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105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     105-686
_______________________________________________________________________


 
COMMUNITY SERVICES AUTHORIZATION ACT OF 1998 AND LOW-INCOME HOME ENERGY 
                     ASSISTANCE AMENDMENTS OF 1998

_______________________________________________________________________


 August 7, 1998.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

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

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 4271]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Education and the Workforce, to whom was 
referred the bill (H.R. 4271) to amend the Community Services 
Block Grant Act to reauthorize and make improvements to that 
Act, having considered the same, report favorably thereon with 
amendments and recommend that the bill as amended do pass.
  The amendments are as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

     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 MarianaIslands, but for 
fiscal years ending before October 1, 2001, includes the Federated 
States of Micronesia, the Republic of he 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 thesemembers 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 usedby 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 
intocontracts 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 followsthrough 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.

                                Purpose

    The purpose of this Act is to extend the authorization of 
the Community Services Block Grant (CSBG) through the year 
2003, and make changes in the program that will better enable 
States and local communities to eradicate poverty, revitalize 
high poverty neighborhoods, and empower low-income individuals 
and communities to become self-sufficient. The bill also 
extends the authorization of the Low-Income Home Energy 
Assistance Program (LIHEAP) through the year 2001 and makes 
needed technical changes.

                            Committee Action

    The Committee on Education and the Workforce held one 
hearing on the Low-Income Home Energy Assistance Program 
(LIHEAP) on April 8, and one hearing on the Community Services 
Block Grant (CSBG) on June 5, 1998.
    The April 8, 1997 hearing was held by the Early Childhood, 
Youth and Families Subcommittee in Washington, D.C. The 
Subcommittee received testimony from the Honorable John Porter 
(R-IL); the Honorable Joe Moakley (D-MA); the Honorable Jack 
Quinn (R-NY); the Honorable Bernie Sanders (I-VT); the 
Honorable Dan Miller (R-FL); the Honorable Joe Kennedy (D-MA); 
Steve Asher, Managing Director, Washington State Department of 
Community, Trade and Economic Development, Olympia, Washington; 
Ruth Lampi, Executive Director, National Fuel Fund Network, 
Silver Spring, Maryland; Tom Schatz, President, Citizens 
Against Government Waste, Washington, DC; Sara Ellison, 
Director of Community Relations, Northeast Utilities, Hartford, 
Connecticut; Joel Eisenberg, Oak Ridge National Laboratory, 
Washington, DC; Val Martinez, Energy Services Director, Redwood 
Community Action Agency, Eureka, California; and Connie 
Tolbert, Former LIHEAP Beneficiary, Baltimore, Maryland.
    The June 5, 1998 hearing on CSBG was also held by the Early 
Childhood, Youth and Families Subcommittee in Washington, D.C. 
The Subcommittee received testimony from Michael Micciche, 
Director, State of California Department of Community Services 
and Development, Sacramento, California; the Honorable Carlton 
Mitchell, Deputy Commissioner for Community Development, 
Department of Youth and Community Development, City of New 
York, New York; Lloyd Throne, Executive Director, Redwood 
Community Action Agency, Eureka, California; Melissa Glatz, 
Former Program Participant, Carlisle, Pennsylvania; and Steven 
Musselwhite, President, Musselwhite and Associates, and 
Chairman, Total Action Against Poverty Community Action 
Program, Roanoke, Virginia. The Subcommittee also received 
testimony from Mary Nelson, Director, Bethel New Life Community 
Development Corporation, Chicago, Illinois; Mary Dupont, 
Director, Working Capital Program, YWCA of New Castle County, 
Wilmington, Delaware; Wilmington, Delaware; Janice McCree, 
Carver Tenants Association, Washington, D.C.; and Jerry 
Rickett, President, Kentucky Highlands Investment Corporation, 
London, Kentucky.

                           Legislative Action

    On July 17, 1998, Representative Frank Riggs (R-CA) 
introduced H.R. 4271, the Community Services Block Grant Act.
    On July 29, 1998, the Committee on Education and the 
Workforce assembled to consider H.R. 4271, the Community 
Services Block Grant Act. H.R. 4271, as amended, was favorably 
reported by the Education and the Workforce Committee by a 
voice vote.

                                Summary

    The Community Services Authorization Act of 1998 extends 
the authorization for, and makes improvements to the Community 
Services Block Grant Act and the Low-Income Home Energy 
Assistance Act of 1981.
    Title I of the bill extends the authorization of the 
Community Services Block Grant at $535 million for fiscal year 
1999, and such sums as may be necessary for fiscal years 2000 
through 2003.
    The bill requires each recipient of CSBG funds to 
participate in a performance measurement system that is 
developed through a collaboration between the States and local 
eligible entities, facilitated by the Secretary of Health and 
Human Services, by October 1, 2001. This system will measure 
how CSBG funds are used to promote self-sufficiency, family 
stability, and community revitalization. Program quality will 
be improved by requiring on-site compliance reviews, enhancing 
opportunities for training and technical assistance where 
deficiencies are noted, and providing opportunities for quality 
improvement plans and corrective action where warranted.
    The legislation protects local control by strengthening the 
role of local tripartite boards in the design and 
implementation of both privately and publicly-administered 
local programs to ensure low income citizen participation in 
decision-making, planning and administration of CSBG programs.
    The bill clarifies that faith-based organizations and other 
neighborhood-based organizations are eligible providers of 
services under CSBG funded programs. The bill also adds several 
new initiatives to the list of allowable State and local 
activities that can be carried out under CSBG including 
programs that focus on literacy, community policing, fatherhood 
initiatives, and after-school programs.
    Title I of the bill also extends the authorization of the 
Community Economic Development and Rural Community Facilities 
programs. It creates a new NeighborhoodInnovation Project to 
provide grants to neighborhood-based private nonprofit organizations 
for the development of new approaches to overcoming problems that are 
contributing to community breakdown. Additionally, the bill extends 
authorizations for the National Youth Sports Program and the Community 
Food and Nutrition Program, with authorization levels reflecting 
current funding levels.
    The Committee-reported bill authorizes a four-year, $100 
million demonstration program of Individual Development 
Accounts (IDAs) for low income working families and 
individuals. Individual Development Accounts are dedicated, 
matched savings accounts that can be used for purchasing a 
first home, meeting the costs of postsecondary education, 
capitalizing a business, or addressing certain defined hardship 
cases. Under the IDA program, nonprofit organizations or State 
and local governments enter into partnerships with low income 
individuals who deposit a self-determined portion of their 
earned income in the account. The sponsoring organization will 
match the individual's deposit with funds provided through this 
demonstration authority and other non-federal sources.
    Title II authorizes the Low Income Home Energy Assistance 
Program for 2 years at $1.1 billion for fiscal year 2000, and 
such sums as may be necessary for fiscal year 2001. In 
addition, the bill maintains the authority for the issuance of 
LIHEAP emergency fund for such fiscal years and includes new 
language defining the circumstances under which natural 
disasters and other emergencies warrant the release of 
additional funding.
    Title II also maintains the leveraging incentive program 
under LIHEAP for fiscal years 2000 and 2001, and adds language 
requiring States to target home weatherization services to 
households with the lowest incomes and the highest energy 
burdens. Finally, Title II requires the GAO to conduct a study 
of the Residential Energy Assistance Challenge (REACH) program.

                            Committee Views

                Title I--Community Services Block Grant

    Statistics show that poverty touches a large proportion of 
Americans over their lifetime. Sometimes it is a chronic 
condition that lasts over years or even generations. More 
often, poverty comes as a consequence of unexpected events or 
tragedies such as loss of a job, illness, disability, or other 
reasons that can destroy a family's ability to support itself. 
Over the years, the Community Services Block Grant (CSBG) has 
provided States and local communities with a flexible stream of 
funding for activities that have a ``measurable and potentially 
major impact on causes of poverty.''
    The Committee has found that the Community Services Block 
Grant, and in particular the Community Action Agencies (CAAs) 
and other eligible entities that deliver its programs, remain 
effective and essential elements of the nation's efforts to 
fight poverty and increase self sufficiency among low income 
individuals and families. The CSBG program stands out as a 
unique example of effective partnerships between federal, State 
and local governments, as well as the private and public 
sectors in our nation's communities. However, more must be done 
to enhance coordination and decrease duplication between CSBG 
and other social services programs designed to fight poverty 
and foster self-sufficiency. More must be done to improve 
services to the nation's poor across all social services 
programs. To this end, the Community Services Authorization Act 
of 1998 was developed.

Purpose

    The Committee-reported bill adds a new statement of purpose 
in the Community Services Block Grant Act that stresses: the 
eradication of poverty, the revitalization of high poverty 
neighborhoods, and the empowerment of low-income families and 
individuals to become fully self-sufficient. In addition, the 
bill borrows from the purpose contained in the original 
Economic Opportunity Act stressing the importance of broadening 
the resource base for programs directed to eliminate poverty, 
including a more active role for private, religious, 
charitable, and neighborhood-based organizations in the 
provision of services.

Designation of eligible entities and local tripartite boards

    The Community Services Block Grant currently provides funds 
to nearly 1,200 ``eligible entities''--mostly local nonprofit 
community action agencies in 98 percent of all counties across 
the country. These programs serve over 11.6 million low-income 
individuals, and over 3.4 million low-income families each 
year. The community action network has done a very effective 
job over the years at addressing the needs of high-poverty 
communities throughout the nation. Recognizing the important 
and historical work of community action agencies, the Committee 
has included language in the bill grandfathering current 
eligible entities for the purpose of continuing to administer 
programs under CSBG.
    For areas that are not currently served by an existing 
eligible entity, the bill amends Section 676A of the Act. The 
bill provides that for any geographic area in a State is not, 
or ceases to be served by an eligible entity, the chief 
executive officer of the State may solicit applications and 
designate as the eligible agency for that area: a private 
nonprofit eligible entity that already provides related 
services in the unserved area; or another private nonprofit 
organization geographically located in the unserved area. In 
any such designation, the organization must be of demonstrated 
effectiveness in meeting the goals and purposes of the Act. The 
organization must also be capable of providing a broad range of 
services designed to eliminate poverty and foster self-
sufficiency.
    Because of the need to strengthen and maintain the 
stability and effectiveness of the CSBG network and avoid 
disruptions of services to low income neighborhoods, the 
Committee has clarified that States may give first priority in 
granting such designation to existing eligible entities already 
providing services within such unserved communities.
    The Committee-reported bill also ensures that local 
tripartite boards represent the areasthey are serving. The 
Committee has therefore included a requirement that if an entity in a 
contiguous area is designated to serve an unserved area, such entity 
must agree to add additional members to its tripartite board to ensure 
adequate representation from the new community served, in each of the 
three required categories. This is of particular importance with 
respect to low-income representation. Those who represent low-income 
individuals on the board must actually reside in the neighborhood to be 
served.
    Where no private, nonprofit organization is determined to 
be qualified to serve as the eligible entity in a local area, 
the bill authorizes the chief executive officer of the State to 
designate an appropriate political subdivision of the State to 
serve as an eligible entity for the area. However, in order to 
be qualified, political subdivisions must agree to administer 
CSBG funded programs through a tripartite board or another 
mechanism specified by the state in which low-income 
individuals are able to actively participate in decision-
making, planning and implementation of programs funded by the 
block grant. This requirement is included in the bill to 
address concerns over an apparent trend toward public entities 
or local governments serving as the eligible entities. The 
number of public agencies serving as eligible entities for CSBG 
has increased from 129 in 1985 to 230 in 1995.
    While many public agencies that administer CSBG programs do 
an excellent job, the Committee is concerned that some public 
agencies have not fully involved the public in the design and 
implementation of local programs. The current CSBG statute 
contains no specific requirements concerning the role of local 
boards with regard to the administration of programs run by 
public agencies. Low-income representatives are currently 
required to serve only in an advisory capacity rather than a 
policy-making capacity. However, as heard in testimony provided 
to the Committee by the City of New York, public agencies can 
benefit a great deal from the full participation of local 
community-based boards and councils. In New York City for 
example, the local community is fully involved in the design 
and delivery of programs under CSBG, ensuring that local 
programs meet the specific needs of the community.
    The Committee-reported bill therefore strengthens the role 
of local tripartite boards in the design and implementation of 
all local CSBG programs whether administered by public or 
private, nonprofit entities. The local tripartite board 
structure that incorporates local public officials, the private 
sector of the broader community, and elected representation 
from the low-income neighborhoods served, is at the heart of 
CSBG--making certain that federal funds are channeled to real 
local needs and priorities. The Committee finds that this 
proven structure should be fully utilized in all areas of the 
nation served and for all local agencies receiving CSBG funds.

Role of faith-based providers

    The Committee bill recognizes the important role that 
private, neighborhood-based organizations, including faith-
based organizations, play in the comprehensive delivery of 
services to individuals and families in poverty. Under the 
bill, we clarify that faith-based providers are eligible 
providers of services. We also encourage these organizations, 
as we do with all relevant organizations, to have significant 
input into the design and implementation of the system.
    The Committee has also attempted to reduce reasons for 
States to under-utilize faith-based organizations because of 
their religious character by specifically including them in the 
definition of private nonprofit organizations, making it clear 
that they are eligible to provide services under CSBG. Section 
679 of the Act also prescribes the circumstances under which 
such an entity may receive grants and contracts under this 
program. Specifically, language has been included which 
provides that faith-based organizations may participate in the 
CSBG program as long as the program is implemented in a manner 
consistent with the Establishment Clause of the Constitution. 
The language further provides that faith-based organizations 
shall not be required to remove religious art, icons, scripture 
or other symbols as a condition of participating in a program 
funded with CSBG. Faith-based organizations receiving funds 
under this Act may not use Federal funds for sectarian worship, 
instruction, or proselytization and must agree to submit to the 
fiscal accountability requirements of the State, including 
requirements that CSBG funds be segregated from other funds.
    The Committee notes the historical importance of such 
entities in serving the poor and believes that they should not 
be precluded from participating in this program. The Committee 
feels it is important to clarify the eligibility of such 
organizations in order to prevent future barriers (or in 
limited circumstances to correct existing barriers) to such 
participation. However, the Committee also notes that faith-
based organizations already appear to be well-utilized in the 
delivery of services under CSBG programs throughout the 
country.

Statewide activities and transfer authority

    The Community Services Block Grant permits a State to spend 
up to 10 percent of its CSBG allotment for Statewide 
activities, with no more than 5 percent (or $55,000, whichever 
is greater) allowed for State administrative costs. Through an 
amendment offered in Committee by Mr. Souder of Indiana and Mr. 
Scott of Virginia, a State may use all or a portion of its 
State-held funds (up to 10 percent of its total State 
allotment) to offset revenue losses attributable to a credit 
provided to individuals against State income taxes, or a 
comparable benefit, for contributions to charitable 
organizations working to prevent or reduce poverty.
    Under this provision, States would only be allowed to 
utilize CSBG funds to offset revenue loss from such tax credits 
which are given for contributions to organizations which 
predominantly serve those with incomes below 185 percent of 
poverty. Further, during Committee consideration of this 
provision, Members of the Committee made it clear that States 
shall use funds for this purpose only to supplement, not 
supplant the amount of funds that would, in the absence of such 
federal funds, be made available for such purposes. Federal 
funds accessed for these purposes are not intended to be used 
for tuition assistance related to compulsory education 
requirements (not including tutoring, camps, skill development, 
and other supplemental services and training); nor are these 
funds intended to be used for providing legal services. This 
provision is intended to encourage States to experiment with 
charity tax credits for donations to charities working 
toalleviate poverty. A variety of eligible State charity tax credits 
already exist such as an individual tax credit for additional giving in 
Arizona, and a tax credit for business donations in Virginia authored 
by Rep. Scott when he was a State legislator.
    This State tax credit is intended to leverage more 
resources for programs designed to fight poverty and foster 
self-sufficiency, mirroring the purpose of the Community 
Services Block Grant.

Unobligated funds

    Under the Committee-reported bill, funds distributed to 
local eligible entities are available for obligation for two 
years. However section 675(c)(A)(3) of the Act provides that 
beginning on October 1, 2000, a State may recapture and 
redistribute funds distributed to an eligible entity that are 
unobligated at the end of a fiscal year if such unobligated 
funds exceed 20 percent of the amount distributed to the 
eligible entity. If the State elects to recapture funds in 
accordance with this provision they shall redistribute such 
funds to other eligible entities within the State 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. In 
either event, the Committee expects States to keep an accurate 
account of funds recaptured and how they are redistributed 
within the State and that they report on these actions as part 
of their annual report to the Secretary.

Additional uses of funds

    The activities of local CSBG programs vary widely depending 
on the needs and circumstances of each local community. Common 
uses of CSBG funds include the coordination of programs and 
services for the poor, and the provision of emergency 
assistance in local communities. CSBG funds are also spent on 
education (including Head Start), employment, housing, 
nutrition, health, income management, and emergency services--
filling gaps in programs that are specifically designed to 
provide these services.
    Because CSBG is a very flexible block grant, the Committee 
did not prescribe how funds in each local community must be 
spent. The bill does however, include several new initiatives 
for which States and local areas may use CSBG funds. These new 
initiatives include: fatherhood and other community-based 
initiatives designed to strengthen the family and encourage 
parental responsibility; initiatives to strengthen and improve 
the relationship between local communities and law enforcement 
(which may include neighborhood and community policing 
initiatives); literacy initiatives (including family literacy 
initiatives); and youth development programs in high poverty 
communities that are designed to prevent youth problems and 
crime (which may include after-school child care and other 
youth development activities). The bill also prioritizes 
programs that are tied to welfare reform and that encourage 
self-sufficiency.

Federal-to-State formula

    Because the formula in the Community Services Block Grant 
has remained constant since 1981, changes in poverty have not 
been reflected in the distribution of funds to States under the 
block grant program over the past 17 years. To address this 
concern, the Committee-reported bill includes a change in the 
federal-to-State formula, however this change only affects 
funds that are appropriated in future years that exceed levels 
appropriated for CSBG in fiscal year 1999. In other words, if 
and when funding exceeds the level appropriated for CSBG in FY 
1999, these additional funds would be distributed to States in 
a manner similar to the formula that was contained in the 
original Economic Opportunity Act (EOA) with \1/3\ based on the 
number of families living in poverty; \1/3\ on unemployment; 
and \1/3\ on welfare participation.

Accountability, monitoring, evaluation, and technical assistance

    The Committee-reported bill includes a number of provisions 
to ensure both fiscal and performance accountability within the 
Community Services Block Grant program. While we do not want to 
tell States and local communities what to do with funds 
provided under this Act, we must have a better understanding of 
how federal funds are spent and what types of services are 
provided.
    The Committee bill includes a requirement that the 
Department of Health and Human Services work with States and 
local eligible entities to facilitate the development of a 
performance measurement system to be used by States and local 
entities to measure their performance in programs funded 
through CSBG. This builds on a voluntary performance 
measurement system begun by States and local entities with the 
help of the Department of Health and Human Services several 
years ago called the Results-Oriented Management and 
Accountability System (ROMA).
    The Committee understands that developing a performance-
based measurement system for a program where local grantees 
have enormous flexibility to pursue a diverse range of programs 
is a complex undertaking. The Committee believes that ROMA is a 
useful tool to assist local agencies in monitoring their 
success in promoting self-sufficiency, family stability and 
community revitalization. States would also be able to use such 
a tool to ensure a results-oriented system. Therefore the bill 
provides for universal participation in this or a similar 
performance measurement system.
    Such a performance measurement system is intended to allow 
local communities to determine their own priorities and 
establish performance objectives accordingly. Each State and 
local eligible entity that receives CSBG funds would be 
required to participate in such a performance measurement 
system by October 1, 2001. States would be required to annually 
prepare and submit a report to the Secretary on the performance 
and the expenditure of funds of the State and of the local 
eligible entities.
    In addition to the performance measurement system 
established under the bill, the Committeehas required the chief 
executive officer of each State to designate a lead agency in the State 
to develop the State plan to be submitted to the Secretary (which may 
cover a two year period). The bill also requires States to hold at 
least one public hearing on the proposed use and distribution of funds 
and one legislative hearing every 3 years in conjunction with the 
development of the State plan. States are also required to conduct 
reviews of eligible entities funded under this Act, and where 
necessary, to terminate eligibility or reduce funding for poor 
performing agencies.
    The Committee is concerned about the number of States that 
have historically filed CSBG plans after the beginning of the 
fiscal year. The bill addresses this concern in two ways. 
First, Governors are given the discretion of sending 2-year 
plans to HHS for approval, allowing for a longer planning 
period for CSBG programs. Second, the bill requires that all 
plans be submitted to HHS at least 30 days before the beginning 
of the first fiscal year covered by the plan.
    Monitoring is a critically important piece of the quality 
assurance process. The Committee believes that the best way to 
ensure high quality programs is for States, working with local 
eligible entities, to develop performance and financial 
management standards and to hold local entities accountable for 
those standards. Where appropriate, States should demand 
improved performance. The legislation therefore requires States 
to conduct an in-depth review of each entity receiving funds 
under CSBG and to provide training and technical assistance 
where the need is indicated.
    The Committee recognizes the need for an equitable process 
which allows CSBG recipients an opportunity to address quality 
deficiencies. However, after completion of this process, 
programs which cannot meet minimum requirements or their own 
outcome measures should be sanctioned, which may include 
termination. If a program falls short of minimum program 
standards, the State is required to notify the program of the 
identified deficiencies. The State may require immediate 
correction, or may allow the program to develop a quality 
improvement plan. This plan shall be developed in a timely 
manner and approved by the State. The State must provide 
training and technical assistance to the program if requested, 
and determined to be in need of such assistance.
    Grantees which feel that their funding has been terminated, 
suspended or reduced unfairly may appeal the decision to the 
Secretary. The Committee intends this process to ensure quality 
services. However, the goal is not to deny services to a 
community served by a poor performing grantee. In such cases 
where funding is reduced or terminated, States are expected to 
work to identify a more capable grantee and provide, to the 
greatest extent possible, a smooth transition of services from 
one grantee to the next.
    In addition, the Secretary of Health and Human Services is 
authorized to provide technical assistance to States and to 
local eligible entities to improve program performance and to 
correct program deficiencies.
    Under current law, the Department has funded a wide variety 
of management support and improvement activities nationwide to 
meet the challenges posed to the network of nearly 1200 CSBG 
local agencies. This funding has supported start-up of the ROMA 
performance measurement system, and other reporting, staff, and 
institutional development systems. The Committee has determined 
that these initiatives have been generally effective in 
maintaining or raising the quality of CSBG management and 
should be continued.
    The Committee finds however, that funding is inadequate for 
technical assistance provided by State associations of local 
eligible entities, which are the primary providers of training, 
technical assistance, management support and electronic systems 
developed for State and local systems. Therefore, the Committee 
has required that of the funds reserved by the Secretary for 
technical assistance, not less than half must be distributed 
directly to local eligible entities or to State associations of 
such entities for the provision of such technical assistance.
    Further, the Secretary is encouraged to establish a 
permanent group experienced in the management of State and 
local CSBG programs and activities to assist the Department 
with the activities described in Sections 678A through 678C 
related to the correction of deficiencies identified by a 
State.

Data collection

    The Committee applauds the work of the National Association 
of Community Services Programs in preparing an annual CSBG 
statistical report. However, the Committee is concerned that 
the Office of Community Services (OCS) does not collect any 
additional information from States or local agencies on the use 
of CSBG funds, other than the annual statistical report. The 
Committee is encouraged that this will soon change as part of 
the application of ROMA to CSBG across the nation.

Reports

    Section 679(b) of current law requires the Secretary of HHS 
to conduct evaluations of the use of CSBG funds in several 
States each fiscal year. Among other things, these evaluations 
are required to assess the program's impact on children, 
pregnant adolescents, homeless families, and the elderly poor. 
The Committee is very concerned that the Department has ignored 
this requirement and has not submitted an annual report to 
Congress since 1991. The Office of Community Services 
anticipates a consolidated report for years 1992-1997 by the 
end of this summer. The Committee looks forward to receiving 
this report.

Discretionary programs and related activities

    The Committee has included a new Neighborhood Innovation 
Project under the 9% discretionary account provided for the 
Secretary. The Committee intends that these funds be made 
available to entities that are not currently eligible entities 
under CSBG. The purpose of these grants is to support local, 
neighborhood-based, private nonprofit organizations in the 
development of new approaches or methods that will aid in 
overcoming special problems identified by communities or 
neighborhoods.
    The Committee also wishes to point out that while it has 
added a new program as an allowable activity which may be 
funded under the 9% discretionary set-aside, it does not 
anticipate a shortfall in funds for the Community Economic 
Development (CED) and Rural Community Facilities (RCF) 
programs. The Appropriations Committee has traditionally 
provided funds for four separate programs out of the 9% set-
aside--the CED and RCF programs, which are allowable activities 
under this section, and the National Youth Sports Program 
(NYSP) and the Community Food and Nutrition Program (CFNP) 
which are separate discretionary programs.
    The Committee bill clearly provides the CFNP and the NYSP 
with their own separately appropriated accounts. The Committee 
intends for these two programs to be provided with their own 
appropriations, rather than including them under the 9% set-
aside where they compete with funds for programs specifically 
authorized under the block grant.

Drug testing and paternity determinations

    The Committee-reported bill includes a provision clarifying 
that nothing in the Subtitle shall be construed to prohibit a 
State from testing participants in programs, activities or 
services carried out under CSBG for controlled substances, or 
from sanctioning such participants who test positive for any 
such substances. The bill further specifies that any funds 
provided under this subtitle that are expended for such 
testing, must come from the State's administrative account, 
which is limited to 5 percent of the State's total allotment.
    The Committee-reported bill also includes provisions 
directing eligible entities to inform custodial parents in 
single-parent families that participate in programs, 
activities, or services carried out under CSBG about the 
availability of child support services. The bill further 
directs eligible entities to establish referral arrangements 
with State and local government child support offices, and to 
refer participants to such offices as appropriate.

Individual development accounts

    In an amendment offered by Mr. Souder of Indiana, Ms. 
Woolsey of California, Mr. Talent of Missouri, and Mr. Fattah 
of Pennsylvania, during Committee consideration of H.R. 4271, a 
new demonstration program was added to the Community Services 
Block Grant Act authorizing $100 million over 4 years for 
establishment of Individual Development Accounts (IDAs). IDAs 
are dedicated, matched savings accounts that can be used for 
purchasing a first home, meeting the costs of postsecondary 
education, capitalizing a business, or addressing certain 
defined hardship cases. Under the IDA program, nonprofit 
organizations or state and local governments enter into 
partnerships with low-income individuals who deposit a self-
determined amount from their earned income in the account. The 
sponsoring organizations match the individual's deposit with 
funds provided through this demonstration authority and other 
non-federal sources.
    This legislation supports the work that States and 
community based organizations are doing in support of IDAs and 
other asset based development strategies. The Committee 
believes that IDAs hold great promise as a strategy to enable 
low-income people and communities to move forward economically, 
participate in the mainstream economy, and realize their dreams 
of good jobs, opening their own small businesses, going to 
college, owning a home, and bequeathing a better future for 
their children.

          title ii--low income home energy assistance program

    The Low Income Home Energy Assistance Program (LIHEAP) 
provides a critical safety net for approximately 4.3 million 
low-income families (in all 50 States) who cannot afford to 
heat their homes in the winter and cool them in the summer. 
Almost 70 percent of recipient families have annual incomes of 
less than $8,000, 33 percent have at least one member who is 
elderly, and 25 percent have one member who is disabled. In 
addition, approximately one-third of participating households 
have children under the age of six.
    The Committee has authorized LIHEAP at the FY 1998 funding 
level of $1.1 billion in fiscal year 2000, and such sums as 
determined necessary in fiscal year 2001.
    The Committee continues to recognize the need in times of 
crisis for emergency/contingency funds to be released by the 
President and has extended the authorization for this program 
through fiscal year 2001.
    The Committee also extended the authorization of the 
leveraging program through fiscal year 2001. Under this 
program, funds are used to reward States for initiatives that 
raise matching and private sector funds for LIHEAP-related 
activities.
    Since 1996, 25 percent of leveraging funds have been set 
aside for the Residential Energy Assistance Challenge (REACH) 
program. This program allows grantees to apply for funds to 
help eligible clients reduce their energy vulnerability. The 
Committee has asked the Comptroller General to conduct an 
evaluation of the REACH program and report its findings within 
two years of the date of enactment of this Act. The Committee 
believes this study should examine the uses of REACH funding 
and the amount of funds that have been leveraged under the 
program.
    The Committee has been concerned about problems related to 
the release of emergency LIHEAP funds. A new provision has been 
added in the Committee-reported bill to clarify the criteria by 
which the President can release LIHEAP funds during a natural 
disaster or emergency. The Committee is very concerned that the 
President and the Secretary have felt constrained by the LIHEAP 
statute when called upon by Members of Congress and Governors 
to release emergency funds during crises that may not be 
exclusively temperature driven, such as the spike in heating 
oil prices during the winter of 1996-97 and the severe ice 
storms in the Northeast during the winter of 1997-98.
    The Committee-reported bill specifically authorizes the 
President to release LIHEAPemergency funds during natural 
disasters that include, but are not limited to, cold or hot weather 
events, floods, earthquakes, tornadoes, hurricanes, or ice storms. The 
Committee has also clarified that the term ``emergency'' means a 
natural disaster: a significant home energy supply shortage or 
disruption; a significant increase in the cost of home energy, as 
determined by the Secretary; a significant increase in home energy 
disconnections reported by a utility, a State regulatory agency, or 
another agency with necessary data; a significant increase in 
participation in a public benefit program such as the Food Stamp 
program; a significant increase in unemployment or layoffs; or any 
other event meeting criteria as the Secretary may determine to be 
appropriate.
    In determining whether a release of emergency funds should 
be made to a State, the Secretary shall take into account the 
extent to which the State was affected by the emergency or 
disaster; the availability of other resources and other 
relevant criteria. It is expected that the Secretary will 
notify Congress within 30 days of making a decision on the 
release of emergency funds, and shall notify individual Members 
of Congress of the status of their request for release of 
emergency funds within 30 days of receipt of such request.

                      Section-by-Section Analysis

     Title I--Amendments to the Community Services Block Grant Act

    Section 101 sets forth the short title of the Act as the 
``Community Services Authorization Act of 1998''.
    Section 102 amends sections 671 through 680 of the 
Community Services Block Grant Act as follows:

           subtitle b--community services block grant program

    ``Section 671 sets forth the short title of this subtitle 
as the `Community Services Block Grant Act'.
    ``Section 672 sets forth the purposes and goals of Part A 
(as redesignated) of the subtitle.
    ``Section 673 contains definitions of `eligible entity'; 
`poverty line'; `private nonprofit organization'; `Secretary'; 
and `State'.
    ``Section 674 authorizes appropriations of $535,000,000 for 
FY 1999 and such sums as may be necessary for each of FY 2000 
through 2003 to carry out the provisions of Part A (as 
redesignated) of this subtitle (other than section 681 and 
682). Of annual appropriations, the Secretary must reserve half 
of 1 percent for payments to territories; 1 and one-half 
percent for activities of the Secretary including technical 
assistance and monitoring activities under sections 678 through 
678F; and not more than 9 percent for discretionary activities 
under section 680.
    ``Section 675 authorizes the Secretary to establish a 
community services block grant program and to make grants 
through the program to States to ameliorate the causes of 
poverty in communities within the States.
    ``Section 675A authorizes the Secretary to apportion 
reserved funds among the territories and Freely Associated 
States on the basis of need, and requires each territory and 
Freely Associated State wishing to receive a grant to submit to 
the Secretary, and obtain approval of, an application that 
describes the program for which assistance is sought.
    ``Section 675B sets forth the provisions for allotment and 
payment of funds to States.
    ``Section 675C sets forth the provisions for the use of 
funds by States, including a requirement that not less than 90 
percent of funds be used by the State to make grants to 
eligible entities; a listing of the allowable uses of funds for 
statewide activities; and establishes a process within States 
through which unobligated funds may be redistributed.
    ``Section 676 requires each State wishing to receive an 
allotment of funds to designate a lead agency to carry out 
State activities under the Act, and to submit an application 
and plan to the Secretary, containing specified assurances and 
information.
    ``Section 676A sets forth the provisions regarding the 
designation and redesignation by States of eligible entities in 
unserved areas of the State.
    ``Section 676B sets forth provisions regarding tripartite 
boards for eligible entities.
    ``Section 677 sets forth provisions regarding direct 
payment of funds by the Secretary to Indian tribes and tribal 
organizations.
    ``Section 678 requires the Secretary to carry out functions 
under this subtitle through an Office of Community Services, 
through grants, contracts, or cooperative agreements.
    ``Section 678A sets forth provisions regarding the use of 
funds, for training and technical assistance by the Secretary; 
and requires that at least one-half of the funds used by the 
Secretary be distributed to States and local eligible entities. 
Such activities shall assist States and localities in meeting 
the evaluation, performance measurement, corrective action, 
reporting, and data collection requirements of the Act.
    ``Section 678B sets forth the provisions for state 
monitoring of eligible entities to determine whether such 
entities meet performance goals, administrative standards, 
financial management requirements, and other requirements of 
the State.
    ``Section 678C sets forth the provisions for corrective 
action, termination and reduction of funding, in cases where a 
State determines that an eligible entity materially fails to 
comply with the terms of an agreement or the State plan, or to 
meet appropriate standards, goals, and other requirements 
established by the State.
    ``Section 678D sets forth provisions for fiscal controls, 
audits, and withholding of federal funds.
    ``Section 678E sets forth State and federal accountability 
and reporting provisions, requiring States and eligible 
entities to participate in a performance measurement system 
facilitated by the Secretary, or an alternative system; 
requiring States to submit an annual report to the Secretary on 
the performance of eligible entities within the State; and 
requiring the Secretary to submit to Congress an annual report 
containing specified information.
    ``Section 678F sets forth limitations on the use of funds 
for construction of facilities and political activities and 
establishes nondiscrimination provisions.
    ``Section 679 sets forth provisions regarding the 
participation of faith-based organizations in programs under 
this subtitle.
    ``Section 680 sets forth provisions regarding the use of 
funds, reserved under section 674, by the Secretary for 
specified discretionary activities including community economic 
development, rural community development, and neighborhood 
innovation projects.
    Section 103 amends the Community Services Block Grant Act 
by striking section 681 and redesignating section 681A as 
section 681; by extending the authorization of the Community 
Food and Nutrition Program through FY 2003 and authorizes 
appropriations of $5,000,000 for such program; by extending the 
authority for the National Youth Sports Program through FY 
2003; and by striking section 683 and section 684 and inserting 
new sections as follows:
    ``Section 683 sets forth provisions that States shall not 
be prohibited from testing participants of programs, 
activities, or services carried out under this subtitle for 
controlled substances, or from imposing sanctions on such 
participants who test positive for any such substances; and 
allows States to use State Administrative funds to pay for such 
testing. Section 683 also requires eligible entities receiving 
a grant under section 675C to inform custodial parents in 
single-parent families participating in programs, activities or 
services carried out under this subtitle about the availability 
of child support services, and refer eligible parents to such 
child support services.
    ``Section 684 provides that any reference in law to the 
poverty line set forth in section 624 or 625 of the Economic 
Opportunity Act shall be construed as a reference to the 
poverty line defined in section 673 of this title. Any 
reference in law to a community action agency designated under 
title II of the Economic Opportunity Act shall be construed to 
be a reference to an eligible entity under the Community 
Services Block Grant program.
    Section 104 adds a new part to the Community Services Block 
Grant which authorizes a four year demonstration program for 
individual development accounts (IDAs) which are matched 
savings accounts for low-income individuals which can be used 
for postsecondary education, purchase of a first home, and 
business capitalization. The program is authorized at $25 
million for each of the fiscal years 1999, 2000, 2001, and 
2002.
    Section 105 sets forth the effective date of this title as 
the date of enactment, and specifies that the application of 
amendments 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

    Section 201 sets forth the short title of title II as the 
``Low-Income Home Energy Assistance Amendments of 1998''.
    Section 202 amends section 2602(b) of the Low Income Home 
Energy Assistance Act of 1981 to extend the authorization of 
the program at $1,100,000 for FY 2000 and such sums as may be 
necessary for FY 2001. This section also amends section 2602(d) 
of the Act to extend the authorization for the Incentive 
Program for Leveraging Non-Federal Resources at $50,000,000 
through FY 2001.
    Section 203 makes technical amendments to section 2603 
containing the Act's definitions.
    Section 204 amends section 2603 of the Act by adding a new 
section pertaining to natural disasters and other emergencies. 
This section clarifies the criteria by which LIHEAP funds can 
be released in an emergency or natural disaster. The standards 
under which such funds may be released include: (1) a natural 
disaster; (2) a significant home energy supply shortage or 
disruption; (3) a significant increase in the cost of home 
energy, as determined by the Secretary; (4) a significant 
increase in home energy disconnections reported by a utility, a 
State regulatory agency, or another agency with necessary data; 
(5) a significant increase in participation in a public benefit 
program such as the food stamp program; (6) a significant 
increase in unemployment or layoffs; or (7) any other event 
meeting criteria as the Secretary may determine to be 
appropriate.
    Section 205 amends section 2604 of the Act to clarify the 
participation of the Freely Associated States in the LIHEAP 
program.
    Section 206 amends section 2605 of the Act, regarding 
administration, making certain technical and conforming 
amendments, and specifying that weatherization services be 
provided to households with the lowest incomes that pay a high 
percentage of their income on home energy.
    Section 207 amends section 2607(b)(2)(B) of the Act to 
disallow certain transfers out of the program.
    Section 208 amends the title to require the Comptroller 
General to conduct an evaluation of the Residential Energy 
Assistance Challenge program and to report on its finding 
within 2 years of the date of enactment of this Act.

                       Explanation of Amendments

    The Amendment in the Nature of a Substitute is explained in 
the body of this report.

              Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch. This bill extends the authorization of the Community 
Services Block Grant Act through the year 2003, and makes 
changes to Act that will better enable States and local 
communities to eradicate poverty, revitalize high poverty 
neighborhoods, and empower low-income individuals and 
communities to become self-sufficient; and extends the 
authorization of the Low Income Home Energy Assistance Program 
through the year 2001. The bill does not prevent legislative 
branch employees from receiving the benefits of this 
legislation.

                   Constitutional Authority Statement

    The Community Services Block Grant Act and the Low Income 
Home Energy Assistance Program and the amendments thereto made 
by this bill are within Congress's authority under Article I, 
section 8, clause 1 of the Constitution.

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act requires a statement of whether the provisions of 
the reported bill include unfunded mandates. This bill extends 
the authorization of the Community Services Block Grant Act 
through the year 2003, and makes changes to Act that will 
better enable States and local communities to eradicate 
poverty, revitalize high poverty neighborhoods, and empower 
low-income individuals and communities to become self-
sufficient; and extends the authorization of the Low Income 
Home Energy Assistance Program through the year 2001. As such, 
the bill does not contain any unfunded mandates.

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 2(l)(3)(A) of Rule XI and clause 
2(b)(1) of Rule X of the Rules of the House of Representatives, 
the Committee's oversight findings and recommendations are 
reflected in the body of this report.

 Statement of Oversight Findings of the Committee on Government Reform 
                             and Oversight

    With respect to the requirement of clause 2(l)(3)(D) of 
Rule XI of the Rules of the House of Representatives, the 
Committee has received no report of oversight findings and 
recommendations from the Committee on Government Reform and 
Oversight on the subject of H.R. 4271.

                           Committee Estimate

    Clause 7 of Rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs that would be incurred in carrying out 
H.R. 4271. However, clause 7(d) of that rule provides that this 
requirement does not apply when the Committee has included in 
its report a timely submitted cost estimate of the bill 
prepared by the Director of the Congressional Budget Office 
under section 403 of the Congressional Budget Act.

     Budget Authority and Congressional Budget Office Cost Estimate

    With respect to the requirements of clause 2(l)(3)(B) of 
Rule XI of the House of Representatives and section 308(a) of 
the Congressional Budget Act of 1974 and with respect to 
requirements of 2(l)(3)(C) of Rule XI of the House of 
Representatives and section 403 of the Congressional Budget Act 
of 1974, the Committee has received the following cost estimate 
for H.R. 4271 from the Director of the Congressional Budget 
Office:

                                     U.S. Congress,
                         Congressional Budget Office,      
                                     Washington, DC, July 31, 1998.
Hon. William F. Goodling,
Chairman, Committee on Education and the Workforce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4271, the 
Community Services Authorization Act of 1998.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Sheila 
Dacey (for federal costs), Marc Nicole (for the state and local 
impact), and Bruce Vavrichek (for the private-sector impact).
            Sincerely,
                                          June E.O'Neill, Director.
    Enclosure.

H.R. 4271--Community Services Authorization Act of 1998

    Summary: H.R. 4271 would reauthorize the Low-Income Home 
Energy Assistance and Community Service Block Grant programs. 
It would also authorize a new demonstration program designed to 
encourage savings by individuals with low income and assets. 
Assuming appropriation of the authorized amounts, outlays for 
these programs would total $10 billion over the 1999-2003 
period. Because enactment of H.R. 4271 would not affect direct 
spending or receipts, pay-as-you-go procedures would not apply.
    H.R. 4271 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates and Reform Act 
(UMRA). The bill would, however, impose new data collection, 
monitoring, and referral requirements on state, local, and 
tribal governments that administer community service programs. 
CBO estimates that the costs of meeting these requirements 
would total about $1 million annually. Under UMRA, such 
conditions of federal assistance are not mandates.
    Estimated cost to the Federal Government: The estimated 
budgetary effect of H.R. 4271 is summarized in Table 1. The 
costs of this legislation fall within budget function 500 
(education, training, employment, and social services) and 
function 600 (income security).

                          TABLE 1. SUMMARY OF ESTIMATED BUDGETARY EFFECTS OF H.R. 4271                          
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                              1998     1999     2000     2001     2002     2003 
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION                                       
                                                                                                                
                                        Without Adjustments for Inflation                                       
                                                                                                                
Authorizations under current law:                                                                               
    Estimated authorization level \1\.....................    1,842    2,650      600      600      600      600
    Estimated outlays.....................................    1,700    2,239      812      341      300      300
Proposed changes:                                                                                               
    Estimated authorization level.........................  .......      580    1,730    1,730      580      555
    Estimated outlays.....................................  .......      403    1,559    1,867    1,026      736
Authorizations under H.R. 4271:                                                                                 
    Estimated authorization level \1\.....................    1,842    3,230    2,330    2,330    1,180    1,155
    Estimated outlays.....................................    1,700    2,642    2,371    2,208    1,326    1,036
                                                                                                                
                                         With Adjustments for Inflation                                         
                                                                                                                
Authorizations under current law:                                                                               
    Estimated authorization level \1\.....................    1,842    2,650      600      600      600      600
    Estimated outlays.....................................    1,700    2,239      812      341      300      300
Proposed changes:                                                                                               
    Estimated authorization level.........................  .......      580    1,743    1,786      611      611
    Estimated outlays.....................................  .......      403    1,567    1,910    1,068      786
Authorization under H.R. 4271:                                                                                  
    Estimated authorization level \1\.....................    1,842    3,230    2,343    2,386    1,221    1,211
    Estimated outlays.....................................    1,700    2,642    2,379    2,251    1,368    1,086
----------------------------------------------------------------------------------------------------------------
\1\ The 1998 level is the amount appropriated for that year.                                                    
                                                                                                                
Note.--Components may not sum to totals because of rounding.                                                    

    Basis of estimate: Tables 2 and 3 detail the estimated 
impact of H.R. 4271 on spending subject to appropriation by 
title, with and without adjustments for inflation. In general, 
CBO assumes current spending patterns in estimates of outlays.

 TABLE 2. ESTIMATED EFFECTS OF H.R. 4271 ON AUTHORIZATIONS OF APPROPRIATIONS, WITHOUT ADJUSTMENTS FOR INFLATION 
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                              1998     1999     2000     2001     2002     2003 
----------------------------------------------------------------------------------------------------------------
                                        Authorizations Under Current Law                                        
                                                                                                                
Community Service Block Grant Program:                                                                          
    Budget authority......................................      542        0        0        0        0        0
    Estimated outlays.....................................      542      232       23        0        0        0
Low-Income Home Energy Assistance:                                                                              
    Estimated authorization level \1\.....................    1,300    2,650      600      600      600      600
    Estimated outlays.....................................    1,158    2,008      789      341      300      300
Total authorizations:                                                                                           
    Estimated authorization level \1\.....................    1,842    2,650      600      600      600      600
    Estimated outlays.....................................    1,700    2,239      812      341      300      300
                                                                                                                
                                             Changes Under H.R. 4271                                            
                                                                                                                
Community Service Block Grant Program:                                                                          
    Estimated authorization level.........................  .......      555      555      555      555      555
    Estimated outlays.....................................  .......      325      531      555      555      555
Assets for Independence:                                                                                        
    Estimated authorization level.........................  .......       25       25       25       25        0
    Estimated outlays.....................................  .......        3       19       35       34        8
Low-Income Home Energy Assistance:                                                                              
    Estimated authorization level.........................  .......        0    1,150    1,150        0        0
    Estimated outlays.....................................  .......       75    1,010    1,277      438      173
Total changes:                                                                                                  
    Estimated authorization level.........................  .......      580    1,730    1,730      580      555
    Estimated outlays.....................................  .......      403    1,559    1,867    1,026      736
                                                                                                                
                                      Total Authorizations Under H.R. 4271                                      
                                                                                                                
Total authorizations:                                                                                           
    Estimated authorization level \1\.....................    1,842    3,230    2,330    2,330    1,180    1,155
    Estimated outlays.....................................    1,700    2,642    2,371    2,208    1,326    1,036
----------------------------------------------------------------------------------------------------------------
\1\ The 1998 level is the amount appropriated for that year.                                                    
                                                                                                                
Note.--Components may not sum to totals because of rounding.                                                    


   TABLE 3. ESTIMATED EFFECTS OF H.R. 4271 ON AUTHORIZATIONS OF APPROPRIATIONS, WITH ADJUSTMENTS FOR INFLATION  
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                              1998     1999     2000     2001     2002     2003 
----------------------------------------------------------------------------------------------------------------
                                        Authorizations Under Current Law                                        
                                                                                                                
Community Service Block Grant Program:                                                                          
    Budget authority......................................      542        0        0        0        0        0
    Estimated outlays.....................................      542      232       23        0        0        0
Low-Income Home Energy Assistance:                                                                              
    Estimated authorization level \1\.....................    1,300    2,650      600      600      600      600
    Estimated outlays.....................................    1,158    2,008      789      341      300      300
Total authorizations:                                                                                           
    Estimated authorization level \1\.....................    1,842    2,650      600      600      600      600
    Estimated outlays.....................................    1,700    2,239      812      341      300      300
                                                                                                                
                                             Changes Under H.R. 4271                                            
                                                                                                                
Community Service Block Grant Program:                                                                          
    Estimated authorization level.........................  .......      555      568      582      596      611
    Estimated outlays.....................................  .......      325      539      576      590      604
Assets for Independence:                                                                                        
    Estimated authorization level.........................  .......       25       25       25       25        0
    Estimated outlays.....................................  .......        3       19       35       34        8
Low-Income Home Energy Assistance:                                                                              
    Estimated authorization level.........................  .......        0    1,150    1,179        0        0
    Estimated outlays.....................................  .......       75    1,010    1,299      444      174
Total changes:                                                                                                  
    Estimated authorization level.........................  .......      580    1,743    1,786      621      611
    Estimated outlays.....................................  .......      403    1,567    1,910    1,068      786
                                                                                                                
                                      Total Authorizations Under H.R. 4271                                      
                                                                                                                
Total authorizations:                                                                                           
    Estimated authorization level \1\.....................    1,842    3,230    2,343    2,386    1,221    1,211
    Estimated outlays.....................................    1,700    2,642    2,379    2,251    1,368    1,086
----------------------------------------------------------------------------------------------------------------
\1\ The 1998 level is the amount appropriated for that year.                                                    
                                                                                                                
Note.--Components may not sum to totals because of rounding.                                                    

    Title I, Part A: Community Services Block Grant. H.R. 4271 
would reauthorize the Community Services Block Grant (CSBG) and 
related programs. CSBG is a grant to states to provide a wide 
variety of anti-poverty activities. Authorizations for CSBG and 
related programs would total $555 million in 1999 and $2.8 
billion over the 1999-2003 period, not including adjustments 
for inflation.
    The bill would authorize CSBG at $535 million in 1999 and 
such sums as necessary for the following four years. It would 
make several changes to the program that CBO estimates would 
have no budgetary effect, including allowing states to 
recapture and reobligate funds that had been passed through to 
local agencies and remain unspent for a given period of time, 
clarifying that nonprofit organizations include faith-based 
organizations, requiring states to participate in a performance 
measurement system, allowing states with charity tax credits 
more flexibility in how they spend grant funds, and 
establishing a new program of grants to neighborhood-based 
nonprofit organizations.
    The bill would also reauthorize the Community Food and 
Nutrition programs at $5 million in 1999 and such sums as 
necessary for the following four years and the National Youth 
Sports programs at $15 million in 1999 and such sums as 
necessary for the following four years.
    Title II, Part B: Assets for Independence. H.R. 4271 would 
establish a new demonstration program designed to encourage 
saving by individuals with low income and assets. The program 
would be authorized at $25 million annually for 1999 through 
2002. Demonstration grants would be awarded to nonprofit 
organizations up to the lesser of $1 million or the aggregate 
amount of funds committed as matching funds by nonfederal 
sources. Grantees would deposit federal and nonfederal funds 
received for the demonstration project in a reserve fund 
pending disbursement to program participants. Grantees would 
use the interest earned on the reserve fund for program 
purposes.
    Individuals with low incomes and assets would be eligible 
to participate in the program. Grantees would match 
participants' deposits into savings accounts, called individual 
development accounts (IDAs). The matching contributions would 
be between $0.50 and $4 for every $1 of earned income deposited 
in the IDA by a participant. Participants could withdraw funds 
from the IDA only for specified purposes such as paying for 
postsecondary education, first-time home purchase, or business 
capitalization.
    Because it would take several months for the Secretary to 
award grants and for the grantees to accumulate matching funds, 
CBO estimates that only 10 percent of the grant would be spent 
in 1999. The rate of spending would accelerate in each of the 
following three years.
    Title III: Low-Income Home Energy Assistance. H.R. 4271 
would reauthorize the Low-Income Home Energy Assistance program 
(LIHEAP) at $1.15 billion in each of fiscal years 2000 and 
2001. The bill would also change how a separate grant for 
emergency energy assistance would operate, increasing federal 
spending on those grants.
    The bill would reauthorize the basic LIHEAP grant, a 
formula grant to states to provide energy assistance to low-
income households, at $1.1 billion a year in 2000 and 2001. It 
would also reauthorize, at $50 million each of those years, the 
incentive program to encourage states to develop nonfederal 
energy assistance resources and the Residential Energy 
Assistance Challenge (REACH) program that gives grants to 
states to operate energy-efficiency educational programs. These 
programs are currently authorized through the end of 1999.
    The bill would change the operation of the grant for 
additional energy assistance to states after a natural disaster 
or other emergency. That grant is permanently authorized at 
$600 million annually. Funds are made available only after a 
formal determination by the President that includes a 
designation of the amount requested as an emergency requirement 
under the Balanced Budget and Emergency Deficit Control Act of 
1985. H.R. 4271 would create a new definition of emergency that 
would result in a greater share of available emergency funds 
being spent than in the past. Under current law, in an average 
year, 50 percent of the emergency funds made available are 
distributed by the Administration. The bill would define 
emergency to include: a natural disaster; a significant 
shortage of home energy supply; or a significant increase in 
the cost of home energy, the number of home energy 
disconnections, participation in public benefit programs, or 
the number of unemployed. That definition of emergency is much 
broader than the one the Administration currently uses to 
determine whether to declare an emergency and release 
additional LIHEAP funds. CBO estimates that, under the new 
definition, 75 percent of the available emergency funds would 
be spent. The provision would affect outlays starting in 1999.
    Estimated Impact on State, local, and tribal governments: 
H.R. 4271 contains no intergovernmental mandates as defined in 
UMRA. The bill would reauthorize the Community Services Block 
Grant and Low-Income Home Energy Assistance program that 
provide grants to state, local, and tribal governments and 
nonprofit agencies. H.R. 4271 would impose new data collection, 
monitoring, and referral requirements on state, local, and 
tribal governments that operate these programs. CBO estimates 
that the cost of meeting these requirements would total about 
$1 million annually. Under UMRA, such conditions of federal 
assistance are not mandates. For fiscal year 1998, CBO 
estimates that state, local, and tribal governments will 
receive approximately $1.8 billion in grants from the programs 
being reauthorized under the bill. Some of these funds will be 
distributed to individuals and nonprofit organizations.
    Estimated impact on the private sector: H.R. 3874 contains 
no private-sector mandates as defined in UMRA.
    Previous CBO estimate: On July 20, 1998, CBO provided an 
estimate of S. 2206, the Human Services Reauthorization Act of 
1998. Where the provisions of S. 2206 and H.R. 4271 are the 
same, the estimates are identical. This estimate corrects one 
error in the estimate of S. 2206. The emergency appropriation 
for LIHEAP of $600 million should have been shown as 
permanently authorized.
    Estimate prepared by: Federal costs--Sheila Dacey; impact 
on state, local, and tribal governments--Marc Nicole; impact on 
the private sector: Bruce Varichek.
    Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.


                             Rollcall Vote





                             Correspondence

                               Committee on Ways and Means,
                                     Washington, DC, July 21, 1998.
Hon. William F. Goodling,
Chairman, Committee on Education and the Workforce,
Washington, DC.
    Dear Bill: I am writing concerning H.R. 4271, the 
``Community Services Block Grant Amendments of 1998,'' which is 
scheduled to be considered by the Committee on Education and 
the Workforce on Wednesday, July 22, 1998. I understand that an 
amendment may be offered by Mr. Souder, Mr. Talent, and Ms. 
Woolsey consisting of the text of H.R. 4254, the ``Assets for 
Independence Act,'' which would authorize $25 million per year 
for five years to conduct demonstration projects on individual 
development accounts. H.R. 4254, as introduced, was referred to 
the Committee on Ways and Means, and in addition to the 
Committee on Education and the Workforce.
    I do not object to consideration of this amendment by your 
Committee. Accordingly, in order to expedite consideration of 
this legislation, I do not believe that a markup by the 
Committee on Ways and Means will be necessary on H.R. 4271, 
should the amendment be adopted. This is being done with the 
understanding that it does not in any way prejudice the 
Committee's jurisdictional prerogatives on this necessary or 
any other similar legislation, and it should not be considered 
as precedent for consideration of matters of jurisdictional 
interest to the Committee in the future.
    I would appreciate your response to this letter, confirming 
this understanding with respect to H.R. 4271 and the proposed 
amendment, and would ask that a copy of our exchange of letters 
on this matter be included in your committee report. With best 
personal regards,
            Sincerely,
                                             Bill Archer, Chairman.
                                ------                                

                   Committee on Education and the Workforce
                                     Washington, DC, July 27, 1998.
Hon. Bill Archer,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Chairman Archer. Thank you for your letter of July 21, 
1998 regarding H.R. 4271, the Community Services Block Grant 
Amendments of 1998, which is now scheduled for consideration by 
the Committee on Education and the Workforce on Wednesday, July 
29, 1998. As you have correctly noted, it is my understanding 
that Mr. Souder intends to offer an amendment consisting of the 
text of H.R. 4254, the ``Assets for Independent Act,'' which 
was referred to the Committee on Ways and Means and in addition 
to the Committee on Education and the Workforce.
    I thank you for your willingness to facilitate expediting 
consideration of H.R. 4271, should the Souder amendment be 
adopted by the Committee, and to forego a markup by the 
Committee on Ways and Means on this amendment. I agree that 
this procedural route should not be construed to prejudice the 
Committee on Ways and Means' jurisdictional interest and 
prerogatives on this amendment or any other similar legislation 
and will not be considered as precedent for consideration of 
matters of jurisdictional interest to your Committee in the 
future.
    I thank your for working with me regarding this matter. 
Your letter and this response will be included in the Committee 
report to accompany H.R. 4271. If you have questions regarding 
this matter, please do not hesitate to call me.
            Sincerely,
                                           Bill Goodling, Chairman.
                                ------                                

                                     Committee on Commerce,
                                    Washington, DC, August 6, 1998.
Hon. William F. Goodling,
Chairman, Committee on Education and the Workforce,
House of Representatives, Washington, DC.
    Dear Chairman Goodling: I understand that on Wednesday, 
July 29, 1998, the Committee on Education and the Workforce 
ordered reported H.R. 4271, the Community Services Block Grant 
Amendments of 1998. It is further my understanding that during 
its full Committee consideration, the Education Committee 
adopted an amendment to H.R. 4271 consisting of a 
reauthorization of the Low Home Energy Assistance Act. As you 
know, the Low Income Home Energy Assistance Act is within the 
jurisdiction of both the Committee on Education and the 
Workforce and the Committee on Commerce.
    Recognizing your Committee's desire to bring this 
legislation before the House before the end of the session, I 
will not seek a sequential referral of the bill. By agreeing 
not to seek a sequential referral, the Commerce Committee does 
not waive its jurisdictional interest in H.R. 4271 or any 
related legislation; my decision not to seek a sequential 
referral of H.R. 4271 should not be construed in any other way 
to prejudice the jurisdiction of the Commerce Committee. 
Furthermore, I would appreciate your support of my efforts to 
seek appropriate representation for the Commerce Committee on 
any House-Senate conference that may be convened on this 
legislation.
    Thank you again for your attention to our jurisdictional 
interests in H.R. 4271. I would appreciate your acknowledgment 
of this letter and request that our exchange of letters be 
included in the Education Committee's report on H.R. 4271.
            Sincerely,
                                              Tom Bliley, Chairman.
                                ------                                

                  Committee on Education and the Workforce,
                                    Washington, DC, August 6, 1998.
Hon. Tom Bliley,
Chairman, Committee on Commerce,
House of Representatives, Washington, DC.
    Dear Chairman Bliley: Thank you for your letter of today 
regarding H.R. 4271, the Community Services Block Grant 
Amendments of 1998, which was ordered favorably reported by the 
Committee on Education and the Workforce on Wednesday, July 29, 
1998. As you have correctly noted, I offered an amendment 
consisting of a reauthoriztion of the Low Income Home Energy 
Assistance Act, which is within the jurisdiction of the 
Committee on Commerce and the Committee on Education and the 
Workforce.
    I thank you for your willingness to facilitate expediting 
consideration of H.R. 4271 and to forego a markup by the 
Committee on Commerce on this amendment as added to this bill. 
I agree that this procedural route should not be construed to 
prejudice the Committee on Commerce's jurisdictional interest 
and prerogatives on this amendment or any other similar 
legislation and will not be considered as precedent for 
consideration of matters of jurisdictional interest to your 
Committee in the future.
    I very sincerely appreciate and thank you for working with 
me regarding this matter. Your letter and this response will be 
included in the Committee report to accompany H.R. 4271. If you 
have questions regarding this matter, please do not hesitate to 
call me.
            Sincerely,
                                           Bill Goodling, Chairman.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3 of rule XIII of the Rules of the 
House of Representatives, changes in existing law made by the 
bill, as reported, are shown as follows (existing law proposed 
to be omitted is enclosed in black brackets, new matter is 
printed in italic, existing law in which no change is proposed 
is shown in roman):

                   COMMUNITY SERVICES BLOCK GRANT ACT

          [Subtitle B--Community Services Block Grant Program

                              [short title

  [Sec. 671. This subtitle may be cited as the ``Community 
Services Block Grant Act''.

                 [community services grants authorized

  [Sec. 672. (a) The Secretary is authorized to make grants in 
accordance with the provisions of this subtitle, to States to 
ameliorate the causes of poverty in communities within the 
State.
  [(b) There are authorized to be appropriated $525,000,000 for 
fiscal year 1995, and such sums as may be necessary for each of 
fiscal years 1996 through 1998, to carry out the provisions of 
this subtitle.

                              [definitions

  [Sec. 673. For purposes of this subtitle:
          [(1) The term ``eligible entity'' means any 
        organization which was officially designated as a 
        community action agency or a community action program 
        under the provisions of section 210 of the Economic 
        Opportunity Act of 1964 for fiscal year 1981, or which 
        came into existence during fiscal year 1982 as a direct 
        successor in interest to such a community action agency 
        or community action program and meets all the 
        requirements under section 675(c)(3) of this Act with 
        respect to the composition of the board, unless such 
        community action agency or a community action program 
        lost its designation under section 210 of such Act as a 
        result of a failure to comply with the provisions of 
        such Act. The term ``eligible entity'' also includes 
        any limited purpose agency designated under title II of 
        the Economic Opportunity Act of 1964 for fiscal year 
        1981 which served the general purposes of a community 
        action agency under title II of such Act, unless such 
        designated agency lost its designation under title II 
        of such Act as a result of a failure to comply with the 
        provisions of such Act, any grantee which received 
        financial assistance under section 222(a)(4) of the 
        Economic Opportunity Act of 1964 in fiscal year 1981, 
        and any organization to which a State which applied for 
        and received a waiver from the Secretary under Public 
        Law 98-139 made a grant under this Act in fiscal year 
        1984. If any geographic area of a State is not, or 
        ceases to be, served by an eligible entity, the chief 
        executive officer of the State may decide to serve such 
        a new area by--
                  [(A) requesting an existing eligible entity 
                which is located and provides services in an 
                area contiguous to the new area to serve the 
                new area;
                  [(B) if no existing eligible entity is 
                located and provides services in an area 
                contiguous to the new area, requesting the 
                eligible entity located closest to the area to 
                be served or an existing eligible entity 
                serving an area within reasonable proximity of 
                the new area to provide services in the new 
                area; or
                  [(C) where no existing eligible entity 
                requested to serve the new area decides to do 
                so, designating any existing eligible entity, 
                any organization which has a board meeting the 
                requirements of section 675(c)(3) or any 
                political subdivision of the State to serve the 
                new area. In making a designation under this 
                subparagraph, such chief executive officer 
                shall give priority to such organization. Such 
                officer's designation of an organization which 
                has a board meeting the requirements of section 
                675(c)(3) or a political subdivision of the 
                State to serve the new area shall qualify such 
                organization as an eligible entity under this 
                Act.
          [(2) The term ``poverty line'' means the official 
        poverty line defined by the Office of Management and 
        Budget based on Bureau of the Census data. The 
        Secretary shall revise the poverty line annually (or at 
        any shorter interval the Secretary deems feasible and 
        desirable) which shall be used as a criterion of 
        eligibility in community service block grant programs. 
        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 the State determines that it serves the 
        objectives of the block grant established by 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) The term ``Secretary'' means the Secretary of 
        Health and Human Services.
          [(4) The term ``State'' means each of the several 
        States, the District of Columbia, the Commonwealth of 
        Puerto Rico, Guam, the Virgin Islands of the United 
        States, American Samoa, the Commonwealth of the 
        Northern Mariana Islands, and the Trust Territory of 
        the Pacific Islands.

                           [state allocations

  [Sec. 674. (a)(1) Of the amounts appropriated for a fiscal 
year pursuant to section 672(b), the Secretary may reserve not 
less than one-half of 1 percent and not more than 1 percent for 
training, technical assistance, planning, evaluation, and data 
collection activities related to programs or projects carried 
out under this subtitle. Such activities may be carried out by 
the Secretary through grants, contracts, or cooperative 
agreements with eligible entitiesor with organizations or 
associations whose membership is composed of eligible entities or 
agencies that administer programs for eligible entities.
  [(2) The process for determining the technical assistance and 
training activities to be carried out under this section 
shall--
          [(A) ensure the needs of community action agencies 
        and programs relating to improving program quality, 
        including financial management practices, are addressed 
        to the maximum extent feasible; and
          [(B) incorporate mechanisms to ensure responsiveness 
        to local needs, including an ongoing procedure for 
        obtaining input from the community action State and 
        national network.
  [(b)(1) The Secretary shall from the amount appropriated 
under section 672 for each fiscal year which remains after--
          [(A) the Secretary makes the apportionment required 
        in subsection (b)(1); and
          [(B) the Secretary determines the amount necessary 
        for the purposes of section 681(d);
allot to each State an amount which 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 part, except that no State shall 
receive less than one-quarter of 1 percent of the amount 
appropriated under section 672 for such fiscal year.
  [(2)(A) Subject to subparagraphs (B) and (C), if the amount 
appropriated under section 672 for each fiscal year which 
remains after--
          [(i) the Secretary makes the apportionment required 
        in subsection (b)(1); and
          [(ii) the Secretary determines the amount necessary 
        for the purposes of section 681(d);
exceeds $345,000,000, the Secretary shall allot to each State 
not less than one-half of 1 percent of the amount appropriated 
under section 672 for such fiscal year.
  [(B) Subparagraph (A) shall not apply with respect to a 
fiscal year if the amount allotted under paragraph (1) to any 
State is less than the amount allotted under such paragraph to 
such State for fiscal year 1990.
  [(C) The amount allotted under subparagraph (A) to a State 
shall be reduced, if necessary, so that the aggregate amount 
allotted to such State under such subparagraph and paragraph 
(1) does not exceed 140 percent of the aggregate amount so 
allotted to such State for the fiscal year preceding the fiscal 
year for which a determination is made under this paragraph.
  [(3) For purposes of this subsection, the term ``State'' does 
not include Guam, American Samoa, the Virgin Islands of the 
United States, the Commonwealth of the Northern Mariana 
Islands, and the Trust Territory of the Pacific Islands.
  [(c)(1) The Secretary shall apportion one-half of 1 percent 
of the amount appropriated under section 672 for each fiscal 
year on the basis of need among Guam, American Samoa, the 
Virgin Islands, the Northern Mariana Islands, and the Trust 
Territory of the Pacific Islands.
  [(2) Each jurisdiction to which paragraph (1) applies may 
receive grants under this subtitle upon an application 
submitted to the Secretary containing provisions which describe 
the programs for which assistance is sought under this 
subtitle, and which are consistent with the requirements of 
section 675.
  [(d)(1) If, with respect to any State, the Secretary--
          [(A) 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
          [(B) 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 which would otherwise 
be allotted to such State under this subtitle for the fiscal 
year the amount determined under paragraph (2).
  [(2) The Secretary shall reserve for the purpose of paragraph 
(1) from sums that would otherwise be allotted to such State 
not less than 100 percent of an amount which bears the same 
ratio to the State's allotment for the fiscal year involved as 
the population of all eligible Indians for whom a determination 
under this paragraph has been made bears to the population of 
all individuals eligible for assistance under this subtitle in 
such State.
  [(3) The sums reserved by the Secretary on the basis of a 
determination under this subsection shall be granted to the 
Indian tribe or tribal organization serving the individuals for 
whom such a determination has been made.
  [(4) In order for an Indian tribe or tribal organization to 
be eligible for an award for a fiscal year under this 
subsection, it shall submit to the Secretary a plan for such 
fiscal year which meets such criteria as the Secretary may 
prescribe by regulation.
  [(5) The terms ``Indian tribe'' and ``tribal organization'' 
means those tribes, bands, or other organized groups of Indians 
recognized in the State in which they reside or considered by 
the Secretary of the Interior to be an Indian tribe or an 
Indian organization for any purpose.

                     [applications and requirements

  [Sec. 675. (a) Each State desiring to receive an allotment 
for a fiscal year under this subtitle shall submit an 
application to the Secretary. Each such application shall be in 
such form as the Secretary shall require. Each such application 
or significant amendments thereof shall contain assurances by 
the chief executive officer of the State that the State will 
comply with subsection (b) and will meet the conditions 
enumerated in subsection (c).
  [(b) After the expiration of the first fiscal year in which a 
State received funds under this subtitle, no funds shall be 
allotted to such State for any fiscal year under this subtitle 
unless the legislature of the State conducts public hearings on 
the proposed use and distribution of funds to be provided under 
this subtitle for such fiscal year.
  [(c) As part of the annual application required by subsection 
(a), the chief executive officer of each State shall certify 
that the State agrees to--
          [(1) ensure that, at its discretion and consistent 
        with agreements with the State, each recipient of funds 
        available under this subtitle will use such funds--
                  [(A) to provide a range of services and 
                activities having a measurable and potentially 
                major impact on causes of poverty in the 
                community or those areas of the community where 
                poverty is a particularly acute problem;
                  [(B) to provide activities designed to assist 
                low-income participants including homeless 
                individuals and families, migrants, and the 
                elderly poor--
                          [(i) to secure and retain meaningful 
                        employment;
                          [(ii) to attain an adequate 
                        education;
                          [(iii) to make better use of 
                        available income;
                          [(iv) to obtain and maintain adequate 
                        housing and a suitable living 
                        environment;
                          [(v) to obtain emergency assistance 
                        through loans or grants to meet 
                        immediate and urgent individual and 
                        family needs, including the need for 
                        health services, nutritious food, 
                        housing, and employment-related 
                        assistance;
                          [(vi) to remove obstacles and solve 
                        problems which block the achievement of 
                        self-sufficiency;
                          [(vii) to achieve greater 
                        participation in the affairs of the 
                        community; and
                          [(viii) to make more effective use of 
                        other programs related to the purposes 
                        of this subtitle;
                  [(C) to provide on an emergency basis for the 
                provision of such supplies and services, 
                nutritious foodstuffs, and related services, as 
                may be necessary to counteract conditions of 
                starvation and malnutrition among the poor;
                  [(D) to coordinate and establish linkages 
                between governmental and other social services 
                programs to assure the effective delivery of 
                such services to low-income individuals; and 1
                  [(E) to encourage the use of entities in the 
                private sector of the community in efforts to 
                ameliorate poverty in the community;
          [(2)(A) use, for fiscal year 1985 and for each 
        subsequent fiscal year, not less than 90 percent of the 
        funds allotted to the State under section 674 to make 
        grants to use for the purposes described in clause (1) 
        to eligible entities (as defined in section 673(1)) or 
        to organizations serving seasonal or migrant 
        farmworkers, except that no more than 7 percent of the 
        funds available for this subclause shall be granted to 
        organizations which were not eligible entities during 
        the previous fiscal year; and
          [(B) if less than 100 percent of the allotment is 
        expended under subparagraph (A), provide assurances 
        that with respect to the remainder of the allotment a 
        reasonable amount shall be used for--
                  [(i) providing training and technical 
                assistance to those entities in need of such 
                assistance and such activities will not be 
                considered administrative expenses;
                  [(ii) coordinating State-operated programs 
                and services targeted to low-income children 
                and families with services provided by eligible 
                entities funded under this subtitle, including 
                outposting appropriate State or local public 
                employees into entities funded under this 
                subtitle to ensure increased access to services 
                provided by such State or local agencies;
                  [(iii) supporting statewide coordination and 
                communication among eligible entities;
                  [(iv) administrative expenses at the State 
                level, including monitoring activities, but not 
                more than $55,000 or 5 percent of its allotment 
                under section 674; and
                  [(v) considering the distribution of funds 
                under this subtitle within the State to 
                determine if such funds have been targeted to 
                the areas of greatest need.
          [(3) provide assurances that (A) in the case of a 
        community action agency or nonprofit private 
        organization, each board will be selected by the 
        community action agency or nonprofit private 
        organization and constituted so as to assure that (i) 
        one-third of the members of the board are elected 
        public officials, currently holding office, or their 
        representatives, except that if the number of elected 
        officials reasonably available and willing to serve is 
        less than one-third of the membership of the board, 
        membership on the board of appointive public officials 
        may be counted in meeting such one-third requirement; 
        (ii) at least one-third of the members are persons 
        chosen in accordance with democratic selection 
        procedures adequate to assure that they are 
        representative of the poor in the area served; and 
        (iii) the remainder of the members are officials or 
        members of business, industry, labor, religious, 
        welfare, education, or other major groups and interests 
        in the community, and (B) in the case of a public 
        organization receiving funds under this subtitle, such 
        organization either establish--
                          [(i) a board of which at least one-
                        third of the members are persons chosen 
                        in accordance with democratic selection 
                        procedures adequate to assure that they 
                        are representative of the poor in the 
                        area served; or
                          [(ii) another mechanism specified by 
                        the State to assure low-income citizen 
                        participation in the planning, 
                        administration, and evaluation of 
                        projects for which such organization 
                        has been funded;
          [(4) give special consideration in the designation of 
        local community action agencies under this subtitle to 
        any community action agency which is receiving funds 
        under any Federal antipoverty program on the date of 
        the enactment of this Act, except that (A) the State 
        shall, before giving such special consideration, 
        determine that the agency involved meets program and 
        fiscal requirements established by the State; and (B) 
        if there is no such agency because of any change in the 
        assistance furnished to programs for economically 
        disadvantaged persons, the State shall give special 
        consideration in the designation of community action 
        agencies to any successor agency which is operated in 
        substantially the same manner as the predecessor agency 
        which did receive funds in the fiscal year preceding 
        the fiscal year for which the determination is made;
          [(5) provide assurances that the State may transfer 
        funds, but not to exceed 5 percent of its allotment 
        under section 674, for the provisions set forth in this 
        subtitle to services under the Older Americans Act of 
        1965, the Head Start program under subchapter B of 
        chapter 8 of subtitle A of this title, the energy 
        crisis intervention program under title XXVI of this 
        Act (relating to low-income home energy assistance), or 
        the Emergency Food Assistance Act of 1983;
          [(6) prohibit any political activities in accordance 
        with subsection (e);
          [(7) prohibit any activities to provide voters and 
        prospective voters with transportation to the polls or 
        provide similar assistance in connection with an 
        election or any voter registration activity;
          [(8) provide for coordination between antipoverty 
        programs in each community, where appropriate, with 
        emergency energy crisis intervention programs under 
        title XXVI of this Act (relating to low-income home 
        energy assistance) conducted in such community;
          [(9) provide that fiscal control and fund accounting 
        procedures will be established as may be necessary to 
        assure the proper disbursal of and accounting for 
        Federal funds paid to the State under this subtitle, 
        including procedures for monitoring the assistance 
        provided under this subtitle, and provide that at least 
        every year each State shall prepare, in accordance with 
        subsection (f), an audit of its expenditures of amounts 
        received under this subtitle and amount transferred to 
        carry out the purposes of this subtitle;
          [(10) permit and cooperate with Federal 
        investigations undertaken in accordance with section 
        679;
          [(11) provide assurances that any community action 
        agency or migrant and seasonal farmworker organization 
        which received funding in the previous fiscal year 
        under this Act will not have its present or future 
        funding terminated under this Act, or reduced below the 
        proportional share of funding it received in the 
        previous fiscal year, unless after notice, and 
        opportunity for hearing on the record, the State 
        determines that cause existed for such termination or 
        such reduction subject to the procedures and review by 
        the Secretary as provided in section 676A.
                  [(A) For purposes of making a determination 
                with respect to a funding reduction, the term 
                ``cause'' includes--
                  [(i) a statewide redistribution of funds 
                under this subtitle to respond to--
                          [(aa) the results of the most 
                        recently available census or other 
                        appropriate data;
                          [(bb) the establishment of a new 
                        eligible entity;
                          [(cc) severe economic dislocation; 
                        and
                  [(ii) the failure of an eligible entity to 
                comply with the terms of its agreement to 
                provide services under this subtitle; and
                  [(B) for purposes of making a determination 
                with respect to a termination, the term 
                ``cause'' includes the material failure of an 
                eligible entity to comply with the terms of its 
                agreement and community action plan to provide 
                services under this subtitle;
          [(12) in the case of a State which applied for and 
        received a waiver from the Secretary under Public Law 
        98-139, provide assurances that funds will not be 
        provided under this subtitle by such State to an 
        organization to which such State made a grant under 
        this subtitle in fiscal year 1984 unless such 
        organization allows, before expending such funds, low-
        income individuals to comment on the uses for which 
        such organization proposes to expend such funds;
          [(13) secure from each eligible entity as a condition 
        to its receipt of funding under this Act a community 
        action plan (which shall be available to the Secretary 
        for inspection) that includes--
                  [(A) a community needs assessment (including 
                food needs);
                  [(B) a description of the service delivery 
                system targeted to low-income individuals and 
                families in the service area;
                  [(C) a description of how linkages will be 
                developed to fill identified gaps in services 
                through information, referral, case management, 
                and followup consultations;
                  [(D) a description of how funding under this 
                Act will be coordinated with other public and 
                private resources; and
                  [(E) a description of outcome measures to be 
                used to monitor success in promoting self-
                sufficiency, family stability, and community 
                revitalization; and
          [(14) provide assurances that cost and accounting 
        standards of the Office of Management and Budget shall 
        apply to a recipient of funds under this subtitle.
The Secretary may prescribe procedures only for the purpose of 
assessing the effectiveness of eligible entities in carrying 
out the purposes of this subtitle. The Secretary shall provide 
to the chief executive officer of each State appropriate 
information regarding designated limited purpose agencies and 
grantees which meet the requirements of the second sentence of 
section 673(1).
  [(d)(1) In addition to the requirements of subsection (c), 
the chief executive officer of each State shall prepare and 
furnish to the Secretary a plan which contains provisions 
describing how the State will carry out the assurances 
contained in subsection (c). The chief executive officer of 
each State may revise any plan prepared under this paragraph 
and shall furnish the revised plan to the Secretary.
  [(2) Each plan or revision prepared under paragraph (1) shall 
be made available for public inspection within the State in 
such a manner as will facilitate review of, and comment on, the 
plan.
  [Subsection (e) was repealed by section 6 of the Hatch Act 
Reform Amendments of 1993 (P.L. 103-94). Section 12(a) of such 
Act provides the amendments made by this Act, shall take effect 
120 days after the date of the enactment [October 6, 1993] of 
this Act.
  [(f) Each audit required by subsection (c)(9) shall be 
conducted by an entity independent of any agency administering 
activities orservices carried out under this subtitle and shall 
be conducted in accordance with generally accepted accounting 
principles. Within 30 days after the completion of each audit, the 
chief executive officer of the State shall submit a copy of such audit 
to the eligible entity at no charge, to the legislature of the State 
and to the Secretary.
  [(g) 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.
  [(h) The Comptroller General of the United States shall, from 
time to time, evaluate the expenditures by States (including 
any State that received a waiver under Public Law 98-139) of 
grants under this subtitle in order to assure that expenditures 
are consistent with the provisions of this subtitle and to 
determine the effectiveness of the State in accomplishing the 
purposes of this subtitle.

                            [administration

  [Sec. 676. (a) There is established in the Department of 
Health and Human Services an Office of Community Services. The 
Office shall be headed by a Director.
  [(b) The Secretary shall carry out his functions under this 
subtitle through the Office of Community Services established 
in subsection (a).

    [procedures for a review of termination or reduction of funding

  [Sec. 676A. (a) Whenever a State violates the assurances 
contained in section 675(c)(11) and terminates or reduces the 
funding of a community action agency or migrant and seasonal 
farmworker organization prior to the completion of the State's 
hearing and the Secretary's review as required in section 679 
of this Act, the Secretary shall assume responsibility for 
providing financial assistance to the community action agency 
or migrant and seasonal farmworker organization affected. The 
allotment for the State shall be reduced by an amount equal to 
the funds provided under this section by the Secretary to such 
agency or organization.
  [(b) The Secretary shall upon request review any termination 
or reduction of funding to a community action agency or migrant 
and seasonal farmworker organization protected by a State's 
assurance under section 675(c)(11). Such review shall be 
conducted promptly and shall be based upon the record and no 
determination shall become effective until a finding by the 
Secretary confirming the State's finding of cause.
  [(c) The Secretary shall conduct the review under subsection 
(b) through the Office of Community Services, which shall 
promptly conduct such review and issue a written determination 
together with the reasons of the Secretary therefor.

                     [nondiscrimination provisions

  [Sec. 677. (a) No person shall on the ground of race, color, 
national origin, or sex be excluded from participation in, be 
denied the benefits of, or be subjected to discrimination 
under, any program or activity funded in whole or in part with 
funds made available under this subtitle. Any prohibition 
against discrimination on the basis of age under the Age 
Discrimination Act of 1975 or with respect to an otherwise 
qualified handicapped individual as provided in section 504 of 
the Rehabilitation Act of 1973 shall also apply to any such 
program or activity.
  [(b) Whenever the Secretary determines that a State that has 
received a payment under this subtitle has failed to comply 
with subsection (a) or an applicable regulation, he shall 
notify the chief executive officer of the State and shall 
request him to 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 (1) refer the matter to the Attorney General with 
a recommendation that an appropriate civil action be 
instituted; (2) exercise the powers and functions provided by 
title VI of the Civil Rights Act of 1964, the Age 
Discrimination Act of 1975, or section 504 of the 
Rehabilitation Act of 1973, as may be applicable; or (3) take 
such other action as may be provided by law.
  [(c) When a matter is referred to the Attorney General 
pursuant to subsection (b), or whenever he has reason to 
believe that the State is engaged in a pattern or practice in 
violation of the provisions of this section, 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.

                          [payments to states

  [Sec. 678. (a) From its allotment under section 674, the 
Secretary shall make payments to each State in accordance with 
section 203 of the Intergovernmental Cooperation Act of 1968 
(42 U.S.C. 4213), for use under this subtitle.
  [(b) Payments to a State from its allotment for any fiscal 
year shall be expended by the State in such fiscal year or in 
the succeeding fiscal year.

                              [withholding

  [Sec. 679. (a)(1) The Secretary shall, after adequate notice 
and an opportunity for a hearing conducted within the affected 
State, withhold funds from any State which does not utilize its 
allotment substantially in accordance with the provisions of 
this subtitle and the assurances such State provided under 
section 675.
  [(2) 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 or the assurances provided by the State under 
section 675. For purposes of this paragraph, a violation of any 
one of the assurances contained in section 675(c) that 
constitutes a disregard of that assurance shall be considered a 
serious complaint.
  [(b)(1) 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 subsections (a) and (b) of 
section 675, and clauses (1) through (11) of subsection (c) of 
such section. Each suchevaluation shall include identifying the 
impact that assistance furnished under this subtitle has on children, 
pregnant adolescents, homeless families, and the elderly poor. A report 
of the evaluation, together with recommendations of improvements 
designed to enhance the benefit and impact to people in need, will be 
sent to each State evaluated. Upon receiving the report the State will 
then submit a plan of action in response to the recommendation 
contained in the report. The results of the evaluation shall be 
submitted annually to the Chairman of the Committee on Education and 
Labor of the House of Representatives and the Chairman of the Committee 
on Labor and Human Resources of the Senate.
  [(2) Whenever the Secretary determines that there is a 
pattern of complaints 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.
  [(3) The Comptroller General of the United States shall 
conduct an investigation of the use of funds received under 
this subtitle by a State in order to ensure compliance with the 
provisions of this subtitle.
  [(c) Pursuant to an investigation conducted under subsection 
(b), a State shall make appropriate books, documents, papers, 
and records available to the Secretary or 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 therefor.

             [limitation on use of grants for construction

  [Sec. 680. (a) Except as provided in subsection (b), grants 
made under this subtitle (other than amounts made available 
under section 681(d)) 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.
  [(b) The Secretary may waive the limitation contained in 
subsection (a) upon the State's request for such a waiver if he 
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 State's ability to carry out 
the purposes of this subtitle.

                 [discretionary authority of secretary

  [Sec. 681. (a) The Secretary is authorized to make grants, 
loans, or guarantees to States and public agencies and private 
nonprofit organizations, or to enter into contracts or jointly 
financed cooperative arrangements with States and public 
agencies and private nonprofit organizations, to provide for 
ongoing activities of national or regional significance related 
to the purposes of this subtitle, with special emphasis on--
          [(1) a Community Initiative Program, awarded on a 
        competitive basis, to fund private, nonprofit community 
        development corporations for purposes of planning and 
        carrying out community and economic development 
        activities in economically distressed areas and in 
        rural areas, as described in subsection (c);
          [(2) grants to support the design, development, and 
        widespread availability of interactive information 
        technology among the nationwide network of Community 
        Service Block Grant eligible entities, State 
        administrators, national associations and 
        organizations, and program recipients to promote 
        electronic communication and access to program 
        information that would enhance the effective delivery 
        of social services; and
          [(3) grants to nonprofit private organizations that 
        provide assistance for migrants and seasonal 
        farmworkers.
  [(b) Community Initiative Program.--
          [(1) In general.--
                  [(A) Economic development activities.--
                Economic development activities under this 
                section shall be 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) in consultation with other 
                relevant Federal officials.
                  [(C) Governing boards.--Each community 
                development corporation receiving funds under 
                this section 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 providing 
                assistance or entering into other arrangements 
                under this section, the Secretary shall take 
                into consideration the geographic distribution 
                of funds among States and the relative 
                proportion of funding among rural and urban 
                areas.
                  [(E) Reservation.--Of the amounts made 
                available to carry out this section, the 
                Secretary may reserve not to exceed 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 projects funded 
                under this section and to evaluate projects 
                funded under this section.
          [(2) Rural community development activities.--Rural 
        community development activities under this section 
        shall include--
                  [(A) grants to private, nonprofit 
                corporations that provide assistance to rural 
                low-income families in home repair and in 
                planning and developing low-income rural rental 
                housing units; and
                  [(B) grants to multistate, regional private, 
                nonprofit organizations that provide training 
                and technical assistance to small, rural 
                communities in meeting their community facility 
                needs.
  [(c)(1) The final reports submitted by recipients of 
assistance under this section on projects completed with such 
assistance shall be summarized and reported by the Secretary 
annually to the Chairman of the Committee on Education and 
Labor of the House of Representatives and the Chairman of the 
Committee on Labor and Human Resources of the Senate. The 
report shall contain a list of recipients who have received 
assistance under this section outside of the competitive 
process.
  [(2) The Secretary shall, at the end of each fiscal year, 
prepare and distribute a catalog listing all the projects 
assisted under clause (A) of subsection (a)(2) in such fiscal 
year. The catalog shall include--
          [(A) a description of each project;
          [(B) an identification of the agency receiving the 
        award, including the name and address of the principal 
        investigator;
          [(C) a description of the project objectives; and
          [(D) a statement of the accomplishments of the 
        project.
  [(d) Of the amounts appropriated under section 672(b) for any 
fiscal year, not more than 9 percent of such amounts shall be 
available to the Secretary for purposes of carrying out this 
section, section 682, and subchapter A of chapter 8 of subtitle 
A of this title.]

           Subtitle B--Community Services Block Grant Program

SEC. 671. SHORT TITLE.

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

                   PART A--COMMUNITY SERVICES GRANTS

SEC. 672. PURPOSES AND GOALS.

  The purpose of this part 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 part:
          (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 part. 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 part, 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 part (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 part 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 part, 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 part.
  (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 part 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 part 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 part.
  (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 part, including detailing appropriate 
                employees of State or local agencies to 
                entities funded under this part, 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 part 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 part; 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 part 
        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 part.
          (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 part, 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 part (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 part, including a description of 
        how the State will support innovative community and 
        neighborhood-based initiatives related to the purposes 
        of this part;
          (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 part 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 
        part will not have its funding terminated under this 
        part, 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 part 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 part 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 part; 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 part 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 part.
  (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 part, 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 part.
          (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 part 
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 part; 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 part.

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 part 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 
        part,
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 part 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 part 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 part 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 part, 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 part in order to evaluate compliance with the provisions 
of this part, 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 peoplein 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 part 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 part 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 part 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 part, 
                including procedures for monitoring the funds 
                provided under this part;
                  (B) ensure that cost and accounting standards 
                of the Office of Management and Budget apply to 
                a recipient of funds under this part;
                  (C) prepare, at least every year in 
                accordance with paragraph (2) an audit of the 
                expenditures of the State of amounts received 
                under this part and amounts transferred to 
                carry out the purposes of this part; 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 part 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 part or the Secretary may offset 
        such amounts against any other amount to which the 
        State is or may become entitled under this part.
  (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 part, 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 part, 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 
        constitutesdisregarding 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 
        part by such State in order to ensure compliance with 
        the provisions of this part.

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 part 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 part 
                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 part 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 part 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 part, the number 
                of low-income persons served under this part, 
                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 part, 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 part.
          (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 part (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 
        part, 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 part.
  (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 part 
        and receives assistance under this part 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 part 
        shall be deemed to be a State or local agency.
          (2) Prohibitions.--Programs assisted under this part 
        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 part. 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 part 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 part, 
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 part shall 
discriminate against an organization that provides assistance 
under, or applies to provide assistance under, this part, 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 orassist 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 part, 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.

                      community food and nutrition

  Sec. [681A] 681. (a) The Secretary may through grants to 
public and private nonprofit agencies, provide for community-
based, local, statewide, and national programs--
          (1) * * *

           *       *       *       *       *       *       *

  (c) For each fiscal year, the Secretary shall prepare and 
submit, to the Committee on Education and [Labor] the Workforce 
of the House of Representatives and the Committee on Labor and 
Human Resources of the Senate, a report concerning the grants 
awarded under this section. Such report shall include--
          (1) * * *

           *       *       *       *       *       *       *

  (d) There are authorized to be appropriated [$25,000,000 for 
fiscal year 1995, and such sums as may be necessary for each of 
fiscal years 1996 through 1998] $5,000,000 for fiscal year 
1999, and such sums as may be necessary for fiscal years 2000 
through 2003, to carry out this section.

SEC. 682. NATIONAL OR REGIONAL PROGRAMS DESIGNED TO PROVIDE 
                    INSTRUCTIONAL ACTIVITIES FOR LOW-INCOME YOUTH.

  (a) * * *

           *       *       *       *       *       *       *

  (c) Eligible Providers.--A national private nonprofit 
organization, a coalition of such organizations, or a private 
nonprofit organization applying jointly with a business concern 
shall be eligible for a grant under this subsection if--
          (1) the applicant has demonstrated experience in 
        operating a program providing instruction to low-income 
        youth;
          (2) the applicant shall contribute amounts in cash or 
        fairly evaluated in kind of no less than 25 percent of 
        the amount requested;
          (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 part;
          [(3)] (4) the applicant shall use no funds from a 
        grant authorized under this section for administrative 
        expenses; and
          [(4)] (5) the applicant agrees to comply with the 
        regulations or program guidelines promulgated by the 
        Secretary of Health and Human Services for use of funds 
        made available by this grant.

           *       *       *       *       *       *       *

  (f) Authorization of Appropriations.--There is authorized to 
be appropriated $15,000,000 [for each fiscal year 1995, 1996, 
1997, and 1998] for fiscal year 1999, and such sums as may be 
necessary for fiscal years 2000 through 2003 for grants to 
carry out this section.

                             [annual report

  [Sec. 683. (a)(1) For each fiscal year beginning after 
September 30, 1991, the Secretary shall, by awarding a grant or 
contract to an entity that is knowledgeable about programs and 
projects assisted under section 674, prepare a report 
containing the following information:
          [(A) The uses of the Community Services Block Grant 
        to the States that are related to the purposes of the 
        subtitle.
          [(B) The number of entities eligible for funds under 
        this subtitle, the number of low-income persons served 
        under this subtitle, and that amount of information 
        concerning the demographics of the low-income 
        populations served by such eligible entities as is 
        determined to be feasible.
          [(C) Any information in addition to that described in 
        subparagraph (B) that the Secretary considers to be 
        appropriate to carry out this subtitle, except that the 
        Secretary may not require a State to provide such 
        additional information until the expiration of the 1-
        year period beginning on the date on which the 
        Secretary notifies such State that such additional 
        information will be required to be provided.
  [(2) In selecting an entity to prepare a report under this 
subsection, the Secretary shall give a preference to any 
nonprofit entity that has demonstrated the ability to secure 
the voluntary cooperation of grantees under this subtitle in 
designing and implementing national Community Services Block 
Grant information systems.
  [(b) The Secretary shall transmit to the Committee on 
Education and Labor of the House of Representatives and the 
Committee on Labor and Human Resources of the Senate--
          [(1) such report in the form in which it was received 
        by the Secretary; and
          [(2) any comments the Secretary may have with respect 
        to such report.
  [(c) Of the funds made available under section 681(d), not 
more than $250,000 shall be available to carry out this 
section.

    [repealer; reauthorization provisions; technical and conforming 
                               provisions

  [Sec. 684. (a) Effective October 1, 1981, the Economic 
Opportunity Act of 1964, other than titles VIII and X of such 
Act, is repealed.
  [(b) There is authorized to be appropriated such sums as may 
be necessary for each of the fiscal years 1982, 1983, and 1984, 
to carry out title VIII of the Economic Opportunity Act of 
1964.
  [(c)(1) 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(2) of this Act.
  [(2) 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 
private nonprofit community organizations eligible to receive 
funds under this subtitle.
  [(3) No action or other proceeding commenced by or against 
any officer in the official capacity of such individual as an 
officer of any agency administering the Act repealed by 
subsection (a) of this section shall abate by reason of the 
enactment of this Act.]

SEC. 683. DRUG TESTING AND PATERNITY DETERMINATIONS.

  (a) Drug Testing Permitted.--(1) Nothing in this part shall 
be construed to prohibit a State from testing participants in 
programs, activities, or services carried out under this part 
for controlled substances or from imposing sanctions on such 
participants who test positive for any of such substances.
  (2) Any funds provided under this part 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 part 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 part. 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.

                    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.
                              ----------                              


             LOW-INCOME HOME ENERGY ASSISTANCE ACT OF 1981

             TITLE XXVI--LOW-INCOME HOME ENERGY ASSISTANCE

                              short title

  Sec. 2601. This title may be cited as the ``Low-Income Home 
Energy Assistance Act of 1981''.

                     home energy grants authorized

  Sec. 2602. (a) * * *
  (b) There are authorized to be appropriated to carry out the 
provisions of this title (other than section 2607A), 
$2,000,000,000 for each of fiscal years 1995 through 1999, 
$1,100,000,000 for fiscal year 2000, and such sums as may be 
necessary for fiscal year 2001. The authorizations of 
appropriations contained in this subsection are subject to the 
program year provisions of subsection (c).
  [(c)(1) In fiscal year 1993 and each fiscal year thereafter, 
amounts appropriated under this section for any fiscal year for 
programs and activities under this title shall be made 
available for obligation only on the basis of a program year. 
The program year shall begin on July 1 of the fiscal year for 
which the appropriation is made.
  [(2) Amounts appropriated for fiscal year 1993 shall be 
available both to fund activities for the period between 
October 1, 1992, and July 1, 1993, and for the program year 
beginning July 1, 1993.
  [(3) There are authorized to be appropriated such additional 
sums as may be necessary for the transition to carry out this 
subsection.]
  (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.
  (d) There are authorized to be appropriated to carry out 
section 2607A, $50,000,000 [for each of the fiscal years 1996 
and 1997, and such sums as may be necessary for each of the 
fiscal years 1998 and 1999.] for each of the fiscal years 1999, 
2000, and 2001.
  (e) There are authorized to be appropriated in each fiscal 
year for payments under this title, in addition to amounts 
appropriated for distribution to all the States in accordance 
with section 2604 (other than [subsection (g)] subsection (e) 
of such section), $600,000,000 to meet the additional home 
energy assistance needs of one or more States arising from a 
natural disaster or other emergency. Funds appropriated 
pursuant to this subsection are hereby designated to be 
emergency requirements pursuant to section 251(b)(2)(D) of the 
Balanced Budget and Emergency Deficit Control Act of 1985, 
except that such funds shall be made available only after the 
submission to Congress of a formal budget request by the 
President (for all or a part of the appropriation pursuant to 
this subsection) that includes a designation of the amount 
requested as an emergency requirement as defined in such Act.

                              definitions

  Sec. 2603. As used in this title:
  (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.
          [(1)] (2) The term ``energy burden'' means the 
        expenditures of the household for home energy divided 
        by the income of the household.
          [(2)] (3) The term ``energy crisis'' means weather-
        related and supply shortage emergencies and other 
        household energy-related emergencies.
          [(3)] (4) The term ``highest home energy needs'' 
        means the home energy requirements of a household 
        determined by taking into account both the energy 
        burden of such household and the unique situation of 
        such household that results from having members of 
        vulnerable populations, including very young children, 
        individuals with disabilities, and frail older 
        individuals.
          [(4) the] (5) The term ``household'' means any 
        individual or group of individuals who are living 
        together as one economic unit for whom residential 
        energy is customarily purchased in common or who make 
        undesignated payments for energy in the form of 
        rent[;].
          [(5)] (6) The term ``home energy'' means a source of 
        heating or cooling in residential dwellings.
          (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.
          [(6)] (8) The term ``poverty level'' means, with 
        respect to a household in any State, the income poverty 
        line as prescribed and revised at least annually 
        pursuant to section 673(2) of the Community Services 
        Block Grant Act, as applicable to such State.
          [(7)] (9) The term ``Secretary'' means the Secretary 
        of Health and Human Services.
          [(8)] (10) The term ``State'' means each of the 
        several States and the District of Columbia.
          [(9)] (11) The term ``State median income'' means the 
        State median income promulgated by the Secretary in 
        accordance with procedures established under section 
        2002(a)(6) of the Social Security Act (as such 
        procedures were in effect on the day before the date of 
        the enactment of this Act) and adjusted, in accordance 
        with regulations prescribed by the Secretary, to take 
        into account the number of individuals in the 
        household.

                            state allotments

  Sec. 2604. (a) * * *
  (b)(1) The Secretary shall apportion not less than one-tenth 
of 1 percent, and not more than one-halfof 1 percent, of the 
amounts appropriated for each fiscal year to carry out this title on 
the basis of need among the Commonwealth of Puerto Rico, Guam, American 
Samoa, the Virgin Islands of the United States, [the Northern Mariana 
Islands, and the Trust Territory of the Pacific Islands.] and the 
Commonwealth of the Northern Mariana Islands. The Secretary shall 
determine the total amount to be apportioned under this paragraph for 
any fiscal year (which shall not exceed one-half of 1 percent) after 
evaluating the extent to which each jurisdiction specified in the 
preceding sentence requires assistance under this paragraph for the 
fiscal year involved.
  (2) Each jurisdiction to which paragraph (1) applies may 
receive grants under this title upon an application submitted 
to the Secretary containing provisions which describe the 
programs for which assistance is sought under this title, and 
which are consistent with the requirements of section 2605.
  (c) Of the funds available to each State under subsection 
(a), a reasonable amount based on data from prior years shall 
be reserved until March 15 of each program year by each State 
for energy crisis intervention. The program for which funds are 
reserved by this subsection shall be administered by public or 
nonprofit entities which have experience in administering 
energy crisis programs under the Low-Income Energy Assistance 
Act of 1980, or under this Act, experience in assisting low-
income individuals in the area to be served, the capacity to 
undertake a timely and effective energy crisis intervention 
program, and the ability to carry out the program in local 
communities. The program for which funds are reserved under 
this subsection shall--
          (1) * * *

           *       *       *       *       *       *       *

          (3) require each entity that administers such 
        program--
                  (A) to accept applications for energy crisis 
                benefits at sites that are geographically 
                accessible to all households in the area to be 
                served by such entity; and
                  (B) to provide to low-income individuals who 
                are physically infirm the means--
                          (i) to submit applications for energy 
                        crisis benefits without leaving their 
                        residences; or
                          (ii) to travel to the sites at which 
                        such [application] applications are 
                        accepted by such entity.
The preceding sentence shall not apply to a program in a 
geographical area affected by a natural disaster in the United 
States designated by the Secretary, or by a major disaster or 
emergency designated by the President under the Disaster Relief 
Act of 1974, for so long as such designation remains in effect, 
if the Secretary determines that such disaster or such 
emergency makes compliance with such sentence impracticable.

           *       *       *       *       *       *       *

  [(f)(1) A State may transfer in accordance with paragraph (2) 
a percentage of the funds payable to it under this section for 
any fiscal year for its use for such fiscal year under other 
provisions of Federal law providing block grants for--
          [(A) support of activities under subtitle B of title 
        VI (relating to community services block grant 
        program);
          [(B) support of activities under title XX of the 
        Social Security Act; or
          [(C) support of preventive health services, alcohol, 
        drug, and mental health services, and primary care 
        under title XIX of the Public Health Service Act, and 
        maternal and child health services under title V of the 
        Social Security Act;
or a combination of the activities described in subparagraphs 
(A), (B), and (C). Amounts allotted to a State under any 
provisions of Federal law referred to in the preceding sentence 
and transferred by a State for use in carrying out the purposes 
of this title shall be treated as if they were paid to the 
State under this title but shall not affect the computation of 
the State's allotment under this title. The State shall inform 
the Secretary of any such transfer of funds.
  [(2)(A) Not to exceed 10 percent of the funds payable to a 
State under this section for each of the fiscal years 1991 
through 1993 may be transferred under paragraph (1).
  [(B) Beginning in fiscal year 1994, no funds payable to a 
State under this section shall be transferred under paragraph 
(1).]
  [(g)] (e) Notwithstanding subsections (a) through [(f)] (d), 
the Secretary may allot amounts appropriated pursuant to 
section 2602(e) to one or more than one State. [In determining 
to which State or States additional funds may be allotted, the 
Secretary shall take into account the extent to which a State 
was affected by the emergency or disaster, the availability to 
an affected State of other resources under this or any other 
program, and such other factors as the Secretary determines 
relevant. The Secretary shall notify Congress of the allotment 
pursuant to this subsection prior to releasing the allotted 
funds.] 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.

                     applications and requirements

  Sec. 2605. (a) * * *
  (b) As part of the annual application required by subsection 
(a), the chief executive officer of each State shall certify 
that the State agrees to--
          (1) * * *

           *       *       *       *       *       *       *

          (9) provide that--
                  (A) the State may use for planning and 
                administering the use of funds under this title 
                an amount not to exceed 10 percent of the funds 
                payable to such State under this title for a 
                fiscal year [and not transferred pursuant to 
                section 2604(f) for use under another block 
                grant]; and

           *       *       *       *       *       *       *

          (14) cooperate with the Secretary with respect to 
        data collecting and reporting under section 2610; [and]
[The Secretary may not prescribe the manner in which the States 
will comply with the provisions of this subsection.]
          (15) beginning in fiscal year 1992, provide, in 
        addition to such services as may be offered by State 
        Departments of Public Welfare at the local level, 
        outreach and intake functions for crisis situations and 
        heating and cooling assistance that is administered by 
        additional State and local governmental entities or 
        community-based organizations (such as community action 
        agencies, area agencies on aging, and not-for-profit 
        neighborhood-based organizations), and in States where 
        such organizations do not administer intake functions 
        as of September 30, 1991, preference in awarding grants 
        or contracts for intake services shall be provided to 
        those agencies that administer the low-income 
        weatherization or energy crisis intervention programs; 
        and
          (16) use up to 5 percent of such funds, at its 
        option, to provide services that encourage and enable 
        households to reduce their home energy needs and 
        thereby the need for energy assistance, including needs 
        assessments, counseling, and assistance with energy 
        vendors, and report to the Secretary concerning the 
        impact of such activities on the number of households 
        served, the level of direct benefits provided to those 
        households, and the number of households that remain 
        unserved.
The Secretary may not prescribe the manner in which the States 
will comply with the provisions of this subsection. The 
Secretary shall issue regulations to prevent waste, fraud, and 
abuse in the programs assisted by this title. Not later than 18 
months after the date of the enactment of the Low-Income Home 
Energy Assistance Amendments of 1994, the Secretary shall 
develop model performance goals and measurements in 
consultation with State, territorial, tribal, and local 
grantees, that the States may use to assess the success of the 
States in achieving the purposes of this title. The model 
performance goals and measurements shall be made available to 
States to be incorporated, at the option of the States, into 
the plans for fiscal year 1997. The Secretary may request data 
relevant to the development of model performance goals and 
measurements.
  (c)(1) As part of the annual application required in 
subsection (a), the chief executive officer of each State shall 
prepare and furnish to the Secretary, in such format as the 
Secretary may require, a plan which--
          (A) describes the eligibility requirements to be used 
        by the State for each type of assistance to be provided 
        under this title, including criteria for designating an 
        emergency under section 2604(c);
          (B) describes the benefit levels to be used by the 
        [States] State for each type of assistance including 
        assistance to be provided for emergency crisis 
        intervention and for weatherization and other energy-
        related home repair;

           *       *       *       *       *       *       *

          (G) states, with respect to the 12-month period 
        specified by the Secretary, the number and income 
        levels of households which apply and the number which 
        are assisted with funds provided under this title, and 
        the number of households so assisted with--
                  (i) one or more members who [has] had 
                attained 60 years of age;

           *       *       *       *       *       *       *

  (k)(1) Except as provided in paragraph (2), not more than 15 
percent of the greater of--
          (A) the funds allotted to a State under this title 
        for any fiscal year; or
          (B) the funds available to such State under this 
        title for such fiscal year;
may be used by the State for low-cost residential 
weatherization or other energy-related home repair for low-
income households, particularly those low-income households 
with the lowest incomes that pay a high proportion of household 
income for home energy.
  (2)(A) If a State receives a waiver granted under 
subparagraph (B) for a fiscal year, the State may use not more 
than the greater of 25 percent of--
          (i) the funds allotted to a State under this title 
        for such fiscal year; or
          (ii) the funds available to such State under this 
        title for such fiscal year;
for residential weatherization or other energy-related home 
repair for low-income households, particularly those low-income 
households with the lowest incomes that pay a high proportion 
of household income for home energy.

           *       *       *       *       *       *       *


                           payments to states

  Sec. 2607. (a) * * *
  (b)(1) * * *
  (2)(A) * * *
  (B) No amount may be held available under this paragraph for 
a State from a prior fiscal year to the extent such amount 
exceeds 10 percent of the amount payable to such State for such 
prior fiscal year [and not transferred pursuant to section 
2604(f)]. For purposes of the preceding sentence, the amount 
payable to a State [but not transferred by the State] for a 
fiscal year shall be determined without regard to any amount 
held available under this paragraph for such State for such 
fiscal year from the prior fiscal year.

           *       *       *       *       *       *       *


SEC. 2607B. RESIDENTIAL ENERGY ASSISTANCE CHALLENGE OPTION (R.E.A.CH.).

  (a) * * *
  (b) Funding.--
          (1) Allocation.--[For each of the fiscal years 1996 
        through 1999] For each fiscal year, the Secretary may 
        allocate not more than 25 percent of the amount made 
        available pursuant to section 2602(d) for such fiscal 
        year to a R.E.A.Ch. fund for the purpose of making 
        incentive grants to States that submit qualifying plans 
        that are approved by the Secretary as R.E.A.Ch. 
        initiatives. States may use such grants for the costs 
        of planning, implementing, and evaluating the 
        initiative.

           *       *       *       *       *       *       *

  (e) State Plans.--
          (1) In general.--Each State plan shall include each 
        of the elements described in paragraph (2), to be met 
        by State and local agencies.
          (2) Elements of state plans.--Each State plan shall 
        include--
                  (A) * * *

           *       *       *       *       *       *       *

                  [(F)] (E) a method for targeting nonmonetary 
                benefits;
                  [(G)] (F) a description of the crisis and 
                emergency assistance activities the State will 
                undertake that are designed to--
                          (i) * * *

           *       *       *       *       *       *       *

                  [(H)] (G) a description of the activities the 
                State will undertake to--
                          (i) * * *

           *       *       *       *       *       *       *

                  [(I)] (H) an assurance that the State will 
                require each entity that receives a grant or 
                enters into a contract under this section to 
                solicit and be responsive to the views of 
                individuals who are financially eligible for 
                benefits and services under this section in 
                establishing its local program;
                  [(J)] (I) a description of performance goals 
                for the State R.E.A.Ch. initiative including--
                          (i) a reduction in the energy costs 
                        [on] of participating households over 
                        one or more fiscal years;

           *       *       *       *       *       *       *

                  [(K)] (J) a description of the indicators 
                that will be used by the State to measure 
                whether the performance goals have been 
                achieved;
                  [(L)] (K) a demonstration that the plan is 
                consistent with section 2603, paragraphs (2), 
                (3), (4), (5), (7), (9), (10), (11), (12), 
                (13), and (14) of section 2605(b), subsections 
                (d), (e), (f), (g), (h), (i), and (j) of 
                section 2605, and section 2606 of this title;
                  [(M)] (L) an assurance that benefits and 
                services will be provided in addition to other 
                benefit payments and services provided under 
                this title and in coordination with such 
                benefit payments and services; and
                  [(N)] (M) an assurance that no regulated 
                utility covered by the plan will be required to 
                act in a manner that is inconsistent with 
                applicable regulatory requirements.
  [(g)] (f) Cost or Function.--None of the costs of providing 
services or benefits under this section shall be considered to 
be an administrative cost or function for purposes of any 
limitation on administrative costs or functions contained in 
this title.

           *       *       *       *       *       *       *


                            ADDITIONAL VIEWS

    While having voiced our overall support for this 
legislation, we are disappointed that the substitute amendment 
which was added at full committee markup only reauthorized the 
Low-Income Home Energy Assistance Program (LIHEAP) for 2 years, 
rather than 5 years as with other Human Services programs. 
LIHEAP funding is essential to ensuring that our elderly, our 
sick, and our poor have access to appropriate cooling and 
heating services. Without LIHEAP hundreds of thousands of 
vulnerable people would be thrown into financial ruin in their 
attempts to pay for their cooling and heating needs. In the 
worst cases, the absence of a strong LIHEAP program could leave 
many vulnerable to utility shut-offs due to lack of financial 
resources.
    Traditionally, Head Start, LIHEAP and the Community 
Services Block Grant (CSBG) have moved together as one 
reauthorization package, often referred to as the Human 
Services Amendments. This legislation and another Committee 
approved bill reauthorizes both the Head Start and CSBG 
programs for 5 years. Singling out LIHEAP with a short 
reauthorization period, does little to assure us that this 
extremely valuable program is continued. We strongly believe 
that LIHEAP should continue to be reauthorized on the same 
period as both Head Start and CSBG. At the full committee 
markup on this bill, Chairman Goodling indicated his preference 
for a 5 year reauthorization of this program and we intend to 
support this position through our deliberations in conference.

                                   William L. Clay.
                                   Dale E. Kildee.
                                   Major R. Owens.
                                   Patsy T. Mink.
                                   Tim Roemer.
                                   Lynn Woolsey.
                                   Chaka Fattah.
                                   Carolyn McCarthy.
                                   Ron Kind.
                                   Harold E. Ford, Jr.
                                   George Miller.
                                   Matthew G. Martinez.
                                   Donald M. Payne.
                                   Robert E. Andrews.
                                   Bobby Scott.
                                   Carlos Romero-Barcelo.
                                   Ruben Hinojosa.
                                   John F. Tierney.
                                   Loretta Sanchez.
                                   Dennis J. Kucinich.

                            ADDITIONAL VIEWS

    While I support H.R. 4271, I would like to make the 
legislative record clear with respect to Section 679 of the 
bill, specifically paragraph (b), as it relates to the removal 
of religious icons. The intent of the Committee is to establish 
that faith-based organizations, providing services under the 
Community Service Block Grant (CSBG), must operate within the 
context of the Establishment Clause of the First Amendment. 
This requirement is explicitly stated in paragraph (a) of this 
section. Furthermore, paragraph (b) must be read within that 
limitation also.
    While paragraph (b) of the section states: ``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),'' this must be read pursuant to the limitation set forth 
in paragraph (a). Further, current law permits ``religiously 
affiliated'' organizations, such as Catholic Charities, to 
provide services with government funds, so long as the program 
is not ``pervasively sectarian''.
    In various cases, the Supreme Court listed several criteria 
to be used to determine if an institution is ``pervasively 
sectarian'': (1) location near a house of worship; (2) an 
abundance of religious symbols on the premises; (3) religious 
discrimination in the institution's hiring practices; (4) the 
presence of religious activities; and (5) the purposeful 
articulation of a religious mission.
    While Section 679 of this bill is meant to clarify and to 
affirm that appropriate faith-based organizations may 
participate in CSBG activities, as they do now, this section 
may cause confusion regarding how faith-based organizations may 
operate with CSBG funds. Specifically, paragraph (b) seems to 
suggest that faith-based organizations that receive funds under 
this program may operate without regard to providing a 
religiously neutral atmosphere. Their constitutional 
requirement to provide services in a non ``pervasively 
sectarian'' environment is not lessened by paragraph (b). It is 
unfortunate that this paragraph may lead some faith-based 
organizations, reading the plain language of the bill, to 
operate in a manner that violates the constitution and subject 
them to unwanted lawsuits. Let the record be clear that it will 
remain appropriate for faith-based organizations to remove 
``religious art, icons, scripture or other symbols'' in order 
to avoid constitutional challenge when such displays are 
inconsistent with Establishment Clause jurisprudence.
    Paragraph (b) is not serious attempt at setting public 
policy for faith-based organizations' participation in CSBG, 
but mere political window dressing for those who have 
continually sought in this Congress to intrude upon the 
religious liberties and protections afforded by the First 
Amendment of our Constitution. This politically expedient form 
shall have no substance.

                                                       Bobby Scott.