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                                                       Calendar No. 414
108th Congress                                                   Report
                                 SENATE
 1st Session                                                    108-210
======================================================================
 
                  POVERTY REDUCTION AND PREVENTION ACT

                                _______
                                

               November 24, 2003.--Ordered to be printed

                                _______
                                

    Mr. Gregg, from the Committee on Health, Education, Labor, and 
                   Pensions, submitted the following

                              R E P O R T

                         [To accompany S. 1786]

    The Committee on Health, Education, Labor, and Pensions, to 
which was referred the bill (S. 1786) to revise and extend the 
Community Services Block Grant Act, the Low-Income Home Energy 
Assistance Act of 1981, and the Assets for Independence Act, 
having considered the same, reports favorably thereon with an 
amendment and recommends that the bill (as amended) do pass.






                                CONTENTS

                                                                   Page
  I. Summary of the bill..............................................1
 II. Background and need for legislation..............................3
III. Legislative history and committee action.........................8
 IV. Explanation of legislation and committee views...................9
  V. Cost estimate...................................................17
 VI. Application of law to the legislative branch....................20
VII. Regulatory impact statement.....................................21
VIII.Section-by-section analysis.....................................21

 IX. Changes in existing law.........................................26






                         I. Summary of the Bill

    The Poverty Reduction and Prevention Act of 2003 
reauthorizes and makes improvements in the Community Services 
Block Grant Act, the Low Income Home Energy Assistance Act of 
1981 and the Assets for Independence Act.
    Title I of the bill reauthorizes the Community Services 
Block Grant (CSBG) program at such sums as may be necessary for 
fiscal years 2004 through 2009. The reauthorization gives 
particular attention to clarifying and strengthening the 
purposes of the Community Services Block Grant program. 
Emphasis is given to the development of partnerships that both 
reduce the risk of individuals and families from becoming or 
remaining poor, or that change the communities in which the 
poor live, so as to reduce conditions of poverty, such as 
inadequate services and infrastructure, crime, or substandard 
housing, and to build assets and economics that will provide 
economic opportunity and a decent living environment. The local 
community governance, a unique requirement for Community 
Action, is given new emphasis.
    The future measurement of the results of CSBG programs is 
expected to reflect the degree to which each of the three 
principal goals is achieved by the programs designed to meet 
them, including community improvements and maintenance of 
representative and active community governance.
    Title II reauthorizes the Low Income Home Energy Assistance 
Program at $3.4 billion for fiscal years 2004 through 2006, and 
then such sums as may be necessary for fiscal years 2007 
through 2010. In addition, it authorizes a $600 million 
emergency fund for each fiscal year and includes language 
defining new circumstances, which warrant the release of 
additional funding. It authorizes the leveraging incentive 
program at $30 million for fiscal years 2004 through 2010. The 
legislation also requires the Secretary to conduct a study on 
the program and develop a protocol for States to collect 
information from energy distribution companies on a variety of 
residential customer statistics.
    Title III reauthorizes the IDA demonstration program for an 
additional 5 years, appropriating $25 million for fiscal year 
2004 and ``such sums'' for each year through fiscal year 2008. 
The amendments make small changes to improve the scope and 
quality of the program's administration: increasing flexibility 
over the use of nonFederal funding, expanding eligibility 
requirements, extending unused ``earned'' match funds, and 
adjusting technical details. The amendments apply to current 
and future individual account holders and entities.
    The amendment of Section (a)(1) gives grantees the option 
of verifying all postsecondary education payments, allowing for 
the provision of related educational material (e.g., computers 
or books).
    The amendment in Section 302(a)(3) permits accountholders 
to save in a postsecondary education IDA for their children or 
dependents.
    Section 302(g) strikes the grandfathering provision, as it 
is no longer necessary given the ongoing nature of the program.
    In Section 302(c)(1), the reauthorization allows nonFederal 
funds to be held in a separate account from the Reserve Fund, 
providing greater flexibility in optimizing these resources.
    Section 302(c)(2) allows those individuals who have not yet 
purchased an asset to maintain their IDA until doing so, under 
a 12 month no cost extension, to ensure participants have time 
to locate appropriate assets.
    Section 302(d) allows up to 20 percent of nonFederal 
funding to be used at the discretion of the AFIA grantees for 
program/operating costs. However, funding priority will be 
given to those grantees using no more than 15 percent for such 
purposes. This will allow greater private flexibility in 
developing the most effective and comprehensive programs while 
ensuring maximum resources are committed to program 
participants for the asset developments promoted under the act.
    Section 302(e) expands the current eligibility standards to 
include Adjusted Gross Income ($18,000 single filer, $30,000 
head of household, $28,000 for joint filers) and Area Median 
Income (AMI), individuals with incomes equal to or less than 80 
percent of AMI.
    (For example, 200 percent of the Federal Poverty Line is 
$36,488, across the United States. In rural Hamilton, AL, 80 
percent of the AMI is $30,240. Yet in Manchester, NH, 80 
percent of the AMI is $54,560, well above the Federal Poverty 
Line.) These changes allow AFIA programs to cooperate better 
with other government programs serving low and moderate income 
families (e.g., HUD's HOME Investment Partnership programs) and 
account for local and geographic variations.
    The original legislation required all earned interest be 
deposited in the IDA of each individual or into a parallel 
account. Section 302(f)(3) allows grantees discretion in how 
they calculate interest earned on match funds, and where there 
is excess interest income on match funds, allows those funds to 
be used to match additional IDAs.
    The program is reauthorized for 5 years, through fiscal 
year 2008. $25 million will be appropriated for 2004 and ``such 
sums'' as may be necessary for each year through 2008.
    The amendments of this section shall be applicable to 
current individual account holders and grantees. The Secretary 
of HHS shall also apply the amendments of 2000 to individual 
account holders and entities that received grants before or 
after the act's enactment.

                II. Background and Need for Legislation


                 A. COMMUNITY SERVICES BLOCK GRANT ACT

    The Community Services Block Grant (CSBG) dates back to 
1964, when the Economic Opportunity Act established the War on 
Poverty and authorized the independent Office of Economic 
Opportunity (OEO). One of the most significant OEO programs was 
the ``community action program,'' under which a nationwide 
network of local Community Action Agencies (CAAs) was 
developed. The law stipulated that each Community Action 
Program must provide services and activities having a 
``measurable and potentially major'' impact on alleviating the 
causes and effects of poverty. The law further required that 
each CAA be governed by a tripartite board, composed equally of 
local elected officials; low income individuals from the 
community; and members of business, industry, labor, religious, 
law enforcement, education, or other major groups and interests 
in the community served. The local boards identify the causes 
of local poverty problems and design services they believe have 
the greatest potential for success in dealing with the problems 
of poverty and oversee the leadership and direction of the 
agencies.
    In 1975, OEO was renamed the Community Services 
Administration (CSA) and continued to operate as an independent 
agency with its chief function being the administration of the 
nationwide network of CAAs. In 1981, CSA was abolished and 
replaced by the CSBG, to be administered by HHS. When CSA was 
abolished, it was administering nearly 900 CAAs, about 40 local 
Community Development Corporations, and several small 
categorical programs that were typically operated by local 
CAAs.
    The CSBG Act was established in 1981 as a partial response 
to President Reagan's proposal to consolidate CSA with 11 other 
social services programs into a block grant to States. Congress 
rejected this proposal and instead created two new block 
grants--the Social Services Block Grant, under Title XX of the 
Social Security Act; and the CSBG, which consists of activities 
previously administered by CSA. The CSBG Act was enacted as 
part of the Omnibus Budget Reconciliation Act of 1981 (P.L. 97-
35), and has been reauthorized five times--in 1984 under P.L. 
98-558, in 1986 under P.L. 99-425, in 1990 under P.L. 101-501, 
in 1994 under P.L. 103-252 and in 1998 under P.L. 105-285.
    Under the CSBG framework, States have the responsibility of 
providing overall direction to eligible entities for achieving 
programmatic results, supporting strong, modern management 
systems and coordination among programs, and ensuring that 
programs have adopted appropriate management and accountability 
measures.
    Each State designates a State agency to administer the 
block grant. State CSBG administrators distribute not less than 
90 percent of the funds available to eligible entities in the 
form of grants. Eligible entities consist of approximately 
1,100 local service providers in 50 States, the U.S. 
Territories, the District of Columbia and the Commonwealth of 
Puerto Rico. These entities, which include private nonprofit 
CAAs, units of local government, migrant and seasonal farm 
worker organizations, Indian Tribes, and limited purpose 
agencies, are referred to as ``eligible entities.'' The vast 
majority of the eligible entities are Community Action Agencies 
(CAAs) which make up approximately 90 percent of the entities 
receiving CSBG funds.
    The broad, overall goal of the 1964 Community Action 
Program to assist low income people to overcome the problems of 
poverty, has not changed. However, the means by which eligible 
entities have pursued this goal have evolved as communities 
face changing local needs and challenges; as the social and 
economic causes of poverty have changed; and as different 
approaches for combating poverty have been tested, refined and 
developed. Under the CSBG, decisions regarding the needs of low 
income communities and the steps needed to meet their needs are 
made at the local level. There, Community Action Agencies, in 
coordination with other community groups and community based 
organizations, conduct periodic assessments of community needs, 
inventory available resources, and organize appropriate 
programs and activities.

                  B. LOW INCOME HOME ENERGY ASSISTANCE

    Energy costs account for a sizable portion of living 
expenses for low income households. To help low income 
families, senior citizens and disabled individuals meet the 
rising cost of home energy, the Low Income Home Energy 
Assistance Program was established in 1980 under the Home 
Energy Assistance Act, part of the Crude Oil Windfall Profit 
Tax Act of 1980 (P.L. 96-223). LIHEAP grew out of several one 
year programs established from 1974 to 1979 primarily to deal 
with energy-related emergencies. The LIHEAP program has been 
reauthorized six times--in the Omnibus Budget Reconciliation 
Act of 1981, the Human Services Reauthorization Act of 1984, 
the Human Services Reauthorization Act of 1986, the Human 
Services Reauthorization Act of 1990, the Human Services 
Reauthorization Act of 1994 and the Coats Human Services 
Reauthorization Act of 1998. The basic design and intent of the 
program remains essentially the same as the 1974 program. 
Grants are made to States, the District of Columbia, U.S. 
territories and commonwealths, and Indian tribal organizations. 
Federal requirements are minimal and leave most important 
decisions to the grantees.
    The Low Income Home Energy Assistance Program (LIHEAP) 
gives States annual grants to assist low income households, 
particularly those with the lowest incomes that pay a high 
proportion of household income for home energy, to meet their 
immediate home energy needs, to make residential energy bills 
more affordable and to prevent household energy crises by 
activities such as reducing costs through payment to, or on 
behalf of, eligible households; obtaining lower costs for the 
fuels purchased by eligible households; and, providing other 
services that reduce the energy burdens of low income 
households. Federal law limits eligibility to households with 
incomes which do not exceed the greater of 150 percent of the 
Federal poverty income guidelines or 60 percent of the State 
median income. States may adopt lower income limits, but all 
households with income below 110 percent of the poverty 
guidelines must receive assistance.
    The 1998 Act authorized LIHEAP at such sums as necessary 
for fiscal years 2000 and 2001 and $2 billion for each fiscal 
year 2002 through 2004. In addition, the act authorized a $600 
million emergency fund for each fiscal year and included new 
language defining the circumstances under which natural 
disasters and other emergencies warrant the release of 
additional funding under Section 2602(e). It authorized the 
leveraging incentive program at $30 million for fiscal years 
2000 through 2004 and retained language allowing States to 
target the households with the highest energy burdens.
    For many low income families, disabled individuals and 
senior citizens, home energy costs are unaffordable. Without 
energy assistance, many low-income households would have to 
choosebetween heating and other vital necessities such as food, 
medicine, rent or mortgage. These families often carry a higher energy 
burden than most Americans. In fiscal year 2000, the average household 
had energy expenditures of $1,293 and a mean individual burden of 6.1 
percent of income. Low income households--households with annual 
incomes under the LIHEAP income maximum of the greater of 150 percent 
of the poverty level or 60 percent of State median income--had energy 
expenditures of $1,099. While the expenditures are 15 percent less than 
the average household, the mean individual energy burden for low income 
households was 12.1 percent, about twice as much as the burden for the 
average household. Energy expenditures for LIHEAP recipient households 
were $1,077 and the mean individual energy burden was 14.8 percent, 
almost 3 percentage points higher than the average low income 
household. In fiscal year 2000, home heating was 30 percent of the 
residential energy bill for low income households and home cooling was 
seven percent. LIHEAP benefits, while critical, cover a small portion 
of low income households' energy costs.
    Low-income families who lack home energy because they 
cannot pay their bills face risks, such as reduced caloric 
intake in winter, fire, or eviction that can lead to 
homelessness. According to data supplied by the Department of 
Health and Human Services (HHS), an estimated 4.8 million 
households received winter heating/crisis assistance in fiscal 
year 2001. This is only 17 percent of the more than 29 million 
eligible households. Of the households receiving assistance in 
fiscal year 2000, about 34 percent had at least one member 60 
years or older, about 36 percent included at least one disabled 
member and about 21 percent included at least one child five 
years or younger. LIHEAP is part of the vital social safety net 
for low income households and senior citizens living on a fixed 
income.

                     C. ASSETS FOR INDEPENDENCE ACT

    The Assets for Independence Act (AFIA) of 1998, originally 
authored by Senator Dan Coats, authorized a demonstration 
program ``to determine the social, civic, psychological and 
economic effects that Individual Development Account (IDA) 
savings accounts can have on low income individuals and their 
families.'' The program encourages low income families to save 
money for starting a business, purchasing a home, or investing 
in a college education. The demonstration program expired at 
the end of fiscal year 2003.
    The savings rate and asset ownership levels of low and 
moderate income individuals are markedly low. The committee 
recognizes that as many as 25 percent of all U.S. households or 
individuals have insufficient net worth to subsist for three 
months at the poverty level. Over the last 20 years, research 
has shown that holding assets, especially in the form of 
homeownership, is associated with enhanced property 
maintenance, and increased social and civic involvement. Asset 
ownership is also associated with decreased economic strains on 
households, increased educational attainment among children, 
decreased intergenerational poverty, and healthier and more 
satisfied parents.
    Communities that have established and implemented IDA 
programs funded with the Assets for Independence Act are 
significantly improving the lives of their lower income 
members. Across the country, IDAs have spurred over $14.5 
million in savings, $22.5 million in match funding, and over 
$130.6 million in loans leveraged for homeownership, small 
businesses, and education. As the largest single funding source 
of match dollars, the Assets for Independence Act provides the 
core support necessary to enable thousands to save to build 
assets.
    Data indicates that the demonstration program has been 
highly successful in engaging qualified entities and enrolling 
individuals. Federal funding, with matching contributions from 
nonFederal sources, was granted to 38 qualified entities in the 
program's first year of existence, fiscal year 1999. The number 
of grantees more than doubled to 77 in fiscal year 2003, 
enabling Health and Human Services (HHS) to give out all but $2 
million of its $25 million annual grant money. The fiscal year 
1999 accountability report from HHS reveal characteristics of 
2,153 individual account holders: 84 percent were female, 42 
percent were African-American and 37 percent were Caucasian, 94 
percent represented the working population (age 18-55), and 51 
percent were single.
    Feedback from HHS and AFIA grantees suggests that minor 
changes in the reauthorization will improve the quality of the 
program's administration over the next 5 years. Broadly, the 
needed modifications include increased flexibility for program 
and operation support, eligibility standards, the use of 
``earned'' match funds, and a few technical adjustments.
    Current law requires all post secondary education expenses 
be paid directly to an eligible education institute. This 
excludes education related material (e.g., computers or books), 
which may be essential to achieving a college education. AFIA 
grantees have proposed broadening the requirement to include 
such related materials, with the provision that the grantees 
verify the payments.
    The original AFIA legislation required IDAs to be available 
only for the purposes of the eligible individual. Feedback from 
the IDA community suggests an interest in allowing individual 
account holders to save in a post secondary education IDA for 
their children or dependents.
    The original demonstration program grandfathered similar 
existing statewide programs (in Indiana and Pennsylvania) to 
streamline the formal application process while the program was 
still being established. Now that the IDA program is underway, 
State entities must formally apply and meet the criteria set 
forth in the statute.
    Current law requires all funds, Federal and nonFederal, 
connected with the demonstration project to be housed in the 
Reserve Fund. Grantees have found this requirement 
unnecessarily restricts nonFederal funds, hindering compliance 
with funding guidelines from various nonFederal funding sources 
and preventing the sound investment of those funds.
    AFIA grantees are authorized to conduct IDA projects for 5-
year periods and then unused, ``earned'' match funds are 
transferred to the Federal Government. This deadline has caused 
problems for individuals who have saved for an asset, but for a 
variety of reasons have not yet secured one (e.g., job loss or 
delay in finding an appropriate home).
    Current law requires nonFederal funding to be used for the 
same purposes and in the same ratio as the Federal funds (no 
more than 15 percent for program/operating costs). Grantees 
have requested more discretion over the use of nonFederal funds 
for program and operation costs. Grantees claim this autonomy 
will allow programs to better meet accountholder needs, enroll 
more individuals, and more aggressively use AFIA funding.
    Original eligibility standards include: (1) 200 percent of 
poverty rate, (2) Earned Income Tax Credit (EITC) guidelines, 
and (3) Temporary Assistance for Needy Families (TANF) 
guidelines. These standards cause some difficulties for AFIA 
programs as they cooperate with other programsserving low and 
moderate income families (e.g., HUD's HOME Investment Partnership 
programs) and fail to effectively account for local and geographic 
variations.
    Originally, all earned interest had to be deposited in the 
IDA of each individual or into a parallel account. Excess 
interest, interest earned from the Reserve Fund as opposed to 
interest earned in IDAs, accrues at substantially greater rates 
as the larger amount of money is held over a longer period of 
time. Grantees suggest requiring that ``excess interest'' to be 
rolled over to fund existing IDAs and/or for new IDAs.
    The committee reviewed these--and a number of other 
suggestions, comments, and concerns from--various stakeholders 
in developing the reauthorization of AFIA.

             III. Legislative History and Committee Action

    On October 28, 2003, Senators Alexander and Dodd introduced 
S. 1786, the Poverty Reduction and Prevention Act, a bill to 
reauthorize the Community Services Block Grant, the Low Income 
Home Energy Assistance Program, and to authorize the Assets for 
Independence Act. On October 29, 2003 the Committee on Health, 
Education, Labor and Pensions met in executive session to 
consider S. 1786 as a manager's substitute amendment. No 
amendments were offered. The bill was voted favorably out of 
the committee.

Hearing

    On July 10, 2003, the Senate Subcommittee on Children and 
Families held a hearing on the Reauthorization of the Community 
Services Block Grant program. Two panels of witnesses were 
heard. The Honorable Wade Horn, Assistant Secretary for 
Children and Families, Department of Health and Human Services, 
spoke on the first panel and testified as to the 
Administration's views on the reauthorization of the program. 
The second panel of witnesses included directors of Community 
Action Agencies and individuals who have benefited from CSBG 
services. The witnesses were David Bradley, Executive Director 
of the National Community Action Foundation, Nathaniel Best 
from Knoxville, Tennessee, Michael Saucier from Berlin, New 
Hampshire, Winifred Octave from Worcester, Massachusetts and E. 
Phillip McKain, President and CEO of CTE, Inc. in Stamford, 
Connecticut. The second panel addressed the following four 
themes:
          1. CSBG assists working poor families address 
        immediate needs and achieve self-sufficiency. CSBG 
        enables Community Action Agencies to coordinate a 
        variety of services and leverage multiple funding 
        sources to provide a comprehensive approach to helping 
        families address the causes--and effects--of poverty, 
        and reach goals on the path to long term economic 
        independence and self sufficiency.
          2. CSBG is serving the ``new poor'' who are facing 
        poverty due to unexpected events. These include the 
        non-traditional poor, such as middle-class families who 
        never expected to be on the receiving end of help, but 
        are hit by an unexpected crisis--a plant closing, a 
        layoff, a major injury or illness. These families 
        strongly prefer to work with a community based agency 
        and not ``welfare.''
          3. CSBG assists ``special populations,'' including 
        the hard-to-serve and those for whom conventional 
        approaches fail. These individuals require outreach to 
        inform them of the assistance available to them, and 
        tailored responses to address their needs.
          4. CSBG supports sustained efforts to change low 
        income communities. These strategies include economic 
        development, job creation, community revitalization, 
        investment in youth (community centers and after school 
        programs), public transit, rural facilities, and crime 
        reduction. Because of the CSBG, these strategies are 
        informed and directed by a unique coalition of low 
        income community residents, often current or past 
        participants in programs, together with business, 
        charitable, and local government leaders.
    The Assets for Independence Act of 1998, Public Law 105-
285, authorized the IDA program on October 10, 1998.
    Public Law 106-554 (42 U.S.C. 604 note), enacted December 
21, 2000, amended the Act with a few minor changes.
    AFIA was again amended for a purely technical detail on 
January 8, 2002, in Public Law 107-110.

           IV. Explanation of Legislation and Committee Views


               A. COMMUNITY SERVICES BLOCK GRANT PROGRAM

1. Additional language on administrative costs

    CSBG remains unique for its flexibility as the resource 
local agencies may use to build partnerships and change 
communities in addition to providing direct family services. 
The committee recognizes that the CSBG funded activities 
classified as ``Linkages,'' including outreach to community 
residents and potential partners, and the inclusion of new 
community organizations and projects, are program services 
funded by CSBG. Also included in program services are 
activities that coordinate multiple services, those that 
mobilize new funding for local programs, and those that develop 
local governance resources. States are expected to assist in 
distinguishing these activities from administrative costs in 
order to ensure the unique local functions CSBG funds are not 
in appropriately restricted.
    It is the intent of the committee that activities directly 
related to the purposes of the Community Services Block Grant 
Act not be included in any measure of administrative 
activities. Specifically, activities that address the linkages, 
leveraging, and mobilizing required by the CSBG Act should be 
considered program activities, similar to the direct provision 
of services.
    The Community Services Block Grant Act requires that 
Community Action Agencies foster partnerships, conduct 
outreach, mobilize the community to bring about change, 
leverage various funding sources to meet their mission, and 
create new, innovative programs to address the needs of their 
communities. As stated in the CSBG Information Memorandum No. 
37 issued by the Office of Community Services on December 10, 
1999:

    ``Direct'' program costs can be specifically identified 
with delivery of a particular project, service, or activity 
undertaken by a grantee to achieve an outcome intended by the 
funding program. For CSBG, such direct costs derive from the 
funding objectives specified in the reauthorizing statute, and 
from the goals and outcome measures in the ROMA system required 
by that statute. Under the CSBG reauthorization and national 
ROMA goals, eligible programmatic activities explicitly include 
efforts to coordinate and strengthen a range of local programs 
and services that combat poverty. These efforts often entail 
planning and management functions that facilitate integrated 
approaches among more categorical public, private, and non-
profit entities within a community.

    Clarification should be provided, if necessary, to ensure 
States and eligible entities follow these practices.
    In the committee's July 9, 2003 hearing on the CSBG Act 
reauthorization, several examples of these direct program 
activities unique to CSBG were presented.
    Mr. Michael Saucier spoke about the programs that Tri-
County Community Action in Berlin, New Hampshire offered when 
the paper mill in their community closed, laying off over 800 
workers among a population of 11,000. TCCAP provided a variety 
of initiatives that spurred economic development, retrained 
workers, provided emergency assistance for families, and 
created new jobs. As stated in the materials provided by the 
agency to accompany Mr. Saucier's testimony:

    It is important to note that these community based 
partnerships and resource coalitions and other across the three 
counties would not be possible without the flexible capacity 
which CSBG provides to Tri-County CAP and the communities it 
serves. The Economic Development Director, who plays a key role 
in all the projects, is jointly funded by Tri-County CAP 
through CSBG and by the City of Berlin. The City did not have 
this capacity before CSBG made it possible. The Project 
Director for downtown redevelopment is CSBG funded enabling her 
to identify, tap and coordinate funds which, by themselves, do 
not provide this capability and which, without coordination, 
are insufficient for the task. CSBG has proven to be the 
indispensable element in these community building efforts.

    Ms. Winifred Octave, now a member of the tripartite board 
of directors for the Worcester Community Action Council (WCAC) 
in Worcester, Massachusetts, spoke about the integrated 
retraining, job support, and homeownership services coordinated 
for her and her three children so that they might be able to 
achieve self sufficiency and economic independence. Ms. Octave 
had lost her job as a legal secretary when the law firm closed 
and sought help for the first time. In materials provided by 
Ms. Patsy Lewis, Executive Director of WCAC, to accompany Ms. 
Octave's testimony, the unique activities that CSBG supports 
are described as follows:

    Community Services Block Grant (CSBG) is the ``core'' 
funding for WCAC and our most important source of support. CSBG 
is used to leverage other public and private funds ($20 for 
each $1 from CSBG), ``pilot'' new programs, support important 
services that are not funded (or are under funded) and support 
community services beyond the Worcester Community Action 
Council.

    Other examples of activities funded with CSBG provided by 
WCAC included the following:

    Three years ago WCAC piloted a twelve week Energy Auditors' 
Training program to prepare low income and unemployed residents 
for positions in utility companies and/or energy conservation 
programs. CSBG was the funding source for developing the 
curriculum and supporting staff. Of our first class of four, 
three graduates immediately found employment in energy related 
fields. Two months ago one of the graduates of our second class 
responded to our ad for an auditor. She just started to work 
for WCAC as an Energy Auditor and she will be an excellent 
addition to the staff and the Energy field. CSBG made her 
employment possible.
    In collaboration with four other Massachusetts Community 
Action agencies, WCAC received a grant from the Office of 
Community Services to start an Individual Development Account 
(IDA) project to assist 25 low income families save toward home 
ownership. The coordinator for the project is paid from CSBG 
and the money raised from Federal and private sources goes 
toward the matched savings accounts.

    In testimony provided by Phillip McKain, the President and 
CEO of CTE, the Community Action Agency for the communities of 
Stamford, Greenwich, and Darien, Connecticut, Mr. McKain 
described mobilizing activities that clearly should not be 
considered administrative:

    In Stamford, given the leadership role we have played in 
the past, the community asked us to form an Affordable House 
Collaborative to help put affordable housing in the 
policymaking agenda for the city. Working with the business 
leaders, labor representatives, faith leaders, nonprofit and 
private housing developers, public officials, and community 
advocates, we were able to approach city government and get 
housing on the agenda. The Mayor established a Task Force, 
which produced recommendations for changes in zoning 
regulations to facilitate the production of affordable housing. 
Stamford now has incentives and regulations that will produce 
affordable units for low to moderate income workers who are the 
lifeblood of a sustainable community.

    In a July 10, 2003 letter to Senator Alexander from Lois 
Smith, the Executive Director of Upper East Tennessee Human 
Development Agency, Inc. (UETHDA), the use of CSBG to develop a 
program to address an unmet need was described. The efforts to 
assess the need, develop the program, leverage the resources 
and implement the services should not be considered 
administrative activities. Excerpts from the letter include the 
following:

    Over the past few years the agency has received numerous 
requests for assistance for families without drinkable running 
water and or septic systems in the eight-county region of 
northeast Tennessee. When a low income family would inquire if 
UETHDA could assist with these problems, we had to refer them 
to USDA Rural Development. USDA provides elderly households 
with a mix of grant dollars (as available) and low interest 
loans to assist with housing renovations including septic 
installation and construction of wells.
    Our staff, conducted extensive funding research to 
determine what other assistance was available for individual 
homeowners to secure adequate drinking water. Really the only 
available source determined in our areas was that same USDA--
Rural Development. Now, we have an approved plan for using CSBG 
funds, to invest in financial assistance for new septic systems 
for low income homeowners and for the construction of water 
wells and assistance with items to make the water drinkable. 
Under our partnership agreement, USDA does the needs and 
eligibility assessment; their experts determine the work plan 
for a property and invest up to $6500 in grant money for septic 
systems and housing/plumbing repairs. In the many cases where 
their grant falls short, we can provide up to $1500 for a well 
and up to $2000 for a septic system. Once the work is 
completed, USDA inspectors will complete a final report that is 
forwarded to UETHDA as verification the work is completed and 
payment is rendered to the vendor. The amount of CSBG dollars 
UETHDA is using only a portion of the total dollars needed to 
complete the process. Unfortunately, many who qualify for 
partial USDA support will not qualify for our program because 
the 125 percent poverty ceiling for CSBG shuts many elderly 
social security recipients out of CSBG programs; we can offer 
many of our other services, however. * * * The UETHDA outreach/
neighborhood service center staff will assess the additional 
service needs of families in our water project using our 
comprehensive intake process, and we link them to any 
appropriate services to increase their self-sufficiency, 
whether delivered at our agency or by others in the community.

2. ROMA and accountability

    The legislation increases accountability of local, State 
and Federal CSBG programs along several dimensions. Fiscal and 
administrative accountability is strengthened at all levels of 
government in Section 678E. The Department will establish and 
report on goals for its timely distribution of funds and 
effective oversight of State programs, as well as on its 
implementation of other Block Grant provisions. The Secretary 
is provided with additional tools to ensure States correct any 
deficiencies that appear during HHS reviews. The States will, 
with the support of the Department and input from the local 
agency network, design and implement a common State financial 
and organizational assessment protocol that provides minimum 
standards for local agency fiscal and administrative 
performance. The States will also establish and report on their 
objectives for effective management of CSBG, including State 
goals set forth in Section 678E(a)(1)(C), as well as their 
support for the development of modern local information and 
management systems and timely distribution of CSBG funds. The 
States will biennially submit to HHS an audit of State use and 
distribution of CSBG funds to permit oversight of the Block 
Grant as distinct from all HHS grants combined. States shall 
fund this audit with CSBG funds provided to the State to meet 
administrative costs, which are capped at five percent of the 
total annual allocation to the State.
    Local eligible entities have been given a more precise 
timetable for correcting any operational deficiencies 
identified by the State and for implementing a corrective 
action plan with the support of the State program.
    A second form of program accountability is the requirement 
for that local eligible entities' annual CSBG plans include 
locally-determined annual goals for at least three types of 
activities: mobilizing or ``leveraging'' community resources; 
coordinating programs and funding from public and private 
sector resources; and promoting involvement of residents of the 
community at large and the low income community served. If a 
State makes an assessment that termination or reduction of an 
eligible entity's funding is warranted based on the degree to 
which these goals are substantially achieved, taking into 
account changing local conditions, the determination and due 
process procedures clearly articulated in Section 678C shall 
apply.
    Third, accountability for progress toward long-term poverty 
reduction, the purpose of the Block Grant, is also strengthened 
by the legislation. The CSBG Results-Oriented Management and 
Accountability (ROMA) system, together with the CSBG 
Information System, was fully designed following the 1998 
reauthorization and pioneered by the local and State CSBG 
agencies. ROMA's purpose is not only to record the multiple 
resources coordinated locally to assist individuals and 
families and to change communities, but also to measure the 
intermediate and longer term effects of the work that CSBG 
supports. The ongoing development of ROMA will reflect the 
promise of collaborative State and local approaches that will 
bring 21st Century experience and skills to bear on the 
difficult challenges of reducing and preventing poverty. In 
particular, the committee acknowledges the value of the 
voluntary expansion of the CSBG Information System by the State 
and local agencies so that the reports cover programs supported 
by nonFederal resources and results of activities that have 
only indirect support from CSBG. This is a significant 
contribution to management of these programs and also to the 
future practice of real world performance based management of 
complex social programs.
    The bill provides an alternative to the approach originally 
suggested by the Department. Rather than establishing Federally 
determined performance goals and measures for State and local 
programs and centralizing the reporting system in the 
Department, the legislation provides for the further 
development and implementation of the ROMA CSBG Information 
System under the guidance of the existing successful State and 
local partnership at the national level. Section 678E requires 
that States provide reports on their local and State programs 
and on CSBG's results, but preserves their discretion to 
develop the systems collectively. Funding for the Department's 
support of these efforts is expanded to permit the network to 
build on its success.
    The purpose of ROMA is to collect measures of the results 
of the set of expenditures that local agencies have chosen to 
be appropriate to their communities and have contracted with 
their State to undertake. Unlike the reports on the new, 
required annual plan goals, ROMA can also test alternative 
innovative approaches to the challenge of reducing and 
preventing poverty and can provide information that allows 
improvement or rejection of new initiatives, and even of new 
ways to measure.
    The bill anticipates that the annual nationwide report on 
CSBG results will be further refined by the States and eligible 
entities, acting together with their national associations, to 
better reflect the degree to which many diverse local programs 
achieve the three primary goals laid out for the CSBG. 
Development of more comprehensive reports showing similar types 
of activity grouped by the goal, which they seek to achieve, 
and including all significant, CSBG-supported activities in the 
State, is currently in progress. The committee recognizes that 
the simplification of the goals of the act may require 
development and testing of new reports and urges the Secretary 
to provide such support as is needed, particularly for 
expansion of measurement tools to capture the outcomes of 
projects that improve local communities and build community 
assets, and of reports to measure success in achieving maximum 
feasible participation of the community's residents in 
governance of CSBG programs.

3. Community Economic Development program

    The bill includes a number of amendments to the 
Discretionary Authority of the Secretary and the Community 
Economic Development program. The amendments codify current HHS 
and Office of Community Service policy regarding disposition of 
intangible assets. These amendments provide that the grant is 
the property of the grantee and allow the grantee to retain any 
intangible asset acquired with grant funds provided under this 
section after the grant period expires so long as such assets 
are used to infuse capital into the community in furtherance of 
the grant purposes. If the grantee no longer needs the grant 
funds or the intangible asset, the grantee is required to seek 
instructions from the Secretary.
    The amendments also clarify policy regarding so-called 
replacement grants. This provision gives the Secretary the 
authority to continue to provide the obligated funds to a 
grantee for a new project when the original project, which was 
the basis of the grant, has changed. In certain instances, 
events beyond the control of the grantee make completion of a 
project infeasible. If such events occur after the end of the 
fiscal year, funds are returned to the Treasury. The amendment 
permits the grantee to use the funds for a revised project 
provided that the Secretary determines that the revised project 
benefits the same population, and remains in the same community 
as the original grant.
    Finally, the amendments elaborate on the purpose of 
Community Economic Development grants and clarify the use of 
grant funds authorized under this section.

              B. LOW-INCOME HOME ENERGY ASSISTANCE PROGRAM

    The committee reaffirms the central purpose of the Low-
Income Home Energy Assistance Program (LIHEAP) as providing 
assistance to eligible households in meeting their energy 
bills. Low income households continue to have difficulty in 
affording the cost of home energy and essential goods and 
services. The costs of residential energy continue to be high 
in relation to their incomes. The committee believes that 
LIHEAP is a critical program for low income households, and 
therefore, increased the authorization for LIHEAP from $2 
billion to $3.4 billion for fiscal years 2004 through 2006 and 
such sums as necessary for fiscal years 2007 through 2010. 
Currently, the program serves only 17 percent of the eligible 
households. The committee believes that funding should be 
increased to meet more of the unmet need. According to the 
National Energy Assistance Directors Association, an increase 
of funding to $3.4 billion would raise the percentage of 
eligible households served to 32 percent.
    The LIHEAP program is ``forward-funded'' and the committee 
anticipates that LIHEAP will be reauthorized in 2009. Forward 
funding allows States to plan more efficiently, and therefore, 
more economically. State LIHEAP directors begin planning in 
spring and early summer for the upcoming year. Without forward 
funding, State directors are unable to plan program outreach or 
leverage resources as effectively. Forward funding will also 
ensure that States have the necessary funding to open their 
programs at the beginning of the fiscal year in order to 
provide timely assistance to low income families who cannot 
afford to wait.
    The committee continues to recognize the need in times of 
crisis for emergency funds to be released by the President and 
the legislation authorizes $600 million for fiscal years 2004 
through 2010 to meet emergency home energy needs. The committee 
is concerned that emergency funds appropriated in fiscal years 
2001 and 2002 were not distributed to States despite requests 
from Congress and Governors for the release of funds. In the 
future, it would be advisable for the Secretary to inform 
Congress and seek appropriate counsel from this authorizing 
committee about the release of emergency funds.
    The legislation includes a new trigger mechanism whereby 
the Secretary shall declare an emergency in the event of 
extreme weather changes or increases in energy costs. 
Specifically, the trigger would be activated if the number of 
heating degree days or cooling days for a month was more than 
100 above the 30 year average in one or more States or regions, 
or if there is an increase of at least 20 percent in the cost 
of home energy over the previous 5 year average for a duration 
of a month or more in one or more States or regions. In such an 
event, the Secretary must determine an appropriate level of 
funds to be distributed to that region. The Secretary has 
discretion in this matter as to the amount of funds to be 
distributed based on the extent of the need of that State or 
region.
    The 1998 Coats Act clarified the term emergency to mean a 
natural disaster; a significant home energy supply shortage or 
disruption; a significant increase in the cost of home energy, 
as determined by the Secretary; a significant increase in home 
energy disconnections reported by a utility, a State regulatory 
agency, or another agency with necessary data; a significant 
increase in participation in a public benefit program such as 
the Food Stamps program; a significant increase in unemployment 
or layoffs; or any other event meeting criteria as the 
Secretary may determine to be appropriate. The committee 
encourages the Secretary to consider all factors defined in the 
statute when making decisions about the release of emergency 
funds.
    Since 1996, 25 percent of leveraging funds have been set 
aside for the Residential Energy Assistance Challenge (REACh) 
program. This program allows grantees to test initiatives 
designed to help eligible clients reduce their energy 
vulnerability. The committee urges the Secretary to give 
priority to initiatives that coordinate multiple resources, are 
replicable and are of sufficient size to indicate their impact. 
The committee also urges the Secretary to disseminate 
information about the evaluated results of REACh initiatives. 
The committee has asked the Comptroller General to conduct an 
evaluation of the REACh program and report its findings within 
two years of the date of enactment of this Act.
    The legislation also directs the Secretary to conduct a 
study on the LIHEAP program. It further directs the Secretary 
to develop a protocol for States to collect information from 
energy distribution companies on a variety of residential 
customer statistics. Volatile natural gas, electricity and fuel 
oil prices in recent years have exacerbated the energy burden 
crises facing low-income households. Reports from many States 
indicate that many electric and natural gas utility 
distribution companies have over the past year experienced high 
levels of customer arrearages leading to increased service 
termination for nonpayment. The loss of vital home energy 
constitutes a serious threat to health, safety and well being 
of households. Reliable and consistent data on customer 
arrearage and termination would help formulate State and 
national policies to address these problems. The National 
Association of Regulatory Utility Commissioners and the 
National Energy Assistance Directors Association support 
efforts to encourage State public utility commissions to 
collect arrearage and shut-off data to help document the energy 
assistance needs of low income households. The committee 
believes that helping families prior to disconnection would 
prevent safety and health concerns surrounding a household 
without energy services. The committee urges the Secretary to 
monitor arrearage trends nationwide and consider a significant 
increase in arrearage rates as part of the disconnection 
criteria. The study is to be submitted to Congress not later 
than 24 months after the date of enactment of this act.

                     C. ASSETS FOR INDEPENDENCE ACT

    The reauthorization maintains current law with respect to 
Federal and nonFederal funding matches, a 1:1 ratio. The 
committee believes this most faithfully maintains the original 
intent of the program: a full and equal Federal/community 
partnership in addressing the economic development needs of 
lowincome families.
    Currently, nonFederal funds must be used for the same 
purposes and in the same ratio as the Federal funds (no more 
than 15 percent for program/operating costs). The proposed 
change to current law would allow up to 20 percent of 
nonFederal funding to be used at the discretion of the AFIA 
grantees for program/operating costs. However, funding priority 
will be given to those grantees using no more than 15 percent 
for such purposes. This will allow greater private flexibility 
in developing the most effective and comprehensive programs 
while ensuring maximum resources are committed to program 
participants for the asset developments promoted under the act.

                            V. Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, November 21, 2003.
Hon. Judd Gregg,
Chairman, Committee on Health, Education, Labor, and Pensions,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 1786, the Improving 
the Poverty Reduction and Prevention Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Donna Wong.
            Sincerely,
                                      Elizabeth M. Robinson
                               (For Douglas Holtz-Eakin, Director).
    Enclosure.

S. 1786--Poverty Reduction and Prevention Act

    Summary: S. 1786 would reauthorize programs created under 
the Community Services Block Grant Act, the Low-Income Home 
Energy Assistance Act of 1981, and the Assets for Independence 
Act.
    CBO estimates that new authorizations under the bill would 
total $2.1 billion in 2004 and about $26.5 billion over the 
2004-2009 period, assuming that annual levels are adjusted for 
inflation when specific amounts are not provided. (Without such 
inflation adjustments, the authorizations would total about 
$24.8 billion over the 2004-2009 period.) CBO estimates that 
appropriations of the necessary amounts would result in outlays 
of $23.0 billion over the 2004-2009 period, if inflation 
adjustments are included (and about $22.4 billion without 
inflation adjustments).
    S. 1786 does not contain any intergovernmental or private-
sector mandates as defined in the Unfunded Mandates Reform Act 
(UMRA) and would impose no significant costs on State, local, 
or tribal governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 1786, with inflation adjustments, is 
shown in the following table. The costs of this legislation 
fall within budget functions 500 (education, training, 
employment, and social services) and 600 (income security).

----------------------------------------------------------------------------------------------------------------
                                                                 By fiscal year, in millions of dollars--
                                                         -------------------------------------------------------
                                                           2003    2004    2005    2006    2007    2008    2009
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION
 Spending Under Current Law:
    Budget Authority/Authorization Level\1\.............   2,483   2,650       0       0       0       0       0
    Estimated Outlays...................................   2,723   2,466     686      54       0       0       0
Proposed Changes:
    Community Services Block Grant:
        Estimated Authorization Level...................       0     657     670     684     698     714     729
        Estimated Outlays...............................       0     342     631     670     690     705     721
    Community Food and Nutrition Programs:
        Estimated Authorization Level...................       0       7       8       8       8       8       8
        Estimated Outlays...............................       0       4       7       8       8       8       8
    Youth Sports:
        Authorization Level.............................       0      18      18      18      18      18      18
        Estimated Outlays...............................       0       9      17      18      18      18      18
    Low-Income Home Energy Assistance:
        Estimated Authorization Level...................       0   1,400   4,050   4,050   4,121   4,198   4,275
        Estimated Outlays...............................       0     639   3,024   3,703   3,803   3,877   3,954
    Low-Income Home Energy Assistance Studies:
        Estimated Authorization.........................       0       *       *       *       0       0       0
        Estimated Outlays...............................       0       *       *       *       0       0       0
    Individual Development Accounts:
        Authorization Level.............................       0      25      25      26      27      27       0
        Estimated Outlays...............................       0       1      24      25      26      27      13
    Total Proposed Changes:
        Estimated Authorization Level...................       0   2,107   4,771   4,786   4,871   4,964   5,030
        Estimated Outlays...............................       0   1,006   3,703   4,424   4,545   4,635   4,714
Total Spending Under S. 1786:
    Budget Authority/Authorization Level................   2,483   4,757   4,771   4,786   4,871   4,964   5,030
    Estimated Outlays...................................   2,723   3,473   4,388   4,478   4,545   4,635   4,714
----------------------------------------------------------------------------------------------------------------
\1\ The 2003 level is the amount appropriated for that year for the Community Services Block Grant, Community
  Food and Nutrition, Youth Sports, Low-Income Home Energy Assistance, and Individual Development Accounts
  programs. The 2004 level is the amount authorized under current law for the Low-Income Home Energy Assistance
  Program. No full-year 2004 appropriation has been enacted yet.
 Notes.--Components may not sum to totals because of rounding. * = Less than $500,000.

Basis of estimate

    For this estimate, CBO assumes S. 1786 will be enacted this 
fall and that the estimated authorization amounts will be 
appropriated for each fiscal year. The estimated outlays 
reflect CBO's current assumptions about spending patterns in 
the authorized programs.
    S. 1786 would reauthorize programs created under the 
Community Service Block Grant Act, the Low-Income Home Energy 
Assistance Act of 1981, and the Assets for Independence Act. 
The Low-Income Home Energy Assistance Program (LIHEAP) is 
authorized through 2004 while the others are currently 
authorized through November 21, 2003, by the Continuing 
Appropriations Act (Public Law 108-107).
    Both the Community Services Block Grant (CSBG) and 
Community Food and Nutrition programs would be reauthorized at 
such sums as may be necessary for 2004 through 2009. For those 
two programs, the estimated authorization levels are equal to 
the 2003 appropriation level plus adjustments for inflation. 
The bill contains specific authorizations in 2004 for the 
LIHEAP, Youth Sports, and Individual Development Accounts 
programs.
    CBO estimates that S. 1786 would authorize additional 
appropriations of $2.1 billion in 2004, assuming that the 2003 
amounts for the CSBG and Community Food and Nutrition programs 
are adjusted for inflation. CBO estimates that the bill would 
authorize total funding of $26.5 billion over the 2004-2009 
period, assuming annual adjustments for anticipated inflation. 
Appropriation of the authorized amounts would result in outlays 
of $1.0 billion in the first year and $23.0 billion over the 
six-year period. (Without inflation adjustments, the increased 
authorizations would total $25.8 billion over the six years, 
with outlays of $22.4 billion over that period.)
            Community Services Block Grant program
    The CSBG program provides grants to States to provide a 
range of services to reduce poverty, including employment 
assistance, education, housing assistance, nutrition, energy, 
emergency services, health, and substance abuse assistance. CBO 
estimates the authorization of such sums as necessary for the 
CSBG program would be $657 million in 2004 and about $4.2 
billion over the 2004-2009 period, with resulting outlays of 
$3.8 billion over the six years. Funding for the program in 
2003 was $646 million.
            Community Food and Nutrition program
    The Community Food and Nutrition program provides grants to 
private and public agencies at the State and local level to 
coordinate existing food assistance resources and to develop 
innovative approaches to meet the nutrition needs of low-income 
people. CBO estimates the authorization of such sums as 
necessary for this program would be $7 million in 2004 and $47 
million over the 2004-2009 period, with resulting outlays of 
$42 million over those six years. The program was funded at $7 
million in 2003.
            Youth Sports
    The Youth Sports program provides an annual grant to a 
national, nonprofit organization to operate the National Youth 
Sports program. The grantee contracts with colleges and 
universities to provide sports instruction and enrichment 
activities (career and education counseling, study skills, and 
drug abuse and nutrition services) to low-income youths in a 
summer program. The bill would reauthorize the current program 
at $18 million annually for the 2004-2009 period. Total funding 
for the six-year period would be $108 million, with resulting 
outlays of about $98 million over that period. The program was 
funded at $17 million in 2003.
            Low-income home energy assistance
    The legislation would raise the current law authorization 
for LIHEAP for 2004, permanently extend the basic State grant 
and emergency grant programs, and continue the incentive grant 
program through fiscal year 2010. Assuming appropriation of the 
authorized amounts, CBO estimates that implementing this 
provision would cost about $639 million in 2004, and $19.0 
billion over the 2004-2009 period.
    Under current law, a total of $2.65 billion is authorized 
to be appropriated for fiscal year 2004. These funds include 
$2.0 billion for the basic formula grant for States to provide 
energy assistance for low-income households, $50 million for 
grants to States to develop nonFederal energy resources and for 
Residential Energy Assistance Challenge (REACh) grants, and 
$600 million for additional energy assistance for emergency 
needs. S. 1786 would increase the authorization for the basic 
formula grant for States to $3.4 billion in fiscal year 2004, 
and extend this authorized level through fiscal year 2006. The 
bill would authorize the appropriation of such sums as may be 
necessary after 2006, which CBO estimates as the 2006 amount 
adjusted for inflation. The extension of the basic formula 
grant automatically extends the authorization of the emergency 
funding at $600 million peryear. The emergency funds are made 
available only after a formal request by the President that includes a 
designation of the amount requested as an emergency requirement as 
defined in the Balanced Budget and Emergency Deficit Control Act.
    The bill requires two new studies--a study by the General 
Accounting Office on the effectiveness of the REACh program, 
and a study by the Department of Health and Human Services on 
how to improve the performance and effectiveness of the LIHEAP 
program--for which CBO estimates the total costs would be less 
then $500,000 over the 2004-2006 period.
            Individual development accounts
    The bill would reauthorize the Individual Development 
Accounts program and authorize the appropriation of $25 million 
in 2004 and such sums as may be necessary in each year from 
2005 through 2008. This program provides matching funds to 
qualified low-income individuals who save to encourage more 
savings. Accounts can be used to purchase a first home, for 
higher education expenses or for small business capitalization. 
Appropriations for the program were $25 million for 2003.
    Intergovernmental and private-sector impact: S. 1786 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. States would be given greater flexibility in 
managing grants but would need to continue to monitor eligible 
entities and assist them in developing local goals; any costs 
incurred by State, local, or tribal governments would result 
from complying with grant conditions.
    Previous CBO estimates: On October 7, 2003, CBO transmitted 
a cost estimate for H.R. 3030, the Improving the Community 
Services Block Grant Act of 2003, as ordered reported by the 
House Committee on Education and the Workforce on October 1, 
2003. H.R. 3030 would reauthorize the CSBG, Community Food and 
Nutrition, and Youth Sports programs. Our estimates of 
authorizations of appropriations for the CSBG and Community 
Food and Nutrition programs are identical to those provided for 
H.R. 3030. The specified authorization for the Youth Sports 
program is $3 million per year higher than the level specified 
in H.R. 3030.
    On September 15, 2003, CBO transmitted a cost estimate for 
H.R. 7, the Charitable Giving Act of 2003, as ordered reported 
by the House Committee on Ways and Means on September 9, 2003. 
That bill would reauthorize the Individual Development Accounts 
program. The two bills contain identical authorizations of 
appropriations for that program.
    On May 1, 2003, CBO transmitted a cost estimate for H.R. 
1644, the Energy Policy Act of 2003, as ordered reported by the 
House Committee on Energy and Commerce on April 8, 2003. H.R. 
1644 would reauthorize LIHEAP at the same levels as S. 1786 
through 2006, but would not extend the program beyond that.
    Estimate prepared by: Federal Costs: CSBG and Assets for 
Independence--Donna Wong. Low-Income Home Energy Assistance--
Michael Carson. Impact on State, local, and tribal 
governments--Sarah Puro. Impact on the Private Sector--
Meenakshi Fernandes.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

            VI. Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1, the Congressional 
Accountability Act (CAA) requires a description of the 
application of this bill to the legislative branch. S. 1786 
authorizes various Federal human services programs and does not 
amend any act that applies to the legislative branch.

                    VII. Regulatory Impact Statement

    The committee has determined that there will be de minimus 
changes in the regulatory burden imposed by this bill.

                   VIII. Section-by-Section Analysis


Section 1. Short title

    This act may be cited as the Poverty Reduction and 
Prevention Act.

Section 101. Purposes and goals

    This section amends section 672 to clarify and strengthen 
the purposes of the Community Services Block Grant Act. 
Reducing poverty is emphasized as the primary purpose of the 
act, and the manner in which this purpose is to be achieved is 
clearly articulated. These key strategies include: (1) 
Coordinated efforts by local eligible entities utilizing 
multiple Federal, State, local and private resources to help 
low-income individuals and families achieve self-sufficiency; 
(2) efforts to improve and revitalize low-income communities 
through developing community assets and coordinating services 
that will have a measurable impact on the causes of poverty; 
and (3) ensuring maximum feasible participation of the poor in 
developing the Community Agencies' response to poverty in their 
communities.

Section 102. Definitions

    This section amends section 673 to clarify that the 
Department of Health and Human Services defines the poverty 
line and the poverty line may be revised by the Secretary to 
take into account higher costs of living. It also gives the 
States greater flexibility in determining who is eligible to 
receive services, while placing a priority on those who are 
most in need. It stipulates that 125 percent of the official 
poverty line is the minimum level a State can set as its 
maximum eligibility requirement and 60 percent of State median 
income is the maximum level a State can set as its maximum 
eligibility requirement.

Section 103. Authorization of appropriations

    This section amends section 674 by reauthorizing the 
program at such sums as may be necessary for fiscal years 2004 
through 2009.

Section 104. Establishment of program

    This section amends section 675 to clarify that grants to 
the States under this program are for the purpose for 
ameliorating the causes of poverty, as well as the conditions 
caused by poverty.

Section 105. Use of funds

    This section amends section 675C(b) to re-prioritize how 
the States should use any remaining funds from sections 675A or 
675B. It stipulates that the States should use these funds (A) 
to provide for training and technical assistance to eligible 
entities that strengthen their managerial or programmatic 
capabilities to reduce poverty, (B) to support statewide 
coordination and communication among eligible entities and 
State-operated or supported programs and services and other 
locally-operated programs and services targeted to low-income 
individuals and their children and families, (C) to continue to 
support innovative partnerships, programs and activities 
conducted by Community Action Agencies and their partners 
including other community-based organizations to eliminate 
poverty, promote self-sufficiency and promote community 
revitalization, (D) to continue to analyze the distribution of 
funds to make sure the funds have been targeted to those who 
are in the greatest need, (E) to continue to support State 
charity tax credits, (F) to support the identification of 
exemplary entities as Centers of Innovation, (G) to support the 
development of eligible entities' partnerships with local law 
enforcement agencies, local housing authorities, private 
foundations and other public and private partners and (H) to 
continue other activities as consistent with CSBG.
    This section further stipulates that the States must ensure 
that funds distributed under section 675C(a) are not used for 
excessive administrative expenses and that these funds used for 
salaries by local entities are fair and appropriate.

Section 106. Application and plan

    This section amends section 676 to allow that additional 
items be included in a State's application and plan to the 
Secretary for grants made under section 675A and 675B. Among 
these is an assurance that the State will use funds to support 
activities to expand opportunities for low-income individuals 
and their families and to assist them in becoming self-
sufficient, that the State has integrated programs of general 
relevance to the extent appropriate to the needs of low-income 
communities, that the State will provide a description of its 
measurement performance system, that the State has identified 
and coordinated with eligible entity programs, and that the 
State, beginning in FY2006, has implemented a Financial and 
Organizational Assessment Protocol as described in section 
678B.

Section 107. Designation of eligible entities in underserved areas

    This section amends section 676A(b) to ensure that entities 
that are granted special consideration are of demonstrative 
effectiveness and consistent with the needs identified by a 
community needs assessment.

Section 108. Tripartite boards

    This section amends section 676B(b) to ensure that the 
tripartite board is the mechanism for determining consideration 
of eligible entities.

Section 109. Training, technical assistance, and other activities

    This section amends section 678A to ensure that funds 
provided for in section 674(b)(2) also are used for the 
development of a common State Financial and Organizational 
Assessment.

Section 110. Monitoring

    This section amends section 678B to stipulate that the 
State shall conduct full onsite biennial reviews of local 
entities, follow-up annual reviews and implement a Financial 
and Organizational Assessment Protocol to monitor and evaluate 
the compliance of eligible entities. It further instructs the 
Secretary to annually submit a report on the results of this 
evaluation.

Section 111. Corrective action; Termination and reduction of funding

    This section amends section 678C to provide that certain 
measures take place if an eligible entity does not correct a 
deficiency after a State has informed the entity of that 
deficiency. It stipulates that the State needs to notify the 
entity that the State intends to initiate proceedings to 
terminate or reduce funding and that it has a right to a 
hearing on record as defined in section 676(c). It further 
instructs the Secretary to continue to fund an eligible entity 
until the Secretary approves or disapproves and reverses, the 
determination of termination or reduction in funding with 
respect to the State.

Section 112. Fiscal controls, audits, and withholdings

    The section amends section 678D to provide that the States 
submit a separate audit of CSBG funds to the Secretary. The 
audit shall be confined to funds at the State level, and focus 
only upon disbursements to local eligible entities, State 
administrative funds, and the disbursement of State 
discretionary funds. The cost of such audit shall be paid for 
out of State CSBG administrative funds; however, if additional 
funds are needed because administrative funds are dedicated to 
other CSBG purposes, then the State shall use the State's 
discretionary funds.
    In addition, State financial reports shall be submitted to 
the Secretary no later than 6 months following the end of each 
fiscal year.
    If a State fails to comply to meet the requirements in 
sections 678A through 678D(a), then the Secretary shall 
withhold funds as described in section 675C(b)(2) until the 
Secretary determines it is compliant.

Section 113. Accountability and reporting requirements

    This section amends section 678E to provide that any 
performance standards for State administration of the Block 
Grant are to be established by the Secretary, in consultation 
with the States.
    The annual CSBG plans of local eligible entities shall 
include locally-determined annual goals for three types of 
activities: mobilizing or ``leveraging'' community resources; 
coordinating programs and funding from public and private 
sector resources; and promoting involvement of the community. 
If a State makes an assessment that termination or reduction of 
an eligible entity's funding is warranted based on the degree 
to which these goals are substantially achieved, taking into 
account changing local conditions, the determination and due 
process procedures clearly articulated in section 678C shall 
apply.
    The Department shall also establish and report on goals for 
its timely distribution of funds, effective oversight of State 
programs, coordination of other Office of Community Services 
programs with the activities of CSBG, and full and timely 
reporting.
    The legislation calls upon the Secretary to coordinate 
reporting requirements of Health and Human Services programs 
administered by eligible entities to reduce the number of 
reports relating to individuals and families served, as well as 
the uses of grant funds. Technical assistance, including 
resources to enhance electronic data systems, shall be provided 
to States and eligible entities to enhance data collection and 
reporting in this coordinated system.
    The legislation also provides for the further development 
and implementation of the Results Oriented Management 
Assessment System and the CSBG Information System under the 
guidance of the existing successful State and local partnership 
at the national level. Measures developed under this system 
shall be numerous enough to cover the range of services 
administered by eligible entities, yet eligible entities shall 
only be compelled to collect data on measures that reflect 
their current community-specific programs. The collection of 
data for reports required by other Federal programs is not 
required to be altered. States are required to report annually 
on their local and State programs and on CSBG's results.
    Funding for the Secretary's annual reporting requirement is 
increased from $350,000 to $500,000 to permit the network to 
build on its success.

Section 114. Limitations on use of funds

    This section amends section 678F by inserting ``religion'' 
after ``race.''

Section 115. Operational rule

    This section amends section 679 to ensure that any programs 
that receive assistance under this Act meet the requirements as 
provided for in the Act.

Section 116. Discretionary authority of the Secretary

    This section amends section 680 to codify current HHS and 
Office of Community Services policy regarding disposition of 
intangible assets.
    The amendments also clarify policy regarding so-called 
replacement grants. This provision gives the Secretary the 
authority to continue to provide the obligated funds to a 
grantee for a new project when the original project, which was 
the basis of the grant, has changed. In certain instances, 
events beyond the control of the grantee make completion of a 
project infeasible. Ifsuch events occur after the end of the 
fiscal year, funds are returned to the Treasury. The amendment permits 
the grantee to use the funds for a revised project provided that the 
Secretary determines that the revised project benefits the same 
population, and remains in the same community as the original grant.
    Finally, the amendments elaborate on the purpose of 
Community Economic Development grants and clarify the use of 
grant funds authorized under this section.

Section 117. Community food and nutrition programs

    This section re-authorizes section 681 for fiscal years 
2004 through 2009.

Section 118. National or religion program designed to provide 
        instructional activities for low-income youth

    This section re-authorizes section 682 for fiscal years 
2004 through 2009 at $18,000,000.

Section 201. Short title

    This Title may be cited as the ``Low-Income Home Energy 
Assistance Amendments Act of 2003.''

Section 202. Reauthorization

    This section reauthorizes the program at $3,400,000,000 for 
fiscal years 2004 through 2006 and then at such sums as may be 
necessary through fiscal year 2010.

Section 203. Natural disasters and other emergencies

    This section includes a new trigger mechanism whereby the 
Secretary shall declare an emergency in the event of extreme 
weather changes or increases in energy costs. Specifically, the 
trigger would be activated if the number of heating degree days 
or cooling days for a month was more than 100 above the 30-year 
average in one or more states or regions, or if there is an 
increase of at least 20 percent in the cost of home energy over 
the previous 5-year average for a duration of a month or more 
in one or more States or regions. In such an event, the 
Secretary must determine an appropriate level of funds to be 
distributed to that region. The Secretary has discretion in 
this matter as to the amount of funds to be distributed based 
on the extent of the need of that State or region.

Section 204. Residential energy assistance challenge option

    This section reauthorizes section 302 of this Act.

Section 205. Report to Congress

    This section directs the Secretary to conduct a study on 
the LIHEAP program. It further directs the Secretary to develop 
a protocol for States to collect information from energy 
distribution companies on a variety of residential customer 
statistics.

Section 301. Short title

    Section 301 provides the short title of the title, the 
Assets for Independence Reauthorization Act.

Section 302. Reauthorization of the Assets for Independence Act

    Section 302 amends the Assets for Independence Act (42 
U.S.C. 604 note) to give grantees the option of verifying all 
postsecondary education payments, allowing for the provision of 
related educational material. Accountholders may save in a 
postsecondary education IDA for their children or dependents. 
This section repeals the grandfathering of statewide programs. 
Qualified entities may hold non-Federal funds in a separate 
account from the Reserve Fund. This section also provides a 12-
month no-cost extension for accountholders to maintain their 
IDA until able to purchase an asset. It permits up to 20 
percent of non-Federal funds be used at the discretion of AFIA 
grantees for program and operating costs, but gives priority to 
those grantees using no more than 15 percent for such purposes. 
This section broadens the eligibility standards to include 
Adjusted Gross Income ($18,000 single filer, $30,000 head of 
household, or $38,000 for joint filers) and 80 percent of the 
Area Median Income. It requires ``excess interest'' earned on 
the Reserve Fund to be rolled over into existing IDAs and/or 
for new IDAs. The program is reauthorized through fiscal year 
2008; allotting $25,000,000 for fiscal year 2004 and such sums 
as may be necessary for each of the following years. The 
Secretary of Health and Human Services shall apply these 
amendments and those made in 2000 to individual account holders 
and entities that received grants either before or after the 
date of enactment of this Act.

                      IX. Changes in Existing Law

    In compliance with rule XXVI paragraph 12 of the Standing 
Rules of the Senate, the following provides a print of the 
statute or the part or section thereof to be amended or 
replaced (existing law proposed to be omitted is enclosed in 
black brackets, new matter is printed in italic, existing law 
in which no change is proposed is shown in roman):

                   COMMUNITY SERVICES BLOCK GRANT ACT


SEC. 671. SHORT TITLE.

           *       *       *       *       *       *       *


[SEC. 672. PURPOSES AND GOALS.

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

SEC. 672. PURPOSES.

    The purpose of this subtitle is to reduce poverty--
          (1) by strengthening and coordinating local efforts 
        to expand opportunities for individuals and families to 
        become economically self-sufficient and to improve and 
        revitalize the communities in which low-income 
        Americans live, by providing resources to States for 
        support of local eligible entities and their partners 
        to--
                  (A) plan, coordinate, and mobilize a broad 
                range of Federal, State, local, and private 
                assistance or investment in such a manner as to 
                use these resources effectively to reduce 
                poverty and in initiatives that are responsive 
                to specific local needs and conditions;
                  (B) organize multiple services that meet the 
                needs of low-income families and individuals, 
                especially low-wage workers and their families, 
                and that assist them in developing the assets 
                and skills needed to become self sustaining 
                while ensuring that these services are provided 
                efficiently, in appropriate combinations, and 
                in effective sequence; and
                  (C) design and implement comprehensive 
                approaches to assist individuals transitioning 
                from the program of block grants to States for 
                temporary assistance for needy families under 
                part A of title IV of the Social Security Act 
                (42 U.S.C. 601 et seq.) to work;
          (2) by improving and revitalizing the communities in 
        which low-income Americans live by providing resources 
        to--
                  (A) broaden the financial resource base of 
                initiatives and projects directed to the 
                elimination of poverty and the re-development 
                of the low-income community, including 
                partnerships with non-governmental and 
                governmental institutions to develop the 
                community assets and services that reduce 
                poverty, such as--
                          (i) other private, charitable, 
                        neighborhood-based, and religious 
                        organizations;
                          (ii) individual citizens, and 
                        businesses, labor, and professional 
                        groups, who are able to influence the 
                        quantity and quality of opportunities 
                        and services for the poor; and
                          (iii) local government leadership; 
                        and
                  (B) coordinate or create community-wide 
                assets and services that will have a 
                significant, measurable impact on the causes of 
                poverty in the community and that will help 
                families and individuals to achieve economic 
                self-sufficiency, and test innovative, 
                community-based approaches to attacking the 
                causes and effects of poverty and of community 
                breakdown, including--
                          (i) innovative initiatives to prevent 
                        and reverse loss of investment, jobs, 
                        public services, and infrastructure in 
                        low- and moderate-income communities; 
                        and
                          (ii) innovative partnerships to 
                        develop the assets and services that 
                        reduce poverty, as provided for in 
                        subparagraph (A); and
          (3) by ensuring maximum participation of residents of 
        low-income communities and of members of the groups 
        served by programs under this subtitle in guiding the 
        eligible entities and in their programs funded under 
        this subtitle to ameliorate the particular problems and 
        needs of low-income residents of their communities and 
        to develop the permanent social and economic assets of 
        the low-income community in order to reduce the 
        incidence of poverty.

           *       *       *       *       *       *       *


SEC. 673. DEFINITIONS.

    In this subtitle:
          (1) Eligible entity; family literacy services.--
                  (A) Eligible entity.--The term ``eligible 
                entity'' means an entity--
                          (i)   * * *
                          (ii) that has a tripartite board [or 
                        other mechanism] described in 
                        subsection (a) or (b), as appropriate, 
                        of section 676B.

           *       *       *       *       *       *       *

          (2) Poverty line.--The term ``poverty line'' means 
        the official poverty line defined by the [Office of 
        Management and Budget] Department of Health and Human 
        Services based on the most recent data available from 
        the Bureau of the Census and increased, as the 
        Secretary determines appropriate, to take into account 
        higher costs-of-living for a State. The Secretary shall 
        revise annually (or at any shorter interval the 
        Secretary determines to be feasible and desirable) the 
        poverty line, which shall be used as a criterion of 
        eligibility in the community services block grant 
        program established under this subtitle. The required 
        revision shall be accomplished by multiplying the 
        official poverty line by the percentage change in the 
        Consumer Price Index for All Urban Consumers during the 
        annual or other interval immediately preceding the time 
        at which the revision is made. [Whenever a State 
        determines that it serves the objectives of the block 
        grant program established under this subtitle, the 
        State may revise the poverty line to not to exceed 125 
        percent of the official poverty line otherwise 
        applicable under this paragraph.] Whenever a State 
        determines that it has served the objectives of the 
        block grant program established under this subtitle, 
        the State may revise the poverty line, while placing a 
        priority in serving those who are most in need, so that 
        125 percent of the official poverty line is the minimum 
        level that a State shall be permitted to set as its 
        maximum eligibility requirement and 60 percent of the 
        State's median income is the maximum level that a State 
        shall be permitted to set as its maximum eligibility 
        requirement. The State may revise the poverty line only 
        upon a determination that eligible entities are 
        providing, coordinating, or partnering with means-
        tested support services for low and moderate-income 
        individuals and families above the official poverty 
        line. Nothing in this paragraph shall be construed to 
        prevent eligible entities from continuing to support 
        individuals and families during their transition from 
        program eligibility to achieve specific goals for their 
        economic security and long-term self-sufficiency as 
        long as priority is given to serving the lowest income 
        individuals who seek services.

           *       *       *       *       *       *       *


SEC. 674. AUTHORIZATION OF APPROPRIATIONS.

    (a) In General.--There are authorized to be appropriated 
such sums as may be necessary for each of fiscal years [1999 
through 2003] 2004 through 2009 to carry out the provisions of 
this subtitle (other than sections 681 and 682).
    (b) Reservations.--* * *
          (1) * * *
          (2) 1\1/2\ percent for activities authorized in 
        sections 678A through 678F, of which--
                  (A) not less than \1/2\ of the amount 
                reserved by the Secretary under this paragraph 
                shall be distributed directly to eligible 
                entities, organizations, [or associations] and 
                associations described in section 678A(c)(2) 
                for the purpose of carrying out activities 
                described in section 678A(c); and
                  (B) [\1/2\ of the remainder] not less than 
                \1/2\ of the remainder of the amount reserved 
                by the Secretary under this paragraph shall be 
                used by the Secretary to carry out [evaluation 
                and] evaluation and training and technical 
                assistance activities and to assist States in 
                carrying out corrective action activities and 
                monitoring (to correct programmatic 
                deficiencies of eligible entities), as 
                described in sections 678B(c) and 678A; and

           *       *       *       *       *       *       *


SEC. 675. ESTABLISHMENT OF BLOCK GRANT PROGRAM.

    The Secretary is authorized to establish a community 
services block grant program and make grants [through the 
program to States to ameliorate the causes of poverty in 
communities within the States.] to States for the purpose of 
ameliorating the causes of poverty and the conditions caused by 
poverty in their communities.

           *       *       *       *       *       *       *


SEC. 675C. USES OF FUNDS.

    (a) Grants to Eligible Entities and Other Organizations.--

           *       *       *       *       *       *       *

    (b) Statewide Activities.--
          (1) Use of remainder.--* * *
                  (A) providing training and technical 
                assistance to those [entities in need of such 
                training and assistance] eligible entities and 
                their statewide associations that strengthens 
                their managerial or programmatic capabilities 
                to reduce poverty;
                  [(B) coordinating State-operated programs and 
                services, and at the option of the State, 
                locally-operated programs and services, 
                targeted to low-income children and families 
                with services provided by eligible entities and 
                other organizations funded under this subtitle, 
                including detailing appropriate employees of 
                State or local agencies to entities funded 
                under this subtitle, to ensure increased access 
                to services provided by such State or local 
                agencies;
                  [(C) supporting statewide coordination and 
                communication among eligible entities;
                  [(D) analyzing the distribution of funds made 
                available under this subtitle within the State 
                to determine if such funds have been targeted 
                to the areas of greatest need;
                  [(E) supporting asset-building programs for 
                low-income individuals, such as programs 
                supporting individual development accounts;
                  [(F) supporting innovative programs and 
                activities conducted by community action 
                agencies or other neighborhood-based 
                organizations to eliminate poverty, promote 
                self-sufficiency, and promote community 
                revitalization;
                  [(G) supporting State charity tax credits as 
                described in subsection (c); and
                  [(H) supporting other activities, consistent 
                with the purposes of this subtitle.]
                  (B) supporting statewide coordination and 
                communication among eligible entities and 
                State-operated or supported programs and 
                services, and other locally-operated programs 
                and services targeted to low-income individuals 
                and their children and families, so as to 
                ensure that local eligible entities' services 
                are integrated in a manner that allows such 
                low-income individual and their families to 
                have access to as many sources of assistance as 
                are appropriate to support their progress to 
                economic stability and self-sufficiency;
                  (C) supporting innovative partnerships, 
                programs, and activities conducted by community 
                action agencies and their partners including 
                other community-based organizations to 
                eliminate poverty, promote self-sufficiency, 
                and promote community revitalization, including 
                asset-building programs for low-income 
                individuals, such as programs supporting 
                individualdevelopment accounts, and home or 
business ownership;
                  (D) analyzing the distribution of funds made 
                available under this subtitle within the State 
                to determine if such funds have been targeted 
                to the areas of greatest need;
                  (E) supporting State charity tax credits as 
                described in subsection (c);
                  (F) supporting the identification of 
                exemplary grantee agencies or programs as 
                Centers of Innovation and methodology for 
                disseminating innovative programs and other 
                best practices from those agencies statewide;
                  (G) supporting the development of eligible 
                entities' partnerships with local law 
                enforcement agencies, local housing 
                authorities, private foundations, and other 
                public and private partners; and
                  (H) supporting other activities, consistent 
                with the purposes of this subtitle.
          (2) Administrative cap.--No State may spend more than 
        the greater of $55,000 or 5 percent, of the grant 
        received under section 675A or State allotment received 
        under section 675B for administrative expenses, 
        including monitoring activities. Funds to be spent for 
        such expenses shall be taken from the portion of the 
        grant under section 675A or State allotment that 
        remains after the State makes grants to eligible 
        entities under subsection (a). The cost of activities 
        conducted under paragraph (1)(A) shall not be 
        considered to be administrative expenses. The startup 
        cost and cost of administrative activities conducted 
        under subsection (c) shall be considered to be 
        administrative expenses. The State shall also ensure 
        that all funds distributed under subsection (a) are not 
        used for excessive administrative expenses and that all 
        funds distributed under such subsection used for 
        salaries by a local entity are fair and equitable. The 
        State has the authority to determine the appropriate 
        level of funds distributed under subsection (a) that an 
        eligible entity shall use for administrative expenses.

           *       *       *       *       *       *       *


SEC. 676. APPLICATION AND PLAN.

    (a) Designation of Lead Agency.--
          (1) Designation.--* * *

           *       *       *       *       *       *       *

    (b) State Application and Plan.--Beginning with fiscal year 
2000, to be eligible to receive a grant or allotment under 
section 675A or 675B, a State shall prepare and submit to the 
Secretary for the Secretary's approval an application and State 
plan covering a period of not less than 1 fiscal year and not 
more than 2 fiscal years. The plan shall be submitted not later 
than 30 days prior to the beginning of the first fiscal year 
covered by the plan, and shall contain such information as the 
Secretary shall require, including--
          [(1) an assurance that funds made available through 
        the grant or allotment will be used--
                  [(A) to support activities that are designed 
                to assist low-income families and individuals, 
                including families and individuals receiving 
                assistance under part A of title IV of the 
                Social Security Act (42 U.S.C. 601 et seq.), 
                homeless families and individuals, migrant or 
                seasonal farmworkers, and elderly low-income 
                individuals and families, and a description of 
                how such activities will enable the families 
                and individuals--
                          [(i) to remove obstacles and solve 
                        problems that block the achievement of 
                        self-sufficiency (including self-
                        sufficiency for families and 
                        individuals who are attempting to 
                        transition off a State program carried 
                        out under part A of title IV of the 
                        Social Security Act);
                          [(ii) to secure and retain meaningful 
                        employment;
                          [(iii) to attain an adequate 
                        education, with particular attention 
                        toward improving literacy skills of the 
                        low-income families in the communities 
                        involved, which may include carrying 
                        out family literacy initiatives;
                          [(iv) to make better use of available 
                        income;
                          [(v) to obtain and maintain adequate 
                        housing and a suitable living 
                        environment;
                          [(vi) to obtain emergency assistance 
                        through loans, grants, or other means 
                        to meet immediate and urgent family and 
                        individual needs; and
                          [(vii) to achieve greater 
                        participation in the affairs of the 
                        communities involved, including the 
                        development of public and private 
                        grassroots partnerships with local law 
                        enforcement agencies, local housing 
                        authorities, private foundations, and 
                        other public and private partners to--
                                  [(I) document best practices 
                                based on successful grassroots 
                                intervention in urban areas, to 
                                develop methodologies for 
                                widespread replication; and
                                  [(II) strengthen and improve 
                                relationships with local law 
                                enforcement agencies, which may 
                                include participation in 
                                activities such as neighborhood 
                                or community policing efforts;
                  [(B) to address the needs of youth in low-
                income communities through youth development 
                programs that support the primary role of the 
                family, give priority to the prevention of 
                youth problems and crime, and promote increased 
                community coordination and collaboration in 
                meeting the needs of youth, and support 
                development and expansion of innovative 
                community-based youth development programs that 
                have demonstrated success in preventing or 
                reducing youth crime, such as--
                          [(i) programs for the establishment 
                        of violence-free zones that would 
                        involve youth development and 
                        intervention models (such as models 
                        involving youth mediation, youth 
                        mentoring, life skills training, job 
                        creation, and entrepreneurship 
                        programs); and
                          [(ii) after-school child care 
                        programs; and
                  [(C) to make more effective use of, and to 
                coordinate with, other programs related to the 
                purposes of this subtitle (including State 
                welfare reform efforts);
          [(2) a description of how the State intends to use 
        discretionary funds made available from the remainder 
        of the grant or allotment described in section 675C(b) 
        in accordance with this subtitle, including a 
        description of how the State will support innovative 
        community and neighborhood-based initiatives related to 
        the purposes of this subtitle;
          [(3) information provided by eligible entities in the 
        State, containing--
                  [(A) a description of the service delivery 
                system, for services provided or coordinated 
                with funds made available through grants made 
                under section 675C(a), targeted to low-income 
                individuals and families in communities within 
                the State;
                  [(B) a description of how linkages will be 
                developed to fill identified gaps in the 
                services, through the provision of information, 
                referrals, case management, and followup 
                consultations;
                  [(C) a description of how funds made 
                available through grants made under section 
                675C(a) will be coordinated with other public 
                and private resources; and
                  [(D) a description of how the local entity 
                will use the funds to support innovative 
                community and neighborhood-based initiatives 
                related to the purposes of this subtitle, which 
                may include fatherhood initiatives and other 
                initiatives with the goal of strengthening 
                families and encouraging effective parenting;
          [(4) an assurance that eligible entities in the State 
        will provide, on an emergency basis, for the provision 
        of such supplies and services, nutritious foods, and 
        related services, as may be necessary to counteract 
        conditions of starvation and malnutrition among low-
        income individuals;
          [(5) an assurance that the State and the eligible 
        entities in the State will coordinate, and establish 
        linkages between, governmental and other social 
        services programs to assure the effective delivery of 
        such services to low-income individuals and to avoid 
        duplication of such services, and a description of how 
        the State and the eligible entities will coordinate the 
        provision of employment and training activities, as 
        defined in section 101 of such Act, in the State and in 
        communities with entities providing activities through 
        statewide and local workforce investment systems under 
        the Workforce Investment Act of 1998;
          [(6) an assurance that the State will ensure 
        coordination between antipoverty programs in each 
        community in the State, and ensure, where appropriate, 
        that emergency energy crisis intervention programs 
        under title XXVI (relating to low-income home energy 
        assistance) are conducted in such community;]
          (1) an assurance that funds made available through 
        the grant or allotment will be used--
                  (A) to support activities directly and 
                through eligible entities that are designed to 
                expand opportunities for and assist low-income 
                individuals and their families (including low-
                income workers) to become self-sufficient, 
                including low-income workers, families, and 
                individuals receiving assistance under part A 
                of title IV of the Social Security Act (42 
                U.S.C. 60 et seq.), homeless families and 
                individuals, migrant or seasonal farmworkers, 
                and elderly low-income individuals and 
                families, and a description of how such 
                activities will enable the families and 
                individuals--
                          (i) to remove obstacles and solve 
                        problems that block the achievement of 
                        self-sufficiency by organizing and 
                        coordinating support for those served 
                        under paragraph (3);
                          (ii) to secure and retain employment 
                        that provides adequate income with 
                        essential benefits;
                          (iii) to attain an adequate 
                        education, with particular attention 
                        toward improving literacy and 
                        communications and technical skills of 
                        the low-income families in the 
                        communities involved;
                          (iv) to make better use of available 
                        income and build household assets;
                          (v) to obtain and maintain adequate 
                        housing and a suitable living 
                        environment;
                          (vi) to obtain assistance that is 
                        needed to resolve family emergencies 
                        and individual needs, to prevent 
                        further hardships, and to secure 
                        economic independence; and
                          (vii) to participate fully in the 
                        public affairs and management of their 
                        communities and the governance of 
                        eligible entities; and
                  (B) to make more effective use of, and to 
                coordinate with, other programs related to the 
                purposes of this subtitle (including State 
                welfare reform efforts);
          (2) a description of how the State intends to use 
        discretionary funds made available from the remainder 
        of the grant or allotment described in section 675C(b) 
        in accordance with this subtitle, including a 
        description of how the State will support innovative 
        community-based initiatives of eligible entities and 
        their partners related to the purposes of this 
        subtitle;
          (3) an assurance that the State has integrated 
        programs of general relevance in its plan, to the 
        extent appropriate to the needs of low-income 
        communities served by the eligible entities, including 
        a description of innovative community and neighborhood-
        based initiatives such as--
                  (A) initiatives with the goal of 
                strengthening families and encouraging 
                effective parenting, including fatherhood 
                initiatives;
                  (B) initiatives to assist those moving from 
                welfare to work to obtain jobs at decent wages 
                with benefits, including those low-income 
                individuals and their families who are 
                attempting to transition off State program 
                carried out under part A of title IV of the 
                Social Security Act (42 U.S.C. 601 et seq.);
                  (C) programs for the establishment of 
                violence-free zones that would involve youth 
                development and intervention models that 
                promote youth success (such as models involving 
                youth mediation, youth mentoring, life skills 
                training, job creation, and entrepreneurship 
                programs);
                  (D) family literacy initiatives;
                  (E) initiatives to increase the development 
                of household assets of individuals such as 
                individual development accounts and 
                homeownership opportunities;
                  (F) public and private partnerships to foster 
                community development, affordable housing, job 
                creation, and other means of building the 
                assets of low-income communities;
                  (G) partnerships with local law enforcement 
                agencies, which may include participation in 
                community policing, and activities to assist 
                community residents and public safety officials 
                in the event of emergencies, including threats 
                to national security;
                  (H) initiatives to improve economic 
                conditions and mobilize new resources in rural 
                areas and other at-risk areas to eliminate 
                obstacles to the self sufficiency of families 
                and individuals in those communities;
                  (I) initiatives to help reduce the 
                concentration of poverty in cities and inner 
                suburbs and provide economic opportunities for 
                individuals and families in those areas; and
                  (J) partnerships with nonprofit or community-
                based organizations that demonstrate 
                effectiveness in child abuse prevention, 
                including with programs that are school-based 
                and that focus on adolescent victims, and 
                victimizers;
          (4) an assurance that the State will provide 
        information, including--
                  (A) a description of the State measurement 
                system and results for the performance goals 
                established under section 678E(a)(1)(C);
                  (B) a description of the service delivery 
                system, for services provided or coordinated 
                with funds made available through grants made 
                under section 675(a), targeted to low-income 
                individuals and families in communities within 
                the State;
                  (C) a description of how linkages will be 
                developed to fill identified gaps in the 
                services, through the provision of information, 
                referrals, case management, and followup 
                consultations, and to support mobilization of 
                new resources and partnerships;
                  (D) a description of how funds made available 
                through grants made under section 675C(a) will 
                be coordinated with other public and private 
                resources; and
                  (E) a description of how the local entity 
                will use the funds to support innovative 
                community and neighborhood-based initiatives 
                related to the purposes of this subtitle;
          (5) an assurance that eligible entities in the State 
        will provide, on an emergency basis, for the provision 
        of such supplies and services, nutritious foods, and 
        related services, as may be necessary to counteract 
        conditions of starvation and malnutrition among low-
        income individuals;
          (6) am assurance that the State has, to avoid 
        duplication of such services, and to ensure that 
        program gaps are addressed, identified and coordinated 
        with eligible entity programs, with State and local 
        agencies, and with programs that assist low-income 
        individuals and their families, including--
                  (A) programs carried out under part A of 
                title IV of the Social Security Act (42 U.S.C. 
                601 et seq.), the Workforce Investment Act of 
                1998 (29 U.S.C. 2801 et seq.), and other 
                programs designed to coordinate work-related 
                supportive services for families;
                  (B) programs for expanding housing 
                opportunities, reducing homelessness, and 
                developing community investment projects;
                  (C) education programs, including those for 
                preschool and school-aged children and for 
                adults to obtain an adequate education; and
                  (D) programs designed to support youth, the 
                homeless, migrants, senior citizens, and 
                individuals with disabilities, including 
                programs under the Low-Income Home Energy 
                Assistance Act of 1981 (42 U.S.C. 8621 et 
                seq.);

           *       *       *       *       *       *       *

          (12) an assurance that the State and all eligible 
        entities in the State will, [not later than fiscal year 
        2001] annually, participate in the Results Oriented 
        Management and Accountability System, another 
        performance measure system for which the Secretary 
        facilitated development pursuant to section 678E(b), or 
        an alternative system for measuring performance and 
        results that meets the requirements of that section, 
        and a description of outcome measures to be used to 
        measure eligible entity performance in promoting self-
        sufficiency, family stability, and community 
        revitalization; [and]
          (13) information describing how the State will carry 
        out the assurances described in this subsection[.] in 
        sufficient detail to permit verification; and
          (14) beginning with fiscal year 2006, and in each 
        fiscal year thereafter, an assurance that the State is 
        using the procedures described in section 678B(b) to 
        monitor eligible entities.
    (C) * * *

           *       *       *       *       *       *       *

    [(f) Transition.--For fiscal year 2000, to be eligible to 
receive a grant or allotment under section 675A or 675B, a 
State shall prepare and submit to the Secretary an application 
and State plan in accordance with the provisions of this 
subtitle (as in effect on the day before the date of enactment 
of the Coats Human Services Reauthorization Act of 1998), 
rather than the provisions of subsections (a) through (c) 
relating to applications and plans.]

           *       *       *       *       *       *       *


SEC. 676A. DESIGNATION AND REDESIGNATION OF ELIGIBLE ENTITIES IN 
                    UNSERVED AREAS.

    (a) Qualified Organization in or Near Area.--
          (1) In general.--* * *

           *       *       *       *       *       *       *

    (b) Special Consideration.--In designating an eligible 
entity under subsection (a), the chief executive officer shall 
grant the designation to an organization of demonstrated 
effectiveness in meeting the goals and purposes of this 
subtitle and may give priority, in granting the designation, to 
eligible entities that are providing related services in the 
unserved area, consistent with the needs identified by a 
community-needs assessment. In granting such designation, the 
State shall deem private nonprofit eligible entities that are 
providing related services in the unserved area to be of 
demonstrated effectiveness, consistent with the needs 
identified by a community needs assessment.

           *       *       *       *       *       *       *


SEC. 676B. TRIPARTITE BOARDS.

    (a) Private Nonprofit Entities.--
          (1) Board.--* * *

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *


SEC. 678A. TRAINING, TECHNICAL ASSISTANCE, AND OTHER ACTIVITIES.

    (a) Activities.--
          (1) In general.--The Secretary shall use amounts 
        reserved in section 674(b)(2)--
                  (A) for training, technical assistance, 
                planning, evaluation, and performance 
                measurement, to assist States in carrying out 
                [corrective action activities and monitoring 
                (to correct programmatic deficiencies of 
                eligible entities), and for reporting and data 
                collection activities, related to programs 
                carried out under this subtitle; and] 
                monitoring and such additional corrective 
                actions as may be needed to strengthen the 
                management and programmatic practices of 
                eligible entities;
                  [(B) to distribute amounts in accordance with 
                subsection (c).]
                  (B) for State and local performance reporting 
                and program data collection activities related 
                to programs carried out under this subtitle;
                  (C) for the preparation of reports provided 
                for in section 678E;
                  (D) for the development and promulgation of a 
                common State Financial and Organizational 
                Protocol that is required to be used by States 
                under section 678B(b); and
                  (E) to distribute amounts in accordance with 
                subsection (c).

           *       *       *       *       *       *       *

    (b) Terms and Technical Assistance Process.-- * * *
          (1) * * *
          (2) incorporate mechanisms to ensure responsiveness 
        to local needs, including [an ongoing procedure for 
        obtaining input from the national and State networks of 
        eligible entities] a strategic plan for annual 
        technical assistance developed in consultation with the 
        national and State networks of eligible entities 
        regarding their management support needs.
    (c) Distribution Requirement.--
          (1) In general.--The amounts reserved under section 
        674(b)(2)(A) for activities to be carried out under 
        this subsection shall be distributed directly to 
        eligible entities organizations, or associations 
        described in paragraph (2) for the purpose of improving 
        program quality (including quality of financial 
        management practices), [management information and 
        reporting systems, and measurement of program results, 
        and for the purpose of ensuring responsiveness to 
        identified local needs.] improving management 
        information and reporting systems, measuring of program 
        results, ensuring responsiveness to identified local 
        needs, and reporting and disseminating successful 
        practices and initiatives.

           *       *       *       *       *       *       *


SEC. 678B. MONITORING [OF ELIGIBLE ENTITIES].

    (a) [In General] Monitoring of Eligible Entities.--In order 
to determine whether eligible entities meet the performance 
goals, administrative standards, financial management 
requirements, and other requirements of a State, the State 
shall conduct the following reviews of eligible entities:
          (1) A full onsite biennial review of each such entity 
        [at least once during each 3-year period].
          [(2) An onsite review of each newly designated entity 
        immediately after the completion of the first year in 
        which such entity receives funds through the community 
        services block grant program.]
          [(3)] (2) Followup annual reviews including prompt 
        return visits to eligible entities, and their programs, 
        that fail to meet the goals, standards, and 
        requirements established by the State.
          [(4)] (3) Other reviews as appropriate, including 
        reviews of entities with programs that have had other 
        Federal, State, or local grants (other than assistance 
        provided under this subtitle), terminated for cause.
    (b) Financial and Organizational Assessment Protocol.--
Beginning in fiscal year 2006, States shall implement a 
financial and organizational assessment protocol to monitor and 
evaluate the compliance of eligible entities with the financial 
and administrative requirements of this section. Such protocol 
shall incorporate the fiscal and organizational review 
procedures and standards appropriate to the management of 
Federal funds under this subtitle and the governance of the 
eligible private non-profit corporations or other eligible 
entities. The Secretary shall require the protocol to be 
developed jointly by the States and eligible entities and shall 
assist States in developing appropriate training for personnel 
monitoring the uses of funds under this subtitle according to 
the requirements of this section.
    [(b)] (c) Requests.--The State may request training and 
technical assistance from the Secretary as needed to comply 
with the requirements of this section.
    [(c)] (d) Evaluation by the Secretary.--The Secretary shall 
conduct in several States in each fiscal year evaluations 
(including investigations) of the use of funds received by the 
States under this subtitle in order to evaluate compliance with 
the provisions of this subtitle, and especially with respect to 
compliance with section 676(b). The Secretary shall submit, to 
each State evaluated, a report containing the results of such 
evaluations, and recommendations of improvements designed to 
enhance the benefit and impact of the activities carried out 
with such funds for people in need. On receiving the report, 
the State shall submit to the Secretary a plan of action in 
response to the recommendations contained in the report. [The 
results of the evaluations shall be submitted annually to the 
Chairperson of the Committee on Education and the Workforce of 
the House of Representatives and the Chairperson of the 
Committee on Labor and Human Resources of the Senate as part of 
the report submitted by the Secretary in accordance with 
section 678E(b)(2).] The Secretary shall annually submit a 
report including the results of the evaluations conducted under 
this subtitle, the State performance reports provided for 
pursuant to section 678E(a)(1)(C), and other material as 
provided by section 678E(b)(2) to the Committee on Education 
and the Workforce of the House of Representatives and the 
Committee on Health, Education, Labor, and Pensions of the 
Senate.

           *       *       *       *       *       *       *


SEC. 678C. CORRECTIVE ACTION; TERMINATION AND REDUCTION OF FUNDINGS.

    (a) Determination.--* * *
          (1) * * *

           *       *       *       *       *       *       *

          (4)(A) * * *
          (B) not later than 30 days after receiving from an 
        eligible entity a proposed quality improvement plan 
        pursuant to subparagraph (A), either approve such 
        proposed plan or specify the reasons why the proposed 
        plan cannot be approved; [and]
          [(5) after providing adequate notice and an 
        opportunity for a hearing, initiate proceedings to 
        terminate the designation of or reduce the funding 
        under this subtitle of the eligible entity unless the 
        entity corrects the deficiency.]
          (5) if the eligible entity fails to correct the 
        deficiency, notify the entity--
                  (A) that the State intends to initiate 
                proceedings to terminate the designation of the 
                entity as an eligible entity or to reduce, from 
                the previous year, the proportion of the total 
                funding received by the State under this 
                subtitle that is allocated to the eligible 
                entity;
                  (B) that the eligible entity has the right to 
                a hearing on the record to determine if there 
                is cause for such termination or reduction in 
                funding, as defined in section 676(c), and that 
                the request for a hearing must be made in 
                writing to the State within 30 days of receipt 
                of the notice from the State; and
                  (C) of the legal basis for the proposed 
                termination or reduction in funding, the 
                factual findings on which the proposed 
                termination or reduction in funding is based or 
                a reference to specific findings in another 
                document that form the basis for the proposed 
                termination or reduction in funding (such as a 
                reference to item numbers in an on-site review 
                report or instrument), and citation to any 
                statutory provisions, agreements, regulations, 
                or State plan; and
          (6) if the eligible entity requests a hearing, 
        conduct a hearing on the record to determine if there 
        is cause for termination or a reduction in funding, as 
        defined in section 676(c).
    (b) Review.--A determination to terminate the designation 
or reduce the funding of an eligible entity is reviewable by 
the Secretary. The Secretary shall, upon request, [review such 
a determination] review and either approve, or disapprove and 
reverse, such a determination. The review shall be completed 
not later than [90 days] 30 days after the Secretary receives 
from the State all necessary documentation relating to the 
determination to terminate the designation or reduce the 
funding. If the review is not completed within [90 days] 30 
days, the determination of the State shall become final at the 
end of the [90th day] 30th day.
    (c) Direct Assistance.--Whenever a State violates the 
assurances contained in section 676(b)(8) and terminates or 
reduces the funding of an eligible entity prior to the 
completion of the State hearing described in that section and 
the Secretary's review as required in subsection (b), the 
Secretary is authorized to provide financial assistance under 
this subtitle to the eligible entity affected until the 
violation is corrected. In such a case, the grant or allotment 
for the State under section 675A or 675B for the earliest 
appropriate fiscal year shall be reduced by an amount equal to 
the funds provided under this subsection to such eligible 
entity. The Secretary shall continue to fund an eligible 
entity, in an amount equal to the same proportion of total 
funds received by the State under this subtitle as was 
allocated to the eligible entity the previous year, until the 
Secretary approves, or disapproves and reverses, the 
determination of termination or reduction in funding with 
respect to the State.

           *       *       *       *       *       *       *


SEC. 678D. FISCAL CONTROLS, AUDITS, AND WITHHOLDING.

    (a) Fiscal Controls, Procedures, Audits, and Inspections.--
          (1) In general.--* * *
                  (A) * * *

           *       *       *       *       *       *       *

                  (C) subject to paragraph (2), prepare, at 
                least every year, an audit of the expenditures 
                of the State of amounts received under this 
                subtitle and amounts transferred to carry out 
                the purposes of this subtitle; [and]
                  (D) notwithstanding paragraph (2)(B), 
                beginning in fiscal year 2005, and not less 
                than every 2 years thereafter, each State shall 
                submit to the Secretary a separate audit of the 
                funds appropriated under this subtitle that 
                meets the standards in paragraph (2)(A);
                  (E) submit full financial reports to the 
                Secretary not later than 6 months following the 
                end of each fiscal year; and
                  [(D)] (F) make appropriate books, documents, 
                papers, and records available to the Secretary 
                and the Comptroller General of the United 
                States, or any of their duly authorized 
                representatives, for examination, copying, or 
                mechanical reproduction on or off the premises 
                of the appropriate entity upon a reasonable 
                request for the items.

           *       *       *       *       *       *       *

    (b) Withholding.--
          (1) In general.--The Secretary shall, after providing 
        adequate notice and an opportunity for a hearing 
        conducted within the affected State, withhold funds 
        from any State that does not utilize the grant or 
        allotment under section 675A or 675B in accordance with 
        the provisions of this subtitle, including the 
        assurances such State provided under section 676. The 
        Secretary, after providing adequate notice, shall 
        withhold administrative funds described in section 
        675C(b)(2) from any State that fails to comply with the 
        provision of sections 678A through 678D(a), and may, 
        after an opportunity for a hearing conducted within the 
        affected State, withhold funds from the State and 
        provide such funds directly to the eligible entities in 
        such State upon a demonstration of the compliance by 
        such entities with the requirements of this subtitle.

           *       *       *       *       *       *       *


[SEC. 678E. ACCOUNTABILITY AND REPORTING REQUIREMENTS.

    [(A) State Accountability and Reporting Requirements.--
        [(1) Performance measurement.--
                  [(A) In general.--By October 1, 2001, each 
                State that receives funds under this subtitle 
                shall participate, and shall ensure that all 
                eligible entities in the State participate, in 
                a performance measurement system, which may be 
                a performance measurement system for which the 
                Secretary facilitated development pursuant to 
                subsection (b), or an alternative system that 
                the Secretary is satisfied meets the 
                requirements of subsection (b).
                  [(B) Local agencies.--The State may elect to 
                have local agencies that are subcontractors of 
                the eligible entities under this subtitle 
                participate in the performance measurement 
                system. If the State makes that election, 
                references in this section to eligible entitles 
                shall be considered to include the local 
                agencies.
          [(2) Annual report.--Each State shall annually 
        prepare and submit to the Secretary a report on the 
        measured performance of the State and the eligible 
        entities in the State. Prior to the participation of 
        the State in the performance measurement system, the 
        State shall include in the report any information 
        collected by the State relating to such performance. 
        Each State shall also include in the report an 
        accounting of the expenditure of funds received by the 
        State through the community services block grant 
        program, including an accounting of funds spent on 
        administrative costs by the State and the eligible 
        entities, and funds spent by eligible entities on the 
        direct delivery of local services, and shall include 
        information on the number of and characteristics of 
        clients served under this subtitle in the State, based 
        on data collected from the eligible entities. The State 
        shall also include in the report a summary describing 
        the training and technical assistance offered by the 
        State under section 678C(a)(3) during the year covered 
        by the report.
    [(b) Secretary's Accountability and Reporting 
Requirements.--
          [(1) Performance measurement.--The Secretary, in 
        collaboration with the States and with eligible 
        entities throughout the Nation, shall facilitate the 
        development of one or more model performance 
        measurement systems, which may be used by the State and 
        by eligible entities to measure their performance in 
        carrying out the requirements of this subtitle and in 
        achieving the goals of their community action plans. 
        The Secretary shall provide technical assistance, 
        including support for the enhancement of electronic 
        data systems, to States and to eligible entities to 
        enhance their capability to collect and report data for 
        such a system and to aid in their participation in such 
        a system.
          [(2) Reporting requirements.--At the end of each 
        fiscal year beginning after September 30, 1999, the 
        Secretary shall, directly or by grant or contract, 
        prepare a report containing--
                  [(A) a summary of the planned use of funds by 
                each State, and the eligible entities in the 
                State, under the community services block grant 
                program, as contained in each State plan 
                submitted pursuant to section 676;
                  [(B) a description of how funds were actually 
                spent by the State and eligible entities in the 
                State, including a breakdown of funds spent on 
                administrative costs and on the direct delivery 
                of local services by eligible entities;
                  [(C) information on the number of entities 
                eligible for funds under this subtitle, the 
                number of low-income persons served under this 
                subtitle, and such demographic data on the low-
                income populations served by eligible entities 
                as is determined by the Secretary to be 
                feasible;
                  [(D) a comparison of the planned uses of 
                funds for each State and the actual uses of the 
                funds;
                  [(E) a summary of each State's performance 
                results, and the results for the eligible 
                entities, as collected and submitted by the 
                States in accordance with subsection (a)(2); 
                and
                  [(F) any additional information that the 
                Secretary considers to be appropriate to carry 
                out this subtitle, if the Secretary informs the 
                States of the need for such additional 
                information and allows a reasonable period of 
                time for the States to collect and provide the 
                information.
          [(3) Submission.--The Secretary shall submit to the 
        Committee on Education and the Workforce of the House 
        of Representatives of the Committee on Labor and Human 
        Resources of the Senate the report described in 
        paragraph (2) and any comments the Secretary may have 
        with respect to such report. The report shall include 
        definitions of direct and administrative costs used by 
        the Department of Health and Human Services for 
        programs funded under this subtitle.
          [(4) Costs.--Of the funds reserved under section 
        674(b)(3), not more than $350,000 shall be available to 
        carry out the reporting requirements contained in 
        paragraph (2).]

SEC. 678E. ACCOUNTABILITY AND REPORTING REQUIREMENTS.

    (a) State Accountability and Reporting Requirements.--
          (1) Performance measurement of eligible entities.--
                  (A) In general.--Each State that receives 
                funds under this subtitle shall participate, 
                and shall ensure that all eligible entities in 
                the State participate, in a performance 
                measurement system, which may be a performance 
                measurement system for which the Secretary 
                facilitated development pursuant to subsection 
                (b), or an alternative system that the 
                Secretary is satisfied meets the requirements 
                of subsection (b).
                  (B) Local agencies.--The State may elect to 
                have local agencies that are subcontractors of 
                the eligible entities under this subtitle 
                participate in the performance measurement 
                system. If the State makes that election, 
                references in this section to eligible entities 
                shall be considered to include the local 
                agencies.
                  (C) Performance measurement of states.--Not 
                later than 1 year after the date of enactment 
                of the Poverty Reduction and Prevention Act, 
                the Secretary shall establish, in consultation 
                with States and eligible entities, performance 
                standards for the State administration of block 
                grant funds. Such standards shall include 
                standards relating to--
                          (i) the timeliness of the 
                        availability of State plans for public 
                        comment as required under section 
                        676(a)(2)(B) and of submission of such 
                        plans to the Secretary as required in 
                        section 676(b);
                          (ii) the utilization of the financial 
                        and organizational assessment protocol 
                        established under section 678B(b), 
                        including the training and skills of 
                        State personnel responsible for such 
                        oversight, the completion of annual 
                        monitoring, the identification of 
                        opportunities for improvement, andthe 
implementation of plans to enhance the management capacity and 
infrastructure of eligible entities;
                          (iii) the timeliness of the 
                        distribution of block grants funds to 
                        eligible entities as provided in 
                        section 675C(a);
                          (iv) the resources made available for 
                        management development at eligible 
                        entities, including monitoring, 
                        training, and assistance with financial 
                        management and program information and 
                        assessment systems;
                          (v) the results of State efforts to 
                        coordinate eligible entity programs 
                        with other State programs for low-
                        income individuals and their families, 
                        especially participants in the program 
                        of block grants to States for temporary 
                        assistance for needy families under 
                        part A of title IV of the Social 
                        Security Act (42 U.S.C. 601 et seq.) 
                        and other working families, and to 
                        ensure the participation of eligible 
                        entities in the development of 
                        statewide strategies to reduce poverty; 
                        and
                          (vi) the assistance provided to 
                        eligible entities in securing private 
                        partnerships as required in section 
                        676(b).
          (2) Annual report.--Each State shall annually prepare 
        and submit to the Secretary a report on the measured 
        performance of the State and the eligible entities in 
        the State. The State shall include in the report any 
        information collected by the State relating to such 
        performance. Each State shall also include in the 
        report an accounting of the expenditure of funds 
        received by the State through the community services 
        block grant program, including an accounting of funds 
        spent on administrative costs by the State and the 
        eligible entities, funds spent by eligible entities on 
        the direct delivery of local services, and the 
        achievement of national goals established under the 
        procedures described in this section, and shall include 
        information on the number of and characteristics of 
        clients served under this subtitle in the State, based 
        on data collected from the eligible entities. The State 
        shall also include in the report a summary describing 
        the training and technical assistance offered by the 
        State under section 678C(a)(3) during the year covered 
        by the report.
    (b) Local Entity Accountability and Reporting 
Requirements.--
          (1) Local entity determined goals.--In order to be 
        designated as an eligible entity and to receive a grant 
        under this subtitle, a grantee shall establish grantee 
        determined goals for reducing poverty in the community, 
        including goals for--
                  (A) leveraging community resources;
                  (B) fostering coordination of Federal, State, 
                local, private, and other assistance; and
                  (C) promoting community involvement.
          (2) Demonstration that goals were met.--In order to 
        receive a grant subsequent to the first grant that is 
        provided to an eligible entity following the date of 
        enactment of the Poverty Reduction and Prevention Act, 
        the entity shall demonstrate to the State that 
        substantial progress has been made in meeting the goals 
        of the entity as described in paragraph (1).
          (3) Goals or performance measures.--Any specific 
        goals or performance measures, for an individual 
        eligible entity, that are used in any monitoring or 
        review process under this subtitle, shall be--
                  (A) determined by the entity;
                  (B) agreed on by the State involved and the 
                entity, during the planning process leading to 
                the grant involved; and
                  (C) incorporated into the grant agreement 
                between the State and entity for each 
                subsequent award cycle.
    (c) Secretary's Accountability and Reporting 
Requirements.--
          (1) Federal performance measurement.--The Secretary 
        shall establish goals for the Department of Health and 
        Human Services Office of Community Services with 
        respect to--
                  (A) the timeliness of the distribution of 
                funds under this subtitle, including funds for 
                training and technical assistance;
                  (B) the monitoring of States as provided for 
                in section 678D;
                  (C) the coordination of other Office of 
                Community Service programs with the activities 
                of States and eligible entities under this 
                subtitle; and
                  (D) the full and timely reporting as required 
                in this section.
          (2) Local performance measurement.--
                  (A) In general.--To the maximum extent 
                practicable, the Secretary shall coordinate 
                reporting requirements for all programs of the 
                Department of Health and Human Services that 
                are managed by eligible entities so as to 
                consolidate and reduce the number of reports 
                required relating to individuals, families, and 
                uses of grant funds, specifically funds under 
                the Head Start Act (42 U.S.C. 9831 et seq.), 
                the Low-Income Home Energy Assistance Act of 
                1981 (42 U.S.C. 8621 et seq.), child care 
                programs administered by the Department, and 
                health related service programs administered by 
                the Department.
                  (B) Technical assistance.--The Secretary 
                shall provide technical assistance, including 
                support for the enhancement of electronic data 
                systems, to States and to eligible entities to 
                enhance their capability to collect and report 
                data for such a system and to aid in their 
                participation in such a system.
                  (C) Local entity performance measurement 
                system.--The Secretary shall assist in the 
                implementation of a local entity performance 
                measurement system, and other voluntary 
                programmatic and results reporting systems, 
                developed by States, eligible entities, and 
                their national associations acting together. 
                The Secretary and the developers of such 
                systems shall ensure that the set of measures 
                are numerous enough to cover the full range of 
                services offered by all local eligible 
                entities. Under such a system, local eligible 
                entities shall only be compelled to collect 
                data on the subset of performance measures that 
                reflect their community-specific programs and 
                services currently adopted. Grantees shall not 
                be required under this subparagraph to alter 
                the collection of data for any reports provided 
                for other programs within the Department of 
                Health and Human Services or other Federal 
                agencies. States shall compile annual Results 
                Oriented Management and Accountability System 
                reports for the Secretary under this 
                subparagraph.
          (3) Reporting requirement.--For each fiscal year the 
        Secretary shall, directly or by grant or contract, 
        prepare a report containing--
                  (A) a summary of the planned use of funds by 
                each State, and the eligible entities in the 
                State, under the community services block 
grantprogram, as contained in each State plan submitted pursuant to 
section 676;
                  (B) a description of how funds were actually 
                spent by the State and eligible entities in the 
                State, including a breakdown of funds spent on 
                administrative costs and on the direct delivery 
                of local programs by eligible entities;
                  (C) information on the number of entities 
                eligible for funds under this subtitle, the 
                number of low-income persons served under this 
                subtitle, and such demographic data on the low-
                income populations served by eligible entities 
                as is determined by the Secretary to be 
                feasible;
                  (D) a comparison of the planned uses of funds 
                for each State and the actual uses of the 
                funds;
                  (E) a summary of each State's performance 
                results, and the results for the eligible 
                entities, as collected and submitted by the 
                States in accordance with subsection (a)(2); 
                and
                  (F) any additional information that the 
                Secretary considers to be appropriate to carry 
                out this subtitle, if the Secretary informs the 
                States of the need for such additional 
                information and allows a reasonable period of 
                time for the States to collect and provide the 
                information.
          (4) Submission.--The Secretary shall submit to the 
        Committee on Education and the Workforce of the House 
        of Representatives and the Committee on Health, 
        Education, Labor, and Pensions of the Senate the report 
        described in paragraph (2), and any comments the 
        Secretary may have with respect to such report. The 
        report shall include definitions of direct and 
        administrative costs used by the Department of Health 
        and Human Services for programs funded under this 
        subtitle.
          (5) Costs.--Of the funds reserved under section 
        674(b)(3), not more than $500,000 shall be available to 
        carry out the reporting requirements contained in 
        paragraph (3).

           *       *       *       *       *       *       *


SEC. 678F. LIMITATIONS ON USE OF FUNDS.

    (A) Construction of Facilities.--
          (1) Limitations.--* * *

           *       *       *       *       *       *       *

    (c) Nondiscrimination.--
          (1) In general.--No person shall, on the basis of 
        race, religion, color, national origin, or sex be 
        excluded from participation in, be denied the benefits 
        of, or be subjected to discrimination under, any 
        program or activity funded in whole or in part with 
        funds made available under this subtitle. Any 
        prohibition against discrimination on the basis of age 
        under the Age Discrimination Act of 1975 (42 U.S.C. 
        6106 et seq.) or with respect to an otherwise qualified 
        individual with a disability as provided in section 504 
        of the Rehabilitation Act of 1973 (29 U.S.C. 794), or 
        title II of the Americans with Disabilities Act of 1990 
        (42 U.S.C. 12131 et seq.) shall also apply to any such 
        program or activity.

           *       *       *       *       *       *       *


SEC. 679. OPERATIONAL RULE.

    (a) Religious Organizations Included as Nongovernmental 
Providers.--For any program carried out by the Federal 
Government, or by a State or local government under this 
subtitle the government shall consider, on the same basis as 
other nongovernmental organizations, religious organizations to 
provide the assistance under the program, so long as the 
program is implemented in a manner consistent with the 
Establishment Clause of the first amendment to the Constitution 
and such organization meets the requirements of this subtitle. 
Neither the Federal Government nor a State or local government 
receiving funds under this subtitle discriminate against an 
organization that provides assistance under, or applies to 
provide assistance under, this subtitle, on the basis that the 
organization has a religious character.

           *       *       *       *       *       *       *


SEC. 680. DISCRETIONARY AUTHORITY OF THE SECRETARY.

    (a) Grants, Contracts, Arrangements, Loans and 
Guarantees.--
          (1) In general.--* * *
          (2) Community economic development.--
                  [(A) Economic development activities.--The 
                Secretary shall make grants described in 
                paragraph (1) on a competitive basis to 
                private, nonprofit organizations that are 
                community development corporations to provide 
                technical and financial assistance for economic 
                development activities designed to address the 
                economic needs of low-income individuals and 
                families by creating employment and business 
                development opportunities.]
                  (A) Economic development activities.--The 
                Secretary shall make grants described in 
                paragraph (1) on a competitive basis to 
                private, nonprofit organizations that are 
                community development corporations to provide 
                technical and financial assistance for economic 
                development activities, including business, 
                economic, and community development projects, 
                designed to address the economic needs of low-
                income individuals and families by creating 
                employment and business development 
                opportunities. Such assistance shall includ--
                          (i) long term loans (up to 15 years) 
                        or investments for private business 
                        enterprises;
                          (ii) providing capital to businesses 
                        owned by community development 
                        corporations; and
                          (iii) marketing and management 
                        assistance for businesses providing 
                        jobs and business opportunities to low-
                        income individuals.
                  (B) Federal interest.--
                          (i) In general.--The Secretary shall 
                        establish procedures that permit a 
                        grantee who receives funds under a 
                        grant to carry out this paragraph, or 
                        intangible assets acquired with such 
                        funds, to become the sole owner of the 
                        funds or assets before the end of the 
                        12-year period beginning at the end of 
                        the fiscal year for which the grant is 
                        made.
                          (ii) Conditions.--To be eligible to 
                        become the sole owner, the grantee 
                        shall agree--
                                  (I) to use the funds or 
                                assets for the purposes and 
                                uses for which the grant was 
                                made, or purposes and uses 
                                consistent with this subtitle, 
                                during and after the 12-year 
                                period described in clause (i), 
                                whether or not the grantee 
                                continues to be supported by 
                                Federal funds; and
                                  (II) that, when the grantee 
                                no longer needs the funds or 
                                assets for purposes and uses 
                                described in subclause (I), the 
                                grantee shall request 
                                instructions from the Secretary 
                                about the disposition of the 
                                funds or assets.
                          (iii) Encumbering.--The grantee may 
                        not encumber the assets without the 
                        approval of the Secretary.
                  (C) Administrative requirements.--In a case 
                in which an eligible project under grant made 
                under this section cannot, for good cause, be 
                implemented, the Secretary shall establish a 
                policy to permit the substitution of other 
                eligible projects. Such policy shall require 
                that such project have the same impact area, 
                the same goals, and the same objectives as the 
                original project and outcomes that are 
                substantially the same as the original project.
                  [(B)] (D) Consultation.--The Secretary shall 
                exercise the authority provided under 
                subparagraph (A) after consultation with other 
                relevant Federal officials.
                  [(C)] (E) Governing boards.--For a community 
                development corporation to receive funds to 
                carry out this paragraph, the corporation shall 
                be governed by a board that shall consist of 
                residents of [the community] the service area 
                and business and civic leaders and shall have 
                as a principal purpose planning, developing, or 
                managing low-income housing or community 
                development projects.
                  [(D)] (F) Geographic distribution.--In making 
                grants to carry out this paragraph, the 
                Secretary shall take into consideration the 
                geographic distribution of funding among States 
                and the relative proportion of funding among 
                rural and urban areas.
                  [(E)] (G) Reservation.--Of the amounts made 
                available to carry out this paragraph, the 
                Secretary may reserve not more than [1 percent] 
                2 percent for each fiscal year to make grants 
                to private, nonprofit organizations or to enter 
                into contracts with private, nonprofit or for-
                profit organizations to provide technical 
                assistance to aid community development 
                corporations in developing or implementing 
                activities funded to carry out this paragraph 
                and to evaluate activities funded to carry out 
                this paragraph.
          (3) Rural community development activities.--* * *
                  (A) * * *
                  (B) grants to multistate, regional, private, 
                nonprofit organizations to enable the 
                organizations to provide training and technical 
                assistance to small, rural communities 
                concerning meeting their [community] water and 
                waste water facility needs.
          (4) Neighborhood innovation projects.--The Secretary 
        shall provide the assistance described in paragraph (1) 
        for neighborhood innovation projects, which shall 
        include providing grants to neighborhood-based private, 
        nonprofit organizations to test or assist in the 
        development of new approaches or methods that will aid 
        in overcoming special problems identified by 
        communities or neighborhoods or otherwise assist in 
        furthering the purposes of this subtitle, and which may 
        include providing assistance for projects that are 
        designed to serve low-income [individuals and families] 
        individuals and their families who are not being 
        effectively served by other programs.

           *       *       *       *       *       *       *

    (c) Annual Report.--The Secretary, shall compile an annual 
report containing a summary of the evaluations required in 
subsection (b) and a listing of all activities assisted under 
this section. The Secretary shall annually submit the report to 
the Chairperson of the Committee on Education and the Workforce 
of the House of Representatives and the Chairperson of the 
Committee on [Labor and Human Resources] Health, Education, 
Labor, and Pensions of the Senate.

           *       *       *       *       *       *       *


SEC. 681. COMMUNITY FOOD AND NUTRITION PROGRAMS.

    (a) Grants.--* * *

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

    (d) Authorization of Appropriations.--There are authorized 
to be appropriated to carry out this section such sums as may 
be necessary for each of fiscal years [1999 through 2003] 2004 
through 2009.

           *       *       *       *       *       *       *


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

    (a) General Authority.--* * *
    (b) Program Requirements.--* * *
          (1) * * *
          (2) an initial medical examination and follow-up 
        referral [or treatment], without charge, for youth 
        during their participation in such activity;

           *       *       *       *       *       *       *

    (g) Authorization of Appropriations.--There are authorized 
to be appropriated [$15,000,000 for each of fiscal years 1999 
through 2003] $18,000,000 for each of fiscal years 2004 through 
2009 for grants to carry out this section.

           *       *       *       *       *       *       *


LOW-INCOME HOME ENERGY ASSISTANCE ACT OF 1981

           *       *       *       *       *       *       *



                     HOME ENERGY GRANTS AUTHORIZED

    Sec. 2602. (a) * * *
    (b) There are authorized to be appropriated to carry out 
the provisions of this title (other than section 2607A), 
$2,000,000,000 for each of fiscal years 1995 through 1999, 
[such sums as may be necessary for each of fiscal years 2000 
and 2001, and $2,000,000,000 for each of fiscal years 2002 
through 2004.] and $3,400,000,000 for each of fiscal years 2004 
through 2006, and such sums as may be necessary for each of 
fiscal years 2007 through 2010. The authorizations of 
appropriations contained in this subsection are subject to the 
program year provisions of subsection (c).
    (c) Amounts appropriated under this section for any fiscal 
year for programs and activities authorized under this title 
shall be made available for obligation in the succeeding fiscal 
year.
    (d)(1) There is authorized to be appropriated to carry out 
section 2607A, $30,000,000 for each of fiscal years [1999 
through 2004], 2004 through 2010 except as provided in 
paragraph (2).
    (2) For any of fiscal years [1999 through 2004] 2004 
through 2010 for which the amount appropriated under subsection 
(b) is not less than $1,400,000,000, there is authorized to be 
appropriated $50,000,000 to carry out section 2607A.

                            STATE ALLOTMENTS

    Sec. 2604. (a)(1)(A) * * *

           *       *       *       *       *       *       *

    (e) Notwithstanding subsections (a) through (d), the 
Secretary may allot amounts appropriated pursuant to section 
2602(e) to one or more than one State. In determining whether 
to make such an allotment to a State, the Secretary shall take 
into account the extent to which the State was affected by the 
natural disaster or other emergency involved, the availability 
to the State of other resources under the program carried out 
under this title or any other program, and such other factors 
as the Secretary may find to be relevant. Not later than 30 
days after making the determination, but prior to releasing an 
allotted amount to a State, the Secretary shall notify Congress 
of the allotments made pursuant to this subsection.
    Notwithstanding any other provision of this section for 
purposes of making determinations under section 2603(1)(C), if 
the Secretary determines that there is an increase of at least 
20 percent in the cost of home energy over the previous 5-year 
average for a duration of a month or more in 1 or more States 
or regions, the Secretary shall declare an energy emergency in 
the affected area and shall make available funds as provided in 
this subsection. Notwithstanding any other provision of this 
section, for purposes of making such determinations, if the 
Secretary determines that the number of heating degree days or 
cooling days for a month was more than 100 above the 30-year 
average in 1 or more States or regions, the Secretary shall 
declare an energy emergency in the affected area and shall make 
available funds as provided in this subsection.

           *       *       *       *       *       *       *


TITLE 42, UNITED STATES CODE ANNOTATED

           *       *       *       *       *       *       *


                      ASSETS FOR INDEPENDENCE ACT


SEC. 401. SHORT TITLE.

           *       *       *       *       *       *       *


SEC. 404. DEFINITIONS.

    In this title:
          (1) Applicable period.--* * *

           *       *       *       *       *       *       *

          (8) Qualified expenses.--* * *
                  (A) Postsecondary educational expenses.--
                Postsecondary educational expenses paid from an 
                individual development account directly to an 
                eligible educational institution or to a vendor 
                following approval by a qualified entity upon 
                submission of an approved qualified education 
                purchase plan.  In this subparagraph:
                          (i) Postsecondary educational 
                        expenses.--* * *

           *       *       *       *       *       *       *

                          (iii) Qualified education purchase 
                        plan.--The term ``qualified education 
                        purchase plan'' means a document that 
                        explains the education item to be 
                        purchased which--
                                  (I) is approved by a 
                                qualified entity; and
                                  (II) includes a description 
                                of the good to be purchased.

           *       *       *       *       *       *       *

                  (D) Transfers to idas of family members.--
                Amounts paid from an individual development 
                account directly into another such account 
                established for the benefit of an [eligible] 
                individual who is--
                          (i) * * *
                          (ii) * * *
                  (E) Saving in idas for dependents.--Amounts 
                paid to an individual development account 
                established for the benefit of a dependent (as 
                such terms is defined for purposes of 
                subparagraph (D)(ii)) of an eligible individual 
                for the purpose of postsecondary education.

           *       *       *       *       *       *       *


SEC. 405. APPLICATIONS.

    (a) Announcement of Demonstration Projects.--* * *

           *       *       *       *       *       *       *

    [(g) Grandfathering of Existing Statewide Programs.--Any 
statewide individual asset-building program that is carried out 
in a manner consistent with the purposes of this title [this 
note], that is established under State law as of the date of 
enactment of this Act [Oct. 27, 1998], and that as of such date 
is operating with an annual State appropriation of not less 
than $1,000,000 in non-Federal funds, shall be deemed to meet 
the eligibility requirements of this subtitle [sic; probably 
should be ``title'', meaning ``this note''], and the entity 
carrying out the program shall be deemed to be a qualified 
entity. The Secretary shall consider funding the statewide 
program as a demonstration project described in this subtitle 
[sic; probably should be ``title'', meaning ``this note'']. In 
considering the statewide program for funding, the Secretary 
shall review an application submitted by the entity carrying 
out such statewide program under this section, not withstanding 
the preference requirements listed in subsection (d). Any 
program requirements under sections 407 through 411 [of this 
note] that are inconsistent with State statutory requirements 
in effect on the date of enactment of this Act [Oct. 27, 1998], 
governing such statewide program, shall not apply to the 
program.]

           *       *       *       *       *       *       *


SEC. 407. RESERVE FUND.

    (a) Establishment.--* * *
    (b) Amounts in Reserve Fund.--
          (1) In general.--* * *
                  (A) all grant funds provided to the qualified 
                entity from the Secretary for the purpose of 
                the demonstration project as described under 
                subsection (c)(1);
                  [(A)] (B) all funds provided to the qualified 
                entity from any public or private source in 
                connection with the demonstration project; and
                  [(B)] (C) the proceeds from any investment 
                made under subsection (c)(2).
          (2) Uniform accounting regulations.--* * *
          (3) Rule of construction.--Nothing in paragraph 
        (1)(A) shall be construed to preclude a qualified 
        entity from depositing other demonstration project 
        funds into the Reserve Fund.
    (c) Use of Amounts in the Reserve Fund.--
          (1) In general.--* * *

           *       *       *       *       *       *       *

          (4) Use of non-federal funds.--
                  (A) In general.--Notwithstanding paragraph 
                (3), not more than 20 percent of the amount of 
                non-Federal funds committed to a project as 
                matching contributions in accordance with the 
                application submitted by the qualified entity 
                under section 405(c)(4) shall be used by the 
                qualified entity for the purposes described in 
                subparagraphs (A), (C), and (D) of paragraph 
                (1).
                  (B) Priority.--In awarding grants under 
                section 406(b), the Secretary shall give 
                priority to qualified entities that submit 
                applications that, with respect to the 
                commitment of non-Federal funds under section 
                405(c)(4), provide assurances that not to 
                exceed 15 percent of such non-Federal funds 
                will be used by the qualified entity for the 
                purposes described in subparagraphs (A), (C), 
                and (D) of paragraph (1).
    (d) Unused Federal Grant Funds Transferred to the Secretary 
When Project Terminates.--Notwithstanding subsection (c), upon 
the date that is 12 months after the termination of any 
demonstration project authorized under this section, the 
qualified entity conducting the project shall transfer to the 
Secretary an amount equal to--

           *       *       *       *       *       *       *


SEC. 408. ELIGIBILITY FOR PARTICIPATION.

    (a) In General.--* * *
          [(1) Income test.--The adjusted gross income of the 
        household is equal to or less than 200 percent of the 
        poverty line (as determined by the Office of Management 
        and Budget) or the earned income amount described in 
        section 32 of the Internal Revenue Code of 1986 [26 
        U.S.C.A. Sec. 32] (taking into account the size of the 
        household).]
          (1) Income test.--The--
                  (A) gross income of the household is equal to 
                or less than--
                          (i) 200 percent of the poverty line 
                        (as determined by the Secretary of 
                        Health and Human Services);
                          (ii) the earned income amount 
                        described in section 32 of the Internal 
                        Revenue Code of 1986 (taking into 
                        account the size of the household); or
                          (iii) 80 percent of the Area Median 
                        Income (as determined by the Department 
                        of Housing and Urban Development); or
                  (B) the modified adjusted gross income of the 
                household for the previous year does not exceed 
                $18,000 for an individual filer, $30,000 for a 
                head of household, or $38,000 for a joint 
                filer.

           *       *       *       *       *       *       *


SEC. 410. DEPOSITS BY QUALIFIED ENTITIES.

    (a) In General.--Not less than once every 3 months during 
each project year, each qualified entity under this title [this 
note] shall deposit in the individual development account of 
each individual participating in the project, or into a 
parallel account maintained by the [qualified entity--
          [(1) from the non-Federal funds described in section 
        405(c)(4) [of this note], a matching contribution of 
        not less than $0.50 and not more than $4 for every $1 
        of earned income (as defined in section 911(d)(2) of 
        the Internal Revenue Code of 1986) [26 U.S.C.A. 
        Sec. 911(d)(2)] deposited in the account by a project 
        participant during that period;
          [(2) from the grant made under section 406(b) [of 
        this note], an amount equal to the matching 
        contribution made under paragraph (1); and
          [(3) any interest that has accrued on amounts 
        deposited under paragraph (1) or (2) on behalf of that 
        individual into the individual development account of 
        the individual or into a parallel account maintained by 
        the qualified entity.] qualified entity, a matching 
        contributions of not less than $0.50 and not more than 
        $4 for every $1 of earned income (as defined in section 
        911(d)(2) of Internal Revenue Code of 1986) deposited 
        in the account and interest earned on that account by a 
        project participant during that period. Matching 
        contribution shall be made--
          (1) from the non-Federal funds described in section 
        405(c)(4); and
          (2) from the grant made under section 406(b); based 
        on a ratio relating to the sources of funds described 
        in paragraph (1) and (2) as determined by the qualified 
        entity, consistent with the requirements of section 
        407(c).
    (b) Use of Excess Interest on Matching Funds Earned on the 
Reserve Fund.--Interest that accrues on the matching funds 
earned and held in the Reserve Fund, over and above the 
interest required to match an individual's deposits and 
interest earned in the individual development account, shall be 
used by the qualified entity to fund existing individual 
development accounts or additional individual development 
accounts.
    [(b)] (c) Limitation on Deposits for an Individual.--Not 
more than $2,000 from a grant made under section 408(b) [of 
this note] shall be provided to any one individual over the 
course of the demonstration project
    [(c)] (d) Limitation on Deposits for a Household.-- * * *
    [(d)] (e) Withdrawal of Funds.-- * * *
    [(e)] (f) Reimbursement.--

           *       *       *       *       *       *       *


SEC. 416 AUTHORIZATION OF APPROPRIATIONS.

    There is authorized to be appropriated to carry out this 
title [this note], $25,000,000 for each of fiscal years 1999, 
2000, 2001, 2002, [and 2003,] and 2003, $25,000,000 for fiscal 
year 2004, and such sums as may be necessary for each of fiscal 
years 2005 through 2008, to remain available until expended.

           *       *       *       *       *       *       *