
            entities to pay all or part of the cost of programs
            that expand and improve the provision of rehabilitation
            and other services authorized under this Act or that
            further the purposes of the Act, including related
            research and evaluation activities.
              (2) Eligible entities; terms and conditions.--
                      (A) Eligible entities.--To be eligible to
                    receive a grant, or enter into a contract,
                    under paragraph (1), an entity shall be a State
                    vocational rehabilitation agency, community
                    rehabilitation program, Indian tribe or tribal
                    organization, or other public or nonprofit
                    agency or organization, or as the
                    [Commissioner] Director determines appropriate,
                    a for-profit organization. The [Commissioner]
                    Director may limit competitions to one or more
                    types of organizations described in this
                    subparagraph.
                      (B) Terms and conditions.--A grant or
                    contract under paragraph (1) shall contain such
                    terms and conditions as the [Commissioner]
                    Director may require.
              (3) Application.--An eligible entity that desires to
            receive a grant, or enter into a contract, under
            paragraph (1) shall submit an application to the
            Secretary at such time, in such form, and containing
            such information and assurances as the [Commissioner]
            Director may require, including, if the [Commissioner]
            Director determines appropriate, a description of how
            the proposed project or demonstration program--
                      (A) * * *

               *       *       *       *       *       *       *

              (5) Priority for competitions.--
                      (A) In general.--In announcing competitions
                    for grants and contracts under this subsection,
                    the [Commissioner] Director shall give priority
                    consideration to--
                              (i) * * *

               *       *       *       *       *       *       *

                      (B) Additional competitions.--In announcing
                    competitions for grants and contracts under
                    this subsection, the [Commissioner] Director
                    may require that applicants address one or more
                    of the following:
                              (i) * * *

               *       *       *       *       *       *       *

              (6) Use of funds for continuation awards.--The
            [Commissioner] Director may use funds made available to
            carry out this section for continuation awards for
            projects that were funded under sections 12 and 311 (as
            such sections were in effect on the day before the date
            of the enactment of the Rehabilitation Act Amendments
            of 1998).
      (c) Parent Information and Training Program.--
              (1) Grants.--The [Commissioner] Director is
            authorized to make grants to private nonprofit
            organizations for the purpose of establishing programs
            to provide training and information to enable
            individuals with disabilities, and the parents, family
            members, guardians, advocates, or other authorized
            representatives of the individuals to participate more
            effectively with professionals in meeting the
            vocational, independent living, and rehabilitation
            needs of individuals with disabilities. Such grants
            shall be designed to meet the unique training and
            information needs of the individuals described in the
            preceding sentence, who live in the area to be served,
            particularly those who are members of populations that
            have been unserved or underserved by programs under
            this Act.
              (3) Award of grants.--The [Commissioner] Director
            shall ensure that grants under this subsection--
                      (A) * * *

               *       *       *       *       *       *       *

              (4) Eligible organizations.--In order to receive a
            grant under this subsection, an organization--
                      (A) shall submit an application to the
                    [Commissioner] Director at such time, in such
                    manner, and containing such information as the
                    [Commissioner] Director may require, including
                    information demonstrating the capacity and
                    expertise of the organization--
                              (i) * * *

               *       *       *       *       *       *       *

              (6) Coordination.--The [Commissioner] Director shall
            provide coordination and technical assistance by grant
            or cooperative agreement for establishing, developing,
            and coordinating the training and information programs.
            To the extent practicable, such assistance shall be
            provided by the parent training and information centers
            established pursuant to section 682(a) of the
            Individuals with Disabilities Education Act (as added
            by section 101 of the Individuals with Disabilities
            Education Act Amendments of 1997; Public Law 105-17).
              (7) Review.--
                      (A) * * *
                      (B) Review for grant renewal.--If a nonprofit
                    private organization requests the renewal of a
                    grant under this subsection, the board of
                    directors or the special governing committee
                    shall prepare and submit to the [Commissioner]
                    Director a written review of the training and
                    information program conducted by the
                    organization during the preceding fiscal year.
      (d) Braille Training Programs.--
              (1) Establishment.--The [Commissioner] Director shall
            make grants to, and enter into contracts with, States
            and public or nonprofit agencies and organizations,
            including institutions of higher education, to pay all
            or part of the cost of training in the use of braille
            for personnel providing vocational rehabilitation
            services or educational services to youth and adults
            who are blind.

               *       *       *       *       *       *       *

              (3) Application.--To be eligible to receive a grant,
            or enter into a contract, under paragraph (1), an
            agency or organization shall submit an application to
            the [Commissioner] Director at such time, in such
            manner, and containing such information as the
            [Commissioner] Director may require.
      (e) Authorization of Appropriations.--There are authorized to
    be appropriated to carry out this section such sums as may be
    necessary for each of the [fiscal years 1999 through 2003]
    fiscal years 2004 through 2009.

    SEC. 304. MIGRANT AND SEASONAL FARMWORKERS.

      (a) Grants.--
              (1) Authority.--The [Commissioner] Director, subject
            to the provisions of section 306, may make grants to
            eligible entities to pay up to 90 percent of the cost
            of projects or demonstration programs for the provision
            of vocational rehabilitation services to individuals
            with disabilities who are migrant or seasonal
            farmworkers, as determined in accordance with rules
            prescribed by the Secretary of Labor, and to the family
            members who are residing with such individuals (whether
            or not such family members are individuals with
            disabilities).

               *       *       *       *       *       *       *

              (4) Assurance of cooperation.--To be eligible to
            receive a grant under this section an entity shall
            provide assurances (satisfactory to the [Commissioner]
            Director) that in the provision of services under the
            grant there will be appropriate cooperation between the
            grantee and other public or nonprofit agencies and
            organizations having special skills and experience in
            the provision of services to migrant or seasonal
            farmworkers or their families.
              (5) Coordination with other programs.--The
            [Commissioner] Director shall administer this section
            in coordination with other programs serving migrant and
            seasonal farmworkers, including programs under title I
            of the Elementary and Secondary Education Act of 1965
            (20 U.S.C. 6301 et seq.), section 330 of the Public
            Health Service Act (42 U.S.C. 254b), the Migrant and
            Seasonal Agricultural Worker Protection Act (29 U.S.C.
            1801 et seq.), and the Workforce Investment Act of
            1998.
      (b) Authorization of Appropriations.--There are authorized to
    be appropriated such sums as may be necessary to carry out this
    section, for each of the [fiscal years 1999 through 2003]
    fiscal years 2004 through 2009.

    SEC. 305. RECREATIONAL PROGRAMS.

      (a) Grants.--
              (1) Authority.--
                      (A) In general.--The [Commissioner] Director,
                    subject to the provisions of section 306, shall
                    make grants to States, public agencies, and
                    nonprofit private organizations to pay the
                    Federal share of the cost of the establishment
                    and operation of recreation programs to provide
                    individuals with disabilities with recreational
                    activities and related experiences to aid in
                    the employment, mobility, socialization,
                    independence, and community integration of such
                    individuals.
              (4) Application.--To be eligible to receive a grant
            under this section, a State, agency, or organization
            shall submit an application to the [Commissioner]
            Director at such time, in such manner, and containing
            such information as the [Commissioner] Director may
            require, including a description of--
                      (A) * * *

               *       *       *       *       *       *       *

              (6) Reports by grantees.--
                      (A) Requirement.--The [Commissioner] Director
                    shall require that each recipient of a grant
                    under this section annually prepare and submit
                    to the [Commissioner] Director a report
                    concerning the results of the activities funded
                    under the grant.
                      (B) Limitation.--The [Commissioner] Director
                    may not make financial assistance available to
                    a grant recipient for a subsequent year until
                    the [Commissioner] Director has received and
                    evaluated the annual report of the recipient
                    under subparagraph (A) for the current year.
      (b) Authorization of Appropriations.--There are authorized to
    be appropriated to carry out this section, such sums as may be
    necessary for each of the [fiscal years 1999 through 2003]
    fiscal years 2004 through 2009.

    SEC. 306. MEASURING OF PROJECT OUTCOMES AND PERFORMANCE.

      The [Commissioner] Director may require that recipients of
    grants under this title submit information, including data, as
    determined by the [Commissioner] Director to be necessary to
    measure project outcomes and performance, including any data
    needed to comply with the Government Performance and Results
    Act.

                    TITLE IV--NATIONAL COUNCIL ON DISABILITY

                           DUTIES OF NATIONAL COUNCIL

      Sec. 401. (a) The National Council shall--
              (1) * * *
              (2) provide advice to the [Commissioner] Director
            with respect to the policies of and conduct of the
            Rehabilitation Services Administration;
              (3) advise the President, the Congress, the
            [Commissioner] Director, the appropriate Assistant
            Secretary of the Department of Education, and the
            Director of the National Institute on Disability and
            Rehabilitation Research on the development of the
            programs to be carried out under this Act;

               *       *       *       *       *       *       *

                        AUTHORIZATION OF APPROPRIATIONS

      Sec. 405. There are authorized to be appropriated to carry
    out this title such sums as may be necessary for each of the
    [fiscal years 1999 through 2003] fiscal years 2004 through
    2009.

                          TITLE V--RIGHTS AND ADVOCACY

           ARCHITECTURAL AND TRANSPORTATION BARRIERS COMPLIANCE BOARD

      Sec. 502. (a) * * *

               *       *       *       *       *       *       *

      (j) There are authorized to be appropriated for the purpose
    of carrying out the duties and functions of the Access Board
    under this section such sums as may be necessary for each of
    the [fiscal years 1999 through 2003] fiscal years 2004 through
    2009.

               *       *       *       *       *       *       *

    SEC. 509. PROTECTION AND ADVOCACY OF INDIVIDUAL RIGHTS.

      (a) * * *
      (b) Appropriations Less Than $5,500,000.--For any fiscal year
    in which the amount appropriated to carry out this section is
    less than $5,500,000, the [Commissioner] Director may make
    grants from such amount to eligible systems within States to
    plan for, develop outreach strategies for, and carry out
    protection and advocacy programs authorized under this section
    for individuals with disabilities who meet the requirements of
    subparagraphs (A) and (B) of subsection (a)(1).
      (c) Appropriations of $5,500,000 or More.--
              (1) Reservations.--
                      (A) Technical assistance.--For any fiscal
                    year in which the amount appropriated to carry
                    out this section equals or exceeds $5,500,000,
                    the [Commissioner] Director shall set aside not
                    less than 1.8 percent and not more than 2.2
                    percent of the amount to provide training and
                    technical assistance to the systems established
                    under this section.
                      (B) Grant for the eligible system serving the
                    american indian consortium.--For any fiscal
                    year in which the amount appropriated to carry
                    out this section equals or exceeds $10,500,000,
                    the [Commissioner] Director shall reserve a
                    portion, and use the portion to make a grant
                    for the eligible system serving the American
                    Indian consortium. The Commission shall make
                    the grant in an amount of not less than $50,000
                    for the fiscal year.
              (2) Allotments.--For any such fiscal year, after the
            reservations required by paragraph (1) have been made,
            the [Commissioner] Director shall make allotments from
            the remainder of such amount in accordance with
            paragraph (3) to eligible systems within States to
            enable such systems to carry out protection and
            advocacy programs authorized under this section for
            individuals referred to in subsection (b).
              (3) Systems within states.--
                      (A) Population basis.--Except as provided in
                    subparagraph (B), from such remainder for each
                    such fiscal year, the [Commissioner] Director
                    shall make an allotment to the eligible system
                    within a State of an amount bearing the same
                    ratio to such remainder as the population of
                    the State bears to the population of all
                    States.

               *       *       *       *       *       *       *

              (5) Adjustment for inflation.--For any fiscal year,
            beginning in fiscal year 1999, in which the total
            amount appropriated to carry out this section exceeds
            the total amount appropriated to carry out this section
            for the preceding fiscal year, the [Commissioner]
            Director shall increase each of the minimum grants or
            allotments under paragraphs (1)(B), (3)(B), and (4)(B)
            by a percentage that shall not exceed the percentage
            increase in the total amount appropriated to carry out
            this section between the preceding fiscal year and the
            fiscal year involved.
      (d) Proportional Reduction.--To provide minimum allotments to
    systems within States (as increased under subsection (c)(5))
    under subsection (c)(3)(B), or to provide minimum allotments to
    systems within States (as increased under subsection (c)(5))
    under subsection (c)(4)(B), the [Commissioner] Director shall
    proportionately reduce the allotments of the remaining systems
    within States under subsection (c)(3), with such adjustments as
    may be necessary to prevent the allotment of any such remaining
    system within a State from being reduced to less than the
    minimum allotment for a system within a State (as increased
    under subsection (c)(5)) under subsection (c)(3)(B), or the
    minimum allotment for a State (as increased under subsection
    (c)(5)) under subsection (c)(4)(B), as appropriate.
      (e) Reallotment.--Whenever the [Commissioner] Director
    determines that any amount of an allotment to a system within a
    State for any fiscal year described in subsection (c)(1) will
    not be expended by such system in carrying out the provisions
    of this section, the [Commissioner] Director shall make such
    amount available for carrying out the provisions of this
    section to one or more of the systems that the [Commissioner]
    Director determines will be able to use additional amounts
    during such year for carrying out such provisions. Any amount
    made available to a system for any fiscal year pursuant to the
    preceding sentence shall, for the purposes of this section, be
    regarded as an increase in the allotment of the system (as
    determined under the preceding provisions of this section) for
    such year.
      (f) Application.--In order to receive assistance under this
    section, an eligible system shall submit an application to the
    [Commissioner] Director, at such time, in such form and manner,
    and containing such information and assurances as the
    [Commissioner] Director determines necessary to meet the
    requirements of this section, including assurances that the
    eligible system will--
              (1) * * *

               *       *       *       *       *       *       *

              (7) provide assurances to the [Commissioner] Director
            that funds made available under this section will be
            used to supplement and not supplant the non-Federal
            funds that would otherwise be made available for the
            purpose for which Federal funds are provided.
      (g) Carryover and Direct Payment.--
              (1) Direct payment.--Notwithstanding any other
            provision of law, the [Commissioner] Director shall pay
            directly to any system that complies with the
            provisions of this section, the amount of the allotment
            of the State or the grant for the eligible system that
            serves the American Indian consortium involved under
            this section, unless the State or American Indian
            consortium provides otherwise.

               *       *       *       *       *       *       *

      (h) Limitation on Disclosure Requirements.--For purposes of
    any audit, report, or evaluation of the performance of the
    program established under this section, the [Commissioner]
    Director shall not require such a program to disclose the
    identity of, or any other personally identifiable information
    related to, any individual requesting assistance under such
    program.

               *       *       *       *       *       *       *

      (j) Delegation.--The [Commissioner] Director may delegate the
    administration of this program to the [Commissioner] Director
    of the Administration on Developmental Disabilities within the
    Department of Health and Human Services.
      (k) Report.--The [Commissioner] Director shall annually
    prepare and submit to the Committee on Education and the
    Workforce of the House of Representatives and the Committee on
    Labor and Human Resources of the Senate a report describing the
    types of services and activities being undertaken by programs
    funded under this section, the total number of individuals
    served under this section, the types of disabilities
    represented by such individuals, and the types of issues being
    addressed on behalf of such individuals.
      (l) Authorization of Appropriations.--There are authorized to
    be appropriated to carry out this section such sums as may be
    necessary for each of the [fiscal years 1999 through 2003]
    fiscal years 2004 through 2009.

               *       *       *       *       *       *       *

    TITLE VI--EMPLOYMENT OPPORTUNITIES FOR INDIVIDUALS WITH DISABILITIES

               *       *       *       *       *       *       *

                             PROJECTS WITH INDUSTRY

      Sec. 611. (a)(1) * * *
      (2) The [Commissioner] Director, in consultation with the
    Secretary of Labor and with designated State units, may award
    grants to individual employers, community rehabilitation
    program providers, labor unions, trade associations, Indian
    tribes, tribal organizations, designated State units, and other
    entities to establish jointly financed Projects With Industry
    to create and expand job and career opportunities for
    individuals with disabilities, which projects shall--
              (A) * * *

               *       *       *       *       *       *       *

      (4) The [Commissioner] Director shall enter into an agreement
    with the grant recipient regarding the establishment of the
    project. Any agreement shall be jointly developed by the
    [Commissioner] Director, the grant recipient, and, to the
    extent practicable, the appropriate designated State unit and
    the individuals with disabilities (or the individuals'
    representatives) involved. Such agreements shall specify the
    terms of training and employment under the project, provide for
    the payment by the [Commissioner] Director of part of the costs
    of the project (in accordance with subsection (c)), and contain
    the items required under subsection (b) and such other
    provisions as the parties to the agreement consider to be
    appropriate.
      (5) Any agreement shall include a description of a plan to
    annually conduct a review and evaluation of the operation of
    the project in accordance with standards developed by the
    [Commissioner] Director under subsection (d), and, in
    conducting the review and evaluation, to collect data and
    information of the type described in subparagraphs (A) through
    (C) of section 101(a)(10), as determined to be appropriate by
    the [Commissioner] Director.
      (6) The [Commissioner] Director may include, as part of
    agreements with grant recipients, authority for such grant
    recipients to provide technical assistance to--
              (A) * * *

               *       *       *       *       *       *       *

      (b) No payment shall be made by the [Commissioner] Director
    under any agreement with a grant recipient entered into under
    subsection (a) unless such agreement--
              (1) * * *

               *       *       *       *       *       *       *

              (3) provides an assurance that an annual evaluation
            report containing information specified under
            subsection (a)(5) shall be submitted as determined to
            be appropriate by the [Commissioner] Director.
      (d)(1) The [Commissioner] Director shall develop standards
    for the evaluation described in subsection (a)(5) and shall
    review and revise the evaluation standards as necessary,
    subject to paragraph (2).
      (2) In revising the standards for evaluation to be used by
    the grant recipients, the [Commissioner] Director shall obtain
    and consider recommendations for such standards from State
    vocational rehabilitation agencies, current and former grant
    recipients, professional organizations representing business
    and industry, organizations representing individuals with
    disabilities, individuals served by grant recipients,
    organizations representing community rehabilitation program
    providers, and labor organizations.
      (e)(1)(A) A grant may be awarded under this section for a
    period of up to 5 years and such grant may be renewed.
      (B) Grants under this section shall be awarded on a
    competitive basis. To be eligible to receive such a grant, a
    prospective grant recipient shall submit an application to the
    [Commissioner] Director at such time, in such manner, and
    containing such information as the [Commissioner] Director may
    require.
      (2) The [Commissioner] Director shall, to the extent
    practicable, ensure an equitable distribution of payments made
    under this section among the States. To the extent funds are
    available, the [Commissioner] Director shall award grants under
    this section to new projects that will serve individuals with
    disabilities in States, portions of States, Indian tribes, or
    tribal organizations, that are currently unserved or
    underserved by projects.
      (f)(1) The [Commissioner] Director shall, as necessary,
    develop and publish in the Federal Register, in final form,
    indicators of what constitutes minimum compliance consistent
    with the evaluation standards under subsection (d)(1).
      (2) Each grant recipient shall report to the [Commissioner]
    Director at the end of each project year the extent to which
    the grant recipient is in compliance with the evaluation
    standards.
      (3)(A) The [Commissioner] Director shall annually conduct
    onsite compliance reviews of at least 15 percent of grant
    recipients. The [Commissioner] Director shall select grant
    recipients for review on a random basis.
      (B) The [Commissioner] Director shall use the indicators in
    determining compliance with the evaluation standards.
      (C) The [Commissioner] Director shall ensure that at least
    one member of a team conducting such a review shall be an
    individual who--
              (i) * * *

               *       *       *       *       *       *       *

      (D) The [Commissioner] Director shall ensure that--
              (i) * * *

               *       *       *       *       *       *       *

      (4) In making a determination concerning any subsequent grant
    under this section, the [Commissioner] Director shall consider
    the past performance of the applicant, if applicable. The
    [Commissioner] Director shall use compliance indicators
    developed under this subsection that are consistent with
    program evaluation standards developed under subsection (d) to
    assess minimum project performance for purposes of making
    continuation awards in the third, fourth, and fifth years.
      (5) Each fiscal year the [Commissioner] Director shall
    include in the annual report to Congress required by section 13
    an analysis of the extent to which grant recipients have
    complied with the evaluation standards. The [Commissioner]
    Director may identify individual grant recipients in the
    analysis. In addition, the [Commissioner] Director shall report
    the results of onsite compliance reviews, identifying
    individual grant recipients.
      (g) The [Commissioner] Director may provide, directly or by
    way of grant, contract, or cooperative agreement, technical
    assistance to--
              (1) * * *

               *       *       *       *       *       *       *

                        AUTHORIZATION OF APPROPRIATIONS

      Sec. 612. There are authorized to be appropriated to carry
    out the provisions of this part, such sums as may be necessary
    for each of [fiscal years 1999 through 2003] fiscal years 2004
    through 2009.

               *       *       *       *       *       *       *

    SEC. 622. ALLOTMENTS.

      (a) * * *
      (b) Reallotment.--Whenever the [Commissioner] Director
    determines that any amount of an allotment to a State for any
    fiscal year will not be expended by such State for carrying out
    the provisions of this part, the [Commissioner] Director shall
    make such amount available for carrying out the provisions of
    this part to one or more of the States that the [Commissioner]
    Director determines will be able to use additional amounts
    during such year for carrying out such provisions. Any amount
    made available to a State for any fiscal year pursuant to the
    preceding sentence shall, for the purposes of this section, be
    regarded as an increase in the allotment of the State (as
    determined under the preceding provisions of this section) for
    such year.

               *       *       *       *       *       *       *

    SEC. 625. STATE PLAN.

      (a) State Plan Supplements.--To be eligible for an allotment
    under this part, a State shall submit to the [Commissioner]
    Director, as part of the State plan under section 101, a State
    plan supplement for providing supported employment services
    authorized under this Act to individuals who are eligible under
    this Act to receive the services. Each State shall make such
    annual revisions in the plan supplement as may be necessary.
      (b) Contents.--Each such plan supplement shall--
              (1) * * *

               *       *       *       *       *       *       *

              (8) contain such other information and be submitted
            in such manner as the [Commissioner] Director may
            require.

               *       *       *       *       *       *       *

    SEC. 628. AUTHORIZATION OF APPROPRIATIONS.

      There are authorized to be appropriated to carry out this
    part such sums as may be necessary for each of [fiscal years
    1999 through 2003] fiscal years 2004 through 2009.

      TITLE VII--INDEPENDENT LIVING SERVICES AND CENTERS FOR INDEPENDENT
                                     LIVING

              CHAPTER 1--INDIVIDUALS WITH SIGNIFICANT DISABILITIES

    PART A--GENERAL PROVISIONS

               *       *       *       *       *       *       *

    SEC. 704. STATE PLAN.

      (a) In General.--
              (1) Requirement.--To be eligible to receive financial
            assistance under this chapter, a State shall submit to
            the [Commissioner] Director, and obtain approval of, a
            State plan containing such provisions as the
            [Commissioner] Director may require, including, at a
            minimum, the provisions required in this section.

               *       *       *       *       *       *       *

              (4) Date of submission.--The State shall submit the
            plan to the [Commissioner] Director 90 days before the
            completion date of the preceding plan. If a State fails
            to submit such a plan that complies with the
            requirements of this section, the [Commissioner]
            Director may withhold financial assistance under this
            chapter until such time as the State submits such a
            plan.

               *       *       *       *       *       *       *

      (c) Designation of State Unit.--The plan shall designate the
    designated State unit of such State as the agency that, on
    behalf of the State, shall--
              (1) * * *

               *       *       *       *       *       *       *

              (3) keep such records and afford such access to such
            records as the [Commissioner] Director finds to be
            necessary with respect to the programs; and
              (4) submit such additional information or provide
            such assurances as the [Commissioner] Director may
            require with respect to the programs.

               *       *       *       *       *       *       *

      (m) Requirements.--The plan shall provide satisfactory
    assurances that all recipients of financial assistance under
    this chapter will--
              (1) * * *

               *       *       *       *       *       *       *

              (4)(A) * * *
              (B) maintain such other records as the [Commissioner]
            Director determines to be appropriate to facilitate an
            effective audit;
              (C) afford such access to records maintained under
            subparagraphs (A) and (B) as the [Commissioner]
            Director determines to be appropriate; and

               *       *       *       *       *       *       *

              (5) provide access to the [Commissioner] Director and
            the Comptroller General or any of their duly authorized
            representatives, for the purpose of conducting audits
            and examinations, of any books, documents, papers, and
            records of the recipients that are pertinent to the
            financial assistance received under this chapter; and

               *       *       *       *       *       *       *

    SEC. 705. STATEWIDE INDEPENDENT LIVING COUNCIL.

      (a) * * *
      (b) Composition and Appointment.--
              (1) * * *

               *       *       *       *       *       *       *

              [(5) Chairperson.--
                      [(A) In general.--Except as provided in
                    subparagraph (B), the Council shall select a
                    chairperson from among the voting membership of
                    the Council.
                      [(B) Designation by chief executive
                    officer.--In States in which the Governor does
                    not have veto power pursuant to State law, the
                    appointing authority described in paragraph (3)
                    shall designate a voting member of the Council
                    to serve as the chairperson of the Council or
                    shall require the Council to so designate such
                    a voting member.]
              (5) Chairperson.--The Council shall select a
            chairperson from among the voting membership of the
            Council.
      (c) Duties.--The Council shall--
              (1) * * *

               *       *       *       *       *       *       *

              (5) submit to the [Commissioner] Director such
            periodic reports as the [Commissioner] Director may
            reasonably request, and keep such records, and afford
            such access to such records, as the [Commissioner]
            Director finds necessary to verify such reports.

    SEC. 706. RESPONSIBILITIES OF THE COMMISSIONER.

      (a) Approval of State Plans.--
              (1) In general.--The [Commissioner] Director shall
            approve any State plan submitted under section 704 that
            the [Commissioner] Director determines meets the
            requirements of section 704, and shall disapprove any
            such plan that does not meet such requirements, as soon
            as practicable after receiving the plan. Prior to such
            disapproval, the [Commissioner] Director shall notify
            the State of the intention to disapprove the plan, and
            shall afford such State reasonable notice and
            opportunity for a hearing.
              (2) Procedures.--
                      (A) In general.--Except as provided in
                    subparagraph (B), the provisions of subsections
                    (c) and (d) of section 107 shall apply to any
                    State plan submitted to the [Commissioner]
                    Director under section 704.
                      (B) Application.--For purposes of the
                    application described in subparagraph (A), all
                    references in such provisions--
                              (i) to the Secretary shall be deemed
                            to be references to the [Commissioner]
                            Director; and
      (b) Indicators.--Not later than October 1, 1993, the
    [Commissioner] Director shall develop and publish in the
    Federal Register indicators of minimum compliance consistent
    with the standards set forth in section 725.
      (c) Onsite Compliance Reviews.--
              (1) Reviews.--The [Commissioner] Director shall
            annually conduct onsite compliance reviews of at least
            15 percent of the centers for independent living that
            receive funds under section 722 and shall periodically
            conduct such a review of each such center. The
            [Commissioner] Director shall annually conduct onsite
            compliance reviews of at least one-third of the
            designated State units that receive funding under
            section 723, and, to the extent necessary to determine
            the compliance of such a State unit with subsections (f
            ) and (g) of section 723, centers that receive funding
            under section 723 in such State. The [Commissioner]
            Director shall select the centers and State units
            described in this paragraph for review on a random
            basis.
              (2) Qualifications of employees conducting reviews.--
            The [Commissioner] Director shall--
                      (A) * * *

               *       *       *       *       *       *       *

      (d) Reports.--The [Commissioner] Director shall include, in
    the annual report required under section 13, information on the
    extent to which centers for independent living receiving funds
    under part C have complied with the standards and assurances
    set forth in section 725. The [Commissioner] Director may
    identify individual centers for independent living in the
    analysis. The [Commissioner] Director shall report the results
    of onsite compliance reviews, identifying individual centers
    for independent living and other recipients of assistance under
    this chapter.

                      PART B--INDEPENDENT LIVING SERVICES

    SEC. 711. ALLOTMENTS.

      (a) In General.--
              (1) States.--
                      (A) Population basis.--Except as provided in
                    subparagraphs (B) and (C), from sums
                    appropriated for each fiscal year to carry out
                    this part, the [Commissioner] Director shall
                    make an allotment to each State whose State
                    plan has been approved under section 706 of an
                    amount bearing the same ratio to such sums as
                    the population of the State bears to the
                    population of all States.

               *       *       *       *       *       *       *

              (3) Adjustment for inflation.--For any fiscal year,
            beginning in fiscal year 1999, in which the total
            amount appropriated to carry out this part exceeds the
            total amount appropriated to carry out this part for
            the preceding fiscal year, the [Commissioner] Director
            shall increase the minimum allotment under paragraph
            (1)(C) by a percentage that shall not exceed the
            percentage increase in the total amount appropriated to
            carry out this part between the preceding fiscal year
            and the fiscal year involved.
      (b) Proportional Reduction.--To provide allotments to States
    in accordance with subsection (a)(1)(B), to provide minimum
    allotments to States (as increased under subsection (a)(3))
    under subsection (a)(1)(C), or to provide minimum allotments to
    States under subsection (a)(2)(B), the [Commissioner] Director
    shall proportionately reduce the allotments of the remaining
    States under subsection (a)(1)(A), with such adjustments as may
    be necessary to prevent the allotment of any such remaining
    State from being reduced to less than the amount required by
    subsection (a)(1)(B).
      (c) Reallotment.--Whenever the [Commissioner] Director
    determines that any amount of an allotment to a State for any
    fiscal year will not be expended by such State in carrying out
    the provisions of this part, the [Commissioner] Director shall
    make such amount available for carrying out the provisions of
    this part to one or more of the States that the [Commissioner]
    Director determines will be able to use additional amounts
    during such year for carrying out such provisions. Any amount
    made available to a State for any fiscal year pursuant to the
    preceding sentence shall, for the purposes of this section, be
    regarded as an increase in the allotment of the State (as
    determined under the preceding provisions of this section) for
    such year.

    SEC. 712. PAYMENTS TO STATES FROM ALLOTMENTS.

      (a) Payments.--From the allotment of each State for a fiscal
    year under section 711, the State shall be paid the Federal
    share of the expenditures incurred during such year under its
    State plan approved under section 706. Such payments may be
    made (after necessary adjustments on account of previously made
    overpayments or underpayments) in advance or by way of
    reimbursement, and in such installments and on such conditions
    as the [Commissioner] Director may determine.

               *       *       *       *       *       *       *

    SEC. 714. AUTHORIZATION OF APPROPRIATIONS.

      There are authorized to be appropriated to carry out this
    part such sums as may be necessary for each of the [fiscal
    years 1999 through 2003] fiscal years 2004 through 2009.

                     PART C--CENTERS FOR INDEPENDENT LIVING

    SEC. 721. PROGRAM AUTHORIZATION.

      (a) In General.--From the funds appropriated for fiscal year
    1999 and for each subsequent fiscal year to carry out this
    part, the [Commissioner] Director shall allot such sums as may
    be necessary to States and other entities in accordance with
    subsections (b) through (d).
      (b) Training.--
              (1) Grants; contracts; other arrangements.--For any
            fiscal year in which the funds appropriated to carry
            out this part exceed the funds appropriated to carry
            out this part for fiscal year 1993, the [Commissioner]
            Director shall first reserve from such excess, to
            provide training and technical assistance to eligible
            agencies, centers for independent living, and Statewide
            Independent Living Councils for such fiscal year, not
            less than 1.8 percent, and not more than 2 percent, of
            the funds appropriated to carry out this part for the
            fiscal year involved.
              (2) Allocation.--From the funds reserved under
            paragraph (1), the [Commissioner] Director shall make
            grants to, and enter into contracts and other
            arrangements with, entities that have experience in the
            operation of centers for independent living to provide
            such training and technical assistance with respect to
            planning, developing, conducting, administering, and
            evaluating centers for independent living.
              (3) Funding priorities.--The [Commissioner] Director
            shall conduct a survey of Statewide Independent Living
            Councils and centers for independent living regarding
            training and technical assistance needs in order to
            determine funding priorities for such grants,
            contracts, and other arrangements.
              (4) Review.--To be eligible to receive a grant or
            enter into a contract or other arrangement under this
            subsection, such an entity shall submit an application
            to the [Commissioner] Director at such time, in such
            manner, and containing a proposal to provide such
            training and technical assistance, and containing such
            additional information as the [Commissioner] Director
            may require. The [Commissioner] Director shall provide
            for peer review of grant applications by panels that
            include persons who are not government employees and
            who have experience in the operation of centers for
            independent living.
              (5) Prohibition on combined funds.--No funds reserved
            by the [Commissioner] Director under this subsection
            may be combined with funds appropriated under any other
            Act or part of this Act if the purpose of combining
            funds is to make a single discretionary grant or a
            single discretionary payment, unless such funds
            appropriated under this chapter are separately
            identified in such grant or payment and are used for
            the purposes of this chapter.
      (c) In General.--
              (1) States.--
                      (A) Population basis.--After the reservation
                    required by subsection (b) has been made, and
                    except as provided in subparagraphs (B) and
                    (C), from the remainder of the amounts
                    appropriated for each such fiscal year to carry
                    out this part, the [Commissioner] Director
                    shall make an allotment to each State whose
                    State plan has been approved under section 706
                    of an amount bearing the same ratio to such
                    remainder as the population of the State bears
                    to the population of all States.
              (3) Adjustment for inflation.--For any fiscal year,
            beginning in fiscal year 1999, in which the total
            amount appropriated to carry out this part exceeds the
            total amount appropriated to carry out this part for
            the preceding fiscal year, the [Commissioner] Director
            shall increase the minimum allotment under paragraph
            (1)(C) by a percentage that shall not exceed the
            percentage increase in the total amount appropriated to
            carry out this part between the preceding fiscal year
            and the fiscal year involved.
              (4) Proportional reduction.--To provide allotments to
            States in accordance with paragraph (1)(B), to provide
            minimum allotments to States (as increased under
            paragraph (3)) under paragraph (1)(C), or to provide
            minimum allotments to States under paragraph (2)(B),
            the [Commissioner] Director shall proportionately
            reduce the allotments of the remaining States under
            paragraph (1)(A), with such adjustments as may be
            necessary to prevent the allotment of any such
            remaining State from being reduced to less than the
            amount required by paragraph (1)(B).
      (d) Reallotment.--Whenever the [Commissioner] Director
    determines that any amount of an allotment to a State for any
    fiscal year will not be expended by such State for carrying out
    the provisions of this part, the [Commissioner] Director shall
    make such amount available for carrying out the provisions of
    this part to one or more of the States that the [Commissioner]
    Director determines will be able to use additional amounts
    during such year for carrying out such provisions. Any amount
    made available to a State for any fiscal year pursuant to the
    preceding sentence shall, for the purposes of this section, be
    regarded as an increase in the allotment of the State (as
    determined under the preceding provisions of this section) for
    such year.

    SEC. 722. GRANTS TO CENTERS FOR INDEPENDENT LIVING IN STATES IN WHICH
                        FEDERAL FUNDING EXCEEDS STATE FUNDING.

      (a) Establishment.--
              (1) In general.--Unless the director of a designated
            State unit awards grants under section 723 to eligible
            agencies in a State for a fiscal year, the
            [Commissioner] Director shall award grants under this
            section to such eligible agencies for such fiscal year
            from the amount of funds allotted to the State under
            subsection (c) or (d) of section 721 for such year.
              (2) Grants.--The [Commissioner] Director shall award
            such grants, from the amount of funds so allotted, to
            such eligible agencies for the planning, conduct,
            administration, and evaluation of centers for
            independent living that comply with the standards and
            assurances set forth in section 725.
      (b) Eligible Agencies.--In any State in which the
    [Commissioner] Director has approved the State plan required by
    section 704, the [Commissioner] Director may make a grant under
    this section to any eligible agency that--
              (1) * * *
              (2) is determined by the [Commissioner] Director to
            be able to plan, conduct, administer, and evaluate a
            center for independent living consistent with the
            standards and assurances set forth in section 725; and
              (3) submits an application to the [Commissioner]
            Director at such time, in such manner, and containing
            such information as the [Commissioner] Director may
            require.
      (c) Existing Eligible Agencies.--In the administration of the
    provisions of this section, the [Commissioner] Director shall
    award grants to any eligible agency that has been awarded a
    grant under this part by September 30, 1997, unless the
    [Commissioner] Director makes a finding that the agency
    involved fails to meet program and fiscal standards and
    assurances set forth in section 725.
      (d) New Centers for Independent Living.--
              (1) In general.--If there is no center for
            independent living serving a region of the State or a
            region is underserved, and the increase in the
            allotment of the State is sufficient to support an
            additional center for independent living in the State,
            the [Commissioner] Director may award a grant under
            this section to the most qualified applicant proposing
            to serve such region, consistent with the provisions in
            the State plan setting forth the design of the State
            for establishing a statewide network of centers for
            independent living.
              (2) Selection.--In selecting from among applicants
            for a grant under this section for a new center for
            independent living, the [Commissioner] Director--
                      (A) * * *

               *       *       *       *       *       *       *

      (e) Order of Priorities.--The [Commissioner] Director shall
    be guided by the following order of priorities in allocating
    funds among centers for independent living within a State, to
    the extent funds are available:
              (1) The [Commissioner] Director shall support
            existing centers for independent living, as described
            in subsection (c), that comply with the standards and
            assurances set forth in section 725, at the level of
            funding for the previous year.
              (2) The [Commissioner] Director shall provide for a
            cost-of-living increase for such existing centers for
            independent living.
              (3) The [Commissioner] Director shall fund new
            centers for independent living, as described in
            subsection (d), that comply with the standards and
            assurances set forth in section 725.

               *       *       *       *       *       *       *

      (g) Review.--
              (1) In general.--The [Commissioner] Director shall
            periodically review each center receiving funds under
            this section to determine whether such center is in
            compliance with the standards and assurances set forth
            in section 725. If the [Commissioner] Director
            determines that any center receiving funds under this
            section is not in compliance with the standards and
            assurances set forth in section 725, the [Commissioner]
            Director shall immediately notify such center that it
            is out of compliance.
              (2) Enforcement.--The [Commissioner] Director shall
            terminate all funds under this section to such center
            90 days after the date of such notification unless the
            center submits a plan to achieve compliance within 90
            days of such notification and such plan is approved by
            the [Commissioner] Director.

    SEC. 723. GRANTS TO CENTERS FOR INDEPENDENT LIVING IN STATES IN WHICH
                        STATE FUNDING EQUALS OR EXCEEDS FEDERAL FUNDING.

      (a) Establishment.--
              (1) In general.--
                      (A) Initial year.--
                              (i) Determination.--The director of a
                            designated State unit, as provided in
                            paragraph (2), or the [Commissioner]
                            Director, as provided in paragraph (3),
                            shall award grants under this section
                            for an initial fiscal year if the
                            [Commissioner] Director determines that
                            the amount of State funds that were
                            earmarked by a State for a preceding
                            fiscal year to support the general
                            operation of centers for independent
                            living meeting the requirements of this
                            part equaled or exceeded the amount of
                            funds allotted to the State under
                            subsection (c) or (d) of section 721
                            for such year.
                              (ii) Grants.--The director or the
                            [Commissioner] Director, as
                            appropriate, shall award such grants,
                            from the amount of funds so allotted
                            for the initial fiscal year, to
                            eligible agencies in the State for the
                            planning, conduct, administration, and
                            evaluation of centers for independent
                            living that comply with the standards
                            and assurances set forth in section
                            725.
                              (iii) Regulation.--The [Commissioner]
                            Director shall by regulation specify
                            the preceding fiscal year with respect
                            to which the [Commissioner] Director
                            will make the determinations described
                            in clause (i) and subparagraph (B),
                            making such adjustments as may be
                            necessary to accommodate State funding
                            cycles such as 2-year funding cycles or
                            State fiscal years that do not coincide
                            with the Federal fiscal year.
                      (B) Subsequent years.--For each year
                    subsequent to the initial fiscal year described
                    in subparagraph (A), the director of the
                    designated State unit shall continue to have
                    the authority to award such grants under this
                    section if the [Commissioner] Director
                    determines that the State continues to earmark
                    the amount of State funds described in
                    subparagraph (A)(i). If the State does not
                    continue to earmark such an amount for a fiscal
                    year, the State shall be ineligible to make
                    grants under this section after a final year
                    following such fiscal year, as defined in
                    accordance with regulations established by the
                    [Commissioner] Director, and for each
                    subsequent fiscal year.
              (2) Grants by designated state units.--In order for
            the designated State unit to be eligible to award the
            grants described in paragraph (1) and carry out this
            section for a fiscal year with respect to a State, the
            designated State agency shall submit an application to
            the [Commissioner] Director at such time, and in such
            manner as the [Commissioner] Director may require,
            including information about the amount of State funds
            described in paragraph (1) for the preceding fiscal
            year. If the [Commissioner] Director makes a
            determination described in subparagraph (A)(i) or (B),
            as appropriate, of paragraph (1), the [Commissioner]
            Director shall approve the application and designate
            the director of the designated State unit to award the
            grant and carry out this section.
              (3) Grants by commissioner.--If the designated State
            agency of a State described in paragraph (1) does not
            submit and obtain approval of an application under
            paragraph (2), the [Commissioner] Director shall award
            the grant described in paragraph (1) to eligible
            agencies in the State in accordance with section 722.
      (b) Eligible Agencies.--In any State in which the
    [Commissioner] Director has approved the State plan required by
    section 704, the director of the designated State unit may
    award a grant under this section to any eligible agency that--
              (1) * * *

               *       *       *       *       *       *       *

      (g) Review.--
              (1) * * *
              (2) Enforcement.--The director of the designated
            State unit shall terminate all funds under this section
            to such center 90 days after--
                      (A) * * *

               *       *       *       *       *       *       *

            unless the center submits a plan to achieve compliance
            within 90 days and such plan is approved by the
            director, or if appealed, by the [Commissioner]
            Director.
      (h) Onsite Compliance Review.--The director of the designated
    State unit shall annually conduct onsite compliance reviews of
    at least 15 percent of the centers for independent living that
    receive funding under this section in the State. Each team that
    conducts onsite compliance review of centers for independent
    living shall include at least one person who is not an employee
    of the designated State agency, who has experience in the
    operation of centers for independent living, and who is jointly
    selected by the director of the designated State unit and the
    chairperson of or other individual designated by the Council
    acting on behalf of and at the direction of the Council. A copy
    of this review shall be provided to the [Commissioner]
    Director.
      (i) Adverse Actions.--If the director of the designated State
    unit proposes to take a significant adverse action against a
    center for independent living, the center may seek mediation
    and conciliation to be provided by an individual or individuals
    who are free of conflicts of interest identified by the
    chairperson of or other individual designated by the Council.
    If the issue is not resolved through the mediation and
    conciliation, the center may appeal the proposed adverse action
    to the [Commissioner] Director for a final decision.

    SEC. 724. CENTERS OPERATED BY STATE AGENCIES.

      A State that receives assistance for fiscal year 1993 with
    respect to a center in accordance with subsection (a) of this
    section (as in effect on the day before the date of enactment
    of the Rehabilitation Act Amendments of 1998) may continue to
    receive assistance under this part for fiscal year 1994 or a
    succeeding fiscal year if, for such fiscal year--
              (1) no nonprofit private agency--
                      (A) submits an acceptable application to
                    operate a center for independent living for the
                    fiscal year before a date specified by the
                    [Commissioner] Director; and
                      (B) obtains approval of the application under
                    section 722 or 723; or
              (2) after funding all applications so submitted and
            approved, the [Commissioner] Director determines that
            funds remain available to provide such assistance.

    SEC. 725. STANDARDS AND ASSURANCES FOR CENTERS FOR INDEPENDENT LIVING.

      (a) * * *

               *       *       *       *       *       *       *

      (c) Assurances.--The eligible agency shall provide at such
    time and in such manner as the [Commissioner] Director may
    require, such satisfactory assurances as the [Commissioner]
    Director may require, including satisfactory assurances that--
              (1) * * *

               *       *       *       *       *       *       *

              (13) the center will prepare and submit a report to
            the designated State unit or the [Commissioner]
            Director, as the case may be, at the end of each fiscal
            year that contains the information described in
            paragraph (8) and information regarding the extent to
            which the center is in compliance with the standards
            set forth in subsection (b); and

               *       *       *       *       *       *       *

    SEC. 727. AUTHORIZATION OF APPROPRIATIONS.

      There are authorized to be appropriated to carry out this
    part such sums as may be necessary for each of the [fiscal
    years 1999 through 2003] fiscal years 2004 through 2009.

     CHAPTER 2--INDEPENDENT LIVING SERVICES FOR OLDER INDIVIDUALS WHO ARE
    BLIND

               *       *       *       *       *       *       *

    SEC. 752. PROGRAM OF GRANTS.

      (a) In General.--
              (1) Authority for grants.--Subject to subsections (b)
            and (c), the [Commissioner] Director may make grants to
            States for the purpose of providing the services
            described in subsection (d) to older individuals who
            are blind.
              (2) Designated state agency.--The [Commissioner]
            Director may not make a grant under subsection (a)
            unless the State involved agrees that the grant will be
            administered solely by the agency described in section
            101(a)(2)(A)(i).
      (c) Contingent Formula Grants.--
              (1) * * *
              (2) Allotments.--For grants under subsection (a) for
            a fiscal year described in paragraph (1), the
            [Commissioner] Director shall make an allotment to each
            State in an amount determined in accordance with
            subsection ( j), and shall make a grant to the State of
            the allotment made for the State if the State submits
            to the [Commissioner] Director an application in
            accordance with subsection (i).
      (d) Services Generally.--The [Commissioner] Director may not
    make a grant under subsection (a) unless the State involved
    agrees that the grant will be expended only for purposes of--
              (1) * * *

               *       *       *       *       *       *       *

      (f ) Matching Funds.--
              (1) In general.--The [Commissioner] Director may not
            make a grant under subsection (a) unless the State
            involved agrees, with respect to the costs of the
            program to be carried out by the State pursuant to such
            subsection, to make available (directly or through
            donations from public or private entities) non-Federal
            contributions toward such costs in an amount that is
            not less than $1 for each $9 of Federal funds provided
            in the grant.

               *       *       *       *       *       *       *

      (h) Requirement Regarding State Plan.--The [Commissioner]
    Director may not make a grant under subsection (a) unless the
    State involved agrees that, in carrying out subsection (d)(1),
    the State will seek to incorporate into the State plan under
    section 704 any new methods and approaches relating to
    independent living services for older individuals who are
    blind.
      (i) Application for Grant.--
              (1) In general.--The [Commissioner] Director may not
            make a grant under subsection (a) unless an application
            for the grant is submitted to the [Commissioner]
            Director and the application is in such form, is made
            in such manner, and contains such agreements,
            assurances, and information as the [Commissioner]
            Director determines to be necessary to carry out this
            section (including agreements, assurances, and
            information with respect to any grants under subsection
            ( j)(4)).
              (2) Contents.--An application for a grant under this
            section shall contain--
                      (A) an assurance that the agency described in
                    subsection (a)(2) will prepare and submit to
                    the [Commissioner] Director a report, at the
                    end of each fiscal year, with respect to each
                    project or program the agency operates or
                    administers under this section, whether
                    directly or through a grant or contract, which
                    report shall contain, at a minimum, information
                    on--
                              (i) * * *

               *       *       *       *       *       *       *

      ( j) Amount of Formula Grant.--
              (1) * * *

               *       *       *       *       *       *       *

              (4) Disposition of certain amounts.--
                      (A) Grants.--From the amounts specified in
                    subparagraph (B), the [Commissioner] Director
                    may make grants to States whose population of
                    older individuals who are blind has a
                    substantial need for the services specified in
                    subsection (d) relative to the populations in
                    other States of older individuals who are
                    blind.
                      (B) Amounts.--The amounts referred to in
                    subparagraph (A) are any amounts that are not
                    paid to States under subsection (a) as a result
                    of--
                              (i) * * *

               *       *       *       *       *       *       *

                              (iii) any State informing the
                            [Commissioner] Director that the State
                            does not intend to expend the full
                            amount of the allotment made for the
                            State under subsection (a).
                      (C) Conditions.--The [Commissioner] Director
                    may not make a grant under subparagraph (A)
                    unless the State involved agrees that the grant
                    is subject to the same conditions as grants
                    made under subsection (a).

    SEC. 753. AUTHORIZATION OF APPROPRIATIONS.

      There are authorized to be appropriated to carry out this
    chapter such sums as may be necessary for each of the [fiscal
    years 1999 through 2003] fiscal years 2004 through 2009.
                                  ----------

                        HELEN KELLER NATIONAL CENTER ACT

    TITLE II--REAUTHORIZATION OF THE HELEN KELLER NATIONAL CENTER FOR DEAF-
    BLIND YOUTHS AND ADULTS

               *       *       *       *       *       *       *

                        AUTHORIZATION OF APPROPRIATIONS

      Sec. 205. (a) There are authorized to be appropriated to
    carry out the provisions of this title such sums as may be
    necessary for each of the fiscal years [1999 through 2003] 2004
    through 2009. Such sums shall remain available until expended.

               *       *       *       *       *       *       *

    SEC. 208. HELEN KELLER NATIONAL CENTER FEDERAL ENDOWMENT PROGRAM.

      (a) * * *

               *       *       *       *       *       *       *

      (h) Authorization of Appropriations.--There are authorized to
    be appropriated to carry out this section, such sums as may be
    necessary for each of the fiscal years [1999 through 2003] 2004
    through 2009. Such sums shall remain available until expended.

               *       *       *       *       *       *       *

                                 MINORITY VIEWS

                                  INTRODUCTION

        We have seen first hand the hardships that our nation's
    poor economy is placing on American workers and those who are
    unemployed. Congress has traditionally responded to the
    employment, training and education needs of workers by
    constructing bipartisan legislation to provide unemployment
    compensation and strengthen the job training system when
    needed. Unfortunately, this bill has been rushed to the floor
    in partisan fashion, and worse, fails to adequately respond to
    the needs of our workers.
        The key failure of this legislation is that it does not
    respond to the economic realities that American families are
    facing today. We have 8.3 million individuals who are out of
    work. Growing budget deficits are projected to top $300 billion
    for this fiscal year. We have a President who is seeking
    additional tax cuts that will drive our deficit even higher,
    leading to higher interest rates on credit cards and home
    mortgages. Possibly, most alarming, is the fact that three
    unemployed individuals are competing for every job.
        In light of these economic conditions, we have grave
    concerns about H.R. 1261. First, this bill fails to respond to
    the number one need of unemployed workers--continued
    unemployment benefits. The last unemployment extension signed
    into law failed to provide for the 1.2 million individuals who
    had exhausted their jobless benefits. Several million more are
    likely to exhaust unemployment benefits at the end of May. The
    Congressional Republican Leadership and President Bush
    purposefully decided not to cover these individuals. These
    individuals are typically the hardest to employ and are most in
    need of continued benefits.
        The bill which the Majority brought to full Committee
    markup contained President Bush's Personal Reemployment
    Accounts (PRA) proposal as a response to the needs of jobless
    Americans. The PRA proposal would provide those at risk of
    exhausting their unemployment benefits with a meager job
    training voucher, while cutting them off from other job
    training support services for one year. This proposal is
    misguided and fails to address the urgent needs of unemployed
    Americans. Fortunately, the Majority struck this provision from
    their bill during Committee consideration.
        H.R. 1261 would also block grant adult, dislocated worker
    and Employment service funding streams. President Bush has
    called for over $700 million in cuts to our job training
    programs for FY 2003 and 2004 in addition to a $300 million FY
    2002 WIA funding rescission.\1\ Block grant proposals such as
    this are shortsighted and likely to lead to reduced funding for
    job training. Millions of Americans are in need of additional
    training and education to secure better jobs. This proposal
    would severely hamper efforts to ensure that WIA has sufficient
    funding and jeopardizes the quality of training provided to
    workers.
    ---------------------------------------------------------------------------
        \1\ Appendix 1--Congressional Research Service--Job Training Cuts
    in FY 2002 and FY 2003.
    ---------------------------------------------------------------------------
        Unfortunately, the stability of WIA funding to states and
    localities is another casualty of block granting these streams.
    The Majority bill institutes new formulas for the distribution
    of WIA funding to states and localities. These funding formula
    changes produced wide swings in the amount states would lose or
    gain compared to allocations in previous years, some as high as
    10 percent with losses totaling up to $45 million. The Majority
    did adopt an amendment by Mrs. McCarthy to guarantee each state
    at least the same amount of WIA funding they received in fiscal
    year 2003. However, states that would have lost funding under
    the base bill will continue to receive less funding than they
    would have received under current law in future years.
        Additionally, WIA should not require mandatory partners to
    contribute a set percentage of their funds for one stop center
    operations while also eliminating their seat on local workforce
    boards. This bill allows governors to take unspecified amounts
    of funding presently used to provide critical adult education,
    vocational rehabilitation, veterans employment and other
    services and instead use it for administrative expenses and
    infrastructure costs.
        We are particularly disappointed that this bill would seek
    to carve out funding of mandatory partners such as those that
    provide funding for veterans employment and vocational
    rehabilitation. At a time when our men and women in the
    military are fighting overseas, it is unacceptable that we are
    attacking the programs that will help them find jobs when they
    return. In addition, 37 State vocational rehabilitation
    agencies presently do not have the resources necessary to serve
    all individuals with disabilities. Removing resources from this
    cash strapped system would only deny more services to
    individuals with disabilities--the very services they need to
    achieve employment. We should instead seek to provide
    operational funding for one-stop centers through a separate
    line item.
        This legislation also denies services to in-school youth.
    While the base bill does permit a measly 30 percent of local
    funding for in-school youth, this remains insufficient. Our
    existing youth job training programs are designed to respond to
    the needs of youth before they drop out of school. This
    legislation restricts the ability of local communities to
    respond to their youth's needs. We should instead concentrate
    our efforts on preventing those currently in school from
    dropping out.
        The legislation's changes to youth programs also affected
    youth funding formulas. These changes had similar impacts to
    those sought by the majority to the adult, dislocated workers
    and employment service funding streams. Fortunately, Ms.
    McCarthy's hold-harmless amendment, as described above, also
    applied to youth programs under WIA.
        Lastly, this legislation eliminates existing protections
    and safeguards against the participation of low quality and
    fly-by-night providers. Rather than embrace upgraded quality
    and accountability, as we did in the President's No Child Left
    Behind Act, this bill empowers governors to allow low quality
    training providers to participate in WIA programs. Shouldn't we
    ask more of those who provide training with limited Federal
    resources? This will result in our underemployed and unemployed
    receiving substandard education and training services when they
    truly are in need of the most effective services possible.

                                   AMENDMENTS

        Democratic Members offered a series of Amendments to
    address the key deficiencies in this legislation.
        Mr. Kildee offered an amendment which would have provided
    immediate and future extended federal unemployment benefits.
    The last extension of unemployment benefits signed into law in
    January provided extended benefits to some, but not all of the
    nation's unemployed. This amendment directly responded to the
    real needs of the American workforce by providing funds to
    extend unemployment benefits to the estimated 1.2 million
    workers who have exhausted their Federal unemployment benefits
    and are still unable to find work. In addition, this amendment
    would have provided funds to extend unemployment benefits to
    September, when the current extension expires at the end of
    May. Unfortunately, this amendment was defeated on a party line
    vote.
        Mr. Ryan offered an amendment to allow communities across
    America to hire 100,000 police, fire, medical or rescue
    personnel who are vital first responders in a terrorist attack.
    Communities are in desperate need of first responders in our
    time of heightened concern over possible terrorist acts and the
    war in Iraq. Since September 11, our communities and towns have
    been forced to require police and other individuals involved in
    public safety to log many hours of overtime. In addition, this
    amendment would increase our supply of jobs at a time when job
    openings are scarce. Unfortunately, this amendment was defeated
    on a party line vote. Appendix 2 of these views shows the
    number of first responders each state would have been able to
    hire under the Ryan amendment.
        Mr. Kildee offered an amendment that provided a Democratic
    view on reauthorization of our WIA programs. This amendment,
    which is comprised of a complete substitute, would have made
    positive changes to the WIA system. Included among those
    changes was expanded access to WIA training services,
    additional summer and afterschool job opportunities for youth,
    improved reporting to expand participation among qualified WIA
    education and training providers, and strengthened WIA
    governance structures.
        Specifically, the substitute would:
               Make clear that individuals may receive
            core, intensive, or training services as appropriate
            and in any sequence as the individual situation
            warrants (recent DOL data has indicated that access to
            training has declined from over 75% to approximately
            35% from PY 1998-2000, a \2/3\ drop from 312,579 to
            84,358 adults receiving training services);
               Permit states and local areas to serve the
            long-term unemployed under dislocated workers services
            if adequate funds exist;
               Permit one-stop centers to provide incumbent
            worker training services to upgrade worker skills or
            prevent layoffs;
               Authorize the YES to WORK program, which
            provides funds for summer and after-school employment
            opportunities, workforce preparation and career
            awareness activities for youth aged 14-21 who are in-
            school;
               Modify training provider certification
            requirements to limit required information to WIA-
            funded participants within an individual program, not
            all enrolled students;
               Make clear that individuals may use both
            Pell grants and ITAs to fund training services;
               Expand availability of English literacy
            training and integrated training for individuals with
            limited English skills;
               Clarify the mission of local boards to
            include local workforce development, strategic
            planning, and one-stop system development;
               Provide a separate line item authorization
            for state and local boards and one-stop center
            operations to prevent WIA training funds from being
            diverted for program infrastructure and administration;
               Require states and localities to encourage
            the co-location of all partner services in order to
            maximize efficiency and minimize duplication;
               Improve data reporting on program
            performance and use of funds to monitor federal, state
            and local use of funds, delivery of services and
            program outcomes, in a timely manner;
               Adjust performance measures to eliminate
            disincentives to serving populations with employment
            barriers such as limited English, lack of a high school
            diploma or GED, limited employment history or
            disabilities, and reflect local labor market
            conditions;
               Reauthorize WIA, adult education, and
            vocational rehabilitation Acts through 2008.
        This substitute included none of the harmful provisions
    contained in the original bill. Unfortunately, the substitute
    was defeated on a party line vote.
        Mr. Holt offered an amendment to reverse the $650 million
    in cuts to WIA programs called for by the Bush Administration
    over the past 2 years. These cuts have been enormously harmful
    to establishing well-run job training and education programs
    for unemployed and underemployed workers. Unfortunately, this
    amendment was defeated on a party line vote.
        Mr. Tierney offered an amendment to correct a major
    deficiency in the bill. Mr. Tierney's amendment would have
    reversed the block granting of the adult, dislocated worker
    andemployment service funding streams. Unfortunately, this amendment
    was defeated on a party line vote.
        Mr. Davis offered an amendment to revert to current law on
    the appointment structure of the Rehabilitation Commissioner.
    Under current law, the Rehabilitation Commissioner is
    Presidentially appointed and Senate confirmed. The bill would
    make this posisiton appointed by the Secretary of Education.
    Maintaining this position as a Presidentially appointed and
    Senate confirmed position is critical to ensuring that
    vocational rehabilitation has a central role in improving the
    lives of disabled adults. Demoting this position would only
    reduce the influence that the Rehabilitation Commissioner would
    have on policy within the Administration. An amendment by Mr.
    Osborne was accepted that grandfathered in the existing
    Rehabilitation Commissioner, Ms. Joanne Wilson. Unfortunately,
    this amendment allowed the policy in the base bill to continue
    after the expiration of Ms. Wilson's term. The amendment by Mr.
    Davis was defeated on a near party line vote.
        Ms. McCarthy offered an amendment to place a hold-harmless
    on WIA funding for adult dislocated worker, employment service
    and youth programs. As described above, this amendment was
    essential to prevent states from losing millions of dollars in
    job training funds. This amendment was accepted by voice vote.
        Mr. Van Hollen offered an amendment to reinstate the civil
    rights protections in WIA. The bill repeals a critical civil
    rights protection for employees of organizations that provide
    job-training services by allowing organizations to discriminate
    in hiring based on religion. This prohibition has been in place
    since President Reagan signed the predecessor Act in 1982. This
    action is but one of many attempts by the Majority to allow
    organizations providing vital social services and job training
    activities to discriminate in hiring staff with federal funds.
    During the debate on the measure, the Majority was unable to
    provide one example of a faith-based organization that would be
    unable to participate in WIA because of the current anti-
    discrimination provision. Mr. Van Hollen's amendment failed on
    a party line vote.

                                   CONCLUSION

        Our country needs more jobs and better opportunities for
    American workers to receive training for these jobs. This bill
    fails on both accounts. In the short term extending
    unemployment benefits, coupled with the assistance that
    unemployed workers can receive through one-stop service
    centers, will provide workers with the means to achieve high
    paying jobs. We need to address the needs of our unemployed
    now, while they are struggling to pay their mortgage and put
    food on the table for their families. The base bill fails to
    address these concerns and squanders resources better used to
    provide immediate help to our unemployed workers.

                                       George Miller.
                                       Major R. Owens.
                                       Robert E. Andrews.
                                       Ruben Hinojosa.
                                       John F. Tierney.
                                       Dennis J. Kucinich.
                                       Rush Holt.
                                       Betty McCollum.
                                       Ed Case.
                                       Denise L. Majette.
                                       Tim Ryan.
                                       Dale E. Kildee.
                                       Donald M. Payne.
                                       Lynn C. Woolsey.
                                       Carolyn McCarthy.
                                       Ron Kind.
                                       David Wu.
                                       Susan A. Davis.
                                       Danny K. Davis.
                                       Raul M. Grijalva.
                                       Chris Van Hollen.
                                       Timothy H. Bishop.

                                      APPENDIX 1.--CONGRESSIONAL RESEARCH SERVICE--JOB TRAINING CUTS IN FY 2002 AND FY 2003
                                                    [Workforce Investment Act funding, dollars in thousands]
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                 Percentage
                                                                                                                   Percentage                    difference
                                                                                                  Difference       difference                     between
                                                                   FY2002          FY2003       between FY2003   between FY2003     FY2004         FY2004
                                                               appropriation  appropriation a    and FY 2002       and FY2002       request     request and
                                                                                               appropriation a  appropriation a                    FY2002
                                                                                                                                               appropriation
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    WIA Total................................................    $5,665,364      $5,224,495        -$440,869            -7.78     $4,959,536         -12.46
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Adult Activities.........................................       950,000         900,000          -50,000            -5.26        900,000          -5.26
    Dislocated Worker Activities.............................     1,549,000       1,463,770          -85,230            -5.50      1,383,040         -10.71
        Formula Grants to State..............................   (1,239,200)      (1,157,162)         (82,038)           -6.62     (1,106,432)        -10.71
        National Emergency Grants............................     (309,800)      b (306,608)          (3,192)           -1.03       (276,608)        -10.71
    Youth Activities.........................................     1,127,965       1,000,965         -127,000           -11.26      1,000,965         -11.26
    Youth Opportunity Grants.................................       225,100          44,500         -180,600           -80.23              0        -100.00
    Job Corps................................................     1,458,732       1,518,550           59,818             4.10      1,565,883           7.35
    Native Americans.........................................        57,000          56,000           -1,000            -1.75         55,000          -3.51
    Migrants & Seasonal Farmworkers..........................      c 79,751        c 77,326           -2,425            -3.04              0        -100.00
    Veterans Employment d....................................         7,550           7,425             -125            -1.66          7,550           0.00
    Pilots, Demos & Research.................................       130,149          76,351          -53,798           -41.34         35,000         -73.11
    Evaluation...............................................         9,098           9,098                0             0.00          9,098           0.00
    Other....................................................        16,019          15,510             -509            -3.18          3,000         -81.27
    Responsible Reintegration for Young Offenders............        55,000          55,000                0             0.00              0        -100.00
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Source: Department of Labor: http://www.doleta.gov/budget/02app$.txt, http://www.doleta.gov/budget/04req$.pdf, and H.J. Res. 2 (Conference Rept. 108-
      10).
    a Does NOT include the across the board offset.
    b Includes $30 million to fund National Emergency Grants authorized in the Trade Act of 2002 to support State administration of health insurance tax
      credits for eligible participants.
    c For FY2002, $1,119,000 for training and technical assistance is shown in the ``Other'' category; for FY2003, $510,000 for these activities is shown in
      the ``Other'' category.
    d The Veterans Program is administered by DOL Veterans Employment and Training Services; all other WIA programs are administered by DOL's Training and
      Employment Services.

     APPENDIX 2.--NUMBER OF FIRST RESPONDERS HIRED UNDER THE RYAN AMENDMENT
    ------------------------------------------------------------------------
                                                                    First
                                                       First      responders
                         State                       responders   per cong.
                                                     per state      dist.
    ------------------------------------------------------------------------
    United States.................................      100,000          230
    Alabama.......................................        1,471          210
    Alaska........................................          500          500
    Arizona.......................................        1,803          225
    Arkansas......................................          863          216
    California....................................       11,952          226
    Colorado......................................        1,478          211
    Connecticut...................................        1,120          224
    Delaware......................................          500          500
    District of Columbia..........................          500          500
    Florida.......................................        5,655          226
    Georgia.......................................        2,865          220
    Hawaii........................................          500          500
    Idaho.........................................          500          250
    Illinois......................................        4,248          224
    Indiana.......................................        2,043          227
    Iowa..........................................          941          188
    Kansas........................................          865          216
    Kentucky......................................        1,336          223
    Louisiana.....................................        1,470          210
    Maine.........................................          500          250
    Maryland......................................        1,803          225
    Massachusetts.................................        2,135          214
    Michigan......................................        3,375          225
    Minnesota.....................................        1,653          207
    Mississippi...................................          918          230
    Missouri......................................        1,877          209
    Montana.......................................          500          500
    Nebraska......................................          527          176
    Nevada........................................          679          226
    New Hampshire.................................          500          250
    New Jersey....................................        2,875          221
    New Mexico....................................          571          190
    New York......................................        6,491          224
    North Carolina................................        2,783          214
    North Dakota..................................          500          500
    Ohio..........................................        3,844          214
    Oklahoma......................................        1,131          226
    Oregon........................................        1,141          228
    Pennsylvania..................................        4,157          219
    Puerto Rico...................................        1,256        1,256
    Rhode Island..................................          500          250
    South Carolina................................        1,341          224
    South Dakota..................................          500          500
    Tennessee.....................................        1,920          213
    Texas.........................................        7,389          231
    Utah..........................................          728          243
    Vermont.......................................          500          500
    Virginia......................................        2,432          221
    Washington....................................        2,013          224
    West Virginia.................................          552          184
    Wisconsin.....................................        1,798          225
    Wyoming.......................................          500          500
    ------------------------------------------------------------------------