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                                                       Calendar No. 462
105th Congress                                                   Report
                                 SENATE

 2d Session                                                     105-243
_______________________________________________________________________


 
                  AMEND THE NATIONAL SCHOOL LUNCH ACT

                                _______
                                

                 July 10, 1998.--Ordered to be printed

_______________________________________________________________________


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

                              R E P O R T

                         [To accompany S. 2286]

    The Committee on Agriculture, Nutrition and Forestry, 
having considered the bill to amend the National School Lunch 
Act and the Child Nutrition Act of 1966 to provide children 
increased access to food and nutrition assistance, simplify 
program operations and improve program management and to extend 
certain authorities contained in those Acts through fiscal year 
2003, and for other purposes, reports favorably thereon and 
recommends that the bill do pass.


                                CONTENTS

                                                                   Page
  I. Purpose and need for legislation.................................1
 II. Background and summary of legislation............................2
III. Legislative history and votes in the committee...................5
 IV. Regulatory impact statement.....................................11
  V. Cost estimate...................................................12
 VI. Section-by-section analysis.....................................26
VII. Changes in existing law.........................................40

                  I. Purpose and Need for Legislation

    Certain child nutrition programs must be reauthorized in 
fiscal year 1998. Some of the larger programs that must be 
reauthorized include: (1) the Special Supplemental Nutrition 
Program for Women, Infants and Children (WIC); (2) the State 
Administrative Expense program; (3) the WIC Farmer's Market 
Nutrition Program; (4) the Summer Food Service Program; and (5) 
the requirement to use certain funds to purchase commodities to 
maintain commodity assistance for child nutrition programs. In 
addition, demonstration and pilot projects contained in the 
National School Lunch Act expire in fiscal year 1998. This 
legislation, Child Nutrition and WIC Reauthorization Amendments 
of 1998, reauthorizes these Acts through fiscal year 2003. The 
legislation also amends the Commodity Distribution Reform Act 
and WIC Amendments of 1987 to reform certain commodity 
provisions as they relate to the child nutrition programs. The 
Committee bill improves the child nutrition programs by 
simplifying and streamlining the administration of the 
programs. The bill also strengthens the anti-fraud and abuse 
provisions in the WIC program and the Child and Adult Care Food 
Program. The legislation allows children in low-income areas to 
participate in the after-school snack program of the child and 
adult care food program up to age 18. The Committee bill does 
not create any new programs, does not reverse any decisions 
made in welfare reform, targets benefits to low-income children 
and, over the five-year reauthorization period, reduces federal 
spending.

               II. Background and Summary of Legislation

                               BACKGROUND

    The federal government supports over a dozen child 
nutrition programs and other activities that reach more than 35 
million children. In fiscal year 1998, federal costs are 
expected to total approximately $12.8 billion.
    The National School Lunch and School Breakfast Programs 
provide cash subsidies to participating schools and residential 
child care institutions for all lunches and breakfasts they 
serve that meet federal nutrition guidelines. Larger subsidies 
are granted for free and reduced-price meals served to lower-
income children. The Child and Adult Care Food Program 
subsidizes meals and snacks served by day care centers and 
family day care homes. In centers, higher subsidies are given 
for free and reduced-price meals/snacks served to lower-income 
children. In day care homes, subsidies generally are not varied 
by individual children's family income, but are larger for 
homes located in lower-income areas or operated by lower-income 
providers. The Summer Food Service Program subsidizes food 
service operations by public and private nonprofit sponsors in 
lower-income areas during the summer months: all meals/snacks 
they serve are subsidized, generally without regard to 
individual children's family income. The Special Milk Program 
operates in schools and residential child care institutions 
without a lunch program and subsidizes all milk they serve. All 
these subsidies are inflation-indexed and are paid only where 
meals/snacks meet federal nutrition standards. In addition to 
cash aid, providers in the lunch, child and adult care food and 
summer programs, receive food commodities from the Agriculture 
Department, at a set value per meal. Grants also are made to 
help cover state administrative expenses. And, the Special 
Supplemental Nutrition Program for Women, Infants and Children 
(the WIC program) provides nutrition services and tailored food 
packages to lower-income pregnant, breast-feeding, and 
postpartum women, and infants and children who are judged to be 
at nutritional risk. Other federal programs/activities include: 
the Nutrition Education and Training Program, a Homeless 
Children Nutrition Program, limited grants for projects serving 
``boarder babies'' and children in after-school programs, a 
commodity supplemental food program, a WIC farmers' market 
program and a Food Service Management Institute.
    The programs are administered by the Agriculture 
Department's Food and Nutrition Service, which also provides 
technical assistance and cooperates with State agencies in 
overseeing providers' adherence to federal standards. They are 
operated, under State oversight, by more than 300,000 local 
providers (e.g., schools, child care centers, family day care 
homes and health clinics). Federal payments do not necessarily 
cover all program costs, and non-federal financial support is 
significant.

                       SUMMARY OF THE LEGISLATION

1. National School Lunch and Breakfast Program

    The Committee bill makes some changes to the National 
School Lunch and Breakfast Program, many of which have no cost 
implication. The legislation requires schools to have at least 
one food safety inspection every year, unless the State or 
local government has a requirement. The bill also eliminates 
the requirement that the Secretary directly administer child 
nutrition programs for a State. The legislation streamlines the 
administration of programs for school food nutrition programs 
for a State. The legislation streamlines the administration of 
programs for school food service personnel by allowing them to 
operate after-school snack programs through the National School 
Lunch Program instead of requiring them to operate the programs 
separately through the Child and Adult Care Food Program. The 
Committee bill also provides for an evaluation of offering free 
school breakfasts to elementary school children without regard 
to family income. There is a great deal of research showing 
that breakfast is an important factor in determining the 
performance and behavior of school children. Some believe that 
offering a free school breakfast for all children will increase 
the number of children who eat breakfast and will therefore 
have a positive effect on their school performance and 
behavior. The legislation will allow six school food 
authorities to participate in a pilot test to determine the 
effect of providing free breakfasts on participation, academic 
achievement, attendance and tardiness and dietary intake over 
the course of a day. Finally, the bill extends expiring 
provisions through fiscal year 2003.

2. The Summer Food Service Program

    The Committee bill allows the Secretary to adjust Summer 
Food Service reimbursement rates for non-contiguous States and 
territories where the cost of providing meals is greater than 
that in the contiguous United States. The legislation also 
eliminates many of the provisions put in place in the 1980's to 
limit participation by private nonprofit organizations. The 
bill extends authorization for appropriations for the Summer 
Food Service Program through fiscal year 2003.

3. The Child and Adult Care Food Program

    The legislation revises current licensing and approval 
conditions by simplifying procedures for schools operating 
child care programs and for institutions providing after-school 
care. The bill includes funding for the Secretary to provide 
technical assistance and training to assist State agencies in 
improving their management and oversight of child care centers 
and family day care homes. The bill also extends a provision in 
current law which allows certain for-profit child care centers 
to participate in the Child and Adult Care Food Program if at 
least 25 percent of the children are eligible for free and 
reduced price lunches. The Committee bill allows children in 
low-income areas to participate in the after-school snack 
program of the Child and Adult Care Food Program until they are 
18 years old. The snack will be served free to children living 
in low-income areas. The bill streamlines the administration of 
the Homeless Children Nutrition Program by consolidating the 
authority under the Child and Adult Care Food Program. The 
legislation also strengthens the anti-fraud and abuse 
provisions by requiring State agencies to visit sites prior to 
approval and periodically visit those sites the State agency 
determines to be high risk.

4. The Special Supplemental Nutrition Program for Women, Infants and 
        Children

    The Committee bill made a number of amendments to current 
law to strengthen anti-fraud and abuse provisions in the WIC 
program. Specifically, the bill requires thatparticipants be 
physically present at each certification and provide income 
documentation prior to participation. The Secretary is required to 
issue regulations on how a State must verify the income of 
participants. State agencies are required to design a system to ensure 
that participants are not collecting benefits from more than one 
location. The Committee bill also provides State agencies with 
additional authorities to penalize fraudulent vendors in the WIC 
program. In response to the concerns raised by State WIC directors 
regarding their limited ability to use savings generated from cost 
containment efforts to perform necessary administrative activities, the 
Committee bill provides States with increased flexibility to convert 
limited amounts of food funding into nutrition services and 
administration funding if circumstances warrant the conversion. The 
Committee bill requires State agencies to offer infant formula 
contracts to the bidders offering the lowest net price and requires the 
Secretary to review the infant formula contracts for any anti-
competitive provisions. The legislation requires the Secretary to 
establish a long-range plan for the implementation of management 
information systems and electronic benefit transfer systems. The 
Secretary is required to report to Congress on the progress of the plan 
no later than two years after the enactment of this Act.
    The Committee bill improves the administration of the WIC 
Farmers' Market and extends the authority for appropriations 
for the Farmers' Market through fiscal year 2003. The Committee 
bill also calls for the General Accounting Office to do two 
studies. The first would study the effects of cost containment 
practices of States on such things as program participation, 
voucher redemption and program costs. The second study would 
assess the cost of delivering nutrition services and 
administrative activities of the WIC program. The Committee 
bill extends all expiring provisions related to the WIC program 
through fiscal year 2003.

5. Additional programs under the jurisdiction of the National School 
        Lunch and Child Nutrition Acts.

    The Committee bill extends the authority through fiscal 
year 2003 for the: (1) food and nutrition curriculum project; 
(2) pilot project to provide food and nutrition services to 
homeless pregnant women and homeless mothers or guardians of 
infants and the children of the homeless women; (3) information 
clearinghouse; (4) program that provides guidance and grants 
for accommodating special dietary needs of children with 
disabilities; and (5) nutrition education and training program.

6. Commodity distribution programs

    The Committee bill amends the Commodity Distribution Reform 
Act and WIC Amendments of 1987 to simplify and improve the 
administration of the commodity distribution programs.

7. Offsets

    The savings to offset the increased spending in the bill 
come from conforming the way reimbursement rates are calculated 
for free and reduced-price meals. The savings generated from 
this provision completely offsets any additional spending in 
the bill.

              III. Legislative History and Committee Votes

    The Committee held two hearings to prepare for this 
legislation. On Thursday, March 12, 1998, the Committee on 
Agriculture, Nutrition and Forestry met to consider testimony 
regarding child nutrition and WIC reauthorization.
    First to testify was Congressman Joseph P. Kennedy II of 
Massachusetts. Congressman Kennedy strongly encouraged the 
Committee to expand summer food programs and the school 
breakfast program. He noted that despite record highs in the 
stock market and a seeming prosperity for all in this country, 
many parents simply do not earn enough to raise a family and 
provide adequate nutrition for their children.
     Next to testify was Shirley Watkins, Under Secretary for 
Food, Nutrition and Consumer Services. Accompanying Ms. Watkins 
were George Braley, Associate Administrator for Food and 
Nutrition Service and Ed Cooney, Deputy Assistant Secretary for 
Special Nutrition Programs. Ms. Watkins announced that the 
Administration transmitted to Congress a child nutrition and 
WIC reauthorization bill on March 10, 1998. The bill reflected 
suggestions voiced at various roundtables and other forums held 
around the country. The Administration's proposal included 
changes and reforms to the National School Lunch Program (NSLP) 
and the School Breakfast Program (SPB), the Summer Food Service 
Program and the Child and Adult Care Food Program (CACFP). 
Noting time limitations and that discussion of the WIC 
proposals would be reserved for a hearing on March 17, 1998, 
Ms. Watkins discussed some of the major provisions of the 
Administration reauthorization legislation relating to the 
National School Lunch and Breakfast programs, the Summer Food 
Service Program and the Child and Adult Care Food Program.
    Specific to the National School Lunch Program and School 
Breakfast Program, the Administration's bill would require 
health and safety inspections, ensure adequate time for 
children to eat, provide funds for USDA to cover the costs of 
removing unsafe food from any domestic food program inventory 
and provide the USDA with authority to accept food donations 
from other Federal sources for distribution through the 
domestic food programs.
    With regard to the Summer Food Service Program, the 
Administration's legislation proposed to raise the number of 
sites that non-profit organizations may serve and lift limits 
on the total number of children that may be served. 
Furthermore, the legislation would adjust reimbursement rates 
for Alaska and Hawaii and outlying territories as done in other 
programs and would allow commercial vendors to supply meals to 
non-profit organizations.
    In the Child and Adult Care Food Program, the 
Administration's proposal would make permanent the Kentucky and 
Iowa demonstration projects, allow after-school facilities that 
meet health and safety standards to participate in the program, 
continue to give Even Start participants categorical 
eligibility in CACFP, delete the audit funding and instead 
allow States to keep 50% of recovered funds from all child 
nutrition programs, allow ``at-risk'' children between the ages 
of 12 and 18 to participate in CACFP and move the Homeless 
Children Nutrition Program and the Summer Food Service Program 
homeless site into the CACFP.
    The second panel was comprised of Melinda Turner, President 
of the American School Food Service Association; Linda Locke, 
Director of Public Policy, Community Coordinated Child Care; 
Karen Ford, Director of the Food Bank of Iowa, accompanied by 
Ellen Teller of Food Research and Action Center; and Bob 
Greenstein, Executive Director for the Center on Budget and 
Policy Priorities.
    Testifying on behalf of the American School Food Service 
Association, Ms. Turner offered a number of suggestions 
reflecting the organization's priorities. First, noting that 
the time between the end of the school day and dinner 
represents the most dangerous time of day for teenagers, Ms. 
Turner encouraged the expansion of the after-school snack 
program to include all ages in order to take advantage of 
existing infrastructure and facilities. Second, Ms. Turner 
encouraged program simplification and streamlining of paperwork 
requirements to ease the administration burden of school mean 
programs. Third, she encouraged the expansion of the school 
breakfast program and supported legislation sponsored by 
Senator Johnson providing free breakfasts for all elementary 
school children.
    Next, Ms. Locke testified as to her concern for the 
efficacy of the Child Care Food Program. Concerned about a 
reduction in funds available for family day care homes, Ms. 
Locke encouraged Congress to enact changes guaranteeing access 
to child nutrition programs for all children in out-of-home 
care. The second issue discussed by Ms. Locke was the family 
day care home portion of the Child and Adult Care Food Program. 
Citing the institution of means-testing for this program as the 
main reason for a decline in the number of participating homes, 
Ms. Locke encouraged the enaction of language to correct this 
problem. Finally, Ms. Locke voiced her support and the support 
of the National Child Care Food Program Sponsors Forum for the 
school-age provisions contained in the Administration's 
proposal.
    Next to testify from the panel was Karen Ford. Ms. Ford 
encouraged the expansion of school food service opportunities 
to best alleviate hunger. Specifically, she encouraged the 
Committee to adopt Senator Johnson's universal school breakfast 
legislation, stating her belief in the need to provide food to 
children during the summer months and after-school hours.
    Last to testify was Bob Greenstein of the Center on Budget 
and Policy Priorities. Mr. Greenstein testified as to the need, 
in light of budget realities, for making after-school child 
nutrition the top priority of reauthorization legislation. 
Noting limited financial resources, Mr. Greenstein voiced his 
support for the after-school food service proposal over 
competing child nutrition proposals such as the expansion of 
the school breakfast program for non-poor children and a fourth 
meal for children in day care longer than eight hours.
    A second hearing on the reauthorization of the Child 
Nutrition programs was held on March 17, 1998. The hearing 
focused on the Special Supplemental Nutrition Program for 
Women, Infants and Children. In attendance were Senators Lugar, 
Harkin, Conrad, Baucus and Johnson. The first witness to 
testify before the Committee was Ms. Shirley Watkins, Under 
Secretary, Food, Nutrition and Consumer Services, United States 
Department of Agriculture, who was accompanied by Mr. George 
Braley, Associate Administrator, Food and Nutrition Service, 
United States Department of Agriculture, and Mr. Ed Cooney, 
Deputy Assistant Secretary for Special Nutrition Programs, 
United States Department of Agriculture.
    Ms. Watkins' testified that WIC is one of the Federal 
Government's true success stories and that it serves as the 
first line of defense for America's infants. Today, the program 
serves 46 percent of all newborns. She stated that dozens of 
studies have shown that WIC reduces infant mortality and other 
medical problems that are associated with childbirth such as 
low birth weight and anemia. Ms. Watkins also noted that for 
every $1 that is invested in prenatal WIC the Federal 
government saves $3.50 in other health care costs. The 
reauthorization proposal submitted by the Administration would: 
increase program flexibility and improve program integrity of 
the WIC program by requiring that all applicants be present at 
each certification visit, that all applications provide 
documentation of household income or show participation in 
another low-income program, and that income be verified. Ms. 
Watkins testified that the Administration's proposal limits the 
amount States can ``spend forward'' in the following fiscal.
    She next discussed improvement in vendor management through 
stricter national standards so that USDA can improve the 
program's integrity and the effectiveness of vendor management. 
Ms. Watkins, addressing a mandate in the welfare reform 
legislation, stated that the regulations will require the 
disqualification of any WIC vendor who has been disqualified 
from the Food Stamp Program. Along with this she proposed 
permanent disqualification of WIC vendors who have been 
convicted of trafficking in WIC food checks or food vouchers, 
or for the sale of firearms, ammunition, explosives, or any 
controlled substances in exchange for WIC food vouchers.
    In addition, Ms. Watkins discussed the Administration's 
legislative changes for the WIC Farmers' Market Nutrition 
Program which currently operates in 32 States, on two Indian 
reservations, and in the District of Columbia. Ending her 
testimony, Ms. Watkins stated that the Administration's fiscal 
year 1999 budget request for the WIC program is $4 billion, 
which would serve approximately 7.5 million participants.
    Chairman Lugar questioned Ms. Watkins about the present 
benchmark for full funding of the WIC program. Mr. Braley 
responded with information on how the 7.5 million ``full 
funding'' participant number was derived. The Chairman also 
asked how possible participants are notified about these 
programs. Ms. Watkins answered that States do this in various 
ways and that they are working to make certain that hard-to-
reach populations are informed. Mr. Lugar inquired as to how 
one would guarantee the integrity of the program in regards to 
verification of participants' income. Mr. Braley answered that 
the Administration's legislative proposal would require income 
documentation of participants applying for the program, but 
noted that about 60 percent of the participants in the program 
are determined eligible through participation in other 
programs.
    Senator Baucus asked how what role WIC played in achieving 
the goal of welfare-to-work? Ms. Watkins responded that the WIC 
program helps to supplement the food budget.
    Senator Harkin indicated that under present regulations, 
military families who qualify can get WIC in the United States 
but they cannot get benefits overseas. Ms. Watkins said that 
military families were not calculated in the funding formulas. 
Senator Harkin also asked about the records that are kept to 
provide information on the percentage of mothers breast feeding 
as opposed to those using infant formula? Mr. Braley responded 
that there has been a substantial increase in the rate of 
breast feeding among WIC mothers as well as the duration.
    The second panel of witnesses included Robert Robinson, 
Director of Food and Agriculture, General Accounting Office; 
Denise Ferris Hemmings, President of the NationalAssociation of 
WIC Directors, Washington, D.C.; and Joan Trendell, American Dietetic 
Association, Director from Marion County WIC, Indianapolis, Indiana.
    Mr. Robinson addressed issues such as: (1) why States have 
unspent grant funds that are returned to USDA; (2) working 
women's access to WIC benefits; (3) the practices States use to 
contain program costs; and (4) how States ensure that 
participants meet eligibility requirements.
    Mr. Robinson pointed out that some efforts to reduce food 
costs increase administrative burdens. Restrictions on how a 
State can use savings resulting from the cost containment 
efforts pose practical obstacles and disincentives to save food 
costs.
    Mr. Robinson finished his testimony talking about State 
efforts to ensure that program participants meet income and 
residency requirements. Thirty-two of 48 State WIC directors, 
responding to a USDA survey on this question, said that their 
States require applicants to provide documentation of income 
eligibility, but 14 States allow applicants to self-declare 
income. Mr. Robinson stated that GAO was concerned that these 
practices may permit ineligible applicants to participate.
    Next to testify was Denise Ferris Hemmings who is President 
of the National Association of WIC Directors (NAWD), 
Washington, DC. Ms. Hemmings stated that NAWD represents the 
Nation's 1,900 State and local WIC programs. She testified that 
NAWD is committed to ensuring program integrity and supports 
States' efforts to provide for adequate levels of income 
documentation for those clients who do not automatically meet 
the income requirements by virtue of participation in Food 
Stamps, Medicaid, or TANF. Ms. Hemmings also indicated that 
NAWD encourages States to adopt a variety of strategies to 
assist working women.
    Included in Ms. Hemmings' testimony was NAWD's proposal to 
allow States to use food funds for the purchase of breast pumps 
as food aids because they assist breast-feeding mothers in 
providing breast milk for their infants when they are at work, 
at school, or otherwise separated from their infant. 
Additionally she proposed allowing the certification of breast-
feeding women for up to one year after delivery or until they 
stop breast feeding.
    Ms. Hemmings indicated that nutrition services and 
administrative fund shortfalls prevent States from addressing 
infrastructure needs including new clinics, extended clinic 
hours to serve working families, updated management information 
systems, and adequate staffing levels to ensure the integrity 
of program services. NAWD proposes to allow States to allocate 
a portion of their rebate savings or revenues to ensure 
appropriate levels of nutrition services and administration. 
Ms. Hemmings expressed concern that the Department's proposal 
to fund EBT development by retaining up to 4 percent of 
nutrition services and administrative funds places an undue 
pressure on an already tight pool of nutrition services and 
administrative funds.
    Next to testify was Ms. Joan Trendell, Director of Marion 
County WIC programs in Indianapolis, Indiana on behalf of the 
American Dietetic Association (ADA), the worlds's largest 
organization of food and nutrition professionals promoting 
optimal nutritional health and well-being. Ms. Trendell urged 
the committee to support full funding for WIC and to enact 
changes in the program which give WIC administrators the 
flexibility to optimize resources, plan ahead, and maintain the 
important nutrition education focus for all those in need. She 
was concerned about the plight of the Nutrition Education and 
Training (NET) Program, the only federally funded nutrition 
education program which directly reaches children, teachers, 
parents, and food service operators in schools and other child 
nutrition settings. Ms. Trendell reminded the committee that 
welfare reform changed the NET program from mandatory to 
discretionary, creating a schism between the authorizing and 
appropriations committees and that the uncertainties of its 
funding have nearly crippled the program.
    The last panel of witnesses was started with the testimony 
of Mr. Joseph T. Williams, the Electronic Benefits Transfer/
Health Passport Manager for the State of Wyoming. Mr. Williams 
suggested Electronic Benefit Transfer (EBT) systems as a 
management tool that would help improve the integrity of the 
WIC program. He related the success of EBT in Wyoming and some 
of the difficulties that were faced in initiating the system.
    Mr. Williams listed several challenges to EBT service in 
the WIC programs. First, the WIC program benefit is a 
prescription for specific quantities and types of foods and 
each purchase, unlike food stamps or welfare benefits, must be 
determined to be in accord with the individual's prescription. 
Second, most WIC EBT systems use an online approach, which 
requires a telephone link to a central computer to authorize 
each purchase or cash withdrawal. In contrast, the smart card 
system in Wyoming places the benefit account balance on the 
card itself, thus enabling off-line transactions. Mr. Williams 
stated that the Wyoming system represents the first time that a 
single card has been used to simultaneously perform the 
electronic benefit transfer functions and to support the 
sharing of health data to improve health-related services.
    Robert Greenstein, Executive Director of the Center on 
Budget and Policy Priorities in Washington, D.C., was the next 
witness. He reported that the WIC program is probably the 
single Federal program for which we have the strongest evidence 
of efficacy. A GAO report estimated that WIC reduces the 
incidence of low-birth weight by a quarter and very low-birth 
weight by 44 percent. The GAO concluded that each $1 invested 
in the prenatal component of WIC ultimately saves $3.50, much 
of it in Medicaid costs. He indicated that there is strong 
evidence from the Centers for Disease Control and Prevention of 
the powerful effects of WIC in reducing anemia among children.
    Mr. Greenstein also testified that the Committee should 
encourage States to offer an infant formula contract to the 
company offering the lowest net price. He also supported a 
provision in current law requiring USDA to reserve the first 
$10 million in unspent nutrition services and administration 
funds it recovers for infrastructure and breast-feeding 
promotion. In addition he supported the Department's proposal 
to allow States to retain and carry forward a somewhat larger 
amount of unspent nutrition services and administrative funds, 
as distinguished from food funds, to the extent that a State 
can use the money for the development of a WIC Electronic 
Benefit Transfer system.
    Mr. Greenstein noted that, although current law allows 
States to convert some food money to administrative money, 
there is a one to two year lag until the current system enables 
the State to use the rebate savings for administrative dollars. 
He suggested trying to solve this problem in the 
reauthorization bill. Mr. Greenstein's last comments concerned 
the administration's proposals to tighten up on program 
integrity.
    The last witness was A. K. Hawley Botchford, Executive 
Director of the Harry Chapin Food Bank in Fort Myers, Florida. 
Mr. Botchford indicated that last year his food bank provided 
more than 1,300,000 pounds of food and grocery items to an 
estimated 150 local charitable agencies that served an 
estimated 36,000 needy Floridians each month. He shared that a 
national research report by Second Harvest showed that despite 
the strong economy, low unemployment,and declining welfare 
rolls, more than 21 million Americans relied on emergency food 
assistance. Mr. Botchford testified that the school lunch and summer 
feeding programs are the basic nutrition safety nets for all too many 
of our country's children. He emphasized that the TEFAP and food stamp 
programs must be fully funded and that the Federal child nutrition 
programs are extremely successful and vitally important to preventing 
childhood hunger.

                             COMMITTEE VOTE

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

                       MOTION TO REPORT THE BILL

    The Committee bill was unanimously ordered reported by 
voice vote. Those members present were: Mr. Lugar, Mr. Helms, 
Mr. Cochran, Mr. McConnell, Mr. Coverdell, Mr. Santorum, Mr. 
Roberts, Mr. Grassley, Mr. Gramm, Mr. Craig, Mr. Harkin, Mr. 
Leahy, Mr. Conrad, Mr. Daschle, Mr. Kerrey, Mrs. Landrieu, and 
Mr. Johnson.

                    IV. Regulatory Impact Statement

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the following evaluation is made 
concerning the regulatory impact of carrying out the changes 
proposed in the bill:
    Individuals and businesses affected.--Average daily 
participation in the National School Lunch Program was 26.3 
million children in fiscal year 1997. Breakfast participation, 
on average, was 6.9 million school-age children in that same 
fiscal year. Approximately 89,000 schools participate in the 
school lunch program and 63,000 schools participate in the 
school breakfast program. The Committee believes that the bill 
will directly or indirectly affect all children and schools 
participating in the school lunch and breakfast programs. The 
Committee believes that, overall, the changes made in the 
school meals programs will modestly reduce the administrative 
burden for schools. The Committee acknowledges that the 
requirement to have one food safety inspection during a school 
year may increase administrative responsibilities, but believes 
this addition to be appropriate in light of the increased 
number of reported food-borne illness outbreaks. The Committee 
believes that changes made in the bill will improve access to 
after-school snacks for low-income school age children. The 
change in the way reimbursement rates are calculated will have 
an effect on schools by slightly reducing reimbursement rates 
to schools for free and reduced-price meals. The Committee 
believes that changes made to reduce administrative burdens 
will offset the small reduction in reimbursement rates to 
schools.
    In fiscal year 1997, 33,000 child care centers, with 13,000 
sponsors, participated in the Child and Adult Care Food 
Program. Average daily attendance in child care centers was 1.4 
million children. Participation of family day care homes in the 
Child and Adult Care Food Program was 190,000 homes, with 1,100 
sponsors. Average daily attendance in family day care homes was 
970,000 children. Participation in the Summer Food Service 
Program was 3,500 sponsors with 30,000 sites. Approximately 2.3 
million children participated in the program in fiscal year 
1997. The Committee believes that changes made to the Summer 
Food Service Program will improve management and increase 
access for eligible children. The Committee believes that 
changes made to the Child and Adult Care Food Program, in 
particular, will improve program integrity and improve access 
for low-income children.
    The WIC program served approximately 7.4 million women, 
infants and children in fiscal year 1997. The Committee expects 
that the additional requirements put upon WIC recipients, i.e., 
the requirement to be physically present at each certification 
and the requirement to provide income documentation, will 
disqualify ineligible individuals. The Committee bill will 
disqualify those vendors who are not following program 
requirements. The Committee believes that the bill's increase 
in requirements for State agencies to oversee the program is 
mostly offset by the increased flexibility to convert certain 
food funds for nutrition service and administration use.
    Economic impact of regulations on individuals, consumers, 
and businesses.--The Committee believes that the economic 
effect of the bill will be mostly limited to those individuals 
or businesses fraudulently participating in the WIC or Child 
and Adult Care Food Program. The Committee understands that the 
savings generated in this bill will have modest economic impact 
on schools, but believes that the bill's provisions to 
streamline the administration of school programs will mostly 
offset the change in how reimbursement rates are calculated.
    Impact on personal privacy.--The Committee bill will have 
minimal impact on personal privacy.
    Amount of additional paperwork.--The Committee believes 
that the bill will reduce paperwork for schools due to 
provisions that streamline program operations. The Committee 
acknowledgesthat the evaluation of the school breakfast pilot 
program will increase paperwork for those schools participating in the 
project. The Committee acknowledges that there may be some increased 
paperwork for State agencies as they implement the Child and Adult Care 
Food Program and the WIC anti-fraud provisions.

                            V. Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, July 8, 1998.
Hon. Richard G. Lugar,
Chairman, Committee on Agriculture, Nutrition, and Forestry,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for the Child Nutrition and 
WIC Reauthorization Amendments of 1998, as ordered reported by 
the Senate Committee on Agriculture, Nutrition, and Forestry on 
June 25, 1998.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Valerie 
Baxter.
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

Child Nutrition and WIC Reauthorization Amendments of 1998--As ordered 
        reported by the Senate Committee on Agriculture, Nutrition, and 
        Forestry on June 25, 1998

    Summary: The bill would reauthorize child nutrition 
programs and the Special Supplemental Nutrition Program for 
Women, Infants, and Children (WIC). The legislation would 
provide authorizations of $3.9 billion for fiscal year 1999 and 
about $19.6 billion over the 1999-2003 period, not including 
adjustments for inflation.
    In addition, the bill would change the National School 
Lunch Act and the Child Nutrition Act to provide reimbursement 
for snacks served to youth in after-school programs in schools 
and low-income areas and lower reimbursement rates for meals 
served free and at a reduced price in schools and child care 
centers. Those changes would slightly increase direct spending 
in 1999 and slightly decrease direct spending over the 1999-
2003 period. Enactment of the bill also would result in 
increased revenues, although the amount is likely to be 
insignificant. Because the bill would affect both direct 
spending and receipts, pay-as-you go procedures would apply.
    The bill contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
The bill would, however, impose new requirements on state and 
local governments that administer child nutrition programs with 
costs totaling $8 million in fiscal 1999 and $175 million for 
the 1999-2003 period. Under UMRA, such requirements would not 
be mandates because they are a result of complying with grant 
conditions or because states have the ability to offset these 
new costs by amending the programs.
    Estimated cost to the Federal Government: The estimated 
budgetary effect of the bill is summarized in Table 1. The 
costs of this legislation fall within budget function 600 
(income security).

                                TABLE 1.--SUMMARY OF ESTIMATED BUDGETARY EFFECTS                                
                                    [By fiscal years in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                              1998     1999     2000     2001     2002     2003 
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION                                       
                                        Without Adjustments for Inflation                                       
                                                                                                                
Authorizations for WIC and nutritional education and                                                            
 training under current law:                                                                                    
    Estimated authorization level \1\.....................    3,928       10       10       10       10        0
    Estimated outlays.....................................    3,917      284       10       10       10        2
Proposed changes:                                                                                               
    Estimated authorization level.........................        0    3,919    3,921    3,919    3,918    3,928
    Estimated outlays.....................................        0    3,645    3,920    3,919    3,918    3,927
Authorizations under the bill:                                                                                  
    Estimated authorization level \1\.....................    3,928    3,929    3,931    3,929    3,928    3,928
    Estimated outlays.....................................    3,917    3,929    3,930    3,929    3,928    3,928
                                                                                                                
                                         With Adjustments for Inflation                                         
                                                                                                                
Authorizations for WIC and nutritional education and                                                            
 training under current law:                                                                                    
    Estimated authorization level \1\.....................    3,928       10       10       10       10        0
    Estimated outlays.....................................    3,917      284       10       10       10        2
Proposed changes:                                                                                               
    Estimated authorization level.........................        0    4,005    4,101    4,198    4,295    4,411
    Estimated outlays.....................................        0    3,725    4,095    4,191    4,289    4,403
Authorizations under the bill:                                                                                  
    Estimated authorization level \1\.....................    3,928    4,015    4,111    4,208    4,305    4,411
    Estimated outlays.....................................    3,917    4,009    4,105    4,201    4,299    4,404
                                                                                                                
                                                 DIRECT SPENDING                                                
                                                                                                                
Spending for child nutrition under current law:                                                                 
    Budget authority......................................    8,779    9,266    9,786   10,333   10,893   11,464
    Estimated outlays.....................................    8,702    9,176    9,689   10,231   10,789   11,358
Proposed changes:                                                                                               
    Budget authority......................................        0       22      -14       -7       -7       -5
    Estimated outlays.....................................        0        6       -9       -2    (\2\)       -4
Spending under the bill:                                                                                        
    Budget authority......................................    8,779    9,288    9,772   10,326   10,886   11,459
    Outlays...............................................    8,702    9,182    9,680   10,229   10,789   11,354
                                                                                                                
                                               CHANGES IN REVENUES                                              
                                                                                                                
Estimted revenues.........................................        0    (\2\)    (\2\)    (\2\)    (\2\)    (\2\)
----------------------------------------------------------------------------------------------------------------
\1\ The 1998 level is the amount appropriated for that year.                                                    
\2\ Less than $500,000.                                                                                         
                                                                                                                
Note: Details may not sum to totals due to rounding.                                                            

    Basis of Estimate: Tables 2 and 3 detail the effects of the 
bill on authorizations of appropriations.

                TABLE 2.--ESTIMATED EFFECTS ON APPROPRIATIONS, WITHOUT ADJUSTMENTS FOR INFLATION                
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                              1998     1999     2000     2001     2002     2003 
----------------------------------------------------------------------------------------------------------------
                                        Authorizations Under Current Law                                        
                                                                                                                
WIC:                                                                                                            
    Budget authority......................................    3,924        0        0        0        0        0
    Estimated outlays.....................................    3,914      275        0        0        0        0
Nutritional Education and Training Program:                                                                     
    Estimated authorization level\1\......................        4       10       10       10       10        0
    Estimated outlays.....................................        3        9       10       10       10        2
Total authorizations under current law:                                                                         
    Estimated authorization level \1\.....................    3,928       10       10       10       10        0
    Estimated outlays.....................................    3,917      284       10       10       10        2
                                                                                                                
                                                                                                                
                                             Changes Under the Bill                                             
                                                                                                                
WIC:                                                                                                            
    Estimated authorization level \1\.....................        0    3,925    3,927    3,925    3,924    3,924
    Estimated outlays.....................................        0    3,650    3,926    3,925    3,924    3,924
Nutritional Education and Training Program:                                                                     
    Estimated authorization level \1\.....................        0       -6       -6       -6       -6        4
    Estimated outlays.....................................        0       -5       -6       -6       -6        3
Total changes:                                                                                                  
    Estimated authorization level \1\.....................        0    3,919    3,921    3,919    3,918    3,928
    Estimated outlays.....................................        0    3,645    3,920    3,919    3,918    3,927
                                                                                                                
                                       Total Authorizations Under the Bill                                      
                                                                                                                
WIC:                                                                                                            
    Estimated authorization level \1\.....................    3,924    3,925    3,927    3,925    3,924    3,924
    Estimated outlays.....................................    3,914    3,925    3,926    3,925    3,924    3,924
Nutritional Education and Training Program:                                                                     
    Estimated authorization level \1\.....................        4        4        4        4        4        4
    Estimated outlays.....................................        3        4        4        4        4        4
Total authorizations under the bill:                                                                            
    Estimated authorization level \1\.....................    3,928    3,929    3,931    3,929    3,928    3,928
    Estimated outlays.....................................    3,917    3,929    3,930    3,929    3,928    3,928
----------------------------------------------------------------------------------------------------------------
\1\ The 1998 level is the amount appropriated for that year.                                                    
                                                                                                                
Note: Details may not sum to totals due to rounding.                                                            


                  TABLE 3.--ESTIMATED EFFECTS ON APPROPRIATIONS, WITH ADJUSTMENTS FOR INFLATION                 
                                    [By fiscal year, im millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                              1998     1999     2000     2001     2002     2003 
----------------------------------------------------------------------------------------------------------------
                                        Authorizations Under Current Law                                        
                                                                                                                
WIC:                                                                                                            
    Budget authority......................................    3,924        0        0        0        0        0
    Estimated outlays.....................................    3,914      275        0        0        0        0
Nutritional Education and Training Program:                                                                     
    Estimated authorization level \1\.....................        4       10       10       10       10        0
    Estimated outlays.....................................        3        9       10       10       10        2
Total authorizations under current law:                                                                         
    Estimated authorization level \1\.....................    3,928       10       10       10       10        0
    Estimated outlays.....................................    3,917      284       10       10       10        2
                                                                                                                
                                             Changes Under the Bill                                             
                                                                                                                
WIC:                                                                                                            
    Estimated authorization level \1\.....................        0    4,011    4,107    4,204    4,301    4,407
    Estimated outlays.....................................        0    3,730    4,100    4,197    4,294    4,400
Nutritional Education and Training Program:                                                                     
    Estimated authorization level \1\.....................        0       -6       -6       -6       -6        4
    Estimated outlays.....................................        0       -5       -6       -6       -6        3
Total changes:                                                                                                  
    Estimated authorization level \1\.....................        0    4,005    4,101    4,198    4,295    4,411
    Estimated outlays.....................................        0    3,725    4,095    4,191    4,289    4,403
                                                                                                                
                                       Total Authorizations Under the Bill                                      
                                                                                                                
WIC:                                                                                                            
    Estimated authorization level \1\.....................    3,924    4,011    4,107    4,204    4,301    4,407
    Estimated outlays.....................................    3,914    4,005    4,100    4,197    4,294    4,400
Nutritional Education and Training Program:                                                                     
    Estimated authorization level \1\.....................        4        4        4        4        4        4
    Estimated outlays.....................................        3        4        4        4        4        4
Total authorizations under the bill:                                                                            
    Estimated authorization level \1\.....................    3,928    4,015    4,111    4,208    4,305    4,411
    Estimated outlays.....................................    3,917    4,009    4,105    4,201    4,299    4,404
----------------------------------------------------------------------------------------------------------------
\1\ The 1998 level is the amount appropriated for that year.                                                    
                                                                                                                
Note: Details may not sum to totals due to rounding.                                                            

            Spending subject to appropriations
    Title II of the bill would extend the authorization of the 
Special Supplemental Nutritional Program for Women, Infants, 
and Children (WIC) at such sums as may be necessary for fiscal 
years 1999 through 2003. The WIC program provides food and 
other support to low-income pregnant, post-partum and breast-
feeding women, infants, and children up to age five. The bill 
would make several changes to the underlying authorization of 
WIC. However, most of these changes would not have significant 
budgetary effects.
    Section 203 would increase federal administrative 
responsibilities in two ways. The first responsibility is the 
review and approval of all solicitations for contracts in the 
infant formula rebate program. In this program, manufacturers 
bid to supply infant formula at a reduced cost for WIC. The 
bill would require the Secretary of Agriculture to review all 
solicitations under this program to ensure that the contracts 
do not contain any anticompetitive provisions. Based on 
discussions with the Food and Nutrition Service, we estimate 
this activity would require five full-time equivalents (FTEs) 
each year. The other administrative responsibility would be the 
development of a plan for a management information system, 
including electronic benefits transfer. The Secretary would 
present the plan to Congress within two years of enactment of 
the bill. We estimate that this activity would require five 
FTEs for the two years of developing the plan and preparing the 
report. Together, these activities would cost about $1 million 
a year in 1999 and 2000, and less than $500,000 for each 
subsequent year.
    The section would also require the Comptroller General to 
undertake two studies of WIC. The first is a study on the 
effect of cost-containment practices employed by the states. 
This report would be due two years after the bill's enactment. 
Based upon estimates by the U.S. Department of Agriculture's 
Economic Research Service for a similar study, CBO estimates 
this requirement would cost $1.5 million. In the second study, 
the General Accounting Office would examine the cost and 
quality of WIC services, with a report due no later than three 
years after enactment of the bill. Given the scope of the 
intended study, CBO estimates its cost to be similar to that of 
the other required study. Thus, the costs of these studies are 
estimated at $3 million over the 1999-2003 period.
    Section 204 would amend the Nutritional Education and 
Training program, which provides funds to train food service 
personnel and to instruct students, teachers, and parents about 
nutrition and health. The program is currently authorized 
through fiscal year 2002 at $10 million a year. The bill would 
authorize such sums as may be necessary for fiscal years 1999 
through 2003. In fiscal year 1998, $4 million was appropriated 
for this program. CBO assumes that, under the new 
authorization, this level of funding would continue for 1999-
2003.
            Direct spending and revenues
    The bill would make several changes to the National School 
Lunch Act and the Child Nutrition Act. These programs provide 
subsidies to schools and child care programs to help provide 
meals to children. CBO's estimates of the bill's effects on 
direct spending, by provision, are detailed in Table 4 and 
explained below.
    Round Down Reimbursement Rates.--Section 106 would lower 
the reimbursement rate for meals served free or for a reduced 
price in schools and day care centers. Under current law, the 
reimbursement rates for those meals are adjusted for inflation 
each year and then rounded to the nearest quarter cent. The 
bill would require those rates (except for lunches) to be 
rounded down to the nearest whole cent. The reimbursement rate 
for free and reduced lunches has two components: the 
reimbursement rate for a full-price meal plus a special 
assistance rate. Each of those rates would be rounded down to 
the nearest cent and then summed. On average, schools would 
receive one cent less reimbursement for each lunch served and 
one-half cent less reimbursement for every other meal served. 
The provision would take effect May 1, 1999, and would reduce 
federal outlays by $7 million in 1999 and $49 million by 2008.
    Adjust Summer Food Program Reimbursement Rates for Alaska 
and Hawaii.--Section 107 would allow the Secretary of 
Agriculture to set higher reimbursement rates for the Summer 
Food Service program in Alaska, Hawaii, and territories where 
the cost of providing meals is greater than in the rest of the 
states. Under current law, the Secretary may set higher rates 
in all the other Child Nutrition programs. The authority to 
adjust rates is currently used only in Alaska and Hawaii. Based 
on the number of meals served in Alaska and Hawaii and the size 
of the adjustment the Secretary makes in the other child 
nutrition programs, the provision would cost less than $500,000 
a year.
    Integrate Food and Nutrition Projects with Elementary 
School Curricula.--Section 109 would continue the authority to 
provide grants in support of projects that integrate food and 
nutrition projects into the elementary school curriculum. Under 
current law, grants of $100,000 a year have been made since 
fiscal year 1995. We assume that the projects would continue to 
be funded at this level and that total outlays would total less 
than $500,000 over the 1999-2003 period.

                                                     TABLE 4.--ESTIMATED EFFECTS ON DIRECT SPENDING                                                     
                                                        [By fiscal year, in millions of dollars]                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                       5-year    10-year
                                    1999      2000      2001      2002      2003      2004      2005      2006      2007      2008      total     total 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Round down reimbursement rates:                                                                                                                         
    Budget authority............       -13       -38       -42       -44       -45       -46       -47       -48       -48       -49      -182      -420
    Outlays.....................        -7       -35       -41       -44       -45       -46       -47       -48       -48       -49      -171      -409
Adjust Summer Food Program                                                                                                                              
 reimbursement rates for Alaska                                                                                                                         
 and Hawaii:                                                                                                                                            
    Budget authority............     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)         1         3
    Outlays.....................     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)         1         3
Integrate food and nutrition                                                                                                                            
 projects with elementary school                                                                                                                        
 curricula:                                                                                                                                             
    Budget authority............     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)         0         0         0         0         0         1         1
    Outlays.....................     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)         0         0         0         0     (\1\)         1
Expand private, nonprofit                                                                                                                               
 participation in the Summer                                                                                                                            
 Food Program:                                                                                                                                          
    Budget authority............     (\1\)     (\1\)         1         1         1         1         1         1         1         1         3         7
    Outlays.....................     (\1\)     (\1\)         1         1         1         1         1         1         1         1         2         6
Extend Kentucky-Iowa                                                                                                                                    
 demonstration project:                                                                                                                                 
    Budget authority............         4         4         4         4         4         0         0         0         0         0        20        20
    Outlays.....................         3         4         4         4         4         1         0         0         0         0        19        20
Technical and training                                                                                                                                  
 assistance:                                                                                                                                            
    Budget authority............         1         1         1         1         1         0         0         0         0         0         5         5
    Outlays.....................         1         1         1         1         1     (\1\)         0         0         0         0         5         5
Provide snacks for teens in low-                                                                                                                        
 income areas:                                                                                                                                          
    Budget authority............         1         1         1         1         1         2         2         2         2         2         6        14
    Outlays.....................     (\1\)         1         1         1         1         1         2         2         2         2         5        14
Transfer homeless assistance                                                                                                                            
 programs to CACFP:                                                                                                                                     
    Budget authority............     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)         1         1         2         4
    Outlays.....................     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)         1         1         2         4
Provide after-school snacks                                                                                                                             
 through the School Lunch                                                                                                                               
 Program:                                                                                                                                               
    Budget authority............         7        16        26        28        31        33        36        38        41        44       107       300
    Outlays.....................         6        14        24        28        30        33        35        38        41        44       102       291
Boarder babies pilot project:                                                                                                                           
    Budget authority............     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)         0         0         0         0         0         2         2
    Outlays.....................     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)         0         0         0         0         2         2
Universal free breakfast pilot:                                                                                                                         
    Budget authority............        20         0         0         0         0         0         0         0         0         0        20        20
    Outlays.....................         1         4         7         7         2         0         0         0         0         0        20        20
Food Service Management                                                                                                                                 
 Institute:                                                                                                                                             
    Budget authority............         1         1         1         1         1         1         1         1         1         1         5        10
    Outlays.....................         1         1         1         1         1         1         1         1         1         1         5        10
Information clearinghouse:                                                                                                                              
    Budget authority............     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)         0         0         0         0         0         1         1
    Outlays.....................     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)         0         0         0         0         1         1
Special dietary needs:                                                                                                                                  
    Budget authority............     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)         1         1
    Outlays.....................     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)         1
Spending from WIC fines and                                                                                                                             
 penalties:                                                                                                                                             
    Budget authority............     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)
    Outlays.....................     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)
Reimbursement for removal of                                                                                                                            
 hazardous commodities:                                                                                                                                 
    Budget authority............     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)
    Outlays.....................     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)
Interactions:                                                                                                                                           
    Budget authority............     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)        -1        -2
    Outlays.....................     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)        -1        -2
Total:                                                                                                                                                  
    Budget authority............        22       -14        -7        -7        -5        -9        -7        -5        -2     (\1\)       -11       -36
    Outlays.....................         6        -9        -2     (\1\)        -4        -8        -8        -6        -3        -1        -8      -33 
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Less than $500,000.                                                                                                                                 
                                                                                                                                                        
Note: Details may not sum to totals due to rounding.                                                                                                    

    Expand Private, Nonprofit Participation in the Summer Food 
Program.--Section 113 would allow private, nonprofit sponsors 
to operate more sites in the Summer Food Service program. 
Current law limits a private, nonprofit sponsor to 5 urban 
sites, 20 rural sites, and 20 sites in total. The proposal 
would raise the limit to 25 sites of any type. In 1997 there 
were about 600 private, nonprofit sponsors operating 2,200 
sites. Only 13 percent of sponsors operate more than 5 sites, 
and only 6 percent of sponsors operate more than 10 sites, 
according to a Food and Nutrition Service (FNS) internal study. 
FNS officials report that about a dozen rural sponsors and a 
couple of urban sponsors have expressed interest in exceeding 
the limits under current law. The estimate assumes that 10 
rural sponsors add 5 additional sites and 4 urban sponsors add 
5 to 10 sites for a total of 80 new sites serving 5,000 new 
participants by 2001. The provision would increase outlays by 
less than $500,000 in 1999 and 2000 and by about $1 million 
each year thereafter.
    Extend Kentucky-Iowa Demonstration Project.--Section 115(f) 
would extend until 2003 a demonstration project that allows 
expanded participation by for-profit providers in the Child and 
Adult Care Food Program (CACFP) in Kentucky and Iowa. Current 
law allows most for-profit providers to participate in CACFP 
only if at least 25 percent of the childrenat the center 
received Title XX funds. In Kentucky and Iowa, a for-profit provider 
can also participate if at least 25 percent of the children enrolled 
meet the income eligibility criteria for free and reduced means (185 
percent of poverty). The pilot project was funded at $3.7 million in 
1998. We estimate that funding would increase each year by 2.7 percent, 
the projected increase in the CACFP reimbursement rate. The provision 
would increase federal costs by $4 million a year through 2003.
    Technical and Training Assistance.--Section 115(g) would 
provide assistance to states for program management and 
oversight. The bill would fund assistance at $1 million each 
year through 2003.
    Provide Snacks for Teens in Low-Income Areas.--Section 
115(r) would allow centers that care for youth between the ages 
of 12 and 18 in low-income areas to participate in CACFP. 
Centers in areas where at least 50 percent of the enrolled 
students are certified eligible for free or reduced meals could 
be reimbursed for one snack per child per day. Reimbursement 
would be at the rate for free snacks and all snacks would be 
served free. Reimbursement would be available for snacks served 
after school, on holidays, and on weekends.
    CBO estimates that, after the initial year, bout 10,000 
youths would participate in the programs, rising to 15,000 by 
2008. About 500,000 children between the ages of 6 and 12 
currently participate in CACFP. Data from the Survey of Income 
and Program Participation indicate that for every 20 children 
between the ages of 6 and 12 who are in care, one child between 
the ages of 13 and 18 is in care. If after-school care programs 
serving children ages 13-18 participate at the same rate as 
those serving younger children, then 25,000 additional youths 
could participate daily. Because the program could operate only 
in low-income areas, CBO estimates that only 40 percent of 
those children (10,000) would be eligible to participate. After 
the initial year in which the program is phased-in, this number 
is assumed to grow by 5.5 percent a year, the projected rate of 
growth for snacks served in CACFP.
    After-school programs would be reimbursed for 1 million 
snacks in 1999, 2 million in 2000, and 3 million by 2008. The 
estimate assumes that programs would operate 200 days a year on 
average. The school lunch program operates 180 days, but this 
program can also operate on weekends and holidays. Each snack 
would be reimbursed at about 50 cents for an annual cost of $1 
million to $2 million once the provision is phased-in.
    Transfer Homeless Assistance Programs to CACFP.--Section 
116 would consolidate two programs that provide meals to 
homeless children into CACFP. The Homeless Children Nutrition 
program serves children under age 7 in homeless shelters up to 
three meals and one snack per day. About 1 million meals were 
served through that program in 1997. The Summer Food Homeless 
program serves children under age 19 in homeless shelters up to 
two meals a day during summer months. About 100,000 meals were 
estimated to be served through that program in 1997. The 
consolidated program would serve homeless children under age 13 
up to three meals a day through CACFP. On balance, this program 
would provide reimbursement for more meals, mostly due to 
additional meals served to children between the ages of 6 and 
12 year-round instead of just in the summer. The provision 
would cost less than $500,000 a year through 2006 and about $1 
million in 2007 and 2008.
    Provide After-School Snacks Through the School Lunch 
Program.--Section 117 would allow schools that operate a school 
lunch program to receive reimbursement for snacks served to 
children in after-school care programs. Under current law, a 
school can receive reimbursement for after-school snacks only 
if it establishes a child care center and participates in 
CACFP. Many school-based, after-school programs do not 
participate in CACFP, partly because they are not willing or 
able to meet state requirements for child care centers. The 
provision would make it significantly easier for schools to 
receive reimbursement for snacks served to children after 
school, because schools would not have to apply as child care 
centers through a separate federal program.
    In general, after-school programs that serve children up to 
age 12 could participate. Programs in low-income areas would 
receive reimbursement for snacks served to children up to age 
18. Only after-school programs which have an educational or 
enrichment purpose and are organized primarily for the purpose 
of providing care could participate. In low-income areas, all 
snacks would be reimbursed at the rate for free snacks in the 
CACFP program, and all snacks would be served free. In all 
other areas the price and reimbursement rates for snacks would 
vary with family income. Low-income areas are areas where at 
least 50 percent of the children enrolled in school are 
certified as eligible to receive free or reduced price school 
meals.
    In 1991, there were about 13,500 after-school programs in 
public and private schools according to a Department of 
Education (ED) study. By 1999, CBO estimates that about 16,000 
after-school programs could potentially participate in the new 
snack program. About 97 percent of public schools and 45 
percent of private schools participate in the school lunch 
program. CBO estimates that 10,600 sites had both a school 
lunch program and an after-school program. Participation in 
CACFP by after-school programs has grown by 9 percent a year in 
recent years. School enrollment grew about 2 percent a year in 
the early 1990s. CBO projects that the number of after-school 
programs would grow by the average of those two rates, or 5.5 
percent a year. The estimate assumes that about 30 percent of 
the eligible programs would be in low-income areas. That 
estimate is based on the percentage of schools that participate 
in the school lunch program that would meet the low-income 
criteria.
    The estimate assumes that 95 percent of eligible programs 
in low-income areas, about 4,600 programs, and 50 percent of 
programs in other areas, about 5,600 programs, 
wouldparticipate. This rate of participation is slightly less, on 
average, than the 70 percent rate at which schools participate in the 
school breakfast program. Wealthier schools are generally less likely 
to participate in the child nutrition programs, and ED data indicate 
that the schools with after-school programs are somewhat wealthier than 
average. About 2,800 school-based after-school programs already receive 
reimbursement for snacks through the CACFP, so 7,400 additional after-
school programs would participate, 45 percent from low-income areas.
    The new program could serve 62 million new snacks in 1999 
and 100 million by 2008. If the new programs are the average 
size of programs already participating in CACFP (45 children) 
and operate the same number of days a year as lunch and 
breakfast programs (180 days), then the program would subsidize 
60 million snacks in 1999. Because children between the ages of 
13 to 18 in low-income areas could also participate in the new 
program, the number of new snacks would be 5 percent higher in 
those areas. CBO projects the number of snacks would grow at 
the same rate projected for all snacks in CACFP. About 45 
percent of the new snacks would be served in low-income areas.
    Schools in low-income areas would be reimbursed at the free 
rate of about 50 cents a snack in 1999. In other areas, 35 
percent of the snacks would be reimbursed at the free rate, 5 
percent at the reduced rate (26 cents in 1999), and the 
remainder at the paid rate (4 cents in 1999). Those rates 
assume that the income of participants would be similar to that 
of school lunch participants in non-low-income areas. CBO 
assumes that participation would increase gradually so the 
first-year cost would be only $7 million. By 2001, the first 
year we expect the program would be fully phased-in, the cost 
would be $26 million; the cost would rise to $44 million by 
2008.
    Boarder Babies Pilot Project.--Section 118 would extend the 
boarder babies pilot project through fiscal year 2003. This 
project provides food and nutrition services to homeless 
mothers and children. These pilot projects would be funded at 
$400,000 per year; outlays would total $2 million over the 
1999-2003 period.
    Universal Free Breakfast Pilot.--Section 119 would provide 
$20 million for a universal free breakfast pilot project. The 
project would examine the effect of serving all breakfasts free 
for three years in selected elementary schools. Breakfasts 
would be reimbursed at the rate for meals served free. Up to 
$12 million of the funds appropriated could be used for the 
evaluation of the pilot. The remaining funds would be used to 
provide meals in the selected schools.
    Food Service Management Institute.--Section 121 would 
increase funding for the Food Service Management Institute. The 
Institute was established for research on food service in 
federally assisted food programs as well as for training and 
technical assistance for food service personnel. The Institute 
has been funded at $2 million a year since fiscal year 1996. 
This bill would increase funding to $3 million a year beginning 
in fiscal year 1999. This new level of funding would increase 
outlays by $5 million over the 1999-2003 period.
    Information Clearinghouse.--An information clearinghouse, 
which provides information on federal nutrition programs and 
self-help activities for low-income individuals, was funded at 
$100,000 in fiscal year 1998. Section 123 would fund the 
program at $166,000 a year through fiscal year 2003.
    Special Dietary Needs.--Section 124 would extend the 
Secretary of Agriculture's authority to provide grants and 
guidance to states on how to accommodate special dietary needs 
of disabled students. Based on current funding levels, CBO 
estimates that these activities would be funded at $100,000 a 
year over the 1999-2003 period.
    Spending From WIC Fines and Penalties.--Section 203 would 
require state agencies to permanently disqualify from 
participating in the WIC program vendors who are convicted of 
trafficking in food instruments or selling firearms in exchange 
for food instruments. If disqualifying a vendor would pose a 
hardship to program participants, the vendor could remain in 
the program but would be assessed a civil money penalty by the 
state. In addition states could impose fines on vendors and 
participants who are found guilty of fraud against the program. 
These penalties and fines could be spent by the states on 
nutrition services, administrative expenses, and food benefit 
assistance. Finally, the bill would allow courts to order 
persons convicted of violating any WIC provision to forfeit all 
property used in the transaction that resulted in the 
violation. The proceeds from a sale of the forfeited property 
would be used to reimburse federal and state agencies for costs 
incurred in the forfeiture proceedings. This section would 
increase both direct spending and receipts, but the amount is 
likely to be insignificant.
    Reimbursement for Removal of Hazardous Commodities.--
Section 302 give the Secretary the authority to use funds from 
section 32 (Funds for Strengthening Markets, Income, and 
Supply) to reimburse states for costs associated with the 
removal of commodities that pose a health or safety hazard. 
Section 32 is a permanent account funded through customs 
duties, and most of the funds are appropriated to the child 
nutrition programs. The remaining funds can be used for a 
variety of purposes, including commodity distribution and 
emergency surplus removal. This section of the bill would allow 
the Secretary to use section 32 funds to reimburse states for 
costs, such as transportation and disposal, associated with the 
removal of the unsafe commodities, as well as to purchase 
replacement commodities. Currently, the Secretary's ability to 
replace commodities can be limited if liability is not 
immediately established. This section would allow the Secretary 
to immediately replace the commodities, and any funds 
subsequently collected from the suppliers of the hazardous 
commodities would be deposited into the section 32 account. 
Assuming that one or two incidents with unsafe food occurs each 
year, we estimate that thecosts of this new authority would be 
insignificant. If the donation of a hazardous commodity occurred on a 
widespread scale, costs in a specific year could be much higher.
    Pay-as-you-go considerations: Section 252 of the Balanced 
Budget and Emergency Deficit Control Act sets up pay-as-you-go 
procedures for legislation affecting direct spending or 
receipts. The net changes in outlays and governmental receipts 
that are subject to pay-as-you-go procedures are shown in Table 
5. For the purposes of enforcing pay-as-you-go procedures, only 
the effects in the budget year and the succeeding four years 
are counted.

                                   TABLE 5.--SUMMARY OF PAY-AS-YOU-GO EFFECTS                                   
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                      1998   1999   2000   2001   2002   2003   2004   2005   2006   2007   2008
----------------------------------------------------------------------------------------------------------------
Changes in outlay..................      0      6     -9     -2  (\1\)     -4     -8     -8     -6     -3     -1
Changes in receipts................      0  (\1\)  (\1\)  (\1\)  (\1\)  (\1\)  (\1\)  (\1\)  (\1\)  (\1\)  (\1\)
                                                                                                                
----------------------------------------------------------------------------------------------------------------
\1\ Less than $500,000.                                                                                         

    Estimated impact on State, local, and tribal governments: 
The bill contains no intergovernmental mandates as defined in 
the Unfunded Mandates Reform Act (UMRA). The bill would, 
however, impose new requirements on state and local governments 
that administer child nutrition programs with costs totaling $8 
million in fiscal 1999 and $175 million for the 1999-2003 
period. Title I of the bill would:
    Require local food service operations to undergo an annual 
health and safety inspection if state or local laws did not 
already require it. Information from the American School Food 
Service Association (ASFSA) indicates that such inspections are 
required in all but two or three states. CBO estimates that 
local education agencies in the affected states would incur new 
costs totaling approximately $500,000 a year.
    Require inflation adjustments for free and reduced-price 
meals served in schools and day care centers to be rounded down 
the nearest whole cent. CBO estimates that local education 
agencies would receive $7 million less in fiscal 1999 and $172 
million less over the 1999-2003 period as the result of this 
provision.
    Require state agencies administering the Child and Adult 
Care Food Program to visit certain facilities with a high 
probability of program abuse and to distribute information 
provided by the Department of Agriculture (USDA) about the WIC 
program to participants of CACFP. Based on information from 
ASFSA and USDA, we estimate that the costs of such requirements 
are not likely to be significant because similar activities are 
currently being done in some form.
    Require states to administer all child nutrition programs 
beginning in fiscal year 2002. (The bill would provide for a 
two-year extension under certain circumstances.) The eight 
states affected by this provision would be reimbursed for the 
costs of administering these programs. In fiscal 1998, USDA 
spent slightly more than $2 million administering these 
programs. These programs would no longer be available in states 
that choose not to administer them.
    Section 421(5)(B)(ii) of UMRA provides that new grant 
conditions and reductions in federal funding for certain 
entitlement programs, including child nutrition programs, are 
mandates if the state, local, or tribal governments that 
participate in the program lack the authority to amend their 
financial or programmatic responsibilities to continue 
providing required services under the program. Based on 
Information from ASFSA and the Congressional Research Service, 
CBO assumes that states and local education agencies do, in 
general, have the authority to amend their financial and 
programmatic responsibilities to offset the costs imposed on 
them by this legislation. In addition to the flexibility under 
current law, the bill would grant additional flexibility by 
waiving the requirement for weighted averages for nutrient 
analysis and would make available additional funds for 
technical and training assistance under CACFP.
    Title II of the bill would impose new requirements on the 
state and local agencies that administer the Special 
Supplemental Nutrition Program for Women, Infants, and 
Children. CBO estimates that the costs of these new grant 
conditions would not be significant because many states already 
comply with several of them. The bill would allow states to 
offset some of these costs by granting them additional time to 
recover claims against vendors and participants. States would 
also be given additional time in which to spend these 
recoveries.
    Title III of the bill would allow the USDA to reimburse 
states for the costs of disposing of commodities that pose a 
health or safety hazard. Based on information from USDA, CBO 
estimates that the benefits of this provision to states would 
not be significant.
    Estimated impact on the private sector: The bill contains 
no private-sector mandates as defined in the Unfunded Mandates 
Reform Act of 1995.
    Previous CBO estimates: CBO submitted a cost estimate for 
H.R. 3874 on June 23, 1998, and estimated that direct spending 
would decrease by about $68 million over the 1999-2003 period. 
The Senate bill saves less than the House bill for three main 
reasons. First, the Senate bill does not contain a House 
provision that would reduce the funds available to states for 
audits of CACFP. Second, it includes the Universal Free 
Breakfast Pilot as direct spending. Third, the bill's 
provisions providing after-school snacks is somewhat more 
expensive.
    Estimate prepared by: Federal Costs: Valerie Baxter, Sheila 
Dacey, and Christina Hawley Sadoti; Revenues: Hester Grippando; 
Impact on State, Local, and Tribal Governments: Marc Nicole; 
Impact on the Private Sector: Bruce Vavrichek.
    Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

                    VI. Section-by-Section Analysis

               Title I--School Lunch and Related Programs

Section 101. Technical amendments to commodity provisions

    Makes technical amendments deleting subsections made 
unnecessary with the passage of the Healthy Meals for Healthy 
Children Act of 1994 (P.L. 103-448).

Section 102. Waiver of requirement for weighted averages for nutrient 
        analysis

    Requires the Secretary of Agriculture to waive, through 
fiscal year 2003, any regulatory requirement for using weighted 
averages for nutrient analysis of menu items and foods offered 
or served as part of a reimbursable meal under the school 
breakfast or lunch program.

Section 103. Requirement for food safety inspections

    Requires schools participating in the school lunch program 
or school breakfast program to obtain a food safety inspection 
at least once during each school year if the state or local 
authority does not otherwise require food safety inspections.
    It is the intent of the Committee that schools which have a 
requirement for food safety inspections, regardless of the time 
frame, are in compliance with this provision.
    The Committee also understands that, in certain localities, 
local offices of the State Health Department conduct voluntary 
health and safety inspections in schools. It is the Committee's 
interpretation of this provision that any such voluntary 
inspection performed at least once a year fulfills the school's 
obligation to complete annual health and safety inspections.

Section 104. Elimination of administration of programs by regional 
        offices

    Removes the requirement that the Secretary of Agriculture 
directly administer local level child nutrition programs 
authorized under the National School Lunch Act. Beginning 
fiscal year 2002, States would be required to assume 
administration of the child nutrition programs being 
administered by the Department of Agriculture. If a State 
begins administering (in whole or in part) any program before 
September 30, 2001, the State is not required to match the 
funds disbursed by the Secretary during the period between when 
the State begins administering the programs and September 30, 
2001. Also during the period between October 1, 1998 and 
September 30, 2001, the Secretary is required to provide States 
that assume administrative responsibility, training and 
technical assistance to allow for an efficient and effective 
transfer of responsibility. The Secretary may extend the time 
frame by not more than two years if the State demonstrates that 
it will not be able to assume administrative responsibility by 
fiscal year 2002 and submits to the Secretary a plan describing 
when and how the State will assume administrative 
responsibility.

Section 105. Special assistance

    Amends the time periods of a provision in current law which 
allows schools to use alternative provisions to the normal 
requirements for annual determinations of eligibility for 
freeand reduced price school meals and daily counts of meals by type 
(free, reduced price, paid meals). Under current law, after a base year 
determination of eligibility and daily meal counts by type, a school 
electing this provision must serve meals free to all children for a 
period of 3 years. At the end of 3 years, State agencies may approve a 
2-year extension provided that socioeconomic data approved by the 
Secretary show that the income level of the school's population has 
remained stable. At the end of the 2-year extension, subsequent 
extensions of 5 years each may be authorized as long as the income 
level of the school's population remains stable. A school electing this 
alternative must pay the difference between the Federal reimbursement 
and the cost of providing all meals free from sources other than 
Federal funds. Section 105 changes the initial and extension periods to 
4 years each. The new time frames are applicable for schools upon 
initial application and, for those schools already utilizing this 
provision, upon application for extension.

Section 106. Adjustments to payment rates

    Section 106 amends the way in which reimbursement rates are 
calculated. Current law calculates inflation adjustments to 
school meal reimbursement rates for paid meals by rounding them 
down to the nearest whole cent. Inflation adjustments to school 
meal reimbursement rates for free and reduced-price meals are 
currently rounded to the nearest quarter cent. Section 106 
conforms the round down procedures for free and reduced price 
school meals to round down procedures for paid meals.
    The Committee intends that, under this section, 
reimbursements for all breakfasts, including severe need 
breakfasts, will, when adjusted for inflation, be rounded down 
to the nearest whole cent.

Section 107. Adjustments to reimbursement rates

    Allows the Secretary to adjust Summer Food Service Program 
reimbursement rates in non-contiguous States and territories 
where the cost of providing meals is greater than that in the 
contiguous States. Under current law, the Secretary may make 
adjustments in reimbursement rates in all the other child 
nutrition programs to reflect the difference in the cost of 
providing meals in Alaska, Hawaii, Guam, American Samoa, Puerto 
Rico, the Commonwealth of the Northern Mariana Islands, and the 
Virgin Islands when compared to the contiguous States.

Section 108. Criminal penalties

    Increases the maximum fine, from $10,000 to $25,000, for 
whomever embezzles, willfully misapplies, steals, or obtains by 
fraud any funds, assets, or property that are the subject of a 
grant or other form of assistance under the Child Nutrition Act 
or the National School Lunch Act if such funds, assets or 
property are of the value of $100 or more.

Section 109. Food and nutrition projects

    Extends the authorization of food and nutrition projects 
through 2003. These projects are designed for private non-
profit organizations and educational institutions in each of 3 
states to integrate food and nutrition projects with elementary 
school curricula.

Section 110. Establishment of an adequate meal service period

    Encourages schools to make every effort to establish meal 
service periods that provide children adequate time to fully 
consume their meals and provide an environment conducive to 
eating these meals. The Committee does not intend to specify 
how this provision will be implemented by individual schools 
nor does the Committee expect the Secretary to issue 
regulations or guidance to schools specifying how this 
provision will be implemented.

Section 111. Buy American

    Requires schools in the contiguous States participating in 
the National School Lunch and Breakfast Programs to purchase, 
whenever possible, only food products that are produced in the 
United States for those programs. The domestic food products 
referred to in the section apply to agricultural commodities 
that are produced in the United States and food products that 
are processed in the United States substantially using 
agricultural commodities that are produced in the United 
States. The Committee does not intend to specify how this 
provision will be implemented by individual schools nor does 
the Committee expect the Secretary to issue regulations or 
guidance to schools specifying how this provision will be 
implemented.

Section 112. Procurement contracts

    Allows a State, State agency or school to enter into a 
contract with a person that has assisted the State, State 
agency or school in drafting contract specifications for 
participation in the school lunch program.

Section 113. Summer Food Service Program (SFSP) for children

    Section 113 (a) establishes a 25 site limit on private 
nonprofit organizations participating in the Summer Food 
Service Program (current law limits sites to 5 urban and 20 
rural). This section also removes the limitation on the total 
number of children (currently 2500) that a private nonprofit 
organization may serve. As in current law, this subsection 
maintains the limit on the number of children that may be 
served at any one site at 300 children unless a waiver is 
granted by a state to increase that number to 500 children.
    Section 113(b) eliminates the Summer Food Service Program 
March 1st Indication of Interest requirement. Current law 
requires that private nonprofit sponsors only be allowed to 
participate in the Summer Food Service Program in areas where 
school or government sponsors have not indicated an interest in 
running the program by March 1. Schools will continue to have 
priority over other sites when more than one eligible 
institution proposes to serve the same area. This subsection 
also eliminates the requirement that private non-profit 
organizations use self-preparation facilities to prepare meals 
or obtain meals from a public facility or school. This 
subsection also allows private non-profit organizations to 
contract on a competitive basis with food service management 
companies and eliminates the requirement that service 
institutions contract only with food service management 
companies registered with the States. States are no longer 
required to register food service management companies, but are 
authorized to do so. This subsection deletes the specific 
requirements of registration as well as the requirement that 
the Secretary maintain a record of all registered food service 
management companies that have been seriously deficient in 
their participation in the program.
    Section 113(c) extends the authorization for appropriation 
for the Summer Food Service Program through fiscal year 2003.

Section 114. Commodity Distribution Program

    Extends through fiscal year 2003 the requirement to use 
Commodity Credit Corporation funds and funds available under 
section 32 of the Act of August 24, 1935 for commodity 
purchases for programs under the National School Lunch Act, the 
Child Nutrition Act of 1966 and the Older Americans Act.

Section 115. Child and Adult Care Food Program (CACFP)

    Section 115(a) makes a technical amendment to conform to 
changes made in the after school care component of the National 
School Lunch Program.
    Section 115(b) revises current law licensing and approval 
conditions by: (1) removing requirements that schools operating 
programs under CACFP meet child care licensing and approval 
standards; and (2) allowing institutions, located in States 
where Federal, State or local licensing or approval is not 
required, that provide care to school children outside of 
school hours to participate in the CACFP as long as the 
institution meets State and local health and safety standards.
    Section 115(c) deletes the provision providing automatic 
eligibility for CACFP benefits for children enrolled in the 
Even Start program. This provision expired September 30, 1997.
    Section 115(d) requires State agencies to perform a site 
visit to a private institution prior to approval for 
participation in the child care food program. The State agency 
is also required to conduct periodic site visits to private 
institutions that the State agency determines have a high 
probability of program abuse.
    Section 115(e) requires an institution moving towards tax 
exempt status be allowed to participate in the Child and Adult 
Care Food Program for a period of not more than 180 days, 
except that a State agency may grant a single extension not to 
exceed 90 days if the institution demonstrates its inability to 
obtain tax exempt status within the 180 day period is due to 
circumstances beyond the control of the institution. This 
subsection also deletes the requirement that the State notify 
an institution within fifteen days of submission if the 
application for participation in the CACFP is incomplete. The 
Committee understands that an institution must have feedback 
from the State as to whether the application is complete. 
Therefore, the Committee encourages State agencies to respond 
to institutions, in a timely fashion, as to the completeness of 
an application.
    Section 115(f) Extends the Kentucky-Iowa Demonstration 
Project relating to the eligibility of for-profit day care 
centers for the CACFP through fiscal year 2003. It also makes 
clear that funding for the project is mandatory.
    Section 115(g) requires the Secretary to provide technical 
assistance and training to assist State agencies in improving 
their management and oversight of sponsors and providers under 
the CACFP. It provides funding for the assistance through 
fiscal year 2003. For each of fiscal years 1999 through 2003, 
the Secretary will make $1,000,000 available for this program.
    This subsection also would allow institutions that provide 
after-school snacks under a program organized primarily to 
provide care to ``at-risk'' children to be eligible to receive 
reimbursement for after-school snacks. ``At-risk children'' are 
defined as a school child who is not more than 18 years of age 
and lives in a geographical area served by a school enrolling 
elementary students in which at least 50 percent of the total 
number of children enrolled are eligible for a free or reduced 
price meal. These institutions would be able to participate in 
the program during after-school hours, weekends, or holidays 
during the school year. Reimbursements are limited to one snack 
per child per day. The institution is required to serve the 
snack free to children participating in a program.
    This subsection also requires the Secretary to provide each 
State agency administering a Child and Adult Care Food Program 
with information concerning the special supplemental nutrition 
program for women, infants, and children. The State agency must 
ensure that participating day care centers and day care homes 
(other than an institutions providing care to school children 
outside school hours) receive materials that explain the 
importance and benefits of the special supplemental nutrition 
program for women, infants, and children. The information 
should also include an explanation of State income eligibility 
standards for the program; and information concerning how 
benefits under the program may be obtained. Day care centers 
and homes must be provided with periodic updates of the 
information; and parents of enrolled children must be provided 
the information at enrollment.

Section 116. Transfer of Homeless Assistance Programs to Child and 
        Adult Care Food Program

    Subsection 116(a) makes technical amendments to conform to 
provisions of Section 116 (b) which transfers the authority of 
nutrition programs for homeless children to the Child Adult 
Care Food Program.
    Subsection 116(b) moves the authority for the Homeless 
Children Nutrition Program and Summer Food Service Program 
homeless sites to the Child and Adult Care Food Program. Meal 
benefits provided in Child and Adult Care Food Program homeless 
sites would be provided to children through the age of 12 
(versus 6 in the Homeless Children Nutrition Program and 18 in 
the Summer Food Service Program). An emergency shelter may 
claim reimbursement under this subsection only for a meal or 
supplement served to children who are not more than 12 years of 
age residing at the emergency shelter; and for not more than 3 
meals, or 2 meals and 1 supplement, per child per day. The meal 
or supplement must be reimbursed at a rate established for a 
free meal or supplement.

Section 117. Meal supplements for children in after-school care

    Section 117(a) limits reimbursements for after-school 
supplements to supplements provided to children in after-school 
programs organized primarily to provide care with an 
educational or enrichment component.
    Section 117(b) provides for a free supplement to at-risk 
children in after-school programs operated by schools in low 
income areas. If a school is located in an area where at least 
50 percent of the children enrolled in elementary schools are 
eligible for free and reduced price meals and children are not 
more than 18 years of age, the program would operate as an 
``at-risk'' after-school program as described in section 112. 
Children would be eligible for free after-school snacks. If the 
school is located in a non-poor area, the school could continue 
to provide snacks to children up to the age of 12 at the free, 
reduced or paid rates.

Section 118. Pilot projects

    Extends through fiscal year 2003 the authority of the 
Secretary to administer pilot projects that are designed to 
provide food and nutrition services to homeless pregnant women 
and homeless mothers or guardians of infants, and the children 
of the mothers and guardians.
    This section also deletes authority for pilot projects that 
provide grants to institutions that provide meals or 
supplements to adolescents in programs outside of school hours. 
The Committee believes that the ``At Risk'' proposal in 
sections 115(g) and 117(b) will deliver similar benefits to the 
same population through the National School Lunch Program and 
the CACFP, so there is no reason to retain the similar pilot 
project. This section also deletes pilot projects that assist 
schools in offering participating students additional choices 
of fruits, vegetables, legumes, cereals, grain-based products, 
and organically produced agricultural commodities; projects to 
assist schools in offering participating students additional 
choices of low-fat dairy products, lean meat and poultry 
products, and organically produced agricultural commodities; 
projects designed to help a limited number of schools reduce 
paperwork, application and meal counting requirements, and make 
changes that will increase participation in the school lunch 
and breakfast programs. The Committee believes it is 
appropriate to eliminate these programs as the Department has 
not sought funding and nor was funding appropriated.

Section 119. Breakfast pilot projects

    Requires the Secretary make grants to state agencies to 
conduct pilot projects in elementary schools under the 
jurisdiction of not more than 6 school food authorities in each 
of the school years 1999 through 2001. The purpose of these 
projects is to carefully evaluate the effect of providing free 
breakfasts to elementary school children, without regard for 
family income, on participation, academic achievement, 
attendance and tardiness, and dietary intake over the course of 
a day. Elementary schools participating in the pilot project 
must have a matching elementary school, not participating in 
the pilot project, in the same school food authority and all 
elementary schools must be approved by the Secretary. A school 
food authority receiving amounts under a grant to conduct a 
pilot project must agree to operate the pilot in the same 
elementary school for a 3-year period beginning July 1, 1999. A 
school food authority conducting a breakfast pilot project 
shall receive reimbursement for each breakfast equal to the 
amount equal to the rate for free breakfasts. On completion of 
the pilot projects and the evaluation, the Secretary must 
submit to the Committee on Education and the Workforce of the 
House of Representatives and the Committee on Agriculture, 
Nutrition, and Forestry of the Senate a report of the 
evaluation of the pilot projects. The Secretary can not exceed 
$20,000,000 in the execution of this pilot project. Out of the 
$20,000,000 to execute the pilot project, the Secretary can not 
spend more than $12,000,000 in the evaluation of this pilot 
project.

Section 120. Training and technical assistance

    Extends through fiscal year 2003 the authorization of 
appropriations to conduct training activities and provide 
technical assistance to improve the skills of individuals 
employed in federally assisted feeding programs.

Section 121. Food Service Management Institute

    Increases the annual funding for the Food Service 
Management Institute from $2,000,000 to $3,000,000 for fiscal 
years 1999 and subsequent fiscal years.

Section 122. Compliance and accountability

    Extends through fiscal year 2003 the authorization of 
appropriations to conduct reviews and audits to ensure that 
local food service authorities participating in the school 
lunch program comply with the provisions of the National School 
Lunch Act.

Section 123. Information clearinghouse

    Extends the authority of the information clearing house 
through fiscal year 2003 at a funding level of $166,000 for 
fiscal years 1999 through 2003.

Section 124. Refocusing of effort to help accommodate the special 
        dietary needs of individuals with disabilities

    Authorizes the Secretary to develop and disseminate to 
State agencies guidance for accommodating the medical and 
special dietary needs of children with disabilities under the 
school lunch program, school breakfast program, and any other 
program under the National School Lunch Act or the Child 
Nutrition Act of 1996. The Secretary is authorized provide 
technical assistance materials, conduct training of State 
agencies and eligible entities, and issue grants to State 
agencies and eligible entities.
    The Committee is aware of the upcoming review of the 
Dietary Guidelines for Americans, which will be updated and 
released as the 5th Edition in the Year 2000. Given the 
importance of these guidelines in promoting healthful food 
choices which influence the optimal health and development of 
our nation's children and adults, the Committee is interested 
in new and emerging science in the area of dietary food 
patterns and their impact on body fat, cholesterol levels, 
heart disease, and other chronic disorders. Specifically, the 
Committee recommends that the Dietary Guidelines review 
committee examine available research on dietary patterns that 
are associated with optimal insulin levels, which may result in 
positive health benefits. The Committee also directs USDA to 
increase preventive health and nutrition research, including 
research that considers the effects of healthful diets on human 
beings. The Committee believes that such research could benefit 
policy and medical experts in the upcoming review as well as 
lead to reducing overall health care costs.

            title ii--school breakfast and related programs

Section 201. Elimination of administration of programs by regional 
        offices

    Conforms provisions under the Child Nutrition Act of 1966 
regarding regional office administration to provisions in 
section 104 of this bill regarding the regional administration 
of programs under the National School Lunch Act.

Section 202. State administrative expenses

    Subsection 202(a) requires States to return to the 
Secretary any amounts appropriated for Stateadministrative 
expenses that are not obligated, expended in the current fiscal year or 
carried over to the next fiscal year. The Secretary is required to 
reallocate those funds, for administrative purposes, among States that 
demonstrate a need. This subsection also includes a technical amendment 
to conform to provisions in section 113 that transfer the homeless 
child nutrition programs to the Child and Adult Care Food Program.
    Subsection 202(b) eliminates the ten percent transfer 
limitation in State administrative expense (SAE) funding. Under 
current law, states are allowed to transfer not more than 10 
percent of the SAE funds provided for the administration of one 
child nutrition program to another. The Committee expects 
States to use this flexibility to determine where 
administrative funds can best be utilized. The Committee notes 
that the Inspector General recently released a report pointing 
out that money available for State agencies to perform audits 
of the Child and Adult Care Food Program is not being used for 
compliance audits. The Committee encourages State Agencies to 
use the available money for compliance audits rather than paper 
audits.
    Subsection 202(c) reauthorizes appropriations for the State 
Administrative Expense program through fiscal year 2003.

Section 203. Special supplemental nutrition program for women, infants 
        and children

    Section 203(a) requires that infants be certified, relative 
to income eligibility only, every six months, except that this 
provision will not apply to infants in families receiving food 
stamps, Temporary Assistance to Needy Families, or Medicaid 
benefits.
    Section 203(b) requires that individuals be physically 
present at each certification determination in order to be 
certified for WIC program benefits. A local agency may waive 
the requirement for an applicant if the agency determines that 
the requirement: (1) would be in conflict with the Disabilities 
Act of 1990; (2) presents a barrier to participation of a child 
who was present at the initial certification and is receiving 
ongoing health care; or (3) presents a barrier to participation 
of a child who was present at the initial certification, was 
present at a certification determination within the last year, 
and has one or more working parents.
    This subsection also requires that all applicants present 
documentation of family income or of participation in one of 
the adjunctive programs (Medicaid, Food Stamps or Temporary 
Assistance for Needy Families) at the time of certification. 
The State agency may waive the requirement if the State 
determines: (1) the necessary documentation is not available 
for an applicant; or (2) the State agency determines that the 
requirement would present a barrier to participation. Finally 
this subsection requires the Secretary to issue regulations 
prescribing when and how verification of income will be 
required.
    Subsection 203(c) allows the Secretary to share nutrition 
education materials developed for the WIC program with State 
agencies administering the Commodity Supplemental Food Program 
(CSFP) at no cost to the CSFP program.
    Subsection 203(d) requires that each State agency, in its 
plan of operation and administration of the WIC program to the 
Secretary, include a plan to limit participation of retail 
stores to stores that offer a variety of foods, as determined 
by the Secretary. This provision is applicable to those States 
that provide for the purchase of foods under the WIC program at 
retail stores.
    Subsection 203(e) allows a State agency to use funds 
recovered from vendors and participants, as a result of a claim 
arising under the WIC program, during the fiscal year in which 
the claim arises, the fiscal year in which the claim was 
collected or the fiscal year following the year in which the 
funds were collected. Current law requires that the recovered 
funds be spent in the fiscal year that the funds collected were 
obligated.
    Subsection 203(f) requires each State agency to implement a 
system designed by the State to identify recipients who are 
receiving benefits in more than one place.
    Subsection 203(g) requires each State agency to conduct 
compliance investigations of those vendors who have been 
identified by the State as having a high probability of program 
abuse.
    Subsection 203(h) reauthorizes appropriations for the WIC 
program as well as the requirement to designate a part of each 
State agency's WIC allocation for nutrition services and 
administration costs through fiscal year 2003.
    Subsection 203(i) allows a State agency, beginning in 
fiscal year 2000, to use supplemental food funds to purchase 
breast pumps. Current law requires that a State agency purchase 
breast pumps out of nutrition services and administration 
accounts. A State agency electing to purchase breast pumps with 
food funds is required to transfer from the nutrition services 
and administration account an amount that is equal to that 
which was expended or transferred, in the prior fiscal year, 
for breast pump purchases out of the nutrition services and 
administrative account.
    The Committee intends that food funds used to provide 
breast pumps shall be in addition to a State's minimum required 
nutrition services and administration expenditure for breast-
feeding support and promotion.
    Subsection 203(j) makes a technical amendment deleting an 
out-of-date reference.
    Subsection 203(k) allows the Secretary to reduce a State's 
nutrition services and administration (NSA) allocation if its 
actual NSA expenditures exceed its per-participant grant for 
NSA by more than 10 percent. Current law allows the Secretary 
to reduce a State's NSA if its actual NSA expenditures exceed 
its per-participant grant by more than 15 percent.
    The Committee has provided States with increased 
flexibility to convert food funds to NSA funds. However, in 
order to ensure that this expanded conversion authority is not 
used to substantially shift food money to NSA spending, the 
Committee believes it is appropriate to lower the level at 
which the Secretary can reduce a State's NSA allocation if the 
NSA expenditures exceed the national per-participant NSA grant.
    Subsection 203(l) makes technical amendments deleting out-
of-date provisions.
    Subsection 203(m) requires a State agency to submit a plan 
showing how it plans to reduceaverage food costs per 
participant and how it plans to increase participation above the level 
estimated for the State agency, in order to convert food funds into 
nutrition services and administration funds. The plan must be approved 
by the Secretary. This subsection changes current law so that States 
are not penalized if their State plan does not fully materialize.
    Subsection 203(n) requires State agencies to offer infant 
formula rebate contracts to the bidder offering the lowest net 
price unless the State agency demonstrates to the satisfaction 
of the Secretary that the weighted average retail price for 
different brands of formula in the State does not vary by more 
than five percent.
    This subsection also requires the Secretary to review 
infant formula cost containment contract solicitations to 
ensure that solicitations do not contain any anti-competitive 
provisions.
    Subsection 203(o) reauthorizes the authority to use up to 
$10,000,000 per year for infrastructure and breast-feeding 
support and promotion through fiscal year 2003.
    Subsection 203(p) requires the Secretary, in consultation 
with State agencies, retailers and other interested parties to 
establish a long-range plan for the development and 
implementation of management information and electronic benefit 
transfer (EBT) systems. Not later than two years after the date 
of enactment, the Secretary is required to report to Congress 
on actions taken to carry out this requirement. Prior to the 
release of the report to Congress, the costs of systems or 
equipment used to test electronic benefit transfer systems may 
not be imposed on a retailer.
    The Committee understands that the use of EBT technology 
for the WIC program is still in its beginning stages. Unlike 
the food stamp program, a program in which EBT has already been 
widely implemented, the WIC program has special characteristics 
making it difficult to simply transfer food stamp EBT 
technology to the WIC program. States are testing various EBT 
systems to determine what works best to address the particular 
concerns of the WIC program. It is the intent of the Committee 
that information obtained in these tests be used in the 
development of the long-range plan.
    The Committee also understands that many WIC participants 
live on the border between two states and may shop in both 
States. It is the intent of the Committee that the Secretary, 
in consultation with other interested parties, develop 
operating rules that permit interoperability among states.
    Subsection 203(q) allows States to use up to 1% of the WIC 
food grant to cover food expenditures incurred in the prior 
year and allows States to use up to 1% of its WIC nutrition 
services and administration (NSA) allocation to cover either 
food expenditures or NSA expenses incurred in the prior year. 
Current law allows States to spend back 1% of the food grant, 
but does not allow States to spend back NSA grants.
    The Committee understands that States are anxious to 
beginning implementing the provisions of this subsection and 
therefore, directs the Secretary to issue interim rules within 
120 days of the enactment of this Act.
    This subsection also deletes a current law provision that 
allows states to spend forward up to 1% of their total grant, 
or up to 3% or 5%, when implementing new cost containment 
measures, replacing it with a provision which allows States to 
spend forward NSA funding--up to 1% of a State's total WIC 
grant. In addition, States would be able to spend forward an 
additional amount of NSA funds--equal to \1/2\% of their total 
WIC grant--for the development of Management Information 
Systems and Electronic Benefit Transfer Systems.
    This subsection also allows the Secretary to use 
unobligated NSA or food funds to meet the requirement to spend 
up to $10,000,000 on infrastructure and breast feeding 
promotion. Current law allows only NSA funds to be used toward 
meeting the requirement.
    Subsection 203(r) allows States to count program income 
toward meeting the Farmers' Market Nutrition Program matching 
requirement.
    This subsection also allows States to use additional 
appropriations (i.e., those amounts over the amount that was 
appropriated to the State in the preceding fiscal year) to 
increase recipient benefit level rather than solely for the 
purposes of serving additional recipients. In approving the 
State plan to increase benefit levels with the additional 
money, the Secretary is required to determine whether the 
increase in recipient benefits will increase coupon redemption.
    This subsection eliminates the specified criteria for 
ranking new State plans for the WIC Farmers' Market Nutrition 
Program. The Secretary continues to be required to establish 
objective criteria for ranking new State plans, but under this 
provision, would no longer have to use the specific factors 
currently stipulated for the process, thus enabling the 
Secretary to adapt to issues and/or priorities that may change 
from year to year.
    This subsection extends the authority for appropriations 
for the WIC Farmers' Market Nutrition Program through fiscal 
year 2003.
    Subsection 203(s) requires State agencies to permanently 
disqualify, except in hardship and certain other specific 
situations, WIC vendors who have been convicted of trafficking 
in food instruments or selling firearms, ammunition, explosives 
or controlled substances in exchange for WIC food instruments. 
The disqualification is effective upon receipt of notice from 
the State agency. The vendor is not entitled to receive any 
compensation for revenues lost as a result of the 
disqualification. In the event that the State agency determines 
that the disqualification would cause a hardship to 
participants in the WIC program or that the vendor had an 
effective policy and program in effect to prevent the violation 
and the ownership of the vendor was not aware or did not 
benefit from the violation, the State agency is required to 
assess a civil money penalty in lieu of disqualification. The 
amount is to be determined by the State agency, except that the 
amount for one violation cannot exceed $20,000 and the amount 
imposed as part of a single investigation cannot exceed 
$40,000. This provision will be effective on the date that the 
Secretary of Agriculture issues final regulations.
    The Committee notes that the Personal Responsibility and 
Work Opportunity Act of 1996 greatly expanded the ability of 
the Secretary to collect information on retailers approved for 
participation in the food stamp program. The Committee believes 
that this information would be useful for State agencies 
operating the WIC program as well in their oversight of WIC 
vendors. The Committee encourages State WIC agencies to take 
advantage of the information in pursuing possible cases of 
fraud and abuse.
    Section 203(t) allows a court to order that a person 
convicted of embezzlement, willfulmisapplication, stealing, 
obtaining by fraud or trafficking in food instruments, funds, assets, 
or property that have a value of $100 or more in the WIC program, 
forfeit all real and personal property used in the transaction to the 
United States. The proceeds from any sale of forfeited property and any 
amounts forfeited shall be used, in the following order: (1) to 
reimbursement the Department of Justice, Department of Treasury and the 
United States Postal Service for costs incurred to initiate and 
complete the forfeiture proceeding; (2) to reimburse the Office of the 
Inspector General of the Department of Agriculture for costs incurred 
in the law enforcement effort resulting in forfeiture; (3) to reimburse 
any Federal, State or local law enforcement agency for costs incurred 
in the law enforcement effort resulting in the forfeiture; and (4) by 
the State agency to carry out approval, reauthorization and compliance 
investigations of vendors.
    Section 203(u) requires the General Accounting Office to 
study, and report to Congress within 30 months after the date 
of enactment, the effects of cost containment practices of 
States for the selection of vendors and approved food items on: 
(1) program participation, current and future projections; (2) 
access and availability of prescribed foods; (3) voucher 
redemption rates and actual food selections by participants; 
(4) participants' consumption of, and satisfaction with, 
prescribed foods; (5) achievement of positive health outcomes; 
and (6) program costs. The managers of this bill encourage the 
Comptroller General to provide interim reports, as data is 
available, to Congress prior to issuance of the final report. 
The Committee also encourages the Comptroller General to 
consult with persons experienced in market research as well as 
health and nutrition research when designing the study.
    Section 203(v) requires the General Accounting Office to 
assess the cost of delivering nutrition services and other 
administrative costs of the WIC program. The Comptroller 
General is to study, and report to Congress within 3 years: (1) 
the cost of delivering WIC program services, including the 
costs of implementing and administering cost containment 
efforts; (2) the fixed and variable costs incurred by State and 
local governments for delivering services; (3) the quality of 
the services delivered, taking into account the effect of such 
services on the health outcome of participants; and (4) the 
costs incurred for personnel, automation, central support, and 
other activities to deliver the services and whether the costs 
meet Federal audit standards for allowable costs under the 
program.
    To better understand the costs of delivering WIC services, 
the Committee encourages the Comptroller General to report to 
Congress in phases.
    The Committee recognizes that WIC helps to assure normal 
growth in children, reduces levels of anemia, increases 
immunization rates, provides better access to regular health 
care and improves diets. WIC blood work testing is an important 
factor in determining the health progress of children in the 
WIC program. WIC blood work testing is currently required at 
certification, which generally does not coincide with the usual 
schedule of well-child pediatric care visits. This results in 
enrollment and recertification delays, duplicative testing and 
extra physical visits.
    The Committee is concerned over the delay in publishing 
final regulations on the coordination of blood work 
requirements between the WIC schedule and the Center for 
Disease Control and Prevention's periodicity schedule. The 
Committee expects a proposed regulation to be published no 
later than 6 months after the amendments made to the Child 
Nutrition Act of 1966 are enacted.
    The Committee understands that the Department of 
Agriculture's Food and Nutrition Service, the WIC directors, 
the Center for Disease Control and Prevention's National 
Immunization Program and others have been working to 
collaboratively promote and support an coordinated strategic 
approach for linking pre-school immunization and WIC services 
on the Federal, State and local level. The Committee urges the 
Department, working with WIC directors, the CDC's National 
Immunization Program and others, to move expeditiously to 
complete this effort which should address certain areas of 
concern including: funding, methodologies, and valid 
measurements of process and outcome.

Section 204. Nutrition education and training

    Extends the authorization for appropriations for the 
Nutrition, Education and Training program through fiscal year 
2003. This section also authorizes such sums as necessary to 
carry out the Nutrition, Education and Training program.

               title iii--commodity distribution programs

Section 301. Commodity Distribution Program reforms

    Subsection 301(a) redefines the applicability of 
requirements for the collection of Customer Acceptability 
Reports by removing the requirement that customer acceptability 
information be gathered for the Nutrition Program for the 
Elderly and child and adult care food centers. Customer 
acceptability information shall apply to the commodity 
supplemental food program, the food distribution program on 
Indian reservations, and the school lunch program.
    Subsection 301(b) requires the Secretary to ensure that 
information on the types and forms of commodities is collected 
from recipient agencies at least once every 2 years. In 
addition to the commodity supplemental food program, the food 
distribution program on Indian reservations and the school 
lunch program, the Secretary may require recipient agencies to 
submit information from other domestic food assistance programs 
administered by the Secretary. The Secretary is also required 
to provide recipient agencies with a way to voluntarily submit 
customer acceptability information.

Section 302. Food distribution

    Section 302(a) authorizes the Secretary to transfer 
commodities purchased for domestic food assistance programs 
administered by USDA to other domestic food assistance programs 
administered by USDA, if the transfer is necessary to ensure 
that the commodities will be used while they are still suitable 
for human consumption. The provision will ensure that the 
commodities will not have to be disposed of, thus causing a 
loss to the domestic food program. The Secretary is required, 
to the extent possible, to reimburse the account that 
originally purchased the commodity from recipient program. The 
program making the original purchase will be credited with the 
reimbursement and that reimbursement will be available for the 
purchase of commodities, with the same limitations as are 
provided for appropriated funds, for the fiscal year in which 
the transfer takes place.
    This subsection also authorizes the Secretary to determine, 
settle, adjust, or waive claims arising under the domestic 
commodity distribution programs. The Secretary has the 
authority towaive a claim if he determines that a waiver would 
serve the purposes of the program. The provision does not diminish the 
authority of the Attorney General to supervise and conduct litigation 
on behalf of the United States.
    This subsection also authorizes the Secretary to use funds 
available to USDA under section 32 of the Act of August 24, 
1935, that are otherwise not committed, to reimburse States for 
State and local costs associated with the removal of 
commodities provided by USDA but subsequently determined by the 
Secretary to pose a health or safety hazard to recipients. 
Costs must be approved by the Secretary and may include the 
costs for storage, transportation, processing and destruction 
of the hazardous commodities. The Secretary may also use funds 
to purchase additional commodities when such purchases will 
expedite replacement of any commodity posing a health or safety 
hazard. In instances in which funds are recovered from the 
supplier of the commodity or other entities, such funds will be 
credited to the section 32 account to the extent that such 
funds represent reimbursement of expenditures from that account 
for the purposes described above.
    Finally, this subsection authorizes the Secretary to accept 
donations of commodities from other Federal sources for 
distribution to States through domestic food assistance 
programs for use in providing food assistance to the needy. It 
would also exempt the USDA from paying 25 percent of the value 
of the commodities when they are donated as excess property 
under the Federal Property and Administrative Services Act of 
1949.

                        title iv--effective date

Section 401. Effective date

    Unless otherwise noted, the amendments made by this Act are 
effective as of October 1, 1998.

                      VII. Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
S. 2286 as reported are shown as follows (existing law proposed 
to be omitted is enclosed in brackets, new matter is printed in 
italic, and existing law in which no change is proposed is 
shown in roman):

 NATIONAL SCHOOL LUNCH ACT

           *       *       *       *       *       *       *


    Sec. 6. * * *

           *       *       *       *       *       *       *

    [(c) Notwithstanding any other provision of law, the 
Secretary, until such time as a supplemental appropriation may 
provide additional funds for the purpose of subsection (b) of 
this section, shall use funds appropriated by section 32 of the 
Act of August 24, 1935 (7 U.S.C. 612c) to make any payments to 
States authorized under such subsection. Any section 32 funds 
utilized to make such payments shall be reimbursed out of any 
supplemental appropriation hereafter enacted [after March 30, 
1973] for the purpose of carrying out subsection (b) of this 
section and such reimbursement shall be deposited into the fund 
established pursuant to section 32 of the Act of August 24, 
1935, to be available for the purposes of said section 32.
    [(d) Any funds made available under subsection (b) or (c) 
of this section shall not be subject to the State matching 
provisions of section 7 of this Act.]
    [(e)](c)(1)(A) The national average value of donated foods, 
or cash payments in lieu thereof, shall be 11 cents, adjusted 
on July 1, 1982, and each July 1 thereafter to reflect changes 
in the Price Index for Food Used in Schools and Institutions. 
The Index shall be computed using 5 major food components in 
the Bureau of Labor Statistics' Producer Price Index (cereal 
and bakery products, meats, poultry and fish, dairy products, 
processed fruits and vegetables, and fats and oils). Each 
component shall be weighed using the same relative weight as 
determined by the Bureau of Labor Statistics.
    [(f)](d) Beginning with the school year ending June 30, 
1981, the Secretary shall not offer commodity assistance based 
upon the number of breakfasts served to children under section 
4 of the Child Nutrition Act of 1966 [(42 U.S.C. 1773)].
    [(g)](e)(1) Subject to paragraph (2), in each school year 
the Secretary shall ensure that not less than 12 percent of the 
assistance provided under section 4, this section, and section 
11 shall be in the form of commodity assistance provided under 
this section, including cash in lieu of commodities and 
administrative costs for procurement of commodities under this 
section.

           *       *       *       *       *       *       *

    Sec. 7. * * * 

                           payments to states

    (b) The State revenues provided by any State to meet the 
requirement of subsection (a) shall, to the extent the State 
deems practicable, be disbursed to schools participating in the 
school lunch program under this Act. [No] During the period 
determined under the section 10(c), no State in which the State 
educational agency is prohibited by law from disbursing State 
appropriated funds to private schools shall be required to 
match Federal funds made available for meals served in such 
schools, or to disburse, to such schools, any of the State 
revenues required to meet the requirements of subsection (a).

nutritional and other program requirements

           *       *       *       *       *       *       *


    Sec. 9. * * *
          (5) Waiver of requirement for weighted averages for 
        nutrient analysis._During the period ending on 
        September 30, 2003, the Secretary shall not require the 
        use of weighted averages for nutrient analysis of menu 
        items and foods offered or served as part of a 
        reimbursable meal under the school lunch or school 
        breakfast program.
    (g) Not later than 1 year after the date of enactment of 
this subsection, the Secretary shall provide a notification to 
Congress that justifies the need for production records 
required under section 210.10(b) of title 7, Code of Federal 
Regulations, and describes how the Secretary has reduced 
paperwork relating to the school lunch and school breakfast 
programs.
    (h) Food Safety Inspections.--
          (1) In general.--Except as provided in paragraph (2), 
        a school participating in the school lunch program 
        authorized under this Act or the school breakfast 
        program authorized under section 4 of the Child 
        Nutrition Act of 1966 (42 U.S.C. 1773) shall, at least 
        once during each school year, obtain a food safety 
        inspection conducted by a State or local governmental 
        agency responsible for food safety inspections.
          (2) Exception.--Paragraph (1) shall not apply to a 
        school if a food safety inspection of the school is 
        required by a State or local authority.''.

               [disbursement to schools by the secretary

    [Sec. 10 (a) The Secretary shall withhold funds payable to 
a State under this Act and disburse the funds directly to 
schools, institutions, or service institutions within the State 
for the purposes authorized by this Act to the extent that the 
Secretary has so withheld and disbursed such funds continuously 
since October 1, 1980, but only to such extent (except as 
otherwise required by subsection (b)). Any funds so withheld 
and disbursed by the Secretary shall be used for the same 
purposes, and shall be subject to the same conditions, as 
applicable to a State disbursing funds made available under 
this Act. If the Secretary is administering (in whole or in 
part) any program authorized under this Act, the State in which 
the Secretary is administering the program may, upon request to 
the Secretary, assume administration of that program.
    [(b) If a State educational agency is not permitted by law 
to disburse the funds paid to it under this Act to any of the 
nonpublic schools in the State, the Secretary shall disburse 
the funds directly to such schools within the State for the 
same purposes and subject to the same conditions as are 
authorized or required with respect to the disbursements to 
public schools within the State by the State educational 
agency.]

SEC. 10. DISBURSEMENT TO SCHOOLS BY THE SECRETARY.

    (a) Authority To Administer Programs._
          (1) In general.--Except as provided in paragraph (3), 
        during the period determined under subsection (c), the 
        Secretary shall withhold funds payable to a State under 
        this Act and disburse the funds directly to school food 
        authorities, institutions, and service institutions 
        within the State for the purposes authorized by this 
        Act to the extent that the Secretary has so withheld 
        and disbursed the funds continuously since October 1, 
        1980.
          (2) Use of funds.--Any funds withheld and disbursed 
        by the Secretary under paragraph (1) shall be used for 
        the same purposes and be subject to the same conditions 
        as apply to disbursing funds made available to States 
        under this Act.
          (3) State administration.--If the Secretary is 
        administering (in whole or in part) any program 
        authorized under this Act in a State, the State may, on 
        request to the Secretary, assume administrative 
        responsibility for the program at any time during the 
        period determined under subsection (c).
    (b) Provision of Training and Technical Assistance.--During 
the period determined under subsection (c), the Secretary shall 
provide a State that assumes administrative responsibility for 
a program from the Secretary with training and technical 
assistance to allow for an efficient and effective transfer of 
the responsibility.
    (c) Period._
          (1) In general.--Except as provided in paragraph (2), 
        this section shall apply during the period beginning on 
        October 1, 1998, and ending on September 30, 2001.
          (2) Extension.--The Secretary may extend the period 
        described in paragraph (1) that applies to a program 
        administered by the Secretary for a State, for a period 
        not to exceed 2 years, if the State--
                  (A) demonstrates to the Secretary that the 
                State will not be able to assume administrative 
                responsibility for the program during the 
                period described in paragraph (1); and
                  (B) submits a plan to the Secretary that 
                describes when and how the State will assume 
                administrative responsibility for the program.

           *       *       *       *       *       *       *


                           special assistance

    Sec. 11. * * *
    (I) elects to serve all children in the school free lunches 
under the school lunch program during any period of 3 
successive school years, or in the case of a school that serves 
both lunches and breakfasts, elects to serve all children in 
the school free lunches and free breakfasts under the school 
lunch program and the school breakfast program established 
under section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 
1773) during any period of [3 successive school years] 4 
successive school years; and
    (ii) For purposes of making special assistance payments 
under clause (i), except as provided in clause (iii), the 
number of lunches or breakfasts served by a school to children 
who are eligible for free lunches or breakfasts or reduced 
price lunches or breakfasts during each school year of the [3-
school-year period] 4-school-year period shall be considered to 
be equal to the number of lunches or breakfasts served by the 
school to children eligible for free lunches or breakfasts or 
reduced price lunches or breakfasts during the first school 
year of the period.
    (iii) For purposes of computing the amount of the payments, 
a school may elect to determine on a more frequent basis the 
number of children who are eligible for free or reduced price 
lunches or breakfasts who are served lunches or breakfasts 
during the [3-school-year period] 4-school-year period.
    (D)(i) In the case of any school that is receiving special 
assistance payments under this paragraph for a [3-school-year 
period] 4-school-year period described in subparagraph (C), the 
State may grant, at the end of the [3-school-year period] 4-
school-year-period, an extension of the period for an 
additional [2 school years] 4 school years, if the State 
determines, through available socioeconomic data approved by 
the Secretary, that the income level of the population of the 
school has remained stable.
    (ii) [A school described in clause (i) may reapply to the 
State at the end of the 2-school-year period described in 
clause (i) for the purpose of continuing to receive special 
assistancepayments, as determined in accordance with this 
paragraph, for a subsequent 5-school-year period.] The school may 
reapply to the State at the end of the [5-school-year period] 4-school-
year period, and at the end of each [5-school-year period] 4-school-
year period thereafter for which the school receives special assistance 
payments under this paragraph, for the purpose of continuing to receive 
the payments for a subsequent [5-school-year period] 4-school-year 
period.

           *       *       *       *       *       *       *

    [(B) The annual] (B) Computation of adjustment.--
          (i) In general.--The annual adjustment under this 
        paragraph shall reflect changes in the cost of 
        operating meal programs under this Act and the Child 
        Nutrition Act of 1966 [(42 U.S.C. 1771 et seq.)], as 
        indicated by the change in the series for food away 
        from home of the Consumer Price Index for all Urban 
        Consumers, published by the Bureau of Labor Statistics 
        of the Department of Labor. [Each annual]
                  (ii) Basis.--Each annual adjustment shall 
                reflect the changes in the series for food away 
                from home for the most recent 12-month period 
                for which such data are available. [The 
                adjustments]
                  (iii) Rounding.--
                  (I) Through April 30, 1999.--For the period 
                ending April 30, 1999, the adjustments made 
                under this paragraph shall be computed to the 
                nearest one-fourth cent, except that 
                adjustments to payment rates for meals and 
                supplements served to individuals not 
                determined to be eligible for free or reduced 
                price meals and supplements shall be computed 
                to the nearest lower cent increment and based 
                on the unrounded amount for the preceding 12-
                month period.
                  (II) May 1, 1999, through june 30, 1999.--For 
                the period beginning on May 1, 1999, and ending 
                on June 30, 1999, the national average payment 
                rates for meals and supplements shall be 
                adjusted to the nearest lower cent increment 
                and shall be based on the unrounded amounts 
                used to calculate the rates in effect on July 
                1, 1998.
                  (III) July 1, 1999, and thereafter.--On July 
                1, 1999, and on each subsequent July 1, the 
                national average payment rates for meals and 
                supplements shall be adjusted to the nearest 
                lower cent increment and shall be based on the 
                unrounded amounts for the preceding 12-month 
                period.
    [(f) In providing assistance for school breakfasts and 
lunches served in Alaska, Hawaii, Guam, American Samoa, Puerto 
Rico, the Virgin Islands of the United States, and the 
Commonwealth of the Northern Mariana Islands, the Secretary may 
establish appropriate adjustments for each such State to the 
national average payment rates prescribed under sections 4 and 
11 of this Act and section 4 of the Child Nutrition Act of 1966 
[(42 U.S.C. 1773)], to reflect the differences between the 
costs of providing lunches and breakfasts in those States and 
the costs of providing lunches and breakfasts in all other 
States.]
    (f) Adjustments to Reimbursement Rates.--In providing 
assistance for breakfasts, lunches, suppers, and supplements 
served in Alaska, Hawaii, Guam, American Samoa, Puerto Rico, 
the Virgin Islands, and the Commonwealth of the Northern 
Mariana Islands, the Secretary may establish appropriate 
adjustments for each such State to the national average payment 
rates prescribed under sections 4, 11, 13 and 17 of this Act 
and section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 
1773) to reflect the differences between the costs of providing 
meals in those States and the costs of providing meals in all 
other States.
    (g) Whoever embezzles, willfully misapplies, steals, or 
obtains by fraud any funds, assets, or property that are the 
subject of a grant or other form of assistance under this Act 
or the Child Nutrition Act of 1966 [(42 U.S.C. 1771 et seq.)], 
whether received directly or indirectly from the United States 
Department of Agriculture, or whoever receives, conceals, or 
retains such funds, assets, or property to personal use or 
gain, knowing such funds, assets, or property have been 
embezzled, willfully misapplied, stolen, or obtained by fraud 
shall, if such funds, assets, or property are of the value of 
$100 or more, be fined not more than [$10,000] $25,000 or 
imprisoned not more than five years, or both, or, if such 
funds, assets, or property are of a value of less than $100, 
shall be fined not more than $1,000 or imprisoned for not more 
than one year, or both.

           *       *       *       *       *       *       *

    (m)(1) The Secretary, acting through the Administrator of 
the Food and Nutrition Service or through the Extension 
Service, shall award on an annual basis grants to a private 
nonprofit organization or educational institution in each of 3 
States to create, operate, and demonstrate food and nutrition 
projects that are fully integrated with elementary school 
curricula.

           *       *       *       *       *       *       *

    (3) Subject to the availability of appropriations to carry 
out this subsection, the Secretary shall make grants to each of 
the 3 private organizations or institutions selected under this 
subsection in amounts of not less than $100,000, nor more than 
$200,000, for each of fiscal years 1995 through [1998] 2003. 
    (4) The Secretary shall establish fair and reasonable 
auditing procedures regarding the expenditure of funds under 
this subsection.
    (5) There are authorized to be appropriated to carry out 
this subsection such sums as are necessary for each of fiscal 
years 1995 through [1998] 2003.
    (n) Length of Meal Service Period and Food Service 
Environment.--A school participating in the school lunch 
program authorized under this Act or the school breakfast 
program authorized under section 4 of the Child Nutrition Act 
of 1966 (42 U.S.C. 1773) is encouraged to establish meal 
service periods that provide children with adequate time to 
fully consume their meals in an environment that is conducive 
to eating the meals.
    (o) Buy American.--
          (1) Definition of domestic commodity or product.--In 
        this subsection, the term ``domestic commodity or 
        product'' means--
                  (A) an agricultural commodity that is 
                produced in the United States; and
                  (B) a food product that is processed in the 
                United States substantially using agricultural 
                commodities that are produced in the United 
                States.
          (2) Requirement.--Subject to paragraph (3), the 
        Secretary shall require that a school purchase, to the 
        maximum extent practicable, domestic commodities or 
        products.
          (3) Limitations.--Paragraph (2) shall apply only to--
                  (A) a school located in the contiguous United 
                States; and
                  (B) a purchase of an agricultural commodity 
                or product forthe school lunch program 
authorized under this Act or the school breakfast program authorized 
under section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 1773).''.
    (p) Procurement Contracts.--In acquiring a good or service 
using funds provided under this Act or the Child Nutrition Act 
of 1966 (42 U.S.C. 1771 et seq.), a State, State agency, or 
school may enter into a contract with a person that has 
provided assistance to the State, State agency, or school in 
drafting contract specifications.

           *       *       *       *       *       *       *


                summer food service program for children

    Sec. 13 * * *

           *       *       *       *       *       *       *

                          [(ii) conduct a regularly scheduled 
                        food service primarily for homeless 
                        children; or
                          [(iii)] (ii) qualify as camps; and
                  (B) As used in this paragraph, the term 
                ``private nonprofit organizations'' means those 
                organizations that--
                          [(i)(I) serve a total of not more 
                        than 2,500 children per day at not more 
                        than 5 sites in any urban area, with 
                        not more than 300 children being served 
                        at any 1 site (or, with a waiver 
                        granted by the State under standards 
                        developed by the Secretary, not more 
                        than 500 children being served at any 1 
                        site); or
                          [(II) serve a total of not more than 
                        2,500 children per day at not more than 
                        20 sites in any rural area, with not 
                        more than 300 children being served at 
                        any 1 site (or, with a waiver granted 
                        by the State under standards developed 
                        by the Secretary, not more than 500 
                        children being served at any 1 site);]
                          (i) operate--
                                  (I) not more than 25 sites, 
                                with not more than 300 children 
                                being served at any 1 site; or
                                  (II) with a waiver granted by 
                                the State agency under 
                                standards developed by the 
                                Secretary, with not more than 
                                500 children being served at 
                                any 1 site;''.
                          [(ii) use self-preparation facilities 
                        to prepare meals, or obtain meals from 
                        a public facility (such as a school 
                        district, public hospital, or State 
                        university) or a school participating 
                        in the school lunch program under this 
                        Act
                          [(iii) operate in areas where a 
                        school food authority or the local, 
                        municipal, or county government has not 
                        indicated by March 1 of any year that 
                        such authority or unit of local 
                        government will operate a program under 
                        this section in such year;]
                          [(iv)] (ii) exercise full control and 
                        authority over the operation of the 
                        program at all sites under their 
                        sponsorship;
                          [(v)] (iii) provide ongoing year-
                        around activities for children or 
                        families;
                          [(vi)] (iv) demonstrate that such 
                        organizations have adequate management 
                        and the fiscal capacity to operate a 
                        program under this section; and
                          [(vii)] (v) meet applicable State and 
                        local health, safety, and sanitation 
                        standards.
    (b) Service Institutions.--

           *       *       *       *       *       *       *

    (l)(1) Service institutions [(other than private nonprofit 
organizations eligible under subsection (a)(7))may contract on 
a competitive basis only with food service management companies 
registered with the State in which they operate] with food 
service management companies for the furnishing of meals or 
management of the entire food service under the program, except 
that a food service management company entering into a contract 
with a service institution under this section may not 
subcontract with a single company for the total meal, with or 
without milk, or for the assembly of the meal. The Secretary 
shall prescribe additional conditions and limitations governing 
assignment of all or any part of a contract entered into by a 
food service management company under this section.
    (2) Each State [shall] may provide for the registration of 
food service management companies. [For the purposes of this 
section, registration shall include, at a minimum--
          [(A) certification that the company meets applicable 
        State and local health, safety, and sanitation 
        standards;
          [(B) disclosure of past and present company owners, 
        officers, and directors, and their relationship, if 
        any, to any service institution or food service 
        management company that received program funds in any 
        prior fiscal year;
          [(C) records of contract terminations or 
        disallowances, and health, safety, and sanitary code 
        violations, in regard to program operations in prior 
        fiscal year; and
          [(D) the addresses of the company's food preparation 
        and distribution sites.
No food service management company may be registered if the 
State determines that such company (i) lacks the administrative 
and financial capability to perform under the program, or (ii) 
has been seriously deficient in its participation in the 
program in prior fiscal years.
    [(3) In order to ensure that only qualified food service 
management companies contract for services in all States, the 
Secretary shall maintain a record of all registered food 
service management companies that have been seriously deficient 
in their participation in the program and may maintain a record 
of other registered food service management companies, for the 
purpose of making such information available to the States.]
    [(4)] (3) In accordance with regulations issued by the 
Secretary, positive efforts shall be made by service 
institutions to use small businesses and minority-owned 
businesses as sources of supplies and services. Such efforts 
shall afford those sources the maximum feasible opportunity to 
compete for contracts using program funds.
    [(5)] (4) Each State, with the assistance of the Secretary, 
shall establish a standard form of contract for use by service 
institutions and food service management companies. The 
Secretary shall prescribe requirements governing bid and 
contract procedures for acquisition of the services of food 
service management companies, including, but not limited to, 
bonding requirements (which may provide exemptions applicable 
to contracts of $100,000 or less), procedures for review 
ofcontracts by States, and safeguards to prevent collusive bidding 
activities between service institutions and food service management 
companies.

                     COMMODITY DISTRIBUTION PROGRAM

    Sec. 14 (a) Notwithstanding any other provision of law, the 
Secretary, during the period beginning July 1, 1974, and ending 
September 30, [1998] 2003, shall--

           *       *       *       *       *       *       *

    (f) Commodity only schools shall be eligible to receive 
donated commodities equal in value to the sum of the national 
average value of donated foods established under [section 6(e)] 
section 6(c) of this Act and the national average payment 
established under section 4 of this Act. Such schools shall be 
eligible to receive up to 5 cents per meal of such value in 
cash for processing and handling expenses related to the use of 
such commodities. Lunches served in such schools shall consist 
of a combination of foods which meet the minimum nutritional 
requirements prescribed by the Secretary under section 9(a) of 
this Act, and shall represent the four basic food groups, 
including a serving of fluid milk.

           *       *       *       *       *       *       *


                   ELECTION TO RECEIVE CASH PAYMENTS

    Sec. 16 (a) Notwithstanding any other provision of law, 
where a State phased out its commodity distribution facilities 
prior to June 30, 1974, such State may, for purposes of the 
programs authorized by this Act and the Child Nutrition Act of 
1966 [(42 U.S.C. 1771 et seq.)], elect to receive cash payments 
in lieu of donated foods. Where such an election is made, the 
Secretary shall make cash payments to such State in an amount 
equivalent in value to the donated foods that the State would 
otherwise have received if it had retained its commodity 
distribution facilities. The amount of cash payments in the 
case of lunches shall be governed by [section 6(e)] section 
6(c) of this Act.

                   CHILD AND ADULT CARE FOOD PROGRAM

    Sec. 17 (a) The Secretary may carry out a program to assist 
States through grants-in-aid and other means to initiate and 
maintain nonprofit food service programs for children in 
institutions providing child care. For purposes of this 
section, the term ``institution'' means any public or private 
nonprofit organization providing nonresidential child care, 
including, but not limited to, child care centers, settlement 
houses, recreational centers, Head Start centers, and 
institutions providing child care facilities for children with 
handicaps; and such term shall also mean any other private 
organization providing nonresidential day care services for 
which it receives compensation from amounts granted to the 
States under title XX of the Social Security Act [(42 U.S.C. 
1397 et seq.)] (but only if such organization receives 
compensation under such title for at least 25 percent of its 
enrolled children or 25 percent of its licensed capacity, 
whichever is less). In addition, the term ``institution'' shall 
include programs developed to provide day care outside school 
hours for schoolchildren, [and public] public or nonprofit 
private organizations that sponsor family or group day care 
homes, and emergency shelters described in subsection (t). 
[Reimbursement] Except as provided in subsection (r), 
reimbursement may be provided under this section only for meals 
or supplements served to children not over 12 years of age 
(except that such age limitation shall not be applicable for 
children of migrant workers if 15 years of age or less or for 
children with handicaps). The Secretary may establish separate 
guidelines for institutions that provide care to school 
children outside of school hours. For purposes of determining 
eligibility--
          [(1) no institution, other than a family or group day 
        care home sponsoring organization, or family or group 
        day care home shall be eligible to participate in the 
        program unless it has Federal, State, or local 
        licensing or approval, or is complying with appropriate 
        renewal procedures as prescribed by the Secretary and 
        the State has no information indicating that the 
        institution's license will not be renewed; or where 
        Federal, State, or local licensing or approval is not 
        available, it receives funds under title XX of the 
        Social Security Act or otherwise demonstrates that it 
        meets either any applicable State or local government 
        licensing or approval standards or approval standards 
        established by the Secretary after consultation with 
        the Secretary of Health and Human Services; and]
          (1) each institution (other than a school or family 
        or group day care home sponsoring organization) and 
        family or group day care home shall--
                  (A)(i) have Federal, State, or local 
                licensing or approval; or
                  (ii) be complying with appropriate renewal 
                procedures as prescribed by the Secretary and 
                not be the subject of information possessed by 
                the State indicating that the license of the 
                institution or home will not be renewed;
                  (B) in any case in which Federal, State, or 
                local licensing or approval is not available--
                          (i) receive funds under title XX of 
                        the Social Security Act (42 U.S.C. 1397 
                        et seq.);
                          (ii) meet any alternate approval 
                        standards established by a State or 
                        local government; or
                          (iii) meet any alternate approval 
                        standards established by the Secretary, 
                        after consultation with the Secretary 
                        of Health and Human Services; or
                  (C) in any case in which the institution 
                provides care to school children outside school 
                hours and Federal, State, or local licensing or 
                approval is not required, meet State or local 
                health and safety standards; and
          (2) no institution shall be eligible to participate 
        in the program unless it satisfies the following 
        criteria:
                  (A) accepts final administrative and 
                financial responsibility for management of an 
                effective food service;
                  (B) has not been seriously deficient in its 
                operation of the child care food program, or 
                any other program under this Act or the Child 
                Nutrition Act of 1966 [(42 U.S.C. 1771 et 
                seq.)], for a period of time specified by the 
                Secretary;
                  (C) will provide adequate supervisory and 
                operational personnel for overall monitoring 
                and management of the child care food program; 
                and

           *       *       *       *       *       *       *

          [(6)(A) A child who has not yet entered kindergarten 
        shall be considered automatically eligible for benefits 
        under this section without further application or 
        eligibility determination if the child is enrolled as a 
        participant in the Even Start program under part B of 
        chapter 1 of title I of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 2741 et seq.).
          [(B) Subparagraph (A) shall apply only with respect 
        to the provision of benefits under this section for the 
        period beginning September 1, 1995, and ending 
        September 30, 1997.
    (d)(1) Any eligible public institution shall be approved 
for participation in the child care food program upon its 
request. Any eligible private institution shall be approved for 
participation if it has been visited by a State agency prior to 
approval and it (A) has tax exempt status under the Internal 
Revenue Code of 1986 or, under conditions established by the 
Secretary, is moving toward compliance with the requirements 
for tax exempt status, or (B) is currently operating a Federal 
program requiring nonprofit status. Family or group day care 
homes need not have individual tax exempt certification if they 
are sponsored by an institution that has tax exempt status, or, 
under conditions established by the Secretary, such institution 
is moving toward compliance with the requirements for tax 
exempt status or is currently operating a Federal program 
requiring nonprofit status. An institution moving toward 
compliance with the requirement for tax exempt status shall be 
allowed to participate in the child and adult care food program 
for a period of not more than 180 days, except that a State 
agency may grant a single extension of not to exceed an 
additional 90 days if the institution demonstrates, to the 
satisfaction of the State agency, that the inability of the 
institution to obtain tax exempt status within the 180-day 
period is due to circumstances beyond the control of the 
institution. An institution applying for participation under 
this section shall be notified of approval or disapproval in 
writing within thirty days after the date its completed 
application is filed. [if an institution submits an incomplete 
application to the State, the State shall so notify the 
institution within fifteen days of receipt of the application.]
    (2)(A) The Secretary shall develop a policy [that allows] 
that--
          (i) allows institutions providing child care that 
        participate in the program under this section, at the 
        option of the State agency, to reapply for assistance 
        under this section at 3-year intervals; and;
          (ii) requires periodic site visits to private 
        institutions that the State agency determines have a 
        high probability of program abuse.
    (B) Each State agency that exercises the option authorized 
by subparagraph (A) shall confirm on an annual basis that each 
such institution is in compliance with the licensing or 
approval provisions of subsection (a)(1).
    (e)(1) Except as provided in paragraph (2), the State shall 
provide, in accordance with regulations issued by the 
Secretary, a fair hearing and a prompt determination to any 
institution aggrieved by the action of the State as it affects 
the participation of such institution in the program authorized 
by this section, or its claim for reimbursement under this 
section.
     (B) The value of the commodities donated under 
subparagraph (A) (or cash in lieu of commodities) to each State 
for each school year shall be, at a minimum, the amount 
obtained by multiplying the number of lunches and suppers 
served in participating institutions in that State during the 
preceding school year by the rate for commodities or cash in 
lieu of commodities established under [section 6(e)] section 
6(c) for the school year concerned.

           *       *       *       *       *       *       *

    (p)(1) From amounts [appropriated or otherwise made 
available for purposes of carrying out this section] made 
available under paragraph (4) the Secretary shall carry out 2 
statewide demonstration projects under which private for-profit 
organizations providing nonresidential day care services shall 
qualify as institutions for the purposes of this section. An 
organization may participate in a demonstration project 
described in the preceding sentence if--

           *       *       *       *       *       *       *

    [(4) Such project shall--
          [(A) commence not earlier than May 1, 1990, and not 
        later than June 30, 1990; and
          [(B) terminate on September 30, 1998.
    [(5) Notwithstanding paragraph (4)(B), the Secretary shall 
continue until September 30, 1998, the two pilot projects 
established under this subsection to the extent, and in such 
amounts, as are provided for in advance in appropriations 
Acts.]
    (4) Funding.--Out of any moneys in the Treasury not 
otherwise appropriated, the Secretary of the Treasury shall 
provide to the Secretary such sums as are necessary to carry 
out this subsection for each of fiscal years 1999 through 2003. 
The Secretary shall be entitled to receive the funds and shall 
accept the funds.
    (q) Management Support.--
          (1) Technical and training assistance.--In addition 
        to the training and technical assistance that is 
        provided to State agencies under other provisions of 
        this Act and the Child Nutrition Act of 1966 (42 U.S.C. 
        1771 et seq.), the Secretary shall provide training and 
        technical assistance in order to assist the State 
        agencies in improving their program management and 
        oversight under this section.
          (2) Funding.--For each of fiscal years 1999 through 
        2003, the Secretary shall reserve to carry out 
        paragraph (1) $1,000,000 of the amounts made available 
        to carry out this section.
    (r) Program for At-Risk School Children.--
          (1) Definition of at-risk school child.--In this 
        subsection, the term ``at-risk school child'' means a 
        school child who--
                  (A) is not more than 18 years of age; and
                  (B) lives in a geographical area served by a 
                school enrolling elementary students in which 
                at least 50 percent of the total number of 
                children enrolled are certified as eligible to 
                receive free or reduced price school meals 
                under this Act or the Child Nutrition Act of 
                1966 (42 U.S.C. 1771 et seq.).
          (2) Participation in child and adult care food 
        program.--Subject to the other provisions of this 
        subsection, an institution that provides supplements 
        under a program organized primarily to provide care to 
        at-risk school children during after-school hours, 
        weekends, or holidays during the regular school year 
        may participate in the program authorized under this 
        section.
          (3) Administration.--Except as otherwise provided in 
        this subsection, the other provisions of this section 
        apply to an institution described in paragraph (2).
          (4) Supplement reimbursement.--
                  (A) Limitations.--An institution may claim 
                reimbursement under this subsection only for--
                          (i) a supplement served under a 
                        program organized primarily to provide 
                        care to at-risk school children during 
                        after-school hours, weekends, or 
                        holidays during the regular school 
                        year; and
                          (ii) 1 supplement per child per day.
                  (B) Rate.--Supplements shall be reimbursed 
                under this subsection at the rate established 
                for free supplements under subsection (c)(3).
                  (C) No charge.--A supplement claimed for 
                reimbursement under this subsection shall be 
                served without charge.
    (s) Information Concerning the Special Supplemental 
Nutrition Program for Women, Infants, and Children.--
          (1) In general.--The Secretary shall provide each 
        State agency administering a child and adult care food 
        program under this section with information concerning 
        the special supplemental nutrition program for women, 
        infants, and children authorized under section 17 of 
        the Child Nutrition Act of 1966 (42 U.S.C. 1786).
          (2) Requirements for state agencies.--A State agency 
        shall ensure that each participating family and group 
        day care home and child care center (other than an 
        institution providing care to school children outside 
        school hours)--
                  (A) receives materials that include--
                          (i) a basic explanation of the 
                        importance and benefits of the special 
                        supplemental nutrition program for 
                        women, infants, and children;
                          (ii) the maximum State income 
                        eligibility standards, according to 
                        family size, for the program; and
                          (iii) information concerning how 
                        benefits under the program may be 
                        obtained;
                  (B) is provided periodic updates of the 
                information described in subparagraph (A); and
                  (C) provides the information described in 
                subparagraph (A) to parents of enrolled 
                children at enrollment.''.
    (t) Participation by Emergency Shelters.--
          (1) Definition of emergency shelter.--In this 
        subsection, the term ``emergency shelter'' means a 
        public or private nonprofit emergency shelter (as 
        defined in section 321 of the Stewart B. McKinney 
        Homeless Assistance Act (42 U.S.C. 11351)), or a site 
        operated by the shelter, that provides food service to 
        homeless children and their parents or guardians.
          (2) Administration.--Except as otherwise provided in 
        this subsection, the other provisions of this section 
        shall apply to an emergency shelter that is 
        participating in the program authorized under this 
        section.
          (3) Institution and site licensing.--Subsection 
        (a)(1) shall not apply to an emergency shelter.
          (4) Health and safety standards.--To be eligible to 
        participate in the program authorized under this 
        section, an emergency shelter shall comply with 
        applicable State and local health and safety standards.
          (5) Meal or supplement reimbursement.--
                  (A) Limitations.--An emergency shelter may 
                claim reimbursement under this subsection only 
                for--
                          (i) a meal or supplement served to 
                        children who are not more than 12 years 
                        of age residing at the emergency 
                        shelter; and
                          (ii) not more than 3 meals, or 2 
                        meals and 1 supplement, per child per 
                        day.
                  (B) Rate.--A meal or supplement shall be 
                reimbursed under this subsection at the rate 
                established for a free meal or supplement under 
                subsection (c).
                  (C) No charge.--A meal or supplement claimed 
                for reimbursement under this subsection shall 
                be served without charge.

SEC. 17A. MEAL SUPPLEMENTS FOR CHILDREN IN AFTERSCHOOL CARE.

    (a) General Authority.--
          (1) Grants to states.--The Secretary shall carry out 
        a program to assist States through grants-in-aid and 
        other means to provide meal [supplements to] 
        supplements under a program organized primarily to 
        provide care for children in afterschool care in 
        eligible elementary and secondary schools.
          (2) Eligible schools.--For the purposes of this 
        section, the term ``eligible elementary and secondary 
        schools'' means schools that--
                  (A) operate school lunch programs under this 
                Act;
                  (B) sponsor afterschool care programs; and
                  [(C) are participating in the child care food 
                program under section 17 on May 15, 1989]
                  (C) operate afterschool programs with an 
                educational or enrichment purpose.
    (b) Eligible Children.--Reimbursement may be provided under 
this section only for supplements served to children--
          (1) who are not more than 12 years of age; [or]
          (2) in the case of children of migrant workers or 
        children with handicaps, who are not more than 15 years 
        of age; or [.]
          (3) in the case of children who live in a 
        geographical area served by a school enrolling 
        elementary students in which at least 50 percent of the 
        total number of children enrolled are certified as 
        eligible to receive free or reduced price school meals 
        under this Act or the Child Nutrition Act of 1966 (42 
        U.S.C. 1771 et seq.), who are not more than 18 years of 
        age.
    [(c) Reimbursement.--For]
    (c) Reimbursement._
          (1) In general._Except as provided in paragraph (2), 
        for the purposes of this section, the national average 
        payment rate for supplements shall be equal to those 
        established under section 17(c)(3) (as adjusted 
        pursuant to section 11(a)(3)).
          (2) Low-income areas.--A supplement provided under 
        this section to a child described in subsection (b)(3) 
        shall be--
                  (A) reimbursed at the rate at which free 
                supplements are reimbursed under section 17(c); 
                and
                  (B) served without charge.
    (d) Contents of Supplements.--The requirements that apply 
to the content of meal supplements served under child care food 
programs operated with assistance under this Act shall apply to 
the content of meal supplements served under programs operated 
with assistance under this section.

[SEC. 17B. HOMELESS CHILDREN NUTRITION PROGRAM.

    [Section 7(a)(5)(B)(i)(I) of the Child Nutrition Act of 
1966 (42 U.S.C. 1776(a)(5)(B)(i)(I)) requires the Secretary of 
Agriculture to allocate, for the purpose of providing grants on 
an annual basis to public entities and private nonprofit 
organizations participating in projects under this section, not 
more than $4,000,000 in fiscal years 1995 and each subsequent 
fiscal year.
    [(a) In General.--The Secretary shall conduct projects 
designed to provide food service throughout the year to 
homeless children under the age of 6 in emergency shelters.
    [(b) Agreements To Participate in Projects.--
          [(1) In general.--The Secretary shall enter into 
        agreements with State, city, local, or county 
        governments, other public entities, or private 
        nonprofit organizations to participate in the projects 
        conducted under this section.
          [(2) Eligibility requirements.--The Secretary shall 
        establish eligibility requirements for the entities 
        described in paragraph (1) that desire to participate 
        in the projects conducted under this section. The 
        requirements shall include the following:
                  [(A) Each private nonprofit organization 
                shall operate not more than 5 food service 
                sites under the project and shall serve not 
                more than 300 homeless children at each such 
                site.
                  [(B) Each site operated by each such 
                organization shall meet applicable State and 
                local health, safety, and sanitation standards.
    [(c) Project Requirements.--
          [(1) In general.--A project conducted under this 
        section shall--
                  [(A) use the same meal patterns and receive 
                reimbursement payments for meals and 
                supplements at the same rates provided to child 
                care centers participating in the child care 
                food program under section 17 for free meals 
                and supplements; and
                  [(B) receive reimbursement payments for meals 
                and supplements served on Saturdays, Sundays, 
                and holidays, at the request of the sponsor of 
                any such project.
          [(2) Modification.--The Secretary may modify the meal 
        pattern requirements to take into account the needs of 
        infants.
          [(3) Homeless children eligible for free meals 
        without application.--Homeless children under the age 
        of 6 in emergency shelters shall be considered eligible 
        for free meals without application.
    [(d) Funding Priorities.--From the amount described in 
subsection (g), the Secretary shall provide funding for 
projects carried out under this section for a particular fiscal 
year (referred to in this subsection as the ``current fiscal 
year'') in the following order of priority, to the maximum 
extent practicable:
          [(1) The Secretary shall first provide the funding to 
        entities and organizations, each of which--
                  [(A) received funding under this section or 
                section 18(c) (as in effect on the day before 
                the date of enactment of this section) to carry 
                out a project for the preceding fiscal year; 
                and
                  [(B) is eligible to receive funding under 
                this section to carry out the project for the 
                current fiscal year;
[to enable the entity or organization to carry out the project 
under this section for the current fiscal year at the level of 
service provided by the project during the preceding fiscal 
year.
          [(2) From the portion of the amount that remains 
        after the application of paragraph (1), the Secretary 
        shall provide funds to entities and organizations, each 
        of which is eligible to receive funding under this 
        section, to enable the entity or organization to carry 
        out a new project under this section for the current 
        fiscal year, or to expand the level of service provided 
        by a project for the current fiscal year over the level 
        provided by the project during the preceding fiscal 
        year.
    [(e) Notice.--The Secretary shall advise each State of the 
availability of the projects conducted under this subsection 
for States, cities, counties, local governments, and other 
public entities, and shall advise each State of the procedures 
for applying to participate in the project.
    [(f) Plan To Allow Participation in the Child and Adult 
Care Food Program.--Not later than September 30, 1996, the 
Secretary shall submit to the Committee on Education and Labor 
of the House of Representatives and the Committee on 
Agriculture, Nutrition, and Forestry of the Senate a plan 
describing--
          [(1) how emergency shelters and homeless children who 
        have not attained the age of 6 and who are served by 
        the shelters under the program might participate in the 
        child and adult care food program authorized under 
        section 17 by September 30, 1998; and
          [(2) the advantages and disadvantages of the action 
        described in paragraph (1).
    [(g) Funding.--
          [(1) In general.--In addition to any amounts made 
        available under section 7(a)(5)(B)(i)(I) of the Child 
        Nutrition Act of 1966 (42 U.S.C. 1776(a)(5)(B)(i)(I)) 
        and any amounts that are otherwise made available for 
        fiscal year 1995, out of any moneys in the Treasury not 
        otherwise appropriated, the Secretary of the Treasury 
        shall provide to the Secretary to carry out this 
        section $1,800,000 for fiscal year 1995, $2,600,000 for 
        fiscal year 1996, $3,100,000 for fiscal year 1997, 
        $3,400,000 for fiscal year 1998, and $3,700,000 for 
        fiscal year 1999 and each succeeding fiscal year. The 
        Secretary shall be entitled to receive the funds and 
        shall accept the funds.
          [(2) Insufficient number of applicants.--The 
        Secretary may expend less than the amount described in 
        paragraph (1) for a fiscal year if there is an 
        insufficient number of suitable applicants to carry out 
        projects under this section for the fiscal year. Any 
        funds made available under this subsection to carry out 
        the projects for a fiscal year that are not obligated 
        to carry out the projects in the fiscal year shall 
        remain available until expended for purposes of 
        carrying out the projects.
    [(h) Definition of emergency shelter.--As used in this 
section, the term ``emergency shelter'' has the meaning 
provided the term in section 321(2) of the Stewart B. McKinney 
Homeless Assistance Act (42 U.S.C. 11351(2)).]

                             PILOT PROJECTS

    Sec. 18 (a) The Secretary may conduct pilot projects in not 
more than three States in which the Secretary is currently 
administering programs to evaluate the effects of the Secretary 
contracting with private profit and nonprofit organizations to 
act as a State agency under this Act and the Child Nutrition 
Act of 1966 [(42 U.S.C. 1771 et seq.)] for schools, 
institutions, or service institutions referred to in section 10 
of this Act and section 5 of the Child Nutrition Act of 1966 
[(42 U.S.C. 1774)].
    * * * 1989, amended this subsection by striking ``(42 
U.S.C. 1771 et seq.)''.

           *       *       *       *       *       *       *

    (c)(1) Using the funds provided under paragraph (7), the 
Secretary shall conduct at least 1 demonstration project 
through a participating entity during each of fiscal years 1995 
through [1998] 2003 that is designed to provide food and 
nutrition services throughout the year to--

           *       *       *       *       *       *       *

    [(7)[(A)] Out of any moneys in the Treasury not otherwise 
appropriated, the Secretary of the Treasury shall provide to 
the Secretary $400,000 for each of fiscal years 1995 through 
[1998] 2003 to carry out this subsection. The Secretary shall 
be entitled to receive the funds and shall accept the funds.
    [(B) Any funds provided under subparagraph (A) to carry out 
projects under this subsection for a fiscal year that are not 
obligated in the fiscal year shall be used by the Secretary to 
carry out the homeless children nutrition program established 
under section 17B.]

           *       *       *       *       *       *       *

    (e) Breakfast Pilot Projects.--
          [(1) In general.--During each of the school years 
        beginning July 1, 1999, July 1, 2000, and July 1, 2001, 
        the Secretary shall make grants to State agencies to 
        conduct pilot projects in elementary schools under the 
        jurisdiction of not more than 6 school food authorities 
        approved by the Secretary--
                  [(A) to reduce paperwork and simplify meal 
                counting requirements; and
                  [(B) to evaluate the effect of providing free 
                breakfasts to elementary school children, 
                without regard to family income, on 
                participation, academic achievement, attendance 
                and tardiness, and dietary intake over the 
                course of a day.
          [(2) Nominations.--A State agency that desires to 
        receive a grant under this subsection shall submit to 
        the Secretary nominations of school food authorities to 
        participate in a pilot project under this subsection.
          (3) Approval.--The Secretary shall approve for 
        participation in pilot projects under this subsection 
        elementary schools under the jurisdiction of not more 
        than 6 school food authorities selected so as to--
                  (A) provide for an equitable distribution of 
                pilot projects among urban and rural elementary 
                schools;
                  (B) provide for an equitable distribution of 
                pilot projects among elementary schools of 
                varying family income levels; and
                  (C) permit the evaluation of pilot projects 
                to distinguish the effects of the pilot 
                projects from other factors, such as changes or 
                differences in educational policies or program.
          (4) Grants to school food authorities.--A State 
        receiving a grant under paragraph (1) shall make grants 
        to school food authorities to conduct the pilot 
        projects described in paragraph (1).
          (5) Duration of pilot projects.--A school food 
        authority receiving amounts under a grant to conduct a 
        pilot project described in paragraph (1) shall conduct 
        the project for the 3-year period beginning July 1, 
        1999.
          (6) Waiver authority.--The Secretary may waive the 
        requirements of this Act and the Child Nutrition Act of 
        1966 (42 U.S.C. 1771 et seq.) relating to counting of 
        meals, applications for eligibility, and other 
        requirements that would preclude the Secretary from 
        making a grant to conduct a pilot project under 
        paragraph (1).
          (7) Requirements for participation in pilot 
        project.--To be eligible to participate in a pilot 
        project under this subsection--
                  (A) a State--
                          (i) shall submit an application to 
                        the Secretary at such time and in such 
                        manner as the Secretary shall establish 
                        to meet criteria the Secretary has 
                        established to enable a valid 
                        evaluation to be conducted; and
                          (ii) shall provide such information 
                        relating to the operation and results 
                        of the pilot project as the Secretary 
                        may reasonably require; and
                  (B) a school food authority--
                          (i) shall agree to serve all 
                        breakfasts at no charge to all children 
                        in participating elementary schools;
                          (ii) shall not have a history of 
                        violations of this Act or the Child 
                        Nutrition Act of 1966 (42 U.S.C. 1771 
                        et seq.);
                          (iii) shall have, under the 
                        jurisdiction of the school food 
                        authority, a sufficient number of 
                        elementary schools that are not 
                        participating in the pilot projects to 
                        permit an evaluation of the effects of 
                        the pilot projects; and
                          (iv) shall meet all other 
                        requirements that the Secretary may 
                        reasonably require.
          (8) Reimbursement rates.--A school food authority 
        conducting a pilot project under this subsection shall 
        receive reimbursement for each breakfast served under 
        the pilot project in an amount that is equal to--
                  (A) in the case of a school food authority 
                that is determined by the Secretary not to be 
                in severe need, the rate for free breakfasts 
                established under section 4(b)(1)(B) of the 
                Child Nutrition Act of 1966 (42 U.S.C. 
                1773(b)(1)(B)); and
                  (B) in the case of a school food authority 
                that is determined by the Secretary to be in 
                severe need, the rate for free breakfasts 
                established under section 4(b)(2)(B) of the 
                Child Nutrition Act of 1966 (42 U.S.C. 
                1773(b)(2)(B)).
          (9) Evaluation of pilot projects.--
                  (A) In general.--The Secretary, acting 
                through the Administrator of the Food and 
                Nutrition Service, shall conduct an evaluation 
                of the pilot projects conducted by the school 
                food authorities selected for participation.
                  (B) Content.--The evaluation shall include--
                          (i) a determination of the effect of 
                        participation in the pilot project on 
                        the academic achievement, attendance 
                        and tardiness, and dietary intake over 
                        the course of a day of participating 
                        children that is not attributable to 
                        changes in educational policies and 
                        practices; and
                          (ii) a determination of the effect 
                        that participation by elementary 
                        schools in the pilot project has on the 
                        proportion of students who eat 
                        breakfast and on the paperwork required 
                        to be completed by the schools.
                  (C) Report.--On completion of the pilot 
                projects and the evaluation, the Secretary 
                shall submit to the Committee on Education and 
                the Workforce of the House of Representatives 
                and the Committee on Agriculture, Nutrition, 
                and Forestry of the Senate a report containing 
                the results of the evaluation of the pilot 
                projects required under subparagraph (A).
          (10) Federal reimbursement.--
                  (A) In general.--Except as provided in 
                subparagraph (B), a school conducting a pilot 
                project under this subsection shall receive a 
                total Federal reimbursement under the school 
                breakfast program in an amount that is equal to 
                the total Federal reimbursement for the school 
                for the prior year under the program (adjusted 
                for inflation and fluctuations in enrollment).
                  (B) Excess needs.--Funds required for the 
                pilot project in excess of the level of 
                reimbursement received by the school for the 
                prior year (adjusted for inflation and 
                fluctuations in enrollment) may be taken from 
                any non-Federal source or from amounts provided 
                under this subsection.
          (11) Funding.--
                  (A) In general.--Out of any moneys in the 
                Treasury not otherwise appropriated, the 
                Secretary of the Treasury shall provide to the 
                Secretary such sums as are necessary to carry 
                out this subsection, but not more than 
                $20,000,000. The Secretary shall be entitled to 
                receive the funds and shall accept the funds.
                  (B) Evaluation.--Of the amounts made 
                available undersubparagraph (A), not more than 
$12,000,000 shall be made available to carry out paragraph (9).
    [(e)(1) The Secretary may establish a demonstration program 
to provide grants to eligible institutions or schools to 
provide meals or supplements to adolescents participating in 
educational, recreational, or other programs and activities 
provided outside of school hours.
    [(2) The Secretary may not provide a grant under paragraph 
(1) to an eligible institution or school unless the institution 
or school submits to the Secretary an application containing 
such information as the Secretary may reasonably require.
    [(3) The Secretary may not provide a grant under paragraph 
(1) to an eligible institution or school unless the institution 
or school agrees that the institution or school will--
          [(A) use amounts from the grant to provide meals or 
        supplements under educational, recreational, or other 
        programs and activities for adolescents outside of 
        school hours, and the programs and activities are 
        carried out in geographic areas in which there are high 
        rates of poverty, violence, or drug and alcohol abuse 
        among school-aged youths; and
          [(B) use the same meal patterns as meal patterns 
        required under the child and adult care food program 
        under section 17.
    [(4) Determinations with regard to eligibility for free and 
reduced price meals and supplements provided under programs and 
activities under this subsection shall be made in accordance 
with the income eligibility guidelines for free and reduced 
price lunches under section 9.
    [(5) Authorization of appropriations.--There are authorized 
to be appropriated to carry out this subsection such sums as 
are necessary for each of fiscal years 1997 and 1998.
    [(6) As used in this subsection:
          [(A) The term ``adolescent'' means a child who has 
        attained the age of 13 but has not attained the age of 
        19.
          [(B) The term ``eligible institution or school'' 
        means--
                  [(i) an institution, as the term is defined 
                in section 17; or
                  [(ii) an elementary or secondary school 
                participating in the school lunch program under 
                this Act.
          [(C) The term ``outside of school hours'' means 
        after-school hours, weekends, or holidays during the 
        regular school year.]

           *       *       *       *       *       *       *

    [(g)(1) The Secretary is authorized to establish a pilot 
project to assist schools participating in the school lunch 
program established under this Act, and the school breakfast 
program established under section 4 of the Child Nutrition Act 
of 1966 (42 U.S.C. 1773), to offer participating students 
additional choices of fruits, vegetables, legumes, cereals, and 
grain-based products (including, subject to paragraph (6), 
organically produced agricultural commodities and products) 
(collectively referred to in this subsection as ``qualified 
products'').
    [(2) The Secretary shall establish procedures under which 
schools may apply to participate in the pilot project. To the 
maximum extent practicable, the Secretary shall select 
qualified schools that apply from each State.
    [(3) The Secretary may provide a priority for receiving 
funds under this subsection to--
          [(A) schools that are located in low-income areas (as 
        defined by the Secretary); and
          [(B) schools that rarely offer 3 or more choices of 
        qualified products per meal.
    [(4) On request, the Secretary shall provide information to 
the Committee on Education and Labor, and the Committee on 
Agriculture, of the House of Representatives and the Committee 
on Agriculture, Nutrition, and Forestry of the Senate on the 
impact of the pilot project on participating schools, 
including--
          [(A) the extent to which participating children 
        increased consumption of qualified products;
          [(B) the extent to which increased consumption of 
        qualified products offered under the pilot project has 
        contributed to a reduction in fat intake in the school 
        breakfast and school lunch programs;
          [(C) the desirability of requiring that--
                  [(i) each school participating in the school 
                breakfast program increase the number of 
                choices of qualified products offered per meal 
                to at least 2 choices;
                  [(ii) each school participating in the school 
                lunch program increase the number of choices of 
                qualified products offered per meal; and
                  [(iii) the Secretary provide additional 
                Federal reimbursements to assist schools in 
                complying with clauses (i) and (ii);
          [(D) the views of school food service authorities on 
        the pilot project; and
          [(E) any increase or reduction in costs to the 
        schools in offering the additional qualified products.
    [(5) Subject to the availability of funds appropriated to 
carry out this subsection, the Secretary shall use not more 
than $5,000,000 for each of fiscal years 1995 through 1997 to 
carry out this subsection.
    [(6) For purposes of this subsection, qualified products 
shall include organically produced agricultural commodities and 
products beginning on the date the Secretary establishes an 
organic certification program for producers and handlers of 
agricultural products in accordance with the Organic Foods 
Production Act of 1990 (7 U.S.C. 6501 et seq.).
    [(h)(1) The Secretary is authorized to establish a pilot 
project to assist schools participating in the school lunch 
program established under this Act, and the school breakfast 
program established under section 4 of the Child Nutrition Act 
of 1966 (42 U.S.C. 1773), to offer participating students 
additional choices of lowfat dairy products (including lactose-
free dairy products) and lean meat and poultry products 
(including, subject to paragraph (6), organically produced 
agricultural commodities and products) (collectively referred 
to in this subsection as ``qualified products'').
    [(2) The Secretary shall establish procedures under which 
schools may apply to participate in the pilot project. To the 
maximum extent practicable, the Secretary shall select 
qualified schools that apply from each State.
    [(3) The Secretary may provide a priority for receiving 
funds under this subsection to--
          [(A) schools that are located in low-income areas (as 
        defined by the Secretary); and
          [(B) schools that rarely offer 3 or more choices of 
        qualified products per meal.
    [(4) On request, the Secretary shall provide information to 
the Committee on Education and Labor, and the Committee on 
Agriculture, of the House of Representatives and the Committee 
on Agriculture, Nutrition, and Forestry of the Senate on the 
impact of the pilot project on participating schools, 
including--
          [(A) the extent to which participating children 
        increased consumption of qualified products;
          [(B) the extent to which increased consumption of 
        qualified products offered under the pilot project has 
        contributed to a reduction in fat intake in the school 
        breakfast and school lunch programs;
          [(C) the desirability of requiring that--
                  [(i) each school participating in the school 
                breakfast program increase the number of 
                choices of qualified products offered per meal 
                to at least 2 choices;
                  [(ii) each school participating in the school 
                lunch program increase the number of choices of 
                qualified products offered per meal; and
                  [(iii) the Secretary provide additional 
                Federal reimbursements to assist schools in 
                complying with clauses (i) and (ii);
          [(D) the views of the school food service authorities 
        on the pilot project; and
          [(E) any increase or reduction in costs to the 
        schools in offering the additional qualified products.
    [(5) Subject to the availability of funds appropriated to 
carry out this subsection, the Secretary shall use not more 
than $5,000,000 for each of fiscal years 1995 through 1997 to 
carry out this subsection.
    [(6) For purposes of this subsection, qualified products 
shall include organically produced agricultural commodities and 
products beginning on the date the Secretary establishes an 
organic certification program for producers and handlers of 
agricultural products in accordance with the Organic Foods 
Production Act of 1990 (7 U.S.C. 6501 et seq.).
    [(i)(1) Subject to the availability of advance 
appropriations under paragraph (8), the Secretary shall make 
grants to a limited number of schools to conduct pilot projects 
in 2 or more States approved by the Secretary to--
          [(A) reduce paperwork;
          [(B) reduce application and meal counting 
        requirements; and
          [(C) make changes that will increase participation in 
        the school lunch and school breakfast programs.
    [(2)(A) Except as provided in subparagraph (B), the 
Secretary may waive the requirements of this Act and the Child 
Nutrition Act of 1966 (42 U.S.C. 1771 et seq.) relating to 
counting of meals, applications for eligibility, and related 
requirements that would preclude the Secretary from making a 
grant to conduct a pilot project under paragraph (1).
    [(B) The Secretary may not waive a requirement under 
subparagraph (A) if the waiver would prevent a program 
participant, a potential program recipient, or a school from 
receiving all of the benefits and protections of this Act, the 
Child Nutrition Act of 1966, or a Federal statute or regulation 
that protects an individual constitutional right or a statutory 
civil right.
    [(C) No child otherwise eligible for free or reduced price 
meals under section 9 or under section 4 of the Child Nutrition 
Act of 1966 (42 U.S.C. 1773) shall be required to pay more 
under a program carried out under this subsection for such a 
meal than the child would otherwise pay under section 9 or 
under section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 
1771 et seq.), respectively.
    [(3) To be eligible to receive a grant to conduct a pilot 
project under this subsection, a school shall--
          [(A) submit an application to the Secretary at such 
        time, in such manner, and accompanied by such 
        information as the Secretary may reasonably require, 
        including, at a minimum, information--
                  [(i) demonstrating that the program carried 
                out under the project differs from programs 
                carried out under subparagraph (C), (D), or (E) 
                of section 11(a)(1);
                  [(ii) demonstrating that at least 40 percent 
                of the students participating in the school 
                lunch program at the school are eligible for 
                free or reduced price meals;
                  [(iii) demonstrating that the school operates 
                both a school lunch program and a school 
                breakfast program;
                  [(iv) describing the funding, if any that the 
                school will receive from non-Federal sources to 
                carry out the pilot project;
                  [(v) describing and justifying the additional 
                amount, over the most recent prior year 
                reimbursement amount received under the school 
                lunch program and the school breakfast program 
                (adjusted for inflation and fluctuations in 
                enrollment), that the school needs from the 
                Federal government to conduct the pilot; and
                  [(vi) describing the policy of the school on 
                a la carte and competitive foods;
          [(B) not have a history of violations of this Act or 
        the Child Nutrition Act of 1966 (42 U.S.C. 1771 et 
        seq.); and
          [(C) meet any other requirement that the Secretary 
        may reasonably require.
    [(4) To the extent practicable, the Secretary shall select 
schools to participate in the pilot program under this 
subsectionin a manner that will provide for an equitable 
distribution among the following types of schools:
          [(A) Urban and rural schools.
          [(B) Elementary, middle, and high schools.
          [(C) Schools of varying income levels.
    [(5)(A) Except as provided in subparagraph (B), a school 
conducting a pilot project under this subsection shall receive 
commodities in an amount equal to the amount the school 
received in the prior year under the school lunch program under 
this Act and under the school breakfast program under section 4 
of the Child Nutrition Act of 1966, adjusted for inflation and 
fluctuations in enrollment.
    [(B) Commodities required for the pilot project in excess 
of the amount of commodities received by the school in the 
prior year under the school lunch program and the school 
breakfast program may be funded from amounts appropriated to 
carry out this section.
    [(6)(A) Except as provided in subparagraph (B), a school 
conducting a pilot project under this subsection shall receive 
a total Federal reimbursement under the school lunch program 
and school breakfast program in an amount equal to the total 
Federal reimbursement for the school in the prior year under 
each such program (adjusted for inflation and fluctuations in 
enrollment).
    [(B) Funds required for the pilot project in excess of the 
level of reimbursement received by the school in the prior year 
(adjusted for inflation and fluctuations in enrollment) may be 
taken from any non-Federal source or from amounts appropriated 
to carry out this subsection. If no appropriations are made for 
the pilot projects, schools may not conduct the pilot projects.
    [(7)(A) The Secretary shall require each school conducting 
a pilot project under this subsection to submit to the 
Secretary documentation sufficient for the Secretary, to the 
extent practicable, to--
          [(i) determine the effect that participation by 
        schools in the pilot projects has on the rate of 
        student participation in the school lunch program and 
        the school breakfast program, in total and by various 
        income groups;
          [(ii) compare the quality of meals served under the 
        pilot project to the quality of meals served under the 
        school lunch program and the school breakfast program 
        during the school year immediately preceding 
        participation in the pilot project;
          [(iii) summarize the views of students, parents, and 
        administrators with respect to the pilot project;
          [(iv) compare the amount of administrative costs 
        under the pilot project to the amount of administrative 
        costs under the school lunch program and the school 
        breakfast program during the school year immediately 
        preceding participation in the pilot project;
          [(v) determine the reduction in paperwork under the 
        pilot project from the amount of paperwork under the 
        school lunch and school breakfast programs at the 
        school; and
          [(vi) determine the effect of participation in the 
        pilot project on sales of, and school policy regarding, 
        a la carte and competitive foods.
    [(B) Not later than January 31, 1998, the Secretary shall 
submit to the Committee on Education and Labor of the House of 
Representatives and the Committee on Agriculture, Nutrition, 
and Forestry of the Senate a report containing--
          [(i) a description of the pilot projects approved by 
        the Secretary under this subsection;
          [(ii) a compilation of the information received by 
        the Secretary under paragraph (1) as of this date from 
        each school conducting a pilot project under this 
        subsection; and
          [(iii) an evaluation of the program by the Secretary.
    [(8) There are authorized to be appropriated to carry out 
this subsection $9,000,000 for each fiscal year during the 
period beginning October 1, 1995, and ending July 31, 1998.

           *       *       *       *       *       *       *


SEC. 21. TRAINING, TECHNICAL ASSISTANCE, AND FOOD SERVICE MANAGEMENT 
                    INSTITUTE.

           *       *       *       *       *       *       *


          (1) Training activities and technical assistance.--
        There are authorized to be appropriated to carry out 
        subsection (a)(1) $3,000,000 for fiscal year 1990, 
        $2,000,000 for fiscal year 1991, and $1,000,000 for 
        each of fiscal years 1992 through [1998] 2003.
          (2) Food service management institute.--
                  (A) Funding.--In addition to any amounts 
                otherwise made available for fiscal year 1995, 
                out of any moneys in the Treasury not otherwise 
                appropriated, the Secretary of the Treasury 
                shall provide to the Secretary $147,000 for 
                fiscal year 1995, [and $2,000,000 for fiscal 
                year 1996 and each subsequent fiscal year] 
                $2,000,000 for each of fiscal years 1996 
                through 1998, and $3,000,000 for fiscal year 
                1999 and each subsequent fiscal year, to carry 
                out subsection (a)(2). The Secretary shall be 
                entitled to receive the funds and shall accept 
                the funds.

           *       *       *       *       *       *       *


SEC. 26. INFORMATION CLEARINGHOUSE.

    (d) Funding.--Out of any moneys in the Treasury not 
otherwise appropriated, the Secretary of the Treasury shall pay 
to the Secretary to provide to the organization selected under 
this section, to establish and maintain the information 
clearinghouse, $200,000 for each of fiscal years 1995 and 1996, 
$150,000 for fiscal year 1997, [and $100,000 for fiscal year 
1998] $100,000 for fiscal year 1998, and $166,000 for each of 
fiscal years 1999 through 2003. The Secretary shall be entitled 
to receive the funds and shall accept the funds.

[SEC. 27. GUIDANCE AND GRANTS FOR ACCOMMODATING SPECIAL DIETARY NEEDS 
                    OF CHILDREN WITH DISABILITIES.

    [(a) Definitions.--As used in this section:
          [(1) Children with disabilities.--The term ``children 
        with disabilities'' means individuals, each of whom 
        is--
                  [(A) a participant in a covered program; and
                  [(B) an individual with a disability, as 
                defined in section 7(8) of the Rehabilitation 
                Act of 1973 (29 U.S.C. 706(8)) for purposes of 
                section 504 of the Rehabilitation Act of 1973 
                (29 U.S.C. 794).
          [(2) Covered program.--The term ``covered program'' 
        means--
                  [(A) the school lunch program established 
                under this Act;
                  [(B) the school breakfast program established 
                under section 4 of the Child Nutrition Act of 
                1966 (42 U.S.C. 1773); and
                  [(C) any other program established under this 
                Act or the Child Nutrition Act of 1966 (42 
                U.S.C. 1771 et seq.) that the Secretary 
                determines is appropriate.
          [(3) Eligible entity.--The term ``eligible entity'' 
        means a school food service authority, or an 
        institution or organization, that participates in a 
        covered program.
    [(b) Guidance.--
          [(1) Development.--The Secretary, in consultation 
        with the Attorney General and the Secretary of 
        Education, shall develop and approve guidance for 
        accommodating the medical and special dietary needs of 
        children with disabilities under covered programs in a 
        manner that is consistent with section 504 of the 
        Rehabilitation Act of 1973 (29 U.S.C. 794).
          [(2) Timing.--In the case of the school lunch program 
        established under this Act and the school breakfast 
        program established under section 4 of the Child 
        Nutrition Act of 1966 (42 U.S.C. 1773), the Secretary 
        shall develop the guidance as required by paragraph (1) 
        not later than 150 days after the date of enactment of 
        this section.
          [(3) Distribution.--Not later than 60 days after the 
        date that the development of the guidance relating to a 
        covered program is completed, the Secretary shall 
        distribute the guidance to school food service 
        authorities, and institutions and organizations, 
        participating in the covered program.
          [(4) Revision of guidance.--The Secretary, in 
        consultation with the Attorney General and the 
        Secretary of Education, shall periodically update and 
        approve the guidances to reflect new scientific 
        information and comments and suggestions from persons 
        carrying out covered programs, recognized medical 
        authorities, parents, and other persons.
    [(c) Grants.--
          [(1) In general.--Subject to the availability of 
        appropriations provided in advance to carry out this 
        subsection, the Secretary shall make grants on a 
        competitive basis to State educational agencies for 
        distribution to eligible entities to assist the 
        eligible entities with nonrecurring expenses incurred 
        in accommodating the medical and special dietary needs 
        of children with disabilities in a manner that is 
        consistent with section 504 of the Rehabilitation Act 
        of 1973 (29 U.S.C. 794).
          [(2) Additional assistance.--Subject to paragraph 
        (3)(A)(iii), assistance received through grants made 
        under this subsection shall be in addition to any other 
        assistance that State educational agencies and eligible 
        entities would otherwise receive.
          (3) Allocation by secretary.--
                  [(A) Preference.--In making grants under this 
                subsection for any fiscal year, the Secretary 
                shall provide a preference to State educational 
                agencies that, individually--
                          [(i) submit to the Secretary a plan 
                        for accommodating the needs described 
                        in paragraph (1), including a 
                        description of the purpose of the 
                        project for which the agency seeks such 
                        a grant, a budget for the project, and 
                        a justification for the budget;
                          [(ii) provide to the Secretary data 
                        demonstrating that the State served by 
                        the agency has a substantial percentage 
                        of children with medical or special 
                        dietary needs, and information 
                        explaining the basis for the data; or
                          [(iii) demonstrate to the 
                        satisfaction of the Secretary that the 
                        activities supported through such a 
                        grant will be coordinated with 
                        activities supported under other 
                        Federal, State, and local programs, 
                        including--
                                  [(I) activities carried out 
                                under title XIX of the Social 
                                Security Act (42 U.S.C. 1396 et 
                                seq.);
                                  [(II) activities carried out 
                                under the Individuals with 
                                Disabilities Education Act (20 
                                U.S.C. 1400 et seq.); and
                                  [(III) activities carried out 
                                under section 19 of the Child 
                                Nutrition Act of 1966 (42 
                                U.S.C. 1788) or by the food 
                                service management institute 
                                established under section 21.
                  [(B) Reallocation.--The Secretary shall act 
                in a timely manner to recover and reallocate to 
                other States any amounts provided to a State 
                educational agency under this subsection that 
                are not used by the agency within a reasonable 
                period (as determined by the Secretary).
                  [(C) Applications.--The Secretary shall allow 
                State educational agencies to apply on an 
                annual basis for assistance under this 
                subsection.
          [(4) Allocation by state educational agencies.--In 
        allocating funds made available under this subsection 
        within a State, the State educational agency shall give 
        a preference to eligible entities that demonstrate the 
        greatest ability to use the funds to carry out the plan 
        submitted by the State in accordance with paragraph 
        (3)(A)(i).
          [(5) Maintenance of effort.--Expenditures of funds 
        from State and local sources to accommodate the needs 
        described in paragraph (1) shall not be diminished as a 
        result of grants received under this subsection.
          [(6) Authorization of appropriations.--There are 
        authorized to be appropriated $1,000,000 for each of 
        fiscal years 1995 through 1998 to carry out this 
        subsection.]

SEC. 27. ACCOMMODATION OF SPECIAL DIETARY NEEDS OF INDIVIDUALS WITH 
                    DISABILITIES.

    (a) Definitions.--In this section:
          (1) Covered program.--The term `covered program' 
        means--
                  (A) the school lunch program authorized under 
                this Act;
                  (B) the school breakfast program authorized 
                under section 4 of the Child Nutrition Act of 
                1966 (42 U.S.C. 1773); and
                  (C) any other program authorized under this 
                Act or the Child Nutrition Act of 1966 that the 
                Secretary determines is appropriate.
          (2) Eligible entity.--The term `eligible entity' 
        means a school food authority, institution, or service 
        institution that participates in a covered program.
          (3) Individuals with disabilities.--The term 
        `individual with disabilities' has the meaning given 
        the term in section 7 of the Rehabilitation Act of 1973 
        (29 U.S.C. 706) for purposes of title VII of that Act 
        (29 U.S.C. 796 et seq.).
    (b) Activities.--The Secretary may carry out activities to 
help accommodate the special dietary needs of individuals with 
disabilities who are participating in a covered program, 
including--
          (1) developing and disseminating to State agencies 
        guidance and technical assistance materials;
          (2) conducting training of State agencies and 
        eligible entities; and
          (3) issuing grants to State agencies and eligible 
        entities.

                      CHILD NUTRITION ACT OF 1966

                 SCHOOL BREAKFAST PROGRAM AUTHORIZATION

    Sec. 4. * * *

           *       *       *       *       *       *       *


APPORTIONMENT TO STATES

           *       *       *       *       *       *       *


                  (B) The national average payment for each 
                free breakfast shall be 57 cents (as adjusted 
                pursuant to section 11(a) of the National 
                School Lunch Act [(42 U.S.C. 1759a(a))]. The 
                national average payment for each reduced price 
                breakfast shall be one-half of the national 
                average payment for each free breakfast, 
                [adjusted to the nearest one-fourth cent,] 
                except that in no case shall the difference 
                between the amount of the national average 
                payment for a free breakfast and the national 
                average payment for a reduced price breakfast 
                exceed 30 cents.

           *       *       *       *       *       *       *

                  (B) The maximum payment for each such free 
                breakfast shall be the higher of--
                          (i) the national average payment 
                        established by the Secretary for free 
                        breakfasts plus 10 cents, or
                          (ii) 45 cents, which shall be 
                        adjusted on an annual basis each July 
                        [to the nearest one-fourth cent] in 
                        accordance with changes in the series 
                        for food away from home of the Consumer 
                        Price Index published by the Bureau of 
                        Labor Statistics of the Department of 
                        Labor for the most recent twelve-month 
                        period for which such data are 
                        available, except that the initial such 
                        adjustment shall be made on January 1, 
                        1978, and shall reflect the change in 
                        the series of food away from home 
                        during the period November 1, 1976, to 
                        October 31, 1977.

[SEC. 5. DISBURSEMENT TO SCHOOLS BY THE SECRETARY.

    [Sec. 5(a) The Secretary shall withhold funds payable to a 
State under this Act and disburse the funds directly to schools 
or institutions within the State for the purposes authorized by 
this Act to the extent that the Secretary has so withheld and 
disbursed such funds continuously since October 1, 1980, but 
only to such extent (except as otherwise required by subsection 
(b)). Any funds so withheld and disbursed by the Secretary 
shall be used for the same purposes, and shall be subject to 
the same conditions, as applicable to a State disbursing funds 
made available under this Act. If the Secretary is 
administering (in whole or in part) any program authorized 
under this Act, the State in which the Secretary is 
administering the program may, upon request to the Secretary, 
assume administration of that program.
    [(b) If a State educational agency is not permitted by law 
to disburse the funds paid to it under this Act to any of the 
nonpublic schools in the State, the Secretary shall disburse 
the funds directly to such schools within the State for the 
same purposes and subject to the same conditions as are 
authorized or required with respect to the disbursements to 
public schools within the State by the State educational 
agency.]

SEC. 5. DISBURSEMENT TO SCHOOLS BY THE SECRETARY.

    (a) Authority To Administer Programs.--
          (1) In general.--Except as provided in paragraph (3), 
        during the period determined under subsection (c), the 
        Secretary shall withhold funds payable to a State under 
        this Act and disburse the funds directly to school food 
        authorities, institutions, and service institutions 
        within the State for the purposes authorized by this 
        Act to the extent that the Secretary has so withheld 
        and disbursed the funds continuously since October 1, 
        1980.
          (2) Use of funds.--Any funds withheld and disbursed 
        by the Secretary under paragraph (1) shall be used for 
        the same purposes and be subject to the same conditions 
        as apply to disbursing funds made available to States 
        under this Act.
          (3) State administration.--If the Secretary is 
        administering (in whole or in part) any program 
        authorized under this Act in a State, the State may, on 
        request to the Secretary, assume administrative 
        responsibility for the program at any time during the 
        period determined under subsection (c).
    (b) Provision of Training and Technical Assistance.--During 
the period determined under subsection (c), the Secretary shall 
provide a State that assumes administrative responsibility for 
a program from the Secretary with training and technical 
assistance to allow for an efficient and effective transfer of 
administrative responsibility.
    (c) Period.--
          (1) In general.--Except as provided in paragraph (2), 
        this section shall apply during the period beginning on 
        October 1, 1998, and ending on September 30, 2001.
          (2) Extension.--The Secretary may extend the period 
        described in paragraph (1) that applies to a program 
        administered by the Secretary for a State, for a period 
        not to exceed 2 years, if the State--
                  (A) demonstrates to the Secretary that the 
                State will not be able to assume administrative 
                responsibility for the program during the 
                period described in paragraph (1); and
                  (B) submits a plan to the Secretary that 
                describes when and how the State will assume 
                administrative responsibility for the program.

           *       *       *       *       *       *       *


SEC. 7. STATE ADMINISTRATIVE EXPENSES.

           *       *       *       *       *       *       *


          (5)(A) Not more than 25 percent of the amounts made 
        available to each State under this section for the 
        fiscal year 1991 and 20 percent of the amounts made 
        available to each State under this section for the 
        fiscal year 1992 and for each succeeding fiscal year 
        may remain available for obligation or expenditure in 
        the fiscal year succeeding the fiscal year for which 
        such amounts were appropriated.
          [(B)(i) In the fiscal year 1991 and each succeeding 
        fiscal year, any amounts appropriated that are not 
        obligated or expended during such fiscal year and are 
        not carried over for the succeeding fiscal year under 
        subparagraph (A) shall be returned to the Secretary. 
        From any amounts returned to the Secretary under the 
        preceding sentence:
                  [(I) The Secretary shall allocate, for the 
                purpose of providing grants on an annual basis 
                to public entities and private nonprofit 
                organizations participating in projects under 
                section 17B of the National School Lunch Act, 
                not more than $4,000,000 in fiscal year 1995 
                and each subsequent fiscal year. Subject to the 
                maximum allocation for the projects for each 
                fiscal year, at the beginning of fiscal year 
                1995 and each subsequent fiscal year, the 
                Secretary shall allocate, from funds available 
                under this section that have not been otherwise 
                allocated to the States, an amount equal to the 
                estimates by the Secretary of funds to be 
                returned under this clause, but not less than 
                $1,000,000 in each fiscal year. To the extent 
                that amounts returned to the Secretary are less 
                than estimated or are insufficient to meet the 
                needs of the projects, the Secretary may, 
                subject to the maximum allocations established 
                in this subclause, allocate amounts to meet the 
                needs of the projects from funds available 
                under this section that have not been otherwise 
                allocated to States.
                  [(II) After making the allocations under 
                subclause (I), the Secretary shall allocate, 
                for purposes of administrative costs, any 
                remaining amounts among States that demonstrate 
                a need for such amounts.
          [(ii) In any fiscal year in which amounts returned to 
        the Secretary under the first sentence of clause (i) 
        are insufficient to provide the complete allocation 
        described in clause (i)(I), all of such amounts shall 
        be allocated for the purpose described in clause 
        (i)(I).
          (B) Reallocation of funds.--
                  (i) Return to secretary.--For each fiscal 
                year, any amounts appropriated that are not 
                obligated or expended during the fiscal year 
                and are not carried over for the succeeding 
                fiscal year under subparagraph (A) shall be 
                returned to the Secretary.
                  (ii) Reallocation by secretary.--The 
                Secretary shall allocate, for purposes of 
                administrative costs, any remaining amounts 
                among States that demonstrate a need for the 
                amounts.
          [(6) Funds available to States under this subsection 
        and under section 13(k)(1) of the National School Lunch 
        Act [(42 U.S.C. 1761(k)(1))] shall be used for the 
        costs of administration of the programs for which the 
        allocations are made, except that States may transfer 
        up to 10 percent of any of the amounts allocated among 
        such programs.]
          (6) Use of administrative funds.--Funds available to 
        a State under this subsection and under section 
        13(k)(1) of the National School Lunch Act (42 U.S.C. 
        1761(k)(1)) may be used by the State for the costs of 
        administration of the programs authorized under the 
        National School Lunch Act (42 U.S.C. 1751 et seq.) or 
        this Act (except for the programs authorized under 
        sections 17 and 21 of this Act) without regard to the 
        basis on which the funds were earned and allocated.
    (g) For the fiscal year beginning October 1, 1977, and each 
succeeding fiscal year ending before October 1, [1998] 2003, 
there are hereby authorized to be appropriated such sums as may 
be necessary for the purposes of this section.

           *       *       *       *       *       *       *

    Sec. 17. * * *

           *       *       *       *       *       *       *

                  (C) Certification period for infants.--
                          (i) In general.--Except as provided 
                        in clause (ii), the procedures 
                        prescribed under subparagraph (A) shall 
                        include a requirement that a family 
                        that includes an infant shall not be 
                        certified to meet income eligibility 
                        criteria for the program for more than 
                        180 days after the date of any 
                        certification.
                          (ii) Presumptively eligible 
                        families.--Clause (i) shall not apply 
                        to a family with a member who is an 
                        individual described in clause (ii) or 
                        (iii) of paragraph (2)(A).
                  (D) Physical presence.--
                          (i) In general.--Except as provided 
                        in clause (ii), each applicant to the 
                        program shall be physically present at 
                        each certification determination to 
                        determine eligibility under the 
                        program.
                          (ii) Waivers.--A local agency may 
                        waive the requirement of clause (i) 
                        with respect to an applicant if the 
                        agency determines that the requirement, 
                        as applied to the applicant, would--
                                  (I) conflict with the 
                                Americans with Disabilities Act 
                                of 1990 (42 U.S.C. 12101 et 
                                seq.);
                                  (II) present a barrier to 
                                participation of a child 
                                (including an infant) who--
                                          (aa) was present at 
                                        the initial 
                                        certification visit; 
                                        and
                                          (bb) is receiving 
                                        ongoing health care 
                                        from a provider other 
                                        than the local agency; 
                                        or
                                  (III) present a barrier to 
                                participation of a child 
                                (including an infant) who--
                                          (aa) was present at 
                                        the initial 
                                        certification visit;
                                          (bb) was present at a 
                                        certification 
                                        determination within 
                                        the 1-year period 
                                        ending on the date of 
                                        the certification 
                                        determination described 
                                        in clause (i); and
                                          (cc) has 1 or more 
                                        parents who work.
                  (E) Income documentation.--
                          (i) In general.--Except as provided 
                        in clause (ii), to be eligible for the 
                        program, each applicant to the program 
                        shall provide--
                                  (I) documentation of 
                                household income; or
                                  (II) documentation of 
                                participation in a program 
                                described in clause (ii) or 
                                (iii) of paragraph (2)(A).
                          (ii) Waivers.--A State agency may 
                        waive the requirement of clause (i) 
                        with respect to--
                                  (I) an applicant for whom the 
                                necessary documentation is not 
                                available; or
                                  (II) an applicant, such as a 
                                homeless woman or child, for 
                                whom the agency determines the 
                                requirement of clause (i) would 
                                present a barrier to 
                                participation.
                          (iii) Regulations.--The Secretary 
                        shall prescribe regulations to carry 
                        out clause (ii)(I).
                  (F) Verification.--The Secretary shall issue 
                regulations under this paragraph prescribing 
                when and how verification of income shall be 
                required.
    (e)(1) The State agency shall ensure that nutrition 
education and drug abuse education is provided to all pregnant, 
postpartum, and breastfeeding participants in the program and 
to parents or caretakers of infant and child participants in 
the program. The State agency may also provide nutrition 
education and drug abuse education to pregnant, postpartum, and 
breastfeeding women and to parents or caretakers of infants and 
children enrolled at local agencies operating the program under 
this section who do not participate in the program.

           *       *       *       *       *       *       *

    [(3) The] (3) Nutrition education materials._
          (A) In general.--The Secretary shall, after 
        submitting proposed nutrition education materials to 
        the Secretary of Health and Human Services for comment, 
        issue such materials for use in the program under this 
        section.
          (B) Sharing of materials with csfp.--The Secretary 
        may provide, in bulk quantity, nutrition education 
        materials (including materials promoting breastfeeding) 
        developed with funds made available for the program 
        authorized under this section to State agencies 
        administering the commodity supplemental food program 
        authorized under sections 4(a) and 5 of the Agriculture 
        and Consumer Protection Act of 1973 (Public Law 93-86; 
        7 U.S.C. 612c note) at no cost to that program.
                  (i) a description of the food delivery system 
                of the State agency and the method of enabling 
                participants to receive supplemental foods 
                under the program, to be administered in 
                accordance with standards developed by the 
                Secretary;
                  (ii) in the case of any State that provides 
                for the purchase of foods under the program at 
                retail grocery stores, a plan to limit 
                participation by the stores to stores that 
                offer a variety of foods, as determined by the 
                Secretary;
                  [(ii)] (iii) a description of the financial 
                management system of the State agency;
                  [(iii)] (iv) a plan to coordinate operations 
                under the program with other services or 
                programs that may benefit participants in, and 
                applicants for, the program;
                  [(v)] (vi) a plan to expend funds to carry 
                out the program during the relevant fiscal 
                year;
                  [(vi)] (vii) a plan to provide program 
                benefits under this section to unserved and 
                underserved areas in the State (including a 
                plan to improve access to the program for 
                participants and prospective applicants who are 
                employed, or who reside in rural areas), if 
                sufficient funds are available to carry out 
                this clause;
                  [(vii)] (viii) a plan for reaching and 
                enrolling eligible women in the early months of 
                pregnancy, including provisions to reach and 
                enroll eligible migrants;
                  [(viii)] (ix) a plan to provide program 
                benefits under this section to unserved infants 
                and children under the care of foster parents, 
                protective services, or child welfare 
                authorities, including infants exposed to drugs 
                perinatally;
                  [(ix)] (x) a plan to provide nutrition 
                education and promote breastfeeding; and
                  [(x)] (xi) such other information as the 
                Secretary may reasonably require.

           *       *       *       *       *       *       *

    [(21) A State agency may use funds recovered as a result of 
violations in the food delivery system of the program in the 
year in which the funds are collected for the purpose of 
carrying out the program.]
    (21) Use of claims from vendors and participants.--A State 
agency may use funds recovered from vendors and participants, 
as a result of a claim arising under the program, to carry out 
the program during--
          (A) the fiscal year in which the claim arises;
          (B) the fiscal year in which the funds are collected; 
        or
          (C) the fiscal year following the fiscal year in 
        which the funds are collected.

           *       *       *       *       *       *       *

    (23) Recipients participating at more than 1 site.--Each 
State agency shall implement a system designed by the State 
agency to identify recipients who are participating at more 
than 1 site under the program.
    (24) High risk vendors.--Each State agency shall--
          (A) identify vendors that have a high probability of 
        program abuse; and
          (B) conduct compliance investigations of the vendors.

           *       *       *       *       *       *       *

    (g)(1) There are authorized to be appropriated to carry out 
this section $2,158,000,000 for the fiscal year 1990, and such 
sums as may be necessary for each of the fiscal years 1995 
through [1998] 2003.

           *       *       *       *       *       *       *

          [(C) In] (C) Remaining amounts._
                  (i) In general.--Except as provided in clause 
                (ii), in any fiscal year, amounts remaining 
                from amounts appropriated for such fiscal year 
                under subsection (g)(1) and from amounts 
                appropriated under such section for the 
                preceding fiscal year, after carrying out 
                subparagraph (A), shall be made available for 
                food benefits under this section, except to the 
                extent that such amounts are needed to carry 
                out the purposes of subsections (g)(4) and 
                (g)(5).
                  (ii) Breast pumps.--
                          (I) In general.--Beginning with 
                        fiscal year 2000, a State agency may 
                        use amounts made available under clause 
                        (i) for the purchase of breast pumps.
                          (II) Maintenance of effort.--From 
                        amounts allocated for nutrition 
                        services and administration to amounts 
                        allocated for supplemental foods, a 
                        State agency that exercises the 
                        authority of subclause (I) shall 
                        transfer an amount equal to the amount 
                        expended for the purchase of breast 
                        pumps, or transferred under this 
                        subclause, from amounts allocated for 
                        nutrition services and administration 
                        for the preceding fiscal year.
          (2)(A) For each of the fiscal years 1995 through 
        [1998] 2003, the Secretary shall allocate to each State 
        agency from the amount described in paragraph (1)(A) an 
        amount for costs of nutrition services and 
        administration on the basis of a formula prescribed by 
        the Secretary. Such formula--

           *       *       *       *       *       *       *

                  (iv) may provide funds[, to the extent funds 
                are not already provided under subparagraph 
                (I)(v) for the same purpose,] to help defray 
                reasonable anticipated expenses associated with 
                innovations in cost containment or associated 
                with procedures that tend to enhance 
                competition.
          (B)(i) Except as provided in clause (ii) and 
        subparagraph (C), in any fiscal year, the total amount 
        allocated to a State agency for costs of nutrition 
        services and administration under the formula 
        prescribed by the Secretary under subparagraph (A) 
        shall constitute the State agency's operational level 
        for such costs for such year even if the number of 
        participants in the program at such agency is lower 
        than the estimate provided under subparagraph 
        (A)(ii)(I).
          (ii) If a State agency's per participant expenditure 
        for nutrition services and administration is more than 
        [15 percent] 10 percent (except that the Secretary may 
        establish a higher percentage for State agencies that 
        are small) higher than its per participant grant for 
        nutrition services and administration without good 
        cause, the Secretary may reduce such State agency's 
        operational level for costs of nutrition services and 
        administration.

           *       *       *       *       *       *       *

          (E) In the case of fiscal year 1996 [(except as 
        provided in subparagraph (G))] and each subsequent 
        fiscal year, the national minimum breastfeeding 
        promotion expenditure means an amount that is--
                  (i) equal to $21 multiplied by the number of 
                pregnant women and breastfeeding women 
                participating in the program nationwide, based 
                on the average number of pregnant women and 
                breastfeeding women so participating during the 
                last 3 months for which the Secretary has final 
                data; and
                  (ii) adjusted for inflation on October 1, 
                1996, and each October 1 thereafter, in 
                accordance with paragraph (1)(B)(ii).
          [(F) In the case of fiscal year 1995, a State shall 
        pay, in lieu of the expenditure required under 
        subparagraph (A)(i)(II), an amount that is equal to the 
        lesser of--
                  [(i) an amount that is more than the 
                expenditure of the State for fiscal year 1994 
                on the activities described in subparagraph 
                (A)(i); or
                  [(ii) an amount that is equal to $21 
                multiplied by the number of pregnant women and 
                breastfeeding women participating in the 
                program in the State, based on the average 
                number of pregnant women and breastfeeding 
                women so participating during the last 3 months 
                for which the Secretary has final data.
          [(G)(i) If the Secretary determines that a State 
        agency is unable, for reasons the Secretary considers 
        to be appropriate, to make the expenditure required 
        under subparagraph (A)(i)(II) for fiscal year 1996, the 
        Secretary may permit the State to make the required 
        level of expenditure not later than October 1, 1996.
          [(ii) In the case of fiscal year 1996, if the 
        Secretary makes a determination described in clause 
        (i), a State shall pay, in lieu of the expenditure 
        required under subparagraph (A)(i)(II), an amount that 
        is equal to the lesser of--
                  [(I) an amount that is more than the 
                expenditure of the State for fiscal year 1995 
                on the activities described in subparagraph 
                (A)(i); and
                  [(II) an amount that is equal to $21 
                multiplied by the number of pregnant women and 
                breastfeeding women participating in the 
                program in the State, based on the average 
                number of pregnant women and breastfeeding 
                women so participating during the last 3 months 
                for which the Secretary has final data.]

           *       *       *       *       *       *       *

          (5)(A) Subject to subparagraph (B), in any fiscal 
        year that a State agency [achieves, through use of 
        acceptable measures, participation that exceeds the 
        participation level estimated for such State agency 
        under paragraph (2)(A)(ii)(I), such State agency may] 
        submits a plan to reduce average food costs per 
        participant and to increase participation above the 
        level estimated for the State agency, the State agency 
        may, with the approval of the Secretary, convert 
        amounts allocated for food benefits for such fiscal 
        year for costs of nutrition services and administration 
        to the extent that such conversion is necessary--

           *       *       *       *       *       *       *

          (8)(A)(i) Except as provided in subparagraphs (B) and 
        (C)(iii), any State that provides for the purchase of 
        foods under the program at retail grocery stores shall, 
        with respect to the procurement of infant formula, 
        use--

           *       *       *       *       *       *       *

          (iii) Competitive bidding system.--A State agency 
        using a competitive bidding system for infant formula 
        shall award a contract to the bidder offering the 
        lowest net price unless the State agency demonstrates 
        to the satisfaction of the Secretary that the weighted 
        average retail price for different brands of infant 
        formula in the State does not vary by more than 5 
        percent.

           *       *       *       *       *       *       *

          (J) A State shall not incur any interest liability to 
        the Federal Government on rebate funds for infant 
        formula and other foods if all interest earned by the 
        State on the funds is used for program purposes.
          (K) Review and approval of solicitations.--The 
        Secretary shall--
                  (i) prior to the issuance of an infant 
                formula cost containment contract solicitation 
                under this paragraph, review the solicitation 
                to ensure that the solicitation does not 
                contain any anticompetitive provisions; and
                  (ii) approve the solicitation only if the 
                solicitation does not contain any 
                anticompetitive provisions.
          (9) For purposes of this subsection, the term ``cost 
        containment measure'' means a competitive bidding, 
        rebate, direct distribution, or home delivery system 
        implemented by a State agency as described in its 
        approved plan of operation and administration.
          (10)(A) For each of fiscal years 1995 through [1998] 
        2003, the Secretary shall use for the purposes 
        specified in subparagraph (B), $10,000,000 or the 
        amount of nutrition services and administration funds 
        and supplemental foods funds for the prior fiscal year 
        that has not been obligated, whichever is less.
          (11) Management information system plan.--
                  (A) In general.--In consultation with State 
                agencies, retailers, and other interested 
                persons, the Secretary shall establish a long-
                range plan for the development and 
                implementation of management information 
                systems (including electronic benefit 
                transfers) to be used in carrying out the 
                program.
                  (B) Report.--Not later than 2 years after the 
                date of enactment of this paragraph, the 
                Secretary shall submit to the Committee on 
                Education and the Workforce of the House of 
                Representatives and the Committee on 
                Agriculture, Nutrition, and Forestry of the 
                Senate a report on actions taken to carry out 
                subparagraph (A).
                  (C) Interim period.--Prior to the date of 
                submission of the report of the Secretary 
                required under subparagraph (B), the cost of 
                systems or equipment that may be required to 
                test management information systems (including 
                electronic benefit transfers) for the program 
                may not be imposed on a retail food store.

           *       *       *       *       *       *       *

          (3)(A) Notwithstanding paragraph (2) and subject to 
        [subparagraphs (B) and (C)] subparagraph (B)--
                  [(i) not more than 1 percent (except as 
                provided in subparagraph (H))17-130 of the 
                amount of funds allocated to a State agency 
                under this section for supplemental foods for a 
                fiscal year may be expended by the State agency 
                for expenses incurred under this section for 
                supplemental foods during the preceding fiscal 
                year; 17-131 and
                  [(ii) not more than 1 percent of the amount 
                of funds allocated to a State agency for a 
                fiscal year under this section may be expended 
                by the State agency during the subsequent 
                fiscal year.]
                  (i)(I) not more than 1 percent (except as 
                provided in subparagraph (C)) of the amount of 
                funds allocated to a State agency under this 
                section for supplemental foods for a fiscal 
                year may be expended by the State agency for 
                allowable expenses incurred under this section 
                for supplemental foods during the preceding 
                fiscal year; and
                  (II) not more than 1 percent of the amount of 
                funds allocated to a State agency under this 
                section for nutrition services and 
                administration for a fiscal year may be 
                expended by the State agency for allowable 
                expenses incurred under this section for 
                supplemental foods and nutrition services and 
                administration during the preceding fiscal 
                year; and
                  (ii)(I) for each fiscal year, of the amounts 
                allocated to a State agency for nutrition 
                services and administration, an amount equal to 
                not more than 1 percent of the amount allocated 
                to the State agency under this section for the 
                fiscal year may be expended by the State agency 
                for allowable expenses incurred under this 
                section for nutrition services and 
                administration during the subsequent fiscal 
                year; and
                  (II) for each fiscal year, of the amounts 
                allocated to a State agency for nutrition 
                services and administration, an amount equal to 
                not more than \1/2\ of 1 percent of the amount 
                allocated to the State agency under this 
                section for the fiscal year may be expended by 
                the State agency, with the prior approval of 
                the Secretary, for the development of a 
                management information system, including an 
                electronic benefit transfer system, during the 
                subsequent fiscal year.
          (B) Any funds made available to a State agency in 
        accordance with subparagraph (A)(ii) for a fiscal year 
        shall not affect the amount of funds allocated to the 
        State agency for such year.
          [(C) The total amount of funds transferred from any 
        fiscal year under clauses (i) and (ii) of subparagraph 
        (A) shall not exceed 1 percent of the amount of the 
        funds allocated to a State agency for such fiscal year.
          [(D) For State agencies implementing cost containment 
        measures as defined in subsection (h)(9), not more than 
        5 percent of the amount of funds allocated under this 
        section to such a State agency for supplemental foods 
        for the fiscal year in which the system is implemented, 
        and not more than 3 percent of the amount of funds 
        allocated to such a State agency for the fiscal year 
        following the fiscal year in which the system is 
        implemented, may be expended by the State agency for 
        expenses incurred under this section for supplemental 
        foods during the succeeding fiscal year.
          [(E) Notwithstanding any other provision in this 
        paragraph and paragraph (2) a State agency may, subject 
        to the approval of the Secretary under subparagraph 
        (F), expend not more than 3 percent of the amount of 
        funds allocated to such agency for supplemental foods 
        for the fiscal year 1991 for expenses incurred under 
        this section for supplemental foods during the fiscal 
        year 1990.
          [(F) Each State agency which intends to use the 
        authority provided in subparagraph (E) shall request 
        approval from the Secretary in advance and shall submit 
        a plan showing how the State's caseload will be managed 
        to meet funding limitations. The Secretary shall review 
        and make determinations on such plans on an expedited 
        basis.
          [(G) No State can use the authority provided under 
        subparagraph (E) to increase the caseload level above 
        the highest level to date in fiscal year 1990.
          (H)](C) The Secretary may authorize a State agency to 
        expend not more than 3 percent of the amount of funds 
        allocated to a State under this section for 
        supplemental foods for a fiscal year for expenses 
        incurred under this section for supplemental foods 
        during the preceding fiscal year, if the Secretary 
        determines that there has been a significant reduction 
        in infant formula cost containment savings provided to 
        the State agency that would affect the ability of the 
        State agency to at least maintain the level of 
        participation by eligible participants served by the 
        State agency.

           *       *       *       *       *       *       *

                  (C) In providing funds to [serve additional 
                recipients in] a State that received assistance 
                under this subsection in the previous fiscal 
                year, the Secretary shall consider--
                          (i) the availability of any such 
                        assistance not spent by the State 
                        during the program year for which the 
                        assistance was received;
                          [(ii) documentation that justifies 
                        the need for an increase in 
                        participation; and]
                          (ii) documentation that demonstrates 
                        that--
                                  (I) there is a need for an 
                                increase in funds; and
                                  (II) the use of the increased 
                                funding will be consistent with 
                                serving nutritionally at-risk 
                                persons and expanding the 
                                awareness and use of farmers' 
                                markets;
                          (iii) demonstrated ability to 
                        satisfactorily operate the existing 
                        program[.]; and;
                          (iv) whether, in the case of a State 
                        that intends to use any funding 
                        provided under subparagraph (G)(i) to 
                        increase the value of the Federal share 
                        of the benefits received by a 
                        recipient, the funding provided under 
                        subparagraph (G)(i) will increase the 
                        rate of coupon redemption.

           *       *       *       *       *       *       *

                  [(F) In approving and ranking State plans 
                submitted under this paragraph, the Secretary 
                shall--
                          [(i) favorably consider a State's 
                        prior experiences with this or similar 
                        programs;
                          [(ii) favorably consider a State's 
                        operation of a similar program with 
                        State or local funds that can present 
                        data concerning the value of the 
                        program;
                          [(iii) require that if a State 
                        receiving a grant under this section 
                        applies the Federal grant to a similar 
                        program operated in the previous fiscal 
                        year with State or local funds, the 
                        State shall not reduce in any fiscal 
                        year the amount of State and local 
                        funds available to the program in the 
                        preceding fiscal year after receiving 
                        funds for the program under this 
                        subsection;
                          [(iv) give preference to State plans 
                        that would serve areas in the State 
                        that have--
                                  [(I) the highest 
                                concentration of eligible 
                                persons;
                                  [(II) the greatest access to 
                                farmers' markets;
                                  [(III) broad geographical 
                                area;
                                  [(IV) the greatest number of 
                                recipients in the broadest 
                                geographical area within the 
                                State; and
                                  [(V) any other 
                                characteristics, as determined 
                                appropriate by the Secretary, 
                                that maximize the availability 
                                of benefits to eligible 
                                persons; and
                          [(v) take into consideration the 
                        amount of funds available and the 
                        minimum amount needed by each applicant 
                        State to successfully operate the 
                        program.
                  (G)](F)(i) An amount equal to 75 percent of 
                the funds available after satisfying the 
                requirements of subparagraph (B) shall be made 
                available to States participating in the 
                program [that wish to serve additional 
                recipients, and whose State plan to do so] 
                whose State plan is approved by the Secretary. 
                If this amount is greater than that necessary 
                to satisfy the approved State plans [for 
                additional recipients], the unallocated amount 
                shall be applied toward satisfying any unmet 
                need of States that have not participated in 
                the program in the prior fiscal year, and whose 
                State plans have been approved.
                  (ii) An amount equal to 25 percent of the 
                funds available after satisfying the 
                requirements of subparagraph (B) shall be made 
                available to States that have not participated 
                in the program in the prior fiscal year, and 
                whose State plans have been approved by the 
                Secretary. If this amount is greater than that 
                necessary to satisfy the approved State plans 
                for new States, the unallocated amount shall be 
                applied toward satisfying any unmet need of 
                States [that desire to serve additional 
                recipients, and] whose State plans have been 
                approved.

           *       *       *       *       *       *       *

    (o) Disqualification of Vendors Convicted of Trafficking or 
Illegal Sales.--
          (1) In general.--Except as provided in paragraph (4), 
        a State agency shall permanently disqualify from 
        participation in the program authorized under this 
        section a vendor convicted of--
                  (A) trafficking in food instruments 
                (including any voucher, draft, check, or access 
                device (including an electronic benefit 
                transfer card or personal identification 
                number) issued in lieu of a food instrument 
                under this section); or
                  (B) selling firearms, ammunition, explosives, 
                or controlled substances (as defined in section 
                102 of the Controlled Substances Act (21 U.S.C. 
                802)) in exchange for food instruments.
          (2) Notice of disqualification.--The State agency 
        shall--
                  (A) provide the vendor with notification of 
                the disqualification; and
                  (B) make the disqualification effective on 
                the date of receipt of the notice of 
                disqualification.
          (3) Prohibition of receipt of lost revenues.--A 
        vendor shall not be entitled to receive any 
        compensation for revenues lost as a result of 
        disqualification under this subsection.
          (4) Exceptions in lieu of disqualification.--
                  (A) In general.--A State agency may permit a 
                vendor that, but for this paragraph, would be 
                disqualified under paragraph (1), to continue 
                to redeem food instruments or otherwise provide 
                supplemental foods to participants if the State 
                agency determines, in its sole discretion 
                according to criteria established by the 
                Secretary, that--
                          (i) disqualification of the vendor 
                        would cause hardship to participants in 
                        the program authorized under this 
                        section; or
                          (ii)(I) the vendor had, at the time 
                        of the conviction under paragraph (1), 
                        an effective policy and program in 
                        effect toprevent violations of this 
section; and
                          (II) the ownership of the vendor was 
                        not aware of, did not approve of, did 
                        not benefit from, and was not involved 
                        in the conduct of the violation.
                  (B) Civil penalty.--If a State agency 
                authorizes a vendor that, but for this 
                paragraph, would be disqualified under 
                paragraph (1) to redeem food instruments or 
                provide supplemental foods under subparagraph 
                (A), in lieu of disqualification, the State 
                agency shall assess the vendor a civil penalty 
                in an amount determined by the State agency, 
                except that--
                          (i) the amount of the civil penalty 
                        shall not exceed $20,000; and
                          (ii) the amount of civil penalties 
                        imposed for violations investigated as 
                        part of a single investigation may not 
                        exceed $40,000.
    (p) Criminal Forfeiture.--
          (1) In general.--In addition to any other penalty or 
        sentence, a court may order that a person forfeit to 
        the United States all property described in paragraph 
        (2), in imposing a sentence on a person convicted of a 
        violation of this section (including a regulation) 
        under--
                  (A) section 12(g) of the National School 
                Lunch Act (42 U.S.C. 1760(g)); or
                  (B) any other Federal law imposing a penalty 
                for embezzlement, willful misapplication, 
                stealing, obtaining by fraud, or trafficking in 
                food instruments, funds, assets, or property, 
                that have a value of $100 or more.
          (2) Property subject to forfeiture.--All property, 
        real and personal, used in a transaction or attempted 
        transaction, to commit, or to facilitate the commission 
        of, a violation (other than a misdemeanor) of any 
        provision of this section (including a regulation), or 
        proceeds traceable to a violation of any provision of 
        this section (including a regulation), shall be subject 
        to forfeiture to the United States under paragraph (1).
          (3) Interest of owner.--No interest in property shall 
        be forfeited under this subsection as the result of any 
        act or omission established by the owner of the 
        interest to have been committed or omitted without the 
        knowledge or consent of the owner.
          (4) Proceeds.--The proceeds from any sale of 
        forfeited property and any amounts forfeited under this 
        subsection shall be used--
                  (A) first, to reimburse the Department of 
                Justice, the Department of the Treasury, and 
                the United States Postal Service for the costs 
                incurred by the Departments or Service to 
                initiate and complete the forfeiture 
                proceeding;
                  (B) second, to reimburse the Office of 
                Inspector General of the Department of 
                Agriculture for any costs incurred by the 
                Office in the law enforcement effort resulting 
                in the forfeiture;
                  (C) third, to reimburse any Federal, State, 
                or local law enforcement agency for any costs 
                incurred in the law enforcement effort 
                resulting in the forfeiture; and
                  (D) fourth, by the State agency to carry out 
                approval, reauthorization, and compliance 
                investigations of vendors.

[APPROPRIATIONS AUTHORIZED

           *       *       *       *       *       *       *


    [(i)(1) For the fiscal years beginning October 1, 1977, and 
October 1, 1978, grants to the States for the conduct of 
nutrition education and information programs shall be based on 
a rate of 50 cents for each child enrolled in schools or in 
institutions within the State, except that no State shall 
receive an amount less than $75,000 per year.
    [(2)(A) Out of any moneys in the Treasury not otherwise 
appropriated, and in addition to any amounts otherwise made 
available for fiscal year 1995, the Secretary of the Treasury 
shall provide to the Secretary $1,000 for fiscal year 1995 and 
$10,000,000 for fiscal year 1996 for making grants under this 
section to each State for the conduct of nutrition education 
and training programs. The Secretary shall be entitled to 
receive the funds and shall accept the funds.
    [(B)(i)(I) Subject to clause (ii), grants to each State 
from the amounts appropriated under subparagraph (A) shall be 
based on a rate of 50 cents for each child enrolled in schools 
or institutions within such State.
    [(II) If the amount appropriated for any fiscal year is 
insufficient to pay the amount to which each State is entitled 
under subclause (I), the amount of each grant shall be ratably 
reduced. If additional funds become available for making such 
payments, such amounts shall be increased on the same basis as 
they were reduced.
    [(ii) No State shall receive an amount that is less than--
          [(I) $50,000, in any fiscal year in which the amount 
        appropriated for purposes of this section is less than 
        $10,000,000;
          [(II) $62,500, in any fiscal year in which the amount 
        appropriated for purposes of this section is 
        $10,000,000 or more but is less than $15,000,000;
          [(III) $68,750, in any fiscal year in which the 
        amount appropriated for purposes of this section is 
        $15,000,000 or more but is less than $20,000,000; and
          [(IV) $75,000 in any fiscal year in which the amount 
        appropriated for purposes of this section is 
        $20,000,000 or more.
    [(3) Fiscal years 1997 through 2002.--
          [(A) In general.--There are authorized to be 
        appropriated to carry out this section $10,000,000 for 
        each of fiscal years 1997 through 2002.]
    (i) Authorization of Appropriations.--
          (1) In general.--
                  (A) Funding.--There are authorized to be 
                appropriated such sums as are necessary to 
                carry out this section for each of fiscal years 
                1997 through 2003.
                  (B) Grants.--
                          (i) In general.--Grants to each State 
                        from the amounts made available under 
                        subparagraph (A) shall be based on a 
                        rate of 50 cents for each child 
                        enrolled in schools or institutions 
                        within the State, except that no State 
                        shall receive an amount less than 
                        $75,000 per fiscal year.
                          (ii) Insufficient funds.--If the 
                        amount made available for any fiscal 
                        year is insufficient to pay the amount 
                        to which each State is entitled under 
                        clause (i), the amount of each grant 
                        shall be ratably reduced.
          [(4)] (2) Funds made available to any State under 
        this section shall remain available to the State for 
        obligation in the fiscal year succeeding the fiscal 
        year in which the funds were received by the State.
          [(5)] (3) Enrollment data used for purposes of this 
        subsection shall be the latest available as certified 
        by the Department of Education.

           *       *       *       *       *       *       *


SEC. 3. COMMODITY DISTRIBUTION PROGRAM REFORMS.

           *       *       *       *       *       *       *


          [``(2) Applicability.--Paragraph (1) shall apply to--
                  [``(A) the commodity distribution and 
                commodity supplemental food programs 
                established under sections 4(a) and 5 of the 
                Agriculture and Consumer Protection Act of 1973 
                [Pub. L. 93-86] (7 U.S.C. 612c note);
                  [``(B) the program established under section 
                4(b) of the Food Stamp Act of 1977 (7 U.S.C. 
                2013(b));
                  [``(C) the school lunch, commodity 
                distribution, and child care food programs 
                established under sections 6, 14, and 17 of the 
                National School Lunch Act (42 U.S.C. 1755, 
                1762a, and 1766);
                  [``(D) the school breakfast program 
                established under section 4 of the Child 
                Nutrition Act of 1966 (42 U.S.C. 1773);
                  [``(E) the donation of surplus commodities to 
                provide nutrition services under section 311 of 
                the Older Americans Act of 1965 (42 U.S.C. 
                3030a); and
                  [``(F) to the extent practicable--
                          [``(i) the emergency food assistance 
                        program established under the Emergency 
                        Food Assistance Act of 1983 (Public Law 
                        100-237; 7 U.S.C. 612c note); and
                          [``(ii) programs under which food is 
                        donated to charitable institutions.]
          (2) Applicability.--Paragraph (1) shall apply to--
                  (A) the commodity supplemental food program 
                authorized under sections 4(a) and 5 of the 
                Agriculture and Consumer Protection Act of 1973 
                (Public Law 93-86; 7 U.S.C. 612c note);
                  (B) the food distribution program on Indian 
                reservations authorized under section 4(b) of 
                the Food Stamp Act of 1977 (7 U.S.C. 2013(b)); 
                and
                  (C) the school lunch program authorized under 
                the National School Lunch Act (42 U.S.C. 1751 
                et seq.).

           *       *       *       *       *       *       *

          [(2) Information from recipient agencies.--Before the 
        expiration of the 120-day period beginning on the date 
        of the enactment of this Act [Jan 8, 1998], the 
        Secretary shall establish procedures to ensure that 
        information is received from recipient agencies at 
        least annually with respect to the types and forms of 
        commodities that are most useful to persons 
        participating in programs operated by recipient 
        agencies.]
          (2) Customer acceptability information.--
                  (A) In general.--The Secretary shall ensure 
                that information with respect to the types and 
                forms of commodities that are most useful is 
                collected from recipient agencies participating 
                in programs described in subsection (a)(2).
                  (B) Frequency.--The information shall be 
                collected at least once every 2 years.
                  (C) Additional submissions.--The Secretary--
                          (i) may require submission of 
                        information described in subparagraph 
                        (A) from recipient agencies 
                        participating in other domestic food 
                        assistance programs administered by the 
                        Secretary; and
                          (ii) shall provide the recipient 
                        agencies a means for voluntarily 
                        submitting customer acceptability 
                        information.

SEC. 8. AUTHORITY TO TRANSFER COMMODITIES BETWEEN PROGRAMS.

    (a) Transfer.--Subject to subsection (b), the Secretary may 
transfer any commodities purchased for a domestic food 
assistance program administered by the Secretary to any other 
domestic food assistance program administered by the Secretary 
if the transfer is necessary to ensure that the commodities 
will be used while the commodities are still suitable for human 
consumption.
    (b) Reimbursement.--The Secretary shall, to the maximum 
extent practicable, provide reimbursement for the value of the 
commodities transferred under subsection (a) from accounts 
available for the purchase of commodities under the program 
receiving the commodities.
    (c) Crediting.--Any reimbursement made under subsection (b) 
shall--
          (1) be credited to the accounts that incurred the 
        costs when the transferred commodities were originally 
        purchased; and
          (2) be available for the purchase of commodities with 
        the same limitations as are provided for appropriated 
        funds for the reimbursed accounts for the fiscal year 
        in which the transfer takes place.

SEC. 9. AUTHORITY TO RESOLVE CLAIMS.

    (a) In General.--The Secretary may determine the amount of, 
settle, and adjust all or part of a claim arising under a 
domestic food assistance program administered by the Secretary.
    (b) Waivers.--The Secretary may waive a claim described in 
subsection (a) if the Secretary determines that a waiver would 
serve the purposes of the program.
    (c) Authority of the Attorney General.--Nothing in this 
section diminishes the authority of the Attorney General under 
section 516 of title 28, United States Code, or any other 
provision of law, to supervise and conduct litigation on behalf 
of the United States.

SEC. 10. PAYMENT OF COSTS ASSOCIATED WITH REMOVAL OF COMMODITIES THAT 
                    POSE A HEALTH OR SAFETY HAZARD.

    (a) In General.--The Secretary may use funds available to 
carry out section 32 of the Act of August 24, 1935 (49 Stat. 
774, chapter 641; 7 U.S.C. 612c), that are not otherwise 
committed, for the purpose of reimbursing States for State and 
local costs associated with the removal of commodities 
distributed under any domestic food assistance program 
administered by the Secretary if the Secretary determines that 
the commodities pose a health or safety hazard.
    (b) Allowable Costs.--The costs--
          (1) may include costs for storage, transportation, 
        processing, and destruction of the hazardous 
        commodities; and
          (2) shall be subject to the approval of the 
        Secretary.
    (c) Replacement Commodities.--
          (1) In general.--The Secretary may use funds 
        described in subsection (a) for the purpose of 
        purchasing additional commodities if the purchase will 
        expedite replacement of the hazardous commodities.
          (2) Recovery.--Use of funds under paragraph (1) shall 
        not restrict the Secretary from recovering funds or 
        services from a supplier or other entity regarding the 
        hazardous commodities.
    (d) Crediting of Recovered Funds.--Funds recovered from a 
supplier or other entity regarding the hazardous commodities 
shall--
          (1) be credited to the account available to carry out 
        section 32 of the Act of August 24, 1935 (49 Stat. 774, 
        chapter 641; 7 U.S.C. 612c), to the extent the funds 
        represent expenditures from that account under 
        subsections (a) and (c); and
          (2) remain available to carry out the purposes of 
        section 32 of that Act until expended.

SEC. 11. AUTHORITY TO ACCEPT COMMODITIES DONATED BY FEDERAL SOURCES.

    (a) In General.--The Secretary may accept donations of 
commodities from any Federal agency, including commodities of 
another Federal agency determined to be excess personal 
property pursuant to section 202(d) of the Federal Property and 
Administrative Services Act of 1949 (40 U.S.C. 483(d)).
    (b) Use.--The Secretary may donate the commodities received 
under subsection (a) to States for distribution through any 
domestic food assistance program administered by the Secretary.
    (c) Payment.--Notwithstanding section 202(d) of the Federal 
Property and Administrative Services Act of 1949 (40 U.S.C. 
483(d)), the Secretary shall not be required to make any 
payment in connection with the commodities received under 
subsection (a).