ADMINISTRATIVE COSTS OF EMPLOYMENT PROJECTS.

SEC. 161. ADMINISTRATIVE COSTS OF EMPLOYMENT PROJECTS. Section 502(c)(3) of the Older Americans Act of 1965 (42 U.S.C. 3056(c)(3)) is amended to read as follows: “(3) Of the amount for any project to be paid by the Secretary under this subsection, not more than 13.5 percent for fiscal year 1987 and each fiscal year thereafter shall be available for paying the costs of administration for such project, except that— “(A) whenever the Secretary determines that it is necessary to carry out the project assisted under this title, based on information submitted by the public or private nonprofit agency or organization with which the Secretary has an agreement under subsection (b), the Secretary may increase the amount available for paying the cost of administration to an amount not more than 15 percent of the cost of such project; and “(B) whenever the public or private nonprofit agency or organization with which the Secretary has an agreement under subsection (b) demonstrates to the Secretary that— “(i) major administrative cost increases are being incurred in necessary program components, including liability insurance, payments for workers’ compensation, costs associated with achieving unsubsidized placement goals, and other operation requirements imposed by the Secretary; “(ii) the number of employment positions in the project or the number of minority eligible individuals participating in the project will decline if the amount available for paying the cost of administration is not increased; or “(iii) the size of the project is so small that the amount of administrative expenses incurred to carry out the project necessarily exceed 13.5 percent of the amount for such project; the Secretary shall increase the amount available for the fiscal year for paying the cost of administration to an amount not more than 15 percent of the cost of such project.”.