Child Care Expansion Act

Summary: TABLE OF CONTENTS: 
     Title I:  General Expansion of Activities 
     Title II:  Tax Incentives for Dependent Care 
Child Care Expansion Act - 
Title I:  General Expansion of Activities
 - Directs the Secretary of Health and Human Services to establish a small business child care grant program to assist States in providing funds to encourage the establishment and operation of employer-operated child care programs.  Authorizes appropriations. 
(Sec. 102) Amends the Older Americans Act of 1965 and the Domestic Volunteer Service Act of 1973 (DVSA) to direct the Secretary of Labor (in carrying out the Older Americans Community Service Employment Program) and the Chief Executive Officer of the Corporation for National and Community Service, respectively, as well as any grantee or contractor, to take steps, including the development of appropriate special projects, to encourage the fullest participation of eligible older individuals (under DVSA, individuals age 55 or older) in projects to provide child care under such program. Requires that such child care projects, to the extent practicable, be carried out in communities with child care shortages. 
Title II:  Tax Incentives for Dependent Care
 - Amends the Internal Revenue Code to increase the child and dependent care credit for specified low and middle income workers. 
Applies the home office tax deduction to the use of such home office for dependent care.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Child Care Expansion Act''.

                TITLE I--GENERAL EXPANSION OF ACTIVITIES

SEC. 101. SMALL BUSINESS CHILD CARE GRANT PROGRAM.

    (a) Establishment.--The Secretary of Health and Human Services 
(hereafter referred to in this section as the ``Secretary'') shall 
establish a program to award grants to States to assist States in 
providing funds to encourage the establishment and operation of 
employer operated child care programs.
    (b) Application.--To be eligible to receive a grant under this 
section, a State shall prepare and submit to the Secretary an 
application at such time, in such manner, and containing such 
information as the Secretary may require, including an assurance that 
the State will provide the funds required under subsection (e).
    (c) Amount of Grant.--The Secretary shall determine the amount of a 
grant to a State under this section based on the population of the 
State as compared to the population of all States.
    (d) Use of Funds.--
            (1) In general.--A State shall use amounts provided under a 
        grant awarded under this section to provide assistance to small 
        businesses located in the State to enable such small businesses 
        to establish and operate child care programs. Such assistance 
        may include--
                    (A) technical assistance in the establishment of a 
                child care program;
                    (B) assistance for the start-up costs related to a 
                child care programs;
                    (C) assistance for the training of child care 
                providers;
                    (D) scholarships for low-income wage earners;
                    (E) the provision of services to care for sick 
                children or to provide care to school aged children;
                    (F) the entering into of contracts with local 
                resource and referral or local health departments;
                    (G) assistance for any other activity determined 
                appropriate by the State; or
                    (H) care for children with disabilities.
            (2) Application.--To be eligible to receive assistance from 
        a State under this section, a small business shall prepare and 
        submit to the State an application at such time, in such 
        manner, and containing such information as the State may 
        require.
            (3) Preference.--
                    (A) In general.--In providing assistance under this 
                section, a State shall give priority to applicants that 
                desire to form consortium to provide child care in 
                geographic areas within the State where such care is 
                not generally available or accessible.
                    (B) Consortium.--For purposes of subparagraph (A), 
                a consortium shall be made up of 2 or more entities 
                which may include businesses, nonprofit agencies or 
                organizations, local governments, or other appropriate 
                entities.
            (4) Limitation.--With respect to grant funds received under 
        this section, a State may not provide in excess of $50,000 in 
        assistance from such funds to any single applicant. A State may 
        not provide assistance under a grant to more than 10 entities.
    (e) Matching Requirement.--To be eligible to receive a grant under 
this section a State shall provide assurances to the Secretary that, 
with respect to the costs to be incurred by an entity receiving 
assistance in carrying out activities under this section, such entity 
will make available (directly or through donations from public or 
private entities) non-Federal contributions to such costs in an amount 
equal to--
            (1) for the first fiscal year in which the entity receives 
        such assistance, not less than 25 percent of such costs ($1 for 
        each $3 of assistance provided to the entity under the grant);
            (2) for the second fiscal year in which an entity receives 
        such assistance, not less than 33\1/3\ percent of such costs 
        ($1 for each $2 of assistance provided to the entity under the 
        grant); and
            (3) for the third fiscal year in which an entity receives 
        such assistance, not less than 50 percent of such costs ($1 for 
        each $1 of assistance provided to the entity under the grant).
    (f) Requirements of Providers.--To be eligible to receive 
assistance under a grant awarded under this section a child care 
provider shall comply with all applicable State and local licensing and 
regulatory requirements and all applicable health and safety standards 
in effect in the State.
    (g) Administration.--
            (1) State responsibility.--A State shall have 
        responsibility for administering the grant awarded under this 
        section and for monitoring entities that receive assistance 
        under such grant.
            (2) Audits.--A State shall require that each entity 
        receiving assistance under a grant awarded under this section 
        conduct of an annual audit with respect to the activities of 
        the entity. Such audits shall be submitted to the State.
            (3) Misuse of funds.--
                    (A) Repayment.--If the State determines, through an 
                audit or otherwise, that an entity receiving assistance 
                under a grant awarded under this section has misused 
                such assistance, the State shall notify the Secretary 
                of such misuses. The Secretary, upon such a 
                notification, may seek from such an entity the 
                repayment of an amount equal to the amount of any 
                misused assistance plus interest.
                    (B) Appeals process.--The Secretary shall by 
                regulation provide for an appeals process with respect 
                to repayments under this paragraph.
    (h) Reporting Requirement.--
            (1) Study.--Not later than 2 years after the date on which 
        the Secretary first provides grants under this section, the 
        Secretary shall conduct a study to determine--
                    (A) the capacity of entities to meet the child care 
                needs of communities within a State;
                    (B) the kinds of partnerships that are being formed 
                with respect to child care at the local level; and
                    (C) who is using the programs funded under this 
                section and the income levels of such individuals.
            (2) Report.--Not later than 28 months after the date of 
        enactment of this Act, the Secretary shall prepare and submit 
        to the appropriate committees of Congress, a report concerning 
        the effectiveness of the grant programs under this section.
    (i) Definition.--As used in this section, the term ``small 
business'' means an employer who employed an average of at least 2 but 
not more than 50 employees on business days during the preceding 
calendar year.
    (j) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section, $25,000,000 for each of the 
fiscal years 1998 through 2000.
    (k) Termination of Program.--The program established under 
subsection (a) shall terminate on September 30, 2001.

SEC. 102. PROJECTS FOR CHILD CARE BY OLDER INDIVIDUALS.

    (a) Community Service Employment Program.--Section 502 of the Older 
Americans Act of 1965 (42 U.S.C. 3056) is amended by adding at the end 
the following:
    ``(f) In carrying out this title, the Secretary, and any entity 
entering into an agreement under this title, shall take necessary 
steps, including the development of special projects, where 
appropriate, to encourage the fullest participation of eligible 
individuals (including eligible individuals described in subsection 
(e), as appropriate), in projects to provide child care under this 
title. Such child care projects shall, to the extent practicable, be 
carried out in communities with child care shortages, as determined by 
the appropriate State agency designated under section 658D(a) of the 
Child Care and Development Block Grant Act of 1990 (42 U.S.C. 
9858b(a)).''.
    (b) Domestic Volunteer Service Act.--Title IV of the Domestic 
Volunteer Service Act of 1973 (42 U.S.C. 5043 et seq.) is amended by 
adding at the end the following:

``SEC. 427. PARTICIPATION IN PROJECT TO PROVIDE CHILD CARE.

    ``(a) In General.--In carrying out this Act, the Director, and any 
recipient of a grant or contract under this Act, shall take necessary 
steps, including the development of special projects, where 
appropriate, to encourage the fullest participation of individuals 55 
and older, in projects to provide child care under this Act. Such child 
care projects shall, to the extent practicable, be carried out in 
communities with child care shortages, as determined by the appropriate 
State agency designated under section 658D(a) of the Child Care and 
Development Block Grant Act of 1990 (42 U.S.C. 9858b(a)).
    ``(b) Funding of Projects.--The Director may, using amounts 
available for experimental projects under section 502(e), provide for 
the development of special projects under subsection (a).''.

              TITLE II--TAX INCENTIVES FOR DEPENDENT CARE

SEC. 201. EXPANSION OF CHILD AND DEPENDENT CARE CREDIT.

    (a) Increase in Credit Percentage for Low and Middle Income 
Workers.--Section 21(a)(2) of the Internal Revenue Code of 1986 
(relating to credit for expenses for household and dependent care 
services necessary for gainful employment) is amended to read as 
follows:
            ``(2) Applicable percentage defined.--For purposes of 
        paragraph (1), the term `applicable percentage' means 30 
        percent reduced (but not below 20 percent) by 1 percentage 
        point for each $2,000 (or fraction thereof) by which the 
        taxpayer's adjusted gross income exceeds $20,000.''
    (b) Increase in Maximum Amount Creditable.--Section 21(c) of the 
Internal Revenue Code of 1986 (relating to dollar limit on amount 
creditable) is amended--
            (1) by striking ``$2,400'' in paragraph (1) and inserting 
        ``$3,600'', and
            (2) by striking ``$4,800'' in paragraph (2) and inserting 
        ``$5,400''.
    (c) Phase-Out of Credit for Higher Income Taxpayers.--
            (1) In general.--Section 21(c) of the Internal Revenue Code 
        of 1986 (relating to dollar limit on amount creditable) is 
        amended by adding at the end the following new paragraph:
            ``(2) Phaseout of credit.--
                    ``(A) In general.--The amount of the credit allowed 
                under subsection (a) shall be reduced (but not below 
                zero) by the amount determined under subparagraph (B).
                    ``(B) Amount of reduction.--The amount determined 
                under this paragraph equals the amount which bears the 
                same ratio to the credit (determined without regard to 
                this subsection) as--
                            ``(i) the excess of--
                                    ``(I) the taxpayer's adjusted gross 
                                income for such taxable year, over
                                    ``(II) the threshold amount, bears 
                                to
                            ``(ii) $10,000.
                Any amount determined under this subparagraph which is 
                not a multiple of $10 shall be rounded to the next 
                lowest $10.
                    ``(C) Threshold amount.--For purposes of this 
                paragraph, the term `threshold amount' means--
                            ``(i) $90,000 in the case of a joint 
                        return,
                            ``(ii) $65,000 in the case of an individual 
                        who is not married, and
                            ``(iii) $45,000 in the case of a married 
                        individual filing a separate return.
                For purposes of this subparagraph, marital status shall 
                be determined under section 7703.
                    ``(D) Adjusted gross income.--For purposes of this 
                paragraph, adjusted gross income of any taxpayer shall 
                be increased by any amount excluded from gross income 
                under section 911, 931, or 933.''
            (2) Conforming amendments.--Section 21(c) of such Code is 
        amended--
                    (A) by striking ``(c) Dollar Limit on Amount 
                Creditable.--The'' and inserting:
    ``(c) Limitations.--
            ``(1) Dollar limit.--The'',
                    (B) by redesignating paragraphs (1) and (2) as 
                subparagraphs (A) and (B), respectively, and
                    (C) by striking ``paragraph (1) or (2)'' in the 
                last sentence and inserting ``subparagraph (A) or 
                (B)''.
    (c) Effective Date.--The amendments made by this section apply to 
taxable years beginning after December 31, 1997.

SEC. 202. EXPANSION OF HOME OFFICE DEDUCTION TO INCLUDE USE OF OFFICE 
              FOR DEPENDENT CARE.

    (a) In General.--Section 280A(c)(1) of the Internal Revenue Code of 
1986 (relating to certain business use) is amended by adding at the end 
the following: ``A portion of a dwelling unit and the exclusive use of 
such portion otherwise described in this paragraph shall not fail to be 
so described if such portion is also used by the taxpayer during such 
exclusive use to care for a dependent of the taxpayer.''.
    (b) Effective Date.--The amendment made by this section applies to 
taxable years beginning after December 31, 1997.