Title III, SEC. 3502. SUPPLEMENTAL FORMULA GRANTS FOR STATES REGARDING 
ACTIVITIES UNDER PART B OF TITLE XIX OF PUBLIC HEALTH SERVICE ACT. 
      (a) Mental Health. 

        (1) In general. In the case of any State that submits to the Secretary 
      an application in accordance with subsection (e) for a fiscal year with 
      respect to mental health, the Secretary shall make a grant to the State 
      for the purposes authorized in subsection (c) with respect to mental 
      health. The grant shall consist of the allotment determined under 
      paragraph (2) for the State for such year. 

        (2) Determination of allotment. For purposes of paragraph (1), the 
      allotment under this paragraph for a State for a fiscal year shall be 
      determined as follows: With respect to the amount reserved under section 
      3501(c)(2) for carrying out this subsection, section 1918 of the Public 
      Health Service Act shall be applied to such amount to the same extent and 
      in the same manner as such section 1918 is applied to the amount 
      determined under section 1918(a)(2) of such Act. 

      (b) Substance Abuse. 

        (1) In general. In the case of any State that submits to the Secretary 
      an application in accordance with subsection (e) for a fiscal year with 
      respect to substance abuse, the Secretary shall make a grant to the State 
      for the purposes authorized in subsection (c) with respect to substance 
      abuse. The grant shall consist of the allotment determined under 
      paragraph (2) for the State for such year. 

        (2) Determination of allotment. For purposes of paragraph (1), the 
      allotment under this paragraph for a State for a fiscal year shall be 
      determined as follows: With respect to the amount reserved under section 
      3501(c)(2) for carrying out this subsection, section 1933 of the Public 
      Health Service Act shall be applied to such amount to the same extent and 
      in the same manner as such section 1933 is applied to the amount 
      determined pursuant to sections 1933(a)(1)(B)(i) and 1918(a)(2)(A) of 
      such Act. 

      (c) Use of Grants. 

        (1) In general. With respect to the expenditure of a grant  to a State 
      under subsection (a) or (b), the Secretary 

          (A) shall designate as authorized expenditures such of the activities 
        described in paragraph (2) with respect to mental health and substance 
        abuse, respectively, as the Secretary determines to be appropriate; and 

          (B) may make the grant only if the State agrees to expend the grant 
        in accordance with the activities so designated. 

        (2) Description of activities. The activities referred to in paragraph 
      (1) are (as applicable to the grant involved) the following: 

          (A) For the purpose of increasing the access of individuals to 
        services relating to mental health and substance abuse, the following 
        services: Transportation, community and patient outreach, patient 
        education, translation services, and such other services as the 
        Secretary determines to be appropriate regarding such purpose. 

          (B) Improving the capacity of State and local service systems to 
        coordinate and monitor mental health and substance abuse services, 
        including improvement of management information systems, and 
        establishment of linkages between providers of mental health and 
        substance abuse services and primary care providers and health plans. 

          (C) Providing incentives to integrate public and private systems for 
        the treatment of mental health and substance abuse disorders. 

          (D) Any activity for which a grant under section 1911 or section 1921 
        of the Public Health Service Act is authorized to be expended. 

      (d) Maintenance of Effort. 

        (1) In general. With respect to the activities for which a grant under 
      subsection (a) or (b) is to be made, the Secretary may make the grant 
      only if the State involved agrees to maintain expenditures of non-Federal 
      amounts for such activities at a level that is not less than the level of 
      such expenditures maintained by the State for the fiscal year preceding 
      the first fiscal year for which the State receives such a grant. 

        (2) Waiver. The Secretary may waive all or part of the requirement 
      established for a State under paragraph (1) if 

          (A) the State agrees that the amounts that otherwise would have been 
        subject to such requirement will be expended for the purpose of 
        developing community-based systems of care to promote the eventual 
        integration of the public and private systems for treatment of mental 
        health, or substance abuse, as applicable to the grant; 

          (B) the State submits to the Secretary a request for the waiver and a 
        description of the manner in which the State will carry out such 
        purpose; and 

          (C) the Secretary approves the waiver. 

      (e) Application for Grant. For purposes of subsection (a)(1) and (b)(1), 
    an application for a grant under this section regarding mental health or 
    substance abuse, respectively, is in accordance with this subsection if the 
    State involved submits the application not later than the date specified by 
    the Secretary, the application contains each applicable agreement described 
    in this section, and the application otherwise is in such form, is made in 
    such manner, and contains such agreements, assurances, and information as 
    the Secretary determines to be necessary to carry out the purpose involved.