[Senate Report 108-279]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 580
108th Congress                                                   Report
                                 SENATE
 2d Session                                                     108-279
======================================================================


 
        THE CHILD NUTRITION AND WIC REAUTHORIZATION ACT OF 2004

                                _______
                                

                  June 7, 2004.--Ordered to be printed

                                _______
                                

    Mr. Cochran, from the Committee on Agriculture, Nutrition, and 
                   Forestry, submitted the following

                              R E P O R T

                         [To accompany S. 2507]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Agriculture, Nutrition, and Forestry, 
having considered the bill S. 2507 to amend the Richard B. 
Russel, National School Lunch Act and the Child Nutrition Act 
of 1966 to provide children with increased access to food and 
nutrition assistance, to simplify program operations and 
improve program management, to reauthorize child nutrition 
programs, and for other purposes, reports favorably thereon and 
recommends that the bill do pass.

                                CONTENTS

                                                                   Page
  I. Purpose and Need for Legislation.................................1
 II. Background and Summary of Legislation............................2
III. Legislative History and Votes in the Committee...................3
 IV. Regulatory Impact Statement......................................7
  V. Cost Estimate....................................................9
 VI. Section-by-Section Analysis.....................................21
VII. Changes in Existing Law.........................................64

                  I. Purpose and Need for Legislation

    Certain child nutrition programs are due to be 
reauthorized. Some of the programs that must be reauthorized 
include: (1) the Special Supplemental Nutrition Program for 
Women, Infants, and Children (WIC); (2) the Summer Food Service 
Program; (3) the State Administrative Expense program; and (4) 
the WIC Farmers' Market Nutrition Program. This legislation, 
the Child Nutrition and WIC Reauthorization Act of 2004, 
reauthorizes programs contained in the Richard B. Russell 
National School Lunch Act and the Child Nutrition Act of 1966 
through fiscal year 2008. The legislation amends the Commodity 
Distribution Reform Act and WIC Amendments of 1987 to reform 
certain commodity provisions as they relate to federal child 
nutrition programs, and amends the Food Stamp Act of 1977 to 
establish agreements between School Food Authorities and State 
Food Stamp Agencies to streamline applications for school meal 
program benefits. The Committee bill strengthens the anti-fraud 
and abuse provisions in the National School Lunch and Breakfast 
programs, and is designed to maximize the enrollment of 
eligible children in the underlying programs while protecting 
program integrity. The bill expands the Fresh Fruit and 
Vegetable program, expands the Summer Food Service Program, 
provides training and technical assistance to assist schools in 
program administration, targets benefits to low-income children 
and, over the five-year reauthorization period, maintains 
federal spending at the levels predicted if existing law were 
continued.

                     II. Background of Legislation

    The federal government, through the U.S. Department of 
Agriculture, administers fifteen child nutrition programs that 
reach over 37 million children each year. Total spending for 
fiscal year 2004 is estimated to be $16.4 billion.
    The National School Lunch and School Breakfast Programs 
provide cash subsidies to participating schools and residential 
child care institutions for all lunches and breakfasts served 
that meet federal nutrition guidelines. Larger subsidies are 
granted for free and reduced-price meals served to lower income 
children. The Child and Adult Care Food Program subsidizes 
meals and snacks served by day care centers and family day care 
homes. In centers, higher subsidies are given for free and 
reduced price meals/snacks served to lower-income children. In 
day care homes, subsidies generally are not varied by 
individual children's family income, but are larger for homes 
located in lower-income areas or operated by lower-income 
providers. The Summer Food Service Program subsidizes food 
service operations by public and private nonprofit sponsors in 
lower-income areas during the summer months: all meals/snacks 
they serve are subsidized, generally without regard to 
individual children's family income. The Special Milk Program 
operates in schools and residential child care institutions 
without a lunch program and subsidizes all milk they serve. All 
of these subsidies are inflation-indexed and are paid only 
where meals/snacks meet federal nutrition standards. In 
addition to cash aid, providers in the school lunch and the 
child and adult care food program receive food commodities from 
the Agriculture Department at a set value per meal. Grants also 
are made to help cover state administrative expenses. The 
Special Supplemental Nutrition Program for Women, Infants and 
Children (the WIC program) provides nutrition services and 
tailored food packages to  lower-income pregnant, breast-
feeding, and postpartum women, and infants and children who are 
judged to be at nutritional risk. Other federal programs/
activities include: the Nutrition Education and Training 
Program, a Homeless Children Nutrition Program, a commodity 
supplemental food program, a WIC Farmers' Market Nutrition 
Program and a Food Service Management Institute.
    The programs are administered by the Agriculture 
Department's Food and Nutrition Service, which also provides 
technical assistance and cooperates with State agencies in 
overseeing providers' adherence to federal standards. They are 
operated, under State oversight, by more than 300,000 local 
providers (e.g., schools, child care centers, family day care 
homes and health clinics). Federal payments do not necessarily 
cover all program costs, and non-federal financial support is 
significant.

              III. Legislative History and Committee Votes

    The Committee held two hearings to prepare for this 
legislation. On Tuesday, March 4, 2003, the Committee on 
Agriculture, Nutrition, and Forestry Committee held a full 
committee hearing to review the federal government's 
initiatives regarding the school lunch and breakfast programs.
    Gayle Lynn MacDonald testified before the Committee on 
behalf of the American School Food Service Association. Ms. 
MacDonald expressed her views on eliminating the reduced-price 
category in school meals, citing the burden it places on 
participating families. She alsoproposed an increase in 
reimbursement rates for all meal categories. She recommended extending 
the USDA commodity program to the school breakfast program by 
contributing 5 cents in commodities for each breakfast served in the 
program. Ms. MacDonald's next recommendation was that an additional 10 
cents per meal be provided to schools to further improve their 
nutritional quality. She also proposed, at a minimum, an entitlement of 
one-half cent per meal be allocated to State development of nutrition 
education. Ms. MacDonald discussed possible verification changes and 
suggested some possibilities for these changes. One was making school 
meal applications valid for the full year. A second recommendation was 
expanding direct certification into the school meals programs of 
participants in other means tested programs. She also suggested 
verifying ``error-prone'' applications, or those that fall within $100 
of the income limitation. Ms. MacDonald included with her testimony a 
legislative proposal to ensure the development and implementation of 
food safety systems in all schools participating in the Federal school 
lunch program.
    Robert Greenstein, executive director of the Center on 
Budget and Policy Priorities, shared his views with the 
Committee on the issue of increased verification in the school 
meals programs. Specifically, he spoke of the need to reduce 
participation in the free and reduced price school meals 
programs by ineligible children in a way that does not cause 
eligible children to lose benefits. Mr. Greenstein extensively 
discussed the varying opinions on the severity of the problem 
as well as possible solutions that have been discussed in other 
forums. He stated his opinion that the data just does not exist 
to show exactly how large the problem is, and therefore, 
finding a solution becomes that much more difficult. Mr. 
Greenstein's suggestion was a series of demonstration projects 
to find the best way to deal with the problem. However, he also 
listed four ideas to deal with the problem now. First would be 
requiring schools to implement direct certification of children 
participating in the food stamp program or the temporary 
assistance for needy families program (TANF). Second, he 
recommended targeting the ``error-prone'' applications when 
verifying applications. Third, Mr. Greenstein suggested a 
reform of the verification procedures to reduce non-response 
rates among eligible families. Finally, he suggested that 
children who are certified should remain eligible for one year. 
Mr. Greenstein's written testimony covered one other issue as 
well, which is the need to continue the competitive bidding 
requirement for the purchase of infant formula in the WIC 
program.
    Susan T. Borra testified on behalf of the American Dietetic 
Association. Ms. Borra's testimony focused on childhood 
overweight and obesity and the variety of factors influencing 
these issues. She stated that genetic, physiological, 
psychological, metabolic, and environmental factors all 
contribute to the imbalance of caloric consumption and energy 
expenditure, which lead to obesity.
    Robert J. Kemmery, Jr., Executive Director of Student 
Support Services of Baltimore County Public Schools, testified 
regarding the school lunch and breakfast programs. His main 
focus was on the importance of schools entering into 
partnerships with businesses. Mr. Kemmery specifically 
addressed partnerships with beverage companies and spoke of 
their benefits when managed appropriately. He expressed his 
feelings that the decision-making power regarding these issues 
should remain with local educators in consultation with their 
school community.
    Melanie Payne, the child nutrition director of the Opelika 
City Schools in Alabama, appeared before the Committee to share 
some information about some initiatives undertaken by her 
school system. These schools have never allowed vending 
machines in schools. They receive additional funds from the 
city, some of which are used for their nutrition program. Ms. 
Payne stated that the Opelika city schools offer two nutritious 
meals per day through their child nutrition program, called 
NuMenus. They also partnered with a local cooperative to obtain 
many of their fruits and vegetables. Ms. Payne stated the 
importance of child nutrition programs to balance what is 
popular versus what is nutritious.
    Jerry Kozak, President and CEO of the National Milk 
Producers Association, testified on behalf of both NMPA and the 
International Dairy Foods Association. He shared his opinion 
that additional budgetary resources are needed for child 
nutrition programs. Mr. Kozak also spoke on the importance of 
milk in these programs, and the various health benefits 
associated with drinking milk. He told of the increase in milk 
consumption among school children after the industry's attempt 
to make milk more attractive. Mr. Kozak listed four 
recommendations to the Committee regarding child nutrition 
programs. His first recommendation was that Congress promote 
milk consumption by providing incentives for schools to upgrade 
the quality of milk served. He also suggested Congress should 
provide more opportunities for commercially branded milk in 
more sales venues through schools. Another recommendation made 
by Mr. Kozak was that Congress reject a tax on milk's role in 
the child nutrition programs. Finally, he stated that Congress 
should assure schools be able to offer milk at any time 
anywhere on the school premises.
    Dennis J. Heiman, a school principal from Muscatine, Iowa, 
was the final witness of the Committee hearing. He shared his 
views on the fresh fruit and vegetable pilot program, of which 
his school is a participant. He spoke of the nutritional value 
of the foods offered through the program, as well as other 
possibly unintended aspects of the program. Mr. Heiman stated 
that student-teacher relationships had grown, and that many 
students were educated about fruits and vegetables they may not 
have previously known.
    A second hearing was held on Thursday, April 3, 2003, to 
review the federal government's initiatives regarding child 
nutrition programs.
    Eric Bost, Under Secretary for Food, Nutrition, and 
Consumer Services, USDA, testified before the Committee. Mr. 
Bost cited three guiding principles that were used in 
developing the Administration's reauthorization proposal. The 
first was access to program benefits for all eligible children. 
The second was support for healthy school environments to 
address the epidemic of overweight and obesity among children. 
Finally, he cited a commitment to program integrity to ensure 
the best possible targeting of program benefits to eligible 
children.
    James Weil, president of the Food Research and Action 
Center, appeared before the Committee. Mr. Weil discussed the 
importance of child nutrition programs and also the need to 
address childhood obesity in this current reauthorization of 
these programs. He also gave his ideas on six changes to be 
made in these programs. First was making a paperwork reduction 
pilot project in the Summer Food Service Program, the so-called 
Lugar Summer Food Rule, apply nationwide to all sponsors. 
Second was make more areas eligible in the community-based 
programs. Mr. Weil's third recommendation was to make school 
breakfasts available to more children. Fourth, he recommended 
making suppers available at after-school programs in low-income 
areas. Fifth, he suggested increasing access to the Child and 
Adult Care Food Program for preschoolers. Sixth, Mr. Weil 
recommended the ages of the children who can be served 
subsidized meals in homeless shelters be raised from 12 to 18.
    Douglas Besharov of the American Enterprise Institute and 
professor at the University of Maryland testified before the 
Committee, expressing his views that federal child nutrition 
programs have been a factor in the obesity increase among 
children. He also cited that what is often referred to as 
hunger is actually food insecurity, and that hunger levels are 
actually verylow in this country. Mr. Besharov stated that the 
hunger problem in this country has been beaten and we should now turn 
our focus to fighting obesity.
    Jill Leppert, president of the National WIC Association, 
shared her views and recommendations on the reauthorization of 
the special supplemental program for women, infants and 
children (WIC). First, Ms. Leppert suggested expanding the 
definition of nutrition education to allow for guidance on 
physical activity, feeding relationships, and child 
development. She went on to recommend that USDA report to 
Congress within 6 months of reauthorization on the status of 
efforts to adopt a new WIC food package, and that USDA publish 
within 6 months of that report, a proposal to revise the WIC 
food package. Ms. Leppert also asked that Congress direct USDA 
to allow States to implement pilot or demonstration projects 
that would allow for food substitutions. She recommended that 
the Institute of Medicine reevaluate the WIC food package every 
10 years. Ms. Leppert urged that Congress protect the 
competitive bidding element for infant formula contracts. She 
recommended that States have the option to convert unspent food 
funds to nutrition services and administration funds. Finally, 
she asked that Congress supply additional money for upgrading 
and maintaining WIC technology systems.
    Anne Curry, vice president, legislative and political 
affairs for the Food Marketing Institute testified before the 
Committee to discuss the reauthorization of the WIC program on 
behalf of retail food stores. She identified six areas to be 
addressed: retailer authorization, retail operations, 
reimbursement issues, penalties, electronic benefits transfer 
(EBT), and infant formula theft.
    Karen Chapman testified on behalf of the United Fresh Fruit 
and Vegetable Association. She stated that Congress should 
develop legislation to make healthfulness and quality equal 
components of school breakfasts and lunches, to build a 
healthier school environment, and to launch a smarter start for 
WIC recipients that could be incorporated into healthy diets 
after they leave the program. Ms. Chapman also discussed the 
success of the fruit and vegetable pilot program and suggested 
the expansion of this program to all States at a pilot level.
    Rod Hofstedt, executive director of the Adult and 
Children's Alliance, testified on behalf of the National Child 
and Adult Care Food Program (CACFP) Forum. Mr. Hofstedt stated 
that changes made within CACFP would increase the number of 
participants in the program. He suggested a reduction in CACFP 
area eligibility from 50 percent of participants receiving free 
and reduced price meals to 40 percent receiving free and 
reduced price meals for qualifying for low-income 
reimbursement. Mr. Hofstedt also stated there is a need to 
raise the reimbursement rates to providers to improve the 
quality of the meals and snacks. His final suggestion was that 
CACFP sponsoring organizations per home administrative rates 
need to be increased to improve nutrition education.
    Last to testify was Don Wambles, president of the National 
Association of Farmer's Market Nutrition Programs. Mr. Wambles 
discussed the two objectives met by the Farmer's Market 
Nutrition Programs. First, that they provide fresh, locally 
grown fresh fruits and vegetables to low income women, 
children, and seniors. These programs also provide additional 
income for small farmers and vegetable growers. He asked that 
the state matching requirement, which currently is 30 percent 
of the Federal grant, be lowered. Mr. Wambles suggested that 
States only be responsible for matching the administrative 
portion of the Federal money. His second request was that the 
current $20 cap per recipient that has existed since the 
inception of the program be raised to $30 due to the rise in 
other cost factors, such as the increase in food prices over 
the last ten years.

                             COMMITTEE VOTE

    In compliance with paragraph 7 of rule XXVI of the Standing 
Rules of the Senate, the following statements are made 
concerning the vote of the Committee in its consideration of 
the Committee bill.

                       MOTION TO REPORT THE BILL

    The Committee on Agriculture, Nutrition and Forestry 
conducted a business meeting at 10:36 a.m. on May 19 in room 
SD-430 to markup this legislation. Senators present were: 
Senators Cochran, Fitzgerald, Roberts, Chambliss, Coleman, 
Crapo, Talent, Harkin, Leahy, Conrad, Daschle, Baucus, Lincoln, 
Miller, Stabenow, Nelson and Dayton. After opening statements 
when a quorum of Members was present, Chairman Cochran moved 
that the bill be reported subject to amendment which passed by 
a voice vote. Three amendments, two by Senator Fitzgerald and 
one by Senator Lincoln, were adopted ``En Bloc'' by a voice 
vote. Senator Harkin offered an amendment that was not adopted 
by a roll call vote of 7 yeas (Senators Harkin, Leahy, Conrad, 
Daschle by proxy, Stabenow, Dayton by proxy, and Fitzgerald) 
and 12 nays (Senators Baucus, Lincoln, Miller, Nelson, 
McConnell by proxy, Roberts by proxy, Chambliss, Coleman, 
Crapo, Talent, Dole by proxy, and Cochran) with Senators Lugar 
and Grassley not recorded. Unanimous Consent was ordered that 
the staff have the authority to make technical and conforming 
changes to the bill being reported. The Committee business 
meeting adjourned at 11:39 a.m.

                    IV. Regulatory Impact Statement

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the following evaluation is made 
concerning the regulatory impact of carrying out the changes 
proposed in the bill:
    Individuals and businesses affected.--On an average school 
day in fiscal year 2003, more than half of all school children 
in America ate a National School Lunch Program (NSLP) lunch. 
More than 4.7 billion meals were served in the NSLP that fiscal 
year, an average of 28.4 million lunches per school day. In 
fiscal year 2003, an average of 8.4 million children 
participated in the School Breakfast Program every school day. 
Of those, almost 7 million received their meals free or at a 
reduced price. More than 98,800 public and non-profit private 
schools and residential childcare institutions participate in 
the school lunch program, and 78,000 schools and institutions 
participate in the breakfast program. The bill will directly or 
indirectly affect all children and schools participating in the 
school lunch and breakfast programs.
    The Committee believes that, overall, the changes made in 
the school meal programs will modestly increase the 
administrative burden for school food authorities. Schools that 
do not now directly certify children in food stamp households 
will have to develop procedures for direct certification. The 
Committee provides $9 million to cover the cost of the initial 
implementation of mandatory direct certification. This 
additional administrative responsibility is deemed appropriate 
to increase the number of eligible students who participate in 
the school meal programs.
    The requirement that schools verify 3 percent of error-
prone applications will minimally increase the administrative 
burden for schools. Schools will have to classify applications 
aseither error-prone or not and will have to develop procedures 
to follow-up with families that do not respond to the first attempt at 
verification. However, this additional administrative burden is 
appropriate to reduce the number of children certified for free or 
reduced price meals in excess of those eligible.
    The bill requires school food authorities to implement a 
school food safety program for the preparation and service of 
meals that complies with a ``hazard analysis and critical 
control point'' system established by the Secretary. The 
Committee believes that this additional responsibility is 
appropriate to assure the safety of foods served in the school 
food programs.
    The bill allows school food authorities to substitute a 
non-dairy beverage that is nutritionally equivalent to fluid 
milk for students who cannot consume fluid milk because of a 
medical or other special dietary need. Because each school will 
determine whether to offer the substitute beverage, the 
Committee believes that each school food authority will 
determine whether it is willing to accept any additional 
administrative burden.
    The bill waives the requirement that school food 
authorities must use ``weighted averages'' for their nutrient 
analysis of their school meal programs. This provision will 
reduce the administrative burden on school food authorities.
    In fiscal year 2003, 2.9 million children and adults 
participated in the Child and Adult Care Food Program. Almost 
700 million meals were served in family day care homes, and 
more than one billion meals were served in day care centers. 
The Committee bill includes several provisions designed to 
reduce the administrative and regulatory burden associated with 
the Child and Adult Care Food Program. The bill also requires 
the Department of Agriculture to establish a paperwork 
reduction task force in order to further reduce regulatory and 
administrative duties while still maintaining program 
integrity.
    More than 2 million children participated in the Summer 
Food Service Program at nearly 30,000 sites. The Committee 
believes that the provision to allow public sponsors of the 
Summer Food Service Program in pilot States to receive the 
maximum summer program reimbursement rates without providing 
documentation of costs will reduce the administrative burden on 
the public sponsors, will improve management and increase 
access for eligible children.
    The WIC program served an average 7.6 million women, 
infants and children each month in fiscal year 2003. The 
Committee bill requires State agencies to maintain a list of 
food wholesalers, distributors, and retailers licensed in the 
State and infant formula manufacturers registered with the Food 
and Drug Administration. It also requires WIC vendors to 
purchase infant formula from the State agency list. The 
Committee believes that this additional regulatory 
responsibility is necessary to ensure the quality and source of 
infant formula provided through the program. The bill also 
requires State WIC agencies to implement vendor cost 
containment provisions including a vendor peer group system and 
competitive price criteria. The Committee believes that the 
bill's additional requirements for State WIC agencies is 
appropriate to better control program costs. The bill allows 
State agencies to certify breastfeeding women for up to one 
year and to waive the requirement that infants under 8 weeks be 
physically present.
    Economic impact of regulation on individuals, consumers, 
and businesses.--The Committee believes that children in food 
stamp households who do not currently participate in school 
meal programs will benefit economically and nutritionally from 
the bill. Those families selected for verification and that are 
unable or unwilling to verify household income will be 
disadvantaged by the bill. The Committee expects that most of 
these households would not be eligible for free or reduced-
price meals, if the required documentation were provided. 
However, some of the affected households will lose benefits 
even though the household would meet income guidelines. The 
Committee believes that the bill contains appropriate 
incentives to encourage school food authorities to work with 
families to obtain the proper documentation to allow eligible 
children to continue to receive free or reduced-price meals.
    Over 130,000 elementary and secondary students will have 
access to free fruits and vegetables when the current fruit and 
vegetable pilot program is expanded to four more states and two 
additional Indian Tribal Organizations.
    Children from low-income households will benefit from the 
provision to exempt military housing benefits from income for 
purposes of determining eligibility for free or reduced price 
meals.
    Impact on personal privacy.--The Committee bill will have 
minimal impact on personal privacy.
    Amount of additional paperwork.--The Committee believes 
that provisions to require household applications and to make 
eligibility for free or reduced-price school meals valid for 
one year will reduce the paperwork burden for school food 
authorities and for families.

                            V. Cost Estimate


                      BUDGETARY IMPACT OF THE BILL

    In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate, the following letter has been 
received from the Congressional Budget Office regarding the 
budgetary impact of the bill:
                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, June 4, 2004.
Hon. Thad Cochran,
Chairman, Committee on Agriculture, Nutrition, and Forestry,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: CBO has prepared the enclosed estimate 
of the direct spending effects of the Child Nutrition and WIC 
Reauthorization Act of 2004. (The enclosed estimate also 
describes the bill's potential effects on discretionary 
spending, but CBO has not completed an analysis of those 
effects on spending subject to appropriation.)
    If you would like additional details on this estimate, we 
will be pleased to provide them. The CBO staff contact is 
Kathleen FitzGerald.
            Sincerely,
                                         Elizabeth Robinson
                               (For Douglas Holtz-Eakin, Director).
    Enclosure.

S. 2507--Child Nutrition and WIC Reauthorization Act of 2004

    Summary: The bill would amend and reauthorize child 
nutrition programs and the Special Supplemental Nutrition 
Program for Women, Infants, and Children (WIC). CBO estimates 
that enacting the bill would increase direct spending by $232 
million over the 2004-2009 period, and by $487 million over the 
2004-2014 period. Enacting the bill would not affect revenues.
    Implementing this legislation also would affect spending 
subject to appropriation action. Those effects would be 
significant, but CBO has not completed an estimate of the 
bill's potential impact on discretionary spending. The bill 
would extend an existing (but expiring) authorization of 
appropriations for the WIC program. In addition, the bill would 
authorize appropriations--mostly of ``such sums as 
necessary''--for a variety of demonstration projects related to 
child nutrition; initiatives in training, administration, and 
promotion of nutrition programs; and studies of best practices 
and potential improvements in such programs.
    The bill contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
Because states and schools have flexibility in how they 
implement the child nutrition program and because they would 
receive new financial assistance, the new requirements of this 
legislation would not be intergovernmental mandates.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of the bill's effects on direct spending is 
shown in Table 1. The changes in direct spending fall within 
budget function 600 (income security).

   TABLE 1.--SUMMARY OF EFFECTS ON DIRECT SPENDING OF THE CHILD NUTRITION AND WIC REAUTHORIZATION ACT OF 2004
----------------------------------------------------------------------------------------------------------------
                                                       By fiscal year, in millions of dollars--
                                    ----------------------------------------------------------------------------
                                      2004   2005   2006   2007   2008   2009   2010   2011   2012   2013   2014
----------------------------------------------------------------------------------------------------------------
                                         CHANGES IN DIRECT SPENDING \1\

Estimated Budget Authority.........      7     69     43     35     40     46     50     51     51     52     52
Estimated Outlays..................      6     58     43     39     41     45     50     51     51     52     52
----------------------------------------------------------------------------------------------------------------
\1\ Implementing the bill also would affect spending subject to appropriation, but CBO has not completed an
  estimate of those effects.

Note.--Components may not sum to totals because of rounding.

    Basis of estimate: The following description and Table 2 
detail those provisions that have significant budgetary 
effects. For this estimate, CBO assumes that the bill will be 
enacted by July 1, 2004.

Direct Certification and Household Applications

    Sections 104 and 105 would alter the application process 
for school meals and would modify the procedures used to verify 
the income of participants. Section 104 would require the 
direct certification of children in Food Stamp households for 
free meals. This new requirement would be phased in over three 
years beginning on July 1, 2005. Section 105 would make changes 
to the verification requirements for free and reduced-price 
meal applications; and those changes would lead to savings 
because increased verification would likely result in the loss 
or reduction of meal benefits for some students.
    On balance, CBO estimates that enacting sections 104 and 
105, would have net savings of $113 million through 2009 and 
$219 million through 2014.

                                                TABLE 2.--ESTIMATED DIRECT SPENDING EFFECTS, BY PROVISION
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         By fiscal year, in millions of dollars--
                                                                 ---------------------------------------------------------------------------------------
                                                                   2004    2005    2006    2007    2008    2009    2010    2011    2012    2013    2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                           Title I, Amendments to Richard B. Russell National School Lunch Act

Direct Certification:
    Estimated Budget Authority..................................       0       0      10       4       9      17      17      18      18      19      20
    Estimated Outlays...........................................       0       0       4       7      10      16      17      18      18      19      19
Household Applications:
    Estimated Budget Authority..................................       0       0     -39     -42     -44     -46     -48     -50     -52     -54     -56
    Estimated Outlays...........................................       0       0     -33     -41     -44     -45     -48     -49     -51     -53     -55
Interactions of Direct Certification and Household Applications
 Provisions:
    Estimated Budget Authority..................................       0       0       *       2       4       7      11      12      12      12      13
    Estimated Outlays...........................................       0       0       *       2       4       7      11      12      12      12      13
Exclusion of Military Housing Allowances:
    Estimated Budget Authority..................................       *       2       3       4       4       4       4       4       4       5       5
    Estimated Outlays...........................................       *       1       3       4       4       4       4       4       4       5       5
Summer Food Service Program for Children:
    Estimated Budget Authority..................................       0       2       2       2       2       2       2       2       2       3       3
    Estimated Outlays...........................................       0       2       2       2       2       2       2       2       2       3       3
Child and Adult Care Food Program:
    Estimated Budget Authority..................................       6      44      46      46      47      48      50      51      52      54      55
    Estimated Outlays...........................................       5      37      45      46      47      48      50      51      52      53      54
Fresh Fruit and Vegetable Program:
    Estimated Budget Authority..................................       0       9       9       9       9       9       9       9       9       9       9
    Estimated Outlays...........................................       0       7       9       9       9       9       9       9       9       9       9
Summer Food Service Rural Transportation Demonstration:
    Estimated Budget Authority..................................       0       0       2       1       1       0       0       0       0       0       0
    Estimated Outlays...........................................       0       0       2       1       1       *       0       0       0       0       0
Summer Food Service Residential Camp Demonstration:
    Estimated Budget Authority..................................       *       1       0       0       0       0       0       0       0       0       0
    Estimated Outlays...........................................       *       1       0       0       0       0       0       0       0       0       0
Year-Round Service for Eligible Entities:
    Estimated Budget Authority..................................       0       1       0       0       0       0       0       0       0       0       0
    Estimated Outlays...........................................       0       *       1       0       0       0       0       0       0       0       0
Training, Technical Assistance, and Food Service Management
 Institute:
    Estimated Budget Authority..................................       0       1       1       1       1       1       1       1       1       1       1
    Estimated Outlays...........................................       0       1       1       1       1       1       1       1       1       1       1
Administrative Error Reduction:
    Estimated Budget Authority..................................       0       9       8       6       6       3       3       3       3       3       3
    Estimated Outlays...........................................       0       7       8       6       6       3       3       3       3       3       3
Information Clearinghouse:
    Estimated Budget Authority..................................       *       *       *       *       *       0       0       0       0       0       0
    Estimated Outlays...........................................       *       *       *       *       *       *       0       0       0       0       0
Gleaning of Fresh Fruit and Vegetables:
    Estimated Budget Authority..................................       0       *       *       *       *       0       0       0       0       0       0
    Estimated Outlays...........................................       0       *       *       *       *       0       0       0       0       0       0

                                                   Title II, Amendments to Child Nutrition Act of 1966

Severe Need Assistance:
    Estimated Budget Authority..................................       *       1       1       1       1       1       1       1       1       1       1
    Estimated Outlays...........................................       *       1       1       1       1       1       1       1       1       1       1

                                                            Total Changes in Direct Spending

Estimated Budget Authority......................................       7      69      43      35      40      46      50      51      51      52      52
Estimated Outlays...............................................       6      58      43      39      41      45      50      51      51      52      52
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes.--Components may not sum to totals because of rounding. * = less than $500,000.

    Direct Certification. Current regulations give school food 
authorities the option to directly certify children for free 
meals by obtaining documentation from the state or local Food 
Stamp, Temporary Assistance to Needy Families (TANF), or Food 
Distribution Program on Indian Reservations (FDPIR) agency. 
Students who are directly certified for free meals do not have 
to complete an application and are not subject to the income 
verification process. According to a recent report from the 
U.S. Department of Agriculture's (USDA's) Economic Research 
Service (ERS), 68 percent of all students were enrolled in a 
district that used direct certification during the 2001-2002 
school year.
    Section 104 would require state agencies to enter into 
direct certification agreements with the state Food Stamp 
agency and would require schools to directly certify eligible 
children. This requirement would be phased in over three years 
based on district size, starting with the largest school 
districts.
    The overwhelming majority of students who would be directly 
certified under the bill are students who are already receiving 
free meals because they have submitted a paper application. 
Research from ERS indicates that direct certification leads to 
a small increase in participation among students eligible for 
free meals. CBO estimates that once direct certification is 
fully implemented, annual costs will increase by about $340, on 
average, for roughly 50,000 students.
    This provision also would provide $9 million to assist 
states in implementing the new direct certification 
requirement. In total, the direct certification provision would 
increase spending by $37 million through 2009 and by $129 
million through 2014.
    Income Verification. Section 105 would expand the 
requirements for verifying the eligibility of a sample of free 
and reduced-price applications. Under current regulations, 
local school food authorities are required to verify either:
          (1) 3 percent or 3,000 free and reduced-price meal 
        applications drawn at random from all applications; or
          (2) The lesser of 1 percent or 1,000 of total 
        applications selected from non-Food Stamp households 
        with monthly incomes within $100 of the monthly income 
        eligibility limit for free or reduced-price meals plus 
        the lesser of 0.5 percent or 500 applications from 
        households that provide a Food Stamp, TANF, or FDPIR 
        case number.
    Section 105 would change the verification requirements for 
local education agencies with high nonresponse rates in their 
verification procedures. A nonresponse rate is the percentage 
of applications chosen for verification for which the local 
education agency is not able to get the required documentation 
from the household. Districts that cannot verify at least 80 
percent of applications chosen for verification or districts 
with 20,000 or more students certified by application for free 
and reduced-price meals that do not decrease their nonresponse 
rate by at least 10 percent from their rate two years earlier 
would be required to comply with the new verification 
procedures. These districts would be required to verify the 
lesser of 3,000 or 3 percent of all applications selected from 
households that report monthly incomes within $100 of the 
monthly income eligibility limit.
    In addition, this provision would make two additions to the 
verification procedures for all school food authorities. First, 
prior to verifying an application, an individual other than the 
one who made the initial eligibility determination, must review 
the applications to ensure that the correct determination was 
made. If there is an error, the school food authority would 
make any necessary adjustments to the student's status. This 
could lead to an increase in savings. According to a report 
from the USDA's Food and Nutrition Service (FNS), the majority 
of administrative errors in eligibility determinations lead to 
a student being certified for greater benefits than they should 
be eligible to receive. Second, all school food authorities 
would be required to follow up at least once with households 
that do not respond to requests for verification. When a 
household fails to respond to a verification request, the 
student loses his or her free or reduced-price certification. 
An additional follow-up with these households could slightly 
reduce the nonresponse rate and reduce the amount of savings 
from income verification.
    Based on data from FNS about the nonresponse rates of 
school districts, CBO estimates that about 85 percent of free 
and reduced-price students are in districts that will be 
subject to the new sample-size procedures for income 
verification. Under the new procedures, a slightly greater 
share of applications will be verified nationwide and a greater 
share of them will be error-prone (within $100 of the monthly 
income limit). The increased verification procedures will 
increase savings by uncovering more errors in reporting of 
household income. In many cases, when the verification process 
uncovers underreporting of household income, the student's meal 
eligibility status is reduced. In addition, some students will 
lose meal benefits because they fail to provide the necessary 
documents for verification. In a few cases, however, households 
may have overreported income, and the verification process 
would lead to an increase in meal benefits.
    Section 105 would also provide $2 million in FY 2006 to 
fund an evaluation of the effectiveness of directly verifying 
applications.
    Interaction Effects. Taken alone, CBO estimates that the 
new verification procedures in section 105 would decrease 
spending by $163 million over the 2006-2009 period and $420 
million through 2014. However, these estimated savings would 
decrease after takinginto account the direct certification 
proposal in section 104. Students who are directly certified are not 
subject to the verification process. With the increase in direct 
certifications required by section 104, the pool of applications 
eligible for verification is smaller, thus reducing the potential 
savings.
    With the direct certification provisions, CBO estimates 
that by 2010 an additional 100,000 students annually--about 
40,000 fewer than without such direct certification--would have 
meal benefits reduced by an average of $365 as a result of 
increased verification procedures. As a result, the gross 
savings cited above would be lowered by $13 million over the 
2006-2009 period and by $72 million through 2014. This estimate 
is based on data from FNS on the results of the verification 
process for both random and error-prone samples of 
applications.

Exclusion of Military Housing Allowances

    Section 108 would make permanent a provision requiring that 
the housing allowance of military personnel living in 
privatized housing units not be counted toward income when 
determining the eligibility of children for free and reduced-
price school meals. This provision was set to expire on 
September 30, 2003, but has been extended several times, the 
latest extension is to June 30, 2004, by Public Law 108-211. 
Based on the income, housing, and family size data for enlisted 
military personnel, CBO estimates that benefits for about 7,000 
children will increase in 2005 as a result of this provision, 
eventually rising to 16,000 as more privatized units become 
available. This provision would take effect upon enactment of 
the bill. CBO estimates that the increase in direct spending 
will not be significant (less than $500,000) for the remainder 
of fiscal year 2004. In 2005, CBO estimates that it would cost 
$1 million, rising to an average of about $4 million a year 
thereafter.

Summer Food Service Program for Children

    Section 115 would reauthorize the Summer Food Service 
Program (SFSP), expand and make permanent the current Summer 
Food Pilot Project (renamed as the Simplified Summer Food 
Program), and authorize a demonstration to lower the area 
eligibility requirements for the SFSP in the rural areas of one 
state for two years. CBO estimates that, taken together, these 
changes would cost between $2 million and $3 million a year 
over the 2005-2014 period.
    In the SFSP, sponsors are reimbursed for actual costs 
incurred for providing meals, up to the maximum reimbursement 
rate. In the current Summer Food Pilot Project, SFSP sites in 
13 states and Puerto Rico (other than those run by private, 
nonprofit sponsors) automatically receive the maximum 
reimbursement per meal. This provision would extend the program 
to six additional states and would allow private, nonprofit 
sponsors to participate in the program. CBO estimates that this 
expansion would result in serving about 400,00 additional 
meals, for an incremental cost of about $1 million a year. When 
fully implemented in 2007, CBO estimates that the costs of 
roughly 12 million meals in the SFSP will be reimbursed at an 
average of 13 cents more per meal than under current law.
    Under current law, organizations are eligible to 
participate in the SFSP if they are located in a neighborhood 
where at least 50 percent of the children are eligible for free 
or reduced-price school meals or if at least 50 percent of the 
children enrolled in the program meet those income 
requirements. In this demonstration, the requirement would be 
lowered to 40 percent for two years in the rural areas of one 
state chosen by the Secretary. Based on data on rural schools 
and SFSP participation rates in rural areas, CBO estimates that 
by 2006, about 35 new sites would participate in the SFSP, 
increasing costs by less than $500,000 a year. This provision 
also would provide $400,000 in 2005 for an evaluation of the 
demonstration's impact on participation of both students and 
sponsoring organizations in the SFSP.

Child and Adult Care Food Program

    Section 117 would expand eligibility for participation in 
the Child and Adult Care Food Program (CACFP), authorize a 
demonstration to lower the area eligibility requirements for 
day care homes in the CACFP in the rural areas of one state for 
two years, and reauthorize a management improvement initiative. 
CBO estimates that enacting this section would increase direct 
spending by about $230 million from 2004 through 2009, and by 
about $490 million over the 2004-2014 period.
    Section 117(a) would make permanent a provision to allow 
for-profit child care centers to participate in the CACFP if at 
least 25 percent of the children served by a center are income-
eligible for free and reduced-price school meals. Under current 
law, the authority expires June 30, 2004. Based on the 
estimated growth in the number of for-profit centers that have 
participated in CACFP under this provision since it was 
instituted, CBO anticipates that about 2,000 for-profit centers 
would participate in CACFP if this provision were made 
permanent. Each center would receive about $21,000 on average 
in annual reimbursements from CACFP. CBO estimates that this 
expansion would cost $473 million over the 2004-2014 period.
    Section 117(e) would authorize a demonstration to lower the 
area eligibility requirements for two years for day care homes 
in the rural areas of one state chosen by the Secretary. Under 
current law, day care homes in the CACFP are eligible for the 
``Tier I'' reimbursement rate if they are located in a 
neighborhood where at least 50 percent of the children are 
eligible for free or reduced-price school meals or if the 
provider's own household income is at or below 185 percent of 
the federal poverty guidelines. All other day care homes are 
classified as ``Tier II'' and reimbursed at a rate that is, on 
average, about half that of the Tier I rates. In this 
demonstration, the requirement would be lowered to 40 percent 
for two years in one state chosen by the Secretary.
    Based on data on rural schools and CACFP homes, CBO 
estimates that by 2007, about 500,000 additional meals would be 
reimbursed at the Tier I rate. Most of these meals would be in 
day care homes that are currently participating in the CACFP 
under the Tier II reimbursement and would become newly eligible 
for the Tier I rate. CBO assumes only a small increase in new 
homes participating in the CACFP as a result of the 
demonstration. This provision also would provide $400,000 in 
2006 for an evaluation. CBO estimates that this demonstration 
would cost about $1 million over the two years.
    Section 117(f) would reauthorize mandatory sending for the 
CACFP management support for 2005 and 2006 at $1 million a 
year. Under this provision, the Secretary provides management 
training and technical assistance to state CACFP agencies.
    Section 117(g) would increase the age limit for children 
served in emergency shelters participating in the CACFP from 12 
to 18. CBO estimates that about 1,500 additional homeless youth 
would be served through the increase in the age limit and a 
small increase in providers participating in the CACFP. This 
estimate is based on data from the National Survey of Homeless 
Assistance Providers and Clients on the number and age of 
homeless youth in emergency shelters. CBO estimates that this 
change would cost $14 million through 2014.

Fresh Fruit and Vegetable Program

    Section 118 would permanently authorize and provide $9 
million a year for a program to provide free fruits and 
vegetables to children in 25 schools in each of eight states 
and three Indian reservations.

Summer Food Service Rural Transportation Demonstration

    Section 119 would provide $2 million in fiscal year 2006 
and $1 million in 2007 and in 2008 for a demonstration to 
provide grants to not more than 60 eligible service 
institutions in five states to provide transportation for 
children to SFSP sites in rural areas.

Summer Food Service Residential Camp Demonstration

    Section 120 would authorize a two-year demonstration to 
allow two nonprofit, residential summer camps to be reimbursed 
for meals under the SFSP. Under current law, a camp can 
participate in the SFSP if it is located in a neighborhood 
where at least half of the children are income-eligible for 
free or reduced-price meals. This pilot would allow two 
residential camps that serve children without charge from area-
eligible neighborhoods, but are not necessarily located in the 
neighborhood itself, to participate in the SFSP. This provision 
would become effective on July 1, 2004. Based on data on the 
number of children and average lengths of stay in a residential 
camp, CBO estimates that this provision would increase spending 
by less than $500,000 in 2004 and about $1 million in 2005.

Year-Round Services for Eligible Entities

    Section 126 would make $1 million available in 2005 to 
allow one service institution in California to be reimbursed 
year-round for meals under the SFSP. Under current law, SFSP 
sites can only be reimbursed for meals served during a school 
vacation period.

Training, Technical Assistance, and Food Service Management Institute

    Section 128 would increase mandatory funding for the Food 
Service Management Institute by $1 million a year. CBO 
estimates that this provision would increase spending by $5 
million over the 2005-2009 period.

Administrative Error Reduction

    Section 129 would provide funds for training and technical 
assistance to reduce administrative errors in school meal 
programs, as well as increase the number of administrative 
reviews of certain local education agencies' meals programs. 
Section 129(a) would provide $5 million in each of 2005 and 
2006 and $3 million a year in each of 2007and 2008 for federal 
training and technical assistance to state and local agencies on best 
management and administrative practices.
    Section 129(b) would require an additional review for a 
local education agency that the Secretary of Agriculture 
determines to be at high risk for administrative error. Under 
current regulations, school food authorities (SFA) are required 
to have an administrative review at least once every five years 
and a follow-up review if it fails to meet review standards. If 
the audit reveals that an SFA has received payments in error, 
FNS recovers those overpayments. For example, if a student is 
found to have been incorrectly certified as eligible for free 
meals when he or she is only eligible for reduced-price meals, 
FNS recoups those overpayments.
    This provision also would extend the maximum period of time 
for which overpayments can be collected if a school food 
authority fails both an initial and a follow-up review for both 
the current review system and the additional review added by 
this provision. Overpayments could be collected for up to 60 
days for a failed follow-up review or 90 days in subsequent 
follow-up reviews. Based on data on the amount of money 
recouped from the current administrative review procedure, CBO 
estimates that the additional review and the extended period of 
collection will result in savings of $1 million to $2 million 
annually over the 2005-2014 period.
    Section 129(c) would require each state to provide annual 
training on administrative practices to local school food 
authority personnel. This provision would provide $4 million a 
year, beginning in fiscal year 2005, to the Secretary to assist 
states in providing training and conducting additional 
administrative reviews.
    CBO estimates that all of these provisions would increase 
direct spending by $43 million over the 2005-2014 period.

Information Clearinghouse

    Section 131 would reauthorize the Information Clearinghouse 
and increase the funding to $250,000 a year through 2008. The 
Information Clearinghouse provides information on food 
assistance program to organizations that work with low-income 
individuals. CBO estimates that this provision would increase 
direct spending by about $1 million over the 2004-2009 period.

Gleaning of Fresh Fruits and Vegetables

    Section 133 would provide $100,000 annually in fiscal years 
2005 through 2008 for grants to a nongovernmental organization 
to establish and maintain a field gleaning operation to 
encourage the consumption of fresh fruits and vegetables. CBO 
estimates that this provision would increase direct spending by 
less than $1 million dollars over the 2005-2009 period.

Severe Need Assistance

    Section 210 would eliminate cost accounting for breakfasts 
served in schools classified as ``severe need'' schools 
(defined below) and eliminate the waiting period for new 
schools to receive the severe need rate. CBO estimates that 
this provision would increase direct spending by $1 million 
annually.
    Currently, a school participating in the School Breakfast 
Program (SBP) is classified as a ``severe need'' school and 
eligible for a higher reimbursement for free and reduced-price 
breakfasts if at least 40 percent of the lunches served in the 
school in the second preceding year were free or reduced-price. 
Severe need schools are reimbursed for their actual costs 
incurred in providing breakfast, up to the maximum severe need 
rate. Based on discussions with the Food and Nutrition Service, 
there are some schools that are eligible for the severe need 
rate but do not receive it because of the paperwork entailed in 
accounting for per-meal costs. This provision would allow these 
schools to automatically receive the maximum severe need rate 
for each breakfast served. Based on data on the number of 
schools that would meet the severe need eligibility 
requirements and the number reported to be receiving the higher 
rate, CBO estimates that about 200 schools would begin 
receiving the severe need rate under this provision, increasing 
payments by about $1,800 per school on average.
    In addition, this provision would allow new schools to 
automatically receive the severe need rate if the Secretary 
determines that a school would have otherwise met the 
requirements. Based on the number of schools that enter the 
National School Lunch Program (NSLP) each year and the 
participation rate in SBP, CBO estimates that each year, about 
150 additional schools would start receiving the severe need 
rate earlier than they would have under current law, increasing 
payments by about $1,800 per school on average.

Spending Subject to Appropriation

    The bill has several provisions that would affect spending 
subject to appropriations. CBO has not completed an estimate of 
these potential effects on discretionary spending. 
Unlessotherwise noted, the bill's authorizations of appropriations 
generally would take effect beginning with fiscal year 2005. The 
following is a description of the provisions of the bill that would 
affect discretionary spending.
    Special Supplemental Nutrition Program for Women, Infants 
and Children (WIC). Section 204 would extend the authorization 
of appropriations of such sums as are necessary for the WIC 
program through fiscal year 2008. In 2004, $4.6 billion was 
appropriated for WIC. The WIC program provides food and other 
support to low-income pregnant, post-partum, and breast-feeding 
women; and to infants and children up to age five. The bill 
would also make several changes to the underlying authorization 
of the program including changes in the certification 
procedures for participants, certification and contracts with 
vendors, the bidding process for infant formula contracts and 
rebates, and the funding for breast-feeding promotion and 
information systems.
    Demonstrations. The bill would authorize several 
demonstration projects:
     Healthy school nutrition environment 
demonstrations. Section 121 would authorize the appropriation 
of such sums as are necessary to conduct demonstrations in 
elementary and secondary schools to create healthy school 
nutrition environments and evaluate the impact on the health 
and well-being of the students.
     Food service program personnel professional 
standards demonstration. Section 122 would authorize the 
appropriation of such sums as are necessary for a demonstration 
to assist states in providing training for food service 
professionals to obtain certain credentials or certificates. In 
addition, the demonstration would include an assessment of food 
service professional certifications and credentials.
     School garden grant demonstration. Section 123 
would authorize the appropriation of $15 million for a 
demonstration to provide grants to states, schools or nonprofit 
organizations to support school gardens.
     Childhood obesity prevention demonstration. 
Section 125 would authorize the appropriation of $250,000 for 
each of fiscal years 2005 through 2008 for a grant to a 
national organization to obesity prevention activities for 
children with limited English proficiency in child care 
centers.
     Free lunch and breakfast expansion demonstration. 
Section 127 would authorize the appropriation of such sums as 
are necessary for a demonstration in five states to raise the 
income eligibility limit for free lunches and breakfasts from 
130 percent of poverty to 185 percent of poverty.
    Training, administration, and education promotion. The bill 
would authorize appropriations for several initiatives related 
to training for, administration of, and promotion of nutrition 
programs:
     Nutrition promotion. Section 101 would authorize 
such sums as are necessary for the Secretary to make annual 
payments to states, using a formula based on a state's 
proportion of meals served under the Richard B. Russell School 
Lunch Act, to promote nutrition in food service programs.
     Purchases of locally produced foods. Section 111 
would extend the authorization of appropriation of $400,000 for 
one year to 2008 to provide start-up grants to institutions 
participating in the NSLP and SBP to purchase locally produced 
foods.
     Access to local foods. Section 124 would authorize 
such sums as are necessary to provide competitive matching 
grants to schools and nonprofits for projects that improve 
access to local foods for schools and institutions 
participating in federal meal programs and support nutrition 
education programs.
     Procurement training. Section 114 would authorize 
the appropriation of $1 million annually for 2005 through 2008 
to provide training and technical assistance to states on 
procurement of goods and services for federal meal programs.
     Training, technical assistance, and food service 
management institute. Section 128 would authorize the 
appropriation of $1 million annually for training and technical 
assistance activities.
     Food employment empowerment and development 
program. Section 401 would authorize $20 million a year for 
2005 through 2008 to make grants to organizations to combat 
hunger at the community level.
     Team nutrition network. Section 205 would 
authorize such sums as are necessary for grants to states for 
nutrition education activities for children, and for training 
and technical assistance to states, schools, and community 
nutrition programs.
     Compliance and Accountability. Section 130 would 
reauthorize the appropriation of funds for accountability 
systems in federal meal programs. This provision also would 
increase the authorization of appropriation from $3 million a 
year to $6 million a year for 2004 through 2008.
     State Administrative Expenses. Section 202 would 
authorize the appropriation of such sums as are necessary for 
grants to states to improve school technology and information 
systems.
    Evaluations. Finally, the bill would authorize 
appropriations for various studies and program evaluations:
     Review of best practices in the breakfast program. 
Section 206 would authorize the appropriation of such sums as 
are necessary to conduct a review of the best practices to 
assist school food authorities in expanding the School 
Breakfast Program.
     Program evaluation. Section 132 would authorize 
the appropriation of $5 million annually for national 
performance assessments of meal programs and such sums as are 
necessary for a study of the feasibility of improving the 
certification process for the school lunch program.
     Fresh fruit and vegetable program. Section 118 
would authorize such sums as are necessary to expand the fresh 
fruit and vegetable program.
     World Food Prize. Section 203 would authorize such 
sums as are necessary to provide assistance to the World Food 
Prize Foundation for activities including acquisition or 
improvement of property and research and outreach.
    Estimated impact on state, local, and tribal governments: 
For large entitlement programs like the child nutrition 
program, the Unfunded Mandates Reform Act defines an increase 
in the stringency of conditions or a cap on federal funding as 
an intergovernmental mandate if the affected governments lack 
authority to offset those costs while continuing to provide 
required services. This bill would alter, and in some cases 
increase, some of the conditions for receiving assistance under 
the child nutrition program. However, the bill also would 
increase federal reimbursements for administrative expenses and 
would provide funding for some of the requirements. In other 
cases, schools and school food authorities currently have 
sufficient flexibility in the program to enable them to comply 
with the changes and still provide the required services. 
Consequently, the legislation contains no intergovernmental 
mandates as defined in UMRA.
    Estimated impact on the private sector: The bill contains 
no private-sector mandates as defined in UMRA.
    Previous CBO estimate: On March 23, 2004, CBO transmitted a 
cost estimate for H.R. 3873, the Child Nutrition Improvement 
and Integrity Act, as ordered reported by the House Committee 
on Education and the Workforce on March 10, 2004. H.R. 3873 
contains several child nutrition proposals, including a 
provision to expand direct certification and increase the 
requirements for income verification. CBO estimated that H.R. 
3873 would increase direct spending by $550 million over the 
2004-2014 period.
    The estimate for the Senate bill differs from the estimate 
for H.R. 3873 largely because the Senate bill has different 
requirements for income verification, because the Senate bill 
would provide a gradual phase-in of direct certification, and 
because it would provide mandatory funding for additional 
projects.
    Estimate prepared by: Federal Costs: Kathleen FitzGerald. 
Impact on State, Local, and Tribal Governments: Leo Lex. Impact 
on the Private Sector: Samuel Kina.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                    VI. Section-by-Section Analysis


TITLE I. AMENDMENTS TO THE RICHARD B. RUSSELL NATIONAL SCHOOL LUNCH ACT

Section 101. Nutrition Promotion

    Current law: No provisions.
    Section 101: Subject to the availability of funds, this 
section requires the Secretary to make payments to State 
agencies to promote nutrition in child nutrition food service 
programs.
    For each fiscal year, the total amount made available may 
not be more than \1/2\ cent times the number of lunches 
reimbursed (subsidized) through the school lunch program, the 
child and adult care food program, and the summer food service 
program. At current lunch service rates, this would total 
approximately $34 million.
    Each State agency would be allocated either a uniform base 
amount set by the Secretary, or if higher, an amount based on 
its proportion of the total number of lunches reimbursed 
through the school lunch program, the child and adult care food 
program, and the summer food service program. However, the 
Secretary would be required to reduce proportional allocations 
to State agencies to the extent necessary to ensure that the 
total allocated is not greater than the amount appropriated for 
the nutrition promotion program.
    Most funding received by State agencies would be disbursed 
to school food authorities and other child nutrition food 
service institutions to disseminate and use nutrition messages 
and materials developed by the Secretary. But State agencies 
would be allowed to (1) reserve up to 5% of their allocation 
(or, in the case of small State agencies, a higher percentage 
set by the Secretary) to support dissemination and use of 
nutrition messages and materials developed by the Secretary and 
(2) retain an additional portion of their allocation (set by 
the Secretary) and use the funds to disseminate and use 
nutrition messages and materials developed by the Secretary 
through the summer food service program.
    Documentation of State agency activities would be required, 
and the Secretary would be permitted to reallocate unused 
funds.
    Appropriations for the nutrition promotion program are 
authorized at ``such sums as necessary'' to carry out the 
program, to remain available until expended.

Section 102. Nutrition Requirements

    Current law: Lunches served by schools participating in the 
school lunch program must offer:
          --Fluid milk; and
          --A variety of fluid milk consistent with prior year 
        preferences, unless the prior year preference for any 
        particular variety of fluid milk is less than 1% of the 
        total milk consumed at the school.

[Sec. 9(a)(2) of the Richard B. Russell National School Lunch Act 
        (NSLA)]

    Notes: By regulation, substitutes for fluid milk may be 
offered by schools. But they are only considered part of a 
reimbursable (subsidized) school meal if they are provided 
under the following rules. Schools must make substitutions in 
response to a request from a licensed physician for students 
with a ``disability'' that restricts their diet. Schools may 
make substitutions for students with ``medical or other special 
dietary needs'' when requested by a recognized medical 
authority. Under the terms of section 4(e) of the Child 
Nutrition Act of 1966, the milk and milk substitute rules of 
the school lunch program also apply to the school breakfast 
program. By policy, they also apply to other child nutrition 
food service programs.
    Section 102: This section replaces current law provisions 
and establishes rules that, in most matters, track current law 
and regulations. It stipulates that lunches served by schools 
participating in the school lunch program:
          --Must offer fluid milk in a variety of fat contents;
          --May offer flavored and unflavored fluid milk and 
        lactose-free fluid milk; and
          --Must provide a fluid milk substitute for students 
        whose ``disability'' restricts their diet on the 
        receipt of a written statement from a licensed 
        physician that identifies the ``disability'' and 
        specifies the substitute.
    In addition, schools may substitute a non-dairy beverage 
that is nutritionally equivalent to fluid milk and meets 
nutritional standards established by the Secretary for students 
who cannot consume fluid milk because of a ``medical or other 
special dietary need'' (other than a ``disability''). The 
standards (among other requirements set by the Secretary) must 
include fortification of calcium, protein, vitamin A, and 
vitamin D to levels found in cow's milk.
    The permissive substitutions noted immediately above may be 
made if (1) the school notifies the State agency that the 
school is implementing a permitted variation and (2) the 
substitution is requested by written statement of a medical 
authority or the student's parent or legal guardian that 
identifies the ``medical or other special dietary need'' that 
restricts the student's diet. A school is not required to 
provide non-dairy beverages other than those the school has 
identified as acceptable substitutes. Expenses incurred in 
providing substitutions for fluid milk that are in excess of 
expenses covered by program reimbursements must be paid by the 
school district.
    Finally, this section bars schools and institutions 
participating in the school lunch program from restricting, 
directly or indirectly, the sale or marketing of ``fluid milk 
products'' by the school (or a person approved by the school) 
at any time or place on school premises or at any school-
sponsored event.
    The Committee recognizes the important role that fluid milk 
and other low-fat dairy products play in the National School 
Lunch Program to help foster children's healthy growth and 
development. Section 102 continues current policy encouraging 
all children to consume cow's milk, yet gives schools the 
option to offer an acceptable non-dairy substitute to children 
who cannot drink cow's milk for medical or other special 
dietary reasons. Section 102 is intended toreduce the barriers 
for schools that participate in the National School Lunch and Breakfast 
Program and who want to allow greater accessibility to a fluid milk 
substitute for children with a medical or other special dietary need.
    The Committee recognizes that schools may make 
substitutions, at their discretion, for individual children who 
do not have a disability, but who have special medical or 
dietary needs. Such determinations are only made on a case-by-
case basis. This provision covers those children who have milk 
intolerances or allergies but do not have life threatening 
reactions (anaphylactic reactions) when exposed to milk. Each 
such request currently must include a statement from a 
recognized medical authority that identifies the medical or 
other dietary condition which restricts the child's diet, foods 
to be omitted and foods to be substituted. Section 102 permits 
a statement from a parent to substitute for the statement from 
the medical authority.
    Section 102 amends Section 9(a)(2) of the Richard B. 
Russell National School Lunch Act by legislating certain 
regulatory provisions governing meal substitutions that are 
found in 7 CFR 210.10(g)(1). Section 102 modifies these 
provisions in only one significant aspect to permit a statement 
from a student's parent or legal guardian identifying a medical 
or other special dietary need that restricts a student's diet 
in order to allow a substitution.
    Section 102 maintains current regulations requiring a 
statement from a licensed physician in cases of a medical 
disability. The term ``disability'' as defined by the Americans 
with Disabilities Act includes severe food allergies (food 
anaphylaxis) or other special food needs of children with 
disabilities. Department of Agriculture regulations (7 CFR 15b) 
require substitutions or modifications for children whose 
disabilities restrict their diet. The term ``medical or other 
special dietary need'' does not include children with 
disabilities and schools may, but are not required, to provide 
dietary substitutions. The Committee encourages local 
educational agencies and school food service personnel to 
consult regulations and guidance published by the Food and 
Nutrition Service to understand definitions established for the 
terms ``medical need'' and ``special dietary needs.''
    As noted above, this section largely codifies 7 CFR 
210.10(g)(1) as it relates to beverages, with one significant 
change. Section 102 does not affect 7 CFR 210.10(g)(2) which 
allows schools to provide alternatives for ethnic, religious, 
or economic reasons. Thus, schools may provide alternative 
beverages under the authority provided in 7 CFR 210.10(g)(2).
    In implementing the substitution provisions of Section 102, 
the Committee intends that the privacy rights of students and 
parents will be safeguarded. Further, the Committee expects 
that the Department of Agriculture will establish nutritional 
requirements for all non-dairy substitutions to assure they are 
nutritionally equivalent to milk.
    This provision will ensure consistency among substitute 
beverages so that children will receive recommended nutrients. 
This amendment, while requiring that substitutes be of 
equivalent nutritional value, does not provide authority for 
the Secretary to ensure the nutrient content of such beverages. 
The Secretary is encouraged to make available to schools a list 
of substitutions for fluid milk determined to meet established 
requirements for nutritional equivalence. However, the 
Committee does not intend to require the Secretary to approve 
specific products. Schools wishing to make available 
substitutions for fluid milk not identified by the Secretary as 
nutritionally acceptable are responsible for making a 
determination in accordance with regulations issued by the 
Secretary.
    The Committee does not intend for Section 102 to create any 
additional paperwork or administrative burdens for parents or 
schools, but it assumes that the Secretary of Agriculture will 
provide schools maximum flexibility in fulfilling notification 
requirements under this Section. Furthermore, the Committee 
encourages schools to identify ways to make parental 
notification simple. For example, a written request from a 
parent or a legal guardian for a non-dairy substitute may be 
included in eligibility forms for a free or reduced price meal, 
provided the parent or legal guardian specifies what substitute 
is requested and the medical and other special dietary needs, 
as indicated in 7 CFR 210.10(g)(1). Moreover, the Committee 
recommends that schools permit requests for substitutions to 
remain in effect until the medical authority or student's 
parent or legal guardian revokes such request in writing.
    Section 102 requires schools that make available to 
students a non-dairy substitute to notify the state agency that 
substitute beverages are being made available. If this 
information is contained in an existing report, this 
requirement will be considered as met.

Section 103. Provision of Information

    Current law: No provisions.
    Section 103: This section requires the Secretary to ensure 
that States and school food authorities administer school 
nutrition programs in a manner that reflects food consumption 
recommendations (1) specified in the Dietary Guidelines for 
Americans and (2) at the Secretary's option, based on other 
recent scientifically valid information.
    In implementing Section 103, the Committee strongly 
encourages the Secretary, for the school year beginning in July 
2004, to take action to encourage schools to offer foods that 
reflect consumption recommendations made by the Dietary 
Guidelines for Americans. As an example, the 2000 revision of 
Dietary Guidelines for Americans included a separate guideline 
for grains, directing Americans to ``choose a variety of grains 
daily, especially whole grains.'' The Dietary Guidelines 
specifically recommend, ``Aim for at least 6 servings of grain 
products per day--more if you are an older child or teenager, 
an adult man, or an active woman--and include several serving 
of whole grains.''
    Section 103 also allows the Secretary to encourage the 
consumption in schools of foods that are recommended by 
scientifically valid information. As an example, there is a 
growing scientific consensus on the value of omega-3 fatty 
acids. The American Heart Association has stated ``Omega-3 
fatty acids have been shown in epidemiological and clinical 
trials to reduce the incidence of cardiovascular disease.'' 
Accordingly, the recent revision of the American Heart 
Association's dietary guidelines recognizes this evidence by 
recommending consuming fish, which is high in omega-3 fatty 
acids, at least twice weekly to reduce the risk of heart 
disease.

Section 104. Direct Certification

                 Applications and descriptive materials

    Current law: Applications for free and reduced-price school 
meals and descriptive materials about school meal programs must 
be distributed to parents and guardians.

[Sec. 9(b) of the NSLA]

    Section 104: This section requires that descriptive 
materials distributed to parents and guardians contain a 
notification that (1) participants in the special supplemental 
nutrition program for women, infants, and children (the WIC 
program), the food stamp program, the food distribution program 
on Indian reservations, and State TANF programs may be eligible 
for free or reduced-price school meals and (2) documentation 
may be requested for verification of eligibility for free or 
reduced-price meals.

                        ``Direct certification''

    Current law: A school food authority may ``directly 
certify'' any child as eligible for free or reduced-price 
school meals, without further application, by directly 
communicating with the appropriate State or local agency to 
obtain documentation of the child's status as a member of a 
food stamp household or a family receiving TANF.

[Sec. 9(b)(2)(C)(ii) of the NSLA]

    Section 104: This section requires school food authorities 
to ``directly certify'' as eligible for free school meals, 
without further application, any child who is a member of a 
food stamp household. In order to carry out this rule, it also 
requires each State agency to enter into an agreement with the 
State food stamp agency to establish procedures under which 
children who are members of food stamp households will be 
``directly certified'' and amends the Food Stamp Act to require 
State food stamp agencies to enter into the required agreements 
and cooperate in carrying out ``direct certification.''
    The ``direct certification'' requirements are phased in. 
For school year 2006-2007, they apply to school districts with 
an enrollment of 25,000 students or more in the preceding year. 
For school year 2007-2008, they apply to school districts with 
an enrollment of 10,000 students or more in the preceding year. 
For subsequent school years, they apply nationwide. Until 
mandatory ``direct certification'' for children in food stamp 
households is fully implemented, the existing permissive 
authority is retained.
    In addition, this section adds (to existing authority with 
regard to children in TANF families) permissive authority for 
school food authorities to ``directly certify'' homeless 
children, children served by programs under the Runaway and 
Homeless Youth Act, and migrant children.
    These provisions are intended to improve certification 
accuracy and reduce the paperwork burden placed on school food 
authorities and families. When implementing these provisions, 
the Committee expects the Secretary and State agencies to 
encourage school food authorities to disregard the paper meal 
applications of students that have already been directly 
certified.

                                Funding

    Current law: No provisions.
    Section 104: This section also provides the Secretary 
mandatory funding ($9 million to be available October 1, 2005 
and remain available until spent) to assist States in carrying 
out the provisions of this section (as to applications and 
descriptive materials and ``direct certification'') and 
verification activities (see section 105).

                             Communications

    Current law: No provisions.
    Section 104: This section requires that any communications 
with households for verification or eligibility determination 
purposes be in an understandable and uniform format and, to the 
extent practicable, in a language that parents and guardians 
can understand. It also explicitly permits applications and 
descriptive material to be made available electronically via 
the Internet.

                Miscellaneous and conforming provisions

    Section 104 further (1) limits information that may be 
provided to third-party contractors used in verification 
``follow-up'' activities (see section 105), (2) allows the 
disclosure of information to State Medicaid agencies for 
``direct verification'' purposes (see section 105), (3) 
requires State food stamp agencies to cooperate in verification 
activities (see section 105), and (4) makes various conforming 
amendments to the NSLA.

Section 105. Household Applications

                       Eligibility determinations

    Current law: Eligibility determinations for free or 
reduced-price school meals (other than cases where ``direct 
certification'' is used) are to be made on the basis of a 
complete application executed by an adult member of the 
household.

[Sec. 9(b)(2)(C) of the NSLA]

    Note: School food authorities may request separate 
applications for each child in a household. By policy, school 
food authorities may assist in completing an application.
    Section 105: This section requires that eligibility 
determinations for free or reduced-price school meals (other 
than cases where ``direct certification'' is used) are to be 
made on the basis of a complete application executed by an 
adult member of the household or in accordance with guidance 
issued by the Secretary. It also stipulates that the household 
application must identify the names of each child in the 
household for whom free or reduced-price meal benefits are 
beingrequested and bars State agencies and school food 
authorities from requesting separate applications for each child in 
cases where the children attend schools under the same school food 
authority. It further explicitly permits applications with electronic 
signatures if the application is submitted electronically and the 
application filing system meets confidentiality standards set by the 
Secretary.

                Verification of a sample of applications

    Current law: By regulation, local school food authorities 
(SFAs) must verify the eligibility of children in a sample of 
approved free and reduced-price school meal applications. The 
sample size selected must be either (1) the lesser of 3% of, or 
3,000, approved applications selected at random or (2) the 
lesser of 1% of all applications selected from ``error-prone'' 
applications or 1,000 ``error-prone'' applications, plus the 
lesser of \1/2\ of 1% of, or 500, approved applications that 
provided a case number (in lieu of income information) showing 
participation in the food stamp program, a State TANF program, 
or the food distribution program on Indian reservations.
    ``Error-prone'' applications are those that indicate 
monthly income within $100 (or annual income within $1,200) of 
the income eligibility limits for free or reduced-price school 
meals.

[Regulations under Sec. 9(b) of the NSLA]

    Section 105: Effective July 2005, this section requires in 
law that SFAs verify the eligibility of children in a sample of 
approved free and reduced-price school meal applications.
    The basic sample size would be the lesser of 3% of all 
approved applications selected from ``error-prone'' 
applications or 3,000 approved error-prone applications. 
``Error-prone'' applications would be those defined as such 
under current regulations or, alternately, under criteria set 
by the Secretary.
    However, SFAs could choose 1 of 2 alternate sample sizes 
(effectively the options established in current regulations, 
noted above) if:
          --Their ``nonresponse rate'' for the preceding school 
        year is less than 20%, or
          --They are an SFA with more than 20,000 children 
        approved by application as eligible for free or 
        reduced-price school meals as of October 1, and their 
        ``nonresponse rate'' for the preceding school year is 
        at least 10% below the ``nonresponse rate'' for the 
        second preceding school year.
    A ``nonresponse rate'' is the percentage of approved 
household applications for which verification information has 
not been obtained by an SFA.
    Note: Second-preceding-school-year ``nonresponse rates'' 
may not be available for all schools for the 2005-2006 school 
year. As a result, this section also provides that, for the 
2005-2006 school year, large SFAs (20,000+ approved students) 
also could qualify to use one 1 of the 2 alternate sample sizes 
(the options in current regulations) if they attempt to verify 
all approved household applications through the use of ``direct 
verification''--i.e., use of public agency records from at 
least 2 programs (see later description of ``direct 
verification'').
    The Committee expects that in implementing these new 
verification requirements, the Secretary or State agencies will 
notify school food authorities that are likely to have more 
than 20,000 children approved by application, before the start 
of each school year, of the verification nonresponse rate they 
would need to achieve in order to be subject to the alternate 
sampling requirements specified in Section 9(b)(3)(D)(iv) of 
the Richard B. Russell National School Lunch Act for the 
following school year.
    In cases in which there are not enough ``error-prone'' 
applications to comply with the options, SFAs would be required 
to randomly select additional applications to fulfill the 
percentage or number requirement.

              Preliminary reviews of approved applications

    Current law: No provisions.
    Section 105: Prior to conducting any other verification 
activity for approved applications, this section requires SFAs 
to ensure that the initial eligibility determination for each 
approved household application is reviewed for accuracy by an 
individual other than the individual making the initial 
determination (unless otherwise determined by the Secretary).
    If the initial determination is found to be incorrect, the 
SFA must (1) correct the household's eligibility status, (2) 
notify the household of the change, (3) if the review indicates 
the household is not eligible for either free or reduced-price 
school meals, notify the household of the reason and that the 
household may reapply with income documentation, and (4) if the 
review indicates that the household is eligible, proceed to 
verify the application.

                        ``Direct verification''

    Current law: No provisions.
    Section 105: When verifying eligibility for free or 
reduced-price school meals, this section permits SFAs to first 
use ``direct verification''--i.e., obtain and use income and 
program participation information from public agencies 
administering certain programs, in accordance with criteria 
established by the Secretary.
    The programs are: the food stamp program, the food 
distribution program on Indian reservations, State TANF 
programs, State Medicaid programs, or similar income-tested 
programs (or other sources of information) as determined by the 
Secretary.
    For purposes of directly verifying school meal 
applications, the Committee expects the Secretary to use 
program participation data in programs with income levels 
comparable to the National School Lunch Program. When verifying 
eligibility using data from other income-testedprograms where 
the income limits are different than the school lunch limits, the 
Committee expects the Secretary to use income information.
    This section also requires the Secretary to evaluate (1) 
the effectiveness of ``direct verification'' in decreasing the 
portion of the verification sample that must be verified by 
contacting the household, while ensuring that adequate 
verification information is obtained, and (2) the feasibility 
of ``direct verification.'' If the Secretary finds that 
``direct verification'' significantly decreases the portion of 
the sample that must be verified by means of directly 
communicating with families, while ensuring that adequate 
information is obtained, and that it can be conducted by most 
State agencies and SFAs, the Secretary may require a State 
agency or SFA to implement ``direct verification'' through 1 or 
more of the programs noted above--unless the State agency or 
SFA demonstrates that it lacks the capacity to conduct ``direct 
verification'' or is unable to implement it.
    This section further provides mandatory funding ($2 million 
to be available October 1, 2005 and remain available until 
spent) for the evaluation of ``direct verification.''

      Individual household verification, ``follow-up'' activities

    Current law: No provisions.
    Section 105: If an approved household application is not 
verified through ``direct verification,'' this section requires 
SFAs to provide the household a written notice that its 
application has been selected for verification and that it is 
required to submit information to confirm eligibility for free 
or reduced-price school meals. The notice is to include a toll-
free phone number that parents or legal guardians may use for 
assistance in the verification process.
    If the household does not respond to a verification request 
for information, the SFA is required to make at least 1 
additional attempt to obtain the necessary verification from 
the household.
    This section also permits SFAs to contract with a third 
party to assist the SFA in carrying out ``follow-up'' 
activities to make additional attempts to obtain necessary 
verification--under standards established by the Secretary.

                         Verification deadline

    Current law: By regulation, verification activities must be 
completed by December 15th of each school year.
    Section 105: This section requires SFAs to complete all 
verification activities (including ``follow-up'' activities) by 
November 15 of each school year. It also requires SFAs to make 
appropriate modifications to eligibility determinations based 
on verification activities.

                    Changing the verification sample

    Current law: No provisions.
    Section 105: This section allows the Secretary to alter 
required verification sample sizes, sample selection criteria, 
and the November 15 verification activity deadline--in the case 
of a natural disaster, civil disorder, strike, or other local 
condition. On individual case review, it also allows SFAs to 
decline to verify up to 5% of the verification sample and 
replace the declined applications with other approved 
applications.

          Feasibility study of the use of computer technology

    Current law: No provisions.
    Section 105: This section requires the Secretary to conduct 
a study of the feasibility of using computer technology 
(including ``data mining'') to reduce: overcertification 
errors; waste, fraud, and abuse in the application process; and 
errors, waste, fraud, and abuse in other nutrition programs. A 
report, including a plan that spells out how using computer 
technology could be implemented, is due not later than 180 days 
after enactment.

Section 106. Duration of Eligibility for Free or Reduced Price Meals

    Current law: No provisions. Note: Current policies direct 
that, when a family's income changes in such a way as to make 
them ineligible for free or reduced-price school meals, they 
are to report the change, and the local school food authority 
is to adjust their status.
    Section 106: This section effectively directs that 
eligibility for free or reduced-price school meals remain valid 
for 1 year for most students. Eligibility would remain in 
effect beginning with approval for the current school year and 
ending on a date during the subsequent school year determined 
by the Secretary. An exception is included for cases where 
verification activities indicate ineligibility.

Section 107. Runaway, Homeless, and Migrant Youth

                  Categorical (automatic) eligibility

    Current law: By administrative guidance, homeless children 
generally are automatically eligible for free school meals. 
There are no explicit eligibility provisions for runaway youth 
or migrant children. Also by administrative guidance, school 
officials may, for purposes of granting eligibility for free 
school meals, accept documentation that children are homeless 
from the local educational liaison for the homeless or 
directors of homeless shelters where the children reside.
    Section 107: This section establishes in law the automatic 
eligibility of homeless children for free school meals. It also 
makes youth served by grant programs under the Runaway and 
Homeless Youth Act and migrant children automatically eligible 
for free school meals. For purposes of granting automatic 
eligibility to homeless children, runaway youth, and migrant 
children, this section also requires documentation that they 
are homeless, served by a runaway youth program, or a migrant 
child.

Section 108. Exclusion of Military Housing Allowances

    Current law: In cases where military families live in 
``privatized'' housing, their housing allowances are not 
counted as income when determining eligibility for free or 
reduced-price school meals. This rule is effective through June 
30, 2004.

[Sec. 9(b)(7) of the NSLA]

    Section 108: This section makes permanent the current rule 
disregarding housing allowances for ``privatized'' housing.

Section 109. Waiver of Requirement for Weighted Averages for Nutrient 
        Analysis

    Current law: School food authorities must use ``weighted 
averages'' for their nutrient analysis of their school meal 
programs. Under this method, the nutrient content of school 
meals is measured (``weighted'') according to food items chosen 
by students. Compliance with this requirement was waived until 
September 30, 2003.

[Sec. 9(f)(5) of the NSLA]

    Section 109: This section re-instates the waiver of the 
requirement to use ``weighted averages'' for nutrient 
analysis--through September 30, 2008.

Section 110. School Food Safety Programs

    Current law: Schools participating in the school lunch and 
breakfast programs must, at least once during each school year, 
obtain a food safety inspection conducted by a State or local 
governmental agency responsible for food safety inspections. 
Schools are not required to comply with this requirement if a 
food safety inspection of the school is required by a State or 
local governmental agency responsible for inspections.

[Sec. 9(h) of the NSLA]

    Section 110: This section adds a requirement that school 
food authorities implement a school food safety program for the 
preparation and service of meals that complies with a ``hazard 
analysis and critical control point'' system established by the 
Secretary (see section 128, Food Service Management Institute).

Section 111. Purchases of Locally Produced Foods

    Current law: Subject to the availability of appropriations, 
the Secretary is required to encourage institutions 
participating in the school lunch and school breakfast programs 
to purchase, in addition to other food purchases, locally 
produced foods--to the maximum extent practicable and 
appropriate. The Secretary also is required to provide startup 
grants to not more than 200 institutions to defray the initial 
costs of equipment, materials, and storage facilities (and 
similar costs) incurred in carrying out this policy. Annual 
appropriations of $400,000 are authorized through fiscal year 
2007.

[Sec. 9(j) of the NSLA]

    Section 111: This section extends the authorization of 
appropriations through fiscal year 2008.

Section 112. Special Assistance

    Current law: Under ``Provision 2'' and ``Provision 3,'' 
schools with high proportions of children eligible for free and 
reduced-price school meals may elect to serve all meals free 
(i.e., avoid annual individual eligibility determinations and 
separate meal counting procedures for free and reduced-price 
meals), if they pay the extra subsidy cost of doing so. The 
Federal government is held harmless through formulas for 
estimating what costs would have been without a totally free 
meal system.

[Sec. 11(a)(1) of the NSLA]

    Section 112: This section allows school districts to claim 
``Provision 2'' or ``Provision 3'' status.

Section 113. Food and Nutrition Projects Integrated with Elementary 
        School Curricula

    Current law: Subject to the availability of appropriations, 
the Secretary is required to award grants to a private 
nonprofit organization or educational institution in each of 3 
States to create, operate, and demonstrate food and nutrition 
projects that are fully integrated with elementary school 
curricula. The authorization of appropriations for these grants 
($100,000--$200,000 a year) expired at the end of fiscal year 
2003.

[Sec. 12(m) of the NSLA]

    Section 113: This section deletes provisions for grants for 
food and nutrition projects integrated with elementary school 
curricula.

Section 114. Procurement Training

    Current law: No provisions.
    Section 114: Subject to the availability of appropriations, 
this section requires the Secretary to provide technical 
assistance and training to States, State agencies, schools, and 
school food authorities in the procurement of goods and 
services for child nutrition meal service programs--including 
technical assistance and training to ensure compliance with 
``Buy American'' requirements. Annual appropriations are 
authorized at $1 million a year for each of fiscal years 2005 
through 2008, to remain available until spent.

Section 115. Summer Food Service Program for Children

                       ``Seamless summer option''

    Current law: No provision. Note: By administrative policy, 
school food authorities may be granted ``seamless summer 
waivers'' under which they may administer summer food service 
programs under provisions of law that normally apply to school 
meal programs, including school meal reimbursement (subsidy) 
rates. These waivers may be obtained to operate programs during 
traditional summer vacation periods and, for year-round 
schools, long school vacation periods (generally exceeding 2-3 
weeks).
    Section 115: This section specifies in law provisions that 
closely track the current ``seamless summer waiver'' policy. 
Under this ``seamless summer option,'' school food authorities 
may administer summer or school vacation food service under the 
provisions of the school meal programs, including school meal 
reimbursement (subsidy) rates--except as otherwise determined 
by the Secretary.

      Rural Area Eligibility Demonstration for Summer Food Service

    Current law: No provisions. Note: Under section 13(a)(1) of 
the NSLA, summer food service programs in ``areas in which poor 
economic conditions exist'' operate as ``open-site'' programs 
in which all participating children are served free meals. 
``Areas in which poor economic conditions exist'' are defined 
as those in which more than 50% of the children are eligible 
for free or reduced-price school meals.
    Section 115: This section requires the Secretary to carry 
out a demonstration in rural areas of 1 State (selected by the 
Secretary) under which the threshold for ``open-site'' programs 
is 40%--for each of calendar years 2005 and 2006.
    This section also requires the Secretary to conduct an 
evaluation of the rural area eligibility summer food service 
demonstration. A report is due not later than January 1, 2008, 
and mandatory funding (a total of $400,000) is provided to 
carry out the evaluation, to be available until spent.

    Appropriations authorization for the summer food service program

    Current law: Appropriations for the summer food service 
program are authorized through June 30, 2004.

[Sec. 13(q) of the NSLA]

    Section 115: This section extends the appropriations 
authorization September 30, 2008.

                    Simplified summer food programs

    Current law: The ``Lugar'' pilot project allows public 
sponsors of summer food service programs (e.g. schools, local 
governments) to receive the maximum summer program 
reimbursement (subsidy) rates without providing documentation 
of costs. The project operates in 13 States and 1 commonwealth: 
Alaska, Arkansas, Idaho, Indiana, Iowa, Kansas, Kentucky, 
Nebraska, New Hampshire, North Dakota, Oklahoma, Puerto Rico, 
Texas, and Wyoming. It is authorized through June 30, 2004.

[Sec. 18(f) of the NSLA]

    Section 115: This section makes the ``Lugar'' pilot project 
permanent as the ``simplified summer food program,'' continues 
it for those States already participating, requires an 
evaluation report by April 30, 2007, and expands it in 2 ways:
          --Effective January 2005, it adds 6 States (Colorado, 
        Louisiana, Michigan, Mississippi, Ohio, and Oregon) 
        based on the proportion of children receiving summer 
        meals compared to the national average; and
          --Effective January 2005, it extends coverage of the 
        ``Lugar'' pilot project to all sponsors in all covered 
        States (i.e., includes private nonprofit sponsors).

Section 116. Commodity Distribution Program

    Current law: The Secretary is required to use ``Section 
32'' and Commodity Credit Corporation funds to maintain the 
``annually programmed level of commodity assistance'' for child 
nutrition and Older Americans Act programs (i.e., supplement 
appropriated funds in order to ensure that the covered programs 
receive the value of commodities they are ``entitled'' to 
receive). This requirement expires June 30, 2004.

[Sec. 14(a) of the NSLA]

    Section 116: This section makes the requirement for the 
Secretary to use ``Section 32'' and Commodity Credit 
Corporation funds to maintain the ``annually programmed level 
of commodity assistance'' permanent.

Section 117. Child and Adult Care Food Program

                      For-profit day care centers

    Current law: For-profit day care centers may participate in 
the child and adult care food program if at least 25% of the 
children they serve meet the eligibility criteria for free or 
reduced- price school meals. In addition, they may participate 
if they receive compensation from amounts granted under Title 
XX of the Social Security Act (the social services block grant 
program) for at least 25% of the children enrolled or their 
licensed capacity, whichever is less. The first of these rules 
(25% of children served meeting the eligibility criteria for 
free or reduced-price school meals) expires June 30, 2004.

[Sec. 17(a)(2)(B) of the NSLA]

    Note: Separately, section 17(p) of the NSLA permanently 
authorizes a 3-State ``pilot'' project under which for-profit 
child care centers can qualify under the first rule noted above 
(25% of children served meeting the eligibility criteria for 
free or reduced-price school meals) in Delaware, Iowa, and 
Kentucky.
    Section 117: This section makes permanent (and nationally 
applicable) for-profit child care centers' ability to qualify 
if at least 25% of the children they serve are eligible for 
free or reduced-price school meals (i.e., the first rule noted 
above). Note: It also ends the 3-State ``pilot'' project 
expanding eligibility of for-profit child care centers since 
the rule they operate under is made nationwide.

      ``Tier I'' family day care homes: duration of determination

    Current law: ``Tier I'' family day care homes are located 
in low-income areas or have low-income providers. They qualify 
for the higher of the 2 day care home reimbursement (subsidy) 
rates offered under the child and adult care food program. A 
determination that a day care home is located in a low-income 
area (typically based on the proportion of children who are 
eligible for free or reduced-price school meals) generally is 
effective for 3 years--unless the State agency determines that 
the area no longer qualifies.

[Sec. 17(f)(3)(E)(iii) of the NSLA]

    Section 117: This section increases the length of ``Tier 
I'' determinations to 5 years--unless the State agency 
determines that the area no longer qualifies.

                        Disregarded overpayments

    Current law: No provisions.
    Section 117: When conducting management evaluations, 
reviews, or audits, this section allows the Secretary or a 
State agency to disregard overpayments to participating 
institutions (typically, child care centers and sponsors of 
family day care homes) if the total overpayment for the fiscal 
year does not exceed an amount--consistent with the disregards 
allowed under other child nutrition programs--that recognizes 
the cost of collecting small claims. Disregards would not be 
allowed for overpayments for which there is evidence of a 
violation of law. Note: By regulation, the comparable disregard 
in school meal programs is $600.

             Family day care homes: duration of agreements

    Current law: The Secretary is authorized to issue 
regulations directing States to develop and provide for the use 
of a standard agreement form between family day care homes and 
their sponsoring organizations. These agreements specify the 
rights and responsibilities of each party.

[Sec. 17(j) of the NSLA]

    Section 117: This section specifies that standard form 
agreements between day care homes and their sponsors are to 
remain in effect until terminated by either party.

        Rural area eligibility demonstration for day care homes

    Current law: No provisions. Note: Under section 17(f)(3)(A) 
of the NSLA, family or group day care homes qualify as ``Tier 
I'' day care homes (i.e., eligible for higher reimbursement/
subsidy rates) if they are located in areas in which more than 
50% of the children are eligible for free or reduced-price 
school meals.
    Section 117: This section requires the Secretary to carry 
out a demonstration in rural areas of 1 State (selected by the 
Secretary) under which the threshold for ``Tier I'' day care 
homes is 40%--for each of fiscal years 2006 and 2007.
    This section also requires the Secretary to conduct an 
evaluation of the rural area eligibility day care home 
demonstration. A report is due not later than March 31, 2008, 
and mandatory funding (a total of $400,000) is provided to 
carry out the evaluation, available until spent.

                     Management support initiative

    Current law: The Secretary is required to provide training 
and technical assistance in order to assist State agencies in 
improving their management and oversight of the child and adult 
care food program. Mandatory funding for this initiative ($1 
million a year) expired at the end of FY2003.

[Sec. 17(q) of the NSLA]

    Section 117: This section provides mandatory funding for 
the management improvement initiative for fiscal years 2005 and 
2006--at $1 million a year.

                               Age limits

    Current law: Emergency homeless shelters may participate in 
the child and adult care food program. Subsidies are paid for 
free meals and snacks served to (1) children not more than 12 
years old, (2) children of migrant workers who are not more 
than 15 years old, and (3) children with disabilities (no age 
limit).

[Sec. 17(t) of the NSLA]

    Section 117: This section allows subsidies to be paid for 
free meals and snacks served by emergency homeless shelters to 
(1) all children not more than 18 years old and (2) children 
with disabilities (no age limit).

              Paperwork reduction and technical amendments

    Current law: No provisions.
    Section 117: This section also makes technical amendments 
to the section 17 of the NSLA and requires the Secretary (in 
conjunction with the States and participating child care food 
service institutions) to examine the feasibility of reducing 
paperwork resulting from regulations and recordkeeping 
requirements for State agencies, day care homes, child care 
centers, and sponsors under the child and adult care food 
program.

Section 118. Fruit and Vegetable Program

    Current law: A pilot project under which students in 25 
elementary or secondary schools in each of 4 States (and 
elementary or secondary schools on 1 Indian reservation) have 
made available to them free fresh and dried fruits and fresh 
vegetables expires at the end of the 2003-2004 school year. The 
project operates in Indiana, Iowa, Ohio, Michigan, and the Zuni 
Reservation and was funded with a total of $6 million.

[Sec. 18(g) of the NSLA]

    Section 118: Beginning with the 2004-2005 school year, this 
section requires the Secretary to operate a permanent program 
under which free fresh fruits and vegetables are made available 
to the maximum extent practicable to students in:
          --25 elementary or secondary schools in each of the 
        States and the Indian reservation in the existing 
        project;
          --25 elementary or secondary schools in a separate 
        existing project in Mississippi; and
          --25 elementary or secondary schools in each of 3 
        additional States and 2 Indian reservations (as 
        selected by the Secretary).
    In selecting schools to participate in the 3 additional 
States and 2 Indian reservations, the Secretary must, to the 
maximum extent practicable, ensure that the majority of schools 
are those in which at least 50% of students are eligible for 
free or reduced-price school meals.
    This section also requires the Secretary to submit annual 
interim reports on the project, along with a final report (due 
by December 31, 2008).
    This section further (1) provides that any remaining 
funding for the existing project may be used for the expanded 
program, (2) provides new mandatory funding for the program ($9 
million a year), and (3) authorizes appropriation of ``such 
sums as are necessary'' to expand the pilot project.

Section 119. Summer Food Service Rural Transportation Demonstration

    Current law: No provisions.
    Section 119: This section requires the Secretary to carry 
out a demonstration providing grants to increase participation 
in the summer food service program through innovative 
approaches to limited transportation in rural areas. The grants 
would be provided through not more than 5 State agencies to not 
more than 60 eligible service institutions--selected by the 
Secretary. Eligible service institutions would be required to 
conduct a project for 3 successive fiscal years, and mandatory 
funding is provided ($2 million for fiscal year 2006, and $1 
million a year for fiscal years 2007 and 2008, available until 
spent). Also required are an interim report and a final report 
(due by January 1, 2009).

Section 120. Summer Food Service Residential Camp Demonstration

    Current law: No provisions. Note: Residential summer camps 
may participate in the summer food service program, but must 
differentiate between children eligible for free and reduced-
price meals and others in their meal service and collect income 
information. They may not operate as an ``open-site'' summer 
program (where all meals are served free to all children).
    Section 120: During the summers of 2004 and 2005, this 
section requires the Secretary to carry out a demonstration to 
identify and evaluate alternative methods of determining the 
eligibility of residential private nonprofit camps to 
participate in the summer food service program. The 
demonstration would be carried out at 1 private nonprofit 
residential camp in each of 2 States. Eligible camps may not 
charge fees to any children in residence, must serve children 
from areas in which at least 50% of the children are eligible 
for free or reduced-price school meals, and would receive 
reimbursements (subsidies) for all meals served to 
participating children at the free-meal summer food service 
reimbursement/subsidy rate (effectively allowing them to 
operate as an ``open-site'' program). An evaluation report 
would be due by March 31, 2006.

Section 121. Healthy School Nutrition Environment Demonstrations

    Current law: No provisions.
    Section 121: Subject to the availability of funds, this 
section requires the Secretary to conduct demonstrations in 
selected elementary and secondary schools to create healthy 
school nutrition environments and to assess the effect of these 
environments on the health and well-being of the children 
enrolled in the schools.
    The Secretary would be required to select schools in a 
manner that (1) provides for an equitable distribution among 
urban, suburban, and rural areas, and schools with varying 
family income levels, and (2) permits evaluation of the 
demonstrations.
    In the first year, selected schools would receive grants to 
assist them in assessing their nutritional environment and 
meeting ``certification criteria.'' For subsequent years, 
schools meeting ``certification criteria'' would receive grants 
to assist them in providing meal services and other approved 
activities consistent with a healthy school environment. 
``Certification criteria'' would be established by the 
Secretary and include at least (1) providing meals that meet 
nutritional standards, (2) offering healthy food choices 
outside regular meal service, (3) promoting the consumption of 
fruits and vegetables, and (4) providing nutrition education to 
staff and to students in an understandable and uniform format 
and, to the extent practicable, in a language students can 
understand.
    The Secretary would be required to evaluate and report on 
demonstration schools--measuring, at a minimum, effects on (1) 
overweight children and obesity, (2) dietary intake, (3) 
nutrition education and behavior, (4) the adequacy of time to 
eat, (5) physical activities, (6) parental and student 
attitudes and participation, and (7) costs.
    Appropriations are authorized at ``such sums as are 
necessary,'' to remain available until spent.
    As part of the Committee's efforts to address the growing 
number of children at risk for overweight or obesity, the 
Committee authorizes pilot projects, subject to the 
availability of funds, to create healthy school nutrition 
environments. The Committee believes schools can play an 
important role in developing opportunities for students to 
develop healthy lifestyles by encouraging physical education 
and activity and providing school children with nutrition 
information so that they can make informed choices from the 
broad variety of foods and beverages available to them on 
school grounds.
    The Committee believes schools should encourage vendors to 
provide healthy choices in vending machines, canteens, and 
school stores as an option for students. This section is not 
meant to direct bans or restrictions beyond the current USDA 
regulations governing the sale of competitive foods.

Section 122. Food Service Program Personnel Professional Standards 
        Demonstration

    Current law: No provisions.
    Section 122: Subject to the availability of funds, this 
section requires the Secretary to carry out a pilot project to 
(1) assess issues pertaining to professional certification of 
school food service program personnel and (2) provide States, 
school districts, and schools with assistance in improving 
professional standards, and obtaining appropriate program 
certification, related to food service and dietary management.
    In carrying out the demonstration, the Secretary must (1) 
assist States in providing training and professional 
development classes and provide assistance to pay the costs of 
attending classes and obtaining certificates/credentials, (2) 
assess which certifications/credentials are appropriate, (3) 
assess the degree to which senior food service personnel are 
required to attain certificates/credentials, (4) assess the 
effect that employing certified/credentialed administrators has 
on program quality, and (5) assess the costs of including 
requirements for certifications/credentials.
    A report on the demonstration is required on its completion 
and ``such sums as are necessary'' to carry out the pilot 
project are authorized, to remain available until spent.

Section 123. School Garden Grant Demonstration

    Current law: No provisions.
    Section 123: Subject to the availability of funds, this 
section permits the Secretary to make grants to State or local 
educational agencies and nonprofit organizations to support 
``school garden programs'' that allow children to learn about 
the importance of ``specialty crops'' to a healthy diet. The 
Secretary must develop and carry out the grant program in 
consultation with State departments of agriculture and other 
appropriate institutions.
    This section also authorizes $15 million for the project, 
to remain available until spent.

Section 124. Access to Local Foods

    Current law: No provisions. Note: Section 9(j) of the NSLA 
requires the Secretary to encourage the purchase of locally 
produced foods (see section 111 above).
    Section 124: This section authorizes the Secretary to 
provide assistance, through competitive matching grants and 
technical assistance, to schools and nonprofit entities that:
          --Improve access to local foods in child nutrition 
        food service schools and institutions through ``farm-
        to-cafeteria'' activities (assistance may include the 
        acquisition of food and appropriate equipment and 
        training and education);
          --Design activities that procure local foods from 
        small- and medium-sized farms;
          --Support nutrition education activities 
        incorporating the participation of schoolchildren in 
        farm and agricultural education activities;
          --Develop a sustained commitment to ``farm-to-
        cafeteria'' projects in the community;
          --Require $100,000 or less in Federal contributions 
        and a Federal contribution of not more than 75%;
          --Provide cash or in-kind matching contributions; and
          --Cooperate in an evaluation carried out by the 
        Secretary.
    ``Such sums as are necessary'' are authorized to be 
appropriated to carry out this grant program--for fiscal years 
2004 through 2008.

Section 125. Childhood Obesity Prevention Demonstration

    Current law: No provisions.
    Section 125: Subject to the availability of funds, this 
section requires the Secretary to award a grant to carry out a 
pilot project to enhance obesity prevention activities for 
child care centers (and their sponsoring organizations) 
providing services to limited-English-proficient individuals 
through the child and adult care food program. The grant would 
be made to a national organization with expertise in designing 
and implementing health education programs forlimited-English-
proficient individuals, would run for a period of 4 years, and would be 
carried out in 4 States that have experienced a growth in their 
limited-English-proficient population of at least 100% between 1990 and 
2000.
    Activities under the grant would include:
          --Developing a ``tool kit'' for use by lay educators;
          --Conducting training and providing technical 
        assistance to lay health educators; and
          --Collaborating with child care centers and 
        sponsoring organizations to identify limited-English-
        proficient children and families and to enhance their 
        capacity to use appropriate obesity-prevention 
        strategies;
    An independent evaluation would be required, and 
appropriations of $250,000 a year for fiscal years 2005 through 
2008 are authorized.

Section 126. Year Round Services for Eligible Entities

    Current law: No provisions.
    Section 126: This section permits local governments and 
private nonprofit organizations in California to receive 
subsidies for up to 3 meals and 2 snacks for any day on which 
they offer services. They would operate generally using summer 
food service program rules, including summer food service 
reimbursement (subsidy) rates. The Secretary is required to 
provide $1 million in fiscal year 2005 to cover additional 
reimbursement (subsidy) costs, to remain available until spent.

Section 127. Free Lunch and Breakfast Expansion Demonstration

    Current law: No provisions. Note: Eligibility for free 
lunches and breakfasts generally is limited to children from 
families with income below 130% of the federal poverty income 
guidelines.
    Section 127: Subject to the availability of funds, this 
section requires the Secretary to carry out a demonstration 
under which the income eligibility limit for free lunches and 
breakfasts is raised to 185% of the federal poverty income 
guidelines (the limit for reduced-price school meals)--in all 
or part of 5 States selected by the Secretary (including a 
largely rural State with a significant Native American 
population).
    This section also requires an evaluation of the 
demonstration to assess (1) its effect on children in 
households with family income below 130% of the poverty 
guidelines and on children with family income between 130% and 
185% of the guidelines, (2) its effect on certification and 
participation rates, (3) its effect on rates of lunch/
breakfast-skipping, (4) its effect on academic achievement, (5) 
its effect on costs, and (6) other factors determined by the 
Secretary.
    A report on the demonstration is required on its 
completion, and ``such sums as are necessary'' to carry out the 
demonstration are authorized to be appropriated, to remain 
available until spent.

Section 128. Training, Technical Assistance, and Food Service 
        Management Institute

             Technology and information management systems

    Current law: No provisions. Note: Section 21(a)(1) of the 
NSLA authorizes training and technical assistance activities to 
improve skills of individuals employed in child nutrition food 
service programs. Appropriations are authorized at $1 million a 
year.
    Section 128: This section adds 2 new uses for the current 
training and technical assistance funding:
          --Providing assistance (on a competitive basis) for 
        the purpose of aiding schools and school food 
        authorities in meeting the cost of acquiring or 
        upgrading technology and information management systems 
        for use in child nutrition food service programs 
        (particularly to schools/school food authorities with 
        at least 50% of enrolled children certified eligible to 
        receive free or reduced-price school meals); and
          --Providing assistance (on a competitive basis) to 
        State agencies with low proportions of schools/students 
        participating in the school breakfast program that 
        demonstrate the greatest need for aid in meeting costs 
        associated with initiating or expanding a school 
        breakfast program.

                   Food Service Management Institute

    Current law: The Food Service Management Institute (FSMI) 
is required to (1) conduct research to assist schools and other 
child nutrition food service organizations in providing high 
quality, nutritious, and cost-effective meal service to 
children, (2) provide training and technical assistance 
relating to a number of food service matters, (3) establish a 
national network of professionals to present training programs 
and workshops for food service personnel, (4) develop training 
materials for the programs/workshops, (5) act as a 
clearinghouse for research on the operation of food service 
programs, (6) train food service personnel, (7) prepare 
informational material, and (8) assist State educational 
agencies in providing additional nutrition and health 
instructions and instructors.

[Sec. 21(c) of the NSLA]

    Section 128: This section adds to the matters for which the 
FSMI is required to provide training and technical assistance--
``hazard analysis and critical control point'' plan 
implementation (see section 110), emergency readiness, 
responding to a food recall, and food bio-security training.

                                Funding

    Current law: For training and technical assistance 
activities, $1 million a year is authorized to be appropriated 
through fiscal year 2003. For the FSMI, mandatory funding of $3 
million a year is provided.

[Sec. 21(e) of the NSLA]

    Section 128: This section extends the $1 million-a-year 
appropriations authorization for training and technical 
assistance activities through fiscal year 2008. It also 
increases mandatory funding for the FSMI to $4 million a year, 
beginning with fiscal year 2005.

Section 129. Administrative Error Reduction

       Administrative training and technical assistance materials

    Current law: No provisions.
    Section 129: This section requires the Secretary--in 
collaboration with State educational agencies, school food 
authorities, and local educational agencies--to develop and 
distribute training and technical assistance materials related 
to the administration of school meal programs that are 
representative of the best management and administrative 
practices.
    The Committee expects the Secretary to implement these 
provisions in a manner that addresses the needs of school food 
authorities of varying sizes and characteristics, including the 
development of different training and technical assistance 
materials as needed.

                     Federal administrative support

    Current law: No provisions.
    Section 129: This section provides mandatory funding to the 
Secretary that the Secretary may use to (1) provide training 
and technical assistance and materials related to improving 
program integrity and administrative accuracy in school meal 
programs and (2) assist State educational agencies in reviewing 
the administrative practices of school food authorities. It 
provides $5 million a year for fiscal years 2005 and 2006, and 
$3 million a year for fiscal years 2007 and 2008.
    The Committee expects the Secretary to use these funds for 
activities including producing and distributing training 
materials, hiring new employees, and contracting with third 
parties.

             Additional administrative review requirements

    Current law: No provisions. Note: School food authorities 
are subject to periodic comprehensive reviews of their food 
service programs--covering all aspects (e.g., meal quality, 
administrative matters). Improperly paid funds may be recovered 
and returned to the Secretary.
    Section 129: In addition to any review carried out under 
current law, this section requires State educational agencies 
to conduct administrative reviews of school food authorities 
that have demonstrated a high level of, or a high risk for, 
administrative error (as determined by the Secretary). These 
additional reviews would review only the administrative 
processes of the selected school food authorities--including 
application, certification, verification, meal counting, and 
meal claiming procedures.
    If, based on the administrative review, the State agency 
determines that a school food authority fails to meet 
performance criteria established by the Secretary, the State 
agency must require the school food authority to develop and 
carry out an approved corrective action plan, provide technical 
assistance in carrying out the plan, and conduct a follow-up 
review.
    If a school food authority fails to meet administrative 
performance criteria set by the Secretary in both an initial 
and follow-up review (under the new administrative review rules 
or current law reviews), this section allows the Secretary to 
require the State educational agency to retain funds otherwise 
payable, under procedures determined by the Secretary. These 
retained funds may be returned to the Secretary or retained by 
the State agency. Specific rules are provided for calculating 
the overpayment amount to be retained.
    Funds returned to the Secretary may be credited to the 
child nutrition appropriation account or be used to (1) provide 
training and technical assistance related to administrative 
practices, (2) assist State agencies in reviewing the 
administrative practices of school food authorities, and (3) 
develop and distribute training and technical assistance 
materials. Funds retained by the State agency (not more than 
25% of the total retained) may be used to carry out school meal 
program integrity initiatives (under an approved State plan) 
that assist school food authorities that have repeatedly failed 
to meet administrative performance criteria.

                        State plan requirements

    Current law: No provisions.
    Section 129: This section stipulates that each State plan 
submitted for State administrative expense funding must include 
a description of how technology and information management 
systems will be used to improve program integrity by: (1) 
monitoring the nutrient content of meals, (2) training schools 
and school food authorities in how to use technology and 
information management systems, and (3) using electronic data 
to establish benchmarks to monitor program integrity, 
participation, and financial data.
    This section also stipulates that each State plan submitted 
for State administrative expense funding must include 
descriptions of the manner in which the State intends to 
administer (1) additional administrative review requirements 
(see above) and (2) state training requirements (see below).

                      State training requirements

    Current law: No provisions.
    Section 129: This section requires each State to provide 
training in administrative practices to school food authority 
administrative personnel and other appropriate personnel and 
mandates that school food authorities and local educational 
agencies ensure that individuals conducting or overseeing 
administrative procedures receive training at least annually 
(unless the Secretary determines otherwise). It also requires 
the Secretary to provide training and technical assistanceto 
States in support of State training initiatives or, at the Secretary's 
option, to directly provide training and technical assistance to school 
food authority administrative personnel and other appropriate 
personnel.

            Funding for training and administrative reviews

    Current law: No provisions.
    Section 129: For each fiscal year beginning with fiscal 
year 2005, this section makes available to the Secretary $4 
million to assist States in carrying out training and 
additional administrative review requirements (see above)--
except that the Secretary may retain a portion of this funding 
to cover costs of activities the Secretary carries out in lieu 
of States. Funding sent to the States must be allocated based 
on the number of local agencies that have demonstrated a high 
level of, or a high risk for, administrative error, and unused 
funding may be reallocated.

Section 130. Compliance and Accountability

    Current law: Appropriations of $3 million a year are 
authorized for compliance and accountability activities--
through fiscal year 2003. Note: Actual appropriations have 
typically been higher than the authorized amount (e.g., $5.2 
million for fiscal year 2004).

[Sec. 22(d) of the NSLA]

    Section 130: This section extends the appropriations 
authorization for compliance and accountability activities 
through fiscal year 2008 and raises it to $6 million a year.

Section 131. Information Clearinghouse

    Current law: The Secretary is required to enter into a 
contract with a nongovernmental organization for a 
clearinghouse that provides information to nongovernmental 
groups that assist low-income individuals and communities with 
food assistance, self-help activities, and other activities 
that empower low-income individuals or communities to improve 
their lives and reduce reliance on Federal, State, or local 
government agencies for food and other assistance. 
Appropriations of $166,000 a year are authorized--through 
fiscal year 2003.

[Sec. 26(d) of the NSLA]

    Section 131: This section extends the appropriations 
authorization for an information clearinghouse through fiscal 
year 2008 and raises it to $250,000 a year.
    The Committee urges the nongovernmental organization 
described in this section to operate and maintain a national 
hunger hotline to assist low-income individuals in obtaining 
emergency food assistance in their communities. Further the 
Committee expects the nongovernmental organization to utilize 
the national hunger hotline to connect low-income individuals 
to local assistance programs that promote self-reliance as 
described in this section.

Section 132. Program Evaluation

    Current law: No provisions.
    Section 132: Subject to the availability of funds, this 
section permits the Secretary to conduct annual national 
performance assessments of child nutrition meal service 
programs that assess the cost of producing meals and snacks, 
the nutrient profile of meals, and the status of menu planning 
activities. For this purpose, it authorizes appropriations of 
$5 million a year.
    Subject to the availability of funds, this section also 
requires the Secretary to conduct a study of the feasibility of 
improving the eligibility certification process for the school 
lunch program and allows the Secretary to conduct pilot 
projects to improve the certification process. For this 
purpose, it authorizes ``such sums as are necessary.''

Section 133. Gleaning of Fresh Fruits and Vegetables

    Current law: No provisions.
    Section 133: This section requires the Secretary to make a 
grant to a nonprofit nongovernmental organization to establish 
and maintain a field gleaning operation in 1 State in order to 
encourage the consumption of fresh fruits and vegetables. The 
organization must be experienced in providing fresh fruits and 
vegetables that would otherwise go to waste to needy 
individuals and in establishing and maintaining a ``field 
gleaning network,'' and must agree to provide information about 
field gleaning operations to related organizations.
    This section also mandates funding for a field gleaning 
grant--$100,000 a year for fiscal years 2005 through 2008 (up 
to 25% of which may be expended in the following fiscal year).

        TITLE II. AMENDMENTS TO THE CHILD NUTRITION ACT OF 1966

Section 201. Severe Need Assistance

    Current law: In order to receive higher ``severe need'' 
school breakfast program reimbursements (subsidies), schools 
must document their costs. They receive the lesser of their 
documented costs or the severe need subsidy rate.
    In order to receive higher ``severe need'' school breakfast 
reimbursements (subsidies), schools must have served 40%+ of 
their lunches free or at a reduced price in the 2nd preceding 
year.

[Sec. 4(d) of the Child Nutrition Act (CNA)]

    Section 201: This section removes the requirement to 
document costs in order to receive severe need reimbursements 
(subsidies). Schools would receive the severe need subsidy 
rate, so long as they meet the ``40%+'' eligibility requirement 
noted above.
    This section also allows eligibility for severe need 
subsidies to schools in which no lunches were served in the 2nd 
preceding year if the Secretary determines that the requirement 
that they have served 40%+ of their lunches free would have 
been met--i.e., allows new schools to meet the ``40%+'' 
requirement without a 2nd preceding year history.

Section 202. State Administrative Expenses

                          Minimum state grants

    Current law: State administrative expense grants are 
calculated as 1.5% of total Federal spending on a list of child 
nutrition programs typically administered by State educational 
agencies--including school meal programs and the child and 
adult care food program. Separate provision is made for grants 
tied to spending on the summer food service program. Spending 
on after-school snack programs operated by schools and 
commodity assistance is not included in the dollar base that 
the 1.5% calculation is applied to.
    Minimum State grants are set at $100,000 a year.

[Sec. 7(a) of the CNA]

    Section 202: This section increases the minimum State grant 
for administrative expenses to $200,000 a year (indexed after 
fiscal year 2008) and requires that--for fiscal years 2005 
through 2007--no State will receive less than its fiscal year 
2004 allocation.

                 Technology infrastructure improvement

    Current law: No provisions.
    Section 202: This section requires States to submit, for 
the Secretary's approval, an amendment to their plan as to how 
they will use their State administrative expense grant for 
information management systems that improve program integrity 
by--(1) monitoring the nutrient content of meals, (2) training 
schools and school food authorities in how to use technology 
and information management systems for menu planning, 
collecting ``point-of-sale'' data, processing applications for 
free and reduced-price meals, and verifying eligibility, and 
(3) using electronic data to establish benchmarks to monitor 
program integrity, program participation, and financial data 
across schools and school food authorities.
    Subject to the availability of funds, this section also 
requires the Secretary to provide funds to States, on a 
competitive basis, to give grants to schools and school food 
authorities to defray the cost of purchasing/upgrading 
technology and information systems. Appropriations of ``such 
sums as are necessary'' are authorized for fiscal years 2005 
through 2008, to remain available until spent.
    The Committee has amended Section 7 of the Child Nutrition 
Act of 1966 to allow school food authorities to use grant money 
to upgrade or purchase technology and information management 
systems. At the option of an individual school food authority, 
the Secretary should allow State agencies to spend funds on 
their behalf, as this would help ensure that such systems are 
purchased or upgraded in a cost-effective and efficient manner.

                      Appropriations authorization

    Current law: ``Such sums as may be necessary'' are 
authorized to be appropriated for State administrative expense 
grants--through fiscal year 2003.

[Sec. 7(g) of the CNA]

    Section 202: This section extends the appropriations 
authorization for State administrative expense grants through 
fiscal year 2008.

Section 203. World Food Prize

    Current law: No provisions.
    Section 203: Subject to the availability of funds, this 
section requires the Secretary to provide assistance for 
activities of the World Food Prize Foundation. Assistance could 
be used to acquire or improve headquarters property, support 
research and outreach for improving the quality, quantity, and 
availability of food throughout the world, and promote 
educational opportunities for students through the World Food 
Prize Youth Institute. Appropriations of ``such sums as are 
necessary'' are authorized.

Section 204. Special Supplemental Nutrition Program for Women, Infants, 
        and Children (The WIC Program)

                 Definition of ``nutrition education''

    Current law: In the WIC context, ``nutrition education'' 
means individual or group sessions and the provision of 
materials designed to improve health status that achieve 
positive change in dietary habits, and emphasize relationships 
between nutrition and health, all in keeping with the 
individual's personal, cultural, and socioeconomic preferences.

[Sec. 17(b)(7) of the CNA]

    Section 204: This section revises the definition of 
``nutrition education'' to read: individual and group sessions 
and the provision of materials that are designed to improve 
health status and achieve positive change in dietary and 
physical activity habits, and that emphasize the relationship 
between nutrition, physical activity, and health, all in 
keeping with the personal and cultural preferences of the 
individual.

                  Definition of ``supplemental foods''

    Current law: In the WIC context, ''supplemental foods'' 
means those foods containing nutrients determined by 
nutritional research to be lacking in the diets of pregnant, 
breastfeeding, andpostpartum women, infants, and children, as 
prescribed by the Secretary. State agencies may substitute 
nutritionally equivalent foods to allow for cultural eating patterns.

[Sec. 17(b)(14) of the CNA]

    Section 204: This section revises the definition of 
``supplemental foods'' to: those foods containing nutrients 
determined by nutritional research to be lacking in the diets 
of pregnant, breastfeeding, and postpartum women, infants, and 
children and foods that promote the health of the population 
served by the WIC program as indicated by relevant nutrition 
science, public health concerns, and cultural eating patterns, 
as prescribed by the Secretary.

                  Certification of breastfeeding women

    Current law: Through regulations, breastfeeding women are 
certified at intervals of approximately 6 months, ending with 
the breastfed infant's first birthday.

[Regulations under sec. 17(d)(3)(A) of the CNA]

    Section 204: This section allows State agencies to certify 
breastfeeding women for up to 1 year postpartum, or until a 
woman stops breastfeeding, whichever is earlier.
    In extending the certification period for breastfeeding 
women, the intent of the Committee is to diminish the 
administrative duties associated with shorter certification 
periods. Accordingly, in extending certification periods for 
breastfeeding women, the Committee expects the Secretary to 
ensure that there will be no decrease in the health and 
nutrition education services that the participants in the 
Special Supplemental Nutrition Program for Women, Infants and 
Children would otherwise have received during a shorter 
certification period and that participants will continue to 
receive the full benefit of supportive services available 
through the program.

                     Physical presence requirement

    Current law: Each individual seeking certification or 
recertification must be physically present to determine program 
eligibility, unless exempt under the terms of the Americans 
with Disabilities Act.
    Local WIC agencies may waive the physical presence 
requirement if they determine it would present an unreasonable 
participation barrier. This waiver authority may be exercised 
only for infants and children who were present at their initial 
certification and (1) are receiving ongoing health care from a 
provider other than the local WIC agency or (2) were physically 
present within 1 year of a certification/recertification and 
have working parents.

[Sec. 17(d)(3)(C) of the CNA]

    Section 204: This section extends the physical presence 
waiver authority under current law to cover infants under 8 
weeks of age (1) who cannot be present at certification for a 
reason determined appropriate by the local WIC agency and (2) 
for whom all necessary certification information is provided.
    The Committee recognizes that many working families, 
especially mothers, find it difficult to access WIC services 
due to the fact that their work schedules preclude them from 
visiting WIC offices during normal office hours. The Committee 
encourages state and local WIC agencies to take such steps as 
are necessary to ensure that working families and families with 
irregular schedules can access the WIC program. Such steps 
might include, extending office hours into the evening and 
weekends, out-stationing staff at temporary locations, and 
utilizing mobile WIC sites.
    The Committee also recognizes that working families with 
children are often in need of other family support services 
such as the Head Start Program, health insurance provided 
through the Medicaid and SCHIP programs, employment and career 
assistance, and other federal, state and local assistance. The 
Committee therefore encourages the Department to work with 
state and local WIC agencies and other relevant stakeholders to 
encourage the co-location of such support services so that 
working families can utilize such services as easily as 
possible.

           Use of WIC benefits at any authorized retail store

    Current law: No provisions.
    Section 204: Through a State plan requirement, this section 
effectively requires State WIC agencies to allow WIC recipients 
to transact WIC vouchers at any authorized retail store in the 
State.

                  Accelerated approval of WIC vendors

    Current law: No provisions.
    Section 204: Through a State plan requirement, this section 
effectively requires that State WIC agencies have procedures 
for accepting and processing vendor applications outside of the 
established time-frames, if the State agency determines there 
will be inadequate access to the program--such as in the case 
in which a previously authorized vendor sells a store under 
circumstances that do not permit timely notification to the 
State agency of the change in ownership.

             Use of funds recovered from local WIC agencies

    Current law: State WIC agencies may use funds recovered 
from vendors and participants as the result of a claim to carry 
out the WIC program in the fiscal year in which the claim 
arises, the fiscal year in which the funds are collected, and 
the fiscal year following the year in which the funds are 
collected.

[Sec. 17(f)(21) of the CNA]

    Section 204: In addition to current law provisions as to 
the use of funds recovered from vendors and participants, this 
section allows State WIC agencies to use funds recovered from 
local WIC agencies as the result of a claim under the same 
terms.

                ``Rounding up'' infant formula benefits

    Current law: Regulations set a limit on the number of 
ounces of infant formula that may be provided to a participant 
each month. Note: If can sizes provided by infant formula 
manufacturers do not add up to the regulatory limit, an extra 
can (going above the limit) may not be provided.
    Section 204: This section allows State WIC agencies to 
``round up'' to the next whole can of infant formula to allow 
all infants to receive the ``full-authorized'' nutritional 
benefit specified by regulation.
    This new authority applies to infant formula provided under 
a contract resulting from a bid solicitation issued on or after 
October 1, 2004.

                 Notification of WIC vendor violations

    Current law: No provisions. Note: State WIC agencies 
approve and disqualify WIC vendors. Section 17(f)(24) of the 
CNA requires each State WIC agency to identify vendors that 
have a high probability of program abuse and conduct compliance 
investigations of the vendors.
    Section 204: If a State WIC agency finds that a vendor has 
committed a violation that requires a pattern of occurrences in 
order to impose a penalty/sanction, this section requires the 
agency to notify the vendor of the initial violation in writing 
(prior to documentation of another violation)--unless the 
agency determines that notification would compromise an 
investigation.

                    Authorization of appropriations

    Current law: ``Such sums as may be necessary'' are 
authorized to carry out the WIC program--through fiscal year 
2003.

[Sec. 17(g) of the CNA]

    Section 204: This section extends the appropriations 
authorization for the WIC program through fiscal year 2008.

           Nutrition services and administration allocations

    Current law: The Secretary is required to allocate to each 
State WIC agency an amount for costs of nutrition services and 
administration (NSA) on the basis of a formula set by the 
Secretary. This requirement was effective through fiscal year 
2003.

[Sec. 17(h)(2)(A) of the CNA]

    Section 204: This section makes the requirement that the 
Secretary allocate amounts for NSA costs permanent.

                   ``Healthy People 2010'' initiative

    Current law: No provisions.
    Section 204: This section requires the Secretary to 
``partner'' with communities, State and local agencies, health 
care professionals, and the private sector to build a 
supportive breastfeeding environment for women participating in 
the WIC program--in order to support the breastfeeding goals of 
the ``Healthy People 2010'' initiative.

                        Size of State alliances

    Current law: No provisions. Note: State WIC agencies have 
formed a number of ``alliances'' through which they join 
together to solicit bids from infant formula manufacturers.
    Section 204: This section defines ``State alliance'' as 2 
or more State agencies that join together for the purpose of 
procuring infant formula by soliciting competitive bids.
    This section also limits the size of State alliances. No 
State alliance may exist among States whose infant 
participation exceeds 100,000 as of October 1, 2003 (or a 
subsequent date determined by the Secretary for which data are 
available).
    However--
          (1) Alliances existing on the date of enactment may 
        continue and expand to include more than 100,000 
        infants, so long as they do not expand to include any 
        additional States;
          (2) Any State alliance may expand to include any 
        State agency that served fewer than 5,000 infants as of 
        October 1, 2003 (or a subsequent date set by the 
        Secretary) or any Indian Tribal Organization; and
          (3) The Secretary may waive the State alliance limits 
        after submitting a report that describes the cost-
        containment and competitive benefits of the waiver to 
        the Committee on Education and the Workforce and the 
        Committee on Agriculture, Nutrition, and Forestry--and 
        waiting at least 30 days.

                    Primary contract infant formula

    Current law: No provisions.
    Section 204: This section requires State WIC agencies to 
use the ``primary contract infant formula'' as the first choice 
of issuance (by formula type)--with all other infant formulas 
issuedas an alternative. It also defines ``primary contract 
formula'' to mean the specific infant formula for which manufacturers 
submit a bid and are awarded a rebate contract.
    This requirement applies to contracts resulting from bid 
solicitations issued on or after October 1, 2004.
    Infant formula manufacturers historically have produced one 
milk-based infant formula that was suitable for the routine 
issuance to the majority of generally healthy, full-term 
infants. Until recently, manufacturers submitted bids for this 
single formula in response to bid solicitations for infant 
formula rebate contracts, and State agencies issued such 
formula to infants as the formula of first choice, since other 
options generally were not available. Manufacturers now produce 
more than one milk-based infant formula that is eligible to be 
bid on in response to a solicitation and that could be issued 
to the majority of generally healthy, full-term infants.
    In response to the increased variety of milk-based infant 
formula, the Committee believes that manufacturers, State 
agencies, and participants should have a common understanding 
of the infant formula product that will serve as the primary 
contract infant formula in each state. To ensure that the 
competitive bidding process can be effectively carried out, the 
Committee believes that the infant formula bid in response to a 
solicitation should be the primary contract infant formula 
issued to infants.
    Each State agency shall issue, as the primary contract 
infant formula, the infant formula for which the winning bidder 
submitted its bid in response to the state's bid solicitation. 
Other infant formula will be considered an alternative to the 
primary contract infant formula.
    The Committee believes, however, that WIC participants 
should have access to the winning bidder's full line of infant 
formula and should be issued the formula that best meets each 
infant's individual nutritional needs. State agencies should 
work closely with parents and/or caregivers and medical 
professionals to determine and issue the most appropriate 
infant formula that best meets an infant's nutritional needs.

      Counting units for infant formula rebates (rebate invoices)

    Current law: No provisions.
    Section 204: This section requires each State WIC agency to 
have a system to ensure that invoices for infant formula 
rebates from manufacturers (paid under competitive bidding/cost 
containment contracts) provide a reasonable estimate or an 
actual count of the number of infant formula units ``sold'' to 
WIC participants.

        Uncoupling milk-based and soy-based infant formula bids

    Current law: No provisions.
    Section 204: This section requires that large State WIC 
agencies/alliances solicit bids from infant formula 
manufacturers using procedures under which bids/discounts are 
solicited separately for milk-based and soy-based infant 
formulas. Large State agencies/alliances are those that served 
a monthly average of more than 100,000 infants during the 12-
month period preceding the bid solicitation.
    This requirement applies to bid solicitations issued on or 
after October 1, 2004.

          Cent-for-cent adjustments to infant formula rebates

    Current law: No provisions. Note: By regulation, infant 
formula WIC agency bid solicitations must require the 
manufacturer to adjust for price changes subsequent to the 
opening of the bidding process. This ``inflation'' provision 
may require a cent-for-cent increase in rebate amounts whenever 
there is any change in the lowest national wholesale price for 
a full truckload of the particular infant formula.
    Section 204: This section mandates that bid solicitations 
for infant formula require the manufacturer to adjust for price 
changes subsequent to the opening of the bidding process in a 
manner that requires:
          --A cent-for-cent increase in rebate amounts if there 
        is an increase in the lowest national wholesale price 
        for a full truckload of the particular formula; and
          --A cent-for-cent decrease in rebate amounts if there 
        is a decrease in the lowest national wholesale price 
        for a full truckload of the particular formula.
    This mandate is effective for bid solicitations issued on 
or after October 1, 2004.

                   Lists of infant formula providers

    Current law: No provisions.
    Section 204: This section requires State WIC agencies to 
maintain a list of infant formula food wholesalers, 
distributors, and retailers licensed in the State and infant 
formula manufacturers registered with the Food and Drug 
Administration. It also requires WIC vendors to purchase infant 
formula from the State agency list.
    The Committee continues to encourage efforts to contain 
food costs under the WIC Program so that the maximum number of 
potentially eligible women, infants and children may be served. 
In approving supplemental foods for use within their 
jurisdictions, the Committee urges State agencies to approve 
private label or store branded products that are nutritionally 
equivalent to national brands as a cost-containment measure.
    State agencies should establish minimum inventory 
requirements to ensure that authorized vendors have sufficient 
quantities of supplemental foods available to meet the needs of 
WIC participants. To the extent possible, State agencies should 
allow vendors the flexibility to obtain exempt infant formula 
or medical foods for participants within a reasonable time 
period, such as24 to 48 hours, depending on manufacturer 
availability, rather than requiring the vendor to stock these items 
continually.
    The Committee recognizes the benefits of maintaining a 
process of ongoing dialogue and collaboration between State 
agencies, authorized WIC vendors, representatives of retailer 
associations, and other entities interested in vendor 
management activities. A number of State agencies have 
established vendor advisory panels or boards as a means of 
obtaining input into the development and implementation of 
effective vendor management policies and procedures. The 
Committee encourages broader use of this approach and, 
therefore, strongly urges the Department to require State 
agencies to establish vendor advisory panels as a mechanism for 
strengthening ongoing communication and collaboration between 
State agencies and the retail vendor community that provides 
supplemental foods.

                           Earmarked funding

    Current law: Through fiscal year 2003, the Secretary is 
required to use $10 million a year or the amount of WIC funding 
for the prior fiscal year that has not been obligated, 
whichever is less for:
          --Development of program infrastructure, including 
        management information systems;
          --Special State projects of regional or national 
        significance to improve program services; and
          --Special breastfeeding support and promotion 
        projects (including projects to assess the 
        effectiveness of particular breastfeeding promotion 
        strategies and projects to develop State or local 
        agency capability or facilities to provide quality 
        breastfeeding services)

[Sec. 17(h)(10) of the CNA]

    Section 204: For fiscal years 2006 through 2008, this 
section requires the Secretary to use $64 million or the amount 
of WIC funding for the prior year that has not been obligated, 
whichever is less, for:
          --Program infrastructure, special projects to promote 
        breastfeeding (including projects to assess the 
        effectiveness of particular breastfeeding promotion 
        strategies), and special State projects of regional or 
        national significance to improve program services ($14 
        million);
          --Establishing, improving, or administering 
        management information systems, including changes 
        necessary to meet new legislative or regulatory 
        requirements ($30 million); and
          --Special nutrition education, such as breastfeeding 
        peer counselors or other related activities ($20 
        million).
    If less than $64 million is available, the Secretary must 
distribute the funding proportional to the above-noted 
distribution.

                        Vendor cost containment

    Current law: In selecting vendors for participation, State 
WIC agencies are required to take into consideration the prices 
charged by the vendor for WIC food items as compared to the 
prices charged by other vendors. State agencies also must 
establish procedures to ensure that selected vendors do not 
raise prices to levels that would otherwise make them 
ineligible to participate. Note: By regulation, State agencies 
must approve an appropriate number and distribution of vendors 
to ensure adequate participant access and may establish 
criteria to limit the number of vendors they approve. They may 
evaluate applicant vendors based on their shelf prices or on 
prices they bid (which may not exceed shelf prices) and must 
establish price limitations (allowable reimbursement levels) on 
the amount that they will pay vendors. They also may establish 
different ``competitive price requirements and price 
limitations for different vendor peer groups'' (which may 
include a factor to reflect fluctuations in wholesale prices) 
and may except pharmacy vendors that supply only infant formula 
or ``medical foods.''

[Sec. 17(h)(11) of the CNA]

    Section 204: This section strikes existing law and replaces 
it with the following vendor cost containment rules.
    State WIC agencies must establish a ``vendor peer group 
system,'' as well as competitive price criteria and allowable 
reimbursement levels for each ``vendor peer group.'' State 
agencies may exempt certain vendors--pharmacy vendors that 
supply only infant formula or ``medical foods'' and certain 
nonprofit vendors.
    Competitive price criteria for the selection of vendors for 
participation in the WIC program must (1) ensure that the 
retail prices vendors charge are competitive with prices 
charged by other vendors, (2) take into account vendors' shelf 
prices or the prices they bid (which may not exceed shelf 
prices), and not result in inadequate access to benefits for 
program participants. State WIC agencies must establish 
procedures to ensure that selected vendors do not raise prices 
to levels that would otherwise make them ineligible to 
participate.
    Allowable reimbursement levels (vendor price limitations) 
must ensure that (1) payments to vendors in a peer group 
reflect ``competitive retail prices'' and (2) the State agency 
does not reimburse a vendor for WIC supplemental foods at a 
level that would otherwise make the vendor ineligible. 
Allowable reimbursement levels may include a factor to reflect 
fluctuations in wholesale prices, and the State agency must 
ensure that allowable reimbursement levels do not result in 
inadequate access to benefits for program participants.
    State WIC agencies must demonstrate to the Secretary (and 
the Secretary must certify) that the competitive price criteria 
and allowable reimbursement levels they establish for vendors 
that derive more than 50% of their annual revenue from the sale 
of food items obtained with WIC vouchers (food instruments) do 
not result in higher food costs than if program 
participantsredeemed their vouchers at other vendors. New applicant 
vendors would be judged to meet the 50% threshold under criteria set by 
the Secretary.
    State WIC agencies must comply with the above-noted cost-
containment rules not later than 18 months after enactment.
    This provision is designed to respond to a new type of 
store in the WIC program, so-called WIC-only stores. As the 
name suggests, WIC-only stores are retail stores that 
predominantly serve WIC participants and in which the vast 
majority of, if not all, store revenue comes from the 
redemption of WIC vouchers for WIC food items.
    Available evidence suggests that WIC-only stores, on 
average, tend to charge much higher prices for WIC food items 
than do regular grocery stores, resulting in significantly 
higher costs to the federal government and creating long-term 
cost-containment problems in the WIC program. Over the past few 
years, WIC-only stores have redeemed a growing share of WIC 
vouchers; in fiscal year 2002, WIC-only stores accounted for 9 
percent of WIC sales nationwide. Given higher costs in and 
rapid growth of WIC-only stores, the Committee is concerned 
that the result of these trends may be significantly higher 
program costs and, consequently, significant barriers to WIC 
program access for low-income women and children.
    The WIC program provides to WIC participants a specific 
food package that includes a prescribed list of individual food 
items that can be obtained using WIC vouchers. WIC vouchers 
list these individual food items and WIC participants receive 
these items with their vouchers regardless of the shelf prices 
that retail stores charge for those items. WIC participants 
themselves are not price-sensitive.
    Market forces and competitive pricing have long been the 
mechanism by which food costs in the WIC program are contained. 
Regular grocery stores receive only a small amount of their 
revenue from WIC customers. Thus, in order to attract and 
maintain all of their other non-WIC customers, these grocery 
stores must charge prices for WIC food items that are designed 
to attract the general population, rather than WIC customers. 
If they fail to price competitively, their regular customers 
will take their business elsewhere.
    WIC-only stores, on the other hand, have no need to attract 
non-WIC customers and, as a result, have no incentive to set 
prices that are determined by market forces. Because the same 
market forces that have long contained costs in the WIC program 
for price-competitive stores do not apply to WIC-only stores, 
the WIC program spends considerably more for the same food 
items when WIC vouchers are redeemed at WIC-only stores than if 
those vouchers are redeemed at the average prices charged by 
competitive grocery stores.
    For example, analysis of food prices in California, where 
over 600 WIC-only stores now operate, indicates that, due to 
higher food prices charged by WIC-only stores, annual food 
costs in California are approximately $33 million higher than 
they would have been had all WIC vouchers in California been 
redeemed at the average prices charged by regular grocery 
stores.
    In order to ensure sound stewardship of taxpayer dollars, 
the Child Nutrition and WIC Reauthorization Act of 2004 
includes several provisions designed to ensure that the WIC 
program continues to rely on market forces to contain food 
costs and that WIC-only stores do not charge higher prices than 
other stores leading to waste of federal funds. These 
provisions also respond to the directive of the Senate Budget 
Committee to ensure appropriate expenditure of taxpayer dollars 
and are consistent with past bipartisan efforts by the Senate 
Agriculture Committee to maintain program integrity in all of 
the food assistance programs within the jurisdiction of the 
Committee.
    Section 204(e)(10) of the Child Nutrition and WIC 
Reauthorization Act of 2004 requires state WIC agencies, for 
the purpose of ensuring cost containment in all retail vendors, 
to establish appropriate vendor peer groups, to establish 
competitive price criteria to be used when considering vendors 
for WIC authorization, and to establish maximum allowable 
reimbursement levels for WIC voucher redemptions. In so doing, 
section 204(e)(10) requires state agencies to distinguish 
between WIC-only and regular grocery stores for the purpose of 
establishing vendor peer groups. It also requires the state 
agency to ensure that WIC-only stores are cost neutral to the 
WIC program by demonstrating that the competitive price 
criteria and allowable reimbursement levels established for 
WIC-only stores are designed so as not to result in higher food 
costs if program participants redeemed their WIC vouchers at 
WIC-only stores rather than at regular retail vendors.
    Section 204(e)(10) also requires the Secretary of 
Agriculture to certify that the peer grouping and cost 
containment measures taken by states as required by section 
204(e)(10) meet the cost-neutrality criteria established by the 
Committee.
    It has been suggested that the Senate language would 
actually require lower prices in WIC-only stores than in 
regular grocery stores. This is because, it is claimed, state 
WIC directors cannot know in advance what store prices will be 
and, therefore, to ensure cost neutrality, WIC Directors will 
be required to demand lower prices from WIC-only stores than 
from regular retail stores.
    This claim lacks merit and is not warranted by a reading of 
the legislative language drafted by the Committee. The Child 
Nutrition and WIC Reauthorization Act of 2004 provides states 
with enormous flexibility to ensure that the participation of 
WIC-only stores in the WIC program does not result in higher 
costs. The bill contains no requirement that WIC-only stores 
charge lower prices on average than other retail stores, nor 
would WIC Directors be required to demand lower average prices 
from WIC-only stores than from regular retail stores to comply 
with this legislative language.
    It is not the intent of the Committee to require after-the-
fact certification by states or USDA of individual voucher 
redemptions or individual store pricing. Rather, it is the 
intent of the Committee to require states in advance to craft 
and implement peer groups and maximum reimbursement rates that 
are designed to achieve the broad cost neutrality goals laid 
out in the Committee legislation. States and USDA should work 
to ensure in advance that the authorization of WIC-only stores 
for participation in the WIC-only program does not result in 
higher program food costs. The Committee does not expect that 
states or USDA will checkevery voucher redemption, but instead 
will put in place such appropriate peer groups, competitive price 
criteria, and reimbursement limits that widespread after-the-fact price 
checks will be unnecessary.
    Similarly, in requiring USDA to ``certify'' that states 
have complied with the cost-neutrality goals established in the 
Child Nutrition and WIC Reauthorization Act of 2004, it is not 
the intent of the Committee to require that USDA certify 
voucher redemption and store prices on an ongoing basis. It is 
the intent of the Committee that USDA certify that the design 
of each state's peer group system and its methodology for 
establishing competitive price criteria and maximum allowable 
reimbursement will achieve the cost containment goal specified 
in Section 17(h)(11)(E) of the Child Nutrition Act of 1966. The 
Committee is aware that neither USDA nor individual states can 
know with absolute certainty or ongoing precision what food 
prices will be. Rather, the Committee expects that USDA will 
work with states to establish reasonable and flexible standards 
for the purpose of grouping vendors and setting competitive 
price criteria and maximum reimbursement levels so that all 
parties--including WIC-only stores, state WIC directors, and 
USDA--can work to ensure compliance with the general principle 
established in the legislation that WIC-only stores ``do not 
result in higher food costs than if program participants 
redeemed supplemental food vouchers'' at regular grocery 
stores.
    One way for USDA to implement these provisions would be to 
provide states with several different models of peer grouping 
and methodologies for establishing competitive price criteria 
and maximum reimbursement levels that states could utilize in 
order to comply with section 204(e)(10). Under such guidelines 
recommended by USDA, nothing would preclude states from 
establishing their own peer group systems, but, in using 
guidelines recommended by USDA, they could be reasonably 
assured in advance of certification by USDA that they are in 
compliance with section 204(e)(10).
    It has also been suggested that section 204(e)(10) of the 
Child Nutrition and WIC Reauthorization Act of 2004 would 
require WIC-only stores to unfairly compete against so-called 
superstores and ``big-box'' stores. Again, this claim is 
inconsistent with the language of the Child Nutrition and 
Reauthorization Act of 2004, which does not mandate how WIC-
only stores are to be grouped or to which stores they should be 
compared for the purpose of setting competitive price criteria 
or maximum allowable reimbursement rates.
    It is not the intent of the Committee to predetermine how 
states comply with the cost neutrality provisions of section 
204(e)(10). Such legislative specificity is not necessary for 
the cost-neutrality goals of section 204(e)(10) to be met. 
Rather, section 204(e)(10) provides to states broad latitude in 
determining appropriate peer groups, competitive price 
criteria, and maximum reimbursement levels. Because the 
characteristics of the retail market for both regular grocery 
stores and WIC-only stores are likely to vary from state to 
state and even within states, it is not the intent of the 
Committee to predetermine how states should establish peer 
groups. There are many factors that states could reasonably 
consider in establishing peer groups, including geography, 
operating and overhead costs, and store sales volume, among 
others. The Child Nutrition and WIC Reauthorization Act does 
not require states to group WIC-only stores with other stores 
with lower operating costs. Rather, it provides to states the 
flexibility to consider all relevant factors for the purposes 
of establishing peer groups, competitive price criteria, and 
reimbursement levels and to act accordingly.
    The Committee will work with USDA to ensure that this cost-
containment provision is implemented as intended. The Committee 
will also work with the Office of Management and Budget and the 
Senate Appropriations Committee to ensure that WIC-only stores 
are not inappropriately resulting in higher food costs to the 
WIC-program.
    Another area of concern to the Committee is the issuance of 
non-contract infant formula in the WIC program. A recent report 
from the General Accounting Office (GAO-03-331) found that the 
use of non-contract formula varies widely from state to state. 
Three state agencies have prohibited the use of non-contract 
formula, seven state agencies have established quantitative 
limits on the provision of non-contract formula, and most 
others have limited the use of non-contract formula to specific 
situations.
    As a result of the provision of non-contract formula, 
estimated in some states to be as high as 10.5 percent of all 
formula provided through the WIC program, GAO estimated that 
the purchase of non-contract formula costs the WIC program over 
$50 million dollars due to the fact that non-contract formulas 
do not receive rebates under competitive bidding arrangements.
    The Committee is concerned about the lost revenue due to 
the provision of non-contract formula and strongly encourages 
the Secretary to work with states to ensure that non-contract 
formula is provided only when its use is medically necessary. 
In particular, the Committee encourages the Secretary to work 
with states identified by the General Accounting Office as 
having the highest non-contract formula usage by percent as 
well as those states in which the largest amount of revenue is 
foregone as a total dollar amount.
    The Secretary is encouraged to report back to the Committee 
within one year of passage of this bill on efforts undertaken 
to work with states to reduce the use of non-contract formula 
and on the estimated cost savings realized as a result of these 
efforts.

                  Imposition of EBT costs on retailers

    Current law: No provisions.
    Section 204: This section bars the Secretary from imposing, 
or allowing a State WIC agency to impose, the costs of any 
equipment, system, or processing required for electronic 
benefit transfer (EBT) systems on any retailer as a condition 
of participation in the WIC program.

                 Universal Product Code (UPC) data base

    Current law: No provisions.
    Section 204: This section requires the Secretary to (1) 
establish a national UPC database for use in carrying out the 
WIC program and (2) make available funds for support of the 
database.

                            Incentive items

    Current law: No provisions.
    Section 204: This section bars State WIC agencies from 
approving or making payments to vendors that derive more than 
50% of their annual revenue from the sale of food items 
obtained with WIC vouchers (food instruments) and provide 
``incentive items'' or other free merchandise to program 
participants unless the vendor provides proof that the items/
merchandise were obtained at no cost.
    Section 204(e)(13) of the Child Nutrition and WIC 
Reauthorization Act of 2004 prohibits state WIC agencies from 
authorizing or making payments to WIC-only stores that provide 
incentive items or provide free merchandise or services to WIC 
participants unless the vendor provides to the state agency 
proof that the incentive items or merchandise were obtained at 
no cost. This provision is intended to bar WIC-only stores from 
in effect using federal funds to purchase food items and other 
incentives not authorized in the WIC program.
    The Committee has included this provision out of its 
concern regarding the wide array of incentives that WIC-only 
stores are offering to WIC participants, including appliances, 
pots and pans, bicycles, food items such as tortillas, and cash 
incentives for participants who bring new customers to WIC-only 
stores. This is of particular concern because, unlike regular 
grocery stores, where the majority of store revenue comes from 
other customers, WIC-only stores receive the majority of their 
store revenue from the redemption of WIC vouchers. As a result, 
the majority of store revenue is derived from federal dollars 
and any such incentives offered in WIC-only stores are thus in 
effect paid for from federal dollars as well.
    The broad range of incentives offered through WIC-only 
stores also appears to be related to the higher prices charged 
by WIC-only stores for standard WIC food items. By charging 
higher prices to the WIC program for authorized food items, 
WIC-only stores are able to obtain higher revenues and then use 
a portion of the higher revenue that accrues for store 
incentives that attract growing numbers of WIC participants. 
These new participants, in turn, purchase authorized foods at 
higher prices. As a result of this cycle, the average cost of 
providing WIC foods to each participant is increased and either 
more funds would need to be appropriated to continue serving 
the same number of participants or the same appropriation level 
would serve fewer and fewer WIC participants.
    Barring the use of federal dollars make payments to stores 
that use revenues or profits from the sale of WIC foods to 
purchase for incentives that are not explicitly recommended by 
the WIC program is not discriminatory, but is instead an 
appropriate cost-containment measure that is consistent with 
the goals of maintaining program focus on child and infant 
nutrition and of protecting taxpayer investments in the WIC 
program.

                      ``Spend-forward'' authority

    Current law: State WIC agencies are authorized to ``spend 
forward'' up to 1% of their nutrition services and 
administration (NSA) funds in the following fiscal year. In 
addition, they may ``spend forward'' up to \1/2\% of their NSA 
funds for the development of management information systems 
(including electronic benefit transfer systems)--with the prior 
approval of the Secretary.

[Sec. 17(i)(3)(A)(ii) of the CNA]

    Section 204: This section raises the current 1% limit on 
spending forward NSA funds to 3%.

             Migrant and community health center initiative

    Current law: The Secretary and the Secretary of Health and 
Human Services are required to establish and carry out an 
initiative to provide supplemental foods and nutrition 
education through an increased number of migrant and community 
health centers. Several notifications to Congress on the 
progress of this initiative were required.

[Sec. 17(j) of the CNA]

    Section 204: This section deletes out-of-date references to 
notifications to Congress.

                 WIC farmers' market nutrition program

    Current law: By regulation, roadside stands may participate 
in the WIC farmers' market nutrition program if approved 
through the Food and Nutrition Service. By law, States must 
provide (from State, local, or private funds) 30% of the total 
cost of the program in the State, and the value of the Federal 
share of benefits received by any recipient may not be more 
than $20 per year. Appropriations for the farmers' market 
nutrition program are authorized at ``such sums as may be 
necessary'' through fiscal year 2003.

[Sec. 17(m) of the CNA]

    Section 204: This section (1) makes roadside stands 
eligible to participate in the WIC farmers' market nutrition 
program at State option, (2) requires that States provide 30% 
of the administrative cost of the program in the State, and (3) 
increases the limit on the Federal share of benefits to $30 per 
year. It also extends the authorization of appropriations for 
the program through fiscal year 2008.

      Demonstration project to enroll children in health programs

    Current law: The Secretary was required to establish a 1-
State demonstration project to use the WIC program to identify 
and enroll children in Medicaid and State Children's Health 
Insurance programs. The authority for this demonstration 
project terminated September 30, 2003.

[Sec. 17(r) of the CNA and Sec. 12(p) of the NSLA]

    Section 204: This section deletes expired authority for a 
demonstration project to enroll children in health programs.

    Demonstration project for offering fruits and vegetables to WIC 
                              participants

    Current law: No provisions.
    Section 204: Subject to the availability of funds, this 
section requires the Secretary to award grants for 
demonstration projects to evaluate the feasibility and 
acceptance of offering fresh, frozen, or canned fruits and 
vegetables to WIC participants. Grants would be awarded to no 
more than 5 State WIC agencies and involve no more than 5 local 
agencies. Fruits and vegetables under this project would be in 
addition to foods offered to WIC participants through the 
regular WIC program.
    A report on this project would be required, and ``such sums 
as are necessary'' are authorized to be appropriated for the 
project. Authority for the project would terminate September 
30, 2005.

Section 205. Team Nutrition Network

    Current law: Authority to operate a Nutrition Education and 
Training (NET) program is provided in Section 19 of the CNA. 
Appropriations have not been provided for this program since 
FY1998. ``Full funding'' for the NET program would now equal 
about $24 million a year (50 cents per enrolled child). 
However, funding typically did not exceed $10 million.
    Under the NET program, the Secretary is authorized to 
formulate a nutrition education and training program through 
grants to State educational agencies that provide: nutritional 
training of educational and food service personnel; training 
school food service personnel in the principles and practices 
of food service management; nutrition education activities in 
schools and other institutions serving children; and nutrition 
education to parents and caregivers.
    NET funds may be used to (1) employ nutrition education 
specialists to coordinate the State's program, (2) undertake 
assessments of nutrition education needs, (3) develop a State 
nutrition education plan, (4) pilot projects, (5) planning, 
developing, and conducting programs and workshops for food 
service and educational personnel, (6) coordinating and 
promoting nutrition education and training activities in local 
school districts, (7) contracting with public and private 
nonprofit educational institutions for the conduct of nutrition 
education instruction, (8) preparing and testing nutrition 
education materials, and (9) carrying out other appropriate 
activities as determined by the State. Each State must have a 
nutrition education specialist as State coordinator.

[Sec. 19 of the CNA]

    Section 204: This section replaces current-law provisions 
for a NET program with new provisions for a Team Nutrition 
Network (``a multidisciplinary program to promote healthy 
eating to children based on scientifically valid information 
and sound educational, social, and marketing principles'').
    Subject to the availability of funds (and in addition to 
any funds normally made available for ``team nutrition'' 
purposes by appropriations laws), the Secretary is authorized 
to make grants to State agencies to establish team nutrition 
networks to promote nutrition education through the use of 
messages and materials developed by the Secretary and the 
promotion of active lifestyles.
    For each fiscal year, the total amount made available may 
not be more than \1/2\ cent  the number of lunches 
reimbursed (subsidized) through the school lunch program, the 
child and adult care food program, and the summer food service 
program. At current lunch service rates, this would total to 
approximately $34 million. This could be supplemented with 
funds received by the Secretary from nongovernmental sources.
    To be eligible to receive team nutrition grants, which may 
be competitive grants, State agencies must submit plans that 
include (1) a description of the goals and primary messages of 
their proposed team nutrition network, (2) an analysis of the 
means by which the State agency will use and disseminate 
messages and materials developed by the Secretary, (3) an 
explanation of the ways the State agency will use grant funds 
to promote healthy eating and physical activity and fitness in 
schools, (4) a description of the ways in which messages and 
materials developed by the Secretary will be used to coordinate 
nutrition and physical activities at the State level with other 
health promotion and education activities, (5) an annual 
summary of team nutrition network activities, (6) a description 
of the ways in which the total school environment will support 
healthy eating and physical activity, and (7) a description of 
how all communications to parents and guardians will be in an 
understandable and uniform format and, to the extent 
practicable, in a language that parent and guardians 
understand.
    Each State receiving a grant must appoint a team nutrition 
network coordinator.
    Activities authorized under team nutrition network grants 
would include: (1) collecting, analyzing, and disseminating 
data regarding the extent to which children/youth are 
overweight, physically inactive, or suffering from nutrition-
related deficiencies or diseases, (2) identifying programs and 
services to meet needs identified in the data, (3) implementing 
model school curricula using team nutrition network messages 
and materials, (4) implementing pilot projects in schools to 
promote physical activity and enhance students' nutritional 
status, (5) improving access to local foods, (6) implementing 
State health guidelines and emphasizing regular physical 
activity during school hours, (6) establishing healthy eating 
and lifestyle policies in schools, (7) and providing training 
and technical assistance to teachers and school food service 
professionals.
    Appropriations for the Team Nutrition Network program are 
authorized at ``such sums as are necessary.''

Section 206. Review of Best Practices in the Breakfast Program

    Current law: No provisions.
    Section 206: Subject to the availability of funds, 
authorizes the Secretary to enter into an agreement with a 
research organization to collect and disseminate a review of 
``best practices'' so as to assist schools in addressing 
impediments that hinder the growth of the school breakfast 
program. The review would describe model breakfast programs and 
offer recommendations forschools to overcome obstacles such as 
the length of the school day, bus schedules, and increased costs. The 
results of the review would be disseminated not later than 1 year after 
enactment.
    The Committee recognizes the value of school breakfast, and 
encourages elementary schools to offer breakfast in a manner 
that is accommodating to early school schedules and working 
parents.

               TITLE III. COMMODITY DISTRIBUTION PROGRAMS

Section 301. Commodity Distribution Programs

    Current law: The Secretary is permitted to use ``Section 
32'' funds to remove and dispose of unsafe foods donated to 
child nutrition programs by the Agriculture Department. This 
authority expired September 30, 2003.
    Section 301: This section makes permanent the Secretary's 
authority to use ``Section 32'' funds to remove and dispose of 
unsafe foods donated to child nutrition programs by the 
Agriculture Department.

                        TITLE IV. MISCELLANEOUS

Section 401. Food Employment Empowerment and Development Program

    Current law: No provisions.
    Section 401: This section authorizes the Secretary to 
establish a ``food employment empowerment and development 
program.'' The Secretary would make grants to encourage the 
effective use of community resources to combat hunger and the 
causes of hunger by ``creating opportunity through food 
recovery, job training, and community service.'' Activities 
under the grants (e.g., job training, providing meals) would be 
primarily directed to ``vulnerable subpopulations''--low-income 
persons, the unemployed, and others identified by the Secretary 
as being likely to experience special risks from hunger or a 
special need for job training (e.g., addicts, at-risk youths, 
individuals who are ``basic skills deficient,'' homeless 
persons, disabled persons).
    Grants would be made to public agencies and private 
nonprofit institutions that, as an integral part of their 
normal operations, conduct 2 or more of the following 
activities:
          --Recovery of donated food from restaurants and other 
        businesses in order to serve meals to vulnerable 
        subpopulations;
          --Distribution of meals to entities that feed 
        vulnerable subpopulations;
          --Training of unemployed/underemployed adults for 
        careers in food service;
          --Engaging people in developing community solutions 
        through community service and leadership training; or
          --Carrying out welfare-to-work job training programs 
        in combination with the production of school meals or 
        support of after-school programs;
    Grantees could use their award for (1) capital investments, 
purchases of equipment and supplies, and building/kitchen 
renovations, (2) support services for clients and staff, (3) 
educational materials and services, (4) administrative costs, 
and (7) additional activities determined by the Secretary.
    The Secretary would be required to establish annual 
``performance indicators'' that grantees would have to meet to 
continue to receive grants. These would measure performance as 
to the provisions of meals, job training, and community 
service. The Secretary also would be required to provide 
specific forms of technical assistance to grantees and could 
retain a portion of the funding provided to carry out this 
responsibility.
    Grants could not exceed $200,000 a year, and appropriations 
of $20 million a year are authorized through fiscal year 2008.

                        TITLE V. IMPLEMENTATION

Section 501. Guidance and Regulations

    This section requires the Secretary to issue guidance to 
implement certain amendments made by this Act as soon as 
practicable after enactment. It also requires the Secretary to 
promulgate final regulations for these amendments not later 
than 2 years after enactment.
    The amendments affected by these directives are:
          --Section 102 (nutrition requirements);
          --Section 103 (provision of information);
          --Section 104 (direct certification);
          --Section 105 (household applications);
          --Section 106 (duration of eligibility for free and 
        reduced price meals);
          --Section 107 (runaway, homeless, and migrant youth);
          --Section 110 (school food safety programs);
          --Section 115 (summer food service program for 
        children);
          --Section 117(c) (disregarded overpayments in the 
        child and adult care food program);
          --Section 117(g) (age limits in emergency shelters in 
        the child and adult care food program);
          --Section 118 (fruit and vegetable program);
          --Section 129(b) and (c) (additional administrative 
        review requirements, State plan requirements, State 
        training requirements, funding);
          --Section 201 (severe need assistance);
          --Section 204(a)(3) (WIC definition changes);
          --Section 204(b) (WIC certification period for 
        breastfeeding women, physical presence requirement);
          --Section 204(c)(4) (notification of WIC vendor 
        violations);
          --Section 204(e)(3) (size of WIC State alliances);
          --Section 204(e)(4) (primary contract infant 
        formula);
          --Section 204(e)(5) (counting units for infant 
        formula rebates in the WIC program);
          --Section 204(e)(6) (uncoupling milk-based and soy-
        based infant formula bids in the WIC program);
          --Section 204(e)(7) (cent-for-cent adjustments to 
        infant formula rebates in the WIC program);
          --Section 204(e)(10) (vendor cost containment in the 
        WIC program); and
          --Section 204(h)(1) (WIC farmers' market nutrition 
        program, roadside stands).

Section 502. Effective Dates

    This section makes most provisions effective on the date of 
enactment. Special effective dates are:
    July 1, 2004 for:
          Section 106 (duration of eligibility for free and 
        reduced price meals);
          Section 107 (runaway, homeless, and migrant youth);
          Section 129(c) (State plan requirements, State 
        training requirements, funding); and
          Section 201 (severe need assistance).
    October 1, 2004 for:
          Section 117(c) (child and adult care food program, 
        disregarded overpayments);
          Section 117(g) (child and adult care food program, 
        age limits);
          Section 202(a) (State administrative expenses, 
        minimum State grants);
          Section 204(a) (WIC definition changes);
          Section 204(b) (WIC certification of breastfeeding 
        women, physical presence requirement);
          Section 204(c)(1) (accelerated approval of WIC 
        vendors);
          Section 204(c)(4) (notification of WIC vendor 
        violations);
          Section 204(e)(4) (primary contract infant formula in 
        the WIC program);
          Section 204(e)(5) (counting units for infant formula 
        rebates in the WIC program);
          Section 204(e)(6) (uncoupling milk and soy infant 
        formula bids in the WIC program);
          Section 204(e)(7) (cent-for-cent adjustments to 
        infant formula rebates in the WIC program);
          Section 204(e)(8) (lists of infant formula providers 
        in the WIC program);
          Section 204(e)(9) (earmarked WIC funding);
          Section 204(e)(10) (WIC vendor cost containment);
          Section 204(e)(13) (incentive items in the WIC 
        program);
          Section 204(f) (spend-forward authority in the WIC 
        program); and
          Section 204 (h)(1) and (2) (WIC farmers' market 
        nutrition program, roadside stands and matching 
        requirement).
    January 1, 2005 for: Section 115(e)(1) and (e)(3) (the 
simplified summer food program).
    July 1, 2005 for:
          Section 104 (direct certification);
          Section 105 (household applications);
          Section 110 (school food safety programs); and
          Section 129(b) (additional administrative review 
        requirements).

                      VII. Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
S. 2507 as reported are shown as follows (existing law proposed 
to be omitted is enclosed in brackets, new matter is printed in 
italic, and existing law in which no change is proposed is 
shown in roman.):

NATIONAL SCHOOL LUNCH ACT

           *       *       *       *       *       *       *



SEC. 5. NUTRITION PROMOTION.

    (a) In General.--Subject to the availability of funds made 
available under subsection (g), the Secretary shall make 
payments to State agencies for each fiscal year, in accordance 
with this section, to promote nutrition in food service 
programs under this Act and the school breakfast program 
established under the Child Nutrition Act of 1966 (42 U.S.C. 
1771 et seq.).
    (b) Total Amount for Each Fiscal Year.--The total amount of 
funds available for a fiscal year for payments under this 
section shall equal not more than the product obtained by 
multiplying--
          (1) \1/2\ cent; by
          (2) the number of lunches reimbursed through food 
        service programs under this Act during the second 
        preceding fiscal year in schools, institutions, and 
        service institutions that participate in the food 
        service programs.
    (c) Payments to States.--
          (1) Allocation.--Subject to paragraph (2), from the 
        amounts of funds available under subsection (g) for a 
        fiscal year, the Secretary shall allocate to each State 
        agency an amount equal to the greater of--
                  (A) a uniform base amount established by the 
                Secretary; or
                  (B) an amount determined by the Secretary, 
                based on the ratio that--
                          (i) the number of lunches reimbursed 
                        through food service programs under 
                        this Act in schools, institutions, and 
                        service institutions in the State that 
                        participate in the food service 
                        programs; bears to
                          (ii) the number of lunches reimbursed 
                        through the food service programs in 
                        schools, institutions, and service 
                        institutions in all States that 
                        participate in the food service 
                        programs.
          (2) Reductions.--The Secretary shall reduce 
        allocations to State agencies qualifying for an 
        allocation under paragraph (1)(B), in a manner 
        determined by the Secretary, to the extent necessary to 
        ensure that the total amount of funds allocated under 
        paragraph (1) is not greater than the amount 
        appropriated under subsection (g).
    (d) Use of Payments.--
          (1) Use by state agencies.--A State agency may 
        reserve, to support dissemination and use of nutrition 
        messages and materials developed by the Secretary, up 
        to--
                  (A) 5 percent of the payment received by the 
                State for a fiscal year under subsection (c); 
                or
                  (B) in the case of a small State (as 
                determined by the Secretary), a higher 
                percentage (as determined by the Secretary) of 
                the payment.
          (2) Disbursement to schools and institutions.--
        Subject to paragraph (3), the State agency shall 
        disburse any remaining amount of the payment to school 
        food authorities and institutions participating in food 
        service programs described in subsection (a) to 
        disseminate and use nutrition messages and materials 
        developed by the Secretary.
          (3) Summer food service program for children.--In 
        addition to any amounts reserved under paragraph (1), 
        in the case of the summer food service program for 
        children established under section 13, the State agency 
        may--
                  (A) retain a portion of the funds made 
                available under subsection (c) (as determined 
                by the Secretary); and
                  (B) use the funds, in connection with the 
                program, to disseminate and use nutrition 
                messages and materials developed by the 
                Secretary.
    (e) Documentation.--A State agency, school food authority, 
and institution receiving funds under this section shall 
maintain documentation of nutrition promotion activities 
conducted under this section.
    (f) Reallocation.--The Secretary may reallocate, to carry 
out this section, any amounts made available to carry out this 
section that are not obligated or expended, as determined by 
the Secretary.
    (g) Authorization of Appropriations.--There are authorized 
to be appropriated such sums as are necessary to carry out this 
section, to remain available until expended.

           *       *       *       *       *       *       *

    Sec. 9 * * *
          [(2) Lunches served by schools participating in the 
        school lunch program under this Act--
                  [(A) shall offer students fluid milk; and
                  [(B) shall offer students a variety of fluid 
                milk consistent with prior year preferences 
                unless the prior year preference for any such 
                variety of fluid milk is less than 1 percent of 
                the total milk consumed at the school.]
          (2) Fluid milk.--
                  (A) In general.--Lunches served by schools 
                participating in the school lunch program under 
                this Act--
                          (i) shall offer students fluid milk 
                        in a variety of fat contents;
                          (ii) may offer students flavored and 
                        unflavored fluid milk and lactose-free 
                        fluid milk; and
                          (iii) shall provide a substitute for 
                        fluid milk for students whose 
                        disability restricts their diet, on 
                        receipt of a written statement from a 
                        licensed physician that identifies the 
                        disability that restricts the student's 
                        diet and that specifies the substitute 
                        for fluid milk.
                  (B) Substitutes.--
                          (i) Standards for substitution.--A 
                        school may substitute for the fluid 
                        milk provided under subparagraph (A), a 
                        nondairy beverage that is nutritionally 
                        equivalent to fluid milk and meets 
                        nutritional standards established by 
                        the Secretary (which shall, among other 
                        requirements to be determined by the 
                        Secretary, include fortification of 
                        calcium, protein, vitamin A, and 
                        vitamin D to levels found in cow's 
                        milk) for students who cannot consume 
                        fluid milk because of a medical or 
                        other special dietary need other than a 
                        disability described in subparagraph 
                        (A)(iii).
                          (ii) Notice.--The substitutions may 
                        be made if the school notifies the 
                        State agency that the school is 
                        implementing a variation allowed under 
                        this subparagraph, and if the 
                        substitution is requested by written 
                        statement of a medical authority or by 
                        a student's parent or legal guardian 
                        that identifies the medical or other 
                        special dietary need that restricts the 
                        student's diet, except that the school 
                        shall not be required to provide 
                        beverages other than beverages the 
                        school has identified as acceptable 
                        substitutes.
                          (iii) Excess expenses borne by school 
                        district.--Expenses incurred in 
                        providing substitutions under this 
                        subparagraph that are in excess of 
                        expenses covered by reimbursements 
                        under this Act shall be paid by the 
                        school district.
                  (C) Restrictions on sale of milk 
                prohibited.--A school or institution that 
                participates in the school lunch program under 
                this Act shall not directly or indirectly 
                restrict the sale or marketing of fluid milk 
                products by the school (or by a person approved 
                by the school) at any time or any place--
                          (i) on the school premises; or
                          (ii) at any school-sponsored event.
          (3) Students in senior high schools that participate 
        in the school lunch program under this Act (and, when 
        approved by the local school district or nonprofit 
        private schools, students in any other grade level) 
        shall not be required to accept offered foods they do 
        not intend to consume, and any such failure to accept 
        offered foods shall not affect the full charge to the 
        student for a lunch meeting the requirements of this 
        subsection or the amount of payments made under this 
        Act to any such school for such lunch.
          (4) Provision of information.--The Secretary shall 
        ensure that States and school food authorities 
        administer school nutrition programs under this Act and 
        the Child Nutrition Act of 1966 (42 U.S.C. 1771 et 
        seq.) in a manner that reflects consumption 
        recommendations--
                  (A) specified in the Dietary Guidelines for 
                Americans; and
                  (B) at the option of the Secretary, based on 
                other recent scientifically valid information.

           *       *       *       *       *       *       *

          (2)(A) Following the determination by the Secretary 
        under paragraph (1) of this subsection of the income 
        eligibility guidelines for each school year, each State 
        educational agency shall announce the income 
        eligibility guidelines, by family size, to be used by 
        schools in the State in making determinations of 
        eligibility for free and reduced price lunches. Local 
        school authorities shall, each year, publicly announce 
        the income eligibility guidelines for free and reduced 
        price lunches on or before the opening of school.
          (B) [Applications] Applications and descriptive 
        material._
                  (i) In general._Applications for free and 
                reduced price lunches, in such form as the 
                Secretary may prescribe or approve, and 
anydescriptive material, shall be distributed to the parents or 
guardians of children in attendance at the school, and shall contain 
only the family size income levels for reduced price meal eligibility 
with the explanation that households with incomes less than or equal to 
these values would be eligible for free or reduced price lunches. [Such 
forms and descriptive material]
                  (ii) Income eligibility guidelines._Forms and 
                descriptive materials distributed in accordance 
                with clause (i) may not contain the income 
                eligibility guidelines for free lunches.
                  (iii) Contents of descriptive materials.--
                          (I) In general.--Descriptive 
                        materials distributed in accordance 
                        with clause (i) shall contain a 
                        notification that-
                                  (aa) participants in the 
                                programs listed in subclause 
                                (II) may be eligible for free 
                                or reduced price meals; and
                                  (bb) documentation may be 
                                requested for verification of 
                                eligibility for free or reduced 
                                price meals.
                          (II) Programs.--The programs referred 
                        to in subclause (I)(aa) are--
                                  (aa) the special supplemental 
                                nutrition program for women, 
                                infants, and children 
                                established by section 17 of 
                                the Child Nutrition Act of 1966 
                                (42 U.S.C. 1786);
                                  (bb) the food stamp program 
                                established under the Food 
                                Stamp Act of 1977 (7 U.S.C. 
                                2011 et seq.);
                                  (cc) the food distribution 
                                program on Indian reservations 
                                established under section 4(b) 
                                of the Food Stamp Act of 1977 
                                (7 U.S.C. 2013(b)); and
                                  (dd) a State program funded 
                                under the program of block 
                                grants to States for temporary 
                                assistance for needy families 
                                established under part A of 
                                title IV of the Social Security 
                                Act (42 U.S.C. 601 et seq.).
          [(C)(i) Except as provided in clause (ii), each 
        eligibility determination shall be made on the basis of 
        a complete application executed by an adult member of 
        the household. The Secretary, State, or local food 
        authority may verify any data contained in such 
        application. A local school food authority shall 
        undertake such verification of information contained in 
        any such application as the Secretary may by regulation 
        prescribe and, in accordance with such regulations, 
        shall make appropriate changes in the eligibility 
        determination with respect to such application on the 
        basis of such verification.
          [(ii) Subject to clause (iii), any school food 
        authority may certify any child as eligible for free or 
        reduced price lunches or breakfasts, without further 
        application, by directly communicating with the 
        appropriate State or local agency to obtain 
        documentation of such child's status as a member of--
                  [(I) a household that is receiving food 
                stamps under the Food Stamp Act of 1977; or
                  [(II) a family that is receiving assistance 
                under the State program funded under part A of 
                title IV of the Social Security Act that the 
                Secretary determines complies with standards 
                established by the Secretary that ensure that 
                the standards under the State program are 
                comparable to or more restrictive than those in 
                effect on June 1, 1995.
          [(iii) The use or disclosure of any information 
        obtained from an application for free or reduced price 
        meals, or from a State or local agency referred to in 
        clause (ii), shall be limited to--
                  [(I) a person directly connected with the 
                administration or enforcement of this Act or 
                the Child Nutrition Act of 1966 (42 U.S.C. 1771 
                et seq.), or a regulation issued pursuant to 
                either Act;
                  [(II) a person directly connected with the 
                administration or enforcement of--
                          [(aa) a Federal education program;
                          [(bb) a State health or education 
                        program administered by the State or 
                        local educational agency (other than a 
                        program carried out under title XIX of 
                        the Social Security Act (42 U.S.C. 1396 
                        et seq.)); or
                          [(cc) a Federal, State, or local 
                        means-tested nutrition program with 
                        eligibility standards comparable to the 
                        program under this section; and
                  [(III)(aa) the Comptroller General of the 
                United States for audit and examination 
                authorized by any other provision of law; and
                  [(bb) notwithstanding any other provision of 
                law, a Federal, State, or local law enforcement 
                official for the purpose of investigating an 
                alleged violation of any program covered by 
                paragraph (1) or this paragraph; and
                  [(IV) a person directly connected with the 
                administration of the State medicaid program 
                under title XIX of the Social Security Act (42 
                U.S.C. 1396 et seq.) or the State children's 
                health insurance program under title XXI of 
                that Act (42 U.S.C. 1397aa et seq.) solely for 
                the purpose of identifying children eligible 
                for benefits under, and enrolling children in, 
                such programs, except that this subclause shall 
                apply only to the extent that the State and the 
                school food authority so elect.
          [(iv) Information provided under clause (iii)(II) 
        shall be limited to the income eligibility status of 
        the child for whom application for free or reduced 
        price meal benefits was made or for whom eligibility 
        informationwas provided under clause (ii), unless the 
consent of the parent or guardian of the child for whom application for 
benefits was made is obtained.
          [(v) A person described in clause (iii) who 
        publishes, divulges, discloses, or makes known in any 
        manner, or to any extent not authorized by Federal law 
        (including a regulation), any information obtained 
        under this subsection shall be fined not more than 
        $1,000 or imprisoned not more than 1 year, or both.
          [(vi) Requirements for waiver of confidentiality.--A 
        State that elects to exercise the option described in 
        clause (iii)(IV) shall ensure that any school food 
        authority acting in accordance with that option--
                  [(I) has a written agreement with the State 
                or local agency or agencies administering 
                health insurance programs for children under 
                titles XIX and XXI of the Social Security Act 
                (42 U.S.C. 1396 et seq. and 1397aa et seq.) 
                that requires the health agencies to use the 
                information obtained under clause (iii) to seek 
                to enroll children in those health insurance 
                programs; and
                  [(II)(aa) notifies each household, the 
                information of which shall be disclosed under 
                clause (iii), that the information disclosed 
                will be used only to enroll children in health 
                programs referred to in clause (iii)(IV); and
                  [(bb) provides each parent or guardian of a 
                child in the household with an opportunity to 
                elect not to have the information disclosed.
          [(vii) Use of disclosed information.--A person to 
        which information is disclosed under clause (iii)(IV) 
        shall use or disclose the information only as necessary 
        for the purpose of enrolling children in health 
        programs referred to in clause (iii)(IV).
          [(D) Free and reduced price policy statement.--After 
        the initial submission, a school food authority shall 
        not be required to submit a free and reduced price 
        policy statement to a State educational agency under 
        this Act unless there is a substantive change in the 
        free and reduced price policy of the school food 
        authority. A routine change in the policy of a school 
        food authority, such as an annual adjustment of the 
        income eligibility guidelines for free and reduced 
        price meals, shall not be sufficient cause for 
        requiring the school food authority to submit a policy 
        statement.]
          (3) Household applications._
                  (A) Definition of household application.--In 
                this paragraph, the term ``household 
                application'' means an application for a child 
                of a household to receive free or reduced price 
                school lunches under this Act, or school 
                breakfasts under the Child Nutrition Act of 
                1966 (42 U.S.C. 1771 et seq.), for which an 
                eligibility determination is made other than 
                under paragraph (4) or (5).
                  (B) Eligibility determination.--
                          (i) In general.--An eligibility 
                        determination shall be made on the 
                        basis of a complete household 
                        application executed by an adult member 
                        of the household or in accordance with 
                        guidance issued by the Secretary
                          (ii) Electronic signatures and 
                        applications.--A household application 
                        may be executed using an electronic 
                        signature if--
                                  (I) the application is 
                                submitted electronically; and
                                  (II) the electronic 
                                application filing system meets 
                                confidentiality standards 
                                established by the Secretary.
                  (C) Children in household.--
                          (i) In general.--The household 
                        application shall identify the names of 
                        each child in the household for whom 
                        meal benefits are requested.
                          (ii) Separate applications.--A State 
                        educational agency or school food 
                        authority may not request a separate 
                        application for each child in the 
                        household that attends schools under 
                        the same school food authority.
                  (D) Verification of sample.--
                          (i) Definitions.--In this 
                        subparagraph:
                                  (I) Error prone 
                                application.--The term ``error 
                                prone application'' means an 
                                approved household application 
                                that--
                                          (aa) indicates 
                                        monthly income that is 
                                        within $100, or an 
                                        annual income that is 
                                        within $1,200, of the 
                                        income eligibility 
                                        limitation for free or 
                                        reduced price meals; or
                                          (bb) in lieu of the 
                                        criteria established 
                                        under item (aa), meets 
                                        criteria established by 
                                        the Secretary.
                                  (II) Non-response rate.--The 
                                term ``non-response rate'' 
                                means (in accordance with 
                                guidelines established by the 
                                Secretary) the percentage of 
                                approved household applications 
                                for which verification 
                                information has not been 
                                obtained by a school food 
                                authority after attempted 
                                verification under 
                                subparagraphs (F) and (G).
                          (ii) Verification of sample.--Each 
                        school year, a school food authority 
                        shall verify eligibility of the 
                        children in a sample of household 
                        applications approved for the school 
                        year by the school food authority, as 
                        determined by the Secretary in 
                        accordance with this subsection.
                          (iii) Sample size.--Except as 
                        otherwise provided in this paragraph, 
                        the sample for a school food authority 
                        for a school year shall equal the 
                        lesser of--
                                  (I) 3 percent of all 
                                applications approved by the 
                                school food authority for the 
                                school year, as of October 1 of 
                                the school year, selected from 
                                error prone applications; or
                                  (II) 3,000 error prone 
                                applications approved by the 
                                school food authority for the 
                                school year, as of October 1 of 
                                the school year.
                          (iv) Alternative sample size.--
                                  (I) In general.--If the 
                                conditions described in 
                                subclause (IV) are met, the 
                                verification sample size for a 
                                school foodauthority shall be 
the sample size described in subclause (II) or (III), as determined by 
the school food authority.
                                  (II) 3,000/3 percent 
                                option.--The sample size 
                                described in this subclause 
                                shall be the lesser of 3,000, 
                                or 3 percent of, applications 
                                selected at random from 
                                applications approved by the 
                                school food authority for the 
                                school year, as of October 1 of 
                                the school year.
                                  (III) 1,000/1 percent plus 
                                option.--
                                          (aa) In general.--The 
                                        sample size described 
                                        in this subclause shall 
                                        be the sum of--
                                                  (AA) the 
                                                lesser of 
                                                1,000, or 1 
                                                percent of, all 
                                                applications 
                                                approved by the 
                                                school food 
                                                authority for 
                                                the school 
                                                year, as of 
                                                October 1 of 
                                                the school 
                                                year, selected 
                                                from error 
                                                prone 
                                                applications; 
                                                and
                                                  (BB) the 
                                                lesser of 500, 
                                                or 1/2 of 1 
                                                percent of, 
                                                applications 
                                                approved by the 
                                                school food 
                                                authority for 
                                                the school 
                                                year, as of 
                                                October 1 of 
                                                the school 
                                                year, that 
                                                provide a case 
                                                number (in lieu 
                                                of income 
                                                information) 
                                                showing 
                                                participation 
                                                in a program 
                                                described in 
                                                item (bb) 
                                                selected from 
                                                those approved 
                                                applications 
                                                that provide a 
                                                case number (in 
                                                lieu of income 
                                                information) 
                                                verifying the 
                                                participation.
                                          (bb) Programs.--The 
                                        programs described in 
                                        this item are--
                                                  (AA) the food 
                                                stamp program 
                                                established 
                                                under the Food 
                                                Stamp Act of 
                                                1977 (7 U.S.C. 
                                                2011 et seq.);
                                                  (BB) the food 
                                                distribution 
                                                program on 
                                                Indian 
                                                reservations 
                                                established 
                                                under section 
                                                4(b) of the 
                                                Food Stamp Act 
                                                of 1977 (7 
                                                U.S.C. 
                                                2013(b)); and
                                                  (CC) a State 
                                                program funded 
                                                under the 
                                                program of 
                                                block grants to 
                                                States for 
                                                temporary 
                                                assistance for 
                                                needy families 
                                                established 
                                                under part A of 
                                                title IV of the 
                                                Social Security 
                                                Act (42 U.S.C. 
                                                601 et seq.) 
                                                that the 
                                                Secretary 
                                                determines 
                                                complies with 
                                                standards 
                                                established by 
                                                the Secretary 
                                                that ensure 
                                                that the 
                                                standards under 
                                                the State 
                                                program are 
                                                comparable to 
                                                or more 
                                                restrictive 
                                                than those in 
                                                effect on June 
                                                1, 1995.
                                  (IV) Conditions.--The 
                                conditions referred to in 
                                subclause (I) shall be met for 
                                a school food authority for a 
                                school year if--
                                          (aa) the nonresponse 
                                        rate for the school 
                                        food authority for the 
                                        preceding school year 
                                        is less than 20 
                                        percent; or
                                          (bb) the school food 
                                        authority has more than 
                                        20,000 children 
                                        approved by application 
                                        by the school food 
                                        authority as eligible 
                                        for free or reduced 
                                        price meals for the 
                                        school year, as of 
                                        October 1 of the school 
                                        year, and--
                                                  (AA) the 
                                                nonresponse 
                                                rate for the 
                                                preceding 
                                                school year is 
                                                at least 10 
                                                percent below 
                                                the nonresponse 
                                                rate for the 
                                                second 
                                                preceding 
                                                school year; or
                                                  (BB) in the 
                                                case of the 
                                                school year 
                                                beginning July 
                                                2005, the 
                                                school food 
                                                authority 
                                                attempts to 
                                                verify all 
                                                approved 
                                                household 
                                                applications 
                                                selected for 
                                                verification 
                                                through use of 
                                                public agency 
                                                records from at 
                                                least 2 of the 
                                                programs or 
                                                sources of 
                                                information 
                                                described in 
                                                subparagraph 
                                                (F)(i).
                          (v) Additional selected 
                        applications.--A sample for a school 
                        food authority for a school year under 
                        clauses (iii) and (iv)(III) shall 
                        include the number of additional 
                        randomly selected approved household 
                        applications that are required to 
                        comply with the sample size 
                        requirements in those clauses.
                  (E) Preliminary review.--
                          (i) In general.--Prior to conducting 
                        any other verification activity for 
                        approved household applications 
                        selected for verification, the school 
                        food authority shall ensure that the 
                        initial eligibility determination for 
                        each approved household application is 
                        reviewed for accuracy by an individual 
                        other than the individual making the 
                        initial eligibility determination, 
                        unless otherwise determined by the 
                        Secretary.
                          (ii) Correct eligibility 
                        determination.--If the review indicates 
                        that the initial eligibility 
                        determination is correct, the school 
                        food authority shall verify the 
                        approved household application.
                          (iii) Incorrect eligibility 
                        determination.--If the review indicates 
                        that the initial eligibility 
                        determination is incorrect, the school 
                        food authority shall (as determined by 
                        the Secretary)--
                                  (I) correct the eligibility 
                                status of the household;
                                  (II) notify the household of 
                                the change;
                                  (III) in any case in which 
                                the review indicates that the 
                                household is not eligible for 
                                free or reduced-price meals, 
                                notify the household of the 
                                reason for the ineligibility 
                                and that the household may 
                                reapply with income 
                                documentation for free or 
                                reduced-price meals; and
                                  (IV) in any case in which the 
                                review indicates that the 
                                household is eligible for free 
                                or reduced-price meals, verify 
                                the approved household 
                                application.
                  (F) Direct verification.--
                          (i) In general.--Subject to clauses 
                        (ii) and (iii), to verify eligibility 
                        for free or reduced price meals for 
                        approved householdapplications selected 
for verification, the school food authority may (in accordance with 
criteria established by the Secretary) first obtain and use income and 
program participation information from a public agency administering--
                                  (I) the food stamp program 
                                established under the Food 
                                Stamp Act of 1977 (7 U.S.C. 
                                2011 et seq.);
                                  (II) the food distribution 
                                program on Indian reservations 
                                established under section 4(b) 
                                of the Food Stamp Act of 1977 
                                (7 U.S.C. 2013(b));
                                  (III) the temporary 
                                assistance for needy families 
                                program funded under part A of 
                                title IV of the Social Security 
                                Act (42 U.S.C. 601 et seq.);
                                  (IV) the State medicaid 
                                program under title XIX of the 
                                Social Security Act (42 U.S.C. 
                                1396 et seq.); or
                                  (V) a similar income-tested 
                                program or other source of 
                                information, as determined by 
                                the Secretary.
                          (ii) Free meals.--Public agency 
                        records that may be obtained and used 
                        under clause (i) to verify eligibility 
                        for free meals for approved household 
                        applications selected for verification 
                        shall include the most recent available 
                        information (other than information 
                        reflecting program participation or 
                        income before the 180-day period ending 
                        on the date of application for free 
                        meals) that is relied on to 
                        administer--
                                  (I) a program or source of 
                                information described in clause 
                                (i) (other than clause 
                                (i)(IV)); or
                                  (II) the State plan for 
                                medical assistance under title 
                                XIX of the Social Security Act 
                                (42 U.S.C. 1396 et seq.) in--
                                          (aa) a State in which 
                                        the income eligibility 
                                        limit applied under 
                                        section 1902(l)(2)(C) 
                                        of that Act (42 U.S.C. 
                                        1396a(l)(2)(C)) is not 
                                        more than 133 percent 
                                        of the income official 
                                        poverty line described 
                                        in section 
                                        1902(l)(2)(A) of that 
                                        Act (42 U.S.C. 
                                        1396a(l)(2)(A)); or
                                          (bb) a State that 
                                        otherwise identifies 
                                        households that have 
                                        income that is not more 
                                        than 133 percent of the 
                                        income official poverty 
                                        line described in 
                                        section 1902(l)(2)(A) 
                                        of that Act (42 U.S.C. 
                                        1396a(l)(2)(A)).
                          (iii) Reduced price meals.--Public 
                        agency records that may be obtained and 
                        used under clause (i) to verify 
                        eligibility for reduced price meals for 
                        approved household applications 
                        selected for verification shall include 
                        the most recent available information 
                        (other than information reflecting 
                        program participation or income before 
                        the 180-day period ending on the date 
                        of application for reduced price meals) 
                        that is relied to administer--
                                  (I) a program or source of 
                                information described in clause 
                                (i) (other than clause 
                                (i)(IV)); or
                                  (II) the State plan for 
                                medical assistance under title 
                                XIX of the Social Security Act 
                                (42 U.S.C. 1396 et seq.) in--
                                          (aa) a State in which 
                                        the income eligibility 
                                        limit applied under 
                                        section 1902(l)(2)(C) 
                                        of that Act (42 U.S.C. 
                                        1396a(l)(2)(C)) is not 
                                        more than 185 percent 
                                        of the income official 
                                        poverty line described 
                                        in section 
                                        1902(l)(2)(A) of that 
                                        Act (42 U.S.C. 
                                        1396a(l)(2)(A)); or
                                          (bb) a State that 
                                        otherwise identifies 
                                        households that have 
                                        income that is not more 
                                        than 185 percent of the 
                                        income official poverty 
                                        line described in 
                                        section 1902(l)(2)(A) 
                                        of that Act (42 U.S.C. 
                                        1396a(l)(2)(A)).
                          (iv) Evaluation.--Not later than 3 
                        years after the date of implementation 
                        of this subparagraph, the Secretary 
                        shall complete an evaluation of--
                                  (I) the effectiveness of 
                                direct verification carried out 
                                under this subparagraph in 
                                decreasing the portion of the 
                                verification sample that must 
                                be verified under subparagraph 
                                (G) while ensuring that 
                                adequate verification 
                                information is obtained; and
                                  (II) the feasibility of 
                                direct verification by State 
                                agencies and school food 
                                authorities.
                          (v) Expanded use of direct 
                        verification.--If the Secretary 
                        determines that direct verification 
                        significantly decreases the portion of 
                        the verification sample that must be 
                        verified under subparagraph (G) while 
                        ensuring that adequate verification 
                        information is obtained and can be 
                        conducted by most State agencies and 
                        school food authorities, the Secretary 
                        may require a State agency or school 
                        food authority to implement direct 
                        verification through 1 or more of the 
                        programs described in clause (i), as 
                        determined by the Secretary, unless the 
                        State agency or school food authority 
                        demonstrates (under criteria 
                        established by the Secretary) that the 
                        State agency or school food authority 
                        lacks the capacity to conduct, or is 
                        unable to implement, direct 
                        verification.
                  (G) Household verification.--
                          (i) In general.--If an approved 
                        household application is not verified 
                        through the use of public agency 
                        records, a school food authority shall 
                        provide to the household written notice 
                        that--
                                  (I) the approved household 
                                application has been selected 
                                for verification; and
                                  (II) the household is 
                                required to submit verification 
                                information to confirm 
                                eligibility for free or reduced 
                                price meals.
                          (ii) Phone number.--The written 
                        notice in clause (i) shall include a 
                        toll-free phone number that parents and 
                        legal guardians in households selected 
                        for verification can call for 
                        assistance with the verification 
                        process.
                          (iii) Follow-up activities.--If a 
                        household does not respond to a 
                        verification request, a school food 
                        authority shall make at least 1 attempt 
                        to obtain the necessary verification 
                        from the household in accordance with 
                        guidelines and regulations promulgated 
                        by the Secretary.
                          (iv) Contract authority for school 
                        food authorities.--A school food 
                        authority may contract (under standards 
                        established by the Secretary) with a 
                        third party to assist the school food 
                        authority in carrying out clause (iii).
                  (H) Verification deadline.--
                          (i) In general.--Not later than 
                        November 15 of each school year, a 
                        school food authority shall complete 
                        the verification activities required 
                        for the school year (including followup 
                        activities).
                          (ii) Eligibility changes.--Based on 
                        the verification activities, the school 
                        food authority shall make appropriate 
                        modifications to the eligibility 
                        determinations made for household 
                        applications in accordance with 
                        criteria established by the Secretary.
                  (I) Local conditions.--In the case of a 
                natural disaster, civil disorder, strike, or 
                other local condition (as determined by the 
                Secretary), the Secretary may substitute 
                alternatives for--
                          (i) the sample size and sample 
                        selection criteria established under 
                        subparagraph (D); and
                          (ii) the verification deadline 
                        established under subparagraph (H).
                  (J) Individual review.--In accordance with 
                criteria established by the Secretary, the 
                school food authority may, on individual 
                review--
                          (i) decline to verify no more than 5 
                        percent of approved household 
                        applications selected under 
                        subparagraph (D); and
                          (ii) replace the approved household 
                        applications with other approved 
                        household applications to be verified.
                  (K) Feasibility study.--
                          (i) In general.--The Secretary shall 
                        conduct a study of the feasibility of 
                        using computer technology (including 
                        data mining) to reduce--
                                  (I) overcertification errors 
                                in the school lunch program 
                                under this Act;
                                  (II) waste, fraud, and abuse 
                                in connection with this 
                                paragraph; and
                                  (III) errors, waste, fraud, 
                                and abuse in other nutrition 
                                programs, as determined to be 
                                appropriate by the Secretary.
                          (ii) Report.--Not later than 180 days 
                        after the date of enactment of this 
                        paragraph, the Secretary shall submit 
                        to the Committee on Education and the 
                        Workforce of the House of 
                        Representatives and the Committee on 
                        Agriculture, Nutrition, and Forestry of 
                        the Senate a report describing--
                                  (I) the results of the 
                                feasibility study conducted 
                                under this subsection;
                                  (II) how a computer system 
                                using technology described in 
                                clause (i) could be 
                                implemented;
                                  (III) a plan for 
                                implementation; and
                                  (IV) proposed legislation, if 
                                necessary, to implement the 
                                system.
          (4) Direct certification for children in food stamp 
        households.--
                  (A) In general.--Subject to subparagraph (D), 
                each State agency shall enter into an agreement 
                with the State agency conducting eligibility 
                determinations for the food stamp program 
                established under the Food Stamp Act of 1977 (7 
                U.S.C. 2011 et seq.).
                  (B) Procedures.--Subject to paragraph (6), 
                the agreement shall establish procedures under 
                which a child who is a member of a household 
                receiving assistance under the food stamp 
                program shall be certified as eligible for free 
                meals lunches under this Act and free 
                breakfasts under the Child Nutrition Act of 
                1966 (42 U.S.C. 1771 et seq.), without further 
                application.
                  (C) Certification.--Subject to paragraph (6), 
                under the agreement, the school food authority 
                conducting eligibility determinations for a 
                school lunch program conducted under this Act 
                and school breakfast program under the Child 
                Nutrition Act of 1966 (42 U.S.C. 1771 et seq.) 
                shall certify a child who is a member of a 
                household receiving assistance under the food 
                stamp program as eligible for free meals 
                lunches under this Act and free breakfasts 
                under the Child Nutrition Act of 1966 (42 
                U.S.C. 1771 et seq.), without further 
                application.
                  (D) Applicability.--This paragraph applies 
                to--
                          (i) in the case of the school year 
                        beginning July 2006, a school district 
                        that had an enrollment of 25,000 
                        students or more in the preceding 
                        school year;
                          (ii) in the case of the school year 
                        beginning July 2007, a school district 
                        that had an enrollment of 10,000 
                        students or more in the preceding 
                        school year; and
                          (iii) in the case of the school year 
                        beginning July 2008 and each subsequent 
                        school year, each school food 
                        authority.
          (5) Discretionary certification.--
                  (A) In general.--Subject to paragraph (6), 
                any school food authority may certify any child 
                as eligible for free lunches or breakfasts, 
                without furtherapplication, by directly 
communicating with the appropriate State or local agency to obtain 
documentation of the status of the child as--
                          (i) a member of a family that is 
                        receiving assistance under the 
                        temporary assistance for needy families 
                        program funded under part A of title IV 
                        of the Social Security Act (42 U.S.C. 
                        601 et seq.) that the Secretary 
                        determines complies with standards 
                        established by the Secretary that 
                        ensure that the standards under the 
                        State program are comparable to or more 
                        restrictive than those in effect on 
                        June 1, 1995;
                          (ii) a homeless child or youth 
                        (defined as 1 of the individuals 
                        described in section 725(2) of the 
                        McKinney-Vento Homeless Assistance Act 
                        (42 U.S.C. 11434a(2));
                          (iii) served by the runaway and 
                        homeless youth grant program 
                        established under the Runaway and 
                        Homeless Youth Act (42 U.S.C. 5701 et 
                        seq.); or
                          (iv) a migratory child (as defined in 
                        section 1309 of the Elementary and 
                        Secondary Education Act of 1965 (20 
                        U.S.C. 6399)).''.
                  (B) Children of households receiving food 
                stamps.--Subject to paragraph (6), any school 
                food authority may certify any child as 
                eligible for free lunches or breakfasts, 
                without further application, by directly 
                communicating with the appropriate State or 
                local agency to obtain documentation of the 
                status of the child as a member of a household 
                that is receiving food stamps under the Food 
                Stamp Act of 1977 (7 U.S.C. 2011 et seq.).
          (6) Use or disclosure of information.--
                  (A) In general.--The use or disclosure of any 
                information obtained from an application for 
                free or reduced price meals, or from a State or 
                local agency referred to in paragraph (3)(F), 
                (4), or (5), shall be limited to--
                          (i) a person directly connected with 
                        the administration or enforcement of 
                        this Act or the Child Nutrition Act of 
                        1966 (42 U.S.C. 1771 et seq.) 
                        (including a regulation promulgated 
                        under either Act);
                          (ii) a person directly connected with 
                        the administration or enforcement of--
                                  (I) a Federal education 
                                program;
                                  (II) a State health or 
                                education program administered 
                                by the State or local 
                                educational agency (other than 
                                a program carried out under 
                                title XIX or XXI of the Social 
                                Security Act (42 U.S.C. 1396 et 
                                seq.; 42 U.S.C. 1397aa et 
                                seq.)); or
                                  (III) a Federal, State, or 
                                local means-tested nutrition 
                                program with eligibility 
                                standards comparable to the 
                                program under this section;
                          (iii)(I) the Comptroller General of 
                        the United States for audit and 
                        examination authorized by any other 
                        provision of law; and
                          (II) notwithstanding any other 
                        provision of law, a Federal, State, or 
                        local law enforcement official for the 
                        purpose of investigating an alleged 
                        violation of any program covered by 
                        this paragraph or paragraph (3)(F), 
                        (4), or (5);
                          (iv) a person directly connected with 
                        the administration of the State 
                        medicaid program under title XIX of the 
                        Social Security Act (42 U.S.C. 1396 et 
                        seq.) or the State children's health 
                        insurance program under title XXI of 
                        that Act (42 U.S.C. 1397aa et seq.) 
                        solely for the purposes of--
                                  (I) identifying children 
                                eligible for benefits under, 
                                and enrolling children in, 
                                those programs, except that 
                                this subclause shall apply only 
                                to the extent that the State 
                                and the school food authority 
                                so elect; and
                                  (II) verifying the 
                                eligibility of children for 
                                programs under this Act or the 
                                Child Nutrition Act of 1966 (42 
                                U.S.C. 1771 et seq.); and
                          (v) a third party contractor 
                        described in paragraph (3)(G)(iv).
                  (B) Limitation on information provided.--
                Information provided under clause (ii) or (v) 
                of subparagraph (A) shall be limited to the 
                income eligibility status of the child for whom 
                application for free or reduced price meal 
                benefits is made or for whom eligibility 
                information is provided under paragraph (3)(F), 
                (4), or (5), unless the consent of the parent 
                or guardian of the child for whom application 
                for benefits was made is obtained.
                  (C) Criminal penalty.--A person described in 
                subparagraph (A) who publishes, divulges, 
                discloses, or makes known in any manner, or to 
                any extent not authorized by Federal law 
                (including a regulation), any information 
                obtained under this subsection shall be fined 
                not more than $1,000 or imprisoned not more 
                than 1 year, or both.
                  (D) Requirements for waiver of 
                confidentiality.--A State that elects to 
                exercise the option described in subparagraph 
                (A)(iv) shall ensure that any school food 
                authority acting in accordance with that 
                option--
                          (i) has a written agreement with 1 or 
                        more State or local agencies 
                        administering health programs for 
                        children under titles XIX and XXI of 
                        the Social Security Act (42 U.S.C. 1396 
                        et seq. and 1397aa et seq.) that 
                        requires the health agencies to use the 
                        information obtained under subparagraph 
                        (A) to seek to enroll children in those 
                        health programs; and
                          (ii)(I) notifies each household, the 
                        information of which shall be disclosed 
                        under subparagraph (A), that the 
                        information disclosed will be used only 
                        to enroll children in health programs 
                        referred to in subparagraph (A)(iv); 
                        and
                          (II) provides each parent or guardian 
                        of a child in the household with an 
                        opportunity to elect not to have the 
                        information disclosed.
                  (E) Use of disclosed information.--A person 
                to which information is disclosed under 
                subparagraph (A)(iv) shall use or disclose the 
                information only as necessary for the purpose 
                of enrolling children in health programs 
                referred to in subparagraph (A)(iv).
          (7) Free and reduced price policy statement.--
                  (A) In general.--After the initial 
                submission, a school food authority shall not 
                be required to submit a free and reduced price 
                policy statement to a State educational agency 
                under this Act unless there is a substantive 
                change in the free and reduced price policy of 
                the school food authority.
                  (B) Routine change.--A routine change in the 
                policy of a school food authority (such as an 
                annual adjustment of the income eligibility 
                guidelines for free and reduced price meals) 
                shall not be sufficient cause for requiring the 
                school food authority to submit a policy 
                statement.
          (8) Communications.--
                  (A) In general.--Any communication with a 
                household under this subsection or subsection 
                (d) shall be in an understandable and uniform 
                format and, to the extent practicable, in a 
                language that parents and legal guardians can 
                understand.
                  (B) Electronic availability.--In addition to 
                the distribution of applications and 
                descriptive material in paper form as provided 
                for in this paragraph, the applications and 
                material may be made available electronically 
                via the Internet.
          [(3)] (9) Eligibility for free and reduced price 
        lunches.--
                  (A) Free lunches._Any child who is a member 
                of a household whose income, at the time the 
                application is submitted, is at an annual rate 
                which does not exceed the applicable family 
                size income level of the income eligibility 
                guidelines for free lunches, as determined 
                under paragraph (1), shall be served a free 
                lunch.
                  (B) Reduced price lunches.--
                          (i) In general._Any child who is a 
                        member of a household whose income, at 
                        the time the application is submitted, 
                        is at an annual rate greater than the 
                        applicable family size income level of 
                        the income eligibility guidelines for 
                        free lunches, as determined under 
                        paragraph (1), but less than or equal 
                        to the applicable family size income 
                        level of the income eligibility 
                        guidelines for reduced price lunches, 
                        as determined under paragraph (1), 
                        shall be served a reduced price lunch.
                          (ii) Maximum price._The price charged 
                        for a reduced price lunch shall not 
                        exceed 40 cents.
                  (C) Duration.--Except as otherwise specified 
                in paragraph (3)(E), (3)(H)(ii), and section 
                11(a), eligibility for free or reduced price 
                meals for any school year shall remain in 
                effect--
                          (i) beginning on the date of 
                        eligibility approval for the current 
                        school year; and
                          (ii) ending on a date during the 
                        subsequent school year determined by 
                        the Secretary.
          [(4)] (10) No physical segregation of or other 
        discrimination against any child eligible for a free 
        lunch or a reduced price lunch under this subsection 
        shall be made by the school nor shall there be any 
        overt identification of any child by special tokens or 
        tickets, announced or published list of names, or by 
        other means.
          [(5)] (11) Any child who has a parent or guardian who 
        (A) is responsible for the principal support of such 
        child and (B) is unemployed shall be served a free or 
        reduced price lunch, respectively, during any period 
        (i) in which such child's parent or guardian continues 
        to be unemployed and (ii) the income of the child's 
        parents or guardians during such period of unemployment 
        falls within the income eligibility criteria for free 
        lunches or reduced price lunches, respectively, based 
        on the current rate of income of such parents or 
        guardians. Local school authorities shall publicly 
        announce that such children are eligible for free or 
        reduced price lunch, and shall make determinations with 
        respect to the status of any parent or guardian of any 
        child under clauses (A) and (B) of the preceding 
        sentence on the basis of a statement executed in such 
        form as the Secretary may prescribe by such parent or 
        guardian. No physical segregation of, or other 
        discrimination against, any child eligible for a free 
        or reduced price lunch under this paragraph shall be 
        made by the school nor shall there be any overt 
        identification of any such child by special tokens or 
        tickets, announced or published lists of names, or by 
        any other means.
          [(6)] (12)(A) A child shall be considered 
        automatically eligible for a free lunch and breakfast 
        under this Act and the Child Nutrition Act of 1966 (42 
        U.S.C. 1771 et seq.), respectively, without further 
        application or eligibility determination, if the child 
        is--
                  (i) a member of a household receiving 
                assistance under the food stamp program 
                authorized under the Food Stamp Act of 1977 (7 
                U.S.C. 2011 et seq.);
                  (ii) a member of a family (under the State 
                program funded under part A of title IV of the 
                Social Security Act (42 U.S.C. 601 et seq.)) 
                that the Secretary determines complies with 
                standards established by the Secretary that 
                ensure that the standards under the State 
                program are comparable to or more restrictive 
                than those in effect on June 1, 1995; [or]
                  (iii) enrolled as a participant in a Head 
                Start program authorized under the Head Start 
                Act (42 U.S.C. 9831 et seq.), on the basis of a 
                determination that the child is a member of a 
                family that meets the low-income criteria 
                prescribed under section 645(a)(1)(A) of the 
                Head Start Act (42 U.S.C. 9840(a)(1)(A))[.];
                  (iv) a homeless child or youth (defined as 1 
                of the individuals described in section 725(2) 
                of the McKinney-Vento Homeless Assistance Act 
                (42 U.S.C. 11434a(2));
                  (v) served by the runaway and homeless youth 
                grant program established under the Runaway and 
                Homeless Youth Act (42 U.S.C. 5701 et seq.); or
                  (vi) a migratory child (as defined in section 
                1309 of the Elementary and Secondary Education 
                Act of 1965 (20 U.S.C. 6399)).
          (B) Proof of receipt of food stamps or assistance 
        under the State program funded under part A of title IV 
        of the Social Security Act (42 U.S.C. 601 et seq.) that 
        the Secretary determines complies with standards 
        established by the Secretary that ensure that the 
        standards under the State program are comparable to or 
        more restrictive than those in effect on June 1, 1995, 
        or of enrollment or participation ina Head Start 
program on the basis described in subparagraph (A)(iii), shall be 
sufficient to satisfy any verification requirement imposed under 
paragraph (2)(C).
          [(7)] (13) Exclusion of certain military housing 
        allowances.--[For each of fiscal years 2002 and 2003 
        and through June 30, 2004, the] The amount of a basic 
        allowance provided under section 403 of title 37, 
        United States Code, on behalf of a member of a 
        uniformed service for housing that is acquired or 
        constructed under subchapter IV of chapter 169 of title 
        10, United States Code, or any related provision of 
        law, shall not be considered to be income for the 
        purpose of determining the eligibility of a child who 
        is a member of the household of the member of a 
        uniformed service for free or reduced price lunches 
        under this Act.

           *       *       *       *       *       *       *

    (d)(1) * * *
    (2) * * *
          (B) documentation showing that the household is 
        participating in the food stamp program under the Food 
        Stamp Act of 1977 [(7 U.S.C. 2011 et seq.)] has been 
        provided to the appropriate local school food 
        authority; [or]
          (C) documentation has been provided to the 
        appropriate local school food authority showing that 
        the family is receiving assistance under the State 
        program funded under part A of title IV of the Social 
        Security Act that the Secretary determines complies 
        with standards established by the Secretary that ensure 
        that the standards under the State program are 
        comparable to or more restrictive than those in effect 
        on June 1, 1995[.];
          (D) documentation has been provided to the 
        appropriate school food authority showing that the 
        child meets the criteria specified in clauses (iv) or 
        (v) of subsection (b)(12)(A); or
          (E) documentation has been provided to the 
        appropriate school food authority showing the status of 
        the child as a migratory child (as defined in section 
        1309 of the Elementary and Secondary Education Act of 
        1965 (20 U.S.C. 6399)).

           *       *       *       *       *       *       *

    (f) * * *
          (5) Waiver of requirement for weighted averages for 
        nutrient analysis.--During the period ending on 
        [September 30, 2003] September 30, 2008, the Secretary 
        shall not require the use of weighted averages for 
        nutrient analysis of menu items and foods offered or 
        served as part of a meal offered or served under the 
        school lunch program under this Act or the school 
        breakfast program under section 4 of the Child 
        Nutrition Act of 1966 (42 U.S.C. 1773).
    (g) Not later than 1 year after the date of enactment of 
this subsection, the Secretary shall provide a notification to 
Congress that justifies the need for production records 
required under section 210.10(b) of title 7, Code of Federal 
Regulations, and describes how the Secretary has reduced 
paperwork relating to the school lunch and school breakfast 
programs.
    (h) Food Safety [Inspections].--
          (1) In general.--Except as provided in paragraph (2), 
        a school participating in the school lunch program 
        under this Act or the school breakfast program under 
        section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 
        1773) shall, at least once during each school year, 
        obtain a food safety inspection conducted by a State or 
        local governmental agency responsible for food safety 
        inspections.
          (2) Exception.--Paragraph (1) shall not apply to a 
        school if a food safety inspection of the school is 
        required by a State or local governmental agency 
        responsible for food safety inspections.
          (3) School food safety program.--Each school food 
        authority shall implement a school food safety program, 
        in the preparation and service of each meal served to 
        children, that complies with a hazard analysis and 
        critical control point system established by the 
        Secretary.

           *       *       *       *       *       *       *

    (j) * * *
          (2) Authorization of appropriations.--
                  (A) In general.--There is authorized to be 
                appropriated to carry out this subsection 
                $400,000 for each of fiscal years 2003 through 
                [2007] 2008, to remain available until 
                expended.

           *       *       *       *       *       *       *

    Sec. 11 * * *
                  (C)(i) Except as provided in subparagraph 
                (D), in the case of any school or school 
                district that--
                          (I) elects to serve all children in 
                        the school or school district free 
                        lunches under the school lunch program 
                        during any period of 4 successive 
                        school years, or in the case of a 
                        school or school district that serves 
                        both lunches and breakfasts, elects to 
                        serve all children in the school or 
                        school district free lunches and free 
                        breakfasts under the school lunch 
                        program and the school breakfast 
                        program established under section 4 of 
                        the Child Nutrition Act of 1966 (42 
                        U.S.C. 1773) during any period of 4 
                        successive school years; 11-6 and
                          (II) pays, from sources other than 
                        Federal funds, for the costs of serving 
                        the lunches or breakfasts that are in 
                        excess of the value of assistance 
                        received under this Act and the Child 
                        Nutrition Act of 1966 (42 U.S.C. 1771 
                        et seq.) with respect to the number of 
                        lunches or breakfasts served during the 
                        period; special assistance payments 
                        shall be paid to the State educational 
                        agency with respect to the school or 
                        school district during the period on 
                        the basis of the number of lunches or 
                        breakfasts determined under clause (ii) 
                        or (iii).
                  (ii) For purposes of making special 
                assistance payments under clause (i), except as 
                provided in clause (iii), the number of lunches 
                or breakfasts served by a school or school 
                district to children who are eligible for free 
                lunches or breakfasts or reduced price lunches 
                or breakfasts during each school year of the 4-
                school-yearperiod shall be considered to be 
equal to the number of lunches or breakfasts served by the school or 
school district to children eligible for free lunches or breakfasts or 
reduced price lunches or breakfasts during the first school year of the 
period.
                  (iii) For purposes of computing the amount of 
                the payments, a school or school district may 
                elect to determine on a more frequent basis the 
                number of children who are eligible for free or 
                reduced price lunches or breakfasts who are 
                served lunches or breakfasts during the 4-
                school-year period.
                          (D)(i) In the case of any school or 
                        school district that is receiving 
                        special assistance payments under this 
                        paragraph for a 4-school-year period 
                        described in subparagraph (C), the 
                        State may grant, at the end of the 4-
                        school-year period, an extension of the 
                        period for an additional 4 school 
                        years, if the State determines, through 
                        available socioeconomic data approved 
                        by the Secretary, that the income level 
                        of the population of the school or 
                        school district has remained stable.
                          (ii) A school or school district 
                        described in clause (i) may reapply to 
                        the State at the end of the 4-school-
                        year period, and at the end of each 4-
                        school-year period thereafter for which 
                        the school or school district receives 
                        special assistance payments under this 
                        paragraph, for the purpose of 
                        continuing to receive the payments for 
                        a subsequent 4-school-year period.
                          (iii) If the Secretary determines 
                        after considering the best available 
                        socioeconomic data that the income 
                        level of families of children enrolled 
                        in a school or school district has not 
                        remained stable, the Secretary may 
                        require the submission of applications 
                        for free and reduced price lunches, or 
                        for free and reduced price lunches and 
                        breakfasts, in the first school year of 
                        any 4-school-year period for which the 
                        school or school district receives 
                        special assistance payments under this 
                        paragraph, for the purpose of 
                        calculating the special assistance 
                        payments.
                          (iv) For the purpose of updating 
                        information and reimbursement levels, a 
                        school or school district described in 
                        clause (i) that carries out a school 
                        lunch or school breakfast program may 
                        at any time require submission of 
                        applications for free and reduced price 
                        lunches or for free and reduced price 
                        lunches and breakfasts.
                          (E)(i) In the case of any school or 
                        school district that--
                                  (I) elects to serve all 
                                children in the school free or 
                                school district lunches under 
                                the school lunch program during 
                                any period of 4 successive 
                                school years, or in the case of 
                                a school or school district 
                                that serves both lunches and 
                                breakfasts, elects to serve all 
                                children in the school or 
                                school district free lunches 
                                and free breakfasts under the 
                                school lunch program and the 
                                school breakfast program during 
                                any period of 4 successive 
                                school years; and
                                  (II) pays, from sources other 
                                than Federal funds, for the 
                                costs of serving the lunches or 
                                breakfasts that are in excess 
                                of the value of assistance 
                                received under this Act and the 
                                Child Nutrition Act of 1966 (42 
                                U.S.C. 1771 et seq.) with 
                                respect to the number of 
                                lunches or breakfasts served 
                                during the period; total 
                                Federal cash reimbursements and 
                                total commodity assistance 
                                shall be provided to the State 
                                educational agency with respect 
                                to the school or school 
                                district at a level that is 
                                equal to the total Federal cash 
                                reimbursements and total 
                                commodity assistance received 
                                by the school or school 
                                district in the last school 
                                year for which the school or 
                                school district accepted 
                                applications under the school 
                                lunch or school breakfast 
                                program, adjusted annually for 
                                inflation in accordance with 
                                paragraph (3)(B) and for 
                                changes in enrollment, to carry 
                                out the school lunch or school 
                                breakfast program.
                          (ii) A school or school district 
                        described in clause (i) may reapply to 
                        the State at the end of the 4-school-
                        year period described in clause (i), 
                        and at the end of each 4-school-year 
                        period thereafter for which the school 
                        or school district receives 
                        reimbursements and assistance under 
                        this subparagraph, for the purpose of 
                        continuing to receive the 
                        reimbursements and assistance for a 
                        subsequent 4-school-year period. The 
                        State may approve an application under 
                        this clause if the State determines, 
                        through available socioeconomic data 
                        approved by the Secretary, that the 
                        income level of the population of the 
                        school or school district has remained 
                        consistent with the income level of the 
                        population of the school or school 
                        district in the last school year for 
                        which the school or school district 
                        accepted the applications described in 
                        clause (i).

           *       *       *       *       *       *       *

    Sec. 12 * * *
    [(m)(1) The Secretary, acting through the Administrator of 
the Food and Nutrition Service or through the Extension 
Service, shall award on an annual basis grants to a private 
nonprofit organization or educational institution in each of 3 
States to create, operate, and demonstrate food and nutrition 
projects that are fully integrated with elementary school 
curricula.
    [(2) Each organization or institution referred to in 
paragraph (1) shall be selected by the Secretary and shall--
          [(A) assist local schools and educators in offering 
        food and nutrition education that integrates math, 
        science, and verbal skills in the elementary grades;
          [(B) assist local schools and educators in teaching 
        agricultural practices through practical applications, 
        like gardening;
          [(C) create community service learning opportunities 
        or educational programs;
          [(D) be experienced in assisting in the creation of 
        curriculum-based models in elementary schools;
          [(E) be sponsored by an organization or institution, 
        or be an organization or institution, that provides 
        information, or conducts other educational efforts, 
        concerning the success and productivity of American 
        agriculture and the importance of the free enterprise 
        system to the quality of life in the United States; and
          [(F) be able to provide model curricula, examples, 
        advice, and guidance to schools, community groups, 
        States, and local organizations regarding means of 
        carrying out similar projects.
    [(3) Subject to the availability of appropriations to carry 
out this subsection, the Secretary shall make grants to each of 
the 3 private organizations or institutions selected under this 
subsection in amounts of not less than $100,000, nor more than 
$200,000, for each of fiscal years 1995 through 2003.
    [(4) The Secretary shall establish fair and reasonable 
auditing procedures regarding the expenditure of funds under 
this subsection.
    [(5) There are authorized to be appropriated to carry out 
this subsection such sums as are necessary for each of fiscal 
years 1995 through 2003.]
    (m) Procurement Training.--
          (1) In general.--Subject to the availability of 
        appropriations under paragraph (3), the Secretary shall 
        provide technical assistance and training to States, 
        State agencies, schools, and school food authorities in 
        the procurement of goods and services for programs 
        under this Act or the Child Nutrition Act of 1966 (42 
        U.S.C. 1771 et seq.) (other than section 17 of that Act 
        (42 U.S.C. 1786)).
          (2) Buy american training.--Activities carried out 
        under paragraph (1) shall include technical assistance 
        and training to ensure compliance with subsection (n).
          (3) Authorization of appropriations.--There is 
        authorized to be appropriated to carry out this 
        subsection $1,000,000 for each of fiscal years 2005 
        through 2008, to remain available until expended.

           *       *       *       *       *       *       *

    [(p) Grant for Demonstration Project.--
          [(1) Use of funds for WIC demonstration project.--
                  [(A) In general.--The Secretary shall make 
                grants of funds under [this subsection to a 
                State-
                          [(i) for purposes that include 
                        carrying out the demonstration project 
                        under section 17(r) of the Child 
                        Nutrition Act of 1966 (42 U.S.C. 
                        1786(r)); and
                          [[(ii) for the purpose described in 
                        clause (i), in amounts not to exceed 
                        $10,000 for each fiscal year for each 
                        site in the State.
                  [(B) Apportionment.--A State that receives a 
                grant under subparagraph (A) shall apportion 
                the funds received to ensure that each site in 
                the State receives not more than $10,000 for 
                any fiscal year.
          [(2) Evaluations of demonstration project.--The 
        Secretary shall conduct an evaluation of the 
        demonstration project and grant program for 
        identification and enrollment efforts funded under this 
        subsection that include a determination of--
                  [(A) the number of children enrolled as a 
                result of the enactment of this subsection;
                  [(B) the income levels of the families of 
                enrolled children;
                  [(C) the cost of identification and 
                enrollment assistance services provided under 
                the project or grant program;
                  [(D) the effect on the caseloads of local 
                agencies that carry out the special 
                supplemental nutrition program for woman, 
                infants, and children established under section 
                17 of the Child Nutrition Act of 1966 (42 
                U.S.C. 1786); and
                  [(E) such other factors as the Secretary 
                determines to be appropriate.
          [(3) Funding.--
                  [(A) In general.--Out of any moneys in the 
                Treasury not otherwise appropriated, the 
                Secretary of the Treasury shall provide to the 
                Secretary to carry out this subsection 
                $1,000,000 for the period of fiscal years 2001 
                through 2004, to remain available until 
                expended but not later than September 30, 2004.
                  [(B) Receipt and acceptance.--The Secretary 
                shall be entitled to receive the funds and 
                shall accept the funds provided under 
                subparagraph (A), without further 
                appropriation.]

           *       *       *       *       *       *       *


                SUMMER FOOD SERVICE PROGRAM FOR CHILDREN

    Sec. 13. * * *
          (8) Seamless summer option.--Except as otherwise 
        determined by the Secretary, a service institution that 
        is a public or private nonprofit school food authority 
        may provide summer or school vacation food service in 
        accordance with applicable provisions of law governing 
        the school lunch program established under this Act or 
        the school breakfast program established under the 
        Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.).
    (b) Service Institutions.-- * * *
                  (D) Seamless summer reimbursements.--A 
                service institution described in subsection 
                (a)(8) shall be reimbursed for meals and meal 
                supplements in accordance with the applicable 
                provisions under this Act (other than 
                subparagraphs (A), (B), and (C) of this 
                paragraph and paragraph (4)) and the Child 
                Nutrition Act of 1966 (42 U.S.C. 1771 et seq.), 
                as determined by the Secretary.

           *       *       *       *       *       *       *

    [(i) Repealed]
    (i) Rural Area Eligibility Demonstration for Summer Food 
Service.--
          (1) In general.--For each of calendar years 2005 and 
        2006, the Secretary shall carry out a demonstration in 
        rural areas of a State selected by the Secretary under 
        which the threshold for determining ``areas in which 
        poor economic conditions exist'' under subsection 
        (a)(1)(C) for the demonstration authorized by this 
        section shall be 40 percent.
          (2) Evaluation.--
                  (A) In general.--The Secretary, acting 
                through the Administrator of the Food and 
                Nutrition Service, shall conduct an evaluation 
                of the demonstration carried out under this 
                subsection to assess the impact of the 
                demonstration by comparing the areas operating 
                under the demonstration to comparable areas not 
                operating under the demonstration.
                  (B) Impact.--The evaluation shall assess the 
                impact of the demonstration on--
                          (i) the number of sponsors offering 
                        meals through the summer food service 
                        program;
                          (ii) the number of sites offering 
                        meals through the summer food service 
                        program;
                          (iii) the geographic location of the 
                        sites;
                          (iv) services provided to eligible 
                        children; and
                          (v) other factors determined by the 
                        Secretary.
                  (C) Report.--Not later than January 1, 2008, 
                the Secretary shall submit to the Committee on 
                Education and the Workforce of the House of 
                Representatives and the Committee on 
                Agriculture, Nutrition, and Forestry of the 
                Senate a report describing the results of the 
                evaluation of the demonstration under this 
                subsection.
                  (D) Funding.--
                          (i) In general.--On January 1, 2005, 
                        out of any funds in the Treasury not 
                        otherwise appropriated, the Secretary 
                        of the Treasury shall transfer to the 
                        Secretary of Agriculture to carry out 
                        this paragraph $400,000, to remain 
                        available until expended.
                          (ii) Receipt and acceptance.--The 
                        Secretary shall be entitled to receive, 
                        shall accept, and shall use to carry 
                        out this paragraph the funds 
                        transferred under clause (i), without 
                        further appropriation.

           *       *       *       *       *       *       *

    (q) For the period beginning October 1, 1977, and ending 
[June 30, 2004] September 30, 2008, there are hereby authorized 
to be appropriated such sums as are necessary to carry out the 
purposes of this section.

           *       *       *       *       *       *       *


                     COMMODITY DISTRIBUTION PROGRAM

    Sec. 14. [42 U.S.C. 1762a] (a) Notwithstanding any other 
provision of law, the Secretary[, during the period beginning 
July 1, 1974, and ending June 30, 2004,] shall--

           *       *       *       *       *       *       *

    Sec. 17. * * *
          (2) Definition of institution.--In this section, the 
        term ``institution'' means--
                  (A) any public or private nonprofit 
                organization providing nonresidential child 
                care or day care outside school hours for 
                school children, including any child care 
                center, settlement house, recreational center, 
                Head Start center, and institution providing 
                child care facilities for children with 
                disabilities;
                  (B) any other private organization providing 
                nonresidential child care or day care outside 
                school hours for school children, if--
                          (i) [during the period beginning on 
                        the date of enactment of this clause 
                        and ending on June 30, 2004,] at least 
                        25 percent of the children served by 
                        the organization meet the income 
                        eligibility criteria established under 
                        section 9(b) for free or reduced price 
                        meals; or

           *       *       *       *       *       *       *

          (6) * * *
                  (B) has not been seriously deficient in its 
                operation of the child and adult care food 
                program, or any other program under this Act or 
                the Child Nutrition Act of 1966 [(42 U.S.C. 
                1771 et seq.)], or has not been determined to 
                be ineligible to participate in any other 
                publicly funded program by reason of violation 
                of the requirements of the program, for a 
                period of time specified by the Secretary;

           *       *       *       *       *       *       *

    (f) * * *
          (3) * * *
                (E) * * *
                          (iii) Duration of determination.--For 
                        purposes of this section, a 
                        determination that a family or group 
                        day care home is located in an area 
                        that qualifies the home as a tier I 
                        family or group day care home (as the 
                        term is defined in subparagraph 
                        (A)(ii)(I)), shall be in effect for [3 
                        years] 5 years (unless the 
                        determination is made on the basis of 
                        census data, in which case the 
                        determination shall remain in effect 
                        until more recent census data are 
                        available) unless the State agency 
                        determines that the area in which the 
                        home is located no longer qualifies the 
                        home as a tier I family or group day 
                        care home.

           *       *       *       *       *       *       *

    [(i) The] (i) Audits._
          (1) Disregards.--
                  (A) In general.--Subject to subparagraph (B), 
                in conducting management evaluations, reviews, 
                or audits under this section, the Secretary or 
                a State agency may disregard any overpayment to 
                an institution for a fiscal year if the total 
                overpayment to the institution for the fiscal 
                year does not exceed an amount thatis 
consistent with the disregards allowed in other programs under this Act 
and recognizes the cost of collecting small claims, as determined by 
the Secretary.
                  (B) Criminal or fraud violations.--In 
                carrying out this paragraph, the Secretary and 
                a State agency shall not disregard any 
                overpayment for which there is evidence of a 
                violation of a criminal law or civil fraud law.
          (2) Funding._The Secretary shall make available for 
        each fiscal year to States administering the child care 
        food program, for the purpose of conducting audits of 
        participating institutions, an amount up to 1.5 percent 
        (except, in the case of each of fiscal years 2005 
        through 2007, 1 percent) of the funds used by each 
        State in the program under this section, during the 
        second preceding fiscal year.
    [(j) The] (j) Agreements._
          (1) In general._The Secretary may issue regulations 
        directing States to develop and provide for the use of 
        a standard form of agreement between each family or 
        group day care sponsoring organization and the family 
        or group day care homes participating in the program 
        under such organization, for the purpose of specifying 
        the rights and responsibilities of each party.
          (2) Duration.--An agreement under paragraph (1) shall 
        remain in effect until terminated by either party to 
        the agreement.

           *       *       *       *       *       *       *

    [(p)(1) From amounts appropriated or otherwise made 
available for purposes of carrying out this section, the 
Secretary shall carry out State-wide demonstration projects in 
three States under which private for-profit organizations 
providing nonresidential day care services shall qualify as 
institutions for the purposes of this section. An organization 
may participate in a demonstration project described in the 
preceding sentence if--
          [(A) at least 25 percent of the children enrolled in 
        the organization or 25 percent of the licensed capacity 
        of the organization for children, whichever is less, 
        meet the income eligibility criteria established under 
        section 9(b) for free or reduced price meals; and
          [(B) as a result of the participation of the 
        organization in the project--
                  [(i) the nutritional content or quality of 
                meals and snacks served to children under the 
                care of such organization will be improved; or
                  [(ii) fees charged by such organization for 
                the care of the children described in 
                subparagraph (A) will be lowered.
          [(2) Under each such project, the Secretary shall 
        examine--
                  [(A) the budgetary impact of the change in 
                eligibility being tested;
                  [(B) the extent to which, as a result of such 
                change, additional low-income children can be 
                reached; and
                  [(C) which outreach methods are most 
                effective.
          [(3) The Secretary shall choose to conduct 
        demonstration projects under this subsection in--
                  [(A) 1 State that--
                          [(i) has a history of participation 
                        of for-profit organizations in the 
                        child care food program;
                          [(ii) allocates a significant 
                        proportion of the amounts it receives 
                        for child care under title XX of the 
                        Social Security Act in a manner that 
                        allows low-income parents to choose the 
                        type of child care their children will 
                        receive;
                          [(iii) has other funding mechanisms 
                        that support parental choice for child 
                        care;
                          [(iv) has a large, State-regulated 
                        for-profit child care industry that 
                        serves low-income children; and
                          [(v) has large sponsors of family or 
                        group day care homes that have a 
                        history of recruiting and sponsoring 
                        for-profit child care centers in the 
                        child care food program;
                  [(B) 1 State in which--
                          [(i) the majority of children for 
                        whom child care arrangements are made 
                        are being cared for in center-based 
                        child care facilities;
                          [(ii) for-profit child care centers 
                        and preschools are located throughout 
                        the State and serve both rural and 
                        urban populations;
                          [(iii) at least \1/3\ of the licensed 
                        child care centers and preschools 
                        operate as for-profit facilities;
                          [(iv) all licensed facilities are 
                        subject to identical nutritional 
                        requirements for food service that are 
                        similar to those required under the 
                        child care food program; and
                          [(v) less than 1 percent of child 
                        care centers participating in [the 
                        child care food program receive 
                        assistance under title XX of the Social 
                        Security Act; and
                  [(C) one other State--
                          [(i) with fewer than 60,000 children 
                        below 5 years of age;
                          [(ii) that serves more than the 
                        national average proportion of children 
                        potentially eligible for assistance 
                        provided under the Child Care and 
                        Development Fund (as indicated in data 
                        published by the Department of Health 
                        and Human Services in October 1999);
                          [(iii) that exempts all low-income 
                        families from cost sharing requirements 
                        under programs funded by the Child Care 
                        and Development Fund; and
                          [(iv) in which State spending 
                        represents more than 50 percent of 
                        total expenditures reported for fiscal 
                        year 1998 under the Child Care and 
                        Development Fund.]
    (p) Rural Area Eligibility Demonstration for Day Care 
Homes.--
          (1) Definition of demonstration tier I family or 
        group day care home.--In this subsection, the term 
        `demonstration tier I family or group day care home' 
        means a family or group day home that meets the 
        definition of tier I family or group day care home 
        under subclause (I) of subsection (f)(3)(A)(ii) except 
        that items (aa) and (bb) of that subclause shall be 
        applied by substituting `40 percent' for `50 percent'.
          (2) Demonstration.--For each of fiscal years 2006 and 
        2007, the Secretary shall conduct a demonstration in 
        rural areas of a State selected by the Secretary under 
        which demonstration tier I family or group day care 
        homes (as defined in paragraph (1)) shall be provided 
        reimbursement under subsection (f)(3) in the same 
        manner as tier I family or group day care homes (as 
        defined in subsection (f)(3)(A)(ii)(I)).
          (3) Evaluation.--
                  (A) In general.--The Secretary, acting 
                through the Administrator of the Food and 
                Nutrition Service, shall conduct an evaluation 
                of the demonstration carried out under this 
                subsection to assess the impact of the 
                demonstration by comparing the areas operating 
                under the demonstration to comparable areas not 
                operating under the demonstration.
                  (B) Impact.--The evaluation shall assess the 
                impact of the demonstration on--
                          (i) the number of family or group day 
                        care homes offering meals under this 
                        section;
                            (ii) the number of family or group 
                        day care homes offering meals under 
                        this section that are defined as tier I 
                        family or group day care homes as a 
                        result of the demonstration conducted 
                        under this subsection that otherwise 
                        would be defined as tier II family or 
                        group day care homes under subsection 
                        (f)(3)(A)(iii);
                          (iii) the geographic location of the 
                        family or group day care homes;
                          (iv) services provided to eligible 
                        children; and
                          (v) other factors determined by the 
                        Secretary.
                  (C) Report.--Not later than March 31, 2008, 
                the Secretary shall submit to the Committee on 
                Education and the Workforce of the House of 
                Representatives and the Committee on 
                Agriculture, Nutrition, and Forestry of the 
                Senate a report describing the results of the 
                evaluation of the demonstration under this 
                subsection.
                  (D) Funding.--
                          (i) In general.--On October 1, 2005, 
                        out of any funds in the Treasury not 
                        otherwise appropriated, the Secretary 
                        of the Treasury shall transfer to the 
                        Secretary of Agriculture to carry out 
                        this paragraph $400,000, to remain 
                        available until expended.
                          (ii) Receipt and acceptance.--The 
                        Secretary shall be entitled to receive, 
                        shall accept, and shall use to carry 
                        out this paragraph the funds 
                        transferred under clause (i), without 
                        further appropriation.
    (q) * * *
          (3) Funding.--For each of fiscal years [1999 through 
        2003] 2005 and 2006, the Secretary shall reserve to 
        carry out paragraph (1) $1,000,000 of the amounts made 
        available to carry out this section.

           *       *       *       *       *       *       *


                             PILOT PROJECTS

    Sec. 18. * * *
    [(f) Summer Food Pilot Projects.--] (f) Simplified Summer 
Food Programs._
          [(1) Definition of eligible state.--In this 
        subsection, the term ``eligible State'' means a State 
        in which (based on data available in July 2000)--
                  [(A) the percentage obtained by dividing--
                          [(i) the sum of--
                                  [(I) the average daily number 
                                of children attending the 
                                summer food service program in 
                                the State in July 1999; and
                                  [(II) the average daily 
                                number of children receiving 
                                free or reduced price meals 
                                under the school lunch program 
                                in the State in July 1999; by
                            [(ii) the average daily number of 
                        children receiving free or [reduced 
                        price meals under the school lunch 
                        program in the State in March 1999; is 
                        less than 50 percent of
                  [(B) the percentage obtained by dividing--
                          [(i) the sum of--
                                  [(I) the average daily number 
                                of children attending the 
                                summer food service program in 
                                all States in July 1999; and
                                  [(II) the average daily 
                                number of children receiving 
                                free or reduced price meals 
                                under the school lunch program 
                                in all States in July 1999; by
                          [(ii) the average daily number of 
                        children receiving free or reduced 
                        price meals under the school lunch 
                        program in all States in March 1999.]
          (1) Definition of eligible state.--In this 
        subsection, the term `eligible State' means--
                  (A) a State participating in the program 
                under this subsection as of May 1, 2004; and
                  (B) a State in which (based on data available 
                in April 2004)--
                          (i) the percentage obtained by 
                        dividing--
                                  (I) the sum of--
                                          (aa) the average 
                                        daily number of 
                                        children attending the 
                                        summer food service 
                                        program in the State in 
                                        July 2003; and
                                          (bb) the average 
                                        daily number of 
                                        children receiving free 
                                        or reduced price meals 
                                        under the school lunch 
                                        program in the State in 
                                        July 2003; by
                                  (II) the average daily number 
                                of children receiving free or 
                                reduced price meals under the 
                                school lunch program in the 
                                State in March 2003; is less 
                                than
                          (ii) 66.67 percent of the percentage 
                        obtained by dividing--
                                  (I) the sum of--
                                          (aa) the average 
                                        daily number of 
                                        children attending the 
                                        summer food service 
                                        program in all States 
                                        in July 2003; and
                                          (bb) the average 
                                        daily number of 
                                        children receiving free 
                                        or reduced price meals 
                                        under the school lunch 
                                        program in all States 
                                        in July 2003; by
                                  (II) the average daily number 
                                of children receiving free or 
                                reduced price meals under the 
                                school lunch program in all 
                                States in March 2003.
          [(2) Pilot projects.--During the period beginning 
        October 1, 2000, and ending June 30, 2004, the] (2) 
        Programs._The Secretary shall carry out a summer food 
        [pilot project] program in each eligible State to 
        increase the number of children participating in the 
        summer food service program in the State.
          (3) Support levels for service institutions.--
                  (A) Food Service.--Under the [pilot project] 
                program, a service institution [(other than a 
                service institution described in section 
                13(a)(7))] in an eligible State shall receive 
                the maximum amounts for food service under 
                section 13(b)(1) without regard to the 
                requirement under section 13(b)(1)(A) that 
                payments shall equal the full cost of food 
                service operations.
                  (B) Administrative costs.--Under the [pilot 
                project] program, a service institution [(other 
                than a service institution described in section 
                13(a)(7))] in an eligible State shall receive 
                the maximum amounts for administrative costs 
                determined by the Secretary under section 
                13(b)(4) without regard to the requirement 
                under section 13(b)(3) that payments to service 
                institutions shall equal the full amount of 
                State-approved administrative costs incurred.

           *       *       *       *       *       *       *

          (5) Evaluation of [pilot projects] programs.--
                  (A) In general.--The Secretary, acting 
                through the Administrator of the Food and 
                Nutrition Service, shall conduct an evaluation 
                of the [pilot project] program.
                  (B) Content.--An evaluation under this 
                paragraph shall describe--
                          (i) any effect on participation by 
                        children and service institutions in 
                        the summer food service program in the 
                        eligible State in which the [pilot 
                        project] program is carried out;
                          (ii) any effect of the [pilot 
                        project] program on the quality of the 
                        meals and supplements served in the 
                        eligible State in which the [pilot 
                        project] program is carried out; and
                          (iii) any effect of the [pilot 
                        project] program on program integrity.

           *       *       *       *       *       *       *

          [(6) Reports.--
                  [(A) Interim report.--Not later than December 
                1, 2002, the Secretary shall submit to the 
                Committee on Education and the Workforce of the 
                House of Representatives and the Committee on 
                Agriculture, Nutrition, and Forestry of the 
                Senate an interim report that describes the 
                status of, and any progress made by, each pilot 
                project being carried out under this subsection 
                as of the date of submission of the report.
                  [(B) Final report.--Not later than April 30, 
                2004, the Secretary shall submit to the 
                Committee on Education and the Workforce of the 
                House of Representatives and the Committee on 
                Agriculture, Nutrition, and Forestry of the 
                Senate a final report that includes--
                          [(i) the evaluations completed by the 
                        Secretary under paragraph (5); and
                          [(ii) any recommendations of the 
                        Secretary concerning the pilot 
                        projects.]
          (6) Report.--Not later than April 30, 2007, the 
        Secretary shall submit to the Committee on Education 
        and the Workforce of the House of Representatives and 
        the Committee on Agriculture, Nutrition, and Forestry 
        of the Senate a report that includes--
                  (A) the evaluations completed by the 
                Secretary under paragraph (5); and
                  (B) any recommendations of the Secretary 
                concerning the programs.

           *       *       *       *       *       *       *

    [(g) Fruit and Vegetable Pilot Program.--
          [(1) In general.--In the school year beginning July 
        2002, the Secretary shall carry out a pilot program to 
        make available to students in 25 elementary or 
        secondary schools in each of 4 States, and in 
        elementary or secondary schools on 1 Indian 
        reservation, free fresh and dried fruits and fresh 
        vegetables throughout the school day in 1 or more areas 
        designated by the school.
          [(2) Publicity.--A school that participates in the 
        pilot program shall widely publicize within the school 
        the availability of free fruits and vegetables under 
        the pilot program.
          [(3) Report.--Not later than May 1, 2003, the 
        Secretary, acting through the Administrator of the 
        Economic Research Service, shall report to the 
        Committee on Education and the Workforce of the House 
        of Representatives and the Committee on Agriculture, 
        Nutrition, and Forestry of the Senate on the results of 
        the pilot program.
          [(4) Funding.--The Secretary shall use not more than 
        $6,000,000 of funds made available under section 32 of 
        the Act of August 24, 1935 (7 U.S.C. 612c), to carry 
        out this subsection (other than paragraph (3)), to 
        remain available until the close of the school year 
        beginning July 2003.]
    (g) Fresh Fruit and Vegetable Program.--
          (1) In general.--For the school year beginning July 
        2004 and each subsequent school year, the Secretary 
        shall carry out a program to make free fresh fruits and 
        vegetables available, to the maximum extent 
        practicable, to--
                  (A) 25 elementary or secondary schools in 
                each of the 4 States authorized to participate 
                in the program under this subsection on May 1, 
                2004;
                  (B) 25 elementary or secondary schools (as 
                selected by the Secretary in accordance with 
                paragraph (3)) in each of 4 States (including a 
                State for which funds were allocated under the 
                program described in paragraph (3)(B)(ii)) that 
                are not participating in the program under this 
                subsection on May 1, 2004; and
                  (C) 25 elementary or secondary schools 
                operated on 3 Indian reservations (including 
                the reservation authorized to participate in 
                the program under this section on May 1, 2004), 
                as selected by the Secretary.
          (2) Program.--A school participating in the program 
        shall make free fresh fruits and vegetables available 
        to students throughout the school day in 1 or more 
        areas designated by the school.
          (3) Selection of schools.--
                  (A) In general.--Except as provided in 
                subparagraph (B), in selecting additional 
                schools to participate in the program under 
                paragraph (1)(B), the Secretary shall--
                          (i) to the maximum extent 
                        practicable, ensure that the majority 
                        of schools selected are those in which 
                        not less than 50 percent of students 
                        are eligible for free or reduced price 
                        meals under this Act;
                          (ii) solicit applications from 
                        interested schools that include--
                                  (I) information pertaining to 
                                the percentage of students 
                                enrolled in the school 
                                submitting the application who 
                                are eligible for free or 
                                reduced price school lunches 
                                under this Act;
                                  (II) a certification of 
                                support for participation in 
                                the program signed by the 
                                school food manager, the school 
                                principal, and the district 
                                superintendent (or equivalent 
                                positions, as determined by the 
                                school); and
                                  (III) such other information 
                                as may be requested by the 
                                Secretary; and
                                          (iii) for each 
                                        application received, 
                                        determine whether the 
                                        application is from a 
                                        school in which not 
                                        less than 50 percent of 
                                        students are eligible 
                                        for free or reduced 
                                        price meals under this 
                                        Act.
                  (B) Nonapplicability to existing 
                participants.--Subparagraph (A) shall not apply 
                to a school, State, or Indian reservation 
                authorized--
                          (i) to participate in the program on 
                        May 1, 2004; or
                          (ii) to receive funding for free 
                        fruits and vegetables under funds 
                        provided for public health improvement 
                        under the heading `disease control, 
                        research, and training' under the 
                        heading `Centers for Disease Control 
                        and Prevention' in title II of the 
                        Departments of Labor, Health and Human 
                        Services, and Education, and Related 
                        Agencies Appropriations Act, 2004 
                        (Division E of Public Law 108 09199; 
                        118 Stat. 238).
          (4) Notice of availability.--To be eligible to 
        participate in the program under this subsection, a 
        school shall widely publicize within the school the 
        availability of free fresh fruits and vegetables under 
        the program.
          (5) Reports.--
                  (A) Interim reports.--Not later than 
                September 30 of each of fiscal years 2005 
                through 2008, the Secretary, acting through the 
                Administrator of the Food and Nutrition 
                Service, shall submit to the Committee on 
                Education and the Workforce of the House of 
                Representatives and the Committee on 
                Agriculture, Nutrition, and Forestry of the 
                Senate an interim report that describes the 
                activities carried out under this subsection 
                during the fiscal year covered by the report.
                  (B) Final report.--Not later than December 
                31, 2008, the Secretary, acting through the 
                Administrator of the Food and Nutrition 
                Service, shall submit to the Committee on 
                Education and the Workforce of the House of 
                Representatives and the Committee on 
                Agriculture, Nutrition, and Forestry of the 
                Senate a final report that describes the 
                results of the program under this subsection.
          (6) Funding.--
                  (A) Existing funds.--The Secretary shall use 
                to carry out this subsection any funds that 
                remain under this subsection on the day before 
                the date of enactment of this subparagraph.
                  (B) Mandatory funds.--
                          (i) In general.--On October 1, 2004, 
                        and on each October 1 thereafter, out 
                        of any funds in the Treasury not 
                        otherwise appropriated, the Secretary 
                        of the Treasury shall transfer to the 
                        Secretary of Agriculture to carry out 
                        this subsection $9,000,000, to remain 
                        available until expended.
                          (ii) Receipt and acceptance.--The 
                        Secretary shall be entitled to receive, 
                        shall accept, and shall use to carry 
                        out this subsection the funds made 
                        available under this subparagraph, 
                        without further appropriation.
                  (C) Authorization of appropriations.--In 
                addition to any amounts made available under 
                subparagraphs (A) and (B), there are authorized 
                to be appropriated such sums as are necessary 
                to expand the program carried out under this 
                subsection.
                  (D) Reallocation.--The Secretary may 
                reallocate any amounts made available to carry 
                out this subsection that are not obligated or 
                expended, as determined by the Secretary.
    (h) Summer Food Service Rural Transportation 
Demonstration.--
          (1) In general.--The Secretary shall carry out a 
        demonstration under which grants are provided, through 
        not more than 5 eligible State agencies selected by the 
        Secretary, to not more than 60 eligible service 
        institutions selected by the Secretary to increase 
        participation in the summer food service program for 
        children authorized by section 13 through innovative 
        approaches to limited transportation in rural areas.
          (2) Eligibility.--To be eligible to participate in 
        the demonstration under this subsection--
                  (A) a State agency shall--
                          (i) submit an application to the 
                        Secretary, in such manner as the 
                        Secretary shall establish, and meet 
                        criteria established by the Secretary;
                          (ii) provide such information 
                        relating to the operation and results 
                        of the demonstration as the Secretary 
                        may require;
                          (iii) provide technical assistance to 
                        participating service institutions; and
                          (iv) establish procedures that ensure 
                        that service institutions making 
                        purchases under this subsection meet 
                        any criteria established by the 
                        Secretary and secure State agency 
                        approval prior to a purchase; and
                  (B) a service institution shall--
                          (i) agree to the terms and conditions 
                        of the grant, as established by the 
                        Secretary;
                          (ii) provide such information 
                        relating to the operation and results 
                        of the demonstration as the Secretary 
                        may require; and
                          (iii) not have a history of 
                        violations of this Act or the Child 
                        Nutrition Act of 1966 (42 U.S.C. 1771 
                        et seq.), as determined by the 
                        Secretary.
          (3) Duration.--A service institution that receives a 
        grant to carry out a demonstration under this 
        subsection shall conduct the demonstration during a 
        period of 3 successive years, beginning in fiscal year 
        2005.
          (4) Reports.--The Secretary shall submit to the 
        Committee on Education and the Workforce of the House 
        of Representatives and the Committee on Agriculture, 
        Nutrition, and Forestry of the Senate--
                  (A) not later than January 1, 2007, an 
                interim report that describes--
                          (i) the use of funds made available 
                        under this subsection; and
                          (ii) any progress made by each 
                        demonstration carried out under this 
                        subsection; and
                  (B) not later than January 1, 2009, a final 
                report that describes--
                          (i) the use of funds made available 
                        under this subsection;
                          (ii) any progress made by each 
                        demonstration carried out under this 
                        subsection;
                          (iii) the impact of the 
                        demonstrations on participation in the 
                        summer food service program for 
                        children authorized by section 13; and
                          (iv) any recommendations by the 
                        Secretary concerning the activities of 
                        the service institutions receiving 
                        grants under this subsection.
          (5) Funding.--
                  (A) In general.--Out of any funds in the 
                Treasury not otherwise appropriated, the 
                Secretary of the Treasury shall transfer to the 
                Secretary of Agriculture to carry out this 
                section--
                          (i) on October 1, 2005, $2,000,000; 
                        and
                          (ii) on October 1, 2006, and October 
                        1, 2007, $1,000,000.
                  (B) Receipt and acceptance.--The Secretary 
                shall be entitled to receive, shall accept, and 
                shall use to carry out this subsection the 
                funds transferred under subparagraph (A), 
                without further appropriation.
                  (C) Availability of funds.--Funds transferred 
                under subparagraph (A) shall remain available 
                until expended.
                  (D) Reallocation.--The Secretary may 
                reallocate any amounts made available to carry 
                out this subsection that are not obligated or 
                expended, as determined by the Secretary.
    (i) Summer Food Service Residential Camp Demonstration.--
          (1) In general.--During the month after the date of 
        enactment of this subsection through September, 2004, 
        and the months of May through September, 2005, the 
        Secretary shall carry out a demonstration, at not more 
        than 1 private nonprofit residential camp in each of 
        not more than 2 States, as determined by the Secretary, 
        for the purpose of identifying and evaluating 
        alternative methods of determining the eligibility of 
        residential private nonprofit camps to participate in 
        the summer food service program for children 
        established under section 13.
          (2) Eligibility.--To be eligible to participate in 
        the demonstration, a residential camp--
                  (A) shall be a service institution (as 
                defined in section 13(a)(1));
                  (B) may not charge a fee to any child in 
                residence at the camp; and
                  (C) shall serve children who reside in an 
                area in which poor economic conditions exist 
                (as defined in section 13(a)(1)).
          (3) Payments.--
                  (A) In general.--Under the demonstration, the 
                Secretary shall provide reimbursement for meals 
                served to all children at a residential camp at 
                the payment rates specified in section 
                13(b)(1).
                  (B) Reimbursable meals.--A residential camp 
                participating in the demonstration may receive 
                reimbursement for not more than 3 meals, or 2 
                meals and 1 supplement, during each day of 
                operation.
          (4) Evaluation of demonstrations.--
                  (A) Information from residential camps.--Not 
                later than December 31, 2005, a residential 
                camp participating in the demonstration shall 
                report to the Secretary such information as is 
                required by the Secretary concerning 
                participation in the demonstration.
                  (B) Report to congress.--Not later than March 
                31, 2006, the Secretary shall submit to the 
                Committee on Education and the Workforce of the 
                House of Representatives and the Committee on 
                Agriculture, Nutrition, and Forestry of the 
                Senate a report that evaluates the results of 
                the demonstration.
    (j) Healthy School Nutrition Environment Demonstrations.--
          (1) In general.--Subject to the availability of funds 
        under paragraph (6), the Secretary shall conduct 
        demonstrations in selected elementary and secondary 
        schools--
                  (A) to create healthy school nutrition 
                environments; and
                  (B) to assess the impact of the environments 
                on the health and well-being of children 
                enrolled in the schools.
          (2) Selection of schools.--In selecting schools for 
        participation in demonstrations under this subsection, 
        the Secretary shall select schools in a manner that--
                  (A) provides for an equitable distribution of 
                demonstrations among--
                          (i) urban, suburban, and rural 
                        schools; and
                          (ii) schools with varying family 
                        income levels; and
                  (B) permits the evaluation of demonstrations 
                designed by the Secretary.
          (3) Assessment of nutritional environments and 
        achievement of certification criteria.--In carrying out 
        this subsection, for the first school year for which 
        funds are made available, the Secretary shall make a 
        grant to each selected school to assist the school in--
                  (A) conducting an assessment of the 
                nutritional environment of the school, in 
                accordance with procedures established by the 
                Secretary; and
                  (B) meeting the certification criteria 
                specified in paragraph (4)(B).
          (4) Incentive grants for healthy school nutrition 
        environments.--
                  (A) In general.--In carrying out this 
                subsection, for each subsequent school year, 
                the Secretary shall make a grant to each 
                selected school that meets the certification 
                criteria specified in subparagraph (B) to 
                assist the school in conducting--
                          (i) meal service activities under the 
                        nonprofit school food service program 
                        of the school; and
                          (ii) other activities that the 
                        Secretary determines are consistent 
                        with a healthy school nutrition 
                        environment.
                  (B) Certification criteria.--To be certified 
                as a school that meets healthy school nutrition 
                environment criteria under subparagraph (A), 
                the school shall meet criteria established by 
                the Secretary, that include (at a minimum)--
                          (i) providing program meals that meet 
                        the nutritional standards for 
                        breakfasts and lunches established by 
                        the Secretary;
                          (ii) offering healthy food choices 
                        outside program meals, such as offering 
                        healthy foods in vending machines, 
                        school stores, and other venues;
                          (iii) promoting the consumption of 
                        fruits and vegetables;
                          (iv) providing nutrition education to 
                        staff and to students in an 
                        understandable and uniform format and, 
                        to the extent practicable, in a 
                        language that students can understand; 
                        and
                          (v) meeting other criteria 
                        established by the Secretary.
          (5) Evaluations.--
                  (A) In general.--In carrying out this 
                subsection, the Secretary, acting through the 
                Administrator of the Food and Nutrition 
                Service, shall conduct an evaluation of schools 
                that conduct demonstrations under this 
                subsection.
                  (B) Content.--The evaluation shall measure, 
                at a minimum, the effects of a healthy school 
                nutrition environment on--
                          (i) overweight children and obesity;
                          (ii) dietary intake;
                          (iii) nutrition education and 
                        behavior;
                          (iv) the adequacy of time to eat;
                          (v) physical activities;
                          (vi) parental and student attitudes 
                        and participation; and
                          (vii) related funding issues, 
                        including the cost of maintaining a 
                        healthy school nutrition environment.
                  (C) Reports.--In carrying out this 
                subsection, the Secretary shall submit to the 
                Committee on Education and the Workforce of the 
                House of Representatives and the Committee on 
                Agriculture, Nutrition, and Forestry of the 
                Senate a report on the activities of schools 
                participating in demonstrations under this 
                subsection.
          (6) Authorization of appropriations.--There is 
        authorized to be appropriated to carry out this 
        subsection such sums as are necessary, to remain 
        available until expended.
    (k) Food Service Program Personnel Professional Standards 
Demonstration.--
          (1) In general.--Subject to the availability of funds 
        under paragraph (5), the Secretary shall carry out a 
        demonstration--
                  (A) to assess issues pertaining to 
                professional certification of school food 
                service program personnel; and
                  (B) to provide States, school districts, and 
                schools with assistance in improving 
                professional standards, and obtaining 
                appropriate program certification, related to 
                food service and dietary management.
          (2) Assistance.--In carrying out the demonstration, 
        the Secretary shall--
                  (A) assist States in providing training and 
                professional development classes and programs 
                for district school food service administrators 
                and other senior food service program personnel 
                who do not possess an approved certificate or 
                credential in preparing for and obtaining an 
                approved certificate or credential; and
                  (B) provide assistance to schools, or 
                individuals described in subparagraph (A), to 
                pay the costs of attending classes and 
                obtaining an approved certificate or 
                credential.
          (3) Assessment.--In carrying out the demonstration, 
        the Secretary shall assess--
                  (A) which certifications or credentials may 
                be considered appropriate professional 
                standards for senior administration personnel 
                of a district school food service program;
                  (B) the degree to which school food 
                authorities require the senior district food 
                service program personnel to have attained 
                certification or credentials from an approved 
                or appropriate governing body, including 
                differences that may derive from district size;
                  (C) the impact that employing a certified or 
                credentialed school food service administrator 
                has on program quality; and
                  (D) the costs to the school food authority of 
                including such a requirement in employing a 
                district school food service administrator.
          (4) Report.--On completion of the demonstration, the 
        Secretary shall submit to the Committee on Education 
        and the Workforce of the House of Representatives and 
        the Committee on Agriculture, Nutrition, and Forestry 
        of the Senate a report on the results of the 
        demonstration.
          (5) Authorization of appropriations.--There are 
        authorized to be appropriatedsuch sums as are necessary 
to carry out this subsection, to remain available until expended.
    (l) School Garden Grant Demonstration.--
          (1) In general.--Subject to paragraph (2), the 
        Secretary may make grants to State or local educational 
        agencies and nonprofit organizations to support school 
        garden demonstrations that allow children to learn 
        about the importance of specialty crops to a healthy 
        diet.
          (2) Substantial urban centers.--The Secretary shall 
        initially target grants under this subsection to 
        substantial urban centers, as determined by the 
        Secretary.
          (3) Consultation.--The Secretary shall develop and 
        carry out the grant demonstration in consultation with 
        the State department of agriculture and other 
        appropriate institutions in each State in which the 
        grant demonstration is conducted.
          (4) Authorization of appropriations.--There is 
        authorized to be appropriated to carry out this 
        subsection $15,000,000, to remain available until 
        expended.
    (m) Access to Local Foods.--
          (1) In general.--The Secretary may provide 
        assistance, through competitive matching grants and 
        technical assistance, to schools and nonprofit entities 
        for projects that--
                  (A) improve access to local foods in schools 
                and institutions participating in programs 
                under this Act and section 4 of the Child 
                Nutrition Act of 1966 (42 U.S.C. 1773) through 
                farm-to-cafeteria activities that may include 
                the acquisition of food and appropriate 
                equipment and the provision of training and 
                education;
                  (B) are, at a minimum, designed to procure 
                local foods from small- and medium-sized farms 
                for school meals;
                  (C) support nutrition education activities or 
                curriculum planning that incorporates the 
                participation of school children in farm and 
                agricultural education activities;
                  (D) develop a sustained commitment to farm-
                to-cafeteria projects in the community by 
                linking schools, agricultural producers, 
                parents, and other community stakeholders;
                  (E) require $100,000 or less in Federal 
                contributions;
                  (F) require a Federal share of costs of not 
                to exceed 75 percent;
                  (G) provide matching support in the form of 
                cash or in-kind contributions (including 
                facilities, equipment, or services provided by 
                State and local governments and private 
                sources); and
                  (H) cooperate in an evaluation carried out by 
                the Secretary.
          (2) Authorization of appropriations.--There are 
        authorized to be appropriated such sums as are 
        necessary to carry out this subsection for each of 
        fiscal years 2004 through 2008.
    (n) Childhood Obesity Prevention Demonstration.--
          (1) In general.--Subject to the availability of funds 
        under paragraph (6), for a period of 4 successive 
        years, the Secretary shall award to a national 
        organization with expertise in designing and 
        implementing health education programs for limited-
        English-proficient individuals a grant to carry out a 
        demonstration to enhance obesity prevention activities 
        for child care centers and sponsoring organizations 
        providing services to limited-English-proficient 
        individuals through the child and adult care food 
        program under section 17 in each of 4 States selected 
        by the Secretary in accordance with paragraph (2).
          (2) States.--The demonstration shall be carried out 
        in States that have experienced a growth in the 
        limited-English-proficient population of the States of 
        at least 100 percent between the years 1990 and 2000, 
        as measured by the census.
          (3) Required activities.--Activities carried out 
        under paragraph (1) shall include--
                  (A) developing an interactive and 
                comprehensive tool kit for use by lay health 
                educators and training activities;
                  (B) conducting training and providing ongoing 
                technical assistance for lay health educators; 
                and
                  (C) establishing collaborations with child 
                care centers and sponsoring organizations 
                participating in the child and adult care food 
                program under section 17 to--
                          (i) identify limited-English-
                        proficient children and families; and
                          (ii) enhance the capacity of the 
                        child care centers and sponsoring 
                        organizations to use appropriate 
                        obesity prevention strategies.
          (4) Evaluation.--The grant recipient shall identify 
        an institution of higher education to conduct an 
        independent evaluation of the effectiveness of the 
        demonstration.
          (5) Report.--The Secretary shall submit to the 
        Committee on Education and the Workforce of the House 
        of Representatives, the Committee on Agriculture, 
        Nutrition, and Forestry of the Senate, and the Health, 
        Education, Labor, and Pensions Committee of the Senate 
        a report that includes--
                  (A) the evaluation completed by the 
                institution of higher education under paragraph 
                (4);
                  (B) the effectiveness of lay health educators 
                in reducing childhood obesity; and
                  (C) any recommendations of the Secretary 
                concerning the demonstration.
          (6) Authorization of appropriations.--There are 
        authorized to be appropriated to carry out this 
        subsection $250,000 for each of fiscal years 2005 
        through 2008.
    (o) Year Round Services for Eligible Entities.--
          (1) In general.--A service institution (as defined in 
        paragraphs (6) or (7) of section 13(a)) located in 
        California--
                  (A) may be reimbursed for up to 3 meals and 2 
                supplements for any day for which services are 
                being offered at the institution; and
                  (B) shall be reimbursed for costs consistent 
                with section 13(b)(1).
          (2) Exemptions.--A service institution that receives 
        assistance under this subsection shall comply with all 
        provisions of section 13 other than subsections (b)(2) 
        and (c)(1) of that section.
          (3) Funding.--From funds made available to carry out 
        section 13, the Secretary shall provide to the State of 
        California in fiscal year 2005 an amount not to exceed 
        $1,000,000, to remain available until expended, for the 
        additional reimbursement costs for meals and 
        supplements authorized by this subsection.
    (p) Free Lunch and Breakfast Expansion Demonstration.--
          (1) In general.--Subject to the availability of funds 
        under paragraph (4), the Secretary shall carry out a 
        demonstration under which expanded service of free 
        lunchesand breakfasts is provided at schools 
participating in the school lunch program under this Act or the school 
breakfast program under section 4 of the Child Nutrition Act of 1966 
(42 U.S.C. 1773) in all or part of 5 States selected by the Secretary 
(of which at least 1 shall be a largely rural State with a significant 
Native American population).
          (2) Income eligibility.--The income guidelines for 
        determining eligibility for free lunches or breakfasts 
        under this subsection shall be 185 percent of the 
        applicable family size income levels contained in the 
        nonfarm income poverty guidelines prescribed by the 
        Office of Management and Budget, as adjusted annually 
        in accordance with section 9(b)(1)(B).
          (3) Evaluation.--
                  (A) In general.--Not later than 3 years after 
                the implementation of the demonstration under 
                this subsection, the Secretary shall conduct an 
                evaluation of the demonstration to assess the 
                impact of the demonstration by comparing the 
                school food authorities operating under the 
                demonstration to school food authorities not 
                operating under the demonstration.
                  (B) Impact assessment.--
                          (i) Children.--The evaluation shall 
                        assess the impact of the demonstration 
                        separately on--
                                  (I) children in households 
                                with incomes less than 130 
                                percent of the applicable 
                                family income levels contained 
                                in the nonfarm poverty income 
                                guidelines prescribed by the 
                                Office of Management and 
                                Budget, as adjusted annually in 
                                accordance with section 
                                9(b)(1)(B); and
                                  (II) children in households 
                                with incomes greater than 130 
                                percent and not greater than 
                                185 percent of the applicable 
                                family income levels contained 
                                in the nonfarm poverty income 
                                guidelines prescribed by the 
                                Office of Management and 
                                Budget, as adjusted annually in 
                                accordance with section 
                                9(b)(1)(B).
                          (ii) Factors.--The evaluation shall 
                        assess the impact of the demonstration 
                        on--
                                  (I) certification and 
                                participation rates in the 
                                school lunch and breakfast 
                                programs;
                                  (II) rates of lunch- and 
                                breakfast-skipping;
                                  (III) academic achievement; 
                                and
                                  (IV) other factors determined 
                                by the Secretary.
                  (C) Cost assessment.--The evaluation shall 
                assess the increased costs associated with 
                providing additional free, reduced price, or 
                paid meals in the school food authorities 
                operating under the demonstration.
                  (D) Report.--On completion of the 
                demonstration and the evaluation, the Secretary 
                shall submit to the Committee on Education and 
                the Workforce of the House of Representatives 
                and the Committee on Agriculture, Nutrition, 
                and Forestry of the Senate a report describing 
                the results of the evaluation of the 
                demonstration under this paragraph.
          (4) Authorization of appropriations.--There are 
        authorized to be appropriated such sums as are 
        necessary to carry out this subsection, to remain 
        available until expended.

           *       *       *       *       *       *       *

    Sec. 21 * * *
    (a) * * *
          (1) subject to the availability of, and from, amounts 
        appropriated pursuant to subsection (e)(1), shall 
        conduct training [activities and provide technical 
        assistance to improve the skills of individuals 
        employed in--
                  [(A) food service programs carried out with 
                assistance under this Act;
                  [(B) school breakfast programs carried out 
                with assistance under section 4 of the Child 
                Nutrition Act of 1966; and
                  [(C) as appropriate, other federally assisted 
                feeding programs; and] activities and provide--
                  (A) technical assistance to improve the 
                skills of individuals employed in--
                          (i) food service programs carried out 
                        with assistance under this Act;
                          (ii) school breakfast programs 
                        carried out with assistance under 
                        section 4 of the Child Nutrition Act of 
                        1966 (42 U.S.C. 1773); and
                          (iii) as appropriate, other federally 
                        assisted feeding programs; and
                  (B) assistance, on a competitive basis, to 
                State agencies for the purpose of aiding 
                schools and school food authorities with at 
                least 50 percent of enrolled children certified 
                to receive free or reduced price meals (and, if 
                there are any remaining funds, other schools 
                and school food authorities) in meeting the 
                cost of acquiring or upgrading technology and 
                information management systems for use in food 
                service programs carried out under this Act and 
                section 4 of the Child Nutrition Act of 1966 
                (42 U.S.C. 1773), if the school or school food 
                authority submits to the State agency an 
                infrastructure development plan that--
                          (i) addresses the cost savings and 
                        improvements in program integrity and 
                        operations that would result from the 
                        use of new or upgraded technology;
                          (ii) ensures that there is not any 
                        overt identification of any child by 
                        special tokens or tickets, announced or 
                        published list of names, or by any 
                        other means;
                          (iii) provides for processing and 
                        verifying applications for free and 
                        reduced price school meals;
                          (iv) integrates menu planning, 
                        production, and serving data to monitor 
                        compliance with section 9(f)(1); and
                          (v) establishes compatibility with 
                        statewide reporting systems;
                  (C) assistance, on a competitive basis, to 
                State agencies with low proportions of schools 
                or students that--
                          (i) participate in the school 
                        breakfast program under section 4 of 
                        the Child Nutrition Act of 1966 (42 
                        U.S.C. 1773); and
                          (ii) demonstrate the greatest need, 
                        for the purpose of aiding schools in 
                        meeting costs associated with 
                        initiating or expanding a school 
                        breakfast program under section 4 of 
                        the Child Nutrition Act of 1966 
(42U.S.C. 1773), including outreach and informational activities; and

           *       *       *       *       *       *       *

    (c) * * *
          (2) * * *
                  (B) providing training and technical 
                assistance with respect to--
                          (i) efficient use of physical 
                        resources;
                          (ii) financial management;
                          (iii) efficient use of computers;
                          (iv) procurement;
                          (v) sanitation;
                          [(vi) safety;
                          [(vii) food handling;]
                          (vi) safety, including food handling, 
                        hazard analysis and critical control 
                        point plan implementation, emergency 
                        readiness, responding to a food recall, 
                        and food biosecurity training;
                          [(viii)] (vii) meal planning and 
                        related nutrition activities;
                          [(ix)] (viii) culinary skills; and
                          [(x)] (ix) other appropriate 
                        activities;

           *       *       *       *       *       *       *

                  (E) acting as a clearinghouse for research, 
                studies, and findings concerning all aspects of 
                the operation of food service programs[, 
                including activities carried out with 
                assistance provided under section 19 of the 
                Child Nutrition Act of 1966];

           *       *       *       *       *       *       *

    (d) * * *
    (e) Authorization of Appropriations.--
          (1) Training activities and technical assistance.--
        There are authorized to be appropriated to carry out 
        subsection (a)(1) $3,000,000 for fiscal year 1990, 
        $2,000,000 for fiscal year 1991, and $1,000,000 for 
        each of fiscal years 1992 through [2003] 2008.
          (2) Food service management institute.--
                  (A) Funding.--In addition to any amounts 
                otherwise made available for fiscal year 1995, 
                out of any moneys in the Treasury not otherwise 
                appropriated, the Secretary of the Treasury 
                shall provide to the Secretary [$147,000 for 
                fiscal year 1995, $2,000,000 for each of fiscal 
                years 1996 through 1998, and $3,000,000 for 
                fiscal year 1999] $3,000,000 for fiscal year 
                2004 and $4,000,000 for fiscal year 2005 and 
                each subsequent fiscal year, to carry out 
                subsection (a)(2). The Secretary shall be 
                entitled to receive the funds and shall accept 
                the funds, without further appropriation.
    (f) Administrative Training and Technical Assistance 
Materials.--In collaboration with State educational agencies, 
school food authorities, and local educational agencies of 
varying sizes, the Secretary shall develop and distribute 
training and technical assistance materials relating to the 
administration of school meal programs that are representative 
of the best management and administrative practices.
    (g) Federal Administrative Support.--
          (1) Funding.--
                  (A) In general.--Out of any funds in the 
                Treasury not otherwise appropriated, the 
                Secretary of the Treasury shall transfer to the 
                Secretary of Agriculture to carry out this 
                subsection--
                          (i) on October 1, 2004, and October 
                        1, 2005, $5,000,000; and
                          (ii) on October 1, 2006, and October 
                        1, 2007, $3,000,000.
                  (B) Receipt and acceptance.--The Secretary 
                shall be entitled to receive, shall accept, and 
                shall use to carry out this subsection the 
                funds transferred under subparagraph (A), 
                without further appropriation.
                  (C) Availability of funds.--Funds transferred 
                under subparagraph (A) shall remain available 
                until expended.
          (2) Use of funds.--The Secretary may use funds 
        provided under this subsection--
                  (A) to provide training and technical 
                assistance and materials related to improving 
                program integrity and administrative accuracy 
                in school meals programs; and
                  (B) to assist State educational agencies in 
                reviewing the administrative practices of 
                school food authorities, to the extent 
                determined by the Secretary.

           *       *       *       *       *       *       *

    Sec. 22 * * *
    (b) * * *
          (3) Additional review requirement for selected school 
        food authorities.--
                  (A) Definition of selected school food 
                authority.--In this paragraph, the term 
                `selected school food authority' means a school 
                food authority that has a demonstrated high 
                level of, or a high risk for, administrative 
                error, as determined by the Secretary.
                  (B) Additional administrative review.--In 
                addition to any review required by subsection 
                (a) or paragraph (1), each State educational 
                agency shall conduct an administrative review 
                of each selected school food authority during 
                the review cycle established under subsection 
                (a).
                  (C) Scope of review.--In carrying out a 
                review under subparagraph (B), a State 
                educational agency shall only review the 
                administrative processes of a selected school 
                food authority, including application, 
                certification, verification, meal counting, and 
                meal claiming procedures.
                  (D) Results of review.--If the State 
                educational agency determines (on the basis of 
                a review conducted under subparagraph (B)) that 
                a selected school food authority fails to meet 
                performance criteria established by the 
                Secretary, the State educational agency shall--
                          (i) require the selected school food 
                        authority to develop and carry out an 
                        approved plan of corrective action;
                          (ii) except to the extent technical 
                        assistance is provided directly by the 
                        Secretary, provide technical assistance 
                        to assist the selected school food 
                        authority in carrying out the 
                        corrective action plan; and
                          (iii) conduct a followup review of 
                        the selected school food authority 
                        under standards established by the 
                        Secretary.
          (4) Retaining funds after administrative reviews.--
                  (A) In general.--Subject to subparagraphs (B) 
                and (C), if the school food authority fails to 
                meet administrative performance criteria 
                established by the Secretary in both an initial 
                review and a followup review under paragraph 
                (1) or (3) or subsection (a), the Secretary may 
                require the State educational agency to retain 
                funds that would otherwise be paid to the 
                school food authority for school meals programs 
                under procedures prescribed by the Secretary.
                  (B) Amount.--The amount of funds retained 
                under subparagraph (A) shall equal the value of 
                any overpayment made to the school food 
                authority as a result of an erroneous claim 
                during the time period described in 
                subparagraph (C).
                  (C) Time period.--The period for determining 
                the value of any overpayment under subparagraph 
                (B) shall be the period--
                          (i) beginning on the date the 
                        erroneous claim was made; and
                          (ii) ending on the earlier of the 
                        date the erroneous claim is corrected 
                        or--
                                  (I) in the case of the first 
                                review conducted by the State 
                                educational agency of the local 
                                educational agency under this 
                                section after July 1, 2005, the 
                                date that is 60 days after the 
                                beginning of the period under 
                                clause (i); or
                                  (II) in the case of any 
                                subsequent review conducted by 
                                the State educational agency of 
                                the local educational agency 
                                under this section, the date 
                                that is 90 days after the 
                                beginning of the period under 
                                clause (i).
          (5) Use of retained funds.--
                  (A) In general.--Subject to subparagraph (B), 
                funds retained under paragraph (4) shall--
                          (i) be returned to the Secretary, and 
                        may be used--
                                  (I) to provide training and 
                                technical assistance related to 
                                administrative practices 
                                designed to improve program 
                                integrity and administrative 
                                accuracy in school meals 
                                programs to State educational 
                                agencies and, to the extent 
                                determined by the Secretary, to 
                                school food authorities and 
                                local educational agencies;
                                  (II) to assist State 
                                educational agencies in 
                                reviewing the administrative 
                                practices of school food 
                                authorities in carrying out 
                                school meals programs; and
                                  (III) to carry out section 
                                21(f); or
                          (ii) be credited to the child 
                        nutrition programs appropriation 
                        account.
                  (B) State share.--A State educational agency 
                may retain not more than 25 percent of an 
                amount recovered under paragraph (4), to carry 
                out school meals program integrity initiatives 
                to assist school food authorities and local 
                educational agencies that have repeatedly 
                failed, as determined by the Secretary, to meet 
                administrative performance criteria.
                  (C) Requirement.--To be eligible to retain 
                funds under subparagraph (B), a State 
                educational agency shall--
                          (i) submit to the Secretary a plan 
                        describing how the State educational 
                        agency will use the funds to improve 
                        school meals program integrity, 
                        including measures to give priority to 
                        school food authorities from which 
                        funds were retained under paragraph 
                        (4); and
                          (ii) obtain the approval of the 
                        Secretary for the plan.

           *       *       *       *       *       *       *

    (d) Authorization of Appropriations.--There is authorized 
to be appropriated for purposes of carrying out the compliance 
and accountability activities referred to in subsection (c) 
[$3,000,000 for each of the fiscal years 1994 through 2003] 
$6,000,000 for each of fiscal years 2004 through 2008.

           *       *       *       *       *       *       *

    Sec. 26 * * *
    (d) Funding.--Out of any moneys in the Treasury not 
otherwise appropriated, the Secretary of the Treasury shall pay 
to the Secretary to provide to the organization selected under 
this section, to establish and maintain the information 
clearinghouse, $200,000 for each of fiscal years 1995 and 1996, 
$150,000 for fiscal year 1997, $100,000 for fiscal year 1998, 
[and $166,000 for each of fiscal years 1999 through 2003] 
$166,000 for each of fiscal years 1999 through 2004, and 
$250,000 for each of fiscal years 2005 through 2008. The 
Secretary shall be entitled to receive the funds and shall 
accept the funds, without further appropriation.

           *       *       *       *       *       *       *


SEC. 28. PROGRAM EVALUATION.

    (a) Performance Assessments.--
          (1) In general.--Subject to the availability of funds 
        made available under paragraph (3), the Secretary, 
        acting through the Administrator of the Food and 
        Nutrition Service, may conduct annual national 
        performance assessments of the meal programs conducted 
        under this Act and the Child Nutrition Act of 1966 (42 
        U.S.C. 1771 et seq.).
          (2) Components.--In conducting an assessment, the 
        Secretary may assess---
                  (A) the cost of producing meals and meal 
                supplements under the programs described in 
                paragraph (1); and
                  (B) the nutrient profile of meals, and status 
                of menu planning practices, under the programs.
          (3) Authorization of appropriations.--There is 
        authorized to be appropriated to carry out this 
        subsection $5,000,000 for fiscal year 2004 and each 
        subsequent fiscal year.
    (b) Certification Improvements.--
          (1) In general.--Subject to the availability of funds 
        made available under paragraph (5), the Secretary, 
        acting through the Administrator of the Food and 
        Nutrition Service, shall conduct a study of the 
        feasibility of improving the certification process used 
        for the school lunch program established under this 
        Act.
          (2) Pilot projects.--In carrying out this subsection, 
        the Secretary may conduct pilot projects to improve the 
        certification process used for the school lunch 
        program.
          (3) Components.--In carrying out this subsection, the 
        Secretary shall examine the use of--
                  (A) other income reporting systems;
                  (B) an integrated benefit eligibility 
                determination process managed by a single 
                agency;
                  (C) income or program participation data 
                gathered by State or local agencies; and
                  (D) other options determined by the 
                Secretary.
          (4) Waivers.--
                  (A) In general.--Subject to subparagraph (B), 
                the Secretary may waive such provisions of this 
                Act and the Child Nutrition Act of 1966 (42 
                U.S.C. 1771 et seq.) as are necessary to carry 
                out this subsection.
                  (B) Provisions.--The protections of section 
                9(b)(6) shall apply to any study or pilot 
                project carried out under this subsection.
          (5) Authorization of appropriations.--There is 
        authorized to be appropriated to carry out this 
        subsection such sums as are necessary.

SEC. 29. GLEANING OF FRESH FRUITS AND VEGETABLES.

    (a) In General.--The Secretary shall make a grant to a 
nongovernmental organization described in subsection (b) to 
establish and maintain a field gleaning operation in a State to 
encourage the consumption of fresh fruits and vegetables.
    (b) Nongovernmental Organization.--The nongovernmental 
organization referred to in subsection (a) shall--
          (1) be selected by the Secretary; and
          (2) be a nonprofit organization that--
                  (A) is an organization described in section 
                501(c)(3) of the Internal Revenue Code of 1986 
                that is exempt from tax under section 501(a) of 
                that Code;
                  (B) is experienced in providing to needy 
                individuals fresh fruits and   vegetables that 
                would otherwise go to waste;
                  (C) is experienced in establishing and 
                maintaining a field gleaning network that 
                coordinates the efforts of volunteers, growers, 
                and distribution agencies to salvage food for 
                needy individuals in multiple States; and
                  (D) agrees to provide to related 
                organizations information regarding field 
                gleaning operations.
    (c) Funding.--
          (1) In general.--On October 1, 2004, and on each 
        October 1 thereafter through October 1, 2007, out of 
        any funds in the Treasury not otherwise appropriated, 
        the Secretary of the Treasury shall transfer to the 
        Secretary of Agriculture to carry out this section 
        $100,000, of which not more than 25 percent of the 
        amount made available from each transfer may be 
        expended in the fiscal year following the fiscal year 
        of the transfer.
          (2) Receipt and acceptance.--The Secretary shall be 
        entitled to receive, shallaccept, and shall use to 
carry out this section the funds transferred under paragraph (1), 
without further appropriation.

           *       *       *       *       *       *       *


CHILD NUTRITION ACT OF 1966

           *       *       *       *       *       *       *


    Sec. 4 * * *
    [(d)(1) Each State educational agency shall provide 
additional assistance to schools in severe need, which shall 
include only--
          [(A) those schools in which the service of breakfasts 
        is required pursuant to State law; and
          [(B) those schools (having a breakfast program or 
        desiring to initiate a breakfast program) in which, 
        during the most recent second preceding school year for 
        which lunches were served, 40 percent or more [of the 
        lunches served to students at the school were served 
        free or at a reduced price, and in which the rate per 
        meal established by the Secretary is insufficient to 
        cover the costs of the breakfast program.

[The provision of eligibility specified in clause (A) of this 
paragraph shall terminate effective July 1, 1983, for schools 
in States where the State legislatures meet annually and shall 
terminate effective July 1, 1984, for schools in States where 
the State legislatures meet biennially.
          [(2) A school, upon the submission of appropriate 
        documentation about the need circumstances in that 
        school and the school's eligibility for additional 
        assistance, shall be entitled to receive 100 percent of 
        the operating costs of the breakfast program, including 
        the costs of obtaining, preparing, and serving food, or 
        the meal reimbursement rate specified in paragraph (2) 
        of section 4(b) of this Act, whichever is less.]
    (d) Severe Need Assistance.--
          (1) In general.--Each State educational agency shall 
        provide additional assistance to schools in severe 
        need, which shall include only those schools (having a 
        breakfast program or desiring to initiate a breakfast 
        program) in which--
                  (A) during the most recent second preceding 
                school year for which lunches were served, 40 
                percent or more of the lunches served to 
                students at the school were served free or at a 
                reduced price; or
                  (B) in the case of a school in which lunches 
                were not served during the most recent second 
                preceding school year, the Secretary otherwise 
                determines that the requirements of 
                subparagraph (A) would have been met.
          (2) Additional assistance.--A school, on the 
        submission of appropriate documentation about the need 
        circumstances in that school and the eligibility of the 
        school for additional assistance, shall be entitled to 
        receive the meal reimbursement rate specified in 
        subsection (b)(2).

           *       *       *       *       *       *       *


                     [STATE ADMINISTRATIVE EXPENSES

    Sec. 7. [42 U.S.C. 1776] (a)(1) Each] Sec. 7. State 
Administrative Expenses.
    (a) Amount and Allocation of Funds._
          (1) Amount available._
                  (A) In general._Except as provided in 
                subparagraph (B), each fiscal year, the 
                Secretary shall make available to the States 
                for their administrative costs an amount equal 
                to not less than 1\1/2\ percent of the Federal 
                funds expended under sections 4, 11, and 17 of 
                the Richard B. Russell National School Lunch 
                Act [(42 U.S.C. 1753, 1759a, and 1766)] and 
                sections 3 and 4 of this Act during the second 
                preceding fiscal year.
                  (B) Minimum amount.--In the case of each of 
                fiscal years 2005 through 2007, the Secretary 
                shall make available to each State for their 
                administrative costs not less than the initial 
                allocation made to the State under this 
                subsection for fiscal year 2004. [The 
                Secretary]
                  (C) Allocation.--The Secretary shall allocate 
                the funds so provided in accordance with 
                paragraphs (2), (3), and (4) of this 
                subsection. [There are hereby authorized to be 
                appropriated such sums as may be necessary to 
                carry out the purposes of this section.]
          [(2) The] (2) Expense grants._
                  (A) In general._Subject to subparagraph (B), 
                the Secretary shall allocate to each State for 
                administrative costs incurred in any fiscal 
                year in connection with the programs authorized 
                under the Richard B. Russell National School 
                Lunch Act [(42 U.S.C. 1751 et seq.)] or under 
                this Act, except for the programs authorized 
                under section 13 or 17 of the Richard B. 
                Russell National School Lunch Act [(42 U.S.C. 
                1761 or 1766)] or under section 17 of this Act, 
                an amount equal to not less than 1 percent and 
                not more than 1\1/2\ percent of the funds 
                expended by each State under sections 4 and 11 
                of the Richard B. Russell National School Lunch 
                Act [(42 U.S.C. 1753 and 1759a)] and sections 3 
                and 4 of this Act during the second preceding 
                fiscal year. [In no case]
                  (B) Minimum amount._
                          (i) In general._In no case shall the 
                        grant available to any State under 
                        [this subsection] this paragraph be 
                        less than the amount such State was 
                        allocated in the fiscal year ending 
                        September 30, 1981, or [$100,000] 
                        $200,000 (as adjusted under clause 
                        (ii), whichever is larger.
                          (ii) Adjustment.--On October 1, 2008, 
                        and each October 1 thereafter, the 
                        minimum dollar amount for a fiscal year 
                        specified in clause (i) shall be 
                        adjusted to reflect the percentage 
                        change between--
                                  (I) the value of the index 
                                for State and local government 
                                purchases, as published by the 
                                Bureau of Economic Analysis of 
                                the Department of Commerce, for 
                                the 12-month period ending June 
                                30 of the second preceding 
                                fiscal year; and
                                  (II) the value of that index 
                                for the 12-month period ending 
                                June 30 of the preceding fiscal 
                                year.

           *       *       *       *       *       *       *

    [(e) Each] (e) Plans For Use of Administrative Expense 
Funds._
          (1) In general._Each State shall submit to the 
        Secretary for approval by October1 of the initial 
fiscal year a plan for the use of State administrative expense funds, 
including a staff formula for State personnel, system level supervisory 
and operating personnel, and school level personnel. [After submitting 
the initial plan, a State shall be required to submit to the Secretary 
for approval only a substantive change in the plan.]
          (2) Updates and information management systems.--
                  (A) In general.--After submitting the initial 
                plan, a State shall be required to submit to 
                the Secretary for approval only a substantive 
                change in the plan.
                  (B) Plan contents.--Each State plan shall, at 
                a minimum, include a description of how 
                technology and information management systems 
                will be used to improve program integrity by--
                          (i) monitoring the nutrient content 
                        of meals served;
                          (ii) training schools and school food 
                        authorities in how to use technology 
                        and information management systems 
                        (including verifying eligibility for 
                        free or reduced price meals using 
                        program participation or income data 
                        gathered by State or local agencies); 
                        and
                          (iii) using electronic data to 
                        establish benchmarks to compare and 
                        monitor program integrity, program 
                        participation, and financial data.
          (3) Training and technical assistance.--Each State 
        shall submit to the Secretary for approval a plan 
        describing the manner in which the State intends to 
        implement subsection (g) of section 7 of this Act and 
        section 22(b)(3) of the Richard B. Russell National 
        School Lunch Act (as added by section 125(b) of the 
        Child Nutrition and WIC Reauthorization Act of 2004).
    (f) * * *
    (g) State Training.--
          (1) In general.--At least annually, each State shall 
        provide training in administrative practices (including 
        training in application, certification, verification, 
        meal counting, and meal claiming procedures) to school 
        food authority administrative personnel and other 
        appropriate personnel, with emphasis on the 
        requirements established by the Child Nutrition and WIC 
        Reauthorization Act of 2004 and the amendments made by 
        that Act.
          (2) Federal role.--The Secretary shall--
                  (A) provide training and technical assistance 
                to a State; or
                  (B) at the option of the Secretary, directly 
                provide training and technical assistance 
                described in paragraph (1).
          (3) Required participation.--In accordance with 
        procedures established by the Secretary, each school 
        food authority or local educational agency shall ensure 
        that an individual conducting or overseeing 
        administrative procedures described in paragraph (1) 
        receives training at least annually, unless determined 
        otherwise by the Secretary.
    (h) Funding for Training and Administrative Reviews.--
          (1) Funding.--
                  (A) In general.--On October 1, 2004, and on 
                each October 1 thereafter, out of any funds in 
                the Treasury not otherwise appropriated, the 
                Secretary of the Treasury shall transfer to the 
                Secretary of Agriculture to carry out this 
                subsection $4,000,000, to remain available 
                until expended.
                  (B) Receipt and acceptance.--The Secretary 
                shall be entitled to receive, shall accept, and 
                shall use to carry out this subsection the 
                funds transferred under subparagraph (A), 
                without further appropriation.
          (2) Use of funds.--
                  (A) In general.--Except as provided in 
                subparagraph (B), the Secretary shall use funds 
                provided under this subsection to assist States 
                in carrying out subsection (g) and 
                administrative reviews of selected school food 
                authorities and local educational agencies 
                carried out under section 22 of the Richard B. 
                Russell National School Lunch Act (42 U.S.C. 
                1769c).
                  (B) Exception.--The Secretary may retain a 
                portion of the amount provided to cover costs 
                of activities carried out by the Secretary in 
                lieu of the State.
          (3) Allocation.--The Secretary shall allocate funds 
        provided under this subsection to States based on the 
        number of local educational agencies that have 
        demonstrated a high level of, or a high risk for, 
        administrative error, as determined by the Secretary, 
        taking into account the requirements established by the 
        Child Nutrition and WIC Reauthorization Act of 2004 and 
        the amendments made by that Act.
          (4) Reallocation.--The Secretary may reallocate, to 
        carry out this section, any amounts made available to 
        carry out this subsection that are not obligated or 
        expended, as determined by the Secretary.
    (i) Technology Infrastructure Improvement.--
          (1) In general.--Each State shall submit to the 
        Secretary, for approval by the Secretary, an amendment 
        to the plan required by subsection (e) that describes 
        the manner in which funds provided under this section 
        will be used for technology and information management 
        systems.
          (2) Requirements.--The amendment shall, at a minimum, 
        describe the manner in which the State will improve 
        program integrity by--
                  (A) monitoring the nutrient content of meals 
                served;
                  (B) providing training to schools and school 
                food authorities on the use of technology and 
                information management systems for activities 
                such as--
                          (i) menu planning;
                          (ii) collection of point-of-sale 
                        data; and
                          (iii) the processing of applications 
                        for free and reduced price meals; and
                  (C) using electronic data to establish 
                benchmarks to compare and monitor program 
                integrity, program participation, and financial 
                data across schools and school food 
                authorities.
          (3) Technology infrastructure grants.--
                  (A) In general.--Subject to the availability 
                of appropriations to carry out this paragraph, 
                the Secretary shall, on a competitive basis, 
                provide funds to States to be used to provide 
                grants to schools and school food authorities 
                to defray the cost of purchasing or upgrading 
                technology and information management systems 
                for use in programs authorized by this Act 
                (other than section 17) and the Richard B. 
                Russell National School Lunch Act (42 U.S.C. 
                1751 et seq.).
                  (B) Infrastructure development plan.--To be 
                eligible to receive a grant under this 
                paragraph, a school or school food authority 
                shall submit to the State a plan to purchase or 
                upgrade technology and information management 
                systems that addresses potential cost savings 
                and methods to improve program integrity, 
                including--
                          (i) processing and verification of 
                        applications for free and reduced price 
                        meals;
                          (ii) integration of menu planning, 
                        production, and serving data to monitor 
                        compliance with section 9(f)(1) of the 
                        Richard B. Russell National School 
                        Lunch Act (42 U.S.C. 1758(f)(1)); and
                          (iii) compatibility with statewide 
                        reporting systems.
          (4) Authorization of appropriations.--There are 
        authorized to be appropriated to carry out this 
        subsection such sums as are necessary for each of 
        fiscal years 2005 through 2008, to remain available 
        until expended.
    [(g)] (j) For the fiscal year beginning October 1, 1977, 
and each succeeding fiscal year ending before October 1, [2003] 
2008, there are hereby authorized to be appropriated such sums 
as may be necessary for the purposes of this section.

           *       *       *       *       *       *       *


               [MISCELLANEOUS PROVISIONS AND DEFINITIONS]

    Sec. 15. [42 U.S.C. 1784] [For the purposes of this Act] 
DEFINITIONS; MISCELLANEOUS PROVISIONS.
    (a) Definitions.--In this Act:
          (1) * * *
    (b) World Food Prize.--
          (1) In general.--Subject to the availability of 
        appropriations, the Secretary shall provide assistance 
        for activities of the World Food Prize Foundation, 
        including--
                  (A) acquisition or improvement of property to 
                serve as headquarters for the World Food Prize 
                Foundation;
                  (B) support of research and outreach for 
                improving the quality, quantity, and 
                availability of food throughout the world; and
                  (C) promotion of educational opportunities 
                available to students through the World Food 
                Prize Youth Institute.
          (2) Authorization of appropriations.--There are 
        authorized to be appropriated such sums as are 
        necessary to carry out this subsection.

           *       *       *       *       *       *       *

    Sec. 17. * * *
    (b) * * *
          [(7) ``Nutrition education'' means individual or 
        group sessions and the provision of materials designed 
        to improve health status that achieve positive change 
        in dietary habits, and emphasize relationships between 
        nutrition and health, all in keeping with the 
        individual's personal, cultural, and socioeconomic 
        preferences.]
          (7) Nutrition education.--The term `nutrition 
        education' means individual and group sessions and the 
        provision of materials that are designed to improve 
        health status and achieve positive change in dietary 
        and physical activity habits, and that emphasize the 
        relationship between nutrition, physical activity, and 
        health, all in keeping with the personal and cultural 
        preferences of the individual.

           *       *       *       *       *       *       *

          (14) ``Supplemental foods'' means those foods 
        containing nutrients determined by nutritional research 
        to be lacking in the diets of pregnant, breastfeeding, 
        and pospartum women, infants, and children and foods 
        that promote the health of the population served by the 
        program authorized by this section, as indicated by 
        relevant nutrition science, public health concerns, and 
        cultural eating patterns, as prescribed by the 
        Secretary. State agencies may, with the approval of the 
        Secretary, substitute different foods providing the 
        nutritional equivalent of foods prescribed by the 
        Secretary, to allow for different cultural eating 
        patterns.

           *       *       *       *       *       *       *

          (22) Primary contract infant formula.--The term 
        `primary contract infant formula' means the specific 
        infant formula for which manufacturers submit a bid to 
        a State agency in response to a rebate solicitation 
        under this section and for which a contract is awarded 
        by the State agency as a result of that bid.
          (23) State alliance.--The term `State alliance' means 
        2 or more State agencies that join together for the 
        purpose of procuring infant formula under the program 
        by soliciting competitive bids for infant formula.

           *       *       *       *       *       *       *

    (d)(1) * * *
          [(3)(A) Persons] (3) Certification._
                  (A) Procedures.--
                          (i) In general.--Subject to clause 
                        (ii), a person shall be certified for 
                        participation in accordance with 
                        general procedures prescribed by the 
                        Secretary.
                          (ii) Breastfeeding women.--A State 
                        may elect to certify a breastfeeding 
                        woman for a period of 1 year postpartum 
                        or until a woman discontinues 
                        breastfeeding, whichever is earlier.

           *       *       *       *       *       *       *

                  (C) * * *
                          (ii) * * *
                                  (I) * * *
                                          (bb) is receiving 
                                        ongoing health care 
                                        [from a provider other 
                                        than the local agency; 
                                        or];
                                  (II) * * *
                                          (cc) has one or more 
                                        parents who work[.]; 
                                        and
                                  (III) an infant under 8 weeks 
                                of age--
                                          (aa) who cannot be 
                                        present at 
                                        certification for a 
                                        reason determined 
                                        appropriate by the 
                                        local agency; and
                                          (bb) for whom all 
                                        necessary certification 
                                        information is 
                                        provided.

           *       *       *       *       *       *       *

    (f)(1)(A) * * *
          (C) The plan shall include--
                  (i) a description of the food delivery system 
                of the State agency and the method of enabling 
                participants to receive supplemental foods 
                under the program at any of the authorized 
                retail stores under the program, to be 
                administered in accordance with standards 
                developed by the Secretary;
                  (ii) procedures for accepting and processing 
                vendor applications outside of the established 
                timeframes if the State agency determines there 
                will be inadequate access to the program, such 
                as in a case in which a previously authorized 
                vendor sells a store under circumstances that 
                do not permit timely notification to the State 
                agency of the change in ownership;
                  [(ii)] (iii) * * *
                  [(iii)] (iv) * * *
                  [(iv)] (v) * * *
                  [(v)] (vi) * * *
                  [(vi)] (vii) * * *
                  [(vii)] (viii) * * *
                  [(viii)] (ix) * * *
                  [(ix)] (x) * * *
                  [(x)] (xi) * * *

           *       *       *       *       *       *       *

          (21) Use of claims from [vendors] local agencies, 
        vendors, and participants.--A State agency may use 
        funds recovered from [vendors] local agencies, vendors, 
        and participants, as a result of a claim arising under 
        the program, to carry out the program during--

           *       *       *       *       *       *       *

          (25) Infant formula benefits.--A State agency may 
        round up to the next whole can of infant formula to 
        allow all infants under the program to receive the 
        full-authorized nutritional benefit specified by 
        regulation.
          (26) Notification of violations.--If a State agency 
        finds that a vendor has committed a violation that 
        requires a pattern of occurrences in order to impose a 
        penalty or sanction, the State agency shall notify the 
        vendor of the initial violation in writing prior to 
        documentation of another violation, unless the State 
        agency determines that notifying the vendor would 
        compromise an investigation.
    [(g)(1) There are authorized to be appropriated to carry 
out this section $2,158,000,000 for the fiscal year 1990, and 
such sums as may be necessary for each of the fiscal years 1995 
through 2003. As authorized]
    (g) Authorization of Appropriations._
          (1) In general._
                  (A) Authorization._There are authorized to be 
                appropriated to carry out this section such 
                sums as are necessary for each of fiscal years 
                2004 through 2008.
                  (B) Advance appropriations; availability._As 
                authorized by section 3 of the Richard B. 
                Russell National School Lunch Act, 
                appropriations to carry out the provisions of 
                this section may be made not more than 1 year 
                in advance of the beginning of the fiscal year 
                in which the funds will become available for 
                disbursement to the States, and shall remain 
                available for the purposes for which 
                appropriated until expended.

           *       *       *       *       *       *       *

    (h)(1)(A) * * *
          (2)(A) [For each of the fiscal years 1995 through 
        2003, the] The Secretary shall allocate to each State 
        agency from the amount described in paragraph (1)(A) an 
        amount for costs of nutrition services and 
        administration on the basis of a formula prescribed by 
        the Secretary. Such formula--

           *       *       *       *       *       *       *

          (4) * * *
                  (D) require the State agency to provide 
                training on the promotion and management of 
                breastfeeding to staff members of local 
                agencies who are responsible for counseling 
                participants in the program under this section 
                concerning breastfeeding[; and];
                  (E) not later than 1 year after the date of 
                enactment of this subparagraph, develop uniform 
                requirements for the collection of data 
                regarding the incidence and duration of 
                breastfeeding among participants in the 
                program[.] ; and
          (F) partner with communities, State and local 
        agencies, employers, health care professionals, and 
        other entities in the private sector to build a 
        supportive breastfeeding environment for women 
        participating in the program under this section to 
        support the breastfeeding goals of the Healthy People 
        2010 initiative.

           *       *       *       *       *       *       *

          (8)(A)(i) * * *
                  (II) * * *
                          (ii) In determining whether a cost 
                        containment measure other than 
                        competitive bidding yields equal or 
                        greater savings, the State, in 
                        accordance with regulations issued by 
                        the Secretary, may take intoaccount 
other cost factors (in addition to rebate levels and procedures for 
adjusting rebate levels when wholesale price levels [rise] change), 
such as--
                                  (I) the number of infants who 
                                would not be expected to 
                                receive the [contract brand of] 
                                primary contract infant formula 
                                under a competitive bidding 
                                system;

           *       *       *       *       *       *       *

                  (III) *  *  *
                          (iii) Competitive bidding system.--A 
                        State agency using a competitive 
                        bidding system for infant formula shall 
                        award contracts to bidders offering the 
                        lowest net price for a primary contract 
                        infant formula unless the State agency 
                        demonstrates to the satisfaction of the 
                        Secretary that the weighted average 
                        retail price for different brands of 
                        infant formula in the State does not 
                        vary by more than 5 percent.
                          (iv) Size of state alliances.--
                                  (I) In general.--Except as 
                                provided in subclauses (II) 
                                through (IV), no State alliance 
                                may exist among States if the 
                                total number of infants served 
                                by States participating in the 
                                alliance as of October 1, 2003, 
                                or such subsequent date 
                                determined by the Secretary for 
                                which data is available, would 
                                exceed 100,000.
                                  (II) Addition of infant 
                                participants.--In the case of a 
                                State alliance that exists on 
                                the date of enactment of this 
                                clause, the alliance may 
                                continue and may expand to 
                                serve more than 100,000 infants 
                                but, except as provided in 
                                subclause (III), may not expand 
                                to include any additional State 
                                agency.
                                  (III) Addition of small state 
                                agencies and indian state 
                                agencies.--Any State alliance 
                                may expand to include any State 
                                agency that served less than 
                                5,000 infant participants as of 
                                October 1, 2003, or such 
                                subsequent date determined by 
                                the Secretary for which data is 
                                available, or any Indian State 
                                agency, if the State agency 
                                requests to join the State 
                                alliance.
                                  (IV) Secretarial waiver.--The 
                                Secretary may waive the 
                                requirements of this clause not 
                                earlier than 30 days after 
                                submitting to the Committee on 
                                Education and the Workforce of 
                                the House of Representatives 
                                and the Committee on 
                                Agriculture, Nutrition, and 
                                Forestry of the Senate a 
                                written report that describes 
                                the cost-containment and 
                                competitive benefits of the 
                                proposed waiver.
                          (v) First choice of issuance.--The 
                        State agency shall use the primary 
                        contract infant formula as the first 
                        choice of issuance (by formula type), 
                        with all other infant formulas issued 
                        as an alternative to the primary 
                        contract infant formula.
                          (vi) Rebate invoices.--Each State 
                        agency shall have a system to ensure 
                        that infant formula rebate invoices, 
                        under competitive bidding, provide a 
                        reasonable estimate or an actual count 
                        of the number of units sold to 
                        participants in the program under this 
                        section.
                          (vii) Separate solicitations.--In 
                        soliciting bids for infant formula 
                        under a competitive bidding system, any 
                        State agency, or State alliance, that 
                        served under the program a monthly 
                        average of more than 100,000 infants 
                        during the preceding 12-month period 
                        shall solicit bids from infant formula 
                        manufacturers under procedures that 
                        require that bids for rebates or 
                        discounts are solicited for milk-based 
                        and soy-based infant formula 
                        separately.
                          (viii) Cent-for-cent adjustments.--A 
                        bid solicitation for infant formula 
                        under the program shall require the 
                        manufacturer to adjust for price 
                        changes subsequent to the opening of 
                        the bidding process in a manner that 
                        requires--
                                  (I) a cent-for-cent increase 
                                in the rebate amounts if there 
                                is an increase in the lowest 
                                national wholesale price for a 
                                full truckload of the 
                                particular infant formula; and
                                  (II) a cent-for-cent decrease 
                                in the rebate amounts if there 
                                is a decrease in the lowest 
                                national wholesale price for a 
                                full truckload of the 
                                particular infant formula.
                          (ix) List of infant formula 
                        wholesalers, distributors, retailers, 
                        and manufacturers.--The State agency 
                        shall maintain a list of--
                                  (I) infant formula 
                                wholesalers, distributors, and 
                                retailers licensed in the State 
                                in accordance with State law 
                                (including regulations); and
                                  (II) infant formula 
                                manufacturers registered with 
                                the Food and Drug 
                                Administration that provide 
                                infant formula.
                          (x) Purchase requirement.--A vendor 
                        authorized to participate in the 
                        program under this section shall only 
                        purchase infant formula from the list 
                        described in clause (ix).

           *       *       *       *       *       *       *

          [(10)(A) For each of fiscal years 1995 through 2003, 
        the Secretary shall use for the purposes specified in 
        subparagraph (B), $10,000,000 or the amount of 
        nutrition services and administration funds and 
        supplemental foods funds for the prior fiscal year that 
        has not been obligated, whichever is less.
          [(B) Funds under subparagraph (A) shall be used for--
                  [(i) development of infrastructure for the 
                program under this section, including 
                management information systems;
                  [(ii) special State projects of regional or 
                national significance to improve the services 
                of the program under this section; and
                  [(iii) special breastfeeding support and 
                promotion projects, including projects to 
                assess the effectiveness of particular 
                breastfeedingpromotion strategies and to 
develop State or local agency capacity or facilities to provide quality 
breastfeeding services.]
          (10) Funds for infrastructure, management information 
        systems, and special nutrition education.--
                  (A) In general.--For each of fiscal years 
                2006 through 2008, the Secretary shall use for 
                the purposes specified in subparagraph (B), 
                $64,000,000 or the amount of nutrition services 
                and administration funds and supplemental food 
                funds for the prior fiscal year that have not 
                been obligated, whichever is less.
                  (B) Purposes.--Of the amount made available 
                under subparagraph (A) for a fiscal year, not 
                more than--
                          (i) $14,000,000 shall be used for--
                                  (I) infrastructure for the 
                                program under this section;
                                  (II) special projects to 
                                promote breastfeeding, 
                                including projects to assess 
                                the effectiveness of particular 
                                breastfeeding promotion 
                                strategies; and
                                  (III) special State projects 
                                of regional or national 
                                significance to improve the 
                                services of the program;
                          (ii) $30,000,000 shall be used to 
                        establish, improve, or administer 
                        management information systems for the 
                        program, including changes necessary to 
                        meet new legislative or regulatory 
                        requirements of the program; and
                          (iii) $20,000,000 shall be used for 
                        special nutrition education such as 
                        breast feeding peer counselors and 
                        other related activities.
                  (C) Proportional distribution.--In a case in 
                which less than $64,000,000 is available to 
                carry out this paragraph, the Secretary shall 
                make a proportional distribution of funds 
                allocated under subparagraph (B).
          [(11) Consideration of price levels of retail stores 
        for participation in program.--
                  [(A) In general.--For the purpose of 
                promoting efficiency and to contain costs under 
                the program, a State agency shall, in selecting 
                a retail store for participation in the 
                program, take into consideration the prices 
                that the store charges for foods under the 
                program as compared to the prices that other 
                stores charge for the foods.
                  [(B) Subsequent price increases.--The State 
                agency shall establish procedures to ensure 
                that a retail store selected for participation 
                in the program does not subsequently raise 
                prices to levels that would otherwise make the 
                store ineligible for participation in the 
                program.]
          (11) Vendor cost containment.--
                  (A) Peer groups.--The State agency of a State 
                shall--
                          (i) establish a vendor peer group 
                        system; and
                          (ii) in accordance with subparagraphs 
                        (B) and (C), establish competitive 
                        price criteria and allowable 
                        reimbursement levels for each vendor 
                        peer group.
                  (B) Competitive pricing.--
                          (i) In general.--The State agency 
                        shall establish competitive price 
                        criteria for the selection of vendors 
                        for participation in the program that--
                                  (I) ensure that the retail 
                                prices charged by vendor 
                                applicants for the program are 
                                competitive with the prices 
                                charged by other vendors; and
                                  (II) consider--
                                          (aa) the shelf prices 
                                        of the vendor for all 
                                        buyers; or
                                          (bb) the prices that 
                                        the vendor bid for 
                                        supplemental foods, 
                                        which shall not exceed 
                                        the shelf prices of the 
                                        vendor for all buyers.
                          (ii) Participant access.--The State 
                        agency shall ensure that the 
                        competitive price criteria do not 
                        result in inadequate program 
                        participant access by geographic area.
                          (iii) Subsequent price increases.--
                        The State agency shall establish 
                        procedures to ensure that a retail 
                        store selected for participation in the 
                        program does not, subsequent to 
                        selection, increase prices to levels 
                        that would otherwise make the store 
                        ineligible for participation in the 
                        program.
                  (C) Allowable reimbursement levels.--
                          (i) In general.--The State agency 
                        shall establish allowable reimbursement 
                        levels for supplemental foods for each 
                        vendor peer group that ensure--
                                  (I) that payments to vendors 
                                in the vendor peer group 
                                reflect competitive retail 
                                prices; and
                                  (II) that the State agency 
                                does not reimburse a vendor for 
                                supplemental foods at a level 
                                that would otherwise make the 
                                vendor ineligible for 
                                authorization.
                          (ii) Price fluctuations.--The 
                        allowable reimbursement levels may 
                        include a factor to reflect 
                        fluctuations in wholesale prices.
                          (iii) Participant access.--The State 
                        agency shall ensure that the allowable 
                        reimbursement levels do not result in 
                        inadequate program participant access 
                        in a geographic area.
                  (D) Exemptions.--The State agency may exempt 
                from competitive price criteria and allowable 
                reimbursement levels established under this 
                paragraph--
                          (i) pharmacy vendors that supply only 
                        exempt infant formula or medical foods 
                        that are eligible under the program; 
                        and
                          (ii) vendors--
                                  (I)(aa) for which more than 
                                50 percent of the annual 
                                revenue of the vendor from the 
                                sale of food items consists of 
                                revenue from the sale of 
                                supplemental foods that are 
                                obtained with food instruments; 
                                or
                                  (bb) who are new applicants 
                                under criteria established by 
                                the Secretary; and
                                  (II) that are nonprofit.
                  (E) Cost containment.--The State agency shall 
                demonstrate to the Secretary, and the Secretary 
                shall certify, that--
                          (i) the competitive price criteria 
                        and allowable reimbursement levels 
                        established under this paragraph for 
                        vendors described in subparagraph 
                        (D)(ii)(I) do not result in higher food 
                        costs than if program participants 
                        redeemed supplemental food vouchers at 
                        vendors other than vendors described in 
                        subparagraph (D)(ii)(I); and
                          (ii) vendor peer groups established 
                        under subparagraph (A)(i) distinguish 
                        between vendors described in 
                        subparagraph (D)(ii)(I) and other 
                        vendors.
                  (F) Implementation.--A State agency shall 
                comply with this paragraph not later than 18 
                months after the date of enactment of this 
                paragraph.
          [(12) Management Information System Plan.--
                  [(A) In general.--In consultation with State 
                agencies, vendors, and other interested 
                persons, the Secretary shall establish a long-
                range plan for the development and 
                implementation of management information 
                systems (including electronic benefit 
                transfers) to be used in carrying out the 
                program.
                  [(B) Report.--Not later than 2 years after 
                the date of enactment of this paragraph, the 
                Secretary shall submit to the Committee on 
                Education and the Workforce of the House of 
                Representatives and the Committee on 
                Agriculture, Nutrition, and Forestry of the 
                Senate a report on actions taken to carry out 
                subparagraph (A).
                  [(C) Interim period.--Prior to the date of 
                submission of the report of the Secretary 
                required under subparagraph (B), a State agency 
                may not require retail stores to pay the cost 
                of systems or equipment that may be required to 
                test electronic benefit transfer systems.]
          (12) Imposition of costs on retail stores.--The 
        Secretary may not impose, or allow a State agency to 
        impose, the costs of any equipment, system, or 
        processing required for electronic benefit transfers on 
        any retail store authorized to transact food 
        instruments, as a condition for authorization or 
        participation in the program.
          (13) Universal product codes database.--The Secretary 
        shall--
                  (A) establish a national universal product 
                code database for use by all State agencies in 
                carrying out the program; and
                  (B) make available from appropriated funds 
                such sums as are required for hosting, hardware 
                and software configuration, and support of the 
                database.
          (14) Incentive items.--A State agency shall not 
        authorize or make payments to a vendor described in 
        paragraph (11)(D)(ii)(I) that provides incentive items 
        or other free merchandise to program participants 
        unless the vendor provides to the State agency proof 
        that the vendor obtained the incentive items or 
        merchandise at no cost.
    (i)(1) * * *
          (3)(A) Notwithstanding paragraph (2) and subject to 
        subparagraph (B)--
                  (i)(I) not more than [1] 3 percent (except as 
                provided in subparagraph (C)) of the amount of 
                funds allocated to a State agency under this 
                section for supplemental foods for a fiscal 
                year may be expended by the State agency for 
                allowable expenses incurred under this section 
                for supplemental foods during the preceding 
                fiscal year; and

           *       *       *       *       *       *       *

    (j)(1) * * *
          [(4)(A) Not later than April 1, 1995, the Secretaries 
        shall provide to Congress a notification concerning the 
        actions the Secretaries intend to take to carry out the 
        initiative.
          [(B) Not later than July 1, 1996, the Secretaries 
        shall provide to Congress a notification concerning the 
        actions the Secretaries are taking under the initiative 
        or actions the Secretaries intend to take under the 
        initiative as a result of their experience in 
        implementing the initiative.
          [(C) On completion of the initiative, the Secretaries 
        shall provide to Congress a notification concerning an 
        evaluation of the initiative by the Secretaries and a 
        plan of the Secretaries to further the goals of the 
        initiative.]
          [(5)] (4) As used in this subsection:

           *       *       *       *       *       *       *

    (m)(1) Subject to the availability of funds appropriated 
for the purposes of this subsection, and as specified in this 
subsection, the Secretary shall award grants to States that 
submit State plans that are approved for the establishment or 
maintenance of programs designed to provide recipients of 
assistance under subsection (c), or those who are on the 
waiting list to receive the assistance, with coupons that may 
be exchanged for fresh, nutritious, unprepared foods at 
farmers' markets and (at the option of a State) roadside 
stands, as defined in the State plans submitted under this 
subsection.

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

          (5) * * *
                  (C) * * *
                          (ii) more than [$20] $30 per year.

           *       *       *       *       *       *       *

          (9) Funding.--
                  (A) In general.--
                          [(i) Authorization of 
                        appropriations.--There are authorized 
                        to be appropriated to carry out this 
                        subsection $8,000,000 for fiscal year 
                        1994, $10,500,000 for fiscal year 1995, 
                        and such sums as may be necessary for 
                        each of fiscal years 1996 through 
                        2003.]
                          (i) Authorization of appropriations._
                        There are authorized to be appropriated 
                        to carry out this subsection such sums 
                        as are necessary for each of fiscal 
                        years 2004 through 2008.

           *       *       *       *       *       *       *

    [(r) Demonstration Project Relating To Use of the WIC 
Program for Identification and Enrollment of Children in 
Certain Health Programs.--
          [(1) In general.--In accordance with paragraph (2), 
        the Secretary shall establish a demonstration project 
        in not more than 20 local agencies in one State under 
        which costs of nutrition services and administration 
        (as defined in subsection (b)(4)) shall include the 
        costs of identification of children eligible for 
        benefits under, and the provision of enrollment 
        assistance for children in--
                  [(A) the State medicaid program under title 
                XIX of the Social Security Act (42 U.S.C. 1396 
                et seq.); and
                  [(B) the State children's health insurance 
                program under title XXI of that Act (42 U.S.C. 
                1397aa et seq.).
          [(2) State-related requirements.--The State in which 
        a demonstration project is established under paragraph 
        (1)--
                  [(A) shall operate not fewer than 20 pilot 
                site locations;
                  [(B) as of the date of establishment of the 
                demonstration project--
                          [(i) with respect to the programs 
                        referred to in subparagraphs (A) and 
                        (B) of paragraph (1)--
                                  [(I) shall have in use a 
                                simplified application form 
                                with a length of not more than 
                                two pages;
                                  [(II) shall accept mail-in 
                                applications; and
                                  [(III) shall permit 
                                enrollment in the program in a 
                                variety of locations; and
                          [(ii) shall have served as an 
                        original pilot site for the program 
                        under this section; and
                  [(C) as of December 31, 1998, shall have 
                had--
                          [(i) an infant mortality rate that is 
                        above the national average; and
                          [(ii) an overall rate of age-
                        appropriate immunizations against 
                        vaccine-preventable diseases that is 
                        below 80 percent.
          [(3) Termination of authority.--The authority 
        provided by this subsection terminates September 30, 
        2003.]
    (r) Demonstration Project Relating to Offering Fresh, 
Frozen, or Canned Fruits and Vegetables to WIC Participants.--
          (1) In general.--Subject to the availability of 
        appropriations to carry out this subsection, the 
        Secretary shall award grants for demonstration projects 
        involving not more than 5 local agencies to not more 
        than 5 State agencies to evaluate the feasibility and 
        acceptance of offering fresh, frozen, or canned fruits 
        and vegetables to participants in the program 
        established under this section.
          (2) Local sites.--In making grants under this 
        subsection, the Secretary shall ensure that State 
        agencies select sites determined to be geographically 
        and culturally representative of local and Indian 
        agencies.
          (3) Additional food.--The provision of fruits and 
        vegetables to program participants under this 
        subsection shall be in addition to the food package 
        offered to the participants under other provisions of 
        this section and not in lieu of any food item in the 
        food package.
          (4) Report.--Not later than 1 year after funds are 
        first made available to carry out this subsection, the 
        Secretary shall submit to the Committee on Education 
        and the Workforce of the House of Representatives and 
        the Committee on Agriculture, Nutrition, and Forestry 
        of the Senate a report that describes the results of 
        carrying out this subsection.
          (5) Authorization of appropriations.--There are 
        authorized to be appropriated such sums as are 
        necessary to carry out this subsection.
          (6) Termination of authority.--The authority provided 
        by this subsection (other than paragraph (4)) 
        terminates September 30, 2005.

           *       *       *       *       *       *       *

    [Sec. 19. [42 U.S.C. 1788] (a) Congress finds that 
effective dissemination of scientifically valid information to 
children participating or eligible to participate in the school 
lunch and related child nutrition programs should be 
encouraged.

                                [PURPOSE

    [(b) It is the purpose of this section to establish a 
system of grants to State educational agencies for the 
development of comprehensive nutrition education and training 
programs. Such nutrition education programs shall fully use as 
a learning laboratory the school lunch and child nutrition 
programs.

                              [DEFINITIONS

    [(c) For purposes of this section, the term ``nutrition 
education and training program'' means a multidisciplinary 
program by which scientifically valid information about foods 
and nutrients is imparted in a manner that individuals 
receiving such information will understand the principles of 
nutrition and seek to maximize their well-being through food 
consumption practices. Nutrition education programs shall 
include, but not be limited to, (A) instructing students with 
regard to the nutritional value of foods and the relationship 
between food and human health; (B) training child nutrition 
program personnel in the principles and practices of food 
service management; (C) instructing teachers in sound 
principles of nutrition education;(D) developing and using 
classroom materials and curricula; and (E) providing information to 
parents and caregivers regarding the nutritional value of food and the 
relationship between food and health.

                  [NUTRITION INFORMATION AND TRAINING

    [(d)(1) The Secretary is authorized to formulate and carry 
out a nutrition education and training through a system of 
grants to State educational agencies, to provide for (A) the 
nutritional training of educational and food service personnel, 
(B) training school food service personnel in the principles 
and practices of food service management, in cooperation with 
materials developed at any food service management institute 
established as authorized by section 21(a)(2) of the Richard B. 
Russell National School Lunch Act, and (C) the conduct of 
nutrition education activities in schools, child care 
institutions, and institutions offering summer food service 
programs under section 13 of the Richard B. Russell National 
School Lunch Act, and the provision of nutrition education to 
parents and caregivers.
          [(2) The program is to be coordinated at the State 
        level with other nutrition activities conducted by 
        education, health, and State Cooperative Extension 
        Service agencies. In formulating the program, the 
        Secretary and the State may solicit the advice and 
        recommendations of State educational agencies, the 
        Department of Health and Human Services, and other 
        interested groups and individuals concerned with 
        improvement of child nutrition.
          [(3) If a State educational agency is conducting or 
        applying to conduct a health education program which 
        includes a school-related nutrition education component 
        as defined by the Secretary, and that health education 
        program is eligible for funds under programs 
        administered by the Department of Health and Human 
        Services, the Secretary may make funds authorized in 
        this section available to the Department of Health and 
        Human Services to fund the nutrition education 
        component of the State program without requiring an 
        additional grant application.
          [(4) The Secretary, in carrying out the provisions of 
        this subsection, shall make grants to State educational 
        agencies who, in turn, may contract with land-grant 
        colleges eligible to receive funds under the Act of 
        July 2, 1862, or the Act of August 30, 1890, including 
        the Tuskegee Institute, other institutions of higher 
        education, and nonprofit organizations and agencies, 
        for the training of educational, school food service, 
        child care, and summer food service personnel with 
        respect to providing nutrition education programs in 
        schools and the training of school food service 
        personnel in school food service management, in 
        coordination with the activities authorized under 
        section 21 of the Richard B. Russell National School 
        Lunch Act. Such grants may be used to develop and 
        conduct training programs for early childhood, 
        elementary, and secondary educational personnel and 
        food service personnel with respect to the relationship 
        between food, nutrition, and health; educational 
        methods and techniques, and issues relating to 
        nutrition education; and principles and skills of food 
        service management for cafeteria personnel.
          [(5) The State, in carrying out the provisions of 
        this subsection, may contract with State and local 
        educational agencies, land-grant colleges eligible to 
        receive funds under the Act of July 2, 1862, or the Act 
        of August 30, 1890, including the Tuskegee Institute, 
        other institutions of higher education, and other 
        public or private nonprofit educational or research 
        agencies, institutions, or organizations to pay the 
        cost of pilot demonstration projects in elementary and 
        secondary schools, and in child care institutions and 
        summer food service institutions, with respect to 
        nutrition education. Such projects may include, but are 
        not limited to, projects for the development, 
        demonstration, testing, and evaluation of curricula for 
        use in early childhood, elementary, and secondary 
        education programs.

                    [AGREEMENTS WITH STATE AGENCIES

    [(e) The Secretary is authorized to enter into agreements 
with State educational agencies incorporating the provisions of 
this section, and issue such regulations as are necessary to 
implement this section.

                             [USE OF FUNDS

    [(f)(1) The funds made available under this section may, 
under guidelines established by the Secretary, be used by State 
educational agencies for--
          [(A) employing a nutrition education specialist to 
        coordinate the program, including travel and related 
        personnel costs;
          [(B) undertaking an assessment of the nutrition 
        education needs of the State;
          [(C) developing a State plan of operation and 
        management for nutrition education;
          [(D) applying for and carrying out planning and 
        assessment grants;
          [(E) pilot projects and related purposes;
          [(F) the planning, development, and conduct of 
        nutrition education programs and workshops for food 
        service and educational personnel;
          [(G) coordinating and promoting nutrition education 
        and training activities in local school districts 
        (incorporating, to the maximum extent practicable, as a 
        learning laboratory, the child nutrition programs);
          [(H) contracting with public and private nonprofit 
        educational institutions for the conduct of nutrition 
        education instruction and programs relating to the 
        purposes of this section;
          [(I) related nutrition education purposes, including 
        the preparation, testing, distribution, and evaluation 
        of visual aids and other informational and educational 
        materials; and
          [(J) other appropriate related activities, as 
        determined by the State.
    [(2) A State agency may use an amount equal to not more 
than 15 percent of the funds made available through a grant 
under this section for expenditures for administrative purposes 
in connection with the program authorized under this section if 
the State makes available at least an equal amount for 
administrative or program purposes in connection with the 
program.

                    [ACCOUNTS, RECORDS, AND REPORTS

    [(g)(1) State educational agencies participating in 
programs under this section shall keep such accounts and 
records as may be necessary to enable the Secretary to 
determine whether there has been compliance with this section 
and the regulations issued hereunder. Such accounts and records 
shall be available at any reasonable time for inspection and 
audit by representatives of the Secretary and shall be 
preserved for such period of time, not in excess of five years, 
as the Secretary determines to be necessary.
    [(2) State educational agencies shall provide reports on 
expenditures of Federal funds, program participation, program 
costs, and related matters, in such form and at such times as 
the Secretary may prescribe.

             [STATE COORDINATORS FOR NUTRITION; STATE PLAN

    [(h)(1) In order to be eligible for assistance under this 
section, a State shall appoint a nutrition education specialist 
to serve as a State coordinator for school nutrition education. 
It shall be the responsibility of the State coordinator to make 
an assessment of the nutrition education needs in the State, 
prepare a State plan, and coordinate programs under this Act 
with all other nutrition education programs provided by the 
State with Federal or State funds.
    [(2) Upon receipt of funds authorized by this section, the 
State coordinator shall prepare an itemized budget and assess 
the nutrition education and training needs of the State.
    [(i) Authorization of Appropriations.--
          [(1) In general.--
                  [(A) Funding.--There are authorized to be 
                appropriated such sums as are necessary to 
                carry out this section for each of fiscal years 
                1997 through 2003.
                  [(B) Grants.--
                          [(i) In general.--Grants to each 
                        State from the amounts made available 
                        under subparagraph (A) shall be based 
                        on a rate of 50 cents for each child 
                        enrolled in schools or institutions 
                        within the State, except that no State 
                        shall receive an amount less than 
                        $75,000 per fiscal year.
                        [(ii) Insufficient funds.--If the 
                        amount made available for any fiscal 
                        year is insufficient to pay the amount 
                        to which each State is entitled under 
                        clause (i), the amount of each grant 
                        shall be ratably reduced.
          [(2) Funds made available to any State under this 
        section shall remain available to the State for 
        obligation in the fiscal year succeeding the fiscal 
        year in which the funds were received by the State.
          [(3) Enrollment data used for purposes of this 
        subsection shall be the latest available as certified 
        by the Department of Education.]

SEC. 19. TEAM NUTRITION NETWORK.

    (a) Purposes.--The purposes of the team nutrition network 
are--
          (1) to promote the nutritional health of school 
        children of the United States through nutrition 
        education and the use of team nutrition messages and 
        materials developed by the Secretary, and to encourage 
        physical activity and other activities that support 
        healthy lifestyles for children, based on the most 
        recent Dietary Guidelines for Americans published under 
        section 301 of the National Nutrition Monitoring and 
        Related Research Act of 1990 (7 U.S.C. 5341);
          (2) to provide assistance to States for the 
        development of nutrition education and active living 
        programs in schools and facilities that participate in 
        child nutrition programs through the use of team 
        nutrition messages and materials developed by the 
        Secretary;
          (3) to provide training and technical assistance to 
        States, school and community nutrition programs, and 
        child nutrition food service professionals; and
          (4) to coordinate and collaborate with other 
        nutrition education and active living programs that 
        share similar goals and purposes.
    (b) Definition of Team Nutrition Network.--In this section, 
the term `team nutrition network' means a multidisciplinary 
program to promote healthy eating to children based on 
scientifically valid information and sound educational, social, 
and marketing principles.
    (c) Grants.--
          (1) In general.--Subject to the availability of funds 
        for use in carrying out this section, in addition to 
        any other funds made available to the Secretary for 
        team nutrition purposes, the Secretary may make grants 
        to State agencies for each fiscal year, in accordance 
        with this section, to establish team nutrition networks 
        to promote nutrition education through--
                  (A) the use of team nutrition network 
                messages and materials developed by the 
                Secretary; and
                  (B) the promotion of active lifestyles as 
                part of food service programs under this Act 
                and the Richard B. Russell National School 
                Lunch Act (42 U.S.C. 1751 et seq.).
          (2) Form.--A portion of the grants provided under 
        this subsection may be in the form of competitive 
        grants.
          (3) Funds from nongovernmental sources.--In carrying 
        out this subsection, the Secretary may accept cash 
        contributions from nongovernmental organizations made 
        expressly to further the purposes of this section, to 
        be managed by the Food and Nutrition Service, for use 
        by the Secretary and the States in carrying out this 
        section.
    (d) Allocation.--Subject to the availability of funds for 
use in carrying out this section, the total amount of funds 
made available for a fiscal year for grants under this section 
shall equal not more than the sum of--
          (1) the product obtained by multiplying 1/2 cent by 
        the number of lunches reimbursed through food service 
        programs under the Richard B. Russell National School 
        Lunch Act (42 U.S.C. 1751 et seq.) during the second 
        preceding fiscal year in schools, institutions, and 
        service institutions that participate in the food 
        service programs; and
          (2) the total value of funds received by the 
        Secretary in support of this section from 
        nongovernmental sources.
    (e) Requirements for State Participation.--To be eligible 
to receive a grant under this section, a State agency shall 
submit to the Secretary a plan that--
          (1) is subject to approval by the Secretary; and
          (2) is submitted at such time and in such manner, and 
        that contains such information, as the Secretary may 
        require, including--
                  (A) a description of the goals and primary 
                healthy eating and physical activity messages 
                of the proposed team nutrition network;
                  (B) an analysis of the means by which the 
                State agency will use and disseminate the team 
                nutrition messages and materials developed by 
                the Secretary;
                  (C) an explanation of the ways in which the 
                State agency will use the funds from the grant 
                to promote healthy eating and physical activity 
                and fitness in schools throughout the State;
                  (D) a description of the ways in which team 
                nutrition network messages and materials 
                developed by the Secretary will be used to 
                coordinate nutrition and physical activities at 
                the State level with other health promotion and 
                education activities;
                  (E) an annual summary of the team nutrition 
                network activities;
                  (F) a description of the ways in which the 
                total school environment will support healthy 
                eating and physical activity; and
                  (G) a description of how all communications 
                to parents and legal guardians of students who 
                are members of a household receiving or 
                applying for assistance under the program shall 
                be in an understandable and uniform format and, 
                to the extent practicable, in a language that 
                parents and legal guardians can understand.
    (f) State Coordinator.--Each State that receives a grant 
under this section shall appoint a team nutrition network 
coordinator who shall--
          (1) administer and coordinate the team nutrition 
        network within and across schools, school food 
        authorities, and other child nutrition program 
        providers in the State; and
          (2) coordinate activities of the Secretary, acting 
        through the Food and Nutrition Service, and State 
        agencies responsible for other children's health, 
        education, and wellness programs to implement a 
        comprehensive, coordinated team nutrition network 
        program.
    (g) Authorized Activities.--A State agency that receives a 
grant under this section may use funds from the grant--
          (1)(A) to collect, analyze, and disseminate data 
        regarding the extent to which children and youths in 
        the State are overweight, physically inactive, or 
        otherwise suffering from nutrition-related deficiencies 
        or disease conditions; and
          (B) to identify the programs and services available 
        to meet those needs;
          (2) to implement model elementary and secondary 
        education curricula using team nutrition network 
        messages and materials developed by the Secretary to 
        create a comprehensive, coordinated nutrition and 
        physical fitness awareness and obesity prevention 
        program;
          (3) to implement pilot projects in schools to promote 
        physical activity and to enhance the nutritional status 
        of students;
          (4) to improve access to local foods through farm-to-
        cafeteria activities that may include the acquisition 
        of food and the provision of training and education;
          (5) to implement State guidelines in health 
        (including nutrition education and physical education 
        guidelines) and to emphasize regular physical activity 
        during school hours;
          (6) to establish healthy eating and lifestyle 
        policies in schools; and
          (7) to provide training and technical assistance to 
        teachers and school food service professionals 
        consistent with the purposes of this section.
    (h) Authorization of Appropriations.--There are authorized 
to be appropriated such sums as are necessary to carry out this 
section.

           *       *       *       *       *       *       *


FOOD STAMP ACT OF 1977

           *       *       *       *       *       *       *


    Sec. 11 * * *
    (u) Agreement for Direct Certification and Cooperation._
          (1) In general.--Each State agency shall enter into 
        an agreement with the State agency administering the 
        school lunch program established under the Richard B. 
        Russell National School Lunch Act (42 U.S.C. 1751 et 
        seq.).
          (2) Contents.--The agreement shall establish 
        procedures that ensure that--
                  (A) any child receiving benefits under this 
                Act shall be certified as eligible for free 
                lunches under the Richard B. Russell National 
                School Lunch Act (42 1U.S.C. 1751 et seq.) and 
                free breakfasts under the Child Nutrition Act 
                of 1966 (42 U.S.C. 1771 et seq.), without 
                further application; and
                  (B) each State agency shall cooperate in 
                carrying out paragraphs (3)(F) and (4) of 
                section 9(b) of the Richard B. Russell National 
                School Lunch Act (42 U.S.C. 1758(b)).

           *       *       *       *       *       *       *


      COMMODITY DISTRIBUTION REFORM ACT AND WIC AMENDMENTS OF 1987

    Sec. 15. * * *

           *       *       *       *       *       *       *

    [(e) Termination Date.--The authority provided by this 
section terminates effective July 1, 2004.]

                                  
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