The Omnibus Budget Reconciliation Act of 1993 makes $1 billion available on an entitlement basis under title XX for the Secretary of HHS to make grants to States for social services in qualified empowerment zones and enterprise communities (the legislation also provides certain tax incentives for zones and communities). On December 21, 1994, President Clinton selected 105 designees to participate in this program (6 urban and 3 rural empowerment zones, 60 urban and 30 rural enterprise communities, 2 supplemental empowerment zones and 4 enhanced enterprise communities).
An empowerment zone or enterprise community is qualified for purposes of the title XX grant if it has been designated a zone or community under part I, subchapter U, chapter I of the Internal Revenue Code of 1986 and if its strategic plan (required in an application for designation under the Internal Revenue Code) is qualified.
A qualified plan is a plan that: (1) includes a detailed description of the activities proposed for the area that are to be funded with the grant; (2) contains a commitment that the funds provided will not be used to supplant Federal or non- Federal funds for services and activities which promote the purposes of the grant; (3) to the extent a State does not use the funds on certain program options, explains the reasons why not; and (4) was developed in cooperation with the local government or governments with jurisdiction over the zone or community.
With respect to each empowerment zone, the Secretary was required to make one grant ($50 million if urban, $20 million if rural) to each State in which the zone lies on the date of its designation, and a second grant of the same amount on the first day of the following fiscal year. With respect to each enterprise community, the Secretary made one grant of up to $3 million to each State in which the community lies on the date of its designation. States have up to 10 years from the date of their designation in which to expend these additional title XX funds, although they must be obligated within the first 2 years.
States, in conjunction with the local governments with jurisdiction over the zone or community, have broad discretion in the use of grant funds. Funds must be used for social services directed at three goals of the basic title XX grant program: achieving or maintaining economic self-support to prevent, reduce or eliminate dependency; achieving or maintaining self-sufficiency, including reduction or prevention of dependency; or preventing or remedying neglect, abuse, or exploitation of children and adults unable to protect their own interests, or preserving, rehabilitating or reuniting families. The funds also must be used in accordance with the strategic plan and on activities that benefit residents of the zone or community.
Despite the similar purposes for which funds may be used, the range of allowable services is narrower in some respects, and broader in others, under the title XX empowerment zone provisions relative to the basic title XX program. For example, the basic title XX program includes a broader range of purposes than those outlined above for the empowerment zone program. On the other hand, certain restrictions of the basic title XX program (e.g., restrictions that limit drug treatment services to initial detoxification, and restrictions on the use of funds for the payment of wages) are waived under the empowerment zone program, in order to carry out certain specified program options.