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H.R. 4271 (105th): Community Services Authorization Act of 1998


The text of the bill below is as of Aug 7, 1998 (Reported by House Committee). The bill was not enacted into law.


HR 4271 RH

Union Calendar No. 388

105th CONGRESS

2d Session

H. R. 4271

[Report No. 105-686]

To amend the Community Services Block Grant Act to reauthorize and make improvements to that Act.

IN THE HOUSE OF REPRESENTATIVES

July 17, 1998

Mr. RIGGS (for himself, Mr. GOODLING, Mr. BARRETT of Nebraska, Mr. GREENWOOD, and Mr. PETERSON of Pennsylvania) introduced the following bill; which was referred to the Committee on Education and the Workforce

August 7, 1998

Additional sponsor: Mr. Souder

August 7, 1998

Reported with amendments, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed

[Strike out all after the enacting clause and insert the part printed in italic]

[For text of introduced bill, see copy of bill as introduced on July 17, 1998]


A BILL

To amend the Community Services Block Grant Act to reauthorize and make improvements to that Act.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

TITLE I--AMENDMENTS TO THE COMMUNITY SERVICES BLOCK GRANT ACT

SEC. 101. SHORT TITLE.

    This title may be cited as the ‘Community Services Authorization Act of 1998’.

SEC. 102. REAUTHORIZATION.

    The heading for subtitle B, and sections 671 through 680, of the Community Services Block Grant Act (42 U.S.C. 9901-9909) are amended to read as follows:

‘Subtitle B--Community Services Block Grant Program

‘SEC. 671. SHORT TITLE.

    ‘This subtitle may be cited as the ‘Community Services Block Grant Act’.

‘SEC. 672. PURPOSES AND GOALS.

    ‘The purpose of this subtitle is 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.)). Such goals may be accomplished through--

      ‘(1) the strengthening of community capabilities for planning, coordinating, and utilizing a broad range of Federal, State, local, and private resources for the elimination of poverty, and for helping individuals and families achieve self-sufficiency;

      ‘(2) greater use of innovative and effective, community-based approaches to attacking the causes and effects of poverty and of community breakdown;

      ‘(3) the maximum participation of residents of the low-income communities and members of the groups served by programs assisted through the block grant to empower such individuals to respond to the unique problems and needs within their communities; and

      ‘(4) the broadening of the resource base of programs directed to the elimination of poverty so as to secure a more active role for private, faith-based, charitable, and neighborhood organizations in the provision of services as well as individual citizens, business, labor, and professional groups who are able to influence the quantity and quality of opportunities and services for the poor.

‘SEC. 673. DEFINITIONS.

    ‘In this subtitle:

      ‘(1) ELIGIBLE ENTITY- The term ‘eligible entity’ means an entity--

        ‘(A) that is an eligible entity described in section 673(1) (as in effect on the day before the date of enactment of the Human Services Reauthorization Act of 1998) as of 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

        ‘(B) that has a tripartite board or other mechanism described in subsection (a) or (b), as appropriate, of section 676B.

      ‘(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 the poverty line annually (or at any shorter interval the Secretary determines to be feasible and desirable) 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 faith-based 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, but for fiscal years ending before October 1, 2001, includes the Federated States of Micronesia, the Republic of the Marshall Islands, and Palau.

‘SEC. 674. AUTHORIZATION OF APPROPRIATIONS.

    ‘(a) IN GENERAL- There are authorized to be appropriated $535,000,000 for fiscal year 1999 and such sums as may be necessary for each of fiscal years 2000 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 local eligible entities or to statewide organizations whose membership is composed of eligible entities, as required under section 678A(c) for the purpose of carrying out activities described in section 678A; and

        ‘(B) 1/2 of the remainder of the amount reserved by the Secretary under this paragraph shall be used to carry out monitoring, evaluation, and corrective activities described in sections 678B(c) and 678A; and

      ‘(3) not more than 9 percent for carrying out section 680 (relating to discretionary activities).

‘SEC. 675. ESTABLISHMENT OF BLOCK GRANT PROGRAM.

    ‘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.

    ‘(a) APPORTIONMENT- The Secretary shall apportion the amount reserved under section 674(b)(1)--

      ‘(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; and

      ‘(2) for fiscal years ending before October 1, 2001, and subject to subsection (c), on the basis of need among the Federated States of Micronesia, the Republic of the Marshall Islands, and Palau.

    ‘(b) APPLICATION- Each jurisdiction to which subsection (a) applies may receive a grant under this subtitle 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 subtitle, and that are consistent with the requirements of section 676.

    ‘(c) LIMITATION- (1) Funds apportioned under subsection (a) for the Federated States of Micronesia, the Republic of the Marshall Islands, and Palau shall be used by

the Secretary to make grants on a competitive basis, pursuant to recommendations submitted to the Secretary by the Pacific Region Educational Laboratory of the Department of Education, to the Federated States of Micronesia, the Republic of the Marshall Islands, Palau, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands, for the purpose of carrying out programs in accordance with this subtitle.

    ‘(2) Not more than 5 percent of such funds may be used by the Secretary to compensate the Pacific Region Educational Laboratory of the Department of Education for administrative costs incurred in connection with making recommendations under paragraph (1).

    ‘(3) Notwithstanding any other provision of law, the Federated States of Micronesia, the Republic of the Marshall Islands, and Palau shall not receive any funds under this subtitle for any fiscal year that begins after September 30, 2001.

‘SEC. 675B. ALLOTMENTS AND PAYMENTS TO STATES.

    ‘(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 that no State shall receive less than 1/4 of 1 percent of the amount appropriated under section 674(a) for such fiscal year.

    ‘(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 subsection (a) to such State for fiscal year 1990.

      ‘(3) MAXIMUM ALLOTMENTS- The amount allotted under paragraph (1) to a State shall be reduced for a fiscal year, 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 fiscal year preceding the fiscal year for which a determination is made under this subsection.

    ‘(c) ALLOTMENT OF ADDITIONAL FUNDS- Notwithstanding subsections (a) and (b), in any fiscal year in which the amount appropriated under section 674(a) exceeds the amount appropriated under such section for fiscal year 1999, such excess shall be allotted among the States proportionately based on--

      ‘(1) the number of public assistance recipients in the respective States;

      ‘(2) the number of unemployed individuals in the respective States; and

      ‘(3) the number of individuals with incomes below the poverty line in the respective States.

    ‘(d) PAYMENTS- The Secretary shall make payments to eligible States from the allotments made under this section. The Secretary shall make payments for the grants in accordance with section 6503(a) of title 31, United States Code.

    ‘(e) DEFINITION- For purposes of 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.

    ‘(a) GRANTS TO LOCAL ELIGIBLE ENTITIES AND OTHER ORGANIZATIONS-

      ‘(1) IN GENERAL- Not less than 90 percent of the funds allotted to a State under section 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, in accordance with 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 State allotment to make grants under subsection (a), the State shall use the remainder of the allotment (subject to paragraph (2)) for--

        ‘(A) providing training and technical assistance to those entities in need of such training and assistance;

        ‘(B) coordinating State-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 other activities, consistent with the purposes of this subtitle; and

        ‘(H) State charity tax credits as described in subsection (c).

      ‘(2) ADMINISTRATIVE CAP- No State may spend more than the greater of $55,000, or 5 percent, of the State’s 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 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.

    ‘(c)(1) Notwithstanding any other provision of law and subject to paragraph (2), if there is in effect under State law a charity tax credit, then the State may use for any purpose the amount of the allotment that is not expended under subsections (a) and (b).

    ‘(2) 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) For purposes of 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 which does not impose an income tax, a comparable benefit) which 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) which 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) a community action agency as defined in the Economic Opportunity Act of 1964; 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) which 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, which 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) which solicits and collects gifts and grants which, by agreement, are distributed to qualified charities described in clause (i);

            ‘(bb) which distributes to qualified charities described in clause (i) at least 90 percent of the gifts and grants it receives that are designated for such qualified charities; and

            ‘(cc) which 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 official poverty line (as defined by the Office of Management and Budget) 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 which 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 operation 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 program 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 which consists of a payment to an affiliate of the organization.

        ‘(v) REPORTING REQUIREMENT- The information required to be furnished under this clause is--

          ‘(i) the percentages determined by dividing the following categories of the organization’s expenses for the year by its total

expenses for the year: program services, management expenses, general expenses, fundraising expenses, and payments to affiliates; and

          ‘(ii) the category or categories (including food, shelter, education, substance abuse, job training, or otherwise) of services which constitute its predominant activities.

        ‘(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 its administrative and fundraising costs and information as to the organizations receiving funds from it and the amount of such funds.

        ‘(vii) SPECIAL RULE FOR STATES REQUIRING TAX UNIFORMITY- In the case of a State--

          ‘(I) which has a constitutional requirement of tax uniformity; and

          ‘(II) which, 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 is limited to a uniform percentage (but not greater than 25 percent) of State personal income tax liability (determined without regard to credits).

‘SEC. 676. APPLICATION AND PLAN.

    ‘(a) DESIGNATION OF LEAD AGENCY-

      ‘(1) DESIGNATION- The chief executive officer of a State desiring to receive an allotment under this subtitle 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 1 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 allotment for the period covered by the State plan; and

        ‘(C) conduct reviews of eligible entities under section 678B.

      ‘(3) LEGISLATIVE HEARING- The State shall hold at least 1 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 an allotment under this subtitle, 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 allotment will be used to support activities that are designed to assist low-income families and individuals, including families and individuals receiving assistance under title IV of the Social Security Act, 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--

        ‘(A) to remove obstacles and solve problems that block the achievement of self-sufficiency (particularly for families and individuals who are attempting to transition off a State program carried out under title IV of the Social Security Act);

        ‘(B) to secure and retain meaningful employment;

        ‘(C) to attain an adequate education with particular attention toward improving literacy skills of the low-income families in the community, which may include family literacy initiatives;

        ‘(D) to make better use of available income;

        ‘(E) to obtain and maintain adequate housing and a suitable living environment;

        ‘(F) to obtain emergency assistance through loans, grants, or other means to meet immediate and urgent individual and family needs;

        ‘(G) to achieve greater participation in the affairs of the community, including activities that strengthen and improve the relationship with local law enforcement agencies, which may include activities such as neighborhood or community policing efforts;

        ‘(H) 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 prevention of youth problems and crime, promote increased community coordination and collaboration in meeting the needs of youth, and support development and expansion of innovative community-based youth development programs, which may include after-school child care programs; and

        ‘(I) 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 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) based on information provided by eligible entities in the State, a description of--

        ‘(A) the service delivery system, for services provided or coordinated with funds made available through the allotment, 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 the allotment will be coordinated with other public and private resources; and

        ‘(D) a description of how the funds will be used to support innovative community and neighborhood-based initiatives related to the purposes of this subtitle which may include fatherhood and other initiatives with the goal of strengthening families and encouraging parental responsibility;

      ‘(4) an assurance that local 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 local 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 (including a description of how the State and the local eligible entities will coordinate with State and local workforce investment systems in the provision of employment and training services in the State and in local communities);

      ‘(6) an assurance that the State will ensure coordination between antipoverty programs in each community, 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 that received funding in the previous fiscal year 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 local 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 faith-based organizations, charitable groups, and community organizations;

      ‘(10) an assurance that the State will require each eligible entity to establish procedures under which a low-income individual, community organization, or faith-based 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, as a condition to receipt of funding by the entity 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 established 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 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 to provide services under this subtitle; and

      ‘(2) a termination, the term ‘cause’ includes the material failure of an eligible entity to comply with the terms of such an agreement and the State plan to provide services under this subtitle or the consistent failure of the entity to achieve performance measures as determined by the State.

    ‘(d) PROCEDURES AND INFORMATION- The Secretary may prescribe procedures only 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.

‘SEC. 676A. 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 eligible entity located in an area contiguous to or within reasonable proximity of the unserved area that is already providing related services in the unserved area; or

        ‘(B) a private nonprofit organization 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.

      ‘(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 3 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), by members that reside in the neighborhood 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 local eligible entities that are already 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.

    ‘(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 and implementation of the program to serve low-income communities or groups.

      ‘(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 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) 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;

        ‘(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; and

        ‘(D) each representative of low-income individuals and families selected to represent a specific neighborhood within a community under subparagraph (B) resides in the neighborhood represented by the member.

    ‘(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 planning and implementation 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 planning, administration, and evaluation of programs funded under this subtitle.

‘SEC. 677. PAYMENTS TO INDIAN TRIBES.

    ‘(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 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 of Indians 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.

    ‘(a) OFFICE- The 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, COOPERATIVE AGREEMENTS- The Secretary shall carry out functions of this subtitle through grants, contracts, or cooperative agreements.

‘SEC. 678A. TRAINING AND TECHNICAL ASSISTANCE.

    ‘(a) ACTIVITIES- The Secretary shall use the amounts reserved in section 674(b)(2) for training, technical assistance, planning, evaluation, performance measurement, corrective action activities (to correct programmatic deficiencies of eligible entities), reporting, and data collection activities related to programs carried out under this subtitle, and in accordance with subsection (c). Training and technical assistance activities may be carried out by the Secretary through grants, contracts, or cooperative agreements with eligible entities or with organizations or associations whose membership is composed of eligible entities or agencies that administer programs for eligible entities.

    ‘(b) 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 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 network of eligible entities.

    ‘(c) DISTRIBUTION REQUIREMENT- Of the amounts reserved under section 674(b)(2) for activities to be carried out under this section, not less than 1/2 of such amounts shall be distributed directly to local eligible entities or to statewide organizations whose membership is composed of eligible entities for the purpose of improving program quality (including financial management practices), management information and reporting systems, measurement of program results, and for the purpose of ensuring responsiveness to local neighborhood needs.

‘SEC. 678B. MONITORING OF ELIGIBLE ENTITIES.

    ‘(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 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 and 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 subsection (b) of section 676. A report of such evaluations, together with recommendations of improvements designed to enhance the benefit and impact to people in need, shall be sent to each State evaluated. Upon receiving the report the State shall submit a plan of action in response to the recommendations contained in the report. The results of the evaluations shall be submitted annually to the Chairman of the Committee on Education and the Workforce of the House of Representatives and the Chairman 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. CORRECTIVE ACTION; TERMINATION AND REDUCTION OF FUNDING.

    ‘(a) DETERMINATION- If the State determines, on the basis of a review pursuant to subsection 678B, that an eligible entity materially 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. The review shall be completed not later than 120 days after the determination to terminate the designation or reduce the funding. If the review is not completed within 120 days, the determination of the State shall become final at the end of the 120th 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’s hearing and the Secretary’s review as required in subsection (b), the Secretary shall assume responsibility for providing financial assistance to the eligible entity affected until the violation is corrected. In such case, the allotment for the State 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.

    ‘(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 funds under this subtitle;

        ‘(C) prepare, at least every year in accordance with paragraph (2) 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- 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. 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 State allotment substantially 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 1 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.

    ‘(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 established by the Secretary pursuant to subsection (b), or an alternative system that meets the requirements of subsection (b).

        ‘(B) LOCAL AGENCIES- The State may elect to have local agencies who 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. 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 indirect services or 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 1 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 indirect services or 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 prior to the start of the fiscal year 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, indirect, 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) and the provision of technical assistance described in paragraph (1).

‘SEC. 678F. LIMITATIONS ON USE OF FUNDS.

    ‘(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, religion, 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) 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.), or section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), 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. 679. OPERATIONAL RULE.

    ‘(a) FAITH-BASED 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, faith-based 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 faith-based character.

    ‘(b) ADDITIONAL SAFEGUARDS- Neither the Federal Government nor a State or local government shall require a faith-based organization to remove religious art, icons, scripture, or other symbols in order to be eligible to provide assistance under a program described in subsection (a).

    ‘(c) LIMITATIONS ON USE OF FUNDS FOR CERTAIN PURPOSES- No funds provided to a faith-based 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 faith-based 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.

‘SEC. 680. DISCRETIONARY AUTHORITY OF THE SECRETARY.

    ‘(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 (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, non-profit 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--

        ‘(A) grants to private, nonprofit corporations that provide assistance concerning home repair to rural low-income families and planning and developing low-income rural rental housing units; and

        ‘(B) grants to multistate, regional, private, nonprofit organizations to provide training and technical assistance to small, rural communities in 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 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 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) 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. 103. RELATED AMENDMENTS.

    The Community Services Block Grant Act (42 U.S.C. 9901 et seq.) is amended--

      (1) by striking section 681;

      (2) in section 681A--

        (A) by striking ‘681A’ and inserting ‘681’;

        (B) in subsection (c) by striking ‘Labor’ and inserting ‘the Workforce’; and

        (C) in subsection (d) by striking ‘$25,000,000’ and all that follows through ‘1998’, and inserting ‘$5,000,000 for fiscal year 1999, and such sums as may be necessary for fiscal years 2000 through 2003’;

      (3) in section 682--

        (A) in subsection (c)--

          (i) by redesignating paragraphs (3) and (4) as paragraphs (4) and (5), respectively; and

          (ii) by inserting after paragraph (2) the following:

      ‘(3) the applicant shall, in each community in which a program is funded under this section--

        ‘(A) ensure that--

          ‘(i) a community-based advisory committee, composed of representatives of local youth, family, and social service organizations, schools, entities that provide park and recreation services, entities that provide training services, and community-based organizations that serve high-risk youth, is established; or

          ‘(ii) an existing community-based advisory board, commission, or committee with similar membership is used; and

        ‘(B) 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;’; and

        (B) in subsection (f) by striking ‘each fiscal year’ and all that follows through ‘1998’, and inserting ‘for fiscal year 1999, and such sums as may be necessary for fiscal years 2000 through 2003’; and

      (4) by striking sections 683 and 684, and inserting the following:

‘SEC. 683. DRUG TESTING AND PATERNITY DETERMINATIONS.

    ‘(a) DRUG TESTING PERMITTED- (1) Nothing in this subtitle shall be construed to prohibit a State from testing participants in programs, activities, or services carried out under this subtitle for controlled substances or from imposing sanctions on such participants who test positive for any of such substances.

    ‘(2) 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 675(b)(2).

    ‘(b) PATERNITY DETERMINATIONS- 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 under this subtitle about the availability of child support services;

      ‘(2) refer eligible parents to the child support offices of State and local governments; and

      ‘(3) establish referral arrangements with such offices.

‘SEC. 684. REFERENCES.

    ‘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 of this subtitle. 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. 104. ASSETS FOR INDEPENDENCE.

    The Community Services Block Grant Act (42 U.S.C. 9901-9912), as amended by sections 102 and 103, is amended--

      (1) by striking ‘this subtitle’ each place it appears (other than in section 671) and inserting ‘this part’, and

      (2) by inserting the following after section 671:

‘PART A--COMMUNITY SERVICES GRANTS’,

      and

      (3) by adding at the end the following:

‘PART B--ASSETS FOR INDEPENDENCE

‘SEC. 685. SHORT TITLE.

    ‘This part may be cited as the ‘Assets for Independence Act’.

‘SEC. 686. 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. 687. PURPOSES.

    ‘The purposes of this part 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 they live.

‘SEC. 688. DEFINITIONS.

    ‘In this part:

      ‘(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 by a qualified entity under section 693.

      ‘(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 meets the following requirements:

          ‘(i) No contribution will be accepted unless it 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 694.

          ‘(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 which is attributable to a deposit provided under section 694 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 part, 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 part, 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 thereof.

      ‘(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 689 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 part.

      ‘(8) QUALIFIED EXPENSES- The term ‘qualified expenses’ means 1 or more of the following, as provided by the 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 481(a)(1) or 1201(a) of the Higher Education Act of 1965 (20 U.S.C. 1088(a)(1) or 1141(a)), as such sections are in effect on the date of enactment of this part.

            ‘(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 part.

        ‘(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 principal 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 (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 which 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 the 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.

      ‘(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. 689. APPLICATIONS.

    ‘(a) ANNOUNCEMENT OF DEMONSTRATION PROJECTS- Not later than 3 months after the date of enactment of this part, the Secretary shall publicly announce the availability of funding under this part for demonstration projects and shall ensure that applications to conduct the demonstration projects are widely available to qualified entities.

    ‘(b) SUBMISSION- Not later than 6 months after the date of enactment of this part, a qualified entity may submit to the Secretary an application to conduct a demonstration project under this part.

    ‘(c) CRITERIA- In considering whether to approve an application to conduct a demonstration project under this part, 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 qualified expenses. In making such assessment, the Secretary shall consider the overall quality of project activities in making any particular kind or combination of qualified expenses to be an essential feature of any project.

      ‘(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 part as the Secretary may specify.

    ‘(d) PREFERENCES- In considering an application to conduct a demonstration project under this part, the Secretary shall give preference to an application that--

      ‘(1) demonstrates the willingness and ability to select individuals described in section 692 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 by private sector sources; and

      ‘(3) targets such individuals residing within 1 or more relatively well-defined neighborhoods or communities (including rural communities) that experience high rates of poverty or unemployment.

    ‘(e) APPROVAL- Not later than 9 months after the date of enactment of this part, the Secretary shall, on a competitive basis, approve such applications to conduct demonstration projects under this part as the Secretary deems appropriate, taking into account the assessments required by subsections (c) and (d). The Secretary is encouraged to ensure 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 conduct

any responsibility of the Secretary under this section or section 696 if--

      ‘(1) such entity demonstrates the ability to conduct such responsibility; and

      ‘(2) the Secretary can demonstrate that such responsibility would not be conducted by the Secretary at a lower cost.

‘SEC. 690. DEMONSTRATION AUTHORITY; ANNUAL GRANTS.

    ‘(a) DEMONSTRATION AUTHORITY- If the Secretary approves an application to conduct a demonstration project under this part, the Secretary shall, not later than 10 months after the date of enactment of this part, authorize the applicant to conduct the project for 5 project years in accordance with the approved application and the requirements of this part.

    ‘(b) GRANT AUTHORITY- For each project year of a demonstration project conducted under this part, 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 by non-Federal public or private sector sources; or

      ‘(2) $1,000,000.

‘SEC. 691. RESERVE FUND.

    ‘(a) ESTABLISHMENT- A qualified entity under this part, other than a State or local government agency, or a tribal government, shall establish a Reserve Fund which 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 by 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) and information necessary to achieve economic self-sufficiency through activities requiring qualified expenses;

        ‘(B) provide deposits in accordance with section 694 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 698 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 698(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 2 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 time of the termination; multiplied by

      ‘(2) a percentage equal to--

        ‘(A) the aggregate amount of grants made to the qualified entity under section 698(b); divided by

        ‘(B) the aggregate amount of all funds provided to the qualified entity by all sources to conduct the project.

‘SEC. 692. 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 part:

      ‘(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 1 motor vehicle owned by the household.

    ‘(b) INDIVIDUALS UNABLE TO COMPLETE THE PROJECT- The Secretary shall establish such regulations as are necessary, including prohibiting future eligibility to participate in any other demonstration project conducted under this part, to ensure compliance with this part 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.

‘SEC. 693. SELECTION OF INDIVIDUALS TO PARTICIPATE.

    ‘From among the individuals eligible to participate in a demonstration project conducted under this part, each qualified entity shall select the individuals--

      ‘(1) that the qualified entity deems to be best suited to participate; and

      ‘(2) to whom the qualified entity will provide deposits in accordance with section 694.

‘SEC. 694. DEPOSITS BY QUALIFIED ENTITIES.

    ‘(a) IN GENERAL- Not less than once every 3 months during each project year, each qualified entity under this Act 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 689(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 690(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 690(b) shall be provided to any 1 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 690(b) shall be provided to any 1 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 1 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 such withdrawal 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 section 694 to the Reserve Fund of the qualified entity, and

use the funds to benefit other individuals participating in the demonstration project involved.

‘SEC. 695. LOCAL CONTROL OVER DEMONSTRATION PROJECTS.

    ‘A qualified entity under this part, other than a State or local government agency or a tribal government, shall, subject to the provisions of section 697, 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 part as are necessary to ensure compliance with the approved applications and the requirements of this part.

‘SEC. 696. ANNUAL PROGRESS REPORTS.

    ‘(a) IN GENERAL- Each qualified entity under this part 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 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. 697. SANCTIONS.

    ‘(a) AUTHORITY TO TERMINATE DEMONSTRATION PROJECT- If the Secretary determines that a qualified entity under this part is not operating the demonstration project in accordance with the entity’s application or the requirements of this part (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 691;

      ‘(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, as modified, if necessary to incorporate the recommendations) and the requirements of this part;

      ‘(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, as modified, if necessary, to incorporate the recommendations) and the requirements of this part;

        ‘(B) transfer to the entity (or entities) control over the Reserve Fund established pursuant to section 691; and

        ‘(C) consider, for purposes of this part--

          ‘(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 689(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 by the source under section 689(c)(4) bears to the amount provided by all such sources under that section.

‘SEC. 698. EVALUATIONS.

    ‘(a) IN GENERAL- Not later than 10 months after the date of enactment of this part, the Secretary shall enter into a contract with an independent research organization to evaluate, individually and as a group, all qualified entities and sources participating in the demonstration projects conducted under this part.

    ‘(b) FACTORS TO EVALUATE- In evaluating any demonstration project conducted under this part, 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 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 part 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 part, the research organization shall--

      ‘(1) for at least 1 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-

      ‘(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 part, and every 12 months thereafter until all demonstration projects conducted under this part are completed, the Secretary shall submit to Congress an interim report setting forth the results of the reports submitted pursuant to section 696(b).

      ‘(2) FINAL REPORTS- Not later than 12 months after the conclusion of all demonstration projects conducted under this part, the Secretary shall submit to Congress a final report setting forth the results and findings of all reports and evaluations conducted pursuant to this part.

    ‘(e) EVALUATION EXPENSES- The Secretary shall expend such sums as may be necessary, but not less than 2 percent of the amount appropriated under section 699A for a fiscal year, to carry out the purposes of this section.

‘SEC. 699. 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 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. 699A. AUTHORIZATION OF APPROPRIATIONS.

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

SEC. 105. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

    (a) EFFECTIVE DATE- Except as provided in subsection (b), this title and the amendments made by this title shall take effect on the date of the enactment of this Act.

    (b) APPLICATION OF AMENDMENTS- The amendments made by this title shall not apply with respect to fiscal years ending before October 1, 1998.

TITLE II--AMENDMENTS TO THE LOW-INCOME HOME ENERGY ASSISTANCE ACT OF 1981

SEC. 201. SHORT TITLE.

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

SEC. 202. 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 ‘, $1,100,000,000 for fiscal year 2000, and such sums as may be necessary for fiscal year 2001’ after ‘1995 through 1999’.

    (b) PROGRAM YEAR- Section 2602(c) of such Act (42 U.S.C. 8621(c)) is amended to read as follows:

    ‘(c) Amounts appropriated under this section in 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 by striking ‘for each of the fiscal years 1996’ and all that follows through the period at the end, and inserting ‘for each of the fiscal years 1999, 2000, and 2001.’.

    (d) TECHNICAL AMENDMENT- Section 2602(e) of such Act (42 U.S.C. 8621(e)) is amended by striking ‘subsection (g)’ and inserting ‘subsection (e) of such section’.

SEC. 203. 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. 204. 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) NATURAL DISASTER- 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) EMERGENCY- 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 such Act (42 U.S.C. 8623(g)) is amended by striking the last 2 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, whether a Member of Congress has requested that the State receive the allotment, and such other factors as the Secretary may find to be relevant. 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. 205. 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. 206. 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.’; and

      (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. 207. 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. 208. RESIDENTIAL ENERGY ASSISTANCE CHALLENGE OPTION.

    (a) EVALUATION- The Comptroller General 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) REPORT- Not later than 2 years after the date of enactment of this Act, the Comptroller General 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 such Act (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).

Amend the title so as to read: ‘A bill to amend the Community Services Block Grant Act to reauthorize and make improvements to that Act; and to amend the Low-Income Home Energy Assistance Act of 1981 to reauthorize and make improvements to that Act.’.