[105th Congress Public Law 285]
[From the U.S. Government Printing Office]


<DOC>
[DOCID: f:publ285.105]

 COMMUNITY OPPORTUNITIES, ACCOUNTABILITY, AND TRAINING AND EDUCATIONAL 
                          SERVICES ACT OF 1998
Public Law 105-285
105th Congress

                                 An Act


 
 To amend the Head Start Act, the Low-Income Home Energy Assistance Act 
 of 1981, and the Community Services Block Grant Act to reauthorize and 
  make improvements to those Acts, to establish demonstration projects 
that provide an opportunity for persons with limited means to accumulate 
  assets, and for other purposes. <<NOTE: Oct. 27, 1998 -  [S. 2206]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, <<NOTE: Community 
Opportunities, Accountability, and Training and Educational Services Act 
of 1998. Children, youth, and 
families. Education. Grants. Housing. Inter-
governmental relations. 42 USC 9801 note.>> 

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Community Opportunities, 
Accountability, and Training and Educational Services Act of 1998'' or 
the ``Coats Human Services Reauthorization Act of 1998''.

SEC. 2. TABLE OF CONTENTS.

    The table of contents for this Act is as follows:

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

                      TITLE I--HEAD START PROGRAMS

Sec. 101. Short title.
Sec. 102. Statement of purpose.
Sec. 103. Definitions.
Sec. 104. Financial assistance for Head Start programs.
Sec. 105. Authorization of appropriations.
Sec. 106. Allotment of funds.
Sec. 107. Designation of Head Start agencies.
Sec. 108. Quality standards.
Sec. 109. Powers and functions of Head Start agencies.
Sec. 110. Head Start transition.
Sec. 111. Submission of plans to Governors.
Sec. 112. Participation in Head Start programs.
Sec. 113. Early Head Start programs for families with infants and 
           toddlers.
Sec. 114. Technical assistance and training.
Sec. 115. Professional requirements.
Sec. 116. Research and evaluation.
Sec. 117. Reports.
Sec. 118. Repeal of consultation requirement.
Sec. 119. Repeal of Head Start Transition Project Act.

            TITLE II--COMMUNITY SERVICES BLOCK GRANT PROGRAM

Sec. 201. Reauthorization.
Sec. 202. Conforming amendments.

              TITLE III--LOW-INCOME HOME ENERGY ASSISTANCE

Sec. 301. Short title.
Sec. 302. Authorization.
Sec. 303. Definitions.
Sec. 304. Natural disasters and other emergencies.
Sec. 305. State allotments.
Sec. 306. Administration.
Sec. 307. Payments to States.
Sec. 308. Residential Energy Assistance Challenge option.
Sec. 309. Technical assistance, training, and compliance reviews.

                    TITLE IV--ASSETS FOR INDEPENDENCE

Sec. 401. Short title.
Sec. 402. Findings.
Sec. 403. Purposes.
Sec. 404. Definitions.
Sec. 405. Applications.
Sec. 406. Demonstration authority; annual grants.
Sec. 407. Reserve Fund.
Sec. 408. Eligibility for participation.
Sec. 409. Selection of individuals to participate.
Sec. 410. Deposits by qualified entities.
Sec. 411. Local control over demonstration projects.
Sec. 412. Annual progress reports.
Sec. 413. Sanctions.
Sec. 414. Evaluations.
Sec. 415. Treatment of funds.
Sec. 416. Authorization of appropriations.

TITLE I-- <<NOTE: Head Start Amendments of 1998.>> HEAD START PROGRAMS

SEC. 101. SHORT TITLE. <<NOTE: 42 USC 9801 note.>> 

    This title may be cited as the ``Head Start Amendments of 1998''.

SEC. 102. STATEMENT OF PURPOSE.

    Section 636 of the Head Start Act (42 U.S.C. 9831) is amended to 
read as follows:

``SEC. 636. STATEMENT OF PURPOSE.

    ``It is the purpose of this subchapter to promote school readiness 
by enhancing the social and cognitive development of low-income children 
through the provision, to low-income children and their families, of 
health, educational, nutritional, social, and other services that are 
determined, based on family needs assessments, to be necessary.''.

SEC. 103. DEFINITIONS.

    Section 637 of the Head Start Act (42 U.S.C. 9832) is amended--
            (1) by redesignating paragraphs (1) and (2) as paragraphs 
        (16) and (17) and inserting the paragraphs at the end of the 
        section;
            (2) by inserting before paragraph (3) the following:
            ``(1) The term `child with a disability' means--
                    ``(A) a child with a disability, as defined in 
                section 602(3) of the Individuals with Disabilities 
                Education Act; and
                    ``(B) an infant or toddler with a disability, as 
                defined in section 632(5) of such Act.
            ``(2) The term `delegate agency' means a public, private 
        nonprofit, or for-profit organization or agency to which a 
        grantee has delegated all or part of the responsibility of the 
        grantee for operating a Head Start program.'';
            (3) by striking paragraph (4);
            (4) by redesignating paragraph (3) as paragraph (4);
            (5) by inserting after paragraph (2) the following:
            ``(3) The term `family literacy services' means services 
        that are of sufficient intensity in terms of hours, and of 
        sufficient duration, to make sustainable changes in a family, 
        and that integrate all of the following activities:
                    ``(A) Interactive literacy activities between 
                parents and their children.
                    ``(B) Training for parents regarding how to be the 
                primary teacher for their children and full partners in 
                the education of their children.
                    ``(C) Parent literacy training that leads to 
                economic self-sufficiency.
                    ``(D) An age-appropriate education to prepare 
                children for success in school and life experiences.'';
            (6) in paragraph (6), by adding at the end the following: 
        ``Nothing in this paragraph shall be construed to require an 
        agency to provide services to a child who has not reached the 
        age of compulsory school attendance for more than the number of 
        hours per day permitted by State law (including regulation) for 
        the provision of services to such a child.'';
            (7) by striking paragraph (12) and inserting the following:
            ``(12) The term `migrant and seasonal Head Start program' 
        means--
                    ``(A) with respect to services for migrant 
                farmworkers, a Head Start program that serves families 
                who are engaged in agricultural labor and who have 
                changed their residence from one geographic location to 
                another in the preceding 2-year period; and
                    ``(B) with respect to services for seasonal 
                farmworkers, a Head Start program that serves families 
                who are engaged primarily in seasonal agricultural labor 
                and who have not changed their residence to another 
                geographic location in the preceding 2-year period.'';
            (8) by inserting after paragraph (14) the following:
            ``(15) The term `scientifically based reading research'--
                    ``(A) means the application of rigorous, systematic, 
                and objective procedures to obtain valid knowledge 
                relevant to reading development, reading instruction, 
                and reading difficulties; and
                    ``(B) shall include research that--
                          ``(i) employs systematic, empirical methods 
                      that draw on observation or experiment;
                          ``(ii) involves rigorous data analyses that 
                      are adequate to test the stated hypotheses and 
                      justify the general conclusions drawn;
                          ``(iii) relies on measurements or 
                      observational methods that provide valid data 
                      across evaluators and observers and across 
                      multiple measurements and observations; and
                          ``(iv) has been accepted by a peer-reviewed 
                      journal or approved by a panel of independent 
                      experts through a comparably rigorous, objective, 
                      and scientific review.''; and
            (9) in paragraph (17) (as redesignated in paragraph (1))--
                    (A) by striking ``Term'' and inserting ``term'';
                    (B) by striking ``Virgin Islands,'' and inserting 
                ``Virgin Islands of the United States, and the 
                Commonwealth of the Northern Mariana Islands, but for 
                fiscal years ending before October 1, 2001 (and fiscal 
                year 2002, if the legislation described in section 
                640(a)(2)(B)(iii) has not been enacted before September 
                30, 2001), also means''; and
                    (C) by striking ``Palau, and the Commonwealth of the 
                Northern Mariana Islands.'' and inserting ``and the 
                Republic of Palau.''.

SEC. 104. FINANCIAL ASSISTANCE FOR HEAD START PROGRAMS.

    Section 638(1) of the Head Start Act (42 U.S.C. 9833(1)) is 
amended--
            (1) by striking ``aid the'' and inserting ``enable the''; 
        and
            (2) by striking the semicolon and inserting ``and attain 
        school readiness;''.

SEC. 105. AUTHORIZATION OF APPROPRIATIONS.

    Section 639 of the Head Start Act (42 U.S.C. 9834) is amended--
            (1) in subsection (a), by striking ``1995 through 1998'' and 
        inserting ``1999 through 2003''; and
            (2) in subsection (b), by striking paragraphs (1) and (2) 
        and inserting the following:
            ``(1) for each of fiscal years 1999 through 2003 to carry 
        out activities authorized under section 642A, not more than 
        $35,000,000 but not less than the amount that was made available 
        for such activities for fiscal year 1998;
            ``(2) not more than $5,000,000 for each of fiscal years 1999 
        through 2003 to carry out impact studies under section 649(g); 
        and
            ``(3) not more than $12,000,000 for fiscal year 1999, and 
        such sums as may be necessary for each of fiscal years 2000 
        through 2003, to carry out other research, demonstration, and 
        evaluation activities, including longitudinal studies, under 
        section 649.''.

SEC. 106. ALLOTMENT OF FUNDS.

    (a) Allotments.--Section 640(a) of the Head Start Act (42 U.S.C. 
9835(a)) is amended--
            (1) in paragraph (2)--
                    (A) in subparagraph (A)--
                          (i) by striking ``and migrant'' the first 
                      place it appears and all that follows through 
                      ``handicapped children'', and inserting ``Head 
                      Start programs, services for children with 
                      disabilities, and migrant and seasonal Head Start 
                      programs'';
                          (ii) by striking ``and migrant'' each other 
                      place it appears and inserting ``Head Start 
                      programs and by migrant and seasonal''; and
                          (iii) by striking ``1994'' and inserting 
                      ``1998'';
                    (B) in subparagraph (B), by striking ``(B) 
                payments'' and all that follows through ``Virgin Islands 
                according'' and inserting the following:
            ``(B) payments, subject to paragraph (7)--
                    ``(i) to Guam, American Samoa, the Commonwealth of 
                the Northern Mariana Islands, and the Virgin Islands of 
                the United States;
                    ``(ii) for fiscal years ending before October 1, 
                2001, to the Federated States of Micronesia, the 
                Republic of the Marshall Islands, and the Republic of 
                Palau; and
                    ``(iii) if legislation approving renegotiated 
                Compacts of Free Association for the jurisdictions 
                described in clause (ii) has not been enacted before 
                September 30, 2001, for fiscal year 2002 to those 
                jurisdictions;
        according'';
                    (C) in subparagraph (C), by striking ``; and'' and 
                inserting ``, of which not less than $3,000,000 of the 
                amount appropriated for such fiscal year shall be made 
                available to carry out activities described in section 
                648(c)(4);'';
                    (D) in subparagraph (D), by striking ``related to 
                the development and implementation of quality 
                improvement plans under section 641A(d)(2).'' and 
                inserting ``carried out under paragraph (1), (2), or (3) 
                of section 641A(d) related to correcting deficiencies 
                and conducting proceedings to terminate the designation 
                of Head Start agencies; and'';
                    (E) by inserting after subparagraph (D) the 
                following:
            ``(E) payments for research, demonstration, and evaluation 
        activities under section 649.''; and
                    (F) by adding at the end the following: ``No Freely 
                Associated State may receive financial assistance under 
                this subchapter after fiscal year 2002.'';
            (2) in paragraph (3)--
                    (A) in subparagraph (A)(i), by striking ``equal'' 
                and all that follows through ``amount;'' and inserting 
                ``equal to the sum of--
            ``(I) 60 percent of such excess amount for fiscal year 1999, 
        50 percent of such excess amount for fiscal year 2000, 47.5 
        percent of such excess amount for fiscal year 2001, 35 percent 
        of such excess amount for fiscal year 2002, and 25 percent of 
        such excess amount for fiscal year 2003;'';
                    (B) in subparagraph (B)--
                          (i) in clause (ii)--
                                    (I) by striking ``adequate qualified 
                                staff'' and inserting ``adequate numbers 
                                of qualified staff''; and
                                    (II) by inserting ``and children 
                                with disabilities'' before ``, when'';
                          (ii) in clause (iv), by inserting before the 
                      period the following: ``, and to encourage the 
                      staff to continually improve their skills and 
                      expertise by informing the staff of the 
                      availability of Federal and State incentive and 
                      loan forgiveness programs for professional 
                      development'';
                          (iii) in clause (v), by inserting ``and 
                      collaboration efforts for such programs'' before 
                      the period;
                          (iv) in clause (vi), by striking the period 
                      and inserting ``, and are accessible to children 
                      with disabilities and their parents.'';
                          (v) by redesignating clause (vii) as clause 
                      (viii); and
                          (vi) by inserting after clause (vi) the 
                      following:
            ``(vii) Ensuring that such programs have qualified staff 
        that can promote language skills and literacy growth of children 
        and that can provide children with a variety of skills that have 
        been identified, through scientifically based reading research, 
        as predictive of later reading achievement.'';
                    (C) in subparagraph (C)--
                          (i) in clause (i)--
                                    (I) in subclause (I)--
                                            (aa) by striking ``this 
                                        subparagraph'' and inserting 
                                        ``this paragraph'';
                                            (bb) by striking ``of 
                                        staff'' and inserting ``of 
                                        classroom teachers and other 
                                        staff'';
                                            (cc) by striking ``such 
                                        staff'' and inserting 
                                        ``qualified staff, including 
                                        recruitment and retention 
                                        pursuant to achieving the 
                                        requirements set forth in 
                                        section 648A(a)''; and
                                            (dd) by adding at the end 
                                        the following: ``Preferences in 
                                        awarding salary increases, in 
                                        excess of cost-of-living 
                                        allowances, with such funds 
                                        shall be granted to classroom 
                                        teachers and staff who obtain 
                                        additional training or education 
                                        related to their 
                                        responsibilities as employees of 
                                        a Head Start program.'';
                                    (II) in subclause (II), by striking 
                                ``the subparagraph'' and inserting 
                                ``this subparagraph''; and
                                    (III) by adding at the end the 
                                following:
            ``(III) From the remainder of the amount reserved under this 
        paragraph (after the Secretary carries out subclause (I)), the 
        Secretary shall carry out any or all of the activities described 
        in clauses (ii) through (vii), placing the highest priority on 
        the activities described in clause (ii).'';
                          (ii) by amending clause (ii) to read as 
                      follows:
            ``(ii) To train classroom teachers and other staff to meet 
        the education performance standards described in section 
        641A(a)(1)(B), through activities--
                    ``(I) to promote children's language and literacy 
                growth, through techniques identified through 
                scientifically based reading research;
                    ``(II) to promote the acquisition of the English 
                language for non-English background children and 
                families;
                    ``(III) to foster children's school readiness skills 
                through activities described in section 648A(a)(1); and
                    ``(IV) to provide training necessary to improve the 
                qualifications of the staff of the Head Start agencies 
                and to support staff training, child counseling, and 
                other services necessary to address the problems of 
                children participating in Head Start programs, including 
                children from dysfunctional families, children who 
                experience chronic violence in their communities, and 
                children who experience substance abuse in their 
                families.'';
                          (iii) by striking clause (v); and
                          (iv) by redesignating clauses (vi) and (vii) 
                      as clauses (v) and (vi), respectively; and
                    (D) in subparagraph (D)(i)(II), by striking ``and 
                migrant'' and inserting ``Head Start programs and 
                migrant and seasonal'';
            (3) in paragraph (4)--
                    (A) in subparagraph (A), by striking ``1981'' and 
                inserting ``1998'';
                    (B) by amending subparagraph (B) to read as follows:
            ``(B) any amount available after all allotments are made 
        under subparagraph (A) for such fiscal year shall be distributed 
        proportionately on the basis of the number of children less than 
        5 years of age from families whose income is below the poverty 
        line.''; and
                    (C) by adding at the end the following:

``For purposes of this paragraph, for each fiscal year the Secretary 
shall use the most recent data available on the number of children less 
than 5 years of age from families whose income is below the poverty 
line, as published by the Department of Commerce, unless the Secretary 
and the Secretary of Commerce determine that use of the most recent data 
available would be inappropriate or unreliable. If the Secretary and the 
Secretary of Commerce determine that some or all of the data referred to 
in this paragraph are inappropriate or unreliable, the Secretaries shall 
issue a report setting forth their reasons in detail.'';
            (4) in paragraph (5)--
                    (A) in subparagraph (A), by striking ``subparagraph 
                (B)'' and inserting ``subparagraphs (B) and (D)'';
                    (B) in subparagraph (B), by inserting before the 
                period the following: ``and to encourage Head Start 
                agencies to collaborate with entities involved in State 
                and local planning processes (including the State lead 
                agency administering the financial assistance received 
                under the Child Care and Development Block Grant Act of 
                1990 (42 U.S.C. 9858 et seq.) and the entities providing 
                resource and referral services in the State) in order to 
                better meet the needs of low-income children and 
                families'';
                    (C) in subparagraph (C)--
                          (i) in clause (i)(I), by inserting ``the 
                      appropriate regional office of the Administration 
                      for Children and Families and'' before 
                      ``agencies'';
                          (ii) in clause (iii), by striking ``and'' at 
                      the end;
                          (iii) in clause (iv)--
                                    (I) by striking ``education, and 
                                national service activities,'' and 
                                inserting ``education, and community 
                                service activities,'';
                                    (II) by striking ``and activities'' 
                                and inserting ``activities''; and
                                    (III) by striking the period and 
                                inserting ``(including coordination of 
                                services with those State officials who 
                                are responsible for administering part C 
                                and section 619 of the Individuals with 
                                Disabilities Education Act (20 U.S.C. 
                                1431-1445, 1419)), and services for 
                                homeless children;''; and
                          (iv) by adding at the end the following:
            ``(v) include representatives of the State Head Start 
        Association and local Head Start agencies in unified planning 
        regarding early care and education services at both the State 
        and local levels, including collaborative efforts to plan for 
        the provision of full-working-day, full calendar year early care 
        and education services for children; and
            ``(vi) encourage local Head Start agencies to appoint a 
        State level representative to represent Head Start agencies 
        within the State in conducting collaborative efforts described 
        in subparagraphs (B) and (D), and in clause (v).'';
                    (D) by redesignating subparagraph (D) as 
                subparagraph (F); and
                    (E) by inserting after subparagraph (C) the 
                following:

    ``(D) Following the award of collaboration grants described in 
subparagraph (B), the Secretary shall provide, from the reserved sums, 
supplemental funding for collaboration grants--
            ``(i) to States that (in consultation with their State Head 
        Start Associations) develop statewide, regional, or local 
        unified plans for early childhood education and child care that 
        include the participation of Head Start agencies; and
            ``(ii) to States that engage in other innovative 
        collaborative initiatives, including plans for collaborative 
        training and professional development initiatives for child 
        care, early childhood education and Head Start service managers, 
        providers, and staff.

    ``(E)(i) The Secretary shall--
            ``(I) review on an ongoing basis evidence of barriers to 
        effective collaboration between Head Start programs and other 
        Federal, State, and local child care and early childhood 
        education programs and resources;
            ``(II) develop initiatives, including providing additional 
        training and technical assistance and making regulatory changes, 
        in necessary cases, to eliminate barriers to the collaboration; 
        and
            ``(III) develop a mechanism to resolve administrative and 
        programmatic conflicts between programs described in subclause 
        (I) that would be a barrier to service providers, parents, or 
        children related to the provision of unified services and the 
        consolidation of funding for child care services.

    ``(ii) In the case of a collaborative activity funded under this 
subchapter and another provision of law providing for Federal child care 
or early childhood education, the use of equipment and nonconsumable 
supplies purchased with funds made available under this subchapter or 
such provision shall not be restricted to children enrolled or otherwise 
participating in the program carried out under that subchapter or 
provision, during a period in which the activity is predominantly funded 
under this subchapter or such provision.''; and
            (5) in paragraph (6)--
                    (A) by inserting ``(A)'' before ``From'';
                    (B) by striking ``3 percent'' and all that follows 
                and inserting the following: ``7.5 percent for fiscal 
                year 1999, 8 percent for fiscal year 2000, 9 percent for 
                fiscal year 2001, 10 percent for fiscal year 2002, and 
                10 percent for fiscal year 2003, of the amount 
                appropriated pursuant to section 639(a), except as 
                provided in subparagraph (B).''; and
                    (C) by adding at the end the following:

    ``(B)(i) If the Secretary does not submit an interim report on the 
preliminary findings of the Early Head Start impact study currently 
being conducted by the Secretary (as of the date of enactment of the 
Head Start Amendments of 1998) to the appropriate committees by June 1, 
2001, the amount of the reserved portion for fiscal year 2002 that 
exceeds the reserved portion for fiscal year 2001, if any, shall be used 
for quality improvement activities described in section 640(a)(3) and 
shall not be used to serve an increased number of eligible children 
under section 645A.
    ``(ii) If the Secretary does not submit a final report on the Early 
Head Start impact study to the appropriate committees by June 1, 2002, 
or if the Secretary finds in the report that there are substantial 
deficiencies in the programs carried out under section 645A, the amount 
of the reserved portion for fiscal year 2003 that exceeds the reserved 
portion for fiscal year 2002, if any, shall be used for quality 
improvement activities described in section 640(a)(3) and shall not be 
used to serve an increased number of eligible children under section 
645A.
    ``(iii) In this subparagraph:
            ``(I) The term `appropriate committees' means the Committee 
        on Education and the Workforce and the Committee on 
        Appropriations of the House of Representatives and the Committee 
        on Labor and Human Resources and the Committee on Appropriations 
        of the Senate.
            ``(II) The term `reserved portion', used with respect to a 
        fiscal year, means the amount required to be used in accordance 
        with subparagraph (A) for that fiscal year.

    ``(C)(i) For any fiscal year for which the Secretary determines that 
the amount appropriated under section 639(a) is not sufficient to permit 
the Secretary to reserve the portion described in subparagraph (A) 
without reducing the number of children served by Head Start programs or 
adversely affecting the quality of Head Start services, relative to the 
number of children served and the quality of the services during the 
preceding fiscal year, the Secretary may reduce the percentage of funds 
required to be reserved for the portion described in subparagraph (A) 
for the fiscal year for which the determination is made, but not below 
the percentage required to be so reserved for the preceding fiscal year.
    ``(ii) For any fiscal year for which the amount appropriated under 
section 639(a) is reduced to a level that requires a lower amount to be 
made available under this subchapter to Head Start agencies and entities 
described in section 645A, relative to the amount made available to the 
agencies and entities for the preceding fiscal year, adjusted as 
described in paragraph (3)(A)(ii), the Secretary shall proportionately 
reduce--
            ``(I) the amounts made available to the entities for 
        programs carried out under section 645A; and
            ``(II) the amounts made available to Head Start agencies for 
        Head Start programs.''.

    (b) Children With Disabilities.--Section 640(d) of the Head Start 
Act (42 U.S.C. 9835(d)) is amended--
            (1) by striking ``1982'' and inserting ``1999'';
            (2) by striking ``(as defined in section 602(a) of the 
        Individuals with Disabilities Education Act)''; and
            (3) by adding at the end the following: ``Such policies and 
        procedures shall require Head Start agencies to coordinate 
        programmatic efforts with efforts to implement part C and 
        section 619 of the Individuals with Disabilities Education Act 
        (20 U.S.C 1431-1445, 1419).''.

    (c) Increased Appropriations.--Section 640(g) of the Head Start Act 
(42 U.S.C. 9835(g)) is amended--
            (1) in paragraph (2)--
                    (A) in subparagraph (A), by striking the semicolon 
                and inserting ``, and the performance history of the 
                applicant in providing services under other Federal 
                programs (other than the program carried out under this 
                subchapter);'';
                    (B) in subparagraph (C), by striking the semicolon 
                and inserting ``, and organizations and public entities 
                serving children with disabilities;'';
                    (C) in subparagraph (D), by striking the semicolon 
                and inserting ``and the extent to which, and manner in 
                which, the applicant demonstrates the ability to 
                collaborate and participate with other local community 
                providers of child care or preschool services to provide 
                full-working-day full calendar year services;'';
                    (D) in subparagraph (E), by striking ``program; 
                and'' and inserting ``program or any other early 
                childhood program;'';
                    (E) in subparagraph (F), by striking the period and 
                inserting a semicolon; and
                    (F) by adding at the end the following:
            ``(G) the extent to which the applicant proposes to foster 
        partnerships with other service providers in a manner that will 
        enhance the resource capacity of the applicant; and
            ``(H) the extent to which the applicant, in providing 
        services, plans to coordinate with the local educational agency 
        serving the community involved and with schools in which 
        children participating in a Head Start program operated by such 
        agency will enroll following such program, regarding such 
        services and the education services provided by such local 
        educational agency.''; and
            (2) by adding at the end the following:

    ``(4) Notwithstanding subsection (a)(2), after taking into account 
paragraph (1), the Secretary may allocate a portion of the remaining 
additional funds under subsection (a)(2)(A) for the purpose of 
increasing funds available for activities described in such 
subsection.''.
    (d) Migrant and Seasonal Head Start Programs.--Section 640(l) (42 
U.S.C. 9835(l)) is amended--
            (1) by striking ``(l)'' and inserting ``(l)(1)'';
            (2) by striking ``migrant Head Start programs'' each place 
        it appears and inserting ``migrant and seasonal Head Start 
        programs'';
            (3) by striking ``migrant families'' and inserting ``migrant 
        and seasonal farmworker families''; and
            (4) by adding at the end the following:

    ``(2) For purposes of subsection (a)(2)(A), in determining the need 
and demand for migrant and seasonal Head Start programs (and services 
provided through such programs), the Secretary shall consult with 
appropriate entities, including providers of services for migrant and 
seasonal Head Start programs. The Secretary shall, after taking into 
consideration the need and demand for migrant and seasonal Head Start 
programs (and such services), ensure that there is an adequate level of 
such services for eligible children of migrant farmworkers before 
approving an increase in the allocation of funds provided under such 
subsection for unserved eligible children of seasonal farmworkers. In 
serving the eligible children of seasonal farmworkers, the Secretary 
shall ensure that services provided by migrant and seasonal Head Start 
programs do not duplicate or overlap with other Head Start services 
available to eligible children of such farmworkers.
    ``(3) In carrying out this subchapter, the Secretary shall continue 
the administrative arrangement responsible for meeting the needs of 
children of migrant and seasonal farmworkers and Indian children and 
shall ensure that appropriate funding is provided to meet such needs.''.
    (e) Conforming Amendment.--Section 644(f)(2) of the Head Start Act 
(42 U.S.C. 9839(f)(2)) is amended by striking ``Except'' and all that 
follows through ``financial'' and inserting ``Financial''.

SEC. 107. DESIGNATION OF HEAD START AGENCIES.

    Section 641 of the Head Start Act (42 U.S.C. 9836) is amended--
            (1) in subsection (a)--
                    (A) in the matter preceding paragraph (1), by 
                inserting ``or for-profit'' after ``nonprofit''; and
                    (B) by inserting ``(in consultation with the chief 
                executive officer of the State involved, if such State 
                expends non-Federal funds to carry out Head Start 
                programs)'' after ``Secretary'' the last place it 
                appears;
            (2) in subsection (b), by striking ``area designated by the 
        Bureau of Indian Affairs as near-reservation'' and inserting 
        ``off-reservation area designated by an appropriate tribal 
        government in consultation with the Secretary'';
            (3) in subsection (c)--
                    (A) in paragraph (1)--
                          (i) by inserting ``, in consultation with the 
                      chief executive officer of the State involved if 
                      such State expends non-Federal funds to carry out 
                      Head Start programs,'' after ``shall'';
                          (ii) by inserting ``or for-profit'' after 
                      ``nonprofit''; and
                          (iii) by striking ``makes a finding'' and all 
                      that follows through the period at the end, and 
                      inserting the following: ``determines that the 
                      agency involved fails to meet program and 
                      financial management requirements, performance 
                      standards described in section 641A(a)(1), 
                      results-based performance measures developed by 
                      the Secretary under section 641A(b), or other 
                      requirements established by the Secretary.'';
                    (B) in paragraph (2), by inserting ``, in 
                consultation with the chief executive officer of the 
                State if such State expends non-Federal funds to carry 
                out Head Start programs,'' after ``shall''; and
                    (C) by aligning the margins of paragraphs (2) and 
                (3) with the margin of paragraph (1);
            (4) in subsection (d)--
                    (A) in the matter preceding paragraph (1), by 
                inserting after the first sentence the following: ``In 
                selecting from among qualified applicants for 
                designation as a Head Start agency, the Secretary shall 
                give priority to any qualified agency that functioned as 
                a Head Start delegate agency in the community and 
                carried out a Head Start program that the Secretary 
                determines met or exceeded such performance standards 
                and such results-based performance measures.'';
                    (B) in paragraph (3), by inserting ``and programs 
                under part C and section 619 of the Individuals with 
                Disabilities Education Act (20 U.S.C 1431-1445, 1419)'' 
                after ``(20 U.S.C. 2741 et seq.)'';
                    (C) in paragraph (4)--
                          (i) in subparagraph (A), by inserting ``(at 
                      home and in the center involved where 
                      practicable)'' after ``activities'';
                          (ii) in subparagraph (D)--
                                    (I) in clause (iii), by adding 
                                ``or'' at the end;
                                    (II) by striking clause (iv); and
                                    (III) by redesignating clause (v) as 
                                clause (iv);
                          (iii) in subparagraph (E), by striking ``and 
                      (D)'' and inserting ``, (D), and (E)'';
                          (iv) by redesignating subparagraphs (D) and 
                      (E) as subparagraphs (E) and (F), respectively; 
                      and
                          (v) by inserting after subparagraph (C) the 
                      following:
                    ``(D) to offer to parents of participating children 
                substance abuse counseling (either directly or through 
                referral to local entities), including information on 
                drug-exposed infants and fetal alcohol syndrome;'';
                    (D) by amending paragraph (7) to read as follows:
            ``(7) the plan of such applicant to meet the needs of non-
        English background children and their families, including needs 
        related to the acquisition of the English language;'';
                    (E) in paragraph (8)--
                          (i) by striking the period at the end and 
                      inserting ``; and''; and
                          (ii) by redesignating such paragraph as 
                      paragraph (9);
                    (F) by inserting after paragraph (7) the following:
            ``(8) the plan of such applicant to meet the needs of 
        children with disabilities;''; and
                    (G) by adding at the end the following:
            ``(10) the plan of such applicant to collaborate with other 
        entities carrying out early childhood education and child care 
        programs in the community.'';
            (5) by striking subsection (e) and inserting the following:

    ``(e) If no agency in the community receives priority designation 
under subsection (c), and there is no qualified applicant in the 
community, the Secretary shall designate a qualified agency to carry out 
the Head Start program in the community on an interim basis until a 
qualified applicant from the community is so designated.''; and
            (6) by adding at the end the following:

    ``(g) If the Secretary determines that a nonprofit agency and a for-
profit agency have submitted applications for designation of equivalent 
quality under subsection (d), the Secretary may give priority to the 
nonprofit agency. In selecting from among qualified applicants for 
designation as a Head Start agency under subsection (d), the Secretary 
shall give priority to applicants that have demonstrated capacity in 
providing comprehensive early childhood services to children and their 
families.''.

SEC. 108. QUALITY STANDARDS.

    (a) Quality Standards.--Section 641A(a) of the Head Start Act (42 
U.S.C. 9836a(a)) is amended--
            (1) in paragraph (1)--
                    (A) in the matter preceding subparagraph (A), by 
                inserting ``, including minimum levels of overall 
                accomplishment,'' after ``regulation standards'';
                    (B) in subparagraph (A), by striking ``education,'';
                    (C) by redesignating subparagraphs (B) through (D) 
                as subparagraphs (C) through (E), respectively; and
                    (D) by inserting after subparagraph (A) the 
                following:
                    ``(B)(i) education performance standards to ensure 
                the school readiness of children participating in a Head 
                Start program, on completion of the Head Start program 
                and prior to entering school; and
                    ``(ii) additional education performance standards to 
                ensure that the children participating in the program, 
                at a minimum--
                          ``(I) develop phonemic, print, and numeracy 
                      awareness;
                          ``(II) understand and use language to 
                      communicate for various purposes;
                          ``(III) understand and use increasingly 
                      complex and varied vocabulary;
                          ``(IV) develop and demonstrate an appreciation 
                      of books; and
                          ``(V) in the case of non-English background 
                      children, progress toward acquisition of the 
                      English language.'';
            (2) by striking paragraph (2);
            (3) by redesignating paragraphs (3) and (4) as paragraphs 
        (2) and (3), respectively;
            (4) in paragraph (2) (as redesignated in paragraph (3))--
                    (A) in subparagraph (B)(iii), by striking ``child'' 
                and inserting ``early childhood education and''; and
                    (B) in subparagraph (C)--
                          (i) in clause (i)--
                                    (I) by striking ``not later than 1 
                                year after the date of enactment of this 
                                section,''; and
                                    (II) by striking ``section 651(b)'' 
                                and all that follows and inserting 
                                ``this subsection; and''; and
                          (ii) in subclause (ii), by striking ``November 
                      2, 1978'' and inserting ``the date of enactment of 
                      the Coats Human Services Reauthorization Act of 
                      1998''; and
            (5) in paragraph (3) (as redesignated in paragraph (3)), by 
        striking ``to an agency (referred to in this subchapter as the 
        `delegate agency')'' and inserting ``to a delegate agency''.

    (b) Performance Measures.--Section 641A(b) of the Head Start Act (42 
U.S.C. 9836a(b)) is amended--
            (1) in the heading, by inserting ``Results-Based'' before 
        ``Performance'';
            (2) in paragraph (1)--
                    (A) by striking ``Not later than 1 year after the 
                date of enactment of this section, the'' and inserting 
                ``The'';
                    (B) by striking ``child'' and inserting ``early 
                childhood education and'';
                    (C) by inserting before ``(referred'' the following: 
                ``, and the impact of the services provided through the 
                programs to children and their families''; and
                    (D) by striking ``performance measures'' and 
                inserting ``results-based performance measures''; and
            (3) in paragraph (2)--
                    (A) in the paragraph heading, by striking ``Design'' 
                and inserting ``Characteristics'';
                    (B) in the matter preceding subparagraph (A), by 
                striking ``shall be designed--'' and inserting ``shall--
                '';
                    (C) in subparagraph (A), by striking ``to assess'' 
                and inserting ``be used to assess the impact of'';
                    (D) in subparagraph (B)--
                          (i) by striking ``to'';
                          (ii) by striking ``and peer review'' and 
                      inserting ``, peer review, and program 
                      evaluation''; and
                          (iii) by inserting ``, not later than July 1, 
                      1999'' before the semicolon;
                    (E) in subparagraph (C), by inserting ``be 
                developed'' before ``for other''; and
                    (F) by adding at the end the following: ``The 
                performance measures shall include the performance 
                standards described in subsection (a)(1)(B)(ii).'';
            (4) in paragraph (3)(A), by striking ``and by region'' and 
        inserting ``, regionally, and locally''; and
            (5) by adding at the end the following:
            ``(4) Educational performance measures.--Such results-based 
        performance measures shall include educational performance 
        measures that ensure that children participating in Head Start 
        programs--
                    ``(A) know that letters of the alphabet are a 
                special category of visual graphics that can be 
                individually named;
                    ``(B) recognize a word as a unit of print;
                    ``(C) identify at least 10 letters of the alphabet; 
                and
                    ``(D) associate sounds with written words.
            ``(5) Additional local results-based performance measures.--
        In addition to other applicable results-based performance 
        measures, Head Start agencies may establish local results-based 
        educational performance measures.''.

    (c) Monitoring.--Section 641A(c) of the Head Start Act (42 U.S.C. 
9836a(c)) is amended--
            (1) in paragraph (1), by inserting ``and results-based 
        performance measures developed by the Secretary under subsection 
        (b)'' after ``standards established under this subchapter''; and
            (2) in paragraph (2)--
                    (A) in subparagraph (B), by striking ``and'' at the 
                end;
                    (B) in subparagraph (C)--
                          (i) by inserting ``(including children with 
                      disabilities)'' after ``eligible children''; and
                          (ii) by striking the period at the end and 
                      inserting a semicolon; and
                    (C) by adding at the end the following:
                    ``(D) include as part of the reviews of the 
                programs, a review and assessment of program 
                effectiveness, as measured in accordance with the 
                results-based performance measures developed by the 
                Secretary pursuant to subsection (b) and with the 
                performance standards established pursuant to 
                subparagraphs (A) and (B) of subsection (a)(1); and
                    ``(E) seek information from the communities and the 
                States involved about the performance of the programs 
                and the efforts of the Head Start agencies to 
                collaborate with other entities carrying out early 
                childhood education and child care programs in the 
                community.''.

    (d) Termination.--Section 641A(d) of the Head Start Act (42 U.S.C. 
9836a(d)) is amended--
            (1) in paragraph (1)--
                    (A) by inserting ``or results-based performance 
                measures developed by the Secretary under subsection 
                (b)'' after ``subsection (a)''; and
                    (B) by amending subparagraph (B) to read as follows:
                    ``(B) with respect to each identified deficiency, 
                require the agency--
                          ``(i) to correct the deficiency immediately, 
                      if the Secretary finds that the deficiency 
                      threatens the health or safety of staff or program 
                      participants or poses a threat to the integrity of 
                      Federal funds;
                          ``(ii) to correct the deficiency not later 
                      than 90 days after the identification of the 
                      deficiency if the Secretary finds, in the 
                      discretion of the Secretary, that such a 90-day 
                      period is reasonable, in light of the nature and 
                      magnitude of the deficiency; or
                          ``(iii) in the discretion of the Secretary 
                      (taking into consideration the seriousness of the 
                      deficiency and the time reasonably required to 
                      correct the deficiency), to comply with the 
                      requirements of paragraph (2) concerning a quality 
                      improvement plan; and''; and
            (2) in paragraph (2)(A), in the matter preceding clause (i), 
        by striking ``able to correct a deficiency immediately'' and 
        inserting ``required to correct a deficiency immediately or 
        during a 90-day period under clause (i) or (ii) of paragraph 
        (1)(B)''.

    (e) <<NOTE: Public information. Internet.>> Report.--Section 641A(e) 
of the Head Start Act (42 U.S.C. 9836a(e)) is amended by adding at the 
end the following: ``Such report shall be widely disseminated and 
available for public review in both written and electronic formats.''.

SEC. 109. POWERS AND FUNCTIONS OF HEAD START AGENCIES.

    Section 642 of the Head Start Act (42 U.S.C. 9837) is amended--
            (1) in subsection (a), by inserting ``or for-profit'' after 
        ``nonprofit'';
            (2) in subsection (b)--
                    (A) in paragraph (6)--
                          (i) by striking subparagraph (D); and
                          (ii) by redesignating subparagraphs (E) and 
                      (F) and subparagraphs (D) and (E), respectively;
                    (B) in paragraph (8), by striking ``and'' at the 
                end;
                    (C) in paragraph (9), by striking the period at the 
                end and inserting ``; and'';
                    (D) by redesignating paragraphs (6) through (9) as 
                paragraphs (7) through (10), respectively;
                    (E) by inserting after paragraph (5) the following:
            ``(6) offer to parents of participating children substance 
        abuse counseling (either directly or through referral to local 
        entities), including information on drug-exposed infants and 
        fetal alcohol syndrome;'';
                    (F) in paragraph (8) (as redesignated in 
                subparagraph (D)), by striking ``paragraphs (4) through 
                (6)'' and inserting ``paragraphs (4) through (7)''; and
                    (G) by adding at the end the following:
            ``(11)(A) inform custodial parents in single-parent families 
        that participate in programs, activities, or services carried 
        out or provided under this subchapter about the availability of 
        child support services for purposes of establishing paternity 
        and acquiring child support; and
            ``(B) refer eligible parents to the child support offices of 
        State and local governments.'';
            (3) in subsection (c)--
                    (A) by inserting ``and collaborate'' after 
                ``coordinate'';
                    (B) by striking ``section 402(g) of the Social 
                Security Act, and other'' and inserting ``the State 
                program carried out under the Child Care and Development 
                Block Grant Act of 1990 (42 U.S.C. 9858 et seq.), and 
                other early childhood education and development''; and
                    (C) by inserting ``and programs under part C and 
                section 619 of the Individuals with Disabilities 
                Education Act (20 U.S.C 1431-1445, 1419)'' after ``(20 
                U.S.C. 2741 et seq.)'';
            (4) in subsection (d)--
                    (A) in paragraph (1)--
                          (i) by striking ``carry out'' and all that 
                      follows through ``maintain'' and inserting ``take 
                      steps to ensure, to the maximum extent possible, 
                      that children maintain'';
                          (ii) by inserting ``and educational'' after 
                      ``developmental''; and
                          (iii) by striking ``to build'' and inserting 
                      ``build'';
                    (B) by striking paragraph (2);
                    (C) by redesignating paragraphs (3) through (5) as 
                paragraphs (2) through (4), respectively; and
                    (D) in subparagraph (A) of paragraph (4) (as 
                redesignated in subparagraph (C)), by striking ``the 
                Head Start Transition Project Act (42 U.S.C. 9855 et 
                seq.)'' and inserting ``section 642A''; and
            (5) by adding at the end the following:

    ``(e) Head Start agencies shall adopt, in consultation with experts 
in child development and with classroom teachers, an assessment to be 
used when hiring or evaluating any classroom teacher in a center-based 
Head Start program. Such assessment shall measure whether such teacher 
has mastered the functions described in section 648A(a)(1).''.

SEC. 110. HEAD START TRANSITION.

    The Head Start Act (42 U.S.C. 9831 et seq.) is amended by inserting 
after section 642 the following:

``SEC. 642A. HEAD START TRANSITION. <<NOTE: 42 USC 9837a.>> 

    ``Each Head Start agency shall take steps to coordinate with the 
local educational agency serving the community involved and with schools 
in which children participating in a Head Start program operated by such 
agency will enroll following such program, including--
            ``(1) developing and implementing a systematic procedure for 
        transferring, with parental consent, Head Start program records 
        for each participating child to the school in which such child 
        will enroll;
            ``(2) establishing channels of communication between Head 
        Start staff and their counterparts in the schools (including 
        teachers, social workers, and health staff) to facilitate 
        coordination of programs;
            ``(3) conducting meetings involving parents, kindergarten or 
        elementary school teachers, and Head Start program teachers to 
        discuss the educational, developmental, and other needs of 
        individual children;
            ``(4) organizing and participating in joint transition-
        related training of school staff and Head Start staff;
            ``(5) developing and implementing a family outreach and 
        support program in cooperation with entities carrying out 
        parental involvement efforts under title I of the Elementary and 
        Secondary Education Act of 1965 (20 U.S.C. 6301 et seq.);
            ``(6) assisting families, administrators, and teachers in 
        enhancing educational and developmental continuity between Head 
        Start services and elementary school classes; and
            ``(7) linking the services provided in such Head Start 
        program with the education services provided by such local 
        educational agency.''.

SEC. 111. SUBMISSION OF PLANS TO GOVERNORS.

    The first sentence of section 643 of the Head Start Act (42 U.S.C. 
9838) is amended--
            (1) by striking ``30 days'' and inserting ``45 days'';
            (2) by striking ``so disapproved'' and inserting 
        ``disapproved (for reasons other than failure of the program to 
        comply with State health, safety, and child care laws, including 
        regulations applicable to comparable child care programs in the 
        State)''; and
            (3) by inserting before the period ``, as evidenced by a 
        written statement of the Secretary's findings that is 
        transmitted to such officer''.

SEC. 112. PARTICIPATION IN HEAD START PROGRAMS.

    (a) Regulations.--Section 645(a)(1) of the Head Start Act (42 U.S.C. 
9840(a)(1)) is amended--
            (1) by striking ``provide (A) that'' and inserting the 
        following: ``provide--
            ``(A) that'';
            (2) by striking ``assistance; and (B) pursuant'' and 
        inserting the following: ``assistance; and
            ``(B) pursuant'';
            (3) in subparagraph (B), by striking ``that programs'' and 
        inserting ``that--
                    ``(i) programs''; and
            (4) by striking ``clause (A).'' and inserting the following: 
        ``subparagraph (A); and
                    ``(ii) a child who has been determined to meet the 
                low-income criteria and who is participating in a Head 
                Start program in a program year shall be considered to 
                continue to meet the low-income criteria through the end 
                of the succeeding program year.

In determining, for purposes of this paragraph, whether a child who has 
applied for enrollment in a Head Start program meets the low-income 
criteria, an entity may consider evidence of family income during the 12 
months preceding the month in which the application is submitted, or 
during the calendar year preceding the calendar year in which the 
application is submitted, whichever more accurately reflects the needs 
of the family at the time of application.''.
    (b) Sliding Fee Scale.--Section 645(b) of the Head Start Act (42 
U.S.C. 9840(b)) is amended by adding at the end the following: ``A Head 
Start agency that provides a Head Start program with full-working-day 
services in collaboration with other agencies or entities may collect a 
family copayment to support extended day services if a copayment is 
required in conjunction with the collaborative. The copayment charged to 
families receiving services through the Head Start program shall not 
exceed the copayment charged to families with similar incomes and 
circumstances who are receiving the services through participation in a 
program carried out by another agency or entity.''.
    (c) Continuous Recruitment and Acceptance of Applications.--Section 
645(c) of the Head Start Act (42 U.S.C. 9840(c)) is amended by adding at 
the end the following: ``Each Head Start program operated in a community 
shall be permitted to recruit and accept applications for enrollment of 
children throughout the year.''.
    (d) Off-Reservation Area.--Section 645(d)(1)(B) of the Head Start 
Act (42 U.S.C. 9840(d)(1)(B)) is amended by striking ``a community 
with'' and all that follows through ``Indian Affairs'' and inserting ``a 
community that is an off-reservation area, designated by an appropriate 
tribal government, in consultation with the Secretary''.
SEC. 113. EARLY HEAD START PROGRAMS FOR FAMILIES WITH INFANTS AND 
                        TODDLERS.

    Section 645A of the Head Start Act (42 U.S.C. 9840a) is amended--
            (1) in the section heading, by inserting ``early head 
        start'' before ``programs for'';
            (2) in subsection (a)--
                    (A) in paragraph (1), by striking ``; and'' and 
                inserting a period;
                    (B) by striking paragraph (2); and
                    (C) by striking ``for--'' and all that follows 
                through ``(1)'' and inserting ``for'';
            (3) in subsection (b)--
                    (A) in paragraph (5), by inserting ``(including 
                programs for infants and toddlers with disabilities)'' 
                after ``community'';
                    (B) in paragraph (7), by striking ``and'' at the 
                end;
                    (C) by redesignating paragraph (8) as paragraph (9); 
                and
                    (D) by inserting after paragraph (7) the following:
            ``(8) ensure formal linkages with the agencies and entities 
        described in section 644(b) of the Individuals with Disabilities 
        Education Act (20 U.S.C. 1444(b)) and providers of early 
        intervention services for infants and toddlers with disabilities 
        under the Individuals with Disabilities Education Act (20 U.S.C. 
        1400 et seq.); and'';
            (4) in subsection (c)--
                    (A) in the matter preceding paragraph (1), by 
                striking ``subsection (a)(1)'' and inserting 
                ``subsection (a)''; and
                    (B) in paragraph (2), by striking ``3 (or under'' 
                and all that follows and inserting ``3;'';
            (5) in subsection (d)--
                    (A) in paragraph (1), by adding ``and'' at the end;
                    (B) by striking paragraph (2);
                    (C) by redesignating paragraph (3) as paragraph (2); 
                and
                    (D) in paragraph (2), as redesignated in 
                subparagraph (C), by inserting ``or for-profit'' after 
                ``nonprofit'';
            (6) by striking subsection (e);
            (7) by redesignating subsections (f) and (g) as subsections 
        (e) and (f), respectively;
            (8) in subsection (e) (as redesignated in paragraph (7))--
                    (A) in the subsection heading, by striking 
                ``Other''; and
                    (B) by striking ``From the balance remaining of the 
                portion specified in section 640(a)(6), after making 
                grants to the eligible entities specified in subsection 
                (e),'' and inserting ``From the portion specified in 
                section 640(a)(6),'';
            (9) by striking subsection (h); and
            (10) by adding at the end the following:

    ``(g) Monitoring, Training, Technical Assistance, and Evaluation.--
            ``(1) Requirement.--In order to ensure the successful 
        operation of programs assisted under this section, the Secretary 
        shall use funds from the portion specified in section 640(a)(6) 
        to monitor the operation of such programs, evaluate their 
        effectiveness, and provide training and technical assistance 
        tailored to the particular needs of such programs.
            ``(2) Training and technical assistance account.--
                    ``(A) In general.--Of the amount made available to 
                carry out this section for any fiscal year, not less 
                than 5 percent and not more than 10 percent shall be 
                reserved to fund a training and technical assistance 
                account.
                    ``(B) Activities.--Funds in the account may be used 
                by the Secretary for purposes including--
                          ``(i) making grants to, and entering into 
                      contracts with, organizations with specialized 
                      expertise relating to infants, toddlers, and 
                      families and the capacity needed to provide 
                      direction and support to a national training and 
                      technical assistance system, in order to provide 
                      such direction and support;
                          ``(ii) providing ongoing training and 
                      technical assistance for regional and program 
                      staff charged with monitoring and overseeing the 
                      administration of the program carried out under 
                      this section;
                          ``(iii) providing ongoing training and 
                      technical assistance for existing recipients (as 
                      of the date of such training or assistance) of 
                      grants under subsection (a) and support and 
                      program planning and implementation assistance for 
                      new recipients of such grants; and
                          ``(iv) providing professional development and 
                      personnel enhancement activities, including the 
                      provision of funds to recipients of grants under 
                      subsection (a) for the recruitment and retention 
                      of qualified staff with an appropriate level of 
                      education and experience.''.

SEC. 114. TECHNICAL ASSISTANCE AND TRAINING.

    (a) In General.--Section 648 of the Head Start Act (42 U.S.C. 9843) 
is amended--
            (1) in subsection (b)--
                    (A) in paragraph (1), by striking ``and'' at the 
                end;
                    (B) in paragraph (2), by striking the period and 
                inserting ``; and''; and
                    (C) by adding at the end the following:
            ``(3) ensure the provision of technical assistance to assist 
        Head Start agencies, entities carrying out other child care and 
        early childhood programs, communities, and States in 
        collaborative efforts to provide quality full-working-day, full 
        calendar year services, including technical assistance related 
        to identifying and assisting in resolving barriers to 
        collaboration.''; and
            (2) in subsection (c)--
                    (A) by amending paragraph (1) to read as follows:
            ``(1) give priority consideration to--
                    ``(A) activities to correct program and management 
                deficiencies identified through reviews carried out 
                pursuant to section 641A(c) (including the provision of 
                assistance to local programs in the development of 
                quality improvement plans under section 641A(d)(2)); and
                    ``(B) assisting Head Start agencies in--
                          ``(i) ensuring the school readiness of 
                      children; and
                          ``(ii) meeting the educational performance 
                      measures described in section 641A(b)(4);'';
                    (B) in paragraph (2), by inserting ``supplement 
                amounts provided under section 640(a)(3)(C)(ii) in order 
                to'' after ``(2)'';
                    (C) in paragraph (4)--
                          (i) by inserting ``and implementing'' after 
                      ``developing''; and
                          (ii) by striking ``a longer day'' and 
                      inserting the following: ``the day, and assist the 
                      agencies and programs in expediting the sharing of 
                      information about innovative models for providing 
                      full-working-day, full calendar year services for 
                      children'';
                    (D) in paragraph (7), by striking ``; and'' and 
                inserting a semicolon;
                    (E) in paragraph (8), by striking the period and 
                inserting ``; and'';
                    (F) by redesignating paragraphs (3) through (8) as 
                paragraphs (5) through (10), respectively;
                    (G) by inserting after paragraph (2) the following:
            ``(3) assist Head Start agencies in the development of 
        collaborative initiatives with States and other entities within 
        the States, to foster effective early childhood professional 
        development systems;
            ``(4) provide technical assistance and training, either 
        directly or through a grant, contract, or cooperative agreement 
        with an entity that has experience in the development and 
        operation of successful family literacy services programs, for 
        the purpose of--
                    ``(A) assisting Head Start agencies providing family 
                literacy services, in order to improve the quality of 
                such family literacy services; and
                    ``(B) enabling those Head Start agencies that 
                demonstrate effective provision of family literacy 
                services, based on improved outcomes for children and 
                their parents, to provide technical assistance and 
                training to other Head Start agencies and to service 
                providers that work in collaboration with such agencies 
                to provide family literacy services;''; and
                    (H) by adding at the end the following:
            ``(11) provide support for Head Start agencies (including 
        policy councils and policy committees, as defined in regulation) 
        that meet the standards described in section 641A(a) but that 
        have, as documented by the Secretary through reviews conducted 
        pursuant to section 641A(c), significant programmatic, quality, 
        and fiscal issues to address.''.

    (b) Services.--Section 648(e) of the Head Start Act (42 U.S.C. 
9843(e)) is amended by inserting ``(including services to promote the 
acquisition of the English language)'' after ``non-English language 
background children''.

SEC. 115. PROFESSIONAL REQUIREMENTS.

    Section 648A of the Head Start Act (42 U.S.C. 9843a) is amended--
            (1) by amending subsection (a) to read as follows:

    ``(a) Classroom Teachers.--
            ``(1) Professional requirements.--The Secretary shall ensure 
        that each Head Start classroom in a center-based program is 
        assigned one teacher who has demonstrated competency to perform 
        functions that include--
                    ``(A) planning and implementing learning experiences 
                that advance the intellectual and physical development 
                of children, including improving the readiness of 
                children for school by developing their literacy and 
                phonemic, print, and numeracy awareness, their 
                understanding and use of language, their understanding 
                and use of increasingly complex and varied vocabulary, 
                their appreciation of books, and their problem solving 
                abilities;
                    ``(B) establishing and maintaining a safe, healthy 
                learning environment;
                    ``(C) supporting the social and emotional 
                development of children; and
                    ``(D) encouraging the involvement of the families of 
                the children in a Head Start program and supporting the 
                development of relationships between children and their 
                families.
            ``(2) Degree requirements.--
                    ``(A) <<NOTE: Deadline.>> In general.--The Secretary 
                shall ensure that not later than September 30, 2003, at 
                least 50 percent of all Head Start teachers nationwide 
                in center-based programs have--
                          ``(i) an associate, baccalaureate, or advanced 
                      degree in early childhood education; or
                          ``(ii) an associate, baccalaureate, or 
                      advanced degree in a field related to early 
                      childhood education, with experience in teaching 
                      preschool children.
                    ``(B) Progress.--The Secretary shall require Head 
                Start agencies to demonstrate continuing progress each 
                year to reach the result described in subparagraph (A).
            ``(3) Alternative credentialing requirements.--The Secretary 
        shall ensure that, for center-based programs, each Head Start 
        classroom that does not have a teacher that meets the 
        requirements of clause (i) or (ii) of paragraph (2)(A) is 
        assigned one teacher who has--
                    ``(A) a child development associate credential that 
                is appropriate to the age of the children being served 
                in center-based programs;
                    ``(B) a State-awarded certificate for preschool 
                teachers that meets or exceeds the requirements for a 
                child development associate credential; or
                    ``(C) a degree in a field related to early childhood 
                education with experience in teaching preschool children 
                and a State-awarded certificate to teach in a preschool 
                program.
            ``(4) Waiver.--
                    ``(A) In general.--On request, the Secretary shall 
                grant a 180-day waiver of the requirements of paragraph 
                (3), for a Head Start agency that can demonstrate that 
                the agency has unsuccessfully attempted to recruit an 
                individual who has a credential, certificate, or degree 
                described in paragraph (3), with respect to an 
                individual who--
                          ``(i) is enrolled in a program that grants any 
                      such credential, certificate, or degree; and
                          ``(ii) will receive such credential, 
                      certificate, or degree under the terms of such 
                      program not later than 180 days after beginning 
                      employment as a teacher with such agency.
                    ``(B) Limitation.--The Secretary may not grant more 
                than one such waiver with respect to such individual.''; 
                and
            (2) in subsection (b)(2)(B)--
                    (A) by striking ``staff,'' and inserting ``staff 
                or''; and
                    (B) by striking ``, or that'' and all that follows 
                through ``families''.

SEC. 116. RESEARCH AND EVALUATION.

    Section 649 of the Head Start Act (42 U.S.C. 9844) is amended--
            (1) in subsection (d)--
                    (A) in paragraph (6), by striking ``and'' at the 
                end;
                    (B) in paragraph (7), by striking the period at the 
                end and inserting a semicolon;
                    (C) by redesignating paragraphs (2) through (7) as 
                paragraphs (3) through (8), respectively;
                    (D) by inserting after paragraph (1) the following:
            ``(2) establish evaluation methods that measure the 
        effectiveness and impact of family literacy services program 
        models, including models for the integration of family literacy 
        services with Head Start services;''; and
                    (E) by adding at the end the following:
            ``(9) study the experiences of small, medium, and large 
        States with Head Start programs in order to permit comparisons 
        of children participating in the programs with eligible children 
        who did not participate in the programs, which study--
                    ``(A) may include the use of a data set that existed 
                prior to the initiation of the study; and
                    ``(B) shall compare the educational achievement, 
                social adaptation, and health status of the 
                participating children and the eligible nonparticipating 
                children; and
            ``(10) provide for--
                    ``(A) using the Survey of Income and Program 
                Participation to conduct an analysis of the different 
                income levels of Head Start participants compared to 
                comparable persons who did not attend Head Start 
                programs;
                    ``(B) using the National Longitudinal Survey of 
                Youth, which began gathering data in 1988 on children 
                who attended Head Start programs, to examine the wide 
                range of outcomes measured within the Survey, including 
                outcomes related to cognitive, socio-emotional, 
                behavioral, and academic development;
                    ``(C) using the Survey of Program Dynamics, the new 
                longitudinal survey required by section 414 of the 
                Social Security Act (42 U.S.C. 614), to begin annual 
                reporting, through the duration of the Survey, on Head 
                Start program attendees' academic readiness performance 
                and improvements;
                    ``(D) ensuring that the Survey of Program Dynamics 
                is linked with the National Longitudinal Survey of Youth 
                at least once by the use of a common performance test, 
                to be determined by the expert panel, for the greater 
                national usefulness of the National Longitudinal Survey 
                of Youth database; and
                    ``(E) disseminating the results of the analysis, 
                examination, reporting, and linkage described in 
                subparagraphs (A) through (D) to persons conducting 
                other studies under this subchapter.

The <<NOTE: Reports.>> Secretary shall ensure that an appropriate entity 
carries out a study described in paragraph (9), and prepares and submits 
to the appropriate committees of Congress a report containing the 
results of the study, not later than September 30, 2002.''; and
            (2) by adding at the end the following:

    ``(g) National Head Start Impact Research.--
            ``(1) Expert panel.--
                    ``(A) In general.--The Secretary shall appoint an 
                independent panel consisting of experts in program 
                evaluation and research, education, and early childhood 
                programs--
                          ``(i) to review, and make recommendations on, 
                      the design and plan for the research (whether 
                      conducted as a single assessment or as a series of 
                      assessments) described in paragraph (2), within 1 
                      year after the date of enactment of the Coats 
                      Human Services Reauthorization Act of 1998;
                          ``(ii) to maintain and advise the Secretary 
                      regarding the progress of the research; and
                          ``(iii) to comment, if the panel so desires, 
                      on the interim and final research reports 
                      submitted under paragraph (7).
                    ``(B) Travel expenses.--The members of the panel 
                shall not receive compensation for the performance of 
                services for the panel, but shall be allowed travel 
                expenses, including per diem in lieu of subsistence, at 
                rates authorized for employees of agencies under 
                subchapter I of chapter 57 of title 5, United States 
                Code, while away from their homes or regular places of 
                business in the performance of services for the panel. 
                Notwithstanding section 1342 of title 31, United States 
                Code, the Secretary may accept the voluntary and 
                uncompensated services of members of the panel.
            ``(2) <<NOTE: Contracts.>> General authority.--After 
        reviewing the recommendations of the expert panel, the Secretary 
        shall make a grant to, or enter into a contract or cooperative 
        agreement with, an organization to conduct independent research 
        that provides a national analysis of the impact of Head Start 
        programs. The Secretary shall ensure that the organization shall 
        have expertise in program evaluation, and research, education, 
        and early childhood programs.
            ``(3) Designs and techniques.--The Secretary shall ensure 
        that the research uses rigorous methodological designs and 
        techniques (based on the recommendations of the expert panel), 
        including longitudinal designs, control groups, nationally 
        recognized standardized measures, and random selection and 
        assignment, as appropriate. The Secretary may provide that the 
        research shall be conducted as a single comprehensive assessment 
        or as a group of coordinated assessments designed to provide, 
        when taken together, a national analysis of the impact of Head 
        Start programs.
            ``(4) Programs.--The Secretary shall ensure that the 
        research focuses primarily on Head Start programs that operate 
        in the 50 States, the Commonwealth of Puerto Rico, or the 
        District of Columbia and that do not specifically target special 
        populations.
            ``(5) Analysis.--The Secretary shall ensure that the 
        organization conducting the research--
                    ``(A)(i) determines if, overall, the Head Start 
                programs have impacts consistent with their primary goal 
                of increasing the social competence of children, by 
                increasing the everyday effectiveness of the children in 
                dealing with their present environments and future 
                responsibilities, and increasing their school readiness;
                    ``(ii) considers whether the Head Start programs--
                          ``(I) enhance the growth and development of 
                      children in cognitive, emotional, and physical 
                      health areas;
                          ``(II) strengthen families as the primary 
                      nurturers of their children; and
                          ``(III) ensure that children attain school 
                      readiness; and
                    ``(iii) examines--
                          ``(I) the impact of the Head Start programs on 
                      increasing access of children to such services as 
                      educational, health, and nutritional services, and 
                      linking children and families to needed community 
                      services; and
                          ``(II) how receipt of services described in 
                      subclause (I) enriches the lives of children and 
                      families participating in Head Start programs;
                    ``(B) examines the impact of Head Start programs on 
                participants on the date the participants leave Head 
                Start programs, at the end of kindergarten and at the 
                end of first grade (whether in public or private 
                school), by examining a variety of factors, including 
                educational achievement, referrals for special education 
                or remedial course work, and absenteeism;
                    ``(C) makes use of random selection from the 
                population of all Head Start programs described in 
                paragraph (4) in selecting programs for inclusion in the 
                research; and
                    ``(D) includes comparisons of individuals who 
                participate in Head Start programs with control groups 
                (including comparison groups) composed of--
                          ``(i) individuals who participate in other 
                      early childhood programs (such as public or 
                      private preschool programs and day care); and
                          ``(ii) individuals who do not participate in 
                      any other early childhood program.
            ``(6) Consideration of sources of variation.--In designing 
        the research, the Secretary shall, to the extent practicable, 
        consider addressing possible sources of variation in impact of 
        Head Start programs, including variations in impact related to 
        such factors as--
                    ``(A) Head Start program operations;
                    ``(B) Head Start program quality;
                    ``(C) the length of time a child attends a Head 
                Start program;
                    ``(D) the age of the child on entering the Head 
                Start program;
                    ``(E) the type of organization (such as a local 
                educational agency or a community action agency) 
                providing services for the Head Start program;
                    ``(F) the number of hours and days of program 
                operation of the Head Start program (such as whether the 
                program is a full-working-day, full calendar year 
                program, a part-day program, or a part-year program); 
                and
                    ``(G) other characteristics and features of the Head 
                Start program (such as geographic location, location in 
                an urban or a rural service area, or participant 
                characteristics), as appropriate.
            ``(7) Reports.--
                    ``(A) Submission of interim reports.--The 
                organization shall prepare and submit to the Secretary 
                two interim reports on the research. The first interim 
                report shall describe the design of the research, and 
                the rationale for the design, including a description of 
                how potential sources of variation in impact of Head 
                Start programs have been considered in designing the 
                research. The second interim report shall describe the 
                status of the research and preliminary findings of the 
                research, as appropriate.
                    ``(B) Submission of final report.--The organization 
                shall prepare and submit to the Secretary a final report 
                containing the findings of the research.
                    ``(C) Transmittal of reports to congress.--
                          ``(i) In general.--The Secretary shall 
                      transmit, to the committees described in clause 
                      (ii), the first interim report by September 30, 
                      1999, the second interim report by September 30, 
                      2001, and the final report by September 30, 2003.
                          ``(ii) Committees.--The committees referred to 
                      in clause (i) are the Committee on Education and 
                      the Workforce of the House of Representatives and 
                      the Committee on Labor and Human Resources of the 
                      Senate.
            ``(8) Definition.--In this subsection, the term `impact', 
        used with respect to a Head Start program, means a difference in 
        an outcome for a participant in the program that would not have 
        occurred without the participation in the program.

    ``(h) Quality Improvement Study.--
            ``(1) Study.--The Secretary shall conduct a study regarding 
        the use and effects of use of the quality improvement funds made 
        available under section 640(a)(3) since fiscal year 1991.
            ``(2) <<NOTE: Deadline.>> Report.--The Secretary shall 
        prepare and submit to Congress not later than September 2000 a 
        report containing the results of the study, including 
        information on--
                    ``(A) the types of activities funded with the 
                quality improvement funds;
                    ``(B) the extent to which the use of the quality 
                improvement funds has accomplished the goals of section 
                640(a)(3)(B);
                    ``(C) the effect of use of the quality improvement 
                funds on teacher training, salaries, benefits, 
                recruitment, and retention; and
                    ``(D) the effect of use of the quality improvement 
                funds on the development of children receiving services 
                under this subchapter.''.

SEC. 117. REPORTS.

    Section 650 of the Head Start Act (42 U.S.C. 9846) is amended--
            (1) by inserting ``(a) Status of Children.--'' before 
        ``At'';
            (2) by striking ``and Labor'' each place it appears and 
        inserting ``and the Workforce''; and
            (3) by adding at the end the following:

    ``(b) Facilities.--At least once during every 5-year period, the 
Secretary shall prepare and submit, to the Committee on Education and 
the Workforce of the House of Representatives and the Committee on Labor 
and Human Resources of the Senate, a report concerning the condition, 
location, and ownership of facilities used, or available to be used, by 
Indian Head Start agencies (including Native Alaskan Head Start 
agencies) and Native Hawaiian Head Start agencies.''.

SEC. 118. REPEAL OF CONSULTATION REQUIREMENT.

    Section 657A of the Head Start Act (42 U.S.C. 9852a) is repealed.

SEC. 119. REPEAL OF HEAD START TRANSITION PROJECT ACT. <<NOTE: 42 USC 
            9801 note.>> 

    The Head Start Transition Project Act (42 U.S.C. 9855-9855g) is 
repealed.

            TITLE II--COMMUNITY SERVICES BLOCK GRANT PROGRAM

SEC. 201. REAUTHORIZATION.

    The Community Services Block Grant Act (42 U.S.C. 9901 et seq.) is 
amended to read as follows:

``Subtitle B--Community Services <<NOTE: Community Services Block Grant 
Act.>>  Block Grant Program

``SEC. 671. SHORT TITLE. <<NOTE: 42 USC 9901 note.>> 

    ``This subtitle may be cited as the `Community Services Block Grant 
Act'.

``SEC. 672. PURPOSES AND GOALS. <<NOTE: 42 USC 9901.>> 

    ``The purposes of this subtitle are--
            ``(1) to provide assistance to States and local communities, 
        working through a network of community action agencies and other 
        neighborhood-based organizations, for the reduction of poverty, 
        the revitalization of low-income communities, and the 
        empowerment of low-income families and individuals in rural and 
        urban areas to become fully self-sufficient (particularly 
        families who are attempting to transition off a State program 
        carried out under part A of title IV of the Social Security Act 
        (42 U.S.C. 601 et seq.)); and
            ``(2) to accomplish the goals described in paragraph (1) 
        through--
                    ``(A) the strengthening of community capabilities 
                for planning and coordinating the use of a broad range 
                of Federal, State, local, and other assistance 
                (including private resources) related to the elimination 
                of poverty, so that this assistance can be used in a 
                manner responsive to local needs and conditions;
                    ``(B) the organization of a range of services 
                related to the needs of low-income families and 
                individuals, so that these services may have a 
                measurable and potentially major impact on the causes of 
                poverty in the community and may help the families and 
                individuals to achieve self-sufficiency;
                    ``(C) the greater use of innovative and effective 
                community-based approaches to attacking the causes and 
                effects of poverty and of community breakdown;
                    ``(D) the maximum participation of residents of the 
                low-income communities and members of the groups served 
                by programs assisted through the block grants made under 
                this subtitle to empower such residents and members to 
                respond to the unique problems and needs within their 
                communities; and
                    ``(E) the broadening of the resource base of 
                programs directed to the elimination of poverty so as to 
                secure a more active role in the provision of services 
                for--
                          ``(i) private, religious, charitable, and 
                      neighborhood-based organizations; and
                          ``(ii) individual citizens, and business, 
                      labor, and professional groups, who are able to 
                      influence the quantity and quality of 
                      opportunities and services for the poor.

``SEC. 673. DEFINITIONS. <<NOTE: 42 USC 9902.>> 

    ``In this subtitle:
            ``(1) Eligible entity; family literacy services.--
                    ``(A) Eligible entity.--The term `eligible entity' 
                means an entity--
                          ``(i) that is an eligible entity described in 
                      section 673(1) (as in effect on the day before the 
                      date of enactment of the Coats Human Services 
                      Reauthorization Act of 1998) as of the day before 
                      such date of enactment or is designated by the 
                      process described in section 676A (including an 
                      organization serving migrant or seasonal 
                      farmworkers that is so described or designated); 
                      and
                          ``(ii) that has a tripartite board or other 
                      mechanism described in subsection (a) or (b), as 
                      appropriate, of section 676B.
                    ``(B) Family literacy services.--The term `family 
                literacy services' has the meaning given the term in 
                section 637 of the Head Start Act (42 U.S.C. 9832).
            ``(2) Poverty line.--The term `poverty line' means the 
        official poverty line defined by the Office of Management and 
        Budget based on the most recent data available from the Bureau 
        of the Census. The Secretary shall revise annually (or at any 
        shorter interval the Secretary determines to be feasible and 
        desirable) the poverty line, which shall be used as a criterion 
        of eligibility in the community services block grant program 
        established under this subtitle. The required revision shall be 
        accomplished by multiplying the official poverty line by the 
        percentage change in the Consumer Price Index for All Urban 
        Consumers during the annual or other interval immediately 
        preceding the time at which the revision is made. Whenever a 
        State determines that it serves the objectives of the block 
        grant program established under this subtitle, the State may 
        revise the poverty line to not to exceed 125 percent of the 
        official poverty line otherwise applicable under this paragraph.
            ``(3) Private, nonprofit organization.--The term `private, 
        nonprofit organization' includes a religious organization, to 
        which the provisions of section 679 shall apply.
            ``(4) Secretary.--The term `Secretary' means the Secretary 
        of Health and Human Services.
            ``(5) State.--The term `State' means each of the several 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, Guam, the United States Virgin Islands, American Samoa, 
        and the Commonwealth of the Northern Mariana Islands.

``SEC. 674. AUTHORIZATION OF APPROPRIATIONS. <<NOTE: 42 USC 9903.>> 

    ``(a) In General.--There are authorized to be appropriated such sums 
as may be necessary for each of fiscal years 1999 through 2003 to carry 
out the provisions of this subtitle (other than sections 681 and 682).
    ``(b) Reservations.--Of the amounts appropriated under subsection 
(a) for each fiscal year, the Secretary shall reserve--
            ``(1) \1/2\ of 1 percent for carrying out section 675A 
        (relating to payments for territories);
            ``(2) 1\1/2\ percent for activities authorized in sections 
        678A through 678F, of which--
                    ``(A) not less than \1/2\ of the amount reserved by 
                the Secretary under this paragraph shall be distributed 
                directly to eligible entities, organizations, or 
                associations described in section 678A(c)(2) for the 
                purpose of carrying out activities described in section 
                678A(c); and
                    ``(B) \1/2\ of the remainder of the amount reserved 
                by the Secretary under this paragraph shall be used by 
                the Secretary to carry out evaluation and to assist 
                States in carrying out corrective action activities and 
                monitoring (to correct programmatic deficiencies of 
                eligible entities), as described in sections 678B(c) and 
                678A; and
            ``(3) 9 percent for carrying out section 680 (relating to 
        discretionary activities) and section 678E(b)(2).

``SEC. 675. ESTABLISHMENT OF BLOCK GRANT PROGRAM. <<NOTE: 42 USC 
            9904.>> 

    ``The Secretary is authorized to establish a community services 
block grant program and make grants through the program to States to 
ameliorate the causes of poverty in communities within the States.

``SEC. 675A. DISTRIBUTION TO TERRITORIES. <<NOTE: 42 USC 9905.>> 

    ``(a) Apportionment.--The Secretary shall apportion the amount 
reserved under section 674(b)(1) for each fiscal year on the basis of 
need among Guam, American Samoa, the United States Virgin Islands, and 
the Commonwealth of the Northern Mariana Islands.
    ``(b) Application.--Each jurisdiction to which subsection (a) 
applies may receive a grant under this section for the amount 
apportioned under subsection (a) on submitting to the Secretary, and 
obtaining approval of, an application, containing provisions that 
describe the programs for which assistance is sought under this section, 
that is prepared in accordance with, and contains the information 
described in, section 676.

``SEC. 675B. ALLOTMENTS AND PAYMENTS TO STATES. <<NOTE: 42 USC 9906.>> 

    ``(a) Allotments in General.--The Secretary shall, from the amount 
appropriated under section 674(a) for each fiscal year that remains 
after the Secretary makes the reservations required in section 674(b), 
allot to each State (subject to section 677) an amount that bears the 
same ratio to such remaining amount as the amount received by the State 
for fiscal year 1981 under section 221 of the Economic Opportunity Act 
of 1964 bore to the total amount received by all States for fiscal year 
1981 under such section, except--
            ``(1) that no State shall receive less than \1/4\ of 1 
        percent of the amount appropriated under section 674(a) for such 
        fiscal year; and
            ``(2) as provided in subsection (b).

    ``(b) Allotments in Years With Greater Available Funds.--
            ``(1) Minimum allotments.--Subject to paragraphs (2) and 
        (3), if the amount appropriated under section 674(a) for a 
        fiscal year that remains after the Secretary makes the 
        reservations required in section 674(b) exceeds $345,000,000, 
        the Secretary shall allot to each State not less than \1/2\ of 1 
        percent of the amount appropriated under section 674(a) for such 
        fiscal year.
            ``(2) Maintenance of fiscal year 1990 levels.--Paragraph (1) 
        shall not apply with respect to a fiscal year if the amount 
        allotted under subsection (a) to any State for that year is less 
        than the amount allotted under section 674(a)(1) (as in effect 
        on September 30, 1989) to such State for fiscal year 1990.
            ``(3) Maximum allotments.--The amount allotted under 
        paragraph (1) to a State for a fiscal year shall be reduced, if 
        necessary, so that the aggregate amount allotted to such State 
        under such paragraph and subsection (a) does not exceed 140 
        percent of the aggregate amount allotted to such State under the 
        corresponding provisions of this subtitle for the preceding 
        fiscal year.

    ``(c) Payments.--The Secretary shall make grants to eligible States 
for the allotments described in subsections (a) and (b). The Secretary 
shall make payments for the grants in accordance with section 6503(a) of 
title 31, United States Code.
    ``(d) Definition.--In this section, the term `State' does not 
include Guam, American Samoa, the United States Virgin Islands, and the 
Commonwealth of the Northern Mariana Islands.

``SEC. 675C. USES OF FUNDS. <<NOTE: 42 USC 9907.>> 

    ``(a) Grants to Eligible Entities and Other Organizations.--
            ``(1) In general.--Not less than 90 percent of the funds 
        made available to a State under section 675A or 675B shall be 
        used by the State to make grants for the purposes described in 
        section 672 to eligible entities.
            ``(2) Obligational authority.--Funds distributed to eligible 
        entities through grants made in accordance with paragraph (1) 
        for a fiscal year shall be available for obligation during that 
        fiscal year and the succeeding fiscal year, subject to paragraph 
        (3).
            ``(3) Recapture and redistribution of unobligated funds.--
                    ``(A) Amount.--Beginning on October 1, 2000, a State 
                may recapture and redistribute funds distributed to an 
                eligible entity through a grant made under paragraph (1) 
                that are unobligated at the end of a fiscal year if such 
                unobligated funds exceed 20 percent of the amount so 
                distributed to such eligible entity for such fiscal 
                year.
                    ``(B) Redistribution.--In redistributing funds 
                recaptured in accordance with this paragraph, States 
                shall redistribute such funds to an eligible entity, or 
                require the original recipient of the funds to 
                redistribute the funds to a private, nonprofit 
                organization, located within the community served by the 
                original recipient of the funds, for activities 
                consistent with the purposes of this subtitle.

    ``(b) Statewide Activities.--
            ``(1) Use of remainder.--If a State uses less than 100 
        percent of the grant or allotment received under section 675A or 
        675B to make grants under subsection (a), the State shall use 
        the remainder of the grant or allotment under section 675A or 
        675B (subject to paragraph (2)) for activities that may 
        include--
                    ``(A) providing training and technical assistance to 
                those entities in need of such training and assistance;
                    ``(B) coordinating State-operated programs and 
                services, and at the option of the State, locally-
                operated programs and services, targeted to low-income 
                children and families with services provided by eligible 
                entities and other organizations funded under this 
                subtitle, including detailing appropriate employees of 
                State or local agencies to entities funded under this 
                subtitle, to ensure increased access to services 
                provided by such State or local agencies;
                    ``(C) supporting statewide coordination and 
                communication among eligible entities;
                    ``(D) analyzing the distribution of funds made 
                available under this subtitle within the State to 
                determine if such funds have been targeted to the areas 
                of greatest need;
                    ``(E) supporting asset-building programs for low-
                income individuals, such as programs supporting 
                individual development accounts;
                    ``(F) supporting innovative programs and activities 
                conducted by community action agencies or other 
                neighborhood-based organizations to eliminate poverty, 
                promote self-sufficiency, and promote community 
                revitalization;
                    ``(G) supporting State charity tax credits as 
                described in subsection (c); and
                    ``(H) supporting other activities, consistent with 
                the purposes of this subtitle.
            ``(2) Administrative cap.--No State may spend more than the 
        greater of $55,000, or 5 percent, of the grant received under 
        section 675A or State allotment received under section 675B for 
        administrative expenses, including monitoring activities. Funds 
        to be spent for such expenses shall be taken from the portion of 
        the grant under section 675A or State allotment that remains 
        after the State makes grants to eligible entities under 
        subsection (a). The cost of activities conducted under paragraph 
        (1)(A) shall not be considered to be administrative expenses. 
        The startup cost and cost of administrative activities conducted 
        under subsection (c) shall be considered to be administrative 
        expenses.

    ``(c) Charity Tax Credit.--
            ``(1) In general.--Subject to paragraph (2), if there is in 
        effect under State law a charity tax credit, the State may use 
        for any purpose the amount of the allotment that is available 
        for expenditure under subsection (b).
            ``(2) Limit.--The aggregate amount a State may use under 
        paragraph (1) during a fiscal year shall not exceed 100 percent 
        of the revenue loss of the State during the fiscal year that is 
        attributable to the charity tax credit, as determined by the 
        Secretary of the Treasury without regard to any such revenue 
        loss occurring before January 1, 1999.
            ``(3) Definitions and rules.--In this subsection:
                    ``(A) Charity tax credit.--The term `charity tax 
                credit' means a nonrefundable credit against State 
                income tax (or, in the case of a State that does not 
                impose an income tax, a comparable benefit) that is 
                allowable for contributions, in cash or in kind, to 
                qualified charities.
                    ``(B) Qualified charity.--
                          ``(i) In general.--The term `qualified 
                      charity' means any organization--
                                    ``(I) that is--
                                            ``(aa) described in section 
                                        501(c)(3) of the Internal 
                                        Revenue Code of 1986 and exempt 
                                        from tax under section 501(a) of 
                                        such Code;
                                            ``(bb) an eligible entity; 
                                        or
                                            ``(cc) a public housing 
                                        agency as defined in section 
                                        3(b)(6) of the United States 
                                        Housing Act of 1937 (42 U.S.C. 
                                        1437a(b)(6));
                                    ``(II) that is certified by the 
                                appropriate State authority as meeting 
                                the requirements of clauses (iii) and 
                                (iv); and
                                    ``(III) if such organization is 
                                otherwise required to file a return 
                                under section 6033 of such Code, that 
                                elects to treat the information required 
                                to be furnished by clause (v) as being 
                                specified in section 6033(b) of such 
                                Code.
                          ``(ii) Certain contributions to collection 
                      organizations treated as contributions to 
                      qualified charity.--
                                    ``(I) In general.--A contribution to 
                                a collection organization shall be 
                                treated as a contribution to a qualified 
                                charity if the donor designates in 
                                writing that the contribution is for the 
                                qualified charity.
                                    ``(II) Collection organization.--The 
                                term `collection organization' means an 
                                organization described in section 
                                501(c)(3) of such Code and exempt from 
                                tax under section 501(a) of such Code--
                                            ``(aa) that solicits and 
                                        collects gifts and grants that, 
                                        by agreement, are distributed to 
                                        qualified charities;
                                            ``(bb) that distributes to 
                                        qualified charities at least 90 
                                        percent of the gifts and grants 
                                        the organization receives that 
                                        are designated for such 
                                        qualified charities; and
                                            ``(cc) that meets the 
                                        requirements of clause (vi).
                          ``(iii) Charity must primarily assist poor 
                      individuals.--
                                    ``(I) In general.--An organization 
                                meets the requirements of this clause 
                                only if the appropriate State authority 
                                reasonably expects that the predominant 
                                activity of such organization will be 
                                the provision of direct services within 
                                the United States to individuals and 
                                families whose annual incomes generally 
                                do not exceed 185 percent of the poverty 
                                line in order to prevent or alleviate 
                                poverty among such individuals and 
                                families.
                                    ``(II) No recordkeeping in certain 
                                cases.--An organization shall not be 
                                required to establish or maintain 
                                records with respect to the incomes of 
                                individuals and families for purposes of 
                                subclause (I) if such individuals or 
                                families are members of groups that are 
                                generally recognized as including 
                                substantially only individuals and 
                                families described in subclause (I).
                                    ``(III) Food aid and homeless 
                                shelters.--Except as otherwise provided 
                                by the appropriate State authority, for 
                                purposes of subclause (I), services to 
                                individuals in the form of--
                                            ``(aa) donations of food or 
                                        meals; or
                                            ``(bb) temporary shelter to 
                                        homeless individuals;
                                shall be treated as provided to 
                                individuals described in subclause (I) 
                                if the location and provision of such 
                                services are such that the service 
                                provider may reasonably conclude that 
                                the beneficiaries of such services are 
                                predominantly individuals described in 
                                subclause (I).
                          ``(iv) Minimum expense requirement.--
                                    ``(I) In general.--An organization 
                                meets the requirements of this clause 
                                only if the appropriate State authority 
                                reasonably expects that the annual 
                                poverty program expenses of such 
                                organization will not be less than 75 
                                percent of the annual aggregate expenses 
                                of such organization.
                                    ``(II) Poverty program expense.--For 
                                purposes of subclause (I)--
                                            ``(aa) In general.--The term 
                                        `poverty program expense' means 
                                        any expense in providing direct 
                                        services referred to in clause 
                                        (iii).
                                            ``(bb) Exceptions.--Such 
                                        term shall not include any 
                                        management or general expense, 
                                        any expense for the purpose of 
                                        influencing legislation (as 
                                        defined in section 4911(d) of 
                                        the Internal Revenue Code of 
                                        1986), any expense for the 
                                        purpose of fundraising, any 
                                        expense for a legal service 
                                        provided on behalf of any 
                                        individual referred to in clause 
                                        (iii), any expense for providing 
                                        tuition assistance relating to 
                                        compulsory school attendance, 
                                        and any expense that consists of 
                                        a payment to an affiliate of the 
                                        organization.
                          ``(v) Reporting requirement.--The information 
                      required to be furnished under this clause about 
                      an organization is--
                                    ``(I) the percentages determined by 
                                dividing the following categories of the 
                                organization's expenses for the year by 
                                the total expenses of the organization 
                                for the year: expenses for direct 
                                services, management expenses, general 
                                expenses, fundraising expenses, and 
                                payments to affiliates; and
                                    ``(II) the category or categories 
                                (including food, shelter, education, 
                                substance abuse prevention or treatment, 
                                job training, or other) of services that 
                                constitute predominant activities of the 
                                organization.
                          ``(vi) Additional requirements for collection 
                      organizations.--The requirements of this clause 
                      are met if the organization--
                                    ``(I) maintains separate accounting 
                                for revenues and expenses; and
                                    ``(II) makes available to the public 
                                information on the administrative and 
                                fundraising costs of the organization, 
                                and information as to the organizations 
                                receiving funds from the organization 
                                and the amount of such funds.
                          ``(vii) Special rule for states requiring tax 
                      uniformity.--In the case of a State--
                                    ``(I) that has a constitutional 
                                requirement of tax uniformity; and
                                    ``(II) that, as of December 31, 
                                1997, imposed a tax on personal income 
                                with--
                                            ``(aa) a single flat rate 
                                        applicable to all earned and 
                                        unearned income (except insofar 
                                        as any amount is not taxed 
                                        pursuant to tax forgiveness 
                                        provisions); and
                                            ``(bb) no generally 
                                        available exemptions or 
                                        deductions to individuals;
                      the requirement of paragraph (2) shall be treated 
                      as met if the amount of the credit described in 
                      paragraph (2) is limited to a uniform percentage 
                      (but not greater than 25 percent) of State 
                      personal income tax liability (determined without 
                      regard to credits).
            ``(4) Limitation on use of funds for startup and 
        administrative activities.--Except to the extent provided in 
        subsection (b)(2), no part of the aggregate amount a State uses 
        under paragraph (1) may be used to pay for the cost of the 
        startup and administrative activities conducted under this 
        subsection.
            ``(5) Prohibition on use of funds for legal services or 
        tuition assistance.--No part of the aggregate amount a State 
        uses under paragraph (1) may be used to provide legal services 
        or to provide tuition assistance related to compulsory education 
        requirements (not including tuition assistance for tutoring, 
        camps, skills development, or other supplemental services or 
        training).
            ``(6) Prohibition on supplanting funds.--No part of the 
        aggregate amount a State uses under paragraph (1) may be used to 
        supplant non-Federal funds that would be available, in the 
        absence of Federal funds, to offset a revenue loss of the State 
        attributable to a charity tax credit.

``SEC. 676. APPLICATION AND PLAN. <<NOTE: 42 USC 9908.>> 

    ``(a) Designation of Lead Agency.--
            ``(1) Designation.--The chief executive officer of a State 
        desiring to receive a grant or allotment under section 675A or 
        675B shall designate, in an application submitted to the 
        Secretary under subsection (b), an appropriate State agency that 
        complies with the requirements of paragraph (2) to act as a lead 
        agency for purposes of carrying out State activities under this 
        subtitle.
            ``(2) Duties.--The lead agency shall--
                    ``(A) develop the State plan to be submitted to the 
                Secretary under subsection (b);
                    ``(B) in conjunction with the development of the 
                State plan as required under subsection (b), hold at 
                least one hearing in the State with sufficient time and 
                statewide distribution of notice of such hearing, to 
                provide to the public an opportunity to comment on the 
                proposed use and distribution of funds to be provided 
                through the grant or allotment under section 675A or 
                675B for the period covered by the State plan; and
                    ``(C) conduct reviews of eligible entities under 
                section 678B.
            ``(3) Legislative hearing.--In order to be eligible to 
        receive a grant or allotment under section 675A or 675B, the 
        State shall hold at least one legislative hearing every 3 years 
        in conjunction with the development of the State plan.

    ``(b) State Application and Plan.--Beginning with fiscal year 2000, 
to be eligible to receive a grant or allotment under section 675A or 
675B, a State shall prepare and submit to the Secretary an application 
and State plan covering a period of not less than 1 fiscal year and not 
more than 2 fiscal years. The plan shall be submitted not later than 30 
days prior to the beginning of the first fiscal year covered by the 
plan, and shall contain such information as the Secretary shall require, 
including--
            ``(1) an assurance that funds made available through the 
        grant or allotment will be used--
                    ``(A) to support activities that are designed to 
                assist low-income families and individuals, including 
                families and individuals receiving assistance under part 
                A of title IV of the Social Security Act (42 U.S.C. 601 
                et seq.), homeless families and individuals, migrant or 
                seasonal farmworkers, and elderly low-income individuals 
                and families, and a description of how such activities 
                will enable the families and individuals--
                          ``(i) to remove obstacles and solve problems 
                      that block the achievement of self-sufficiency 
                      (including self-sufficiency for families and 
                      individuals who are attempting to transition off a 
                      State program carried out under part A of title IV 
                      of the Social Security Act);
                          ``(ii) to secure and retain meaningful 
                      employment;
                          ``(iii) to attain an adequate education, with 
                      particular attention toward improving literacy 
                      skills of the low-income families in the 
                      communities involved, which may include carrying 
                      out family literacy initiatives;
                          ``(iv) to make better use of available income;
                          ``(v) to obtain and maintain adequate housing 
                      and a suitable living environment;
                          ``(vi) to obtain emergency assistance through 
                      loans, grants, or other means to meet immediate 
                      and urgent family and individual needs; and
                          ``(vii) to achieve greater participation in 
                      the affairs of the communities involved, including 
                      the development of public and private grassroots 
                      partnerships with local law enforcement agencies, 
                      local housing authorities, private foundations, 
                      and other public and private partners to--
                                    ``(I) document best practices based 
                                on successful grassroots intervention in 
                                urban areas, to develop methodologies 
                                for widespread replication; and
                                    ``(II) strengthen and improve 
                                relationships with local law enforcement 
                                agencies, which may include 
                                participation in activities such as 
                                neighborhood or community policing 
                                efforts;
                    ``(B) to address the needs of youth in low-income 
                communities through youth development programs that 
                support the primary role of the family, give priority to 
                the prevention of youth problems and crime, and promote 
                increased community coordination and collaboration in 
                meeting the needs of youth, and support development and 
                expansion of innovative community-based youth 
                development programs that have demonstrated success in 
                preventing or reducing youth crime, such as--
                          ``(i) programs for the establishment of 
                      violence-free zones that would involve youth 
                      development and intervention models (such as 
                      models involving youth mediation, youth mentoring, 
                      life skills training, job creation, and 
                      entrepreneurship programs); and
                          ``(ii) after-school child care programs; and
                    ``(C) to make more effective use of, and to 
                coordinate with, other programs related to the purposes 
                of this subtitle (including State welfare reform 
                efforts);
            ``(2) a description of how the State intends to use 
        discretionary funds made available from the remainder of the 
        grant or allotment described in section 675C(b) in accordance 
        with this subtitle, including a description of how the State 
        will support innovative community and neighborhood-based 
        initiatives related to the purposes of this subtitle;
            ``(3) information provided by eligible entities in the 
        State, containing--
                    ``(A) a description of the service delivery system, 
                for services provided or coordinated with funds made 
                available through grants made under section 675C(a), 
                targeted to low-income individuals and families in 
                communities within the State;
                    ``(B) a description of how linkages will be 
                developed to fill identified gaps in the services, 
                through the provision of information, referrals, case 
                management, and followup consultations;
                    ``(C) a description of how funds made available 
                through grants made under section 675C(a) will be 
                coordinated with other public and private resources; and
                    ``(D) a description of how the local entity will use 
                the funds to support innovative community and 
                neighborhood-based initiatives related to the purposes 
                of this subtitle, which may include fatherhood 
                initiatives and other initiatives with the goal of 
                strengthening families and encouraging effective 
                parenting;
            ``(4) an assurance that eligible entities in the State will 
        provide, on an emergency basis, for the provision of such 
        supplies and services, nutritious foods, and related services, 
        as may be necessary to counteract conditions of starvation and 
        malnutrition among low-income individuals;
            ``(5) an assurance that the State and the eligible entities 
        in the State will coordinate, and establish linkages between, 
        governmental and other social services programs to assure the 
        effective delivery of such services to low-income individuals 
        and to avoid duplication of such services, and a description of 
        how the State and the eligible entities will coordinate the 
        provision of employment and training activities, as defined in 
        section 101 of such Act, in the State and in communities with 
        entities providing activities through statewide and local 
        workforce investment systems under the Workforce Investment Act 
        of 1998;
            ``(6) an assurance that the State will ensure coordination 
        between antipoverty programs in each community in the State, and 
        ensure, where appropriate, that emergency energy crisis 
        intervention programs under title XXVI (relating to low-income 
        home energy assistance) are conducted in such community;
            ``(7) an assurance that the State will permit and cooperate 
        with Federal investigations undertaken in accordance with 
        section 678D;
            ``(8) an assurance that any eligible entity in the State 
        that received funding in the previous fiscal year through a 
        community services block grant made under this subtitle will not 
        have its funding terminated under this subtitle, or reduced 
        below the proportional share of funding the entity received in 
        the previous fiscal year unless, after providing notice and an 
        opportunity for a hearing on the record, the State determines 
        that cause exists for such termination or such reduction, 
        subject to review by the Secretary as provided in section 
        678C(b);
            ``(9) an assurance that the State and eligible entities in 
        the State will, to the maximum extent possible, coordinate 
        programs with and form partnerships with other organizations 
        serving low-income residents of the communities and members of 
        the groups served by the State, including religious 
        organizations, charitable groups, and community organizations;
            ``(10) an assurance that the State will require each 
        eligible entity in the State to establish procedures under which 
        a low-income individual, community organization, or religious 
        organization, or representative of low-income individuals that 
        considers its organization, or low-income individuals, to be 
        inadequately represented on the board (or other mechanism) of 
        the eligible entity to petition for adequate representation;
            ``(11) an assurance that the State will secure from each 
        eligible entity in the State, as a condition to receipt of 
        funding by the entity through a community services block grant 
        made under this subtitle for a program, a community action plan 
        (which shall be submitted to the Secretary, at the request of 
        the Secretary, with the State plan) that includes a community-
        needs assessment for the community served, which may be 
        coordinated with community-needs assessments conducted for other 
        programs;
            ``(12) an assurance that the State and all eligible entities 
        in the State will, not later than fiscal year 2001, participate 
        in the Results Oriented Management and Accountability System, 
        another performance measure system for which the Secretary 
        facilitated development pursuant to section 678E(b), or an 
        alternative system for measuring performance and results that 
        meets the requirements of that section, and a description of 
        outcome measures to be used to measure eligible entity 
        performance in promoting self-sufficiency, family stability, and 
        community revitalization; and
            ``(13) information describing how the State will carry out 
        the assurances described in this subsection.

    ``(c) Funding Termination or Reductions.--For purposes of making a 
determination in accordance with subsection (b)(8) with respect to--
            ``(1) a funding reduction, the term `cause' includes--
                    ``(A) a statewide redistribution of funds provided 
                through a community services block grant under this 
                subtitle to respond to--
                          ``(i) the results of the most recently 
                      available census or other appropriate data;
                          ``(ii) the designation of a new eligible 
                      entity; or
                          ``(iii) severe economic dislocation; or
                    ``(B) the failure of an eligible entity to comply 
                with the terms of an agreement or a State plan, or to 
                meet a State requirement, as described in section 
                678C(a); and
            ``(2) a termination, the term `cause' includes the failure 
        of an eligible entity to comply with the terms of an agreement 
        or a State plan, or to meet a State requirement, as described in 
        section 678C(a).

    ``(d) Procedures and Information.--The Secretary may prescribe 
procedures for the purpose of assessing the effectiveness of eligible 
entities in carrying out the purposes of this subtitle.
    ``(e) Revisions and Inspection.--
            ``(1) Revisions.--The chief executive officer of each State 
        may revise any plan prepared under this section and shall submit 
        the revised plan to the Secretary.
            ``(2) Public inspection.--Each plan or revised plan prepared 
        under this section shall be made available for public inspection 
        within the State in such a manner as will facilitate review of, 
        and comment on, the plan.

    ``(f) Transition.--For fiscal year 2000, to be eligible to receive a 
grant or allotment under section 675A or 675B, a State shall prepare and 
submit to the Secretary an application and State plan in accordance with 
the provisions of this subtitle (as in effect on the day before the date 
of enactment of the Coats Human Services Reauthorization Act of 1998), 
rather than the provisions of subsections (a) through (c) relating to 
applications and plans.
``SEC. 676A. <<NOTE: 42 USC 9909.>>  DESIGNATION AND REDESIGNATION 
                            OF ELIGIBLE ENTITIES IN UNSERVED 
                            AREAS.

    ``(a) Qualified Organization In or Near Area.--
            ``(1) In general.--If any geographic area of a State is not, 
        or ceases to be, served by an eligible entity under this 
        subtitle, and if the chief executive officer of the State 
        decides to serve such area, the chief executive officer may 
        solicit applications from, and designate as an eligible entity--
                    ``(A) a private nonprofit organization (which may 
                include an eligible entity) that is geographically 
                located in the unserved area, that is capable of 
                providing a broad range of services designed to 
                eliminate poverty and foster self-sufficiency, and that 
                meets the requirements of this subtitle; and
                    ``(B) a private nonprofit eligible entity that is 
                geographically located in an area contiguous to or 
                within reasonable proximity of the unserved area and 
                that is already providing related services in the 
                unserved area.
            ``(2) Requirement.--In order to serve as the eligible entity 
        for the area, an entity described in paragraph (1)(B) shall 
        agree to add additional members to the board of the entity to 
        ensure adequate representation--
                    ``(A) in each of the three required categories 
                described in subparagraphs (A), (B), and (C) of section 
                676B(a)(2), by members that reside in the community 
                comprised by the unserved area; and
                    ``(B) in the category described in section 
                676B(a)(2)(B), by members that reside in the 
                neighborhood to be served.

    ``(b) Special Consideration.--In designating an eligible entity 
under subsection (a), the chief executive officer shall grant the 
designation to an organization of demonstrated effectiveness in meeting 
the goals and purposes of this subtitle and may give priority, in 
granting the designation, to eligible entities that are providing 
related services in the unserved area, consistent with the needs 
identified by a community-needs assessment.
    ``(c) No Qualified Organization in or Near Area.--If no private, 
nonprofit organization is identified or determined to be qualified under 
subsection (a) to serve the unserved area as an eligible entity the 
chief executive officer may designate an appropriate political 
subdivision of the State to serve as an eligible entity for the area. In 
order to serve as the eligible entity for that area, the political 
subdivision shall have a board or other mechanism as required in section 
676B(b).

``SEC. 676B. TRIPARTITE BOARDS. <<NOTE: 42 USC 9910.>> 

    ``(a) Private Nonprofit Entities.--
            ``(1) Board.--In order for a private, nonprofit entity to be 
        considered to be an eligible entity for purposes of section 
        673(1), the entity shall administer the community services block 
        grant program through a tripartite board described in paragraph 
        (2) that fully participates in the development, planning, 
        implementation, and evaluation of the program to serve low-
        income communities.
            ``(2) Selection and composition of board.--The members of 
        the board referred to in paragraph (1) shall be selected by the 
        entity and the board shall be composed so as to assure that--
                    ``(A) \1/3\ of the members of the board are elected 
                public officials, holding office on the date of 
                selection, or their representatives, except that if the 
                number of such elected officials reasonably available 
                and willing to serve on the board is less than \1/3\ of 
                the membership of the board, membership on the board of 
                appointive public officials or their representatives may 
                be counted in meeting such \1/3\ requirement;
                    ``(B)(i) not fewer than \1/3\ of the members are 
                persons chosen in accordance with democratic selection 
                procedures adequate to assure that these members are 
                representative of low-income individuals and families in 
                the neighborhood served; and
                    ``(ii) each representative of low-income individuals 
                and families selected to represent a specific 
                neighborhood within a community under clause (i) resides 
                in the neighborhood represented by the member; and
                    ``(C) the remainder of the members are officials or 
                members of business, industry, labor, religious, law 
                enforcement, education, or other major groups and 
                interests in the community served.

    ``(b) Public Organizations.--In order for a public organization to 
be considered to be an eligible entity for purposes of section 673(1), 
the entity shall administer the community services block grant program 
through--
            ``(1) a tripartite board, which shall have members selected 
        by the organization and shall be composed so as to assure that 
        not fewer than \1/3\ of the members are persons chosen in 
        accordance with democratic selection procedures adequate to 
        assure that these members--
                    ``(A) are representative of low-income individuals 
                and families in the neighborhood served;
                    ``(B) reside in the neighborhood served; and
                    ``(C) are able to participate actively in the 
                development, planning, implementation, and evaluation of 
                programs funded under this subtitle; or
            ``(2) another mechanism specified by the State to assure 
        decisionmaking and participation by low-income individuals in 
        the development, planning, implementation, and evaluation of 
        programs funded under this subtitle.

``SEC. 677. PAYMENTS TO INDIAN TRIBES. <<NOTE: 42 USC 9911.>> 

    ``(a) Reservation.--If, with respect to any State, the Secretary--
            ``(1) receives a request from the governing body of an 
        Indian tribe or tribal organization within the State that 
        assistance under this subtitle be made directly to such tribe or 
        organization; and
            ``(2) determines that the members of such tribe or tribal 
        organization would be better served by means of grants made 
        directly to provide benefits under this subtitle,

the Secretary shall reserve from amounts that would otherwise be 
allotted to such State under section 675B for the fiscal year the amount 
determined under subsection (b).
    ``(b) Determination of Reserved Amount.--The Secretary shall reserve 
for the purpose of subsection (a) from amounts that would otherwise be 
allotted to such State, not less than 100 percent of an amount that 
bears the same ratio to the State allotment for the fiscal year involved 
as the population of all eligible Indians for whom a determination has 
been made under subsection (a) bears to the population of all 
individuals eligible for assistance through a community services block 
grant made under this subtitle in such State.
    ``(c) Awards.--The sums reserved by the Secretary on the basis of a 
determination made under subsection (a) shall be made available by grant 
to the Indian tribe or tribal organization serving the individuals for 
whom such a determination has been made.
    ``(d) Plan.--In order for an Indian tribe or tribal organization to 
be eligible for a grant award for a fiscal year under this section, the 
tribe or organization shall submit to the Secretary a plan for such 
fiscal year that meets such criteria as the Secretary may prescribe by 
regulation.
    ``(e) Definitions.--In this section:
            ``(1) Indian tribe; tribal organization.--The terms `Indian 
        tribe' and `tribal organization' mean a tribe, band, or other 
        organized group recognized in the State in which the tribe, 
        band, or group resides, or considered by the Secretary of the 
        Interior, to be an Indian tribe or an Indian organization for 
        any purpose.
            ``(2) Indian.--The term `Indian' means a member of an Indian 
        tribe or of a tribal organization.

``SEC. 678. OFFICE OF COMMUNITY SERVICES. <<NOTE: 42 USC 9912.>> 

    ``(a) Office.--The <<NOTE: Establishment.>>  Secretary shall carry 
out the functions of this subtitle through an Office of Community 
Services, which shall be established in the Department of Health and 
Human Services. The Office shall be headed by a Director.

    ``(b) Grants, Contracts, and Cooperative Agreements.--The Secretary 
shall carry out functions of this subtitle through grants, contracts, or 
cooperative agreements.
``SEC. 678A. <<NOTE: 42 USC 9913.>>  TRAINING, TECHNICAL 
                            ASSISTANCE, AND OTHER ACTIVITIES.

    ``(a) Activities.--
            ``(1) In general.--The Secretary shall use amounts reserved 
        in section 674(b)(2)--
                    ``(A) for training, technical assistance, planning, 
                evaluation, and performance measurement, to assist 
                States in carrying out corrective action activities and 
                monitoring (to correct programmatic deficiencies of 
                eligible entities), and for reporting and data 
                collection activities, related to programs carried out 
                under this subtitle; and
                    ``(B) to distribute amounts in accordance with 
                subsection (c).
            ``(2) Grants, contracts, and cooperative agreements.--The 
        activities described in paragraph (1)(A) may be carried out by 
        the Secretary through grants, contracts, or cooperative 
        agreements with appropriate entities.

    ``(b) Terms and Technical Assistance Process.--The process for 
determining the training and technical assistance to be carried out 
under this section shall--
            ``(1) ensure that the needs of eligible entities and 
        programs relating to improving program quality (including 
        quality of financial management practices) are addressed to the 
        maximum extent feasible; and
            ``(2) incorporate mechanisms to ensure responsiveness to 
        local needs, including an ongoing procedure for obtaining input 
        from the national and State networks of eligible entities.

    ``(c) Distribution Requirement.--
            ``(1) In general.--The amounts reserved under section 
        674(b)(2)(A) for activities to be carried out under this 
        subsection shall be distributed directly to eligible entities, 
        organizations, or associations described in paragraph (2) for 
        the purpose of improving program quality (including quality of 
        financial management practices), management information and 
        reporting systems, and measurement of program results, and for 
        the purpose of ensuring responsiveness to identified local 
        needs.
            ``(2) Eligible entities, organizations, or associations.--
        Eligible entities, organizations, or associations described in 
        this paragraph shall be eligible entities, or statewide or local 
        organizations or associations, with demonstrated expertise in 
        providing training to individuals and organizations on methods 
        of effectively addressing the needs of low-income families and 
        communities.

``SEC. 678B. MONITORING OF ELIGIBLE ENTITIES. <<NOTE: 42 USC 9914.>> 

    ``(a) In General.--In order to determine whether eligible entities 
meet the performance goals, administrative standards, financial 
management requirements, and other requirements of a State, the State 
shall conduct the following reviews of eligible entities:
            ``(1) A full onsite review of each such entity at least once 
        during each 3-year period.
            ``(2) An onsite review of each newly designated entity 
        immediately after the completion of the first year in which such 
        entity receives funds through the community services block grant 
        program.
            ``(3) Followup reviews including prompt return visits to 
        eligible entities, and their programs, that fail to meet the 
        goals, standards, and requirements established by the State.
            ``(4) Other reviews as appropriate, including reviews of 
        entities with programs that have had other Federal, State, or 
        local grants (other than assistance provided under this 
        subtitle) terminated for cause.

    ``(b) Requests.--The State may request training and technical 
assistance from the Secretary as needed to comply with the requirements 
of this section.
    ``(c) Evaluations by the Secretary.--The Secretary shall conduct in 
several States in each fiscal year evaluations (including 
investigations) of the use of funds received by the States under this 
subtitle in order to evaluate compliance with the provisions of this 
subtitle, and especially with respect to compliance with section 
676(b). <<NOTE: Reports.>> The Secretary shall submit, to each State 
evaluated, a report containing the results of such evaluations, and 
recommendations of improvements designed to enhance the benefit and 
impact of the activities carried out with such funds for people in need. 
On receiving the report, the State shall submit to the Secretary a plan 
of action in response to the recommendations contained in the report. 
The results of the evaluations shall be submitted annually to the 
Chairperson of the Committee on Education and the Workforce of the House 
of Representatives and the Chairperson of the Committee on Labor and 
Human Resources of the Senate as part of the report submitted by the 
Secretary in accordance with section 678E(b)(2).
``SEC. 678C.  <<NOTE: 42 USC 9915.>> CORRECTIVE ACTION; 
                            TERMINATION AND REDUCTION OF FUNDING.

    ``(a) Determination.--If the State determines, on the basis of a 
final decision in a review pursuant to section 678B, that an eligible 
entity fails to comply with the terms of an agreement, or the State 
plan, to provide services under this subtitle or to meet appropriate 
standards, goals, and other requirements established by the State 
(including performance objectives), the State shall--
            ``(1) inform the entity of the deficiency to be corrected;
            ``(2) require the entity to correct the deficiency;
            ``(3)(A) offer training and technical assistance, if 
        appropriate, to help correct the deficiency, and prepare and 
        submit to the Secretary a report describing the training and 
        technical assistance offered; or
            ``(B) if the State determines that such training and 
        technical assistance are not appropriate, prepare and submit to 
        the Secretary a report stating the reasons for the 
        determination;
            ``(4)(A) at the discretion of the State (taking into account 
        the seriousness of the deficiency and the time reasonably 
        required to correct the deficiency), allow the entity to develop 
        and implement, within 60 days after being informed of the 
        deficiency, a quality improvement plan to correct such 
        deficiency within a reasonable period of time, as determined by 
        the State; and
            ``(B) not later than 30 days after receiving from an 
        eligible entity a proposed quality improvement plan pursuant to 
        subparagraph (A), either approve such proposed plan or specify 
        the reasons why the proposed plan cannot be approved; and
            ``(5) after providing adequate notice and an opportunity for 
        a hearing, initiate proceedings to terminate the designation of 
        or reduce the funding under this subtitle of the eligible entity 
        unless the entity corrects the deficiency.

    ``(b) Review.--A determination to terminate the designation or 
reduce the funding of an eligible entity is reviewable by the Secretary. 
The Secretary shall, upon request, review such a 
determination. <<NOTE: Deadline.>> The review shall be completed not 
later than 90 days after the Secretary receives from the State all 
necessary documentation relating to the determination to terminate the 
designation or reduce the funding. If the review is not completed within 
90 days, the determination of the State shall become final at the end of 
the 90th day.

    ``(c) Direct Assistance.--Whenever a State violates the assurances 
contained in section 676(b)(8) and terminates or reduces the funding of 
an eligible entity prior to the completion of the State hearing 
described in that section and the Secretary's review as required in 
subsection (b), the Secretary is authorized to provide financial 
assistance under this subtitle to the eligible entity affected until the 
violation is corrected. In such a case, the grant or allotment for the 
State under section 675A or 675B for the earliest appropriate fiscal 
year shall be reduced by an amount equal to the funds provided under 
this subsection to such eligible entity.

``SEC. 678D. FISCAL CONTROLS, AUDITS, AND WITHHOLDING. <<NOTE: 42 USC 
            9916.>> 

    ``(a) Fiscal Controls, Procedures, Audits, and Inspections.--
            ``(1) In general.--A State that receives funds under this 
        subtitle shall--
                    ``(A) establish fiscal control and fund accounting 
                procedures necessary to assure the proper disbursal of 
                and accounting for Federal funds paid to the State under 
                this subtitle, including procedures for monitoring the 
                funds provided under this subtitle;
                    ``(B) ensure that cost and accounting standards of 
                the Office of Management and Budget apply to a recipient 
                of the funds under this subtitle;
                    ``(C) subject to paragraph (2), prepare, at least 
                every year, an audit of the expenditures of the State of 
                amounts received under this subtitle and amounts 
                transferred to carry out the purposes of this subtitle; 
                and
                    ``(D) make appropriate books, documents, papers, and 
                records available to the Secretary and the Comptroller 
                General of the United States, or any of their duly 
                authorized representatives, for examination, copying, or 
                mechanical reproduction on or off the premises of the 
                appropriate entity upon a reasonable request for the 
                items.
            ``(2) Audits.--
                    ``(A) In general.--Subject to subparagraph (B), each 
                audit required by subsection (a)(1)(C) shall be 
                conducted by an entity independent of any agency 
                administering activities or services carried out under 
                this subtitle and shall be conducted in accordance with 
                generally accepted accounting principles.
                    ``(B) Single audit requirements.--Audits shall be 
                conducted under this paragraph in the manner and to the 
                extent provided in chapter 75 of title 31, United States 
                Code (commonly known as the `Single Audit Act Amendments 
                of 1996').
                    ``(C) Submission of copies.--Within 30 days after 
                the completion of each such audit in a State, the chief 
                executive officer of the State shall submit a copy of 
                such audit to any eligible entity that was the subject 
                of the audit at no charge, to the legislature of the 
                State, and to the Secretary.
            ``(3) Repayments.--The State shall repay to the United 
        States amounts found not to have been expended in accordance 
        with this subtitle or the Secretary may offset such amounts 
        against any other amount to which the State is or may become 
        entitled under this subtitle.

    ``(b) Withholding.--
            ``(1) In general.--The Secretary shall, after providing 
        adequate notice and an opportunity for a hearing conducted 
        within the affected State, withhold funds from any State that 
        does not utilize the grant or allotment under section 675A or 
        675B in accordance with the provisions of this subtitle, 
        including the assurances such State provided under section 676.
            ``(2) Response to complaints.--The Secretary shall respond 
        in an expeditious and speedy manner to complaints of a 
        substantial or serious nature that a State has failed to use 
        funds in accordance with the provisions of this subtitle, 
        including the assurances provided by the State under section 
        676. For purposes of this paragraph, a complaint of a failure to 
        meet any one of the assurances provided under section 676 that 
        constitutes disregarding that assurance shall be considered to 
        be a complaint of a serious nature.
            ``(3) Investigations.--Whenever the Secretary determines 
        that there is a pattern of complaints of failures described in 
        paragraph (2) from any State in any fiscal year, the Secretary 
        shall conduct an investigation of the use of funds received 
        under this subtitle by such State in order to ensure compliance 
        with the provisions of this subtitle.

``SEC. 678E. ACCOUNTABILITY AND REPORTING REQUIREMENTS. <<NOTE: 42 USC 
            9917.>> 

    ``(a) State Accountability and Reporting Requirements.--
            ``(1) Performance measurement.--
                    ``(A) In general.--By October 1, 2001, each State 
                that receives funds under this subtitle shall 
                participate, and shall ensure that all eligible entities 
                in the State participate, in a performance measurement 
                system, which may be a performance measurement system 
                for which the Secretary facilitated development pursuant 
                to subsection (b), or an alternative system that the 
                Secretary is satisfied meets the requirements of 
                subsection (b).
                    ``(B) Local agencies.--The State may elect to have 
                local agencies that are subcontractors of the eligible 
                entities under this subtitle participate in the 
                performance measurement system. If the State makes that 
                election, references in this section to eligible 
                entities shall be considered to include the local 
                agencies.
            ``(2) Annual report.--Each State shall annually prepare and 
        submit to the Secretary a report on the measured performance of 
        the State and the eligible entities in the State. Prior to the 
        participation of the State in the performance measurement 
        system, the State shall include in the report any information 
        collected by the State relating to such performance. Each State 
        shall also include in the report an accounting of the 
        expenditure of funds received by the State through the community 
        services block grant program, including an accounting of funds 
        spent on administrative costs by the State and the eligible 
        entities, and funds spent by eligible entities on the direct 
        delivery of local services, and shall include information on the 
        number of and characteristics of clients served under this 
        subtitle in the State, based on data collected from the eligible 
        entities. The State shall also include in the report a summary 
        describing the training and technical assistance offered by the 
        State under section 678C(a)(3) during the year covered by the 
        report.

    ``(b) Secretary's Accountability and Reporting Requirements.--
            ``(1) Performance measurement.--The Secretary, in 
        collaboration with the States and with eligible entities 
        throughout the Nation, shall facilitate the development of one 
        or more model performance measurement systems, which may be used 
        by the States and by eligible entities to measure their 
        performance in carrying out the requirements of this subtitle 
        and in achieving the goals of their community action plans. The 
        Secretary shall provide technical assistance, including support 
        for the enhancement of electronic data systems, to States and to 
        eligible entities to enhance their capability to collect and 
        report data for such a system and to aid in their participation 
        in such a system.
            ``(2) Reporting requirements.--At the end of each fiscal 
        year beginning after September 30, 1999, the Secretary shall, 
        directly or by grant or contract, prepare a report containing--
                    ``(A) a summary of the planned use of funds by each 
                State, and the eligible entities in the State, under the 
                community services block grant program, as contained in 
                each State plan submitted pursuant to section 676;
                    ``(B) a description of how funds were actually spent 
                by the State and eligible entities in the State, 
                including a breakdown of funds spent on administrative 
                costs and on the direct delivery of local services by 
                eligible entities;
                    ``(C) information on the number of entities eligible 
                for funds under this subtitle, the number of low-income 
                persons served under this subtitle, and such demographic 
                data on the low-income populations served by eligible 
                entities as is determined by the Secretary to be 
                feasible;
                    ``(D) a comparison of the planned uses of funds for 
                each State and the actual uses of the funds;
                    ``(E) a summary of each State's performance results, 
                and the results for the eligible entities, as collected 
                and submitted by the States in accordance with 
                subsection (a)(2); and
                    ``(F) any additional information that the Secretary 
                considers to be appropriate to carry out this subtitle, 
                if the Secretary informs the States of the need for such 
                additional information and allows a reasonable period of 
                time for the States to collect and provide the 
                information.
            ``(3) Submission.--The Secretary shall submit to the 
        Committee on Education and the Workforce of the House of 
        Representatives and the Committee on Labor and Human Resources 
        of the Senate the report described in paragraph (2), and any 
        comments the Secretary may have with respect to such report. The 
        report shall include definitions of direct and administrative 
        costs used by the Department of Health and Human Services for 
        programs funded under this subtitle.
            ``(4) Costs.--Of the funds reserved under section 674(b)(3), 
        not more than $350,000 shall be available to carry out the 
        reporting requirements contained in paragraph (2).

``SEC. 678F. LIMITATIONS ON USE OF FUNDS. <<NOTE: 42 USC 9918.>> 

    ``(a) Construction of Facilities.--
            ``(1) Limitations.--Except as provided in paragraph (2), 
        grants made under this subtitle (other than amounts reserved 
        under section 674(b)(3)) may not be used by the State, or by any 
        other person with which the State makes arrangements to carry 
        out the purposes of this subtitle, for the purchase or 
        improvement of land, or the purchase, construction, or permanent 
        improvement (other than low-cost residential weatherization or 
        other energy-related home repairs) of any building or other 
        facility.
            ``(2) Waiver.--The Secretary may waive the limitation 
        contained in paragraph (1) upon a State request for such a 
        waiver, if the Secretary finds that the request describes 
        extraordinary circumstances to justify the purchase of land or 
        the construction of facilities (or the making of permanent 
        improvements) and that permitting the waiver will contribute to 
        the ability of the State to carry out the purposes of this 
        subtitle.

    ``(b) Political Activities.--
            ``(1) Treatment as a state or local agency.--For purposes of 
        chapter 15 of title 5, United States Code, any entity that 
        assumes responsibility for planning, developing, and 
        coordinating activities under this subtitle and receives 
        assistance under this subtitle shall be deemed to be a State or 
        local agency. For purposes of paragraphs (1) and (2) of section 
        1502(a) of such title, any entity receiving assistance under 
        this subtitle shall be deemed to be a State or local agency.
            ``(2) Prohibitions.--Programs assisted under this subtitle 
        shall not be carried on in a manner involving the use of program 
        funds, the provision of services, or the employment or 
        assignment of personnel, in a manner supporting or resulting in 
        the identification of such programs with--
                    ``(A) any partisan or nonpartisan political activity 
                or any political activity associated with a candidate, 
                or contending faction or group, in an election for 
                public or party office;
                    ``(B) any activity to provide voters or prospective 
                voters with transportation to the polls or similar 
                assistance in connection with any such election; or
                    ``(C) any voter registration activity.
            ``(3) Rules and regulations.--The Secretary, after 
        consultation with the Office of Personnel Management, shall 
        issue rules and regulations to provide for the enforcement of 
        this subsection, which shall include provisions for summary 
        suspension of assistance or other action necessary to permit 
        enforcement on an emergency basis.

    ``(c) Nondiscrimination.--
            ``(1) In general.--No person shall, on the basis of race, 
        color, national origin, or sex be excluded from participation 
        in, be denied the benefits of, or be subjected to discrimination 
        under, any program or activity funded in whole or in part with 
        funds made available under this subtitle. Any prohibition 
        against discrimination on the basis of age under the Age 
        Discrimination Act of 1975 (42 U.S.C. 6101 et seq.) or with 
        respect to an otherwise qualified individual with a disability 
        as provided in section 504 of the Rehabilitation Act of 1973 (29 
        U.S.C. 794), or title II of the Americans with Disabilities Act 
        of 1990 (42 U.S.C. 12131 et seq.) shall also apply to any such 
        program or activity.
            ``(2) <<NOTE: Notification.>> Action of secretary.--Whenever 
        the Secretary determines that a State that has received a 
        payment under this subtitle has failed to comply with paragraph 
        (1) or an applicable regulation, the Secretary shall notify the 
        chief executive officer of the State and shall request that the 
        officer secure compliance. If within a reasonable period of 
        time, not to exceed 60 days, the chief executive officer fails 
        or refuses to secure compliance, the Secretary is authorized 
        to--
                    ``(A) refer the matter to the Attorney General with 
                a recommendation that an appropriate civil action be 
                instituted;
                    ``(B) exercise the powers and functions provided by 
                title VI of the Civil Rights Act of 1964 (42 U.S.C. 
                2000d et seq.), the Age Discrimination Act of 1975 (42 
                U.S.C. 6101 et seq.), section 504 of the Rehabilitation 
                Act of 1973 (29 U.S.C. 794), or title II of the 
                Americans with Disabilities Act of 1990 (42 U.S.C. 12131 
                et seq.), as may be applicable; or
                    ``(C) take such other action as may be provided by 
                law.
            ``(3) Action of attorney general.--When a matter is referred 
        to the Attorney General pursuant to paragraph (2), or whenever 
        the Attorney General has reason to believe that the State is 
        engaged in a pattern or practice of discrimination in violation 
        of the provisions of this subsection, the Attorney General may 
        bring a civil action in any appropriate United States district 
        court for such relief as may be appropriate, including 
        injunctive relief.

``SEC. 678G. DRUG AND CHILD SUPPORT SERVICES AND REFERRALS. <<NOTE: 42 
            USC 9919.>> 

    ``(a) Drug Testing and Rehabilitation.--
            ``(1) In general.--Nothing in this subtitle shall be 
        construed to prohibit a State from testing participants in 
        programs, activities, or services carried out or provided under 
        this subtitle for controlled substances. A State that conducts 
        such testing shall inform the participants who test positive for 
        any of such substances about the availability of treatment or 
        rehabilitation services and refer such participants for 
        appropriate treatment or rehabilitation services.
            ``(2) Administrative expenses.--Any funds provided under 
        this subtitle expended for such testing shall be considered to 
        be expended for administrative expenses and shall be subject to 
        the limitation specified in section 675C(b)(2).
            ``(3) Definition.--In this subsection, the term `controlled 
        substance' has the meaning given the term in section 102 of the 
        Controlled Substances Act (21 U.S.C. 802).

    ``(b) Child Support Services and Referrals.--During each fiscal year 
for which an eligible entity receives a grant under section 675C, such 
entity shall--
            ``(1) inform custodial parents in single-parent families 
        that participate in programs, activities, or services carried 
        out or provided under this subtitle about the availability of 
        child support services; and
            ``(2) refer eligible parents to the child support offices of 
        State and local governments.

``SEC. 679. OPERATIONAL RULE. <<NOTE: 42 USC 9920.>> 

    ``(a) Religious Organizations Included as Nongovernmental 
Providers.--For any program carried out by the Federal Government, or by 
a State or local government under this subtitle, the government shall 
consider, on the same basis as other nongovernmental organizations, 
religious organizations to provide the assistance under the program, so 
long as the program is implemented in a manner consistent with the 
Establishment Clause of the first amendment to the Constitution. Neither 
the Federal Government nor a State or local government receiving funds 
under this subtitle shall discriminate against an organization that 
provides assistance under, or applies to provide assistance under, this 
subtitle, on the basis that the organization has a religious character.
    ``(b) Religious Character and Independence.--
            ``(1) In general.--A religious organization that provides 
        assistance under a program described in subsection (a) shall 
        retain its religious character and control over the definition, 
        development, practice, and expression of its religious beliefs.
            ``(2) Additional safeguards.--Neither the Federal Government 
        nor a State or local government shall require a religious 
        organization--
                    ``(A) to alter its form of internal governance, 
                except (for purposes of administration of the community 
                services block grant program) as provided in section 
                676B; or
                    ``(B) to remove religious art, icons, scripture, or 
                other symbols;
        in order to be eligible to provide assistance under a program 
        described in subsection (a).
            ``(3) Employment practices.--A religious organization's 
        exemption provided under section 702 of the Civil Rights Act of 
        1964 (42 U.S.C. 2000e-1) regarding employment practices shall 
        not be affected by its participation in, or receipt of funds 
        from, programs described in subsection (a).

    ``(c) Limitations on Use of Funds for Certain Purposes.--No funds 
provided directly to a religious organization to provide assistance 
under any program described in subsection (a) shall be expended for 
sectarian worship, instruction, or proselytization.
    ``(d) Fiscal Accountability.--
            ``(1) In general.--Except as provided in paragraph (2), any 
        religious organization providing assistance under any program 
        described in subsection (a) shall be subject to the same 
        regulations as other nongovernmental organizations to account in 
        accord with generally accepted accounting principles for the use 
        of such funds provided under such program.
            ``(2) Limited audit.--Such organization shall segregate 
        government funds provided under such program into a separate 
        account. Only the government funds shall be subject to audit by 
        the government.

    ``(e) Treatment of Eligible Entities and Other Intermediate 
Organizations.--If an eligible entity or other organization (referred to 
in this subsection as an `intermediate organization'), acting under a 
contract, or grant or other agreement, with the Federal Government or a 
State or local government, is given the authority under the contract or 
agreement to select nongovernmental organizations to provide assistance 
under the programs described in subsection (a), the intermediate 
organization shall have the same duties under this section as the 
government.

``SEC. 680. DISCRETIONARY AUTHORITY OF THE SECRETARY. <<NOTE: 42 USC 
            9921.>> 

    ``(a) Grants, Contracts, Arrangements, Loans, and Guarantees.--
            ``(1) In general.--The Secretary shall, from funds reserved 
        under section 674(b)(3), make grants, loans, or guarantees to 
        States and public agencies and private, nonprofit organizations, 
        or enter into contracts or jointly financed cooperative 
        arrangements with States and public agencies and private, 
        nonprofit organizations (and for-profit organizations, to the 
        extent specified in paragraph (2)(E)) for each of the objectives 
        described in paragraphs (2) through (4).
            ``(2) Community economic development.--
                    ``(A) Economic development activities.--The 
                Secretary shall make grants described in paragraph (1) 
                on a competitive basis to private, nonprofit 
                organizations that are community development 
                corporations to provide technical and financial 
                assistance for economic development activities designed 
                to address the economic needs of low-income individuals 
                and families by creating employment and business 
                development opportunities.
                    ``(B) Consultation.--The Secretary shall exercise 
                the authority provided under subparagraph (A) after 
                consultation with other relevant Federal officials.
                    ``(C) Governing boards.--For a community development 
                corporation to receive funds to carry out this 
                paragraph, the corporation shall be governed by a board 
                that shall consist of residents of the community and 
                business and civic leaders and shall have as a principal 
                purpose planning, developing, or managing low-income 
                housing or community development projects.
                    ``(D) Geographic distribution.--In making grants to 
                carry out this paragraph, the Secretary shall take into 
                consideration the geographic distribution of funding 
                among States and the relative proportion of funding 
                among rural and urban areas.
                    ``(E) Reservation.--Of the amounts made available to 
                carry out this paragraph, the Secretary may reserve not 
                more than 1 percent for each fiscal year to make grants 
                to private, nonprofit organizations or to enter into 
                contracts with private, nonprofit or for-profit 
                organizations to provide technical assistance to aid 
                community development corporations in developing or 
                implementing activities funded to carry out this 
                paragraph and to evaluate activities funded to carry out 
                this paragraph.
            ``(3) Rural community development activities.--The Secretary 
        shall provide the assistance described in paragraph (1) for 
        rural community development activities, which shall include 
        providing--
                    ``(A) grants to private, nonprofit corporations to 
                enable the corporations to provide assistance concerning 
                home repair to rural low-income families and concerning 
                planning and developing low-income rural rental housing 
                units; and
                    ``(B) grants to multistate, regional, private, 
                nonprofit organizations to enable the organizations to 
                provide training and technical assistance to small, 
                rural communities concerning meeting their community 
                facility needs.
            ``(4) Neighborhood innovation projects.--The Secretary shall 
        provide the assistance described in paragraph (1) for 
        neighborhood innovation projects, which shall include providing 
        grants to neighborhood-based private, nonprofit organizations to 
        test or assist in the development of new approaches or methods 
        that will aid in overcoming special problems identified by 
        communities or neighborhoods or otherwise assist in furthering 
        the purposes of this subtitle, and which may include providing 
        assistance for projects that are designed to serve low-income 
        individuals and families who are not being effectively served by 
        other programs.

    ``(b) Evaluation.--The Secretary shall require all activities 
receiving assistance under this section to be evaluated for their 
effectiveness. Funding for such evaluations shall be provided as a 
stated percentage of the assistance or through a separate grant awarded 
by the Secretary specifically for the purpose of evaluation of a 
particular activity or group of activities.
    ``(c) <<NOTE: Records.>> Annual Report.--The Secretary shall compile 
an annual report containing a summary of the evaluations required in 
subsection (b) and a listing of all activities assisted under this 
section. The Secretary shall annually submit the report to the 
Chairperson of the Committee on Education and the Workforce of the House 
of Representatives and the Chairperson of the Committee on Labor and 
Human Resources of the Senate.

``SEC. 681. COMMUNITY FOOD AND NUTRITION PROGRAMS. <<NOTE: 42 USC 
            9922.>> 

    ``(a) Grants.--The Secretary may, through grants to public and 
private, nonprofit agencies, provide for community-based, local, 
statewide, and national programs--
            ``(1) to coordinate private and public food assistance 
        resources, wherever the grant recipient involved determines such 
        coordination to be inadequate, to better serve low-income 
        populations;
            ``(2) to assist low-income communities to identify potential 
        sponsors of child nutrition programs and to initiate such 
        programs in underserved or unserved areas; and
            ``(3) to develop innovative approaches at the State and 
        local level to meet the nutrition needs of low-income 
        individuals.

    ``(b) Allotments and Distribution of Funds.--
            ``(1) Not to exceed $6,000,000 in appropriations.--Of the 
        amount appropriated for a fiscal year to carry out this section 
        (but not to exceed $6,000,000), the Secretary shall distribute 
        funds for grants under subsection (a) as follows:
                    ``(A) Allotments.--From a portion equal to 60 
                percent of such amount (but not to exceed $3,600,000), 
                the Secretary shall allot for grants to eligible 
                agencies for statewide programs in each State the amount 
                that bears the same ratio to such portion as the low-
                income and unemployed population of such State bears to 
                the low-income and unemployed population of all the 
                States.
                    ``(B) Competitive grants.--From a portion equal to 
                40 percent of such amount (but not to exceed 
                $2,400,000), the Secretary shall make grants on a 
                competitive basis to eligible agencies for local and 
                statewide programs.
            ``(2) Greater available appropriations.--Any amounts 
        appropriated for a fiscal year to carry out this section in 
        excess of $6,000,000 shall be allotted as follows:
                    ``(A) Allotments.--The Secretary shall use 40 
                percent of such excess to allot for grants under 
                subsection (a) to eligible agencies for statewide 
                programs in each State an amount that bears the same 
                ratio to 40 percent of such excess as the low-income and 
                unemployed population of such State bears to the low-
                income and unemployed population of all the States.
                    ``(B) Competitive grants for local and statewide 
                programs.--The Secretary shall use 40 percent of such 
                excess to make grants under subsection (a) on a 
                competitive basis to eligible agencies for local and 
                statewide programs.
                    ``(C) Competitive grants for nationwide programs.--
                The Secretary shall use the remaining 20 percent of such 
                excess to make grants under subsection (a) on a 
                competitive basis to eligible agencies for nationwide 
                programs, including programs benefiting Indians, as 
                defined in section 677, and migrant or seasonal 
                farmworkers.
            ``(3) Eligibility for allotments for statewide programs.--To 
        be eligible to receive an allotment under paragraph (1)(A) or 
        (2)(A), an eligible agency shall demonstrate that the proposed 
        program is statewide in scope and represents a comprehensive and 
        coordinated effort to alleviate hunger within the State.
            ``(4) Minimum allotments for statewide programs.--
                    ``(A) In general.--From the amounts allotted under 
                paragraphs (1)(A) and (2)(A), the minimum total 
                allotment for each State for each fiscal year shall be--
                          ``(i) $15,000 if the total amount appropriated 
                      to carry out this section is not less than 
                      $7,000,000 but less than $10,000,000;
                          ``(ii) $20,000 if the total amount 
                      appropriated to carry out this section is not less 
                      than $10,000,000 but less than $15,000,000; or
                          ``(iii) $30,000 if the total amount 
                      appropriated to carry out this section is not less 
                      than $15,000,000.
                    ``(B) Definition.--In this paragraph, the term 
                `State' does not include Guam, American Samoa, the 
                United States Virgin Islands, and the Commonwealth of 
                the Northern Mariana Islands.
            ``(5) Maximum grants.--From funds made available under 
        paragraphs (1)(B) and (2)(B) for any fiscal year, the Secretary 
        may not make grants under subsection (a) to an eligible agency 
        in an aggregate amount exceeding $50,000. From funds made 
        available under paragraph (2)(C) for any fiscal year, the 
        Secretary may not make grants under subsection (a) to an 
        eligible agency in an aggregate amount exceeding $300,000.

    ``(c) Report.--For each fiscal year, the Secretary shall prepare and 
submit, to the Committee on Education and the Workforce of the House of 
Representatives and the Committee on Labor and Human Resources of the 
Senate, a report concerning the grants made under this section. Such 
report shall include--
            `` <<NOTE: Records.>> (1) a list of grant recipients;
            ``(2) information on the amount of funding awarded to each 
        grant recipient; and
            ``(3) a summary of the activities performed by the grant 
        recipients with funding awarded under this section and a 
        description of the manner in which such activities meet the 
        objectives described in subsection (a).

    ``(d) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section such sums as may be necessary for 
each of fiscal years 1999 through 2003.
``SEC. 682.  <<NOTE: 42 USC 9923.>> NATIONAL OR REGIONAL PROGRAMS 
                          DESIGNED TO PROVIDEINSTRUCTIONAL 
                          ACTIVITIES FOR LOW-INCOME YOUTH.

    ``(a) General Authority.--The Secretary is authorized to make a 
grant to an eligible service provider to administer national or regional 
programs to provide instructional activities for low-income youth. In 
making such a grant, the Secretary shall give priority to eligible 
service providers that have a demonstrated ability to operate such a 
program.
    ``(b) Program Requirements.--Any instructional activity carried out 
by an eligible service provider receiving a grant under this section 
shall be carried out on the campus of an institution of higher education 
(as defined in section 1201(a) of the Higher Education Act of 1965 (20 
U.S.C. 1141(a))) and shall include--
            ``(1) access to the facilities and resources of such an 
        institution;
            ``(2) an initial medical examination and follow-up referral 
        or treatment, without charge, for youth during their 
        participation in such activity;
            ``(3) at least one nutritious meal daily, without charge, 
        for participating youth during each day of participation;
            ``(4) high quality instruction in a variety of sports (that 
        shall include swimming and that may include dance and any other 
        high quality recreational activity) provided by coaches and 
        teachers from institutions of higher education and from 
        elementary and secondary schools (as defined in section 14101 of 
        the Elementary and Secondary Education Act of 1965 (20 U.S.C. 
        8801)); and
            ``(5) enrichment instruction and information on matters 
        relating to the well-being of youth, to include educational 
        opportunities and information on study practices, education for 
        the prevention of drug and alcohol abuse, and information on 
        health and nutrition, career opportunities, and family and job 
        responsibilities.

    ``(c) Advisory Committee; Partnerships.--The eligible service 
provider shall, in each community in which a program is funded under 
this section--
            ``(1) ensure that--
                    ``(A) a community-based advisory committee is 
                established, with representatives from local youth, 
                family, and social service organizations, schools, 
                entities providing park and recreation services, and 
                other community-based organizations serving high-risk 
                youth; or
                    ``(B) an existing community-based advisory board, 
                commission, or committee with similar membership is 
                utilized to serve as the committee described in 
                subparagraph (A); and
            ``(2) enter into formal partnerships with youth-serving 
        organizations or other appropriate social service entities in 
        order to link program participants with year-round services in 
        their home communities that support and continue the objectives 
        of this subtitle.

    ``(d) Eligible Providers.--A service provider that is a national 
private, nonprofit organization, a coalition of such organizations, or a 
private, nonprofit organization applying jointly with a business concern 
shall be eligible to apply for a grant under this section if--
            ``(1) the applicant has demonstrated experience in operating 
        a program providing instruction to low-income youth;
            ``(2) the applicant agrees to contribute an amount (in cash 
        or in kind, fairly evaluated) of not less than 25 percent of the 
        amount requested, for the program funded through the grant;
            ``(3) the applicant agrees to use no funds from a grant 
        authorized under this section for administrative expenses; and
            ``(4) the applicant agrees to comply with the regulations or 
        program guidelines promulgated by the Secretary for use of funds 
        made available through the grant.

    ``(e) Application Process.--To be eligible to receive a grant under 
this section, a service provider shall submit to the Secretary, for 
approval, an application at such time, in such manner, and containing 
such information as the Secretary may require.
    ``(f) Promulgation of Regulations or Program Guidelines.--The 
Secretary shall promulgate regulations or program guidelines to ensure 
funds made available through a grant made under this section are used in 
accordance with the objectives of this subtitle.
    ``(g) Authorization of Appropriations.--There are authorized to be 
appropriated $15,000,000 for each of fiscal years 1999 through 2003 for 
grants to carry out this section.

``SEC. 683. REFERENCES. <<NOTE: 42 USC 9924.>> 

    ``Any reference in any provision of law to the poverty line set 
forth in section 624 or 625 of the Economic Opportunity Act of 1964 
shall be construed to be a reference to the poverty line defined in 
section 673. Except as otherwise provided, any reference in any 
provision of law to any community action agency designated under title 
II of the Economic Opportunity Act of 1964 shall be construed to be a 
reference to an entity eligible to receive funds under the community 
services block grant program.''.

SEC. 202. CONFORMING AMENDMENTS.

    (a) Older Americans Act of 1965.--Section 306(a)(6)(E)(ii) of the 
Older Americans Act of 1965 (42 U.S.C. 3026(a)(6)(E)(ii)) is amended by 
striking ``section 675(c)(3) of the Community Services Block Grant Act 
(42 U.S.C. 9904(c)(3))'' and inserting ``section 676B of the Community 
Services Block Grant Act''.
    (b) Community Economic Development Act of 1981.--
            (1) Source of funds.--Section 614 of the Community Economic 
        Development Act of 1981 (42 U.S.C. 9803) is repealed.
            (2) Advisory community investment board.--Section 615(a)(2) 
        of the Community Economic Development Act of 1981 (42 U.S.C. 
        9804(a)(2)) is amended by striking ``through the Office'' and 
        all that follows and inserting ``through an appropriate 
        office.''.

    (c) Human Services Reauthorization Act of 1986.--Section 407 of the 
Human Services Reauthorization Act of 1986 (42 U.S.C. 9812a) is 
amended--
            (1) in subsection (a)--
                    (A) by inserting after ``funds available'' the 
                following: ``(before the date of enactment of the Coats 
                Human Services Reauthorization Act of 1998)''; and
                    (B) by inserting after ``9910(a))'' the following: 
                ``(as in effect before such date)''; and
            (2) in subsection (b)(2)--
                    (A) by inserting after ``funds available'' the 
                following: ``(before the date of enactment of the Coats 
                Human Services Reauthorization Act of 1998)''; and
                    (B) by inserting after ``9910(a))'' the following: 
                ``(as in effect before such date)''.

    (d) Anti-Drug Abuse Act of 1988.--Section 3521(c)(2) of the Anti-
Drug Abuse Act of 1988 (42 U.S.C. 11841(c)(2)) is amended by striking 
``, such as activities authorized by section 681(a)(2)(F) of the 
Community Services Block Grant Act (42 U.S.C. section 9910(a)(2)(F)),''.

  TITLE III-- <<NOTE: Low-Income Home Energy Assistance Amendments of 
1998.>> LOW-INCOME HOME ENERGY ASSISTANCE

SEC. 301. SHORT TITLE. <<NOTE: 42 USC 8621 note.>> 

    This title may be cited as the ``Low-Income Home Energy Assistance 
Amendments of 1998''.

SEC. 302. AUTHORIZATION.

    (a) In General.--Section 2602(b) of the Low-Income Home Energy 
Assistance Act of 1981 (42 U.S.C. 8621(b)) is amended by inserting ``, 
such sums as may be necessary for each of fiscal years 2000 and 2001, 
and $2,000,000,000 for each of fiscal years 2002 through 2004'' after 
``1995 through 1999''.
    (b) Program Year.--Section 2602(c) of the Low-Income Home Energy 
Assistance Act of 1981 (42 U.S.C. 8621(c)) is amended to read as 
follows:
    ``(c) Amounts appropriated under this section for any fiscal year 
for programs and activities under this title shall be made available for 
obligation in the succeeding fiscal year.''.
    (c) Incentive Program for Leveraging Non-Federal Resources.--Section 
2602(d) of the Low-Income Home Energy Assistance Act of 1981 (42 U.S.C. 
8621(d)) is amended--
            (1) by striking ``(d)'' and inserting ``(d)(1)'';
            (2) by striking ``are authorized'' and inserting ``is 
        authorized'';
            (3) by striking ``$50,000,000'' and all that follows and 
        inserting the following: ``$30,000,000 for each of fiscal years 
        1999 through 2004, except as provided in paragraph (2).''; and
            (4) by adding at the end the following:

    ``(2) For any of fiscal years 1999 through 2004 for which the amount 
appropriated under subsection (b) is not less than $1,400,000,000, there 
is authorized to be appropriated $50,000,000 to carry out section 
2607A.''.
    (d) Technical Amendments.--Section 2602(e) of the Low-Income Home 
Energy Assistance Act of 1981 (42 U.S.C. 8621(e)) is amended--
            (1) by striking ``are authorized'' and inserting ``is 
        authorized''; and
            (2) by striking ``subsection (g)'' and inserting 
        ``subsection (e) of such section''.

SEC. 303. DEFINITIONS.

    Section 2603(4) of the Low-Income Home Energy Assistance Act of 1981 
(42 U.S.C. 8622(4)) is amended--
            (1) by striking ``the term'' and inserting ``The term''; and
            (2) by striking the semicolon and inserting a period.

SEC. 304. NATURAL DISASTERS AND OTHER EMERGENCIES.

    (a) Definitions.--Section 2603 of the Low-Income Home Energy 
Assistance Act of 1981 (42 U.S.C. 8622) is amended--
            (1) by redesignating paragraphs (6) through (9) as 
        paragraphs (8) through (11), respectively;
            (2) by inserting before paragraph (8) (as redesignated in 
        paragraph (1)) the following:
            ``(7) The term `natural disaster' means a weather event 
        (relating to cold or hot weather), flood, earthquake, tornado, 
        hurricane, or ice storm, or an event meeting such other criteria 
        as the Secretary, in the discretion of the Secretary, may 
        determine to be appropriate.'';
            (3) by redesignating paragraphs (1) through (5) as 
        paragraphs (2) through (6), respectively; and
            (4) by inserting before paragraph (2) (as redesignated in 
        paragraph (3)) the following:
            ``(1) The term `emergency' means--
                    ``(A) a natural disaster;
                    ``(B) a significant home energy supply shortage or 
                disruption;
                    ``(C) a significant increase in the cost of home 
                energy, as determined by the Secretary;
                    ``(D) a significant increase in home energy 
                disconnections reported by a utility, a State regulatory 
                agency, or another agency with necessary data;
                    ``(E) a significant increase in participation in a 
                public benefit program such as the food stamp program 
                carried out under the Food Stamp Act of 1977 (7 U.S.C. 
                2011 et seq.), the national program to provide 
                supplemental security income carried out under title XVI 
                of the Social Security Act (42 U.S.C. 1381 et seq.), or 
                the State temporary assistance for needy families 
                program carried out under part A of title IV of the 
                Social Security Act (42 U.S.C. 601 et seq.), as 
                determined by the head of the appropriate Federal 
                agency;
                    ``(F) a significant increase in unemployment, 
                layoffs, or the number of households with an individual 
                applying for unemployment benefits, as determined by the 
                Secretary of Labor; or
                    ``(G) an event meeting such criteria as the 
                Secretary, in the discretion of the Secretary, may 
                determine to be appropriate.''.

    (b) Considerations.--Section 2604(g) of the Low-Income Home Energy 
Assistance Act of 1981 (42 U.S.C. 8623(g)) is amended by striking the 
last two sentences and inserting the following: ``In determining whether 
to make such an allotment to a State, the Secretary shall take into 
account the extent to which the State was affected by the natural 
disaster or other emergency involved, the availability to the State of 
other resources under the program carried out under this title or any 
other program, and such other factors as the Secretary may find to be 
relevant. <<NOTE: Notification.>> Not later than 30 days after making 
the determination, but prior to releasing an allotted amount to a State, 
the Secretary shall notify Congress of the allotments made pursuant to 
this subsection.''.

SEC. 305. STATE ALLOTMENTS.

    Section 2604 of the Low-Income Home Energy Assistance Act of 1981 
(42 U.S.C. 8623) is amended--
            (1) in subsection (b)(1), by striking ``the Northern Mariana 
        Islands, and the Trust Territory of the Pacific Islands.'' and 
        inserting ``and the Commonwealth of the Northern Mariana 
        Islands.'';
            (2) in subsection (c)(3)(B)(ii), by striking ``application'' 
        and inserting ``applications'';
            (3) by striking subsection (f);
            (4) in the first sentence of subsection (g), by striking 
        ``(a) through (f)'' and inserting ``(a) through (d)''; and
            (5) by redesignating subsection (g) as subsection (e).

SEC. 306. ADMINISTRATION.

    Section 2605 of the Low-Income Home Energy Assistance Act of 1981 
(42 U.S.C. 8624) is amended--
            (1) in subsection (b)--
                    (A) in paragraph (9)(A), by striking ``and not 
                transferred pursuant to section 2604(f) for use under 
                another block grant'';
                    (B) in paragraph (14), by striking ``; and'' and 
                inserting a semicolon;
                    (C) in the matter following paragraph (14), by 
                striking ``The Secretary may not prescribe the manner in 
                which the States will comply with the provisions of this 
                subsection.''; and
                    (D) in the matter following paragraph (16), by 
                inserting before ``The Secretary shall issue'' the 
                following: ``The Secretary may not prescribe the manner 
                in which the States will comply with the provisions of 
                this subsection.'';
            (2) in subsection (c)(1)--
                    (A) in subparagraph (B), by striking ``States'' and 
                inserting ``State''; and
                    (B) in subparagraph (G)(i), by striking ``has'' and 
                inserting ``had''; and
            (3) in paragraphs (1) and (2)(A) of subsection (k) by 
        inserting ``, particularly those low-income households with the 
        lowest incomes that pay a high proportion of household income 
        for home energy'' before the period.

SEC. 307. PAYMENTS TO STATES.

    Section 2607(b)(2)(B) of the Low-Income Home Energy Assistance Act 
of 1981 (42 U.S.C. 8626(b)(2)(B)) is amended--
            (1) in the first sentence, by striking ``and not transferred 
        pursuant to section 2604(f)''; and
            (2) in the second sentence, by striking ``but not 
        transferred by the State''.

SEC. 308. RESIDENTIAL ENERGY ASSISTANCE CHALLENGE OPTION.

    (a) <<NOTE: 42 USC 8626b note.>> Evaluation.--The Comptroller 
General of the United States shall conduct an evaluation of the 
Residential Energy Assistance Challenge program described in section 
2607B of the Low-Income Home Energy Assistance Act of 1981 (42 U.S.C. 
8626b).

    (b) <<NOTE: Deadline. 42 USC 8626b note.>> Report.--Not later than 2 
years after the date of enactment of this Act, the Comptroller General 
of the United States shall prepare and submit to Congress a report 
containing--
            (1) the findings resulting from the evaluation described in 
        subsection (a); and
            (2) the State evaluations described in paragraphs (1) and 
        (2) of subsection (b) of such section 2607B.

    (c) Incentive Grants.--Section 2607B(b)(1) of the Low-Income Home 
Energy Assistance Act of 1981 (42 U.S.C. 8626b(b)(1)) is amended by 
striking ``For each of the fiscal years 1996 through 1999'' and 
inserting ``For each fiscal year''.
    (d) Technical Amendments.--Section 2607B of the Low-Income Home 
Energy Assistance Act of 1981 (42 U.S.C. 8626b) is amended--
            (1) in subsection (e)(2)--
                    (A) by redesignating subparagraphs (F) through (N) 
                as subparagraphs (E) through (M), respectively; and
                    (B) in clause (i) of subparagraph (I) (as 
                redesignated in subparagraph (A)), by striking ``on'' 
                and inserting ``of''; and
            (2) by redesignating subsection (g) as subsection (f).
SEC. 309. TECHNICAL ASSISTANCE, TRAINING, AND COMPLIANCE REVIEWS.

    (a) In General.--Section 2609A(a) of the Low-Income Home Energy 
Assistance Act of 1981 (42 U.S.C. 8628a(a)) is amended--
            (1) in the matter preceding paragraph (1), by striking 
        ``$250,000'' and inserting ``$300,000'';
            (2) by striking ``Secretary--'' and all that follows through 
        ``(1) to make'' and inserting the following: ``Secretary--
            ``(1) to--
                    ``(A) make'';
            (3) by striking ``organizations; or'' and all that follows 
        through ``(2) to enter'' and inserting the following: 
        ``organizations; or
                    ``(B) enter'';
            (4) by striking the following:

``to provide'' and inserting the following:
        ``to provide'';
            (5) by striking ``title.'' and inserting the following: 
        ``title; or
            ``(2) to conduct onsite compliance reviews of programs 
        supported under this title.''; and
            (6) in paragraph (1)(B) (as redesignated in paragraphs (2) 
        and (3))--
                    (A) by inserting ``or interagency agreements'' after 
                ``cooperative arrangements''; and
                    (B) by inserting ``(including Federal agencies)'' 
                after ``public agencies''.

    (b) Conforming Amendment.--The section heading of section 2609A of 
the Low-Income Home Energy Assistance Act of 1981 (42 U.S.C. 8628a) is 
amended to read as follows:

       ``technical assistance, training, and compliance reviews''.

       TITLE IV-- <<NOTE: Assets for Independence Act. 42 USC 604 
note.>> ASSETS FOR INDEPENDENCE

SEC. 401. SHORT TITLE.

    This title may be cited as the ``Assets for Independence Act''.

SEC. 402. FINDINGS.

    Congress makes the following findings:
            (1) Economic well-being does not come solely from income, 
        spending, and consumption, but also requires savings, 
        investment, and accumulation of assets because assets can 
        improve economic independence and stability, connect individuals 
        with a viable and hopeful future, stimulate development of human 
        and other capital, and enhance the welfare of offspring.
            (2) Fully \1/2\ of all Americans have either no, negligible, 
        or negative assets available for investment, just as the price 
        of entry to the economic mainstream, the cost of a house, an 
        adequate education, and starting a business, is increasing. 
        Further, the household savings rate of the United States lags 
        far behind other industrial nations, presenting a barrier to 
        economic growth.
            (3) In the current tight fiscal environment, the United 
        States should invest existing resources in high-yield 
        initiatives. There is reason to believe that the financial 
        returns, including increased income, tax revenue, and decreased 
        welfare cash assistance, resulting from individual development 
        accounts will far exceed the cost of investment in those 
        accounts.
            (4) Traditional public assistance programs concentrating on 
        income and consumption have rarely been successful in promoting 
        and supporting the transition to increased economic self-
        sufficiency. Income-based domestic policy should be complemented 
        with asset-based policy because, while income-based policies 
        ensure that consumption needs (including food, child care, rent, 
        clothing, and health care) are met, asset-based policies provide 
        the means to achieve greater independence and economic well-
        being.

SEC. 403. PURPOSES.

    The purposes of this title are to provide for the establishment of 
demonstration projects designed to determine--
            (1) the social, civic, psychological, and economic effects 
        of providing to individuals and families with limited means an 
        incentive to accumulate assets by saving a portion of their 
        earned income;
            (2) the extent to which an asset-based policy that promotes 
        saving for postsecondary education, homeownership, and 
        microenterprise development may be used to enable individuals 
        and families with limited means to increase their economic self-
        sufficiency; and
            (3) the extent to which an asset-based policy stabilizes and 
        improves families and the community in which the families live.

SEC. 404. DEFINITIONS.

    In this title:
            (1) Applicable period.--The term ``applicable period'' 
        means, with respect to amounts to be paid from a grant made for 
        a project year, the calendar year immediately preceding the 
        calendar year in which the grant is made.
            (2) Eligible individual.--The term ``eligible individual'' 
        means an individual who is selected to participate in a 
        demonstration project by a qualified entity under section 409.
            (3) Emergency withdrawal.--The term ``emergency withdrawal'' 
        means a withdrawal by an eligible individual that--
                    (A) is a withdrawal of only those funds, or a 
                portion of those funds, deposited by the individual in 
                the individual development account of the individual;
                    (B) is permitted by a qualified entity on a case-by-
                case basis; and
                    (C) is made for--
                          (i) expenses for medical care or necessary to 
                      obtain medical care, for the individual or a 
                      spouse or dependent of the individual described in 
                      paragraph (8)(D);
                          (ii) payments necessary to prevent the 
                      eviction of the individual from the residence of 
                      the individual, or foreclosure on the mortgage for 
                      the principal residence of the individual, as 
                      defined in paragraph (8)(B); or
                          (iii) payments necessary to enable the 
                      individual to meet necessary living expenses 
                      following loss of employment.
            (4) Household.--The term ``household'' means all individuals 
        who share use of a dwelling unit as primary quarters for living 
        and eating separate from other individuals.
            (5) Individual development account.--
                    (A) In general.--The term ``individual development 
                account'' means a trust created or organized in the 
                United States exclusively for the purpose of paying the 
                qualified expenses of an eligible individual, or 
                enabling the eligible individual to make an emergency 
                withdrawal, but only if the written governing instrument 
                creating the trust contains the following requirements:
                          (i) No contribution will be accepted unless 
                      the contribution is in cash or by check.
                          (ii) The trustee is a federally insured 
                      financial institution, or a State insured 
                      financial institution if no federally insured 
                      financial institution is available.
                          (iii) The assets of the trust will be invested 
                      in accordance with the direction of the eligible 
                      individual after consultation with the qualified 
                      entity providing deposits for the individual under 
                      section 410.
                          (iv) The assets of the trust will not be 
                      commingled with other property except in a common 
                      trust fund or common investment fund.
                          (v) Except as provided in clause (vi), any 
                      amount in the trust that is attributable to a 
                      deposit provided under section 410 may be paid or 
                      distributed out of the trust only for the purpose 
                      of paying the qualified expenses of the eligible 
                      individual, or enabling the eligible individual to 
                      make an emergency withdrawal.
                          (vi) Any balance in the trust on the day after 
                      the date on which the individual for whose benefit 
                      the trust is established dies shall be distributed 
                      within 30 days of that date as directed by that 
                      individual to another individual development 
                      account established for the benefit of an eligible 
                      individual.
                    (B) Custodial accounts.--For purposes of 
                subparagraph (A), a custodial account shall be treated 
                as a trust if the assets of the custodial account are 
                held by a bank (as defined in section 408(n) of the 
                Internal Revenue Code of 1986) or another person who 
                demonstrates, to the satisfaction of the Secretary, that 
                the manner in which such person will administer the 
                custodial account will be consistent with the 
                requirements of this title, and if the custodial account 
                would, except for the fact that it is not a trust, 
                constitute an individual development account described 
                in subparagraph (A). For purposes of this title, in the 
                case of a custodial account treated as a trust by reason 
                of the preceding sentence, the custodian of that 
                custodial account shall be treated as the trustee of the 
                account.
            (6) Project year.--The term ``project year'' means, with 
        respect to a demonstration project, any of the 5 consecutive 12-
        month periods beginning on the date the project is originally 
        authorized to be conducted.
            (7) Qualified entity.--
                    (A) In general.--The term ``qualified entity'' 
                means--
                          (i) one or more not-for-profit organizations 
                      described in section 501(c)(3) of the Internal 
                      Revenue Code of 1986 and exempt from taxation 
                      under section 501(a) of such Code; or
                          (ii) a State or local government agency, or a 
                      tribal government, submitting an application under 
                      section 405 jointly with an organization described 
                      in clause (i).
                    (B) Rule of construction.--Nothing in this paragraph 
                shall be construed as preventing an organization 
                described in subparagraph (A)(i) from collaborating with 
                a financial institution or for-profit community 
                development corporation to carry out the purposes of 
                this title.
            (8) Qualified expenses.--The term ``qualified expenses'' 
        means one or more of the following, as provided by a qualified 
        entity:
                    (A) Postsecondary educational expenses.--
                Postsecondary educational expenses paid from an 
                individual development account directly to an eligible 
                educational institution. In this subparagraph:
                          (i) Postsecondary educational expenses.--The 
                      term ``postsecondary educational expenses'' means 
                      the following:
                                    (I) Tuition and fees.--Tuition and 
                                fees required for the enrollment or 
                                attendance of a student at an eligible 
                                educational institution.
                                    (II) Fees, books, supplies, and 
                                equipment.--Fees, books, supplies, and 
                                equipment required for courses of 
                                instruction at an eligible educational 
                                institution.
                          (ii) Eligible educational institution.--The 
                      term ``eligible educational institution'' means 
                      the following:
                                    (I) Institution of higher 
                                education.--An institution described in 
                                section 101 or 102 of the Higher 
                                Education Act of 1965.
                                    (II) Postsecondary vocational 
                                education school.--An area vocational 
                                education school (as defined in 
                                subparagraph (C) or (D) of section 
                                521(4) of the Carl D. Perkins Vocational 
                                and Applied Technology Education Act (20 
                                U.S.C. 2471(4))) which is in any State 
                                (as defined in section 521(33) of such 
                                Act), as such sections are in effect on 
                                the date of enactment of this title.
                    (B) First-home purchase.--Qualified acquisition 
                costs with respect to a principal residence for a 
                qualified first-time homebuyer, if paid from an 
                individual development account directly to the persons 
                to whom the amounts are due. In this subparagraph:
                          (i) Principal residence.--The term ``principal 
                      residence'' means a main residence, the qualified 
                      acquisition costs of which do not exceed 100 
                      percent of the average area purchase price 
                      applicable to such residence.
                          (ii) Qualified acquisition costs.--The term 
                      ``qualified acquisition costs'' means the costs of 
                      acquiring, constructing, or reconstructing a 
                      residence. The term includes any usual or 
                      reasonable settlement, financing, or other closing 
                      costs.
                          (iii) Qualified first-time homebuyer.--
                                    (I) In general.--The term 
                                ``qualified first-time homebuyer'' means 
                                an individual participating in the 
                                project involved (and, if married, the 
                                individual's spouse) who has no present 
                                ownership interest in a principal 
                                residence during the 3-year period 
                                ending on the date of acquisition of the 
                                principal residence to which this 
                                subparagraph applies.
                                    (II) Date of acquisition.--The term 
                                ``date of acquisition'' means the date 
                                on which a binding contract to acquire, 
                                construct, or reconstruct the principal 
                                residence to which this subparagraph 
                                applies is entered into.
                    (C) Business capitalization.--Amounts paid from an 
                individual development account directly to a business 
                capitalization account that is established in a 
                federally insured financial institution (or in a State 
                insured financial institution if no federally insured 
                financial institution is available) and is restricted to 
                use solely for qualified business capitalization 
                expenses. In this subparagraph:
                          (i) Qualified business capitalization 
                      expenses.--The term ``qualified business 
                      capitalization expenses'' means qualified 
                      expenditures for the capitalization of a qualified 
                      business pursuant to a qualified plan.
                          (ii) Qualified expenditures.--The term 
                      ``qualified expenditures'' means expenditures 
                      included in a qualified plan, including capital, 
                      plant, equipment, working capital, and inventory 
                      expenses.
                          (iii) Qualified business.--The term 
                      ``qualified business'' means any business that 
                      does not contravene any law or public policy (as 
                      determined by the Secretary).
                          (iv) Qualified plan.--The term ``qualified 
                      plan'' means a business plan, or a plan to use a 
                      business asset purchased, which--
                                    (I) is approved by a financial 
                                institution, a microenterprise 
                                development organization, or a nonprofit 
                                loan fund having demonstrated fiduciary 
                                integrity;
                                    (II) includes a description of 
                                services or goods to be sold, a 
                                marketing plan, and projected financial 
                                statements; and
                                    (III) may require the eligible 
                                individual to obtain the assistance of 
                                an experienced entrepreneurial adviser.
                    (D) Transfers to idas of family members.--Amounts 
                paid from an individual development account directly 
                into another such account established for the benefit of 
                an eligible individual who is--
                          (i) the individual's spouse; or
                          (ii) any dependent of the individual with 
                      respect to whom the individual is allowed a 
                      deduction under section 151 of the Internal 
                      Revenue Code of 1986.
            (9) Qualified savings of the individual for the period.--The 
        term ``qualified savings of the individual for the period'' 
        means the aggregate of the amounts contributed by an individual 
        to the individual development account of the individual during 
        the period.
            (10) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services, acting through the Director of 
        Community Services.
            (11) Tribal government.--The term ``tribal government'' 
        means a tribal organization, as defined in section 4 of the 
        Indian Self-Determination and Education Assistance Act (25 
        U.S.C. 450b) or a Native Hawaiian organization, as defined in 
        section 9212 of the Native Hawaiian Education Act (20 U.S.C. 
        7912).

SEC. 405. APPLICATIONS.

    (a) <<NOTE: Deadline. Public information.>> Announcement of 
Demonstration Projects.--Not later than 3 months after the date of 
enactment of this title, the Secretary shall publicly announce the 
availability of funding under this title for demonstration projects and 
shall ensure that applications to conduct the demonstration projects are 
widely available to qualified entities.

    (b) <<NOTE: Deadline.>> Submission.--Not later than 6 months after 
the date of enactment of this title, a qualified entity may submit to 
the Secretary an application to conduct a demonstration project under 
this title.

    (c) Criteria.--In considering whether to approve an application to 
conduct a demonstration project under this title, the Secretary shall 
assess the following:
            (1) Sufficiency of project.--The degree to which the project 
        described in the application appears likely to aid project 
        participants in achieving economic self-sufficiency through 
        activities requiring one or more qualified expenses.
            (2) Administrative ability.--The experience and ability of 
        the applicant to responsibly administer the project.
            (3) Ability to assist participants.--The experience and 
        ability of the applicant in recruiting, educating, and assisting 
        project participants to increase their economic independence and 
        general well-being through the development of assets.
            (4) Commitment of non-federal funds.--The aggregate amount 
        of direct funds from non-Federal public sector and from private 
        sources that are formally committed to the project as matching 
        contributions.
            (5) Adequacy of plan for providing information for 
        evaluation.--The adequacy of the plan for providing information 
        relevant to an evaluation of the project.
            (6) Other factors.--Such other factors relevant to the 
        purposes of this title as the Secretary may specify.

    (d) Preferences.--In considering an application to conduct a 
demonstration project under this title, the Secretary shall give 
preference to an application that--
            (1) demonstrates the willingness and ability to select 
        individuals described in section 408 who are predominantly from 
        households in which a child (or children) is living with the 
        child's biological or adoptive mother or father, or with the 
        child's legal guardian;
            (2) provides a commitment of non-Federal funds with a 
        proportionately greater amount of such funds committed from 
        private sector sources; and
            (3) targets such individuals residing within one or more 
        relatively well-defined neighborhoods or communities (including 
        rural communities) that experience high rates of poverty or 
        unemployment.

    (e) <<NOTE: Deadline.>> Approval.--Not later than 9 months after the 
date of enactment of this title, the Secretary shall, on a competitive 
basis, approve such applications to conduct demonstration projects under 
this title as the Secretary considers to be appropriate, taking into 
account the assessments required by subsections (c) and (d). The 
Secretary shall ensure, to the maximum extent practicable, that the 
applications that are approved involve a range of communities (both 
rural and urban) and diverse populations.

    (f) Contracts With Nonprofit Entities.--The Secretary may contract 
with an entity described in section 501(c)(3) of the Internal Revenue 
Code of 1986 and exempt from taxation under section 501(a) of such Code 
to carry out any responsibility of the Secretary under this section or 
section 412 if--
            (1) such entity demonstrates the ability to carry out such 
        responsibility; and
            (2) the Secretary can demonstrate that such responsibility 
        would not be carried out by the Secretary at a lower cost.

    (g) Grandfathering of Existing Statewide Programs.--Any statewide 
individual asset-building program that is carried out in a manner 
consistent with the purposes of this title, that is established under 
State law as of the date of enactment of this Act, and that as of such 
date is operating with an annual State appropriation of not less than 
$1,000,000 in non-Federal funds, shall be deemed to meet the eligibility 
requirements of this subtitle, and the entity carrying out the program 
shall be deemed to be a qualified entity. The Secretary shall consider 
funding the statewide program as a demonstration project described in 
this subtitle. In considering the statewide program for funding, the 
Secretary shall review an application submitted by the entity carrying 
out such statewide program under this section, notwithstanding the 
preference requirements listed in subsection (d). Any program 
requirements under sections 407 through 411 that are inconsistent with 
State statutory requirements in effect on the date of enactment of this 
Act, governing such statewide program, shall not apply to the program.

SEC. 406. DEMONSTRATION AUTHORITY; ANNUAL GRANTS.

    (a) <<NOTE: Deadline.>> Demonstration Authority.--If the Secretary 
approves an application to conduct a demonstration project under this 
title, the Secretary shall, not later than 10 months after the date of 
enactment of this title, authorize the applicant to conduct the project 
for 5 project years in accordance with the approved application and the 
requirements of this title.

    (b) Grant Authority.--For each project year of a demonstration 
project conducted under this title, the Secretary may make a grant to 
the qualified entity authorized to conduct the project. In making such a 
grant, the Secretary shall make the grant on the first day of the 
project year in an amount not to exceed the lesser of--
            (1) the aggregate amount of funds committed as matching 
        contributions from non-Federal public or private sector sources; 
        or
            (2) $1,000,000.

SEC. 407. RESERVE FUND.

    (a) Establishment.--A qualified entity under this title, other than 
a State or local government agency or a tribal government, shall 
establish a Reserve Fund that shall be maintained in accordance with 
this section.
    (b) Amounts in Reserve Fund.--
            (1) In general.--As soon after receipt as is practicable, a 
        qualified entity shall deposit in the Reserve Fund established 
        under subsection (a)--
                    (A) all funds provided to the qualified entity from 
                any public or private source in connection with the 
                demonstration project; and
                    (B) the proceeds from any investment made under 
                subsection (c)(2).
            (2) Uniform accounting regulations.--The Secretary shall 
        prescribe regulations with respect to accounting for amounts in 
        the Reserve Fund established under subsection (a).

    (c) Use of Amounts in the Reserve Fund.--
            (1) In general.--A qualified entity shall use the amounts in 
        the Reserve Fund established under subsection (a) to--
                    (A) assist participants in the demonstration project 
                in obtaining the skills (including economic literacy, 
                budgeting, credit, and counseling skills) and 
                information necessary to achieve economic self-
                sufficiency through activities requiring qualified 
                expenses;
                    (B) provide deposits in accordance with section 410 
                for individuals selected by the qualified entity to 
                participate in the demonstration project;
                    (C) administer the demonstration project; and
                    (D) provide the research organization evaluating the 
                demonstration project under section 414 with such 
                information with respect to the demonstration project as 
                may be required for the evaluation.
            (2) Authority to invest funds.--
                    (A) Guidelines.--The Secretary shall establish 
                guidelines for investing amounts in the Reserve Fund 
                established under subsection (a) in a manner that 
                provides an appropriate balance between return, 
                liquidity, and risk.
                    (B) Investment.--A qualified entity shall invest the 
                amounts in its Reserve Fund that are not immediately 
                needed to carry out the provisions of paragraph (1), in 
                accordance with the guidelines established under 
                subparagraph (A).
            (3) Limitation on uses.--Not more than 9.5 percent of the 
        amounts provided to a qualified entity under section 406(b) 
        shall be used by the qualified entity for the purposes described 
        in subparagraphs (A), (C), and (D) of paragraph (1), of which 
        not less than 2 percent of the amounts shall be used by the 
        qualified entity for the purposes described in paragraph (1)(D). 
        If two or more qualified entities are jointly administering a 
        project, no qualified entity shall use more than its 
        proportional share for the purposes described in subparagraphs 
        (A), (C), and (D) of paragraph (1).

    (d) Unused Federal Grant Funds Transferred to the Secretary When 
Project Terminates.--Notwithstanding subsection (c), upon the 
termination of any demonstration project authorized under this section, 
the qualified entity conducting the project shall transfer to the 
Secretary an amount equal to--
            (1) the amounts in its Reserve Fund at the time of the 
        termination; multiplied by
            (2) a percentage equal to--
                    (A) the aggregate amount of grants made to the 
                qualified entity under section 406(b); divided by
                    (B) the aggregate amount of all funds provided to 
                the qualified entity from all sources to conduct the 
                project.

SEC. 408. ELIGIBILITY FOR PARTICIPATION.

    (a) In General.--Any individual who is a member of a household that 
is eligible for assistance under the State temporary assistance for 
needy families program established under part A of title IV of the 
Social Security Act (42 U.S.C. 601 et seq.), or that meets each of the 
following requirements shall be eligible to participate in a 
demonstration project conducted under this title:
            (1) Income test.--The adjusted gross income of the household 
        does not exceed the earned income amount described in section 32 
        of the Internal Revenue Code of 1986 (taking into account the 
        size of the household).
            (2) Net worth test.--
                    (A) In general.--The net worth of the household, as 
                of the end of the calendar year preceding the 
                determination of eligibility, does not exceed $10,000.
                    (B) Determination of net worth.--For purposes of 
                subparagraph (A), the net worth of a household is the 
                amount equal to--
                          (i) the aggregate market value of all assets 
                      that are owned in whole or in part by any member 
                      of the household; minus
                          (ii) the obligations or debts of any member of 
                      the household.
                    (C) Exclusions.--For purposes of determining the net 
                worth of a household, a household's assets shall not be 
                considered to include the primary dwelling unit and one 
                motor vehicle owned by a member of the household.

    (b) <<NOTE: Regulations.>> Individuals Unable To Complete the 
Project.--The Secretary shall establish such regulations as are 
necessary to ensure compliance with this title if an individual 
participating in the demonstration project moves from the community in 
which the project is conducted or is otherwise unable to continue 
participating in that project, including regulations prohibiting future 
eligibility to participate in any other demonstration project conducted 
under this title.

SEC. 409. SELECTION OF INDIVIDUALS TO PARTICIPATE.

    From among the individuals eligible to participate in a 
demonstration project conducted under this title, each qualified entity 
shall select the individuals--
            (1) that the qualified entity determines to be best suited 
        to participate; and
            (2) to whom the qualified entity will provide deposits in 
        accordance with section 410.

SEC. 410. DEPOSITS BY QUALIFIED ENTITIES.

    (a) In General.--Not less than once every 3 months during each 
project year, each qualified entity under this title shall deposit in 
the individual development account of each individual participating in 
the project, or into a parallel account maintained by the qualified 
entity--
            (1) from the non-Federal funds described in section 
        405(c)(4), a matching contribution of not less than $0.50 and 
        not more than $4 for every $1 of earned income (as defined in 
        section 911(d)(2) of the Internal Revenue Code of 1986) 
        deposited in the account by a project participant during that 
        period;
            (2) from the grant made under section 406(b), an amount 
        equal to the matching contribution made under paragraph (1); and
            (3) any interest that has accrued on amounts deposited under 
        paragraph (1) or (2) on behalf of that individual into the 
        individual development account of the individual or into a 
        parallel account maintained by the qualified entity.

    (b) Limitation on Deposits for an Individual.--Not more than $2,000 
from a grant made under section 406(b) shall be provided to any one 
individual over the course of the demonstration project.
    (c) Limitation on Deposits for a Household.--Not more than $4,000 
from a grant made under section 406(b) shall be provided to any one 
household over the course of the demonstration project.
    (d) Withdrawal of Funds.--The Secretary shall establish such 
guidelines as may be necessary to ensure that funds held in an 
individual development account are not withdrawn, except for one or more 
qualified expenses, or for an emergency withdrawal. Such guidelines 
shall include a requirement that a responsible official of the qualified 
entity conducting a project approve a withdrawal from such an account in 
writing. The guidelines shall provide that no individual may withdraw 
funds from an individual development account earlier than 6 months after 
the date on which the individual first deposits funds in the account.
    (e) Reimbursement.--An individual shall reimburse an individual 
development account for any funds withdrawn from the account for an 
emergency withdrawal, not later than 12 months after the date of the 
withdrawal. If the individual fails to make the reimbursement, the 
qualified entity administering the account shall transfer the funds 
deposited into the account or a parallel account under this section to 
the Reserve Fund of the qualified entity, and use the funds to benefit 
other individuals participating in the demonstration project involved.

SEC. 411. LOCAL CONTROL OVER DEMONSTRATION PROJECTS.

    A qualified entity under this title, other than a State or local 
government agency or a tribal government, shall, subject to the 
provisions of section 413, have sole authority over the administration 
of the project. The Secretary may prescribe only such regulations or 
guidelines with respect to demonstration projects conducted under this 
title as are necessary to ensure compliance with the approved 
applications and the requirements of this title.

SEC. 412. ANNUAL PROGRESS REPORTS.

    (a) In General.--Each qualified entity under this title shall 
prepare an annual report on the progress of the demonstration project. 
Each report shall include both program and participant information and 
shall specify for the period covered by the report the following 
information:
            (1) The number and characteristics of individuals making a 
        deposit into an individual development account.
            (2) The amounts in the Reserve Fund established with respect 
        to the project.
            (3) The amounts deposited in the individual development 
        accounts.
            (4) The amounts withdrawn from the individual development 
        accounts and the purposes for which such amounts were withdrawn.
            (5) The balances remaining in the individual development 
        accounts.
            (6) The savings account characteristics (such as threshold 
        amounts and match rates) required to stimulate participation in 
        the demonstration project, and how such characteristics vary 
        among different populations or communities.
            (7) What service configurations of the qualified entity 
        (such as configurations relating to peer support, structured 
        planning exercises, mentoring, and case management) increased 
        the rate and consistency of participation in the demonstration 
        project and how such configurations varied among different 
        populations or communities.
            (8) Such other information as the Secretary may require to 
        evaluate the demonstration project.

    (b) Submission of Reports.--The qualified entity shall submit each 
report required to be prepared under subsection (a) to--
            (1) the Secretary; and
            (2) the Treasurer (or equivalent official) of the State in 
        which the project is conducted, if the State or a local 
        government or a tribal government committed funds to the 
        demonstration project.

    (c) Timing.--The first report required by subsection (a) shall be 
submitted not later than 60 days after the end of the calendar year in 
which the Secretary authorized the qualified entity to conduct the 
demonstration project, and subsequent reports shall be submitted every 
12 months thereafter, until the conclusion of the project.

SEC. 413. SANCTIONS.

    (a) Authority To Terminate Demonstration Project.--If the Secretary 
determines that a qualified entity under this title is not operating a 
demonstration project in accordance with the entity's approved 
application under section 405 or the requirements of this title (and has 
not implemented any corrective recommendations directed by the 
Secretary), the Secretary shall terminate such entity's authority to 
conduct the demonstration project.
    (b) Actions Required Upon Termination.--If the Secretary terminates 
the authority to conduct a demonstration project, the Secretary--
            (1) shall suspend the demonstration project;
            (2) shall take control of the Reserve Fund established 
        pursuant to section 407;
            (3) shall make every effort to identify another qualified 
        entity (or entities) willing and able to conduct the project in 
        accordance with the approved application (or, if modification is 
        necessary to incorporate the recommendations, the application as 
        modified) and the requirements of this title;
            (4) shall, if the Secretary identifies an entity (or 
        entities) described in paragraph (3)--
                    (A) authorize the entity (or entities) to conduct 
                the project in accordance with the approved application 
                (or, if modification is necessary to incorporate the 
                recommendations, the application as modified) and the 
                requirements of this title;
                    (B) transfer to the entity (or entities) control 
                over the Reserve Fund established pursuant to section 
                407; and
                    (C) consider, for purposes of this title--
                          (i) such other entity (or entities) to be the 
                      qualified entity (or entities) originally 
                      authorized to conduct the demonstration project; 
                      and
                          (ii) the date of such authorization to be the 
                      date of the original authorization; and
            (5) if, by the end of the 1-year period beginning on the 
        date of the termination, the Secretary has not found a qualified 
        entity (or entities) described in paragraph (3), shall--
                    (A) terminate the project; and
                    (B) from the amount remaining in the Reserve Fund 
                established as part of the project, remit to each source 
                that provided funds under section 405(c)(4) to the 
                entity originally authorized to conduct the project, an 
                amount that bears the same ratio to the amount so 
                remaining as the amount provided from the source under 
                section 405(c)(4) bears to the amount provided from all 
                such sources under that section.

SEC. 414. EVALUATIONS.

    (a) <<NOTE: Deadline. Contracts.>> In General.--Not later than 10 
months after the date of enactment of this title, the Secretary shall 
enter into a contract with an independent research organization to 
evaluate the demonstration projects conducted under this title, 
individually and as a group, including evaluating all qualified entities 
participating in and sources providing funds for the demonstration 
projects conducted under this title.

    (b) Factors To Evaluate.--In evaluating any demonstration project 
conducted under this title, the research organization shall address the 
following factors:
            (1) The effects of incentives and organizational or 
        institutional support on savings behavior in the demonstration 
        project.
            (2) The savings rates of individuals in the demonstration 
        project based on demographic characteristics including gender, 
        age, family size, race or ethnic background, and income.
            (3) The economic, civic, psychological, and social effects 
        of asset accumulation, and how such effects vary among different 
        populations or communities.
            (4) The effects of individual development accounts on 
        savings rates, homeownership, level of postsecondary education 
        attained, and self-employment, and how such effects vary among 
        different populations or communities.
            (5) The potential financial returns to the Federal 
        Government and to other public sector and private sector 
        investors in individual development accounts over a 5-year and 
        10-year period of time.
            (6) The lessons to be learned from the demonstration 
        projects conducted under this title and if a permanent program 
        of individual development accounts should be established.
            (7) Such other factors as may be prescribed by the 
        Secretary.

    (c) Methodological Requirements.--In evaluating any demonstration 
project conducted under this title, the research organization shall--
            (1) for at least one site, use control groups to compare 
        participants with nonparticipants;
            (2) before, during, and after the project, obtain such 
        quantitative data as are necessary to evaluate the project 
        thoroughly; and
            (3) develop a qualitative assessment, derived from sources 
        such as in-depth interviews, of how asset accumulation affects 
        individuals and families.

    (d) Reports by the Secretary.-- <<NOTE: Deadlines.>> 
            (1) Interim reports.--Not later than 90 days after the end 
        of the calendar year in which the Secretary first authorizes a 
        qualified entity to conduct a demonstration project under this 
        title, and every 12 months thereafter until all demonstration 
        projects conducted under this title are completed, the Secretary 
        shall submit to Congress an interim report setting forth the 
        results of the reports submitted pursuant to section 412(b).
            (2) Final reports.--Not later than 12 months after the 
        conclusion of all demonstration projects conducted under this 
        title, the Secretary shall submit to Congress a final report 
        setting forth the results and findings of all reports and 
        evaluations conducted pursuant to this title.

    (e) Evaluation Expenses.--The Secretary shall expend 2 percent of 
the amount appropriated under section 416 for a fiscal year, to carry 
out the objectives of this section.

SEC. 415. TREATMENT OF FUNDS.

    Of the funds deposited in individual development accounts for 
eligible individuals, only the funds deposited by the individuals 
(including interest accruing on those funds) may be considered to be the 
income, assets, or resources of the individuals, for purposes of 
determining eligibility for, or the amount of assistance furnished 
under, any Federal or federally assisted program based on need.

SEC. 416. AUTHORIZATION OF APPROPRIATIONS.

    There is authorized to be appropriated to carry out this title, 
$25,000,000 for each of fiscal years 1999, 2000, 2001, 2002, and 2003, 
to remain available until expended.

    Approved October 27, 1998.

LEGISLATIVE HISTORY--S. 2206:
---------------------------------------------------------------------------

HOUSE REPORTS: No. 105-788 (Comm. of Conference).
SENATE REPORTS: No. 105-256 (Comm. on Labor and Human Resources).
CONGRESSIONAL RECORD, Vol. 144 (1998):
            July 27, considered and passed Senate.
            Sept. 14, considered and passed House, amended.
            Oct. 8, House and Senate agreed to conference report.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 34 (1998):
            Oct. 27, Presidential statement.

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