The Senate Amendment names Title IV the Food Stamp Reauthorization Act of 2001. (Section 401)

The House bill contains no comparable provision.

The Conference substitute adopts the Senate provision. (Section 4001)

Subtitle A–Food Stamp Program

The House bill adds new types of income exclusions: at state option, education assistance that is required to be excluded under its Medicaid rules; "state complementary assistance program payments" that are excluded under Medicaid rules; and at state option, any income the state does not consider when determining eligibility for cash assistance under its Temporary Assistance for Needy Families (TANF) program or eligibility for medical assistance under its Medicaid program. Under the third exclusion authority, states are specifically not permitted to exclude earned income, various Social Security Act payments (e.g., Supplemental Security Income (SSI), Social Security disability and retirement benefits, and foster care and adoption assistance payments), or other types of income the Secretary judges essential to equitable eligibility determinations. (Section 401)

The Senate amendment adds new income exclusions: education assistance, "state complementary assistance program payments," same as the House bill with technical differences and at state option; any types of income the state does not consider when determining eligibility for or the amount of cash assistance under its TANF program or eligibility for medical assistance under its Medicaid program. Under the third exclusion authority, states are specifically not permitted to exclude wages or salaries, various Social Security Act payments, regular payments from a government source (such as unemployment benefits and general assistance), workers’ compensation, child support payments (for the recipient), or other types of income the Secretary judges essential to equitable eligibility determinations. It is the intent of this provision to align, to the extent possible, with Medicaid and TANF rules and that the Secretary will only add additional types of income that are judged to be absolutely essential to make equitable determinations of eligibility in the food stamp program. (Section 412)

The Conference substitute adopts the Senate provision. (Section 4102)

The Managers intend that this provision will allow states to eliminate consideration of any types of income they do not consider when judging eligibility for temporary assistance to needy families (TANF) cash assistance or those required to be covered by Medicaid. It does not include items that are included in the definition of income but part of which are disregarded for the purposes of TANF and Medicaid by state agencies.

The House bill establishes multiple standard deductions equal to 9.7 percent of the federal poverty income guideline amounts used for food stamp income eligibility determinations in FY2002. The new standard deductions would remain fixed over time. It also requires that the new standard deductions not be less than the current amount for each jurisdiction or greater than 9.7 percent of the FY2002 poverty guideline amounts for a 6-person household. In the case of the Virgin Islands, the new standard deductions would be similar to those for the 48 states and the District of Columbia. In the case of Guam, a special rule would maintain standard deduction levels at about twice the levels for the 48 states and the District of Columbia. (Section 402)

The Senate amendment establishes multiple standard deductions equal to an increasing percentage of the inflation-indexed federal poverty income guideline amounts used for food stamp income eligibility determinations: for FY2002-FY2004, the new standard deductions would equal 8 percent of each year’s poverty guideline amounts; _ for FY2005-FY2007, the new standard deductions would equal 8.5 percent of each year’s poverty guideline amounts; for FY2008-FY2010, the new standard deductions would equal 9 percent of each year’s poverty guideline amounts; and for FY2011and each following year, the new standard deductions would equal 10 percent of each year’s poverty guideline amounts. The Senate amendment also requires that the new standard deductions not be less than the current amount for each jurisdiction or greater than the applicable percentage (noted above) of the poverty guideline amounts for a 6-person household. In the case of the Virgin Islands, the new standard deductions would be similar to those for the 48 states and the District of Columbia. In the case of Guam, a special rule would maintain standard deduction levels at about twice the levels for the 48 states and the District of Columbia. (Section 171(c)(2), replacing Section 413)

The Conference substitute adopts the House provision with an amendment that sets the standard deduction equal to 8.31 percent of the inflation-indexed federal poverty income guideline used for food stamp income eligibility determinations and includes comparable provisions for the Virgin Islands and Guam. (Section 4103)

The House bill provides, at state option, for 6 months of transitional food stamp benefits for families no longer eligible to receive Temporary Assistance for Needy Families (TANF). Households could receive transitional benefits for up to 6 months after termination of cash assistance, regardless of whether their certification period expires during the transitional period. The transitional benefit amount would be equal to the monthly allotment households received in the month immediately prior to termination. Households receiving transitional benefits could apply for food stamps under regular rules at any time during the transitional period. In the final month of the transitional period, states could require a household to cooperate in a re-determination of eligibility in order to receive continued benefits.

Transitional benefits would not be allowed for (1) households sanctioned under food stamp rules for intentional program violations, failure to cooperate, failure to meet work requirements, transferring assets to gain eligibility, failure to perform an action required under a federal, state, or local means-tested public assistance program, multiple receipt of food stamp benefits, or failure to fulfill child-support-related requirements and (2) households sanctioned for failure to perform an action required by federal, state, or local law relating to TANF cash assistance. (Section 403)

The Senate amendment permits states to provide transitional food stamp benefits to households who cease to receive TANF cash assistance. Under this option, households could receive transitional benefits for up to 6 months after termination of cash assistance, without regard to normal eligibility reviews or termination of an eligibility review period. During the transitional period, food stamp benefits generally would be frozen, without required reports of changed circumstances. Transitional benefits would be equal to the monthly allotment received in the month immediately prior to termination _ adjusted for (1) the change in household income because of termination of cash assistance and (2) any changes in circumstances that could increase household benefits (if the household elects to report them). In the final month of the transitional period, states could require a household to cooperate in a re-determination of eligibility in order to receive continued benefits.

Transitional benefits would not be allowed for households (1) losing eligibility under food stamp rules for intentional program violations, failure to cooperate or meet work- requirements, post-secondary students, transferring assets to gain eligibility, failure to perform an action required by a means-tested assistance program, receipt of multiple benefits, fleeing felons, or failure to fulfill child-support-related requirements, (2) sanctioned for failure to perform an action required by a federal, state, or local TANF law, or (3) in any state-designated category. (Section 429)

The Conference substitute adopts the Senate provision with an amendment that allows households to receive transitional benefits for up to 5, instead of up to 6, months after termination of cash assistance, without regard to normal eligibility reviews or termination of an eligibility review period. In addition, transitional benefits are equal to the monthly allotment received in the month immediately prior to termination, adjusted for the change in household income because of termination of cash assistance but not adjusted for any other changes in circumstances that could increase household benefits and which the household may report. The Conference substitute retains the House bill language that enables households receiving transitional benefits to apply for food stamps under regular rules at any time during the transitional period. (Section 4115)

The House bill reforms the food stamp quality control program to require the Secretary to use a 95 percent statistical probability (lower bound) in calculating state error rates. States with a total payment error rate (lower bound) between 6 percent and the national performance measure (plus 1 percentage point) receive no special treatment, but have to develop and implement corrective action plans to reduce errors. The bill provides that, in determining sanctions against states for high error rates, sanctions are delayed until the third consecutive year in which a state’s error rate (lower bound) exceeds the national average error rate by more than 1 percentage point.

Sanctions are figured as follows: First, the state’s potential total liability amount is calculated. This is the difference between its total payment error rate (point estimate) and the national performance measure plus one percentage point, multiplied by the dollar value of benefits issued in the state for the year. Then, the state’s actual penalty/sanction is calculated. This assessment is "scaled" according to how far above 10 percent the state’s total payment error rate (point estimate) is.

The House bill also requires the Secretary to measure states’ performance with respect to (1) compliance with deadlines for prompt determinations of eligibility and issuance of benefits and (2) the percentage of negative eligibility decisions that are made correctly for each of fiscal years 2002 through 2007. It provides for "excellence bonus payments" of $1 million each to (1) the 5 states with the highest combined performance in the 2 measures noted above and (2) the 5 states whose combined performance in the 2 measures noted above is most improved for each of fiscal years 2002-2007. (Section 404)

The Senate amendment reforms the system that measures the degree to which states make erroneous eligibility and benefit decisions so that only states with serious, persistent problems would be sanctioned. For states with error rates below 6 percent, enhanced federal matching is reduced for 2001 and then discontinued in subsequent years. States with a total payment error rate between 6 percent and the national average plus 1 percentage point would receive no special treatment. All states are required to develop and implement corrective action plans to reduce payment errors.

Each year, the Secretary is required to investigate the administration of the food stamp program in states with a total payment error rate above the national average plus one percentage point, unless sufficient information is already available to review the state’s administration. A "good cause" exception is provided. If the investigation/review results in a determination that the state has been "seriously negligent" (under standards promulgated by the Secretary), the state has to pay a fine ("initial sanction") that reflects the extent of negligence (again, under standards promulgated by the Secretary) _ not to exceed 5 percent of the federal match for state administrative costs. States with a total payment error rate above the national average plus 1 percentage point are assessed fiscal penalties if they have been the subject of an investigation/review or sanctioned for high error rates in each of the 2 preceding years. This effectively sanctions states with a payment error rate above the national average plus 1 percentage point for 3 consecutive years, in the third year as in the House bill. Sanctions are figured in the same way as is done in the House bill.

Beginning with error rates calculated for FY2002, the Senate amendment establishes in law a requirement that the Secretary adjust states’ total payment error rates to take into account any increases in errors because a state serves high percentages of households with earnings or households containing non-citizens. The adjustments are similar to those carried out under current policy for states subject to penalties/ sanctions; however, they are somewhat more liberal in the measurement standard they use to identify states with "high" proportions of error-prone households, likely qualifying more states for an adjustment. For error rates figured for FY2003 and later years, additional adjustments to states’ total payment error rates are permitted, as the Secretary determines consistent with achieving the purposes of the Food Stamp Act. (Section 431)

The Senate amendment beginning with FY2002, requires the Secretary to measure states’ performance with respect to the proportion of households with children _ having (a) income below 130 percent of the federal poverty income guidelines and (b) annual earnings of at least half the full-time minimum wage equivalent _ who receive food stamps. Beginning with FY2002, it also requires the Secretary to measure states’ performance with respect to four additional measures established by the Secretary in consultation with the National Governors Association, the American Public Human Services Association, and the National Conference of State Legislatures. The additional four measures must be established not later than 180 days after enactment, and at least 1 measure must relate to the provision of timely and appropriate services to food stamp applicants and recipients.

In FY2003 and each following year, it requires the Secretary to make "high performance bonus payments" totaling $6 million for each of the 5 measures noted above. For each measure, payments (allocated by caseload size) are to be made to the 6 states with (1) the greatest improvement in performance, (2) the highest level of performance, or (3) a combination of greatest improvement and highest performance. Among the 6 states chosen for payments under each measure, payments are allocated according to caseload size.

The Senate amendment prohibits bonus payments to states subject to a quality control system sanction for that fiscal year and it provides that the Secretary’s determinations relating to whether and in what amount bonus payments are made are not subject to judicial review. (Section 433)

The Conference substitute adopts the Senate provisions with amendments. In general, the new system eliminates features of current law under which approximately half the states must be assessed sanctions each year, reconfigures the formula for determining sanction amounts, delays any sanctions until a state has shown a persistently high error rate, explicitly recognizes a policy for new investment in improved administration by states with high error rates, places some limits on the Secretary’s ability to excuse payment of sanctions, and replaces the current system for rewarding states with very low error rates with a requirement to pay bonuses to states that exhibit exemplary administrative performance. The major features of the Conference substitute are as follows.

Threshold for potential sanctions: The threshold for sanctions is set at 105 percent of the national average, rather than the national average as under current law.

Calculation of state error rates: A state is not considered to be above the threshold unless there is a 95 percent statistical certainty that the state’s error rate is truly above the threshold.

Sanction Notification and Method of Payment: When the Secretary determines that a state must pay a sanction, the state agency, the Governor, and the state legislature must be notified. The Chief Executive Officer of the state subject to a sanction must remit the amount of the sanction or the state’s letter of credit will be reduced.

Corrective action plans: States with combined error rates of 6 percent or more are

required to provide a corrective action plan to the Secretary.

Time period for sanctions: States will not have a sanction amount calculated until the

second consecutive year in which their error rates exceed the threshold. If, in the

following year, they still exceed the threshold, they will be required to pay an amount the

Secretary has determined to be at risk.

State liability: States’ potential liability amounts will equal dollar issuance multiplied by

ten percent of the amount by which a state’s error rate exceeds a six percent threshold.

Under the Conference substitute, the Secretary has the authority to resolve the liability

(calculated for the second consecutive year in which the state exceeds the threshold) in

one of three ways: require the state to reinvest up to 50 percent of the liability; hold up to

50 percent of the liability "at risk," to be paid as a sanction by the state the following year

only if the state’s error rate continues to exceed the threshold; or to waive any amount

that is not reinvested or held at risk. If a state fails to reduce its error rate to below the

threshold for a third consecutive year, it must pay its ‘at-risk’ amount to the federal

government. The Secretary may settle amounts required to be reinvested.

Waivers, Adjustments and Appeals: The Secretary retains the authority to waive any amount of a state’s potential liability and to make adjustments to claims against states. States continue to have the full right to appeal liability amounts.

Enhanced funding and bonus payments: Enhanced funding is eliminated for Fiscal Year

2003 and beyond and replaced by bonuses to states. The Secretary must issue regulations

regarding the criteria for bonus awards for FY2005 and succeeding years. Performance

criteria specified in legislation include those related to actions taken to correct errors;

reduce rates of error; and improve eligibility determinations, including in the area of

service delivery (such as timeliness and a low rate of improper denials). The Secretary is

directed to solicit concrete ideas within these general areas from state agencies and

organizations that represent state interests prior to issuing proposed regulations. For

FY2003 and FY2004, the Secretary is provided the authority to issue guidance to the

state regarding criteria for bonus awards.

Effective dates: The new policy is effective for error rates measured in FY 2003 and

sanctions and enhanced funding laws and regulations are unchanged for FY2002 and

prior years. (Sections 4118 and 4120)

The House bill requires the Secretary to spend up to $9.5 million to provide grants to states to develop and implement programs that improve the food stamp application and eligibility determination process. (Section 405)

The Senate amendment contains no comparable provision.

The Conference substitute adopts the House provision with an amendment to establish a program of grants to states and other eligible entities to simplify food stamp application and eligibility determination systems and to improve access to the food stamp program. The Secretary would be required to fund grants totaling up to $5 million per year for projects: to coordinate application and eligibility procedures; establish methods for applying and determining eligibility that use electronic alternatives; otherwise improve program administration; or improve access to the Program. Grants could not be made for on-going costs and preference would be given to government/non-government partnerships.

n addition to the types of projects described in the amendment, the Managers believe that other types of projects may be permissible under this section. These projects include but are not limited to:

(a) establishing a single site at which individuals may apply for food stamp benefits, supplemental security income, Medicaid, states’ children’s health insurance program benefits, WIC benefits and benefits under other programs as determined by the Secretary;

(b) developing systems to enable increased participation in the provision of benefits under the food stamp program through farmers’ markets, roadside stands, and other community-supported agriculture programs, including wireless electronic benefit transfer systems and other systems appropriate to open-air settings where farmers and other vendors sell directly to consumers;

(c) encouraging consumption of fruit and vegetables by developing a cost-effective system for providing discounts for purchases of fruit and vegetables made through use of electronic benefit transfer cards; or,

(d) reducing barriers to participation by individuals, with emphasis on working families, eligible immigrants, elderly individuals, and individuals with disabilities.

The Conference substitute repeals existing grant authority (Section 17(i)), dependent on appropriations, in the expectation that similar grants may be made under this new authority. (Section 4116)

(7) Authorization of Appropriations: Employment and training programs

The House bill reauthorizes the existing food stamp employment and training program through FY2011. It sets the annual amount of unmatched federal funds at the current FY2002 level of $165 million. It also preserves the current requirement to use at least 80 percent of unmatched federal funding for able-bodied adults without dependents (ABAWDs). (Section 406(a))

The Senate amendment extends the requirement for unmatched federal funding for employment and training programs through FY2006; and sets the basic amount of unmatched federal funding at $90 million a year _ for FY2002-FY2006.

In addition to the basic $90 million a year, the Senate amendment requires the Secretary to allocate up to $25 million a year for FY2002-FY2006 _ to reimburse states for services to able-bodied adults without dependents (ABAWDs). In order to be eligible for a share of this unmatched funding, a state must (1) exhaust its basic funding allocation and (2) make and comply with a commitment to offer an employment/training placement ("position") to all applicant/recipient ABAWDs who are in the last month of their 6-month eligibility period under ABAWD work rules and not eligible for an exemption.

The Senate amendment rescinds any unmatched federal funding provided through FY2001 unless obligated by a state before enactment. However, the new $90 million basic grant money would remain available until expended, while the new $25 million ABAWD grant money would not. It also provides that the basic $90 million a year in unmatched federal funding be allocated among states according to a formula established and adjusted by the Secretary that takes into account their ABAWD populations; and eliminates the requirement to use at least 80 percent of unmatched federal funding for ABAWDs.

The Senate amendment eliminates the "maintenance of effort" requirement, whereby states must maintain expenditures on employment and training programs at a level not less than FY 1996 spending in order to receive a portion of their allocation of unmatched federal funding; and eliminates the authority for the Secretary to set reimbursement levels for each qualifying employment and training slot that a state offers or fills. (Section 434)

The Senate amendment eliminates the $25 per-month limit on the amount that states provide to participants in employment and training programs for transportation and other costs (other than dependent care costs) that are reasonably necessarily and directly related to their participation. (Section 169(c)(3)) It also eliminates the limit on federal matching payments for these costs. (Section 169(c)(4))

The Conference substitute adopts the Senate provision with technical changes, and amendments to: provide unmatched funding through FY2007, reduce the allocation from "up to $25 million a year" to "up to $20 million a year" to reimburse states for services provided only to ABAWDs, and eliminate the requirement that states must exhaust their basic funding allocation before being eligible for a share of this unmatched funding. (Section 4121)

(8) Authorization of Appropriations: Cost allocation

The House bill extends the required reduction in federal matching payments to states for administrative costs through FY2011. (Section 406(b))

The Senate amendment extends the required reduction in federal matching payments to states for administrative costs through FY2006. (Section 435(a))

The Conference substitute adopts the House provision with an amendment to reauthorize the required reduction in federal matching payments to states for administrative costs through FY2007. (Section 4122)

(9) Authorization of Appropriations: Cash payment pilot projects

The House bill extends the authority for cash payment projects through FY2011, if the state requests. (Section 406(c))

The Senate amendment extends authority for cash payment projects through FY2006, if the state requests. (Section 435(b))

The Conference substitute adopts the House provision with an amendment to extend the authority for cash payment projects through FY2007, if the state requests. (Section 4122)

(10) Authorization of Appropriations: Outreach demonstration projects

The House bill extends the authority for outreach demonstration projects through FY2011. (Section 406(d))

The Senate amendment extends the authority for outreach demonstration projects through FY2006. (Section 435(c))

The Conference substitute repeals the authority for outreach demonstration projects and replaces it with new grant authority found in Section 4116. (Section 4122)

(11) Authorization of Appropriations

The House bill extends the authorization of appropriations for the Food Stamp Act through FY2011. This includes the food stamp program as well as the Food Distribution Program on Indian Reservations. (Section 406(e))

The Senate amendment extends the authorization of appropriations for the Food Stamp Act through FY2006. This includes the food stamp program as well as the Food Distribution Program on Indian Reservations. (Section 435(d))

The Conference substitute adopts the House provision with an amendment to extend the authorization of appropriations for the Food Stamp Act through FY2007. This includes the food stamp program as well as the Food Distribution Program on Indian Reservations. (Section 4122)

The House bill extends Puerto Rico’s nutrition assistance block grant through FY2011, retaining annual indexing for food-price inflation using changes in the cost of the Thrifty Food Plan. It also authorizes the use of up to $6 million to pay for upgrading and modernizing electronic data processing systems and implementing systems to simplify eligibility determinations without regard to the regular 50 percent administrative cost matching requirement. (Section 406(f))

The House bill extends American Samoa’s nutrition assistance grant through FY2011 and increases the size of the annual grant to $5.75 million in FY2002 and $5.8 million a year for FYs 2003-2011. (Section 406(g))

The Senate amendment consolidates funding for Puerto Rico’s nutrition assistance block grant and American Samoa’s nutrition assistance grant and establishes the consolidated "mandatory" grant through FY2006. The base consolidated grant amount would be $1.356 billion (FY2002), which would then be adjusted for food-price inflation using changes in the cost of the Thrifty Food Plan starting with FY2003. Under the terms of the consolidated grant, Puerto Rico would receive 99.6 percent of the annual total. Of the amount paid to Puerto Rico in FY2002, up to $6 million could be used to pay for upgrading and modernizing electronic data processing systems, implementing systems to simplify eligibility determinations, and operating electronic benefit transfer systems _ without regard to the regular 50 percent administrative cost matching requirement.

Not later than 270 days after enactment, the Senate amendment requires the GAO to develop and submit a report to Congress that: describes the similarities and differences (in program administration, rules, benefits, and requirements) between the regular Food Stamp program and Puerto Rico’s nutrition assistance program; specifies the costs and savings associated with each similarity and difference; and_ states the recommendation of the GAO as to whether additional funding should be provided to carry out Puerto Rico’s nutrition assistance program. Effective on the date of submission of the report, it authorizes additional appropriations for the new consolidated nutrition assistance block grant _at a level of $50 million a year.

Under the terms of the consolidated grant, American Samoa would receive .4 percent of the annual total. (Section 439)

The Conference substitute adopts the Senate provision with a number of amendments: authorizing the consolidated grant through FY2007; deleting reference to the report and authorization for appropriations; increasing the base consolidated grant amount by (approximately $10 million per year for Puerto Rico) to $1.401 billion in FY2003; allowing carryover of up to two-percent of funds; allowing the one-time authority to use $6 million for upgrading and modernizing electronic data processing systems, implementing systems to simplify eligibility determinations, and operating electronic benefit transfer systems without regard to the regular 50 percent administrative cost matching requirement, in either FY2002, FY2003 or in both years. (Section 4124)

(13) Authorization of Appropriations: Assistance for Community Food Projects

The House bill extends the authority for community food project grants through FY2011 and increases the amount reserved to $7.5 million a year, beginning in FY2002. (Section 406)

The Senate amendment extends the authority for community food project grants through FY2006; and maintains the amount reserved at $2.5 million a year. It also increases the federal share of projects’ costs to 75 percent.

The Senate amendment broadens the list of projects that must be given preference by: modifying the 4th preference category to projects that encourage long-term planning activities and multi-system, interagency approaches with multi-stakeholder collaborations, that build the long-term capacity of communities to address their food and agriculture problems (such as food policy councils and food planning associations); and adding a 5th preference category of projects that meet (through grants not exceeding $25,000 each) specific neighborhood, local, or state food and agriculture needs including: needs for infrastructure improvement and development (purchase of equipment for production, handling, or marketing of locally produced food), needs for planning for long-term solutions, or needs for the creation of innovative marketing activities that mutually benefit farmers and low-income consumers. (Section 440)

The Conference substitute adopts the House provision with amendments to increase funding for the projects to $5 million per year, extend the authority for community food project grants through FY2007, and add additional language describing other purposes for community food projects which must meet specific state, local, or neighborhood food and agriculture needs, including needs for infrastructure improvement and development; planning for long-term solutions; or, the creation of innovative marketing activities that mutually benefit agricultural producers and low-income consumers.

The Conference substitute includes language from former Senate section 443 ("Innovative Programs for Addressing Common Community Problems") as a new subsection (h) and provides funding for additional years such that not later than 90 days after enactment, and on October 1 of each of fiscal years 2003 through 2007, the Secretary must allocate $200,000 out of the funds made available under this section, to implement subsection (h), and to remain available until expended. The Conference language permits the Secretary in selecting a non-governmental organization (NGO) to carry out this provision to either contract with that NGO or provide a grant to that NGO indicating the responsibilities to be completed for the $200,000. (Section 4125)

As was the case with the Senate amendment, the Managers intend that the NGO selected by the Secretary to carry out this subsection shall: be experienced in gathering relevant information about successful innovative programs; be experienced in working with other targeted entities (NGOs, federal agencies, states, and political subdivisions) and be experienced in providing information about such innovative programs; and be experienced in operating a national information clearinghouse. In addition, the Managers intend that the NGO selected under subsection (h) shall contribute in-kind resources toward implementation of any contract or grant and should be prepared to coordinate with targeted entities and with the Community Food Security Coalition.

The House bill extends the requirement to purchase commodities for The Emergency Food Assistance Program (TEFAP) through FY2011 and increases to $140 million a year through FY2011 the amount of commodities the Secretary must purchase for TEFAP. Beginning in FY2002, the House bill requires the Secretary to use $10 million a year of the TEFAP funds to pay for direct and indirect costs related to processing, storing, transporting, and distributing commodities, including gleaned commodities. (Section 406(i))

The Senate amendment extends the requirement to purchase commodities for TEFAP through FY2006 and increases the amount reserved for TEFAP to $110 million a year for FY2002-2006. The provision setting aside $10 million a year is the same as the House bill, but through FY2006. (Section 441)

The Conference substitute adopts the House funding level of $140 million a year with an amendment extending the purchasing requirement through FY2007, eliminating the $10 million a year set-aside, and increasing the authorization of appropriations from $50 million to $60 million a year for direct and indirect costs related to processing, storing, transporting, and distributing commodities, including gleaned commodities. (Section 4126)

Subtitle B–Commodity Distribution

The House bill extends this requirement through FY2011. (Section 441)

The Senate amendment reauthorizes the commodity distribution program through FY2006. (Section 451(c))

The Conference substitute adopts the Senate provision with an amendment to reauthorize the program through FY2007. (Section 4203)

The House bill reauthorizes the commodity supplemental food program through FY2011. (Section 442)

The Senate amendment reauthorizes the commodity supplemental food program through FY2006. (Section 451(a))

The Senate amendment also replaces the current rule limiting administrative payments to 20 percent of the Commodity Supplemental Food Program (CSFP) appropriation with a requirement for "grants per caseload slot." The amendment requires the Secretary to provide each state CSFP agency (from discretionary funds for the current year or carried over) an administrative grant per assigned caseload slot, as follows: for FY2003, the grant would be $50 per assigned caseload slot _ adjusted for the percentage change in the state and local government price index of the Bureau of Economic Analysis between the 12-month period ending June 30, 2001, and the 12-month period ending June 30, 2002. For later years, the per-slot grant would be adjusted in the same manner. (Section 451(b))

The Conference substitute adopts the Senate provision with amendments reauthorizing the program through FY2007; requiring the Secretary to use the FY2001 fiscal year grant-per-assigned slot as the baseline from which the administrative cost grant per assigned caseload slot is calculated, rather than using $50 as the base; requiring the Secretary to spend the amount necessary to permit all states that began to participate in the Commodity Supplemental Food Program in the FY2000 caseload cycle to participate at a caseload level not less than their originally assigned caseload through the FY2002 caseload cycle , as determined by the Secretary. Funding from the Commodity Credit Corporation (CCC) is provided to permit the Secretary to alleviate an unusual situation that has arisen in two states that have recently implemented the CSFP. This is a one-time emergency use of CCC funds and is not intended as a precedent for drawing on the CCC to supplement appropriations for the CSFP. (Section 4201)

(17) Emergency food assistance

The House bill reauthorizes TEFAP administrative cost appropriations through FY2011 and revises the definition of costs to be covered to include the costs to the states related to the processing, storage, transporting, and distributing commodities. (Section 443)

The Senate amendment reauthorizes TEFAP administrative cost appropriations through FY2006 and revises the definition of costs to be covered to include the costs to the states related to the processing, storage, transporting, and distributing commodities. (Section 451(d))

The Conference substitute adopts the House provision with an amendment to reauthorize TEFAP administrative costs through FY2007. (Section 4204)

Subtitle C–Miscellaneous Provisions

The House bill establishes an independent agency of the Legislative Branch of the U.S. government, the Congressional Hunger Fellows Program. (Section 461)

The Senate amendment establishes a Congressional Hunger Fellowship. This formalizes an internship program already being carried out by the Congressional Hunger Center and funded under annual appropriations bills. (Section 462)

The Conference substitute adopts the House provision but deletes a reference to "a commitment to social change" as a required attribute for fellows. In addition, it directs the program to make available to the General Accounting Office the salaries of the Executive Director and personnel, in addition to the other materials already included, to carry out audits. (Section 4404)

The House bill designates that the amendments made by this title shall take effect on October 1, 2002, unless otherwise specified. (Section 462)

The Senate amendment designates that the amendments made by this title shall take effect on September 1, 2002, except that a state agency may elect to implement any or all of the amendments on October 1, 2002. (Section 464)

The Conference substitute adopts the House provision. (Section 4405)

(20) Payment limitations; Nutrition and commodity programs

The Senate amendment increases the cap on the amount that may be claimed as an excess shelter expense deduction. For FY2003, the cap would be $390 a month for the 48 states and the District of Columbia, $624 for Alaska, $526 for Hawaii, $458 for Guam, and $307 for the Virgin Islands. For FY2004-FY2009, amounts would be annually adjusted for changes in the Consumer Price Index for All Urban Consumers (CPI-U). Effective, FY2010, the cap is eliminated. (Section169(c)(2))

The House bill contains no comparable provision.

The Conference substitute deletes the Senate provision.

The Senate amendment permits states to (1) exclude completely from a household’s counted income any legally obligated child support payments made by a household member (before calculating any deductions) or (2) continue to deduct them in the calculation of net income (as under current law). Regardless of a state’s exclusion or deduction choice, the Senate amendment requires the Secretary to establish simplified procedures that allow a state option to determine the amount of child support paid. These must include procedures that permit states to rely on information from state child support enforcement agencies about payments made in prior months _ in lieu of obtaining current information from the household. The amendment also allows states to freeze the amount of any child support payment exclusion or deduction until the eligibility of the household is re-determined. (Section 411)

The House bill contains no comparable provision.

The Conference substitute adopts the Senate provision with a technical amendment and an amendment that deletes the state option to freeze the amount of child support payment exclusion or deduction. In addition, states are allowed to rely on information from child support enforcement agencies about payments made in prior months. (Section 4101)

The Senate amendment mandates that states treat any required payment to a landlord as a housing or shelter cost when determining a household’s shelter expenses for application of the excess shelter expense deduction. The payments are included without regard to the specific charges they cover. It also permits states to allow homeless households not receiving free shelter throughout the month to choose a standard shelter deduction from income (set by law at $143 a month) in lieu of any excess shelter expense deduction. Sates could deny this deduction to households with extremely low shelter costs. Homeless households would continue to be permitted to choose the regular excess shelter expense deduction that is based on actual shelter costs. (Section 414)

The House bill contains no comparable provision.

The Conference substitute adopts the Senate provision with an amendment that strikes the section mandating that states treat any required payment to a landlord as a housing or shelter cost when determining a household’s shelter expenses for application of the excess shelter expense deduction. It does, however, permit states to allow homeless households not receiving free shelter throughout the month to receive a standard deduction from income in lieu of any excess shelter expense deduction.

The Conference substitute deletes the Senate provision that allows all required payments to landlords to count as eligible shelter costs for the purpose of calculating a food stamp excess shelter expense deduction. The Secretary should review current rules governing allowable shelter costs and their implementation and identify any means, within existing authority, to modify or communicate these rules in a manner that makes the determination of eligible shelter costs less complicated and error prone for food stamp participants and eligibility workers. (Section 4105)

The Senate amendment allows states choosing to make standard utility allowances (SUAs) mandatory to do so without regard to the current metered public housing and prorating rules. SUAs could be used in lieu of actual costs for all households incurring a heating or cooling expense and covered by a mandatory SUA without having to determine their utility metering status or prorated expenses. (Section 415)

The House bill contains no comparable provision.

The Conference substitute adopts the Senate provision. (Section 4104)

The Senate amendment allows states to elect to determine monthly-earned income by multiplying weekly income by 4 and biweekly income by 2. The amendment requires states making this election to adjust the earned income deduction (normally 20 percent of earnings) downward for all households with earnings to the extent necessary to prevent the election from resulting in increased benefit costs consistent with standards promulgated by the Secretary. (Section 416)

The House bill contains no comparable provision.

The Conference substitute deletes the Senate provision.

The Senate amendment establishes a state option to disregard most types of changes in household circumstances that affect the amount of those deductions until the next determination of eligibility. The amendment makes clear that states are not permitted to disregard (1) any reported change in residence or (2) under standards prescribed by the Secretary, any change in earned income. (Section 417)

The House bill contains no comparable provision.

The Conference substitute adopts the Senate provision. States will be able to disregard changes in: household size; the costs for dependent care; the amount of child support payments; medical expenses for elderly or disabled individuals; and shelter costs, unless they were the result of a move. (Section 4106)

The Senate amendment requires the Secretary to promulgate regulations under which a state may exclude any types of financial resources that it does not consider when determining eligibility for cash assistance under its TANF program, or medical assistance under its Medicaid program. This authority would not allow the exclusion of cash, vehicles (except to the extent states already are allowed to use their TANF standard to exclude vehicles), and readily available amounts in any account in a financial institution, or any similar type of resource the Secretary judges essential to equitable determinations of eligibility. The intent of this provision is to align with, to the extent possible, Medicaid and TANF rules. The Secretary will only count types of resources that are required by law or judged to be absolutely essential to equitable determinations of eligibility in the food stamp program. (Section 418)

The Senate amendment also adds households with disabled members to those covered by the current $3,000 liquid asset limit applied to the elderly. (Section 171(c)(1))

The House bill contains no comparable provisions.

The Conference substitute adopts the Senate provisions. (Section 4107)

The Senate amendment allows the Secretary to adjust issuance systems in disaster situations to take into account any conditions that make reliance on EBT systems impracticable, effectively permitting the issuance of cash or other forms of benefits. (Section 419)

The House bill contains no comparable provision.

The Conference substitute adopts the Senate provision. (Section 4108)

The Managers expect the authority provided in this section for alternative issuances in disaster programs will only be used in the most extreme circumstances, after the Secretary, working with the state, has exhausted all other means of benefit delivery and determined that electronic systems cannot be restored in a timely fashion and that the use of food coupons is impractical.

The Senate amendment allows states to establish semi-annual reporting requirements for any household, independent of the presence of earners or other characteristics. However, households required to report less often than once each 3 months are required to report, in a manner prescribed by the Secretary, if their income exceeds the food stamp gross income eligibility limit (130 percent of the federal poverty income guidelines). (Section 420)

The House bill contains no comparable provision.

The Conference substitute adopts the Senate provision. (Section 4109)

The Senate amendment changes the "3-months-out-of-36 months" rule to make able-bodied adults without dependents (ABAWDs) ineligible if, during the preceding 24 months they received benefits for 6 months while not meeting work-related requirements. ABAWDS ineligible under this new "6-months-out-of-24-months" rule may become eligible during any period in which they work 20+ hours a week, participate in a work program 20+ hours a week, or participate in a workfare program. In implementing the new "6-months-out-of-24-months" rule, states are required to disregard any period before enactment during which an individual received food stamps.

The Senate amendment changes the definition of a qualifying work program to include job search or job search training programs if (1) they meet standards set by the Secretary to ensure that participants are continuously and actively seeking private-sector employment and (2) no position is available for the participant in another employment or training program. (Section 421)

The House bill contains no comparable provision.

The Conference substitute deletes the Senate provision.

The Senate amendment requires that no benefits provided through EBT systems be taken "off-line" (or otherwise made inaccessible) because of inactivity until at least 180 days have elapsed since the recipient household last accessed the account. Where benefits are taken off-line or made inaccessible, it requires that the household be sent a notice that explains how to reactivate benefits and offers assistance if the household is having difficulty doing so. These requirements apply to states as they enter into EBT contracts. (Section 422)

The House bill contains no comparable provision.

The Conference substitute deletes the Senate provision.

The Senate amendment eliminates the current requirement that EBT systems not cost the federal government more than the prior paper issuance systems. (Section 423)

The House bill contains no comparable provision.

The Conference substitute adopts the Senate provision. (Section 4110)

The Managers encourage the Department to continue its cost containment and competition efforts and its efforts to work with the states on this issue. Information about these efforts will be provided in the report detailed in Section 4110.

The Senate amendment provides a state option that allows the provision of an inflation-adjusted standardized monthly benefit to residents of group homes, rather than going through the individualized benefit calculation for each resident. The group homes that are eligible include those for the disabled; shelters for battered women/children or the homeless, and substance abuse treatment centers. Recipients’ benefits are calculated according to standardized procedures established by the Secretary and take into account benefits typically received by recipients in these group living facilities.

States shall issue benefits to the facility (as an authorized representative), and the Secretary shall establish procedures to ensure that the facility does not receive a greater proportion of a recipient’s monthly benefits than the proportion of the month during which the recipient lived there.

Group living facilities are required to (1) notify the state when a recipient departs and (2) notify the recipient that the recipient is eligible for continued benefits and should contact the state about continuation of benefits.

On receiving notification that a recipient has departed a group living facility, the state is required to issue the recipient a benefit allotment covering the remainder of the month (calculated in a manner prescribed by the Secretary) _ unless the recipient re-applies for food stamps or the state cannot locate the recipient. The state also is permitted to issue a benefit allotment for the month following departure _ calculated under the standardized procedures used to set the amount received while the departed recipient lived in the group living facility. Recipients who have left group facilities and re-apply for food stamps will have their benefits determined under regular food stamp rules. (Section 424)

The House bill contains no comparable provision.

The Conference substitute adopts the Senate provision with an amendment to convert this provision to a pilot program that tests, at the request of a state agency or state agencies, the feasibility of the alternative procedures for determining allotments for residents of groups living in certain group facilities. If an insufficient number of pilot projects are proposed by state agencies or the Secretary concludes that this is not in the best interest of the food stamp program, the Secretary must inform the Senate Committee on Agriculture, Nutrition, and Forestry and the House Committee on Agriculture, and will not implement this provision nationwide. (Section 4112)

(33) Redemption of benefits through group living arrangements

The Senate amendment allows the Secretary to authorize group living facilities to redeem food stamp benefits through direct use of EBT cards, if they are equipped with "point-of-sale" devices. This provision allows authorized group living facilities to continue a practice they have been carrying out using waiver authority. (Section 425)

The House bill contains no comparable provision.

The Conference substitute adopts the Senate provision. (Section 4113)

The Senate amendment requires states to make food stamp applications available on their agencies’ Internet websites in each language in which printed applications available. (Section 426)

The House bill contains no comparable provision.

The Conference substitute adopts the Senate provision with an amendment to change the effective date for this provision to 18 months after enactment of this Act. Section 504 of the Rehabilitation Act requires state agencies to make their web sites accessible to people with disabilities. The requirement includes ensuring that documents are in a format in which browsers for the visually impaired can read them, and that they can be converted to Braille documents; that graphic elements that convey meaning have text explanations available; and that English language text is also available in other languages, as appropriate. Many states have already adopted standards that comply with this requirement. States should, therefore, not incur additional costs to put their food stamp application forms on their web sites. (Section 4114)

The Senate amendment provides for procedures for re-determining recipient households' continuing eligibility that are consistent with re-determination procedures in other programs serving low-income families. It replaces assigned certification periods and the rules governing recertification with new "eligibility review periods" under which states periodically review the eligibility status of recipient households. Eligibility review periods are up to 12 months (or 24 months if all adult household members are elderly or disabled), and states are required to have at least 1 contact with each household every 12 months. Eligibility review periods are not necessarily assigned to each household when their eligibility is established. Instead, states are mandated to periodically require each household to cooperate in a re-determination of eligibility. Each re-determination is based on information supplied by the household and has to conform to standards established by the Secretary, _ and the interval between redeterminations cannot exceed 12 or 24 months. Where households are found ineligible (or eligible for a reduced amount) in their re-determination, they can continue to receive benefits until the conclusion of any fair hearing process. (Section 427)

The House bill contains no comparable provision.

The Conference substitute deletes the Senate provision.

The Senate amendment requires the Secretary to (1) ask states for descriptions of successful nutrition education programs for the food stamp and other nutrition assistance programs, (2) make them available on the Agriculture Department’s website, and (3) inform states of their availability on the website. (Section 428)

The House bill contains no comparable provision.

The Conference substitute deletes the Senate provision. In March 2002, the U.S.

Department of Agriculture unveiled a Website that features a clearinghouse for nutrition education efforts described in the Senate amendment.

The Senate amendment permits notices of adverse action against retailers to be delivered by any form of delivery that the Secretary determines will provide evidence of delivery. (Section 430)

The House bill contains no comparable provision.

The Conference substitute adopts the Senate provision. (Section 4117)

(39) Improvement of calculation of state performance measures

The Senate amendment changes the deadline for completion of error-rate determinations and arbitration of state-federal differences to May 31st; it also changes the deadline for the determination of final error rates and claims against states to June 30th. (Section 432)

The House bill contains no comparable provision.

The Conference substitute adopts the Senate provision. (Section 4119)

The Senate amendment permits states to use Temporary Assistance for Needy Families (TANF) funds to conduct food stamp information informational activities. (Section 436)

The House bill contains no comparable provision.

The Conference substitute deletes the Senate provision.

The Managers understand that, to further the purposes of TANF, it is current policy to allow states to use TANF (and "maintenance of effort") funds for food stamp informational activities directed to families, long as they do not also charge these same costs to the food stamp program. The Managers expect the Secretary and the Secretary of Health and Human Services to issue guidance that clearly informs states of this policy.

The Senate amendment extends the Secretary’s waiver authority to cover any and all contracts and grants authorized under this section. (Section 437)

The House bill contains no comparable provision.

The Conference substitute adopts the Senate provision. (Section 4123)

The Senate amendment requires the Secretary to make grants to states and other entities to pay the federal share (75 percent) of the cost of projects to improve access to food stamp benefits or outreach to eligible individuals. It authorizes appropriations totaling $3 million for FY2003-FY2005 for pilot programs and requires the Secretary to evaluate funded projects, but limits spending on evaluations to no more than 10 percent of funds made available. Criteria for selecting grantees are to be developed by the Secretary and include a record of serving low-income individuals, ability to reach hard-to-serve populations, innovative proposals in the application, and the development of public-private partnerships and community linkages. Preference is required for project partnerships between states and private/public entities (e.g., food banks, community-based organizations, public schools and health clinics, nonprofit health or welfare agencies). At least 1 grantee has to be selected from each Food and Nutrition Service (FNS) region and additional rural or urban areas chosen by the Secretary. The Secretary is not required to select grantees where an insufficient number of applications have been received. (Section 438)

The House bill contains no comparable provision.

The Conference substitute combines Section 405 of the House Bill with Section 438

of the Senate amendment, as described in Section 4116: "Grants for simple application and eligibility determination systems and improved access to benefits."

The Senate amendment bars the Secretary from prohibiting the use of "any technology that has been approved by the Secretary or the Secretary of Health and Human Services " in acquiring commodities for distribution through _TEFAP, the Food Distribution Program on Indian Reservations (FDPIR), the Commodity Supplemental Food Program (CSFP), and programs under the Richard B. Russell National School Lunch Act and the Child Nutrition Act. This bar is effective on enactment. (Section 442)

The House bill contains no comparable provision.

The Conference substitute adopts the Senate provision with a technical

amendment that clarifies that the Secretary cannot prohibit the use of any technology to improve food safety that has been approved or is otherwise allowed by the Secretary or the Secretary of Health and Human Services. In implementing this provision, the Secretary is not expected to set aside established, well-founded procurement practices. (Section 4201)

The Managers expect the Secretary to continue to make commodity purchases, taking into consideration the acceptability by recipients of products purchased and considering the relative costs of products available for purchase.

The Senate amendment requires the Secretary to offer a contract to a non-governmental organization to coordinate with federal agencies, states, political subdivisions, and nongovernmental organizations ("targeted entities") to develop, and recommend to the targeted entities, innovative programs for addressing "common community problems" _ including loss of farms, rural poverty, welfare dependency, hunger, the need for job training, juvenile crime prevention, and individuals’ and communities’ need for self-sufficiency. The organization must be selected competitively and must (1) be experienced in working with targeted entities and organizing workshops that demonstrate programs to targeted entities, (2) be experienced in identifying programs that effectively address "common community problems," (3) agree to contribute in-kind resources and provide targeted entities information free of charge, (4) be experienced in and capable of receiving information from (and communicating with) targeted entities throughout the U.S., and (5) be experienced in operating a national information clearinghouse that addresses "common community problems." It also makes available to the Secretary mandatory funding totaling $400,000 to carry out the contract in two installments effective on enactment.

This Senate provision was based in part on a project (called "Reinvesting in America") in which a non-profit group headquartered in New York, called World Hunger Year, gathered information about successful innovative local programs and then advised other NGOs, communities, or city, state or federal agencies (targeted entities) about these successful projects and about how to replicate them. This turned out to be a very efficient approach because other communities or agencies would be aware of the lessons learned by the community that originated the idea. World Hunger Year held "replication workshops" in which they advised these targeted entities about how to replicate those successful programs in other areas. World Hunger Year officials also provided information about some of these programs to the Community Food Security Coalition and to federal Departments. (Section 443)

The House bill contains no comparable provision.

The Conference substitute deletes the Senate provision. The Conference substitute includes a variation of this provision in House Section 440, as described in Section 4125.

The Senate amendment requires the Secretary to submit a report to Congress on (1) difficulties relating to use of EBT systems, (2) the extent of fraud and the types of fraud that exist, and (3) the efforts being made by the Secretary, retailers, EBT contractors, and states to address difficulties and fraud in EBT systems. The report is due no later than one year after enactment. (Section 444)

The House bill contains no comparable provision.

The Conference substitute adopts the Senate provision with an amendment that

changes the elements to be included in the report. The report will include: a description of the status of statewide EBT implementation in the food stamp program; an indication of the number of vendors that currently hold an EBT-related contract with the states; information on the number of states that are working with multiple vendors and a description of how responsibilities are divided among the various vendors and other organizations within a given state; an explanation of the reasons any state is not operational statewide by October 1, 2002, how these issues are being addressed, and the expected date for statewide EBT operations; a description of the issues faced by any states that have awarded a second EBT contract in the last two years and the steps taken to resolve them; a description of the issues faced by any states that will award a second EBT contract within the next two years and strategies they are considering to address these issues; initiatives being considered or taken by USDA, food retailers, EBT vendors, and client advocates to address any outstanding issues with respect to EBT systems; and an examination of areas of potential advances in electronic benefit delivery in the next 5-10 years including but not limited to access to electronic benefits in farmers' markets, increased use of EBT transaction data to identify and prosecute fraud, and the fostering of increased EBT vendor competition to ensure cost-containment and optimal service. (Section 4111)

The Senate amendment adds dietary supplements that "provide exclusively 1 or more vitamins or minerals" to the food items that may be purchased with food stamp benefits.

Not later than April 1, 2003, the amendment requires the Secretary to contract with a scientific research organization to study and develop a report on technical issues, economic impacts, and health effects associated with allowing individuals to use food stamp benefits to purchase dietary vitamin-mineral supplements. The report is to be submitted to the Secretary no later than 2 years after the contract is entered into. The Senate amendment authorizes $3 million for the report. At a minimum, the report is to examine: the extent to which problems arise in the purchase of vitamin-mineral supplements with EBT cards; the extent of any difficulties in distinguishing vitamin-mineral supplements from herbal and botanical supplements (for which food stamp benefits may not be used); whether recipients spend more on vitamin-mineral supplements than non-recipients; the extent to which vitamin-mineral supplements are substituted for other foods purchased with food stamp benefits; the proportion of the average food stamp allotment that is being used to purchase vitamin-mineral supplements; and the extent to which the quality of recipients’ diets has changed as the result of allowing them to use food stamp benefits to purchase vitamin-mineral supplements. (Section 445)

The House bill contains no comparable provision.

The Conference substitute deletes the Senate provision.

The Senate amendment makes legal permanent residents under age 18 eligible for food stamps without regard to date of entry. It also exempts them from requirements that their sponsors’ financial resources be deemed to them in determining food stamp eligibility. The Senate amendment also reduces the work history requirement for legal permanent residents’ eligibility for food stamps to 16 quarters (4 years); removes the 7-year limit on eligibility for refuges and people seeking asylum, Cuban/Haitian entrants, certain aliens whose deportation is being withheld for humanitarian reasons, and Vietnam-born Americans fathered by U.S. citizens; and makes eligible legal permanent residents receiving government disability benefits _ regardless of date of entry _ so long as they meet any non citizen test applied by the program under which they receive benefits. (Section 452)

ffective April 1, 2003, the Senate amendment makes eligible individuals who have continuously resided in the U.S. as "qualified aliens" for a period of 5 years or more _ beginning on the date on which the qualified alien entered the U.S. However, eligibility based on this new 5-year residence rule would not apply in the case of an alien who enters the country illegally and remains illegally for a period of one year or more (or has been an "illegal alien" for one year or more) _ unless the alien has continuously resided in the U.S. for a period of 5 years or more as of the "date of enactment." (Section 170(b) and (c))

The House bill contains no comparable provision.

The Conference substitute adopts the Senate provision with an amendment that

eliminates the provision that restricts application of the new 5-year residence rule by denying it to aliens who enter the country illegally and remain illegally for a period of one year or more. The substitute also eliminates the provision that changes the work history requirement provision for legal permanent residents’ from 40 quarters (in current law) to 16 quarters and the removal of the 7-year limit on the length of time that refugees and people seeking asylum may participate in the program. The Managers note that application of the new 5-year residence rule to refugees and asylees has the same effect as lifting the 7-year limit. (Section 4401)

The Senate amendment extends, until FY2004, provisions of current law that remove a mandate that any "bonus" commodities acquired for agricultural support purposes and donated to schools be counted toward a minimum requirement that 12 percent of all school lunch assistance be in the form of commodities. The provision, therefore, mandates that only entitlement commodities count toward the 12 percent requirement through FY2003. (Section 453)

The House bill contains no comparable provisions.

The Conference substitute adopts the Senate provision. (Section 4301)

(49) Eligibility for free and reduced-price school meals: military housing

Effective on enactment and through FY2003, the Senate amendment requires that, in cases where military personnel live in "privatized" housing, their housing allowance not be counted as income in determining eligibility for free and reduced-price school meals. (Section 454)

The House bill contains no comparable provision.

The Conference substitute adopts the Senate provision. (Section 4302)

Effective on enactment, the Senate amendment adds an option for states to exclude any housing allowance in cases in which military personnel live in "privatized" housing _ whether on base or off base. (Section 455)

The House bill contains no comparable provision.

The Conference substitute adopts the Senate provision. (Section 4306)

The Senate amendment requires, no later than December 31, 2002, a report from the Secretary to the House Committee on Education and the Workforce and the Senate Committee on Agriculture, Nutrition, and Forestry _that analyzes the conversion of the WIC program from a discretionary program into an individual entitlement program. It also requires the Secretary to use funds made available to carry out the WIC program to fund the cost of the report. (Section 456)

The House bill contains no comparable provision.

The Conference substitute deletes the Senate amendment.

The Managers expect that, in preparation for child nutrition programs’ reauthorization in FY2003, the Department will work with the Congressional Budget Office, the Office of Management and Budget and others to review the current WIC funding approach and alternative approaches to ensure an appropriate level of funding is available throughout the fiscal year. Also in preparation for this legislation, the Managers encourage the continued development, refinement, and testing of a national standard for WIC electronic benefit transfer (EBT) transactions. The Managers encourage the completion of work on a national standard for WIC EBT transactions prior to WIC reauthorization.

In addition, the Managers understand that several states differentiate between 100 percent fruit juice and blended 100 percent fruit juices in formulating an approved WIC list. The Managers are aware that a number of factors are considered by a state when selecting products for its approved WIC list. The Managers encourage states not to limit the availability of eligible food choices of WIC participants, and strongly urge states to evaluate objectively the merits of WIC-eligible food products. The Managers encourage the Department to provide guidance to the states, making them aware that blended 100 percent fruit juices are permissible WIC products.

The Senate amendment provides that, notwithstanding any provision of law concerning commodity donations, any commodities acquired in the conduct of CCC operations and any "Section 32" commodities may be used for any domestic feeding program involving acquisition and use of commodities. This authority applies to the extent that the commodities involved are in excess of quantities needed to carry out other obligations (including quantities otherwise reserved for a specific purpose). The domestic feeding programs covered by this authority include TEFAP, and programs authorized under the Richard B. Russell National School Lunch Act, the Child Nutrition Act, the Older Americans Act, or other laws the Secretary determines appropriate. (Section 457)

The House bill contains no comparable provision.

The Conference substitute adopts the Senate provision. (Section 4202)

The Managers recognize that, under current law, the source of funding for the purchase of a particular commodity can limit the eligible recipient programs. As a result, distribution of commodities to the Department’s School Nutrition Programs and other domestic programs has sometimes been difficult or prevented entirely. The limitation in the current law has stymied the two-fold purposes of commodity purchases - to support American agriculture and to provide nutritious foods through our domestic feeding programs. For purposes of this distribution authority, the Managers consider eligible excess commodities to be those that are purchased by the Commodity Credit Corporation

or by the Secretary and remain available after all other authorized distributions, including distribution of specific quantities reserved for specific purposes, have been satisfied. This section allows more efficient, expeditious and direct distribution of excess commodities by expanding the Secretary’s existing distribution authorities.

The Senate amendment requires the Secretary to: encourage institutions participating in the School Lunch and Breakfast programs to purchase locally produced foods, to the maximum extent practicable and appropriate and in addition to other food purchases; advise these institutions of the locally produced food policy; and provide start-up grants to up to 200 institutions to defray initial costs of equipment, materials, storage facilities, and similar costs incurred in carrying out the locally produced food policy. Also it authorizes appropriations of $400,000 a year for FY2002-FY2006. (Section 458)

The House bill contains no comparable provision.

The Conference substitute adopts the Senate provision.

The intent of the Managers is to authorize the Secretary to award modest start-up grants for equipment, materials and similar costs associated with purchasing locally produced foods. It is not the intent to create a geographical preference for purchases of locally produced foods or purchases made with grant funds. All purchases are to be made competitively, consistent with federal procurement laws and regulations.

The Conference substitute also includes an amendment that treats Puerto Rico in the same way as Hawaii is treated under the Buy America provision in the National School Lunch Act. It extends, to the extent practicable, an advantage of domestic grown or produced products over foreign products, to Puerto Rico for purposes of the School Lunch Program. The Buy America provision originally applied only to the 48 contiguous states with the later addition of Hawaii.

The Managers want to make clear that school food authorities are still required to follow federal procurement rules calling for free and open competition and limit local product purchases to those that are practicable. Furthermore, while products from Puerto Rico will have an advantage over foreign products, this provision will not give an advantage to products produced or grown in one of the 48 contiguous states or Hawaii. (Section 4303)

The Senate amendment makes available an additional $15 million in mandatory funding for the WIC farmers’ market nutrition program no later than 30 days after enactment. (Section 460)

The House bill contains no comparable provision.

The Conference substitute adopts the Senate provision with an amendment providing that funding for the program is made available out of the Commodity Credit Corporation. This emergency allocation of CCC funding to the WIC farmers’ market nutrition program is made to meet a one-time shortfall and is not intended to set a precedent for the use of CCC resources to support the WIC farmers’ market nutrition program. (Section 4307)

The Senate amendment requires the Secretary to use "Section 32" funds to conduct a pilot program to make free fruits and vegetables available to students in 25 schools in each of four states and students in schools on one Indian reservation, in the 2002-2003 school year. It also requires an evaluation of the pilot to determine whether students take advantage, whether interest increased or lessened over time, and what effect the pilot has on vending machine sales and sales of school meals. The Secretary is required to use $200,000 in "Section 32" funds to carry out the evaluation. The evaluation is to be conducted through the Economic Research Service and submitted to the House Committee on Education and the Workforce and the Senate Committee on Agriculture, Nutrition, and Forestry not later than one year after implementation of the pilot program. (Section 461)

The House bill contains no comparable provision.

The Conference substitute adopts the Senate provision with amendments: The pilot will begin in July 2002 and last one year; free fresh and dried fruits and fresh vegetables will be made available throughout the school day in one or more areas designated by the school; not later than one year after the implementation of the pilot program, the Secretary (acting through the Economic Research Service) shall report to the Committee on Education and the Workforce of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate, the results of the pilot program; $6 million of Section 32 funds shall be made available to carry out this pilot program. (Section 4305)

The Managers agree that the intent of the pilot program is to determine the feasibility of carrying out such a program and its success as determined by the students' interest in participating in the program. The Managers encourage USDA to work with the schools to collect information on the types of schools that ultimately participate in the program, how schools choose to implement the program (including information on whether or not they incorporate nutrition education), and reasons for different implementation approaches. The Department is encouraged to find out from the schools about lessons learned and whether or not (and why) they are interested in continuing to participate in a similar program. To the extent practical, the Department is also asked to find out from teachers and/or students about students' attitudes and actual behavior over the course of time. The Managers recommend the selection of the following four states to participate in the pilot: Indiana, Iowa, Michigan, and Ohio. The Secretary will select the Indian reservation and the schools within each of the states that will participate in the pilot project.

The Senate amendment authorizes the Secretary to establish-- in not more than 15 states-- a pilot program to increase domestic consumption of fresh fruits and vegetables and convey related health messages. It authorizes appropriations of $25 million a year for FY2002-FY2006. The federal share of project costs is 50 percent and funds are not available to any foreign for-profit corporation. Where practicable, the amendment requires the Secretary to: establish the program in states where production of fresh fruits and vegetables is a significant industry; and base the program on "strategic initiatives," including health promotion and education interventions, public service and paid marketing activities, and health promotion and social marketing campaigns.

In selecting states, the Senate amendment requires the Secretary to take into account the state’s experience in: carrying out similar activities and its ability to be innovative, conduct marketing campaigns to promote produce consumption, track increases in levels of produce consumption, and to optimize the availability of produce. (Section 463)

The House bill contains no comparable provision.

The Conference substitute adopts the Senate provision with amendments: establishing in not more than 5 states, and for a period not to exceed 4 years for each participating state, a pilot program for the purpose of increasing the domestic consumption of fresh fruits and vegetables and conveying related health promotion messages; funds may not be used to disparage any other agricultural commodities and funds made available to states under this program may not be provided by a state to any foreign for-profit corporation; regarding the Secretary selecting states to participate in the program, the funds may be used to enhance existing state programs that are consistent with the purposes of this section, and the Secretary shall take into consideration states’ experience in carrying out similar projects or activities, innovative approaches, and the ability of the state to promote and track increases in levels of produce consumption; participating states shall establish eligibility criteria under which the states may select public and private sector entities to carry out demonstration projects under this program ; authorizing to be appropriated $10 million per fiscal year 2002 through 2007 to carry out this section. (Section 4403)