I

106TH CONGRESS

1ST SESSION H. R. 1119

To enable a greater number of children to receive child care services, and

to improve the quality of child care services.

IN THE HOUSE OF REPRESENTATIVES

MARCH 16, 1999

Mr. CARDIN (for himself, Mr. RANGEL, Mr. MATSUI, Mr. COYNE, Mr. JEFFERSON, Mr. LEVIN, Mr. LEWIS of Georgia, Mr. DOGGETT, and Mr.

STARK) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Education and the Workforce, for a period to be subsequently determined by

the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To enable a greater number of children to receive child

care services, and to improve the quality of child care

services.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Child Care Improve5 ment Act of 1999’’.
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1 SEC. 2. CHILD CARE SUBSIDY FUNDING.

2 (a) APPROPRIATION; ALLOCATION.—Section 418 of

3 the Social Security Act (42 U.S.C. 618) is amended—

4 (1) by redesignating subsections (b), (c), and

5 (d) as subsections (d), (e), and (f), respectively; and

6 (2) by inserting after subsection (a) the fol7 lowing:

8 ‘‘(b) CHILD CARE SUBSIDY FUNDING.—

9 ‘‘(1) APPROPRIATION.—Out of any funds in the

10 Treasury not otherwise appropriated, there are ap11 propriated for grants and other activities under this

12 subsection—

13 ‘‘(A) $1,155,000,000 for fiscal year 2000;

14 ‘‘(B) $1,280,000,000 for fiscal year 2001;

15 ‘‘(C) $1,400,000,000 for fiscal year 2002;

16 ‘‘(D) $1,600,000,000 for fiscal year 2003;

17 and

18 ‘‘(E) $2,065,000,000 for fiscal year 2004.

19 ‘‘(2) ALLOTMENT AND RESERVATION OF

20 FUNDS.—

21 ‘‘(A) ALLOTMENTS FOR INDIAN TRIBES.—

22 From the amount appropriated pursuant to

23 paragraph (1) for a fiscal year, the Secretary

24 shall allot to each Indian tribe that has received

25 a share for the fiscal year under section

26 658O(c) of the CCDBG Act, an amount that
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1 bears the same ratio to such sum as the Sec2 retary may determine that is not less than 1

3 and not more than 2 percent of the amount so

4 appropriated as the share so received by the

5 tribe bears to the total of the shares so received

6 by all Indian tribes.

7 ‘‘(B) RESERVATION FOR SECRETARY’S AC8 TIVITIES.—From the amount appropriated pur9 suant to paragraph (1) for a fiscal year, the

10 Secretary shall reserve $1,000,000 for expendi11 ture by the Secretary for quality assurance and

12 quality improvement activities relating to pro13 grams under the CCDBG Act.

14 ‘‘(C) ALLOTMENTS FOR STATES AND TER15 RITORIES.—From the amount appropriated

16 pursuant to paragraph (1) for a fiscal year that

17 remains after applying subparagraphs (A) and

18 (B) of this paragraph for the fiscal year, the

19 Secretary shall allot to each State and territory

20 an amount that bears the same ratio to such re21 maining amount as the number of children re22 siding in the State or territory in the second

23 preceding fiscal year bears to the number of

24 children residing in the United States in the

25 second preceding fiscal year.
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1 ‘‘(3) MATCHING PAYMENTS TO STATES AND

2 TERRITORIES.—

3 ‘‘(A) IN GENERAL.—From the amount al4 lotted to a State or territory for a fiscal year

5 under paragraph (2), the Secretary shall pay to

6 the State or territory for the fiscal year an

7 amount equal to the lesser of the amount so al8 lotted or 80 percent of the amount of eligible

9 child care expenditures of the State or territory

10 during the fiscal year.

11 ‘‘(B) ELIGIBLE CHILD CARE EXPENDI12 TURES DEFINED.—In subparagraph (A), the

13 term ‘eligible child care expenditures’ means,

14 with respect to a State or territory,

15 expenditures—

16 ‘‘(i) made under the approved plan of

17 the State or territory under the CCDBG

18 Act;

19 ‘‘(ii) for which Federal matching pay20 ments or reimbursements have not other21 wise been made; and

22 ‘‘(iii) in the case of a State, to the ex23 tent the amount of such expenditures ex24 ceeds the amount necessary to secure pay25 ment of the full amount of the State’s al-
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1 lotment (if any) under subsection (a)(2)

2 (determined without regard to subsection

3 (a)(2)(D)).

4 ‘‘(C) REDISTRIBUTION.—The Secretary

5 shall, to the extent necessary, determine the

6 need for redistribution of, and redistribute,

7 amounts allotted under this subsection to

8 States, in accordance with the procedures and

9 formula set forth in subsection (a)(2)(D).

10 ‘‘(4) PAYMENTS TO INDIAN TRIBES.—From the

11 amount allotted to an Indian tribe for a fiscal year

12 under paragraph (2), the Secretary shall pay to the

13 tribe for the fiscal year an amount equal to the less14 er of the amount so allotted or the total amount ex15 pended by the tribe pursuant to the CCDBG Act for

16 which Federal payments have not otherwise been

17 made.

18 ‘‘(5) TARGETING OF FUNDS FOR WORKING

19 NON-WELFARE FAMILIES.—Notwithstanding sub20 section (e) of this section, a State or territory to

21 which amounts are provided under this subsection

22 shall use not less than 70 percent of the amounts for

23 child care assistance to working families who are not

24 recipients of assistance under the State or territory

25 program funded under section 403(a)(1).’’.
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1 (b) INCLUSION OF TERRITORIES IN DEFINITIONS.—

2 Section 418(f) of such Act, as so redesignated by sub3 section (a)(1) of this section, is amended to read as fol4 lows:

5 ‘‘(f) DEFINITIONS.—As used in this section:

6 ‘‘(1) CCDBG ACT.—The term ‘CCDBG Act’

7 means the Child Care and Development Block Grant

8 Act of 1990 (42 U.S.C. 9801 et seq.).

9 ‘‘(2) STATE.—The term ‘State’ means each of

10 the 50 States, the District of Columbia, and (except

11 for purposes of subsection (a)) the Commonwealth of

12 Puerto Rico.

13 ‘‘(3) TERRITORY.—The term ‘territory’ means

14 the United States Virgin Islands, Guam, American

15 Samoa, and the Commonwealth of the Northern

16 Mariana Islands.’’.

17 (c) CONFORMING AMENDMENTS.—

18 (1) Section 418(a)(3) of such Act (42 U.S.C.

19 618(a)(3)) is amended by striking ‘‘this section’’ and

20 inserting ‘‘this subsection’’.

21 (2) Section 418(d) of such Act (as so redesig22 nated by subsection (a)(1) of this section) is amend23 ed in paragraphs (1) and (2) by striking ‘‘under this

24 section’’ each place it appears and inserting ‘‘under

25 subsection (a)’’.
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1 (3) Section 1108(a)(2) of such Act (42 U.S.C.

2 1308(a)(2)) is amended by striking ‘‘or 413(f)’’ and

3 inserting ‘‘413(f), or 418(b)(3)(A)’’.

4 SEC. 3. CHILD CARE QUALITY AND EARLY LEARNING PRO5 GRAM.

6 (a) FUNDING.—Section 418 of the Social Security

7 Act (42 U.S.C. 618), as amended by section 2(b) of this

8 Act, is amended by inserting after subsection (b) the fol9 lowing:

10 ‘‘(c) APPROPRIATIONS FOR CHILD CARE QUALITY

11 AND EARLY LEARNING PROGRAM.—

12 ‘‘(1) IN GENERAL.—Out of any funds in the

13 Treasury not otherwise appropriated, there are ap14 propriated $600,000,000 for each of fiscal years

15 2000 through 2004 for carrying out activities re16 lated to early learning programs in accordance with

17 this section and section 658T of the CCDBG Act.

18 ‘‘(2) ALLOTMENT AND RESERVATION OF

19 FUNDS.—

20 ‘‘(A) ALLOTMENTS FOR INDIAN TRIBES.—

21 From the amount appropriated pursuant to

22 paragraph (1) for a fiscal year, the Secretary

23 shall allot to each Indian tribe that has received

24 a share for the fiscal year under section

25 658O(c) of the CCDBG Act, an amount that
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1 bears the same ratio to such sum as the Sec2 retary may determine that is not more than 2

3 percent of the amount so appropriated as the

4 share so received by the tribe bears to the total

5 of the shares so received by all Indian tribes.

6 ‘‘(B) ALLOTTMENTS FOR TERRITORIES.—

7 From the amount appropriated pursuant to

8 paragraph (1) for a fiscal year, the Secretary

9 shall allot to each territory an amount that

bears the same ratio to 1 10 ⁄2 of 1 percent of the

11 amount so appropriated as the amount allotted

12 to the territory for the fiscal year under section

13 658O(a)(1) of the CCDBG Act bears to the

14 total amount received by all territories for the

15 fiscal year under such section.

16 ‘‘(C) RESERVATION FOR SECRETARY’S AC17 TIVITIES.—From the amount appropriated pur18 suant to paragraph (1) for a fiscal year, the

19 Secretary shall reserve $6,000,000 for expendi20 ture by the Secretary for costs of providing

21 technical assistance to, and conducting national

22 evaluations of, State, local, and tribal early

23 learning programs under such section 658T of

24 the CCDBG Act.
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1 ‘‘(D) ALLOTMENTS TO STATES AND TERRI2 TORIES.—From the amount appropriated pur3 suant to paragraph (1) for a fiscal year that re4 mains after applying subparagraphs (A), (B),

5 and (C) of this paragraph for the fiscal year,

6 the Secretary shall allot to each State an

7 amount based on the formula used for deter8 mining the amount of Federal payments to the

9 State under section 658O of the CCDBG Act.

10 ‘‘(3) MATCHING PAYMENTS TO STATES AND

11 TERRITORIES.—

12 ‘‘(A) IN GENERAL.—From the amount al13 lotted to a State or territory for a fiscal year

14 under paragraph (2), the Secretary shall pay to

15 the State or territory for the fiscal year an

16 amount equal to the lesser of the amount so al17 lotted or 80 percent of the amount expended by

18 the State or territory during the fiscal year for

19 an early learning program under a plan ap20 proved under section 658T of the CCDBG Act.

21 ‘‘(B) REDISTRIBUTION.—The Secretary

22 shall, to the extent necessary, determine the

23 need for redistribution of, and redistribute,

24 amounts allotted under this subsection to
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1 States, in accordance with the procedures and

2 formula set forth in subsection (a)(2)(D).

3 ‘‘(4) PAYMENTS TO INDIAN TRIBES.—The Sec4 retary shall pay to each Indian tribe for a fiscal year

5 an amount equal to the lesser of its allotment under

6 paragraph (2)(A) or the total amount of expendi7 tures by the tribe for an early learning program

8 under section 658T of the CCDBG Act.’’.

9 (b) ESTABLISHMENT OF CHILD CARE QUALITY AND

10 EARLY LEARNING PROGRAM.—

11 (1) STATE PLAN REQUIREMENT.—Section

12 658E(c) of the Child Care and Development Block

13 Grant Act of 1990 (42 U.S.C. 9858c(c)) is amended

14 by adding at the end the following new:

15 ‘‘(6) EARLY LEARNING PROGRAM PLAN RE16 QUIREMENTS.—In the case of a State electing to im17 plement an early learning program under section

18 658T, the State plan shall meet the requirements

19 specified in section 658T(b)(2).’’.

20 (2) EARLY LEARNING PROGRAM.—The Child

21 Care and Development Block Grant Act of 1990 (42

22 U.S.C. 9858 et seq.) is amended by adding at the

23 end the following:
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1 ‘‘SEC. 658T. EARLY LEARNING PROGRAM.

2 ‘‘(a) PROGRAM PURPOSE.—The purpose of the pro3 gram under this section is to enable States, through

4 grants to communities, to support activities that—

5 ‘‘(1) promote children’s healthy development

6 during the earliest years of life;

7 ‘‘(2) improve the quality and safety of child

8 care for children aged five and under, including

9 those with disabilities;

10 ‘‘(3) encourage and facilitate emerging literacy

11 and language development, and school readiness,

12 based on research-based practices; and

13 ‘‘(4) enhance programs designed to achieve

14 these goals.

15 ‘‘(b) REQUIREMENTS FOR STATE PARTICIPATION.—

16 ‘‘(1) IN GENERAL.—In order to be eligible for

17 Federal matching funds under section 418(c) of the

18 Social Security Act, the State shall have in effect

19 under its plan under section 658E an early learning

20 program plan meeting the requirements specified in

21 paragraph (2).

22 ‘‘(2) EARLY LEARNING PROGRAM PLAN RE23 QUIREMENTS.—The early learning program plan

24 shall meet the following requirements:
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1 ‘‘(A) LEAD AGENCY.—The plan shall pro2 vide that the program will be administered by

3 the lead agency designated under 658D.

4 ‘‘(B) COMMUNITY GRANT PROCEDURES.—

5 The plan shall describe the standards and pro6 cedures to be applied in the review and approval

7 of community applications, and in setting

8 amounts, terms, and conditions of community

9 grants, including the methods to be used to en10 sure that no less than 70 percent of grant

11 funds are awarded to low-income communities.

12 ‘‘(C) COMMUNITY PARTICIPATION IN PLAN13 NING AND MONITORING.—The plan shall de14 scribe the methods to be used to ensure partici15 pation, in planning and monitoring activities

16 under the community plan, of representatives of

17 concerned elements of the community, including

18 parents of young children, child care providers,

19 child development and mental health profes20 sionals, early intervention specialists, health

21 care providers, public school representatives,

22 local interagency coordinating councils for chil23 dren with disabilities, local government, and

24 business leaders.
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1 ‘‘(D) PROGRAM ACTIVITIES.—The plan

2 shall specify which of the allowable activities

3 enumerated in subsection (c) may be carried

4 out under community grants under the plan.

5 ‘‘(E) PERFORMANCE GOALS AND MEAS6 URES.—The plan shall specify—

7 ‘‘(i) performance goals to be achieved

8 and the interim and long term performance

9 measures and timetables, as appropriate,

10 to be used to assess progress toward each

11 goal under the plan, which—

12 ‘‘(I) shall be developed pursuant

13 to guidance provided by the Secretary

14 and in consultation with local govern15 ment authorities in accordance with

16 section 658D(b)(2); and

17 ‘‘(II) shall be designed to im18 prove child development through co19 ordination with health care and men20 tal health services; enhanced early

21 learning environments, especially

22 those that promote language skills

23 and literacy growth of children; qual24 ity of infant and toddler care; paren25 tal involvement; consumer education;
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1 reduced staff turnover; and increased

2 rates of accreditation by nationally

3 recognized accreditation organizations;

4 ‘‘(ii) the steps to be taken by the

5 State or grantees in accordance with guid6 ance provided by the Secretary if the speci7 fied benchmarks are not achieved.

8 ‘‘(F) COORDINATION WITH ACTIVITIES TO

9 IMPROVE THE QUALITY OF CHILD CARE.—The

10 State plan shall specify the methods to be used

11 to coordinate activities under this section and

12 section 658G(a), including coordination of plan13 ning and of performance goals and measures, in

14 order to maximize the effectiveness of both pro15 grams.

16 ‘‘(c) ALLOWABLE ACTIVITIES.—An early learning

17 program under a State plan under this section may pro18 vide for any or all of the following activities to promote

19 cognitive, social, emotional, and physical development in

20 order to enhance emerging literacy and language develop21 ment, and school readiness:

22 ‘‘(1) INFORMATION AND RESOURCES.—

23 ‘‘(A) PARENTING EDUCATION.—Provision

24 of parenting education, including use of or col25 laboration with Head Start, Even Start or simi-
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1 lar programs, for parents of young children by

2 means including use of community-based re3 source centers, family literacy programs with

4 parenting education components, collaboration

5 with early intervention and preschool providers

6 of services for children, public elementary

7 schools, centers that serve children with special

8 health care needs or disabilities and their fami9 lies, and home visiting programs.

10 ‘‘(B) INFORMATION AND REFERRAL.—Ini11 tiatives to develop or increase the availability of

12 consumer education information and referral

13 services and other resources to assist parents to

14 locate and assess the quality of available child

15 care services.

16 ‘‘(C) FAMILY CHILD CARE NETWORKS.—

17 Development of support networks, information

18 and referral services, and other supportive serv19 ices addressing needs of family child care pro20 viders for access to such resources as education,

21 training, and community support services.’’.

22 ‘‘(2) QUALITY AND AVAILABILITY.—

23 ‘‘(A) PROVIDER TRAINING.—Training of

24 child care personnel, which may include train25 ing in early childhood development, early lit-
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1 eracy, health, nutrition, hygiene, first-aid and

2 safety, best practices for serving children with

3 disabilities in child care, awareness of resources

4 in the community, awareness of Medicaid, the

5 Children’s Health Insurance Program (CHIP),

6 and other health services, and other appropriate

7 matters.

8 ‘‘(B) IMPROVED STAFFING RATIOS.—Ini9 tiatives to increase ratios of child care staff to

10 children in care and to reduce child care group

11 sizes.

12 ‘‘(C) LICENSING AND ACCREDITATION AS13 SISTANCE.—Assistance to entities and individ14 uals in meeting applicable child care accredita15 tion and licensing requirements and in obtain16 ing licensing or accreditation.

17 ‘‘(D) STANDARDS ENFORCEMENT.—Initia18 tives to increase the numbers of qualified child

19 care licensing and standards enforcement staff

20 and activities to increase monitoring and en21 forcement of State and local health and safety

22 standards, and activities to educate child care

23 providers on the requirements of State and

24 local health and safety standards.
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1 ‘‘(E) HEALTH SERVICES.—Improving co2 ordination of child care with appropriate health

3 services including health and mental health con4 sultations, hearing and vision testing, blood

5 lead level screening, and immunizations, by

6 methods such as co-location of health and child

7 care services, referrals of children in child care

8 to health care providers or screening services,

9 and transfer of child health records to public

10 school at school entry. Services under this sub11 paragraph shall not include direct provision of

12 or payment for health care services.

13 ‘‘(F) CARE FOR CHILDREN WITH SPECIAL

14 NEEDS.—Increasing the availability and quality

15 of child care for young children with special

16 health care needs, developmental delays, and

17 disabilities; and coordinating with early inter18 vention and preschool special education services.

19 ‘‘(G) SALARY AND BENEFIT ENHANCE20 MENT.—Assistance to child care programs to

21 increase the quality and continuity of care by

22 attracting or retaining highly qualified child

23 care staff working directly with children

24 through enhanced compensation.
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1 ‘‘(H) MONITORING AND TECHNICAL AS2 SISTANCE.—Technical assistance to grantees,

3 and monitoring of programs, assisted under this

4 section. State expenditures under this subpara5 graph shall not exceed a percentage of total

6 State expenditures for the program under this

7 section equal to 10 percent for each of fiscal

8 years 2000 through 2002, and 5 percent for fis9 cal year 2003 and each succeeding fiscal year.’’.

10 (c) ANNUAL REPORT.—Section 658K(a)(2) of the

11 Child Care and Development Block Grant Act of 1990 (42

12 U.S.C. 9858i(a)(2)) is amended—

13 (1) by striking ‘‘and’’ at the end of subpara14 graph (D);

15 (2) by striking the period at the end of sub16 paragraph (E) and inserting a semicolon; and

17 (3) by inserting after and below subparagraph

18 (E) the following new subparagraphs:

19 ‘‘(F) the early learning program under sec20 tion 658T, including—

21 ‘‘(i) the number and average dollar

22 amount of grants awarded;

23 ‘‘(ii) the number, average dollar

24 amount, and percentage of the total State
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1 award of such grants made to low-income

2 communities;

3 ‘‘(iii) the number of early learning

4 programs;

5 ‘‘(iv) the number of children served

6 with special health care needs, disabilities

7 or developmental delays;

8 ‘‘(v) the number of early learning pro9 grams that assist children with special

10 needs;

11 ‘‘(vi) progress toward achievement of

12 each performance goal, for each specific,

13 quantifiable and measurable objective;

14 ‘‘(vii) expenditures for each allowable

15 activity listed in section 658T(c), total ex16 penditures and, to the extent feasible, the

17 volume or frequency of such activity and

18 the average expenditure per unit of such

19 activity; and

20 ‘‘(viii) with respect to any allowable

21 activity listed in section 658T(c) for which

22 expenditures are made by the State both

23 under section 658G(a) and under section

24 658T, the amount expended under each

25 such section; and
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1 ‘‘(ix) such other data as the Secretary

2 may require.’’.

3 SEC. 4. 4% MINIMUM QUALITY EXPENDITURES.

4 Section 658G of the Child Care and Development

5 Block Grant Act of 1990 (42 U.S.C. 9858e) is amended—

6 (1) by striking ‘‘A State’’ and inserting the following:

7 ‘‘(a) 4 PERCENT MINIMUM QUALITY EXPENDI8 TURES.—Subject to subsection (b), a State’’; and

9 (2) by adding at the end the following new subsection:

10 ‘‘(b) DISREGARD OF EARLY LEARNING PROGRAM

11 FUNDS.—For purposes of subsection (a), amounts re12 ceived by the State from amounts appropriated under sec13 tion 418(c) of the Social Security Act and expended under

14 a plan in accordance with section 658T shall be dis15 regarded.’’.

16 SEC. 5. EXPANSION OF DEPENDENT CARE TAX CREDIT.

17 (a) IN GENERAL.—Paragraph (2) of section 21(a) of

18 the Internal Revenue Code of 1986 (relating to expenses

19 for household and dependent care services necessary for

20 gainful employment) is amended to read as follows:

21 ‘‘(2) APPLICABLE PERCENTAGE DEFINED.—For

22 purposes of paragraph (1), the term ‘applicable per23 centage’ means 50 percent reduced (but not below

24 20 percent) by 1 percentage point for each $1,000

25 (or fraction thereof) by which the taxpayer’s ad-
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1 justed gross income for the taxable year exceeds

2 $30,000.’’

3 (b) MINIMUM CREDIT ALLOWED FOR STAY-AT4 HOME PARENTS.—Section 21(e) of such Code (relating

5 to special rules) is amended by adding at the end the fol6 lowing:

7 ‘‘(11) MINIMUM CREDIT ALLOWED FOR STAY8 AT-HOME PARENTS.—Notwithstanding subsection

9 (d), in the case of any taxpayer with one or more

10 qualifying individuals described in subsection

11 (b)(1)(A) under the age of 1 at any time during the

12 taxable year, such taxpayer shall be deemed to have

13 employment-related expenses with respect to such

14 qualifying individuals in an amount equal to the

15 greater of—

16 ‘‘(A) the amount of employment-related ex17 penses incurred for such qualifying individuals

18 for the taxable year (determined under this sec19 tion without regard to this paragraph), or

20 ‘‘(B) $125 for each month in such taxable

21 year during which such qualifying individual is

22 under the age of 1.’’.

23 (c) INFLATION ADJUSTMENT OF DOLLAR

24 AMOUNTS.—
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1 (1) Section 21 of such Code is amended by re2 designating subsection (f) as subsection (g) and by

3 inserting after subsection (e) the following new sub4 section:

5 ‘‘(f) INFLATION ADJUSTMENT.—In the case of any

6 taxable year beginning in a calendar year after 2000, the

7 $30,000 amount contained in subsection (a), the $2,400

8 amount in subsection (c), and the $125 amount in sub9 section (e)(11) shall be increased by an amount equal to—

10 ‘‘(1) such dollar amount, multiplied by

11 ‘‘(2) the cost-of-living adjustment determined

12 under section 1(f)(3) for such calendar year by sub13 stituting ‘calendar year 1999’ for ‘calendar year

14 1992’ in subparagraph (B) thereof.

15 If the increase determined under the preceding sentence

16 is not a multiple of $50 ($5 in the case of the amount

17 in subsection (e)(11)), such amount shall be rounded to

18 the next lowest multiple thereof.’’

19 (2) Paragraph (2) of section 21(c) of such Code

20 is amended by striking ‘‘$4,800’’ and inserting

21 ‘‘twice the dollar amount applicable under paragraph

22 (1)’’.

23 (3) Paragraph (2) of section 21(d) of such Code

24 is amended by striking ‘‘less than—’’ and all that

25 follows through the end of the first sentence and in-
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serting ‘‘less than 1 1 ⁄12 of the amount which applies

2 under subsection (c) to the taxpayer for the taxable

3 year.’’

4 (d) CREDIT ALLOWED BASED ON RESIDENCY IN

5 CERTAIN CASES.—Subsection (e) of section 21 of such

6 Code is amended by adding at the end the following new

7 paragraph:

8 ‘‘(12) CREDIT ALLOWED BASED ON RESIDENCY

9 IN CERTAIN CASES.—In the case of a taxpayer—

10 ‘‘(A) who does not satisfy the household

11 maintenance test of subsection (a) for any pe12 riod, but

13 ‘‘(B) whose principal place of abode for

14 such period is also the principal place of abode

15 of any qualifying individual,

16 then such taxpayer shall be treated as satisfying

17 such test for such period but the amount of credit

18 allowable under this section with respect to such individual shall be determined by allowing only 1 19 ⁄12 of

20 the limitation under subsection (c) for each full

21 month that the requirement of subparagraph (B) is

22 met.’’

23 (e) EFFECTIVE DATE.—The amendments made by

24 this section shall apply to taxable years beginning after

25 December 31, 1999.
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1 SEC. 6. ALLOWANCE OF CREDIT FOR EMPLOYER EXPENSES

2 FOR CHILD CARE ASSISTANCE.

3 (a) IN GENERAL.—Subpart D of part IV of sub4 chapter A of chapter 1 of the Internal Revenue Code of

5 1986 (relating to business related credits) is amended by

6 adding at the end the following new section:

7 ‘‘SEC. 45D. EMPLOYER-PROVIDED CHILD CARE CREDIT.

8 ‘‘(a) IN GENERAL.—For purposes of section 38, the

9 employer-provided child care credit determined under this

10 section for the taxable year is an amount equal to 25 per11 cent of the qualified child care expenditures of the tax12 payer for such taxable year.

13 ‘‘(b) DOLLAR LIMITATION.—The credit allowable

14 under subsection (a) for any taxable year shall not exceed

15 $150,000.

16 ‘‘(c) DEFINITIONS.—For purposes of this section—

17 ‘‘(1) QUALIFIED CHILD CARE EXPENDITURE.—

18 The term ‘qualified child care expenditure’ means

19 any amount paid or incurred—

20 ‘‘(A) to acquire, construct, rehabilitate, or

21 expand property—

22 ‘‘(i) which is to be used as part of a

23 qualified child care facility of the taxpayer,

24 ‘‘(ii) with respect to which a deduction

25 for depreciation (or amortization in lieu of

26 depreciation) is allowable, and
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1 ‘‘(iii) which does not constitute part of

2 the principal residence (within the meaning

3 of section 121) of the taxpayer or any em4 ployee of the taxpayer,

5 ‘‘(B) for the operating costs of a qualified

6 child care facility of the taxpayer, including

7 costs related to the training of employees, to

8 scholarship programs, and to the providing of

9 increased compensation to employees with high10 er levels of child care training,

11 ‘‘(C) under a contract with a qualified

12 child care facility to provide child care services

13 to employees of the taxpayer,

14 ‘‘(D) under a contract to provide child care

15 resource and referral services to employees of

16 the taxpayer, or

17 ‘‘(E) for the costs of seeking accreditation

18 from a child care credentialing or accreditation

19 entity.

20 ‘‘(2) QUALIFIED CHILD CARE FACILITY.—

21 ‘‘(A) IN GENERAL.—The term ‘qualified

22 child care facility’ means a facility—

23 ‘‘(i) the principal use of which is to

24 provide child care assistance, and
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1 ‘‘(ii) which meets the requirements of

2 all applicable laws and regulations of the

3 State or local government in which it is lo4 cated, including, but not limited to, the li5 censing of the facility as a child care

6 facility.

7 Clause (i) shall not apply to a facility which is

8 the principal residence (within the meaning of

9 section 121) of the operator of the facility.

10 ‘‘(B) SPECIAL RULES WITH RESPECT TO A

11 TAXPAYER.—A facility shall not be treated as a

12 qualified child care facility with respect to a

13 taxpayer unless—

14 ‘‘(i) enrollment in the facility is open

15 to all employees of the taxpayer during the

16 taxable year,

17 ‘‘(ii) services available at such facility

18 do not discriminate in favor of employees

19 of the taxpayer who are highly com20 pensated employees (within the meaning of

21 section 414(q)), and

22 ‘‘(iii) in the case of a facility which is

23 owned or operated by the taxpayer, at least

24 30 percent of the enrollees of such facility
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1 are dependents of employees of the tax2 payer.

3 ‘‘(d) RECAPTURE OF ACQUISITION AND CONSTRUC4 TION CREDIT.—

5 ‘‘(1) IN GENERAL.—If, as of the close of any

6 taxable year, there is a recapture event with respect

7 to any qualified child care facility of the taxpayer,

8 then the tax of the taxpayer under this chapter for

9 such taxable year shall be increased by an amount

10 equal to the product of—

11 ‘‘(A) the applicable recapture percentage,

12 and

13 ‘‘(B) the aggregate decrease in the credits

14 allowed under section 38 for all prior taxable

15 years which would have resulted if the qualified

16 child care expenditures of the taxpayer de17 scribed in subsection (c)(1)(A) with respect to

18 such facility had been zero.

19 ‘‘(2) APPLICABLE RECAPTURE PERCENTAGE.—

20 ‘‘(A) IN GENERAL.—For purposes of this

21 subsection, the applicable recapture percentage

22 shall be determined from the following table:

The applicable

recapture

‘‘If the recapture event occurs in: percentage is:

Years 1–3 .................................................................. 100

Year 4 ........................................................................ 85

Year 5 ........................................................................ 70

Year 6 ........................................................................ 55
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Year 7 ........................................................................ 40

Year 8 ........................................................................ 25

Years 9 and 10 .......................................................... 10

Years 11 and thereafter ............................................ 0.

1 ‘‘(B) YEARS.—For purposes of subpara2 graph (A), year 1 shall begin on the first day

3 of the taxable year in which the qualified child

4 care facility is placed in service by the taxpayer.

5 ‘‘(3) RECAPTURE EVENT DEFINED.—For pur6 poses of this subsection, the term ‘recapture event’

7 means—

8 ‘‘(A) CESSATION OF OPERATION.—The

9 cessation of the operation of the facility as a

10 qualified child care facility.

11 ‘‘(B) CHANGE IN OWNERSHIP.—

12 ‘‘(i) IN GENERAL.—Except as pro13 vided in clause (ii), the disposition of a

14 taxpayer’s interest in a qualified child care

15 facility with respect to which the credit de16 scribed in subsection (a) was allowable.

17 ‘‘(ii) AGREEMENT TO ASSUME RECAP18 TURE LIABILITY.—Clause (i) shall not

19 apply if the person acquiring such interest

20 in the facility agrees in writing to assume

21 the recapture liability of the person dis22 posing of such interest in effect imme23 diately before such disposition. In the
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1 event of such an assumption, the person

2 acquiring the interest in the facility shall

3 be treated as the taxpayer for purposes of

4 assessing any recapture liability (computed

5 as if there had been no change in owner6 ship).

7 ‘‘(4) SPECIAL RULES.—

8 ‘‘(A) TAX BENEFIT RULE.—The tax for

9 the taxable year shall be increased under para10 graph (1) only with respect to credits allowed

11 by reason of this section which were used to re12 duce tax liability. In the case of credits not so

13 used to reduce tax liability, the carryforwards

14 and carrybacks under section 39 shall be appro15 priately adjusted.

16 ‘‘(B) NO CREDITS AGAINST TAX.—Any in17 crease in tax under this subsection shall not be

18 treated as a tax imposed by this chapter for

19 purposes of determining the amount of any

20 credit under subpart A, B, or D of this part.

21 ‘‘(C) NO RECAPTURE BY REASON OF CAS22 UALTY LOSS.—The increase in tax under this

23 subsection shall not apply to a cessation of op24 eration of the facility as a qualified child care

25 facility by reason of a casualty loss to the ex-
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1 tent such loss is restored by reconstruction or

2 replacement within a reasonable period estab3 lished by the Secretary.

4 ‘‘(e) SPECIAL RULES.—For purposes of this

5 section—

6 ‘‘(1) AGGREGATION RULES.—All persons which

7 are treated as a single employer under subsections

8 (a) and (b) of section 52 shall be treated as a single

9 taxpayer.

10 ‘‘(2) PASS-THRU IN THE CASE OF ESTATES AND

11 TRUSTS.—Under regulations prescribed by the Sec12 retary, rules similar to the rules of subsection (d) of

13 section 52 shall apply.

14 ‘‘(3) PARTNERSHIPS.—In the case of partner15 ships, the credit under this section shall be deter16 mined at the partnership level and allocated among

17 the partners under regulations prescribed by the

18 Secretary; except that—

19 ‘‘(A) subsection (b) shall be applied at the

20 partner level, and

21 ‘‘(B) the employees of the partnership and

22 of each partner shall be treated as employees of

23 the taxpayer for purposes of applying sub24 section (c)(2)(B)(iii).

25 ‘‘(f) NO DOUBLE BENEFIT.—
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1 ‘‘(1) REDUCTION IN BASIS.—For purposes of

2 this subtitle—

3 ‘‘(A) IN GENERAL.—If a credit is deter4 mined under this section with respect to any

5 property by reason of expenditures described in

6 subsection (c)(1)(A), the basis of such property

7 shall be reduced by the amount of the credit so

8 determined.

9 ‘‘(B) CERTAIN DISPOSITIONS.—If during

10 any taxable year there is a recapture amount

11 determined with respect to any property the

12 basis of which was reduced under subparagraph

13 (A), the basis of such property (immediately be14 fore the event resulting in such recapture) shall

15 be increased by an amount equal to such recap16 ture amount. For purposes of the preceding

17 sentence, the term ‘recapture amount’ means

18 any increase in tax (or adjustment in

19 carrybacks or carryovers) determined under

20 subsection (d).

21 ‘‘(2) OTHER DEDUCTIONS AND CREDITS.—No

22 deduction or credit shall be allowed under any other

23 provision of this chapter with respect to the amount

24 of the credit determined under this section.’’

25 (b) CONFORMING AMENDMENTS.—
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1 (1) Section 38(b) of such Code is amended—

2 (A) by striking ‘‘plus’’ at the end of para3 graph (11),

4 (B) by striking the period at the end of

5 paragraph (12), and inserting a comma and

6 ‘‘plus’’, and

7 (C) by adding at the end the following new

8 paragraph:

9 ‘‘(13) the employer-provided child care credit

10 determined under section 45D.’’.

11 (2) Subsection (d) of section 39 of such Code

12 (relating to carryback and carryforward of unused

13 credits) is amended by adding at the end the fol14 lowing new paragraph:

15 ‘‘(9) NO CARRYBACK OF SECTION 45D CREDIT

16 BEFORE JANUARY 1, 2000.—No portion of the un17 used business credit for any taxable year which is

18 attributable to the credit determined under section

19 45D may be carried back to a taxable year begin20 ning before January 1, 2000.’’.

21 (3) The table of sections for subpart D of part

22 IV of subchapter A of chapter 1 of such Code is

23 amended by adding at the end the following new

24 item:

‘‘Sec. 45D. Employer-provided child care credit.’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 1999.

4 SEC. 7. DEPENDENT CARE CREDIT ALLOWED AGAINST THE

5 ALTERNATIVE MINIMUM TAX.

6 (a) IN GENERAL.—Subsection (a) of section 26 of the

7 Internal Revenue Code of 1986 is amended by inserting

8 ‘‘(other than the credit allowed by section 21)’’ after

9 ‘‘credits allowed by this subpart’’.

10 (b) CONFORMING AMENDMENT.—Section 21 of such

11 Code is amended by adding at the end the following new

12 subsection:

13 ‘‘(f) LIMITATION BASED ON AMOUNT OF TAX.—The

14 aggregate credit allowed by this section for the taxable

15 year shall not exceed the sum of—

16 ‘‘(1) the taxpayer’s regular tax liability for the

17 taxable year reduced by the sum of the credits al18 lowed by this subpart other than this section, plus

19 ‘‘(2) the tax imposed by section 55 for such

20 taxable year.’’

21 (c) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to taxable years beginning after

23 December 31, 1999.

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