42 U.S.C. § 9907 — Uses of funds

Page 7951 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 9907 ted to such State under such paragraph and subsection (a) does not exceed 140 percent of the aggregate amount allotted to such State under the corresponding provisions of this chapter for the preceding fiscal year. (c) Payments The Secretary shall make grants to eligible States for the allotments described in sub- sections (a) and (b). The Secretary shall make payments for the grants in accordance with sec- tion 6503(a) of title 31. (d) Definition In this section, the term ‘‘State’’ does not in- clude Guam, American Samoa, the United States Virgin Islands, and the Commonwealth of the Northern Mariana Islands. (Pub. L. 97–35, title VI, § 675B, as added Pub. L. 105–285, title II, § 201, Oct. 27, 1998, 112 Stat. 2730.) Editorial Notes REFERENCES IN TEXT Section 2808 of this title, referred to in subsec. (a), was repealed by Pub. L. 97–35, title VI, § 683(a), Aug. 13, 1981, 95 Stat. 519. PRIOR PROVISIONS A prior section 9906, Pub. L. 97–35, title VI, § 677, Aug. 13, 1981, 95 Stat. 516, contained nondiscrimination pro- visions, prior to the general amendment of this chapter by Pub. L. 105–285. § 9907. Uses of funds (a) Grants to eligible entities and other organiza- tions (1) In general Not less than 90 percent of the funds made available to a State under section 9905 or 9906 of this title shall be used by the State to make grants for the purposes described in section 9901 of this title to eligible entities. (2) Obligational authority Funds distributed to eligible entities through grants made in accordance with para- graph (1) for a fiscal year shall be available for obligation during that fiscal year and the suc- ceeding fiscal year, subject to paragraph (3). (3) Recapture and redistribution of unobli- gated funds (A) Amount Beginning on October 1, 2000, a State may recapture and redistribute funds distributed to an eligible entity through a grant made under paragraph (1) that are unobligated at the end of a fiscal year if such unobligated funds exceed 20 percent of the amount so dis- tributed to such eligible entity for such fis- cal year. (B) Redistribution In redistributing funds recaptured in ac- cordance with this paragraph, States shall redistribute such funds to an eligible entity, or require the original recipient of the funds to redistribute the funds to a private, non- profit organization, located within the com- munity served by the original recipient of the funds, for activities consistent with the purposes of this chapter. (b) Statewide activities (1) Use of remainder If a State uses less than 100 percent of the grant or allotment received under section 9905 or 9906 of this title to make grants under sub- section (a), the State shall use the remainder of the grant or allotment under section 9905 or 9906 of this title (subject to paragraph (2)) for activities that may include— (A) providing training and technical as- sistance to those entities in need of such training and assistance; (B) coordinating State-operated programs and services, and at the option of the State, locally-operated programs and services, tar- geted to low-income children and families with services provided by eligible entities and other organizations funded under this chapter, including detailing appropriate em- ployees of State or local agencies to entities funded under this chapter, to ensure in- creased 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 chapter 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 orga- nizations to eliminate poverty, promote self- sufficiency, and promote community revital- ization; (G) supporting State charity tax credits as described in subsection (c); and (H) supporting other activities, consistent with the purposes of this chapter. (2) Administrative cap No State may spend more than the greater of $55,000, or 5 percent, of the grant received under section 9905 of this title or State allot- ment received under section 9906 of this title for administrative expenses, including moni- toring activities. Funds to be spent for such expenses shall be taken from the portion of the grant under section 9905 of this title or State allotment that remains after the State makes grants to eligible entities under sub- section (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 con- ducted under subsection (c) shall be considered to be administrative expenses. (c) Charity tax credit (1) In general Subject to paragraph (2), if there is in effect under State law a charity tax credit, the State may use for any purpose the amount of the al- lotment that is available for expenditure under subsection (b). (2) Limit The aggregate amount a State may use under paragraph (1) during a fiscal year shall Page 7952 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 9907 not exceed 100 percent of the revenue loss of the State during the fiscal year that is attrib- utable to the charity tax credit, as determined by the Secretary of the Treasury without re- gard to any such revenue loss occurring before January 1, 1999. (3) Definitions and rules In this subsection: (A) Charity tax credit The term ‘‘charity tax credit’’ means a nonrefundable credit against State income tax (or, in the case of a State that does not impose an income tax, a comparable benefit) that is allowable for contributions, in cash or in kind, to qualified charities. (B) Qualified charity (i) In general The term ‘‘qualified charity’’ means any organization— (I) that is— (aa) described in section 501(c)(3) of title 26 and exempt from tax under sec- tion 501(a) of such title; (bb) an eligible entity; or (cc) a public housing agency as de- fined in section 1437a(b)(6) of this title; (II) that is certified by the appropriate State authority as meeting the require- ments of clauses (iii) and (iv); and (III) if such organization is otherwise required to file a return under section 6033 of such title, that elects to treat the information required to be furnished by clause (v) as being specified in section 6033(b) of such title. (ii) Certain contributions to collection or- ganizations treated as contributions to qualified charity (I) In general A contribution to a collection organi- zation shall be treated as a contribution to a qualified charity if the donor des- ignates in writing that the contribution is for the qualified charity. (II) Collection organization The term ‘‘collection organization’’ means an organization described in sec- tion 501(c)(3) of such title and exempt from tax under section 501(a) of such title— (aa) that solicits and collects gifts and grants that, by agreement, are dis- tributed to qualified charities; (bb) that distributes to qualified charities at least 90 percent of the gifts and grants the organization receives that are designated for such qualified charities; and (cc) that meets the requirements of clause (vi). (iii) Charity must primarily assist poor in- dividuals (I) In general An organization meets the require- ments of this clause only if the appro- priate State authority reasonably ex- pects that the predominant activity of such organization will be the provision of direct services within the United States to individuals and families whose annual incomes generally do not exceed 185 percent of the poverty line in order to prevent or alleviate poverty among such individuals and families. (II) No recordkeeping in certain cases An organization shall not be required to establish or maintain records with re- spect to the incomes of individuals and families for purposes of subclause (I) if such individuals or families are members of groups that are generally recognized as including substantially only individ- uals and families described in subclause (I). (III) Food aid and homeless shelters Except as otherwise provided by the appropriate State authority, for pur- poses of subclause (I), services to individ- uals in the form of— (aa) donations of food or meals; or (bb) temporary shelter to homeless individuals; shall be treated as provided to individ- uals described in subclause (I) if the lo- cation and provision of such services are such that the service provider may rea- sonably conclude that the beneficiaries of such services are predominantly indi- viduals described in subclause (I). (iv) Minimum expense requirement (I) In general An organization meets the require- ments of this clause only if the appro- priate State authority reasonably ex- pects that the annual poverty program expenses of such organization will not be less than 75 percent of the annual aggre- gate expenses of such organization. (II) Poverty program expense For purposes of subclause (I)— (aa) In general The term ‘‘poverty program expense’’ means any expense in providing direct services referred to in clause (iii). (bb) Exceptions Such term shall not include any management or general expense, any expense for the purpose of influencing legislation (as defined in section 4911(d) of title 26), any expense for the purpose of fundraising, any expense for a legal service provided on behalf of any individual referred to in clause (iii), any expense for providing tuition assistance relating to compulsory school attendance, and any expense that consists of a payment to an affil- iate of the organization. (v) Reporting requirement The information required to be furnished under this clause about an organization is— Page 7953 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 9908 (I) the percentages determined by di- viding the following categories of the or- ganization’s expenses for the year by the total expenses of the organization for the year: expenses for direct services, man- agement expenses, general expenses, fundraising expenses, and payments to affiliates; and (II) the category or categories (includ- ing food, shelter, education, substance abuse prevention or treatment, job train- ing, or other) of services that constitute predominant activities of the organiza- tion. (vi) Additional requirements for collection organizations The requirements of this clause are met if the organization— (I) maintains separate accounting for revenues and expenses; and (II) makes available to the public in- formation on the administrative and fundraising costs of the organization, and information as to the organizations receiving funds from the organization and the amount of such funds. (vii) Special rule for States requiring tax uniformity In the case of a State— (I) that has a constitutional require- ment of tax uniformity; and (II) that, as of December 31, 1997, im- posed a tax on personal income with— (aa) a single flat rate applicable to all earned and unearned income (ex- cept insofar as any amount is not taxed pursuant to tax forgiveness pro- visions); and (bb) no generally available exemp- tions or deductions to individuals; the requirement of paragraph (2) shall be treated as met if the amount of the credit described in paragraph (2) is limited to a uniform percentage (but not greater than 25 percent) of State personal income tax li- ability (determined without regard to credits). (4) Limitation on use of funds for startup and administrative activities Except to the extent provided in subsection (b)(2), no part of the aggregate amount a State uses under paragraph (1) may be used to pay for the cost of the startup and administrative activities conducted under this subsection. (5) Prohibition on use of funds for legal serv- ices or tuition assistance No part of the aggregate amount a State uses under paragraph (1) may be used to pro- vide legal services or to provide tuition assist- ance related to compulsory education require- ments (not including tuition assistance for tu- toring, camps, skills development, or other supplemental services or training). (6) Prohibition on supplanting funds No part of the aggregate amount a State uses under paragraph (1) may be used to sup- plant non-Federal funds that would be avail- able, in the absence of Federal funds, to offset a revenue loss of the State attributable to a charity tax credit. (Pub. L. 97–35, title VI, § 675C, as added Pub. L. 105–285, title II, § 201, Oct. 27, 1998, 112 Stat. 2731.) Editorial Notes PRIOR PROVISIONS A prior section 9907, Pub. L. 97–35, title VI, § 678, Aug. 13, 1981, 95 Stat. 516, related to payments to States, prior to the general amendment of this chapter by Pub. L. 105–285. § 9908. Application and plan (a) Designation of lead agency (1) Designation The chief executive officer of a State desir- ing to receive a grant or allotment under sec- tion 9905 or 9906 of this title shall designate, in an application submitted to the Secretary under subsection (b), an appropriate State agency that complies with the requirements of paragraph (2) to act as a lead agency for pur- poses of carrying out State activities under this chapter. (2) Duties The lead agency shall— (A) develop the State plan to be submitted to the Secretary under subsection (b); (B) in conjunction with the development of the State plan as required under subsection (b), hold at least one hearing in the State with sufficient time and statewide distribu- tion of notice of such hearing, to provide to the public an opportunity to comment on the proposed use and distribution of funds to be provided through the grant or allotment under section 9905 or 9906 of this title for the period covered by the State plan; and (C) conduct reviews of eligible entities under section 9914 of this title. (3) Legislative hearing In order to be eligible to receive a grant or allotment under section 9905 or 9906 of this title, the State shall hold at least one legisla- tive hearing every 3 years in conjunction with the development of the State plan. (b) State application and plan Beginning with fiscal year 2000, to be eligible to receive a grant or allotment under section 9905 or 9906 of this title, a State shall prepare and submit to the Secretary an application and State plan covering a period of not less than 1 fiscal year and not more than 2 fiscal years. The plan shall be submitted not later than 30 days prior to the beginning of the first fiscal year covered by the plan, and shall contain such in- formation as the Secretary shall require, includ- ing— (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 individ- uals, including families and individuals re- ceiving assistance under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.), homeless families and individuals, mi-