[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.
---------------------------------------------------------------------------
    \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
------------------------------------------------------------------------

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