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[Senate Report 108-37]
[From the U.S. Government Publishing Office]

                                                        Calendar No. 72
108th Congress                                                   Report
 1st Session                    SENATE                           108-37
======================================================================
 
                    CARING FOR CHILDREN ACT OF 2003

                                _______
                                

                 April 10, 2003.--Ordered to be printed

                                _______
                                

    Mr. Gregg, from the Committee on Health, Education, Labor, and 
                   Pensions, submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                         [To accompany S. 880]

    The Committee on Health, Education, Labor, and Pensions, to 
which was referred the original bill (S. 880) to amend the 
Caring for Children Act of 2003 to reauthorize the Act, to 
improve early learning opportunities and promote school 
preparedness, and for other purposes, having considered the 
same, reports favorably thereon without amendment and 
recommends that the bill do pass.

                                CONTENTS

                                                                   Page
  I. Purpose and Summary of the bill..................................1
 II. Background and need for legislation..............................2
III. Legislative history and committee action.........................4
 IV. Explanation of Legislation and Committee Views...................4
  V. Cost estimate...................................................14
 VI. Regulatory impact statement.....................................16
VII. Legislative Impact..............................................17
VIII.Section-by-section analysis.....................................17

 IX. Additional views................................................27
  X. Changes in existing law.........................................36

                   I. Purpose and Summary of the Bill

    It is the purpose of the Caring for Children Act of 2003 to 
renew, improve, and strengthen the Child Care and Development 
Block Grant Act of 1990 for the next five years. The Caring for 
Children Act of 2003 is designed to maintain state flexibility 
and improve access to high quality child care for low income 
working families.

                II. Background and Need for Legislation

    The current system of child care assistance, which is 
supported by Federal, State, and local funds, is largely a 
result of Federal legislative activity over the last 14 years. 
In 1988, the Family Support Act, which at the time represented 
groundbreaking legislation to reform the Aid to Families with 
Dependent Children (AFDC) program, for the first time provided 
a child care entitlement for families on welfare. Originated by 
the Senate Finance Committee, the Family Support Act created a 
child care entitlement for AFDC parents who were working, 
enrolled in job training, or enrolled in an educational 
program, and for parents needing transitional child care 
assistance for 12 months after leaving welfare (Transitional 
Child Care or TCC).
    In 1990, two more child care programs were created: the 
Child Care and Development Block Grant (CCDBG) program under 
the jurisdiction of the Senate Labor Committee (now renamed the 
Senate Health, Education, Labor, and Pensions Committee), and 
the Title IV-A At Risk Child Care program under the 
jurisdiction of the Senate Finance Committee. Both of these 
programs were designed to help low income working families and 
CCDBG was designed to improve the quality of child care as 
well. Unlike the Family Support Act child care programs, these 
two new programs were block grants to the States (not 
individual entitlements) and were not designed to assist 
welfare families.
    In 1996, the four Federal child care programs (the AFDC 
child care entitlement, the Transitional Child Care 
entitlement, the IV-A at Risk child care program and the Child 
Care and Development Block Grant) were consolidated under the 
Personal Responsibility and Work Opportunity Reconciliation Act 
(PRWORA). The act eliminated the entitlement to child care 
assistance for parents receiving welfare and for those 
transitioning from welfare to work. The three Finance Committee 
programs were consolidated into one funding stream referred to 
as (mandatory funding) because the funding is specified in law 
and does not need to compete against other funding in the 
regular appropriations process. Funding for the Child Care and 
Development Block Grant (CCDBG) remained under the jurisdiction 
of the Senate Health, Education, Labor, and Pensions (HELP) 
Committee and was retained as a discretionary program.

Child care funding

    Since 1988, funding for child care has grown dramatically. 
Federal child care spending through the CCDF has increased by 
over 175 percent since 1996. Discretionary funding for the 
Child Care and Development Block Grant has more than doubled in 
the last five years to $2.1 billion in fiscal year 2003. 
Mandatory funding currently is set at $2.7 billion, for a total 
of $4.8 billion.
    In addition to Federal dollars provided through mandatory 
and discretionary funding, States currently may transfer up to 
30 percent of their TANF block grant to the Child Care and 
Development Block Grant. In FY2001 and FY2002, States 
transferred a total of $3.8 billion of TANF funds to CCDBG.
    States also may spend additional TANF money directly on 
child care services outside of the CCDBG. In fiscal year 2000, 
States spent $1.4 billion of their TANF grants directly on 
child care. In fiscal years 2001 and 2002, TANF direct 
expenditures on child care reached $1.6 billion in each year.
    Expenditure data show that in fiscal year 2001, States 
spent more than $7.95 billion in Federal and State money from 
the Child Care and Development Block Grant (this amount 
includes spending from the TANF transfers to the CCDBG). In 
addition, States spent over $1.7 billion on child care within 
the TANF system. Therefore, in total, over $9.66 billion was 
spent on child care through the CCDBG and TANF in fiscal year 
2001, of which $7.6 billion were Federal funds. As a result of 
CCDBG, TANF, and State funding of child care, over 2 million 
children receive child care assistance today.
    In addition to the CCDBG, TANF and Social Services Block 
Grants, which States may use to support child care for low-
income families, other Federal programs provide funds for child 
care and early childhood development. These include Head Start 
(funded at $6.5 billion in fiscal year 2002), the Child and 
Adult Care Food Program ($1.9 billion), the Individuals with 
Disabilities Education Act preschool and infant/toddler grants 
($807 million), and, for after-school and weekend activities 
for school age children, the 21st Century Community Learning 
Centers ($1 billion). In total, combined current funding for 
child care and early education programs is estimated by the 
Department of Health and Human Services to exceed $17 billion.

Assistance for low-income working families

    Between 1996 and June 2000, the welfare caseload dropped by 
2.3 million families. The majority of welfare leavers are now 
employed. The share of TANF families working or participating 
in work-related activities while receiving TANF has soared to 
nearly 900,000 in fiscal year 1999. Between 1996 and 1999, the 
number of employed single mothers grew from 1.8 million to 2.7 
million. And, according to the Congressional Research Service, 
there has been a marked increase in single mothers working--
from 63.5 percent in 1996 to 73 percent in 2001. Many of these 
parents need child care assistance to stay employed.
    The committee believes that the challenge for Congress this 
year is to build on the success of the 1996 welfare reform 
law--and put even more Americans on the path to self reliance 
and improve the quality of child care. The dramatic increase in 
the number of women participating in the labor force, and the 
number of these women who are the sole or primary financial 
supporters of their children are the most important factors 
affecting the demand for child care.
    Increasingly, the effect of child care on children also has 
become a significant public issue. Research in the field of 
child development demonstrates that low-income children can 
benefit from child care with an early childhood development 
focus. Therefore, the quality of child care available is 
important so that all young children are developmentally 
prepared to enter and succeed in school. The Caring for 
Children Act strengthens the Federal commitment to foster 
quality environments and early learning experiences for young 
children.
    Concerns about the supply, quality and affordability of 
child care for many low income families led to a national 
debate over the nature and extent of the Nation's child care 
problems. Federal lawmakers recognized the need to address the 
accessibility and affordability of child care so that parents 
could participate in the workforce.

             III. Legislative History and Committee Action

                           EXECUTIVE SESSION

    On April 2, 2003, the committee met in Executive Session to 
consider the Caring for Children Act of 2003. Three amendments 
were offered. A technical amendment by Senator Dodd was agreed 
to on a voice vote; an amendment by Senator Jeffords was 
offered on his behalf by Senator Dodd. It was later modified 
and subsequently accepted on a voice vote. An amendment by 
Senator Edwards to create a $100 million set aside for children 
with special needs was defeated on a recorded vote of 10 yeas, 
11 nays. The bill as amended was subsequently approved on a 
voice vote.

           IV. Explanation of Legislation and Committee Views

            TITLE I--CHILD CARE AND DEVELOPMENT BLOCK GRANT

Overview

    The Caring for Children Act of 2003 reauthorizes the Child 
Care and Development Block Grant (CCDBG) through 2008 at a 
level of $2.3 billion for fiscal year 2004, $2.5 billion for 
fiscal year 2005, $2.7 billion for fiscal year 2006, $2.9 
billion for fiscal year 2007, and $3.1 billion for fiscal year 
2008. The current 2003 appropriation is $2.1 billion.

Program goals

    The Caring for Children Act amends the existing goals to 
emphasize that the Block grant is intended to serve both low 
income working families who receive cash assistance and those 
who do not. It continues to provide states maximum flexibility 
in developing child care programs and policies and promotes 
parental choice so that parents can select the type of child 
care and setting that they prefer.
    The legislation creates three new goals: (1) to assist 
States in improving the quality of child care available to 
families; (2) to promote school preparedness by encouraging 
children, families and caregivers to engage in developmentally 
and age appropriate activities in child care settings that will 
improve children's social, emotional and behavioral skills and 
foster their early cognitive, prereading and language 
development; and (3) to promote parental and family involvement 
in the education of their young children in child care 
settings.
    The new goals that have been added to encourage States to 
improve the quality of child care and to promote cognitive 
development and school readiness are consistent with the 
President's new early childhood education initiative, Good 
Start, Grow Smart, designed to address the cognitive and other 
developmental needs of young children so that they are prepared 
to enter and succeed in school.

Lead agency

    The committee bill amends the act to let States designate a 
collaborative agency or establish a joint interagency office to 
serve as the lead agency responsible for administering the 
program.

State plan requirements

    The Caring for Children Act modifies the State plan in 
several ways. The legislation asks States to collect and 
disseminate information to both parents of eligible children 
and child care providers about: the quality and availability of 
child care services; resources to assist families in obtaining 
child care; research and best practices on children's 
development; and, other programs and services for which 
families may be eligible, including the food stamp, WIC, 
Medicaid and SCHIP programs.
    This legislation requires States to describe partnerships 
between public and private entities that will increase the 
supply and quality of child care services, and coordination of 
child care services provided by this act with other child care 
and early childhood education programs, such as Head Start, 
Early Reading First, Even Start, and State-sponsored 
prekindergarten.
    Beginning in 2004, State plans will contain the outline of 
the state's strategy to address the quality of child care 
available to children in that State. States will report on the 
use of quantifiable, objective measures for evaluating the 
quality of child care services and progress in improving child 
care quality.
    Finally, States are asked to address factors that can make 
finding care difficult for some parents. States will report how 
the state is working to meet the child care needs of parents 
eligible for assistance who have children with special needs, 
work non-traditional hours, or require infant and toddler care.
    The intent of the language in this section is to ensure 
that state re-determination policies do not interfere with 
parents' ability to maintain employment while maintaining their 
eligibility for assistance. The committee encourages States to 
explore approaches to eligibility redetermination that support 
the work schedules of families receiving assistance, such as: 
the provision of extended office hours (including office hours 
before 8 a.m., after 6 p.m., or on the weekend); and the use of 
postal mail or electronic communications such as communications 
by telephone, fax, or electronic mail, and provision of a 
receipt providing confirmation that required documents have 
been submitted.

Application and State plan requirements

    Under current law, each State that applies for a Federal 
block grant is required to submit a State plan to the Secretary 
of the Department of Health and Human Services. The State plan 
is designed to ensure that States are complying with minimal 
Federal guidelines before receiving their grant. States are 
asked to certify that parents have unlimited access to their 
children while in care and the ability to choose their child's 
care provider and setting. States also must assure compliance 
with State licensing, health and safety requirements, address 
the child care needs of certain population groups, and 
substantiate that payment rates for child care services are 
sufficient to ensure equal access to services available to 
children not eligible for subsidized care.
    The Caring for Children Act enhances the State plan in 
several ways to improve the quality of child care services 
provided to eligible families. This includes encouraging states 
to: (1) collect and disseminate information to parents to 
assist them in making informed child care choices; (2) put in 
place procedures and policies to protect working parents such 
as providing assistance for eligible families for not at least 
6 months before redetermining eligibility; (3) coordinate this 
program with other Federal, State and local programs (including 
Head Start, Early Head Start, Early Reading First, Title I 
preschool program, Part C of IDEA, State prekindergarten 
programs and other early childhood education programs); (4) 
describe any training requirements that are in effect that are 
designed to enable childcare providers to promote the social, 
emotional, physical, and cognitive development of children; (5) 
encourage partnerships with private and other public entities 
to leverage existing service delivery systems of early 
childhood and increase the supply and quality of childcare 
services; (6) address the child care needs of parents eligible 
for child care services who have children with special needs, 
work nontraditional hours, or require child care services for 
infants or toddlers; and (7) inform parents receiving 
assistance under a program funded under part A of Title IV of 
the Social Security Act and low-income parents about 
eligibility for assistance under this subchapter.
    Beginning in 2004, State plans will contain the outline of 
the State's strategy to address the quality of child care 
available to children in that State. States will report on the 
use of quantifiable, objective measures for evaluating the 
quality of child care services and its progress in improving 
child care quality. The committee does not intend or desire to 
create any Federal standards for quality of child care and 
intends for states to have broad discretion in fulfilling these 
provisions.

Child care resource and referral system

    The Caring for Children Act allows States to use block 
grant funds to support child care resource and referral 
organizations. State and local child care resource and referral 
agencies (CCR&R) are often a community's vital link between 
parents and child care providers. Most States have in place a 
comprehensive child care resource and referral network that 
supports families in finding child care; compiles, analyzes and 
shares information with parents, providers and communities on 
the supply, cost, and quality of child care and the 
availability of child care subsidies; and, supports individuals 
and programs providing care for children. Child care resource 
and referral organizations can be a costeffective resource 
because of their ability to leverage public dollars with 
contributions from private sources.

Payment rates and market rate surveys

    Under current law, States are required to set payment rates 
that are sufficient to ensure equal access for eligible 
children to comparable child care services in the State for 
children who are not eligible for assistance with Federal 
guidelines suggesting a goal of reaching the 75th percentile of 
the market rate.
    States use a variety of means to determine and establish 
reimbursement and payment rates for subsidized child care. 
According to the General Accounting Office most States report 
using the results of market rate surveys to help set these 
rates but also report considering other factors such as 
budgets, the age group of the child needing care, and the 
geographic location of the care. The committee recognizes and 
intends to maintain the flexibility that States currently have 
to design and implement payment and reimbursement rates in ways 
that reflect their particular circumstances.
    The Caring for Children Act requires States to conduct a 
statistically valid and reliable survey of the market rates for 
child care services in the State within two years preceding the 
date of submission of the application, although the committee 
encourages States to conduct their survey as close as possible 
to the development of the State plan. States must also describe 
how the State will set payment rates to reflect the results of 
the market rates survey without reducing the number of families 
served as of the date of introduction of this act.
    The committee bill further requires States to publish the 
results of the survey within 30 days. Additionally, if in a 
fiscal year a State receives funds in an amount that exceeds 
the funds it received in fiscal year 2003 to carry out the 
CCDBG, the State is encouraged to consider using a portion of 
the excess to increase payment rates, support the establishment 
of tiered payment rates or to support payment rate increases 
for child care for children in communities served by elementary 
and secondary schools in need of improvement. In addition, the 
committee encourages States to examine the usual and customary 
practices with regard to payment for child absentee days.
    The committee bill preserves the equal access standard that 
State payment rates be sufficient to provide children receiving 
CCDBG funded assistance equal access to comparable child care 
services available to families which are not financially 
eligible to receive subsidy assistance. The committee reminds 
States that a key factor of equal access is determined by the 
degree to which low income families have access to care that is 
of comparable quality to other families.
    The provision on payment rates differentiation clarifies 
that nothing in the CCDBG statute is intended to prohibit 
States from having differentiated payment rates using such 
factors as geographic location of child care providers, age or 
particular needs of children (such as children with special 
needs and children served by child protective services), and 
care provided during weekends and other nontraditional hours. 
This provision is not intended to prevent States from 
developing and implementing differential rates for other 
appropriate reasons, such as a tiered rate structure which 
permits higher payments for care with specific quality 
standards.
    The committee intends to maintain flexibility in the ways 
in which the State gathers information used to inform the 
process as they set payment and reimbursement rates. The 
committee recognizes that there are multiple ways States 
actually survey the child care market. Some do telephone or 
mailed surveys to a sample of providers, others rely on the 
data collected by resource and referral agencies in the course 
of maintaining an accurate data base. Research indicates that 
both of these approaches can be statistically valid. 
Additionally, child care markets vary across States based on 
population demographics and density, culture, licensing and 
subsidy policies, provider practices and parent preferences, to 
name a few. A market rate survey that works in New York may not 
work in a rural State such as Idaho or Utah. Similarly, in a 
rural State, there may be little variation in the cost of care 
across geographic areas and types of care, while in other 
States, child care center care may cost twice as much in 
metropolitan as rural areas. In one case, the cost of a more 
complex survey may be justified, in another case not. Because 
of these variances, the committee has asked the Secretary to 
provide technical assistance to States on the design and 
implementation of statistically valid market rate surveys.

Child care quality

    The Caring for Children Act of 2003 increases from four to 
six percent the amount of the total block grant that a State 
must spend on activities to improve the quality of child care 
provided to eligible families in that State, and establishes 
permissible uses for those funds. The quality set-aside may be 
used to support: programs that provide training, education, and 
other professional development activities to enhance the skills 
of the child care workforce, including informal caregivers; 
activities to enhance early learning and foster school 
readiness; initiatives to increase the retention and 
compensation of child care providers; and, other activities 
deemed by the States to improve the quality of child care 
services (for children up to age 13) provided in the State.
    In recognition of the importance of the quality of child 
care on all aspects of child development, including cognitive 
development, the bill seeks to emphasize the importance of 
early childhood development and encourages States to improve 
the quality of child care.
    Knowledge about children's learning has expanded greatly 
during the past two decades. Research in the neurobiological 
and behavioral sciences related to young children suggests the 
importance of the first years of life for healthy brain 
development. From birth through age five, children rapidly 
develop the capabilities on which subsequent development 
builds. In addition to linguistic and cognitive gains, children 
exhibit dramatic progress in their emotional and social 
capacities. According to child development expert Dr. T. Berry 
Brazelton:

          A child's experiences in the first months and years 
        of life determine whether he or she will enter school 
        eager to learn or not. By school age, family and 
        caregivers have already prepared the child for success 
        or failure. The community has already helped or 
        hindered the family's capacity to nurture the child's 
        development.

    High quality child care involves much more than the 
essential ingredients of love, nurture, and care. The committee 
included school preparedness activities as a permissible use to 
encourage States to invest in initiatives that will help foster 
children's social and cognitive skills. These skills provide 
the foundation for school readiness and are easily attainable 
when young children are exposed to language-rich environments 
with caregivers who engage them in interactive activities, 
promote curiosity and challenge children to develop self-
confidence and problem-solving skills.
    While many of a State's school preparedness activities are 
likely to be directed at preschool children, such activities 
also concern younger or older children. A State's 
responsibilities under CCDBG include providing child care 
services for children up to age 13 (or, at State option, 
nineteen when the child is physically or mentally incapable of 
caring for himself or herself or under court supervision). 
School preparedness is a continuing process and does not stop 
simply because a child has entered school.
    There is also general agreement among experts that the ways 
that parents, families and other caregivers relate and respond 
to a young child directly affect cognitive development. 
Research suggests that the quality of child care and early 
education is ultimately dependent on the quality of the 
relationship between the caregiver and child. Studies indicate 
that children are more advanced in all realms of development 
when their parents, teachers or caregivers provide regular 
verbal and cognitive stimulation, are sensitive and responsive, 
and give generous amounts of attention and support in safe and 
healthy environments.
    Based on this research, the Caring for Children Act 
stipulates permissible uses for the quality set-aside to help 
ensure that States spend their quality allocation on activities 
that have been proven to improve the quality of child care. 
Beginning in 2004, States are asked to report how these funds 
are used.
    The committee notes the importance of States evaluating and 
assessing child care programs in order to ensure their 
continued high quality and identify and correct weaknesses and 
has authorized such evaluations and assessments as allowable 
uses. However, nothing in this section should be construed to 
require formal testing of pre-school age children.
    The committee has allowed States to exercise broad 
discretion in additional quality activities (such as enforcing 
compliance with State licensing requirements and State and 
local health and safety standards) so long as those activities 
can be directly linked to improving child safety, child-well 
being, or school preparedness and are capable of being measured 
for outcomes. This requirement is intended to ensure that 
States consider the connection between a proposed activity and 
desired outcome goals, but it is not intended to require States 
to establish, track, or determine child outcomes in order for a 
particular activity to be allowable; it is sufficient that the 
State has determined that measurement of outcomes is possible 
in relation to child safety, child well-being, or school 
preparedness. The committee does not require States to actually 
measure or produce such outcomes in order to support its 
discretionary quality activities.

Data collection and reporting requirements

    Under current law, lead State agencies are required to 
collect and submit data regarding the children, families, and 
child care providers participating in the program on both a 
quarterly and annual basis. The quarterly report collects 
disaggregate data for each family receiving child care 
assistance, and the annual report collects aggregate numbers 
over the course of a fiscal year.
    The committee bill streamlines data requirements so that 
lead agencies are only required to submit quarterly reports. 
The fourth quarterly report each year would preserve some of 
the data elements formerly required in the annual report. For 
any new requirements, States would need to begin submitting 
data 2 years from the date of enactment of the act. The bill 
provides the Secretary with the authority to grant waivers from 
the 2 year requirement if a State can show that it has plans to 
procure a data system.
    The bill deletes reporting elements that have proven to be 
unnecessary: receipt of housing assistance, receipt of food 
stamps; receipt of ``other'' assistance programs; and length of 
subsidy receipt. The bill requires a single data element 
regarding whether a family receives assistance under TANF or 
separate maintenance of effort State programs, and clarifies 
that the cost of child care data element should require both a 
statement about the amount of the State's subsidy payment and a 
separate statement of the amount of the family's copayment. The 
bill clarifies that data on the type of care provided to a 
family should include all those types listed in the 
subchapter's definition of eligible child care provider.
    New data elements are added: household size, whether the 
parent reports that the child has an Individualized Education 
Plan or an Individualized Family Services Plan under the 
Individuals with Disabilities Education Act, and case closure 
codes for each family that no longer receives child care 
assistance under the subchapter.
    States will no longer have to report an annualized 
unduplicated count of the number of children and families 
served. A requirement to submit data on the manner and number 
of parents receiving consumer education information is moved to 
the biennial State plan. In the fourth quarterly report of the 
year, lead agencies will be required to submit some annual 
information formerly required in the annual report: the annual 
number and type of child care providers receiving payments 
under the subchapter, and the annual number of those payments 
made by type of child care provider through vouchers, under 
contracts, or by payment to parent.
    The bill would also require States to collect monthly data 
on the number of children and families that receive child care 
assistance, submit this information in their quarterly reports, 
and to post this information on their websites.

Reporting requirements

    Current law requires the Secretary of HHS to file biennial 
reports to Congress summarizing and analyzing the disaggregate 
and aggregate data reports that States submit, as well as other 
relevant information.
    The committee bill updates the current requirements for the 
Secretary to summarize and analyze State collected data on 
children and families, requiring that starting in April 2004, 
and then on an annual basis, the Secretary submit reports 
summarizing and analyzing State data provided on children and 
families, with regard to activities to improve the quality of 
child care, and in State plans. The language adds a requirement 
that the Secretary include information on the supply, demand, 
and quality of child care, early education, and nonschool-hour 
programs, and a progress report that describes State progress 
in meeting the new data requirements, plans for technical 
assistance to help States meet these requirements, and the 
explanation of any barriers States are facing in meeting the 
timeline for reporting on these new requirements. The Secretary 
must post these reports on the Department of Health and Human 
Services website no later than 30 days after submitting them to 
the relevant congressional committees.

National activities: Infants and toddlers and child care hotline

    Many States are experiencing problems with access to 
quality, affordable infant and toddler care. This, combined 
with the increase in the number of mothers with babies and 
toddlers in the workforce, makes the need for quality child 
care even more critical. Approximately 60 percent of mothers 
with children under age three are in the workforce, at least on 
a part-time basis.
    The committee has included an authorization for a $100 
million set-aside, subject to the availability of 
appropriations for this purpose. With this authorization, the 
committee intends that States maintain the flexibility that 
they have had under appropriations bills since FY 2000, to 
coordinate activities to enhance infant and toddler child care. 
States are encouraged to continue to support activities under 
the set aside that are designed to protect the health and well-
being of infants and toddlers; offer specialized training for 
such providers that emphasizes the unique developmental needs 
of infants and toddlers; create statewide networks of 
specialists on infants and toddlers, to provide training and 
consultations for such providers who are center-based child 
care providers, group home child care providers, or relatives 
of the infants and toddlers; and establish local networks of 
support for family child care home providers and other 
activities to improve the quality and availability of infant 
care.
    Research indicates that the strongest effects of quality 
child care are found with at-risk children--children from 
families with the fewest resources and under the greatest 
stress. Yet, at-risk babies and toddlers receive some of the 
poorest quality care that exists in communities across the 
United States resulting in poorer cognitive, social, and 
emotional developmental outcomes. Research confirms that most 
child care centers do not meet infants and toddlers needs for 
health, safety, nurturing relationships, and learning. A 
child's first three 3 are a critical time for child 
development. Numerous studies show that high quality care 
improves school readiness and prevents crime in the long-term. 
It is especially critical that access to high quality infant 
and toddler care be expanded to allow more parents who must 
work to leave their children in a safe and nurturing 
environment while they work.
    The committee recognizes the need for a toll free hotline 
that is assisting families nationwide in accessing local 
information on child care options and providing consumer 
education and has authorized $1 million, subject to the 
availability of appropriations for such purposes.

Federal eligibility guidelines and direct services

    The Caring for Children Act eliminates the Federal income 
limit for eligibility, previously set at 85 percent of the 
State median income, which included families at both the lowest 
and more moderate income levels. Across all States 85 percent 
of SMO for a family of three ranged from $53,940 a year in 
Connecticut to $30,156 in Mississippi for a family of the same 
size.
    Some advocates and lawmakers contend that many potentially 
eligible children do not receive subsidies due to limited 
resources. However, program officials in five of seven States 
interviewed by the General Accounting Office reported that all 
families eligible under the State's income criteria who applied 
for child care assistance were being served.
    Additionally, the demand for child care services and the 
number of eligible families in need of subsidies may be 
overestimated because not all low-income parents need 
subsidized child care. In fact, not all parents who receive 
welfare or are transitioning off welfare are working, and many 
parents make in-home or other informal care arrangements with 
friends or relatives instead of applying for child care 
assistance through the block grant.
    Estimates of subsidies needed by children through the Child 
Care and Development Block Grant and TANF might be reduced 
further by taking into account the availability of other 
programs and funding sources serving children, including State-
funded pre-kindergarten programs and Head Start. Sixty-five 
percent of all 3 and 4 year olds eligible for Head Start are 
enrolled, and it is estimated that 62,000 toddlers are served 
under the Early Head Start program.
    The committee received comments that States might interpret 
the elimination of a Federal eligibility limit as a suggestion 
that assistance provided through the block grant should be 
targeted to TANF families only. This is not the intent of the 
committee. The legislation amends the CCDBG goals to clarify 
the congressional intent to provide assistance to low-income 
working families, not exclusively those on or transitioning off 
TANF. States and territories must spend 70 percent of their 
mandatory child care money to subsidize child care for TANF 
families, families transitioning off TANF, and families at risk 
of becoming dependent on public assistance.
    The Caring for Children Act has included a new requirement 
that States also must ensure that 70 percent of the State grant 
is used to provide direct services to low-income working 
families. Though these services will be defined by the States, 
the committee intends at a minimum, to include services that 
are designed to assist families with the purchase of child care 
from an eligible child care provider such as vouchers for 
families and contracts and grants with child care providers in 
the definition of direct services.

Children with special needs

    Families with children with disabilities often have 
difficulty finding high quality child care for their children. 
This problem is compounded for many low-income families. Early 
intervention services for pre-school age children can help 
identify, address, and sometimes prevent cognitive, physical 
and emotional disabilities at a young age. Unfortunately, many 
child care professionals have no experience with disabled 
children making accessing quality child care for children with 
special needs a challenge for many families. The committee 
notes that in addition to the Child Care and Development Block 
Grant there are several Federal programs that have been 
designed specifically to respond to the needs of children with 
special needs. The committee recommends greater collaboration 
between the CCDBG and these other programs.
    The Americans with Disabilities Act (ADA) prevents 
discrimination against children with disabilities by child care 
providers and requires providers to make reasonable 
accommodations to ensure their participation. The Individuals 
with Disabilities Education Act (IDEA) has two main programs 
that provide for specialized services (which may include child 
care) for young children with disabilities (Part C Early 
Intervention Program for Infants and Toddlers with Disabilities 
and Section 619 Pre-School Program). IDEA's Part C supports 
developmental services for infants and toddlers, up to age 
three, and their families. More than 230,000 children 
participated in Part C in 2001. Most of the children who 
received Part C supports in 2001 were served in their homes or 
in a child care setting.
    IDEA's Section 619 pre-school program provides special 
education and related services to preschool-aged children with 
disabilities. More than 598,000 children participated in the 
IDEA 619 preschool program in 2001, receiving services in 
public schools, child care, Head Start, or other settings. A 
child between the ages of three and five is eligible for 
Section 619 services if he or she has a disability and needs 
special education and related services.
    To further respond to the child care needs of families with 
children who have special needs, the committee has included 
language requiring States to demonstrate how they are 
addressing the child care needs of parents who have children 
who have special needs. Additionally, the committee has 
authorized States to use funds under the quality set-aside to 
offer training professional development, and educational 
opportunities for child care providers, and specifically 
providers who care for children with special needs. The 
committee recognizes the need of providers to be equipped to 
offer quality child care services to children with special 
needs, and believes additional opportunities for specialized 
training will assist in this effort.

     TITLE II--ENHANCING SECURITY AT CHILD CARE CENTERS IN FEDERAL 
                               FACILITIES

    The committee bill includes new requirements to ensure that 
Federal child care facilities have safe plans of action for 
children in the case of an emergency. The committee bill 
directs the Administrator of General Services, the Chief 
Administrative Officer of the House of Representatives, the 
Librarian of Congress, the head of a designated entity in the 
Senate, and the Director of the Administrative Office of the 
United States Courts to issue regulations for child occupant 
emergency plans and evacuation procedures, for their respective 
Federal child care facilities.
    The committee feels that administrators of Federal 
facilities should consider different types of emergencies in 
designing their action plans and should encourage an informed 
parent body. Further, the committee feels that it is important 
to inform parents of children in Federal child care facilities 
about evacuation procedures and relocation sites, and to ensure 
that directors of Federal facilities regularly update parental 
contact information.

  TITLE III--REMOVAL OF BARRIERS TO INCREASING THE SUPPLY OF QUALITY 
                               CHILD CARE

    The committee bill includes a short-term, flexible grant 
program to encourage small businesses to work with other local 
agencies to provide child care services for employees. The 
committee recognizes that small businesses play a critical role 
in providing child care options to millions of working parents. 
Unfortunately, small businesses generally do not have the 
resources required to start up and support a child care center. 
This grant program takes the necessary steps to ensuring small 
businesses and other local organizations are able to work 
together to provide child care for employees.
    A consortium of small businesses and other organizations 
will be eligible for grants for start-up costs, training, 
scholarships, or other related activities. Businesses will be 
required to match Federal funds to encourage self-sustaining 
facilities well into the future. Business must continue to meet 
State quality and health standards.

                            V. Cost Estimate

               CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

Caring for Children Act of 2003

    Summary: The Caring for Children Act would amend and 
reauthorize the Child Care and Development Block Grant (CCDBG) 
Act of 1990. The Child Care and Development Block Grant program 
was authorized through 2002 by the CCDBG and is currently 
authorized through 2003 by the Consolidated Appropriations 
Resolution, 2003 (Public Law 108-7). The bill also would create 
one new demonstration grant program and increase set-asides for 
quality improvements and other activities.
    If enacted, the bill would authorize appropriations 
totaling $2.3 billion in 2004. Total authorizations under the 
Caring for Children Act would be $13.5 billion over the 2004-
2008 period. CBO estimates that appropriations of these amounts 
would result in additional outlays of $12.2 billion over the 
2004-2008 period. Enacting the bill would not affect direct 
spending or receipts.
    The bill contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
It would increase the authorization of funds for the Child Care 
and Development Block Grant and increase some of the 
requirements for using those funds. The bill also would 
establish a new grant program for states to provide assistance 
to small business consortia and other entities to increase the 
availability of child care. The requirements associated with 
these programs would be conditions of assistance resulting from 
the state's voluntary participation in the program, and thus, 
not intergovernmental mandates as defined by UMRA.
    Estimated cost to the Federal Government: The estimated 
budgetary impact for the various components of each title under 
the Caring for Children Act is shown in the following table. 
The costs of this legislation fall within budget function 600 
(income security).

----------------------------------------------------------------------------------------------------------------
                                                                     By fiscal year, in millions of dollars--
                                                                 -----------------------------------------------
                                                                   2003    2004    2005    2006    2007    2008
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION
Spending Under Current Law:
    Budget Authority............................................   2,086       0       0       0       0       0
    Estimated Outlays...........................................   2,165     819     130      21       0       0
Proposed Changes:
    Title I--Child Care and Development Block Grant Program:
        Authorization Level.....................................       0   2,300   2,500   2,700   2,900   3,100
        Estimated Outlays.......................................       0   1,472   2,290   2,593   2,814   3,014
    Title III--Small Business Child Care Grant Program:
        Authorization Level.....................................       0      30       0       0       0       0
        Estimated Outlays.......................................       0       2      12       9       6       2
Total Proposed Changes:
    Authorization Level.........................................       0   2,330   2,500   2,700   2,900   3,100
    Estimated Outlays...........................................       0   1,474   2,302   2,602   2,820   3,016
Total Spending Under the Bill:
    Authorization Level \1\.....................................   2,086   2,330   2,500   2,700   2,900   3,100
    Estimated Outlays...........................................   2,165   2,292   2,432   2,623   2,820   3,016
----------------------------------------------------------------------------------------------------------------
\1\ The 2003 level is the amount appropriated for that year.
Notes.--Components may not sum to totals because of rounding.

    Basis of estimate: The Caring for Children Act would 
authorize funding for the CCDBC program (title I) at specific 
levels in all years, 2004 through 2008. The Small Business 
Child Care Grant program (title III) would be authorized at $30 
million total over the five years.
    The bill would authorize total appropriations of $2.3 
billion in 2004 and $13.5 billion over the 2004-2008 period. If 
the authorized amounts are appropriated, outlays would increase 
by $1.5 billion in the first year and by $12.2 billion over the 
five-year period. The estimated outlays reflect historical 
rates of spending for the affected programs or the historical 
rates of similar programs.

Title I--Child Care and Development Block Grant Act of 1990

    Title I of the bill would reauthorize the CCDBG program 
currently authorized under the Child Care and Development Block 
Grant Act. The bill would authorize $2.3 billion in 2004, $2.5 
billion in 2005, $2.7 billion in 2006, $2.9 billion in 2007, 
and $3.1 billion in 2008. Funding in 2003 was $2.086 billion.
    The CCDBG program provides funding to states for child care 
subsidies to low-income families, quality improvement, and 
other activities. It is one of the two federal funding programs 
for child care subsidies within a program grouping often 
referred to as the Child Care and Development Fund. The other 
program is the Child Care Entitlement to States, a mandatory 
program that is not affected by the bill.

Title II--Enhancing security at child care centers in Federal 
        facilities

    Title II would direct certain federal officials to develop 
regulations for enhancing the security and fostering effective 
disaster plans in child care facilities operated by the federal 
government. CBO does not expect the regulations would have any 
significant effects on federal costs. Many of these facilities 
already have similar security procedures in place, while others 
are anticipated to implement such measures in the future even 
without the enactment of further legislation.

Title III--Removal of barriers to increasing the supply of quality 
        child care

    Title III would authorize a total of $30 million over the 
2004-2008 period to create a small business child care 
demonstration grant program. The program would encourage small 
businesses to establish and operate child care programs by 
providing grants to cover part of the costs of the programs. 
The grants would go to eligible consortia of small businesses. 
CBO estimates that outlays would be around $2 million in 2004 
and $30 million over the 2004-2008 period. The bill specifies 
that the program would be terminated September 30, 2009.
    Intergovernmental and private-sector impact: The bill 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. It would increase the authorization of funds 
for the Child Care and Development Block Grant and increase 
some of the requirements for using those funds. The bill also 
would establish a new grant program for states to provide 
assistance to small business consortia and other entities to 
increase the availability of child care. The requirements 
associated with these programs would be conditions of 
assistance resulting from the state's voluntary participation 
in the program and thus not intergovernmental mandates as 
defined by UMRA.
    Estimate prepared by: Federal Costs: Donna Wong; Impact on 
State, Local, and Tribal Governments: Leo Lex; and Impact on 
the Private Sector: Kate Bloniarz.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                    VI. Regulatory Impact Statement

                          A. REGULATORY IMPACT

    In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the committee has determined that 
there will be minimal increases in the regulatory burden 
imposed by this bill.

Impact on individuals and businesses

    In general, the bill provides grants to States to provide 
child care assistance to low-income working parents. 
Regulations may be needed to implement these grants in 
specified areas but do not affect individuals or businesses, 
unless they choose to participate in providing services under 
this act.

Impact on personal privacy and paperwork

    The bill provides grants to States to provide child care 
assistance to low-income working parents, to improve the 
quality of child care, early learning opportunities and promote 
school preparedness, and for other purposes. The bill should 
not increase the amount of personal information and paperwork 
required.

                     B. UNFUNDED MANDATES STATEMENT

    According to the Congressional Budget Office, the bill 
contains no intergovernmental or private-sector mandates as 
defined in the Unfunded Mandates Reform Act (UMRA). It would 
increase the authorization of funds for the Child Care and 
Development Block Grant and increase some of the requirements 
for using those funds. The bill also would establish a new 
grant program for States to provide assistance to small 
business consortia and other entities to increase the 
availability of child care. The requirements associated with 
these programs would be conditions of assistance resulting from 
the State's voluntary participation in the program, and thus, 
not intergovernmental mandates as defined by UMRA. The bill 
places several new requirements and limitations on State 
programs as conditions of receiving assistance.

                        VII. Legislative Impact

    The committee has determined that there is no legislative 
impact.

                   VIII. Section-by-Section Analysis

Section 1. Short title

    This Act may be cited as the ``Caring for Children Act of 
2003''.

Section 2. Table of contents

Sec. 101. Short title and goals

    This Section modifies the goals of the Child Care and 
Development Block Grant (CCDBG) in Section 658A(b) to add three 
new goals: (1) to assist states in improving the quality of 
child care available to families; (2) to promote school 
preparedness by encouraging children, families, and caregivers 
to engage in developmentally appropriate and age-appropriate 
activities in child care settings that will--(A) improve the 
children's social, emotional, and behavioral skills; and (B) 
foster their early cognitive, pre-reading, and language 
development; and (3) to promote parental and family involvement 
in the education of young children in child care settings.

Sec. 102. Authorization of appropriations

    This Section amends Section 658B to authorize 
$2,300,000,000 for fiscal year 2004, $2,500,000,000 for fiscal 
year 2005, $2,700,000,000 for fiscal year 2006, $2,900,000,000 
for fiscal year 2007, and $3,100,000,000 for fiscal year 2008.

Sec. 103. Lead agency

    This Section amends Section 658D of CCDBG by allowing a 
State receiving funds under this act to designate an agency 
(which may be an appropriate collaborative agency), or 
establish a joint interagency office to serve as the lead 
agency for the State under this Act.

Sec. 104. State plan

    Section 658E of CCDBG is amended to require a State 
receiving funds under this act to collect and disseminate, 
through resource and referral services and other means, to 
parents of eligible children, child care providers, and the 
general public, information regarding (I) the promotion of 
informed child care choices, including information about the 
quality and availability of services; (II) research and best 
practices concerning children's development, including early 
cognitive development; (III) the availability of assistance to 
obtain child care services; and (IV) other programs for which 
families may be eligible, eligible, including the food stamp 
program, the special supplemental nutrition program for women, 
infants, and children, the child and adult care food program, 
and the Medicaid and State children's health insurance 
programs. The State must also report to the Secretary the 
manner in which the consumer education information described 
was provided to parents and the number of parents to whom such 
consumer education information was provided. This Section also 
requires the State to inform parents receiving assistance under 
TANF and low-income parents about eligibility for child care 
assistance.
    This Section requires that a State has procedures and 
policies in place to ensure that working parents are not 
required to unduly disrupt their employment in order to comply 
with the State's requirements for eligibility re-determination, 
and requires that each child that receives assistance will 
receive such assistance for not less than 6 months before re-
determination. This Section also gives states the option to not 
terminate child care assistance based on a parent's loss of 
work or cessation of attendance at a job training or 
educational program without continuing the assistance for not 
less than 1 month.
    This Section requires the State to describe how it will 
coordinate early child education activities assisted under this 
act with programs such as Head Start, Early Head Start, Early 
Reading First, Even Start, Title I preschool, section 619 and 
part C of IDEA, and other early childhood education programs. A 
State must also describe any training requirements in effect 
designed to enable providers under this act to promote the 
social, emotional, physical, and cognitive development of 
children. A State must describe how it is encouraging 
partnerships between states and other public agencies, and 
private entities, to leverage existing service delivery systems 
and to increase the supply and quality of services for children 
ages 0-13. A State must describe how it is addressing the child 
care needs of eligible parents, who have children with special 
needs, work nontraditional hours, or require child care 
services for infants and toddlers.
    This Section allows the State to use funds to establish or 
support a system of local child care resource and referral 
organizations coordinated by a statewide private, nonprofit, 
community-based lead child care resource and referral 
organization to provide parents with information, and consumer 
education concerning should concern the full range of child 
care options (including care provided during nontraditional 
hours and through emergency child care centers). This network 
may also collect and analyze data on the supply of and demand 
for child care in political subdivisions within the State; 
submit reports to the State containing the data and analysis; 
and work to establish partnerships with public agencies and 
private entities to increase the supply and quality of child 
care services.
    From amounts provided to a State for a fiscal year, the 
State shall reserve the minimum amount required for the quality 
set aside, administration, and other set asides, and from the 
remainder, use not less than 70% to fund direct services (as 
defined by the State).
    This Section requires the State to develop and conduct a 
statistically valid and reliable survey of the market rates for 
child care services in the State (reflecting variations in the 
cost of child care services by geographic area, type of 
provider, and age of child) within the 2 years preceding the 
date of the submission of the application containing the State 
plan. The State should also detail the results of the market 
rates survey; describe how the State will provide for timely 
payment for child care services, and set payment rates for 
child care services in accordance with the results of the 
market rates survey without reducing the number of families in 
the State receiving assistance (as of the date of introduction 
of the Caring for Children Act of 2003). The State shall make 
the results of the survey available to the public no later than 
30 days after the completion of the survey. The State plan 
shall include a certification that the payment rates are 
sufficient to ensure equal access for eligible children to 
child care services comparable to child care services in the 
State or sub-state area provided to children not eligible to 
receive such child care assistance.
    This section includes a rule of construction stating that 
nothing shall prevent a State from differentiating the payment 
rates to providers on the basis of geographic location, the age 
or particular needs of children, and whether the providers 
provide child care during weekend and other nontraditional 
hours.

Sec. 105. Activities to improve the quality of child care

    Section 658G of CCDBG is amended to require each state 
receiving funds under this act to reserve not less than 6% of 
the funds provided directly, or through grants or contracts 
with resource and referral organizations or other appropriate 
entities that are designed to improve the quality of child care 
services. This Section requires that funds be used only for:
          (A) to develop and implement voluntary guidelines on 
        pre-reading and language skills and activities, that 
        are aligned with State standards for kindergarten 
        through grade 12 or the State's general goals for 
        school preparedness;
          (B) support activities and provide technical 
        assistance in Federal, State, and local child care 
        settings to enhance early learning for young children, 
        to promote literacy, and to foster school preparedness;
          (C) offer training, professional development, and 
        educational opportunities for child care providers that 
        relate to the use of developmentally appropriate and 
        age-appropriate curricula, and early childhood teaching 
        strategies, that are scientifically based and aligned 
        with the social, emotional, physical, and cognitive 
        development of children, including--(i) developing and 
        operating distance learning child care training 
        infrastructures; (ii) developing model technology-based 
        training courses; (iii) offering training for 
        caregivers in informal child care settings; and (iv) 
        offering training for child care providers who care for 
        infants and toddlers and children with special needs;
          (D) engage in programs designed to increase the 
        retention and improve the competencies of child care 
        providers, including wage incentive programs and 
        initiatives that establish tiered payment rates for 
        providers that meet or exceed child care services 
        guidelines, as defined by the State;
          (E) evaluate and assess the quality and effectiveness 
        of child care programs and services offered in the 
        State to young children on improving overall school 
        preparedness; and
          (F) carry out other activities determined by the 
        State to improve the quality of child care services for 
        which measurement of outcomes relating to improved 
        child safety, child well-being, or school preparedness 
        is possible.
    This Section also requires that beginning with FY2004, the 
State shall submit an annual certification to the Secretary 
that the State was in compliance with the quality activities 
described above and describes how the State used quality during 
that preceding fiscal year. Beginning with FY2004, the State is 
required to submit an annual report to the Secretary that 
outlines the strategy the State will use to address the quality 
of child care in the State, including a description of 
quantifiable, objective measures that the State will use to 
evaluate the State's progress in improving the quality of the 
child care services and a list of State-developed child care 
services quality targets quantified for such measures. This 
section requires that beginning with FY2005, the State shall 
submit a report on its progress in achieving targets for the 
preceding fiscal year. A State failing to make progress in 
quality improvements shall submit an improvement plan to the 
Secretary, and that State shall comply with the improvement 
plan within 1 year.
    Nothing in this act shall be construed to require that the 
State apply measures for evaluating quality of child care 
services to specific types of child care providers.

Sec. 106. Optional priority use of additional funds

    This Section amends Section 658G of CCDBG to require a 
State receiving funds under this act to consider using a 
portion of any funds exceeding the amount of funds the State 
received to carry out this act for FY2003 to support payment 
rate increases in accordance with the market rate survey 
results; to support the establishment of tiered payment rates 
for providers; and to support payment rate increases for care 
for children in communities served by local educational 
agencies that have been identified for improvement under 
section 1116(c)(3) of the Elementary and Secondary Education 
Act of 1965 (20 U.S.C. 6316(c)(3)).
    This Section also states that nothing in Section 106 shall 
be construed to require a State to take an action that the 
State determines would result in a reduction of child care 
services to families of eligible children.
    This Section also defines ``payment rate'' to mean the rate 
of State payment or reimbursement to providers for subsidized 
child care.

Sec. 107. Reporting requirements

    This Section amends Section 658K to require a State 
receiving funds under this act to collect, with respect to a 
family unit receiving assistance under this act, information 
concerning family income; county of residence; the gender, 
race, and age of children receiving such assistance; whether 
the head of the family unit is a single parent; the sources of 
family income (including employment, including self-employment 
and assistance under a State program funded under part A of 
title IV of the Social Security Act and a State program for 
which states spending is counted toward the maintenance of 
effort requirement under section 409(a)(7) of the Social 
Security Act); the type, amount and cost of child care; 
household size; whether the parent involved reports that the 
child has an individualized education plan under IDEA and the 
reason for any termination of benefits under this act 
(including the child's age exceeding the allowable limit; the 
family income exceeding the State eligibility limit; the State 
recertification or administrative requirements not being met; 
parent work, training, or education status no longer meeting 
State requirements; a non income related change in status).
    A State shall, on a quarterly basis, submit to the 
Secretary the information required to be collected and the 
number of children and families receiving assistance. 
Information on the number of families receiving the assistance 
shall also be posted on the website of the State. In the fourth 
quarterly report of each year, a State shall also submit to the 
Secretary information on the annual number and type of child 
care providers that received funding under this act and the 
annual number of payments made by the State through vouchers, 
under contracts, or by payment to parents reported by type of 
child care provider.
    A State may comply with the requirement to collect the 
information through the use of disaggregated case record 
information on a sample of families selected through the use of 
scientifically acceptable sampling methods approved by the 
Secretary. The Secretary shall provide the states with such 
case sampling plans and data collection procedures as the 
Secretary determines necessary to produce statistically valid 
samples of the information. The Secretary may develop and 
implement procedures for verifying the quality of data 
submitted by the states.
    This Section requires states to comply with the changes in 
data collection and reporting requirement within 2 years from 
the date of enactment of this Act. The Secretary of Health and 
Human Services may grant a waiver to states with plans to 
procure data systems.

Sec. 108. National activities

    This Section amends Section 658L to require the Secretary 
to no later than April 30, 2004, and annually thereafter, 
prepare and submit to the Committee on Education and the 
Workforce of the House of Representatives and the Committee on 
Health, Education, Labor, and Pensions of the Senate, and, not 
later than 30 days after the date of such submission, post on 
the Department of Health and Human Services website, a report 
containing a summary and analysis of the data and information 
provided to the Secretary in the State reports submitted under 
sections 658E, 658G(c), and 658K; aggregated statistics on and 
an analysis of the supply of, demand for, and quality of child 
care, early education, and non-school hour programs; an 
assessment and, where appropriate, recommendations for Congress 
concerning efforts that should be undertaken to improve the 
access of the public to quality and affordable child care in 
the United States; and a progress report describing the 
progress of the states in streamlining data reporting, the 
Secretary's plans and activities to provide technical 
assistance to states, and an explanation of any barriers to 
getting data in an accurate and timely manner.
    This Section also allows the Secretary to make arrangements 
with resource and referral organizations, to utilize the child 
care data system of the resource and referral organizations at 
the national, State, and local levels, to collect the 
information required by paragraph (1)(B).
    This Section also directs the Secretary to provide 
technical assistance to states on developing and conducting the 
State market rates survey.
    Under this section, the Secretary is instructed to award 
grants to states, to improve the quality of and access to child 
care for infants and toddlers, subject to the availability of 
appropriations for this purpose. The Secretary shall also award 
a grant or contract, or enter into a cooperative agreement for 
the operation of a national toll-free hotline to assist 
families in accessing local information on child care options 
and providing consumer education materials, subject to the 
availability of appropriations for this purpose.

Sec. 109. Grants and hotline

    This Section amends Section 658O(a) of the Child Care and 
Development Block Grant Act to require the Secretary to reserve 
an amount not to exceed $100,000,000 for each fiscal year to 
carry out activities designed to improve the quality of and 
access to child care for infants and toddlers. The section also 
requires the Secretary to reserve an amount not to exceed 
$1,000,000 to carry out operation of a national toll-free 
hotline to assist families in accessing local information on 
child care options and providing consumer education materials.

Sec. 110. Definitions

    This Section amends Section 658P of the Child Care and 
Development Block Grant Act by allowing states to set the 
income eligibility level for families, with priority given by 
need as defined by the State. The term `child with special 
needs' was defined in section 602 of the Individuals with 
Disabilities Education Act (20 U.S.C. 1401); and a child who is 
eligible for early intervention services under part C of the 
Individuals with Disabilities Education Act (20 U.S.C. 1431 et 
seq.) Section 658P is also amended by redefining ``Native 
Hawaiian organization'' as it is defined in section 7207 of the 
Elementary and Secondary Education Act of 1965 (20 U.S.C. 7517)

Sec. 111. Rules of construction

    Section 658P is amended to include a rule of construction 
stating that nothing in this act shall be construed to require 
a State to impose State child care licensing requirements on 
any type of early childhood provider, including any such 
provider who is exempt from State child care licensing 
requirements on the date of enactment of the Caring for 
Children Act of 2003.

     TITLE II--ENHANCING SECURITY AT CHILD CARE CENTERS IN FEDERAL 
                               FACILITIES

Sec. 201. Definitions

    This Section defines the term ``Administrator'' as the 
Administrator of General Services. The term ``corresponding 
child care facility'', used with respect to the Chief 
Administrative Officer of the House of Representatives, the 
Librarian of Congress, or the head of a designated entity in 
the Senate, means a child care facility operated by, or under a 
contract or licensing agreement with, an office of the House of 
Representatives, the Library of Congress, or an office of the 
Senate, respectively. The term ``entity sponsoring'', used with 
respect to a child care facility, means a Federal agency that 
operates, or an entity that enters into a contract or licensing 
agreement with a Federal agency to operate, a child care 
facility primarily for the use of Federal employees.
    This section defines the term ``Executive agency'' as 
defined in section 105 of title 5, United States Code, except 
that the term--(A) does not include the Department of Defense 
and the Coast Guard; and (B) includes the General Services 
Administration, with respect to the administration of a 
facility described in paragraph (5)(B). The term ``executive 
facility''--(A) means a facility that is owned or leased by an 
Executive agency; and (B) includes a facility that is owned or 
leased by the General Services Administration on behalf of a 
judicial office. The term ``Federal agency'' means an Executive 
agency, a legislative office, or a judicial office.
    This section also defines the term ``judicial facility'' 
means a facility that is owned or leased by a judicial office 
(other than a facility that is also a facility described in 
paragraph (5) (B)). The term ``judicial office'' means an 
entity of the judicial branch of the Federal Government.
    Lastly, this section defines the term ``legislative 
facility'' means a facility that is owned or leased by a 
legislative office. The term ``legislative office'' means an 
entity of the legislative branch of the Federal Government.

Sec. 202. Enhancing security

    This section (1) directs the Administrator of General 
Services to issue regulations for child care facilities, and 
entities sponsoring child care facilities, in executive 
facilities; (2) directs the Chief Administrative Officer of the 
House of Representatives, the Librarian of Congress, and the 
head of a designated entity in the Senate to issue the 
regulations for corresponding child care facilities, and 
entities sponsoring the corresponding child care facilities, in 
legislative facilities; and (3) the Director of the 
Administrative Office of the United States Courts to issue the 
regulations described in subsection for child care facilities, 
and entities sponsoring child care facilities, in judicial 
facilities.
    This Section directs the officers described above to issue 
regulations that concern matters relating to an occupant 
emergency plan and evacuations, such as providing for building 
security Committee membership for each director of a child care 
facility; establishing a separate section in an occupant 
emergency plan for a facility; promoting familiarity with 
procedures and evacuation routes for different types of 
emergencies; strengthening onsite relationships between 
security personnel and the personnel of such a facility; 
providing specific, clear, and concise evacuation instructions 
for a facility; providing for good evacuation equipment, 
especially cribs; and promoting the ability to evacuate without 
outside assistance; and
    This Section also directs the above officers to issue 
regulations that concern matters relating to relocation sites, 
such as promoting an informed parent body that is knowledgeable 
about evacuation procedures and relocation sites; providing 
regularly updated parent contact information (regarding matters 
such as names, locations, electronic mail addresses, and cell 
phone and other telephone numbers); establishing remote 
telephone contact for parents, to and from areas that are not 
less than 10 miles from such a facility; and providing for an 
alternate site (in addition to regular sites) in the event of a 
catastrophe, which site may include--(i) a site that would be 
an unreasonable distance from the facility under normal 
circumstances; and (ii) a facility with 24-hour operations, 
such as a hotel or law school library.

  TITLE III--REMOVAL OF BARRIERS TO INCREASING THE SUPPLY OF QUALITY 
                               CHILD CARE

Sec. 301. Small business child care grant program

    This section requires the Secretary of Health and Human 
Services to establish a program to award grants to states, on a 
competitive basis, to assist states in providing funds to 
encourage the establishment and operation of employer-operated 
child care programs. 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 receiving grants under this section.
    This section allows a State to use awarded funds to provide 
assistance to a consortium of a small business and other 
appropriate entities located in the State to enable the small 
businesses to establish and operate child care programs. Such 
assistance may include the acquisition, construction, 
renovation, and operation of child care facilities and 
equipment; technical assistance in the establishment of a child 
care program; assistance for the startup costs related to a 
child care program; assistance for the training of child care 
providers; scholarships for low-income wage earners; the 
provision of services to care for sick children or to provide 
care to school-aged children; the entering into of contracts 
with local resource and referral or local health departments; 
assistance for care for children with disabilities; or 
assistance for any other activity determined appropriate by the 
State (including loans, grants, investment guarantees, interest 
subsidies, or other mechanisms to expand the availability of, 
and improve the quality of, employer-operated child care in the 
State).
    A consortium is required by this section to apply to the 
State for grants. A State is required to give priority to a 
consortium that desires to provide child care in a geographic 
area within the State where such care is not generally 
available or accessible. A State may not provide in excess of 
$500,000 in assistance from such funds to any single applicant.
    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 a consortium receiving 
assistance from the State to carry out activities under this 
section--the consortium will make available non-Federal 
contributions to such costs in an amount equal to--(A) for the 
first fiscal year in which the consortium receives such 
assistance, not less than 50 percent of such costs; (B) for the 
second fiscal year in which the consortium receives such 
assistance, not less than 662.3 percent of such costs; and (C) 
for the third fiscal year in which the consortium receives such 
assistance, not less than 75 percent of such costs; and
    (2) the consortium will make the contributions available--
(A) directly or through donations from public or private 
entities; and (B) as determined by the State, in cash or in 
kind, fairly evaluated, including plant, equipment, or 
services.
    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.
    A State may not retain more than 3 percent of awarded funds 
for State administration and other State-level activities. The 
Secretary requires that the State has responsibility for 
administering the awarded grant under this section and for 
monitoring consortia that receive assistance under such grant. 
Each State shall require each consortium receiving assistance 
under the grant awarded to conduct an annual audit with respect 
to the activities of the consortium. Such audits shall be 
submitted to the State. If the State determines, through an 
audit or otherwise, that a consortium has misused the 
assistance, the State shall notify the Secretary of the misuse. 
The Secretary, upon such a notification, may seek from such a 
consortium the repayment of an amount equal to the amount of 
any such misused assistance plus interest.
    This section requires the Secretary to by regulation 
provide for an appeals process with respect to repayments under 
this paragraph.
    This section requires the Secretary to conduct a study not 
later than 2 years after the date on which the Secretary first 
awards grants under this section to determine the capacity of 
consortia to meet the child care needs of communities within 
states; the kinds of consortia that are being formed with 
respect to child care at the local level to carry out programs 
funded under this section; and who is using the programs funded 
under this section and the income levels of such individuals.
    This Section requires the Secretary to prepare and submit 
to the appropriate Committees of Congress not later than 28 
months after the date on which the Secretary first awards 
grants under this section, a report on the results of the study 
conducted in accordance with subparagraph (A).
    This Section requires that not later than 4 years after the 
date on which the Secretary first awards grants under this 
section, the Secretary shall conduct a study to determine the 
number of child care facilities that are funded through 
consortia that received assistance through a grant awarded 
under this section and that remain in operation and the extent 
to which such facilities are meeting the child care needs of 
the individuals served by such facilities.
    This Section requires that not later than 52 months after 
the date on which the Secretary first awards grants under this 
section, the Secretary shall prepare and submit to the 
appropriate Committees of Congress a report on the results of 
the study conducted in accordance with subparagraph (A).
    As defined by this section, the term ``consortium'' means 2 
or more entities that--include at least 1 small business; and 
may include other small businesses, nonprofit agencies or 
community development corporations, local governments, or other 
appropriate entities. The term ``small business'' as defined by 
this section is an employer who employed an average of at least 
2 but not more than 50 employees on business days during the 
preceding calendar year.
    This section authorizes $30,000,000 for the period of 
fiscal years 2004 through 2008 to carry out the grant program. 
With respect to the total amount appropriated for such period 
in accordance with this subsection, not more than $2,500,000 of 
that amount may be used for expenditures related to conducting 
evaluations required under, and the administration of, this 
section. The grant program established by this section shall 
terminate on September 30, 2009.

                          IX. ADDITIONAL VIEWS

    While we support the Caring for Children Act and were 
pleased to work with the majority in drafting bipartisan 
legislation, there are a few areas in the report where we would 
like to clarify the basis of our views and support.
Federal funds for child care and early education
    It is true that $17 billion is currently spent by the 
federal government on child care and early child development, 
however, many of the programs mentioned in the report do not 
provide child care services. In short, they are simply not 
child care, they are not designed to meet the needs of working 
parents, and they are services provided regardless of a 
parent's work status. Head Start, the Child and Adult Care Food 
Program, IDEA preschool and Part C infant and toddler grants, 
and the 21st Century Community Learning Centers program do not 
fund child care services. These programs provide critical 
services, but each of these programs targets different children 
for different purposes. None pay for the cost of child care.
    Head Start is not child care. There is no requirement for 
Head Start parents to be working. Assistant Secretary Wade Horn 
said before the Senate Finance Committee in March of 2002, ``I 
agree that Head Start is not child care.'' In response to 
questions, Dr. Horn agreed that of the 800,000 or so children 
in Head Start, about 450,000 of them needed child care in 
addition to Head Start. Most Head Start programs and state pre-
kindergarten programs are part day. The short hours of part-day 
programs can be a challenge for working poor families who work 
full-time. For families working part-time, the hours of 
operation may not correspond to parent work schedules. The 
Congressional Budget Office estimates that an additional $500 
million per year would be necessary to meet the needs of 
current Head Start parents who report that they need child 
care, but are not provided assistance.
    While it is true that during the time a child spends in 
Head Start, child care services are not needed, it is also true 
that only if the hours in which a child spends in Head Start 
perfectly correspond with a parent's work schedule, is there an 
overall reduction in hours of child care that a particular 
family may need. Since the majority of Head Start programs are 
part-day, many parents require child care assistance in 
addition to Head Start.
    The IDEA preschool and Part C infant and toddler grant 
programs provide critical services for children with 
disabilities. However, the provision of services for a few 
hours a week is not child care. With regard to the Section 619 
preschool grants program, most of the programs are 2\1/2\ hours 
a day. Again, this can be a challenge to working families who 
work longer than 2\1/2\ hours a day.
    What the list of programs (excluding child care) has in 
common is that these programs are designed to meet the needs of 
children, not working parents. On the otherhand, child care is 
designed to meet the needs of working parents and their 
children. Since the intent of the Caring for Children Act is to 
meet the child care needs of parents while promoting quality 
care for children, the fact that there is $17 billion available 
for child care and early education is irrelevant. Funding for 
intervention programs is not a substitute for child care 
funding.
    More mothers, particularly single mothers, are working now 
than in years past, which makes juggling part-day programs, 
child care needs, and work that much more challenging. Among 
children under age 18 living in families headed by a single 
mother, the proportion whose mother was working full-time, 
year-round, increased from 38 percent in 1995 to 50 percent in 
2000. For children under age 6, the percentage with a single 
mother working full-time, year-round, increased from 24 percent 
in 1995 to 37 percent in 2000. The proportion of employed 
single mothers with children under 6 rose from 44 percent in 
1992 to 65 percent in 2000.
    In addition, while $17 billion is currently spent on child 
care and early education, such spending is subject to the 
annual appropriations process. For fiscal year 2004, the 
President has proposed a $400 million cut in the 21st Century 
program, freezes in program spending for IDEA preschool grants 
and child care. A modest but below inflation adjustment was 
proposed for IDEA Part C (grants for infants and toddlers. If 
one assumes that program costs increase with inflation, 
particularly the salaries needed to attract and retain quality 
teachers, then budget freezes in these programs could have the 
effect of reducing the number of children served. The President 
proposed a modest inflation adjustment for Head Start (which 
will not create new Head Start programs in communities or 
extend the hours of operation of existing Head Start centers).
Children with special needs
    While we recognize that efforts have been made in this 
legislation to expand access and improve the quality of care 
for disabled children, in too many states, parents with 
children with disabilities have a great deal of difficulty 
finding child care. Forty-five percent of mothers of infants 
with disabilities do not work outside the home for pay because 
they cannot find child care, according to the Institute of 
Medicine at the National Academies. Mothers are less likely to 
re-enter the labor force by the time their child is one and 
those who do enter the workforce work fewer hours than mothers 
of typically developing children. For these reasons, despite 
the improvements in the bill, we will continue to work to see 
how we can further address the child care needs of families 
with children who have disabilities.
    We want to allay any misconception that programs under IDEA 
pay for child care for disabled children. They do not. Under 
IDEA Part C, the infant and toddler grant program, and Part 
619, the preschool grant program, funds are provided for 
therapeutic services to address specific disabilities or 
developmental delays in children. These services are not child 
care. For example, IDEA Part C provides infants and toddlers 
with occupational and physical therapy, and other services to 
enhance disabled infants and toddlers' functioning (such as 
physical therapy for a child with cerebral palsy). To be 
eligible for special education services, children must be 
classified by the state as having a disability and being in 
need of services to address the disability; in no way does 
eligibility relate to whether a parent works or needs child 
care. In fact, for working families, the hours of services 
provided can be a challenge in finding ``wrap-around'' child 
care. Or, too often, parents can't work because not only do 
their children require special services, but then the parents 
can't find a child care provider to care for a disabled child. 
Special education services under IDEA Part C can take place 
across a variety of settings (e.g., within the infant or 
toddler's home, in day care, etc), and often require the 
presence of a family member (for training, etc.). IDEA Part C 
monies pay for these therapeutic and other services; families 
do not receive these IDEA funds directly. In addition, IDEA 
Part C services may be 30 minutes a day, 30 minutes a week, it 
depends on the disability of the child and the services needed. 
But, these are intervention services, for the most part with 
the parent present, not child care for working parents.
    While it is true that while a child is receiving a service, 
like physical therapy, the child may not need supervision by a 
parent, that doesn't make the service child care. Saying 
otherwise, would mean that pediatric surgery for ear tubes (a 
common procedure for infants and toddlers) is child care since 
parents don't need to supervise such children while they are in 
the operating room. But, we feel everyone would agree that the 
time a child spends in the operating room is not child care. 
The same is true with IDEA intervention programs.
Payment rates and access to quality care
    We are particularly concerned about state payment rates for 
child care. Low payment rates directly affect the kind of care 
children receive and whether families can find quality child 
care in their communities. Low rates can also compromise the 
quality of care offered by providers who are unable to attract 
and retain qualified staff or invest in curriculum 
enhancements.
    We are strongly concerned that the suggestion of state 
flexibility could lead to even lower payment rates; the clear 
intent of the bill's provisions on rates are to encourage 
states to improve their market rate surveys and raise rates 
when needed to reflect the findings from those surveys. Indeed, 
requiring states to develop and conduct a representative market 
rates survey and set payment rates based on its results is 
critically important to address problems that stem from low 
payment rates and help states set payment rates that keep pace 
with the marketplace.
    Current law requires states to set rates that ensure equal 
access to comparable child care services provided to those who 
are not eligible for assistance. The Department of Health and 
Human Services recommends that states set payment rates at or 
above the 75th percentile of market rates in order to meet the 
equal access requirements, and we believe that nothing in this 
bill is intended to modify that guidance. However, nearly half 
the states set rates below this level, leaving parents with few 
choices among child care providers.
    The survey requirement is not intended to preclude a state 
from raising payment rates if the state has previously found it 
necessary to reduce the number of families assisted for other 
programmatic or fiscal reasons. In addition to encouraging 
states to conduct their survey as close as possible to the 
development of the state plan so that the findings are not 
outdated, we hope that states will make adjustments between 
survey intervals as necessary to reflect increases in the cost 
of living.
    Yet, we believe the bill does not go far enough. The bill 
retains the requirement that rates be sufficient to provide for 
equal access, but does not set out a quantified, objective 
payment level that states must reach. Setting the bar at the 
HHS recommended level of the 75th percentile would improve the 
situation that exists in half the states that have not yet 
reached this level. But, even the 75th percentile means that 
rates are too low to pay for 25% of care in a community, so 
that low-income parents lack choice among the full range of 
care and may be unable to access high quality care for their 
children. We should be setting the bar higher than the 75th 
percentile to ensure that states strive to do better to improve 
access to high quality child care, so children have safe, 
healthy child care that prepares them for school.
    The Committee's recognition of the importance of rates-
related expenditures to improve parental access to higher 
quality child care is underscored by the inclusion of a 
provision to encourage states to spend funds in excess of 
amounts received for fiscal year 2003 on supporting payment 
rate increases, establishing tiered reimbursement rates, and 
increasing payment rates for care in communities identified for 
improvement under the Elementary and Secondary Education Act. 
We believe that states should set their payment rates so all 
parents have the option of high quality care.
    However, we also believe that states need resources to 
ensure higher rates and increased quality of care, and we 
regret that there are no actual funds devoted for this much 
needed purpose. Indeed, little or nothing will come of our 
efforts to improve child care quality and ensure children are 
ready for school and not left behind, if states merely maintain 
the current strategy of pushing more and more children into 
inadequately supported child care settings. The serious issue 
of affordable high quality child care merits specific 
requirements and dedicated funding for increased payment rates. 
Otherwise, we will not see improved payment rates and real, 
high quality choices for parents in child care. We will seek to 
address these issues as this bill moves forward.

Federal eligibility guidelines and direct services

    The majority says, ``program officials in five of seven 
states interviewed by the General Accounting Office reported 
that all families eligible under the state's income criteria 
who applied for child care assistance were being served.'' This 
data is out of date, pre-dates the impact of the recession on 
states, and will soon be replaced by a new GAO study reflecting 
more current information, including the impact of the 
recession.
    The majority of states are currently not able to provide 
child care assistance to all eligible families who need help--
even under state criteria. Studies repeatedly support this 
conclusion. Many states have very long waiting lists for child 
care assistance. Most states cannot serve all eligible families 
(even under state criteria). Over 200,000 eligible children are 
on the waiting list in California, more than 50,000 children in 
Florida, more than 22,000 families in Georgia, 12,000 families 
in Indiana, and 17,000 in Massachusetts. Several states 
including Connecticut, Tennessee, and Maryland as well as the 
District of Columbia--each with existing waiting lists--have 
stopped taking new applications for assistance from some 
eligible families.
    Many states choose not to keep waiting lists, which does 
not mean that the demand is not there for child care 
assistance. In other cases, this may have more to do with weak 
state efforts to advertise child care assistance or to perform 
outreach activities to let eligible families know about the 
availability of assistance. Recent reports found that some 
states do not perform aggressive outreach because it would 
increase demand at a time when states don't have the resources. 
Twenty-one states said that most low-income families do not 
know that they could receive assistance and another eight 
states reported that they were uncertain about whether or not 
most eligible families know about child care assistance.
    In more than a quarter of the states, a family of three 
earning just $25,000 does not qualify for assistance. This 
includes four states where a family of three earning $20,000 
per year would not qualify for assistance. Families with low 
earnings cannot afford the cost of care on their own. Full-day 
care in a center can easily cost $4,000 to $10,000 per year--at 
least as much as college tuition at a public university. Child 
care ranks among the largest expenses for young families, 
rivaling what even middle-income families spend on rent or 
food. Other programs such as Head Start and state pre-
kindergarten programs provide support to low-income families 
who are eligible for child care assistance. However, the 
majority of these programs operate on a part day schedule. This 
requires parents who work full time to also have access to 
child care assistance to supplement these part-day programs.
    What is clear is that by eliminating the 85% state median 
income eligibility threshold, on a national level we would not 
be able to say what percentage of eligible children receive 
assistance.
    The majority contends, ``the demand for child care services 
and the number of eligible families in need of subsidies may be 
overestimated because not all low-income parents need 
subsidized child care.'' While informal care may be the choice 
of care for some families, for others it is a default. If state 
subsidy rates (or payment vouchers) are too low, families are 
limited in their child care choices. If families work 
nontraditional hours, there may be few nontraditional hour 
child care providers in their community. Increasingly, relative 
care is not free. With increasing economic pressure on 
relatives, many parents find that they have to pay relatives so 
that relatives can forgo other employment. Last, in an 
increasingly transient society, many families simply do not 
have close geographic access to relatives.
    The majority also contends that ``estimates of subsidies 
needed by children through the Child Care and Development Block 
Grant and TANF might be reduced further by taking into account 
the availability of other programs and funding sources serving 
children, including state funded pre-kindergarten programs and 
Head Start.'' As already mentioned, the short hours of these 
part-time programs can be a challenge to working parents and 
may not correspond to parent work schedules. According to a 
nationwide study released in 2000, more than 25 percent of low 
income working families primarily work evening or overnight 
shifts. In contrast, 83 percent of higher-income working 
families work traditional daytime hours, with only 17 percent 
primarily working evening or overnight shifts. An even higher 
percentage (42 percent) of working women earning less than 
$25,000 a year had nontraditional schedules (nights and 
weekends).
    A study of mothers participating in welfare-to-work 
programs in California, Connecticut, and Florida found that 
nearly one-third worked evening shifts and four out of ten 
worked weekends. A study of 207 Illinois families receiving 
transitional child care assistance after leaving welfare for 
work found that nearly 75 percent were working nontraditional 
hours.
    We want to be clear on current law. States have complete 
flexibility to set income eligibility at whatever level they 
choose. New Mexico is a prime example of this recently reducing 
eligibility to the poverty level. Eliminating the federal 
maximum income level could lead to a race to the bottom. 
Already, Connecticut, Tennessee, D.C., Maryland, and Colorado 
have restricted child care assistance to families on welfare.
    The child care block grant, authored by this committee, has 
long been designed to address the needs of low income and 
working families. The Finance Committee child care money has 
historically been used for welfare recipients and those most 
at-risk of welfare receipt. We are very concerned that the 
removal of the 85 percent state median income threshold will 
send a signal to the states that child care assistance is for 
welfare recipients alone. It is not. That's not the history of 
this committee action and not the record of the Congress.
    Child care in nearly every state costs as much if not more 
than public college tuition. If we truly care about the quality 
of care that children receive, we need to ensure that all low 
income and working families who need child care assistance have 
access to it, not just families on welfare.

State supplantation

    An issue that was not addressed in this bill and one that 
we will seek to address on the floor is the issue of state 
supplanting. We have worked very hard on this bill to improve 
the quality of care and the child care subsidy system and we 
are concerned that states could undercut our efforts by using 
any new child care funds to supplant state budget cuts.
    According to the National Governors Association, state 
budgets are in the worst shape since World War II. For fiscal 
year 2004, states are facing budget deficits of between $70 
billion and $85 billion. Last year, 13 states (Alabama, 
Arizona, Maine, Massachusetts, Michigan, Mississippi, Missouri, 
Nebraska, North Carolina, North Dakota, Oklahoma, Oregon, and 
Utah) cut child care funding. Seven states (Alabama, Indiana, 
Kansas, Mississippi, Oklahoma, Utah, and Wyoming) were not able 
to provide state matching funds to draw down all their 
available federal child care funding.
    Several states have cut state pre-kindergarten funds, with 
the threat of further cuts this year. Recent budget cuts in 
Ohio will mean 18,500 children will lose child care by 
September. Connecticut's Governor has proposed cutting child 
care by $40 million over the next 3 years, which will drop 
30,000 children from child care assistance. Maryland's Governor 
has proposed a 25 percent reduction in child care.
    A large number of states are cutting TANF funding 
transferred to child care and also TANF funding spent directly 
on child care. States are reducing eligibility for child care, 
reducing payment rates for child care vouchers, and increasing 
parent co-pays. North Carolina, Oklahoma, and Kansas are 
cutting funds for infant and toddler care. Some states, like 
Tennessee and Arizona, are even cutting funds used to ensure 
child care safety. Nothing will come of our efforts to improve 
the quality of child care and expand access to child care if 
states merely use new child care money to supplant state child 
care cuts.

School-age children

    The term ``school-age children'' is not specifically 
mentioned in the Caring for Children Act, but it is clear in 
the bill that children through age 12 are eligible for child 
care assistance. The capacity of child care to foster 
children's social, emotional, physical and cognitive 
development must continue when children enter school. Improved 
access to, and quality of, school-age care is critical for the 
at least 2.4 million children ages 5 to 11, and the 24 percent 
and 33 percent of 11 and 12 year old children, respectively, 
who are regularly left alone or unsupervised when they are out 
of school and their parents are away from the home.
    School-age children also face multiple child care 
arrangements that vary sometimes by day and week. Access to 
programs, like those supported by 21st Century Community 
Learning Centers funds, is limited. Moreover, traditional 
before and after school program hours may not correspond to 
parent work schedules. For instance, a typical 21st Century 
middle school program runs for two and a half hours a day, from 
2:30 to 5 pm, after which time children typically go home on 
buses. Census data show that working parents (or parents in 
school) with children aged 5 to 14, on average, must piece 
together multiple child care arrangements per week to meet 
their needs for child care during non-school hours.
    According to Census data, nearly 7 million children between 
the ages of 5 and 14 go home alone unsupervised each week. 
Those home alone include: two percent of 5 year-olds, three 
percent of 6 year-olds, 4 percent of 7 year-olds, 8 percent of 
8 year-olds, 10 percent of 9 year-olds, and 14 percent of 10 
year-olds. It could very well be that a far greater number of 
children are home alone each week, but 7 million represents the 
data collected by the Census Bureau. Many people believe that 
the number of children home alone is much greater, but parents 
don't like to admit that their children, particularly young 
children, are home alone.
    Unsupervised time is a significant factor that affects 
children's safety, well being, and school performance; 
therefore, enhancing the quality of, and access to, child care 
for school-aged populations is a critical component of this 
bill.

National activities: (child care hotline and infants and toddler 
        setaside)

    The Appropriations Act for the Departments of Labor, HHS, 
and Education has set aside funds for infants and toddlers 
since FY2000. The President's budget has also recognized the 
importance of this funding for infants and toddlers by 
requesting $100 million for this purpose for the last 3 years. 
With the funds made available through the Appropriations 
Committee, all states already have activities in place to 
improve the quality of care for infants and toddlers. This 
legislation encourages the Appropriations Committee to continue 
to fully fund this proven effective initiative. Maintaining 
these targeted funds is especially important in light of recent 
state cut backs in initiatives that support infant and toddler 
care.
    We want to highlight Child Care Aware as a very good model 
for a national toll free hotline currently assisting families 
nationwide in accessing local information on child care options 
and providing consumer education. It is important for families 
to continue to have national access to the same level of 
services, and we agree with the President's FY 2004 budget 
request which would continue support for this project. 
Furthermore, we are aware of the Child Care Aware quality 
assurance program that has been developed to ensure families 
receive the highest quality local services possible, and 
encourage the Secretary to continue this initiative.

Funding

    The Caring for Children Act authorizes $2.1 billion in 
FY2004, increasing to $3.1 billion in FY2008, an increase of $1 
billion over current CCDBG discretionary funding over the next 
five years. We are hopeful that the appropriations process will 
result in increases to match the authorized levels. At the same 
time, we will work to increase funding for child care through 
the mandatory child care funding stream during consideration of 
welfare reform.
    About 16 million children under the age of 13 live in 
families with incomes below 200% of poverty where someone works 
and no one receives welfare. These are our primary target 
families, yet only 2 million children receive child care 
assistance. These are the families we are concerned have the 
least amount of choice in child care providers.
    We believe that funding for child care must be adjusted for 
inflation to ensure that current assistance retains its 
purchasing power in the market, particularly given the already 
low subsidy rates for child care used by many states. The 
Congressional Budget Office estimated last year that adjusting 
assistance for 2 million children would cost $4.5 billion over 
the next 5 years. Some argue that it is not Congressional 
policy to adjust block grants for inflation. Congressional 
policy is whatever the Congress supports; there is no written 
policy prohibiting the adjustment of block grants for 
inflation. By not providing inflation adjustments, states will 
bear the burden by reducing the number of children served, 
reducing eligibility levels, reducing subsidies for care 
(voucher levels), or increasing parent co-payments. The fact 
is, if we want to maintain current services without reducing 
the number of children served, some one must pick up the cost 
of care. If the federal government does not adjust its 
contribution for inflation, then either states or low income 
parents will be left to make up the shortfall.
    Beyond adjusting current assistance, we also believe that 
any child care funding made available this year (and through 
CCDBG and TANF reauthorization) must also reflect any increased 
TANF work requirements for parents (as estimated by the 
Congressional Budget Office), sufficient funds to invest in 
improving the quality of child care, and sufficient funds to 
expand access to child care for more working poor families.
                                   Edward M. Kennedy.
                                   Tom Harkin.
                                   James Jeffords.
                                   Patty Murray.
                                   John Edwards.
                                   Christopher Dodd.
                                   Barbara A. Mikulski.
                                   Jeff Bingaman.
                                   Jack Reed.
                                   Hillary Rodham Clinton.

                       X. Changes in Existing Law

    In compliance with rule XXVI paragraph 12 of the Standing 
Rules of the Senate, the following provides a print of the 
statute or the part or section thereof to be amended or 
replaced (existing law proposed to be omitted is enclosed in 
black brackets, new matter is printed in italic, existing law 
in which no change is proposed is shown in roman):

           *       *       *       *       *       *       *

CHILD CARE AND DEVELOPMENT BLOCK GRANT ACT OF 1990

           *       *       *       *       *       *       *

[SEC. 658A. SHORT TITLE AND GOALS.]

SEC. 658A. SHORT TITLE AND GOALS.

    (a) Short Title.--This subchapter may be cited as the 
``Child Care and Development Block Grant Act of 1990''.
    (b) Goals.--The goals of this subchapter are--
          (1) to allow each State maximum flexibility in 
        developing child care programs and policies that best 
        suit the needs of children and parents within such 
        State;
          (2) to promote parental choice to empower working 
        parents to make their own decisions on the child care 
        that best suits their family's needs;
          (3) to [encourage] assist States to provide consumer 
        education information to help parents make informed 
        choices about child care;
          (4) to assist States to provide child care to 
        [parents trying to achieve independence from public 
        assistance; and] low-income and working parents;
          (5) to assist States in improving the quality of 
        child care available to families;
          (6) to promote school preparedness by encouraging 
        children, families, and caregivers to engage in 
        developmentally appropriate and age-appropriate 
        activities in child care setting that will--
                  (A) improve the children's social, emotional, 
                and behavioral skills; and
                  (B) foster their early cognitive, pre-reading 
                and language development;
          (7) to promote parental and family involvement in the 
        education of young children in child care settings; and
          [(5)] (8) to assist States in implementing the 
        health, safety, licensing, and registration standards 
        established in State regulations.

           *       *       *       *       *       *       *

SEC. 658B. AUTHORIZATION OF APPROPRIATIONS.

    There is authorized to be appropriated to carry out this 
[subchapter $1,000,000,000 for each of the fiscal years 1996 
through 2002.] subchapter $2,300,000,000 for fiscal year 2004, 
$2,500,000,000 for fiscal year 2005, $2,700,000,000 for fiscal 
year 2006, $2,900,000,000 for fiscal year 2007, and 
$3,100,000,000 for fiscal year 2008.

           *       *       *       *       *       *       *

SEC. 658D. LEAD AGENCY.

    (a) Designation.--The chief executive officer of a State 
desiring to receive a grant under this subchapter shall 
[designate, in an application submitted to the Secretary under 
section 658E, an appropriate State agency that complies with 
the requirements of subsection (b) to act as the lead agency.] 
designate an agency (which may be an appropriate collaborative 
agency), or establish a joint interagency office, that complies 
with the requirements of subsection (b) to serve as the lead 
agency for the State under this subchapter.

           *       *       *       *       *       *       *

SEC. 658E. APPLICATION AND PLAN.

    (a) Application.--* * *

           *       *       *       *       *       *       *

    (c) Requirements of a Plan.--
          (1) Lead agency.--The State plan shall identify the 
        lead agency [designated] designated or established 
        under section 658D.
          (2) Policies and procedures.--The State plan shall:
                  (A) Parental choice of providers.--Provide 
                assurances that--
                          (i) the parent or parents of each 
                        eligible child within the State who 
                        receives or is offered child care 
                        services for which financial assistance 
                        is provided under this subchapter are 
                        given the option either--
                                  (I) to enroll such child with 
                                a child care provider that has 
                                a grant or contract for the 
                                provision of such services; or
                                  (II) to receive a child care 
                                certificate as defined in 
                                [section 658P(2)] section 
                                658T(2);
                          (ii) in cases in which the parent 
                        selects the option described in clause 
                        (i)(I), the child will be enrolled with 
                        the eligible provider selected by the 
                        parent to the maximum extent 
                        practicable; and
                          (iii) child care certificates offered 
                        to parents selecting the option 
                        described in clause (i)(II) shall be of 
                        a value commensurate with the subsidy 
                        value of child care services provided 
                        under the option described in clause 
                        (i)(I);
                and provide a detailed description of the 
                procedures the State will implement to carry 
                out the requirements of this subparagraph.
                  (B) Unlimited parental access.--* * *

           *       *       *       *       *       *       *

                  [(D) Consumer education information.--Certify 
                that the State will collect and disseminate to 
                parents of eligible children and the general 
                public, consumer education information that 
                will promote informed child care choices.]
                  (D) Consumer and child care provider 
                education information.--Certify that the State 
                will--
                          (i) collect and disseminate, through 
                        resource and referral services and 
                        other means as determined by the State, 
                        to parents of eligible children, child 
                        care providers, and the general public, 
                        information regarding--
                                  (I) the promotion of informed 
                                child care choices, including 
                                information about the quality 
                                and availability of child care 
                                services;
                                  (II) research and best 
                                practices concerning children's 
                                development, including early 
                                cognitive development;
                                  (III) the availability of 
                                assistance to obtain child care 
                                services; and
                                  (IV) other programs for which 
                                families that receive child 
                                care services for which 
                                financial assistance is 
                                provided under this subchapter 
                                may be eligible, including the 
                                food stamp program established 
                                under the Food Stamp Act of 
                                1977 (7 U.S.C. 2011 et seq.), 
                                the special supplemental 
                                nutrition program for women, 
                                infants, and children 
                                established by section 17 of 
                                the Child Nutrition Act of 1966 
                                (42 U.S.C. 1786), the child and 
                                adult care food program 
                                established under section 17 of 
                                the Richard B. Russell National 
                                School Lunch Act (42 U.S.C. 
                                1766), and the medicaid and 
                                State children's health 
                                insurance programs under titles 
                                XIX and XXI of the Social 
                                Security Act (42 U.S.C. 1396 et 
                                seq. and 1397aa et seq.); and
                          (ii) report to the Secretary the 
                        manner in which the consumer education 
                        information described in clause (i) was 
                        provided to parents and the number of 
                        parents to whom such consumer education 
                        information was provided, during the 
                        period of the previous State plan.
                  (E) Compliance with state licensing 
                requirements.--
                          (i) In general.--* * *

           *       *       *       *       *       *       *

                  (H) Meeting the needs of certain 
                populations.--* * *

           *       *       *       *       *       *       *

                  (I) Protection for working parents.--
                          (i) Redetermination process.--
                        Describe the procedures and policies 
                        that are in place to ensure that 
                        working parents (especially parents in 
                        families receiving assistance under a 
                        State program funded under part A of 
                        title IV of the Social Security Act (42 
                        U.S.C. 601 et seq.)) are not required 
                        to unduly disrupt their employment in 
                        order to comply with the State's 
                        requirements for redetermination of 
                        eligibility for assistance under this 
                        subchapter.
                          (ii) Minimum period.--Demonstrate 
                        that each child that receives 
                        assistance under this subchapter in the 
                        State will receive such assistance for 
                        not less than 6 months before the State 
                        redetermines the eligibility of the 
                        child under this subchapter, except as 
                        provided in clause (iii).
                          (iii) Period before termination.--At 
                        the option of the State, demonstrate 
                        that the State will not terminate 
                        assistance under this subchapter based 
                        on a parent's loss of work or cessation 
                        of attendance at a job tranining or 
                        educational program for which the 
                        family was receiving the assistance, 
                        without continuing the assistance for a 
                        reasonable period of time, of not less 
                        than 1 month, after such loss or 
                        cessation in order for the parent to 
                        engage in a job search and resume work, 
                        or resume attendance of a job training 
                        or educational program, as soon as 
                        possible.
                  (J) Coordination with other programs.--
                Describe how the State, in order to expand 
                accessibility and continuity of quality early 
                care and early education, will coordinate the 
                early childhood education activities assisted 
                under this subchapter with--
                          (i) programs carried out under the 
                        Head Start Act (42 U.S.C. 9831 et 
                        seq.), including the Early Head Start 
                        programs carried out under section 645A 
                        of that Act (42 U.S.C. 9840a);
                          (ii)(I) Early Reading First and Even 
                        Start programs carried out under 
                        subparts 2 and 3 of prt B of title I of 
                        the Elementary and Secondary Education 
                        Act of 1965 (20 U.S.C. 6371 et seq., 
                        6381 et seq.); and
                          (II) other preschool programs carried 
                        out under title I of that Act (20 
                        U.S.C. 6301 et seq.);
                          (iii) programs carried out under 
                        section 619 and part C of the 
                        Individuals with Disabilities Education 
                        Act (20 U.S.C. 1419, 1431 et seq.);
                          (iv) State prekindergarten programs; 
                        and
                          (v) other early childhood education 
                        programs.
                  (K) Training in early learning and childhood 
                development.--Describe any training 
                requirements that are in effect within the 
                State that are designed to enable child care 
                providers to promote the social, emotional, 
                physical, and cognitive development of children 
                and that are applicable to child care providers 
                that provide services for which assistance is 
                made available under this subchapter in the 
                State.
                  (L) Public-private partnerships.--Demonstrate 
                how the State is encouraging partnerships among 
                State agencies, other public agencies, and 
                private entities, to leverage existing service 
                delivery systems (as of the date of submission 
                of the State plan) for early child-hood 
                education and to increase the supply and 
                quality of child care services for children who 
                are less than 13 years of age.
                  (M) Access to care for certain populations.--
                Demonstrate how the State is addressing the 
                child care needs of parents eligible for child 
                care services for which assistance is provided 
                under this subchapter, who have children with 
                special needs, work nontraditional hours, or 
                require child care services for infants and 
                toddlers.
                  (N) Coordination with title iv of the social 
                security act.--Describe how the State will 
                inform parents receiving assistance under a 
                State program funded under part A of title IV 
                of the Social Security Act (42 U.S.C. 601 et 
                seq.) and low-income parents about eligibility 
                for assistance under this subchapter.
          (3) Use of block grant funds.--
                  (A) General requirement.--The State plan 
                shall provide that the State will use the 
                amounts provided to the State for each fiscal 
                year under this subchapter [as required under] 
                in accordance with subparagraphs (B) through 
                [(D)] (E).
                  (B) Child care services and related 
                activities.--[The State]
                          (i) In general.--The State shall use 
                        amounts provided to the State for each 
                        fiscal year under this subchapter for 
                        child care services on a sliding fee 
                        scale basis, activities that improve 
                        the quality or availability of such 
                        services, and and any other activity 
                        that the State deems [appropriate to 
                        realize any of the goals specified in 
                        paragraphs (2) through (5) of section 
                        658A(b)] appropriate (which may include 
                        an activity described in clause (ii)) 
                        to realize any of the goals specified 
                        in paragraphs (2) through (8) of 
                        section 658A(b), with priority being 
                        given for services provided to children 
                        of families with very low family 
                        incomes (taking into consideration 
                        family size) and to children with 
                        special needs.
                          (ii) Child care resource and referral 
                        system.--A State may use amounts 
                        described in clause (i) to establish or 
                        support a system of local child care 
                        resource and referral organizations 
                        coordinated by a statewide private, 
                        nonprofit, community-based lead child 
                        care resource and referral 
                        organization. The local child care 
                        resource and referral organizations 
                        shall--
                                  (I) provide parents in the 
                                State with information, and 
                                consumer education, concerning 
                                the full range of child care 
                                options, including child care 
                                provided during nontraditional 
                                hours and through emergency 
                                child care centers, in their 
                                communities;
                                  (II) collect and analyze data 
                                on the supply of and demand for 
                                child care in political 
                                subdivisions within the State;
                                  (III) submit reports to the 
                                State containing data and 
                                analysis described in clause 
                                (II); and
                                  (IV) work to establish 
                                partnerships with public 
                                agencies and private entities 
                                to increase the supply and 
                                quality of child care services.
                  (C) Limitation on administrative costs.--* * 
                *
                  (D) Assistance for certain families.--* * *
                  (E) Direct services.--From amounts provided 
                to a State for a fiscal year to carry out this 
                subchapter, the State shall--
                          (i) reserve the minimum amount 
                        required to be reserved under section 
                        658G, and the funds for costs described 
                        in subparagraph (C); and
                          (ii) from the remainder, use not less 
                        than 70 percent to fund direct services 
                        (as defined by the State).
          (4) Payemnt rates.--
                  (A) In general.--[The State plan shall 
                certify that payment rates for the provision of 
                child care services for which assistance is 
                provided under this subchapter are sufficient 
                to ensure equal access for eligible children to 
                comparable child care services in the State or 
                substate area that are provided to children 
                whose parents are not eligible to receive 
                assistance under this subchapter or for child 
                care assistance under any other Federal or 
                State programs and shall provide a summary of 
                the facts relied on by the State to determine 
                that such rates are sufficient to ensure such 
                access.]
                          (i) Survey.--The State plan shall--
                                  (I) demonstrate that the 
                                State has, after consulting 
                                with local area child care 
                                program administrators, 
                                developed and conducted a 
                                statistically valid and 
                                reliable survey of the market 
                                rates for child care services 
                                in the State (that reflects 
                                variations in the cost of child 
                                care services by geographic 
                                area, type of provider, and age 
                                of child) within the 2 years 
                                preceding the date of the 
                                submission of the application 
                                containing the State plan;
                                  (II) detail the results of 
                                the State market rates survey 
                                conducted pursuant to subclause 
                                (I);
                                  (III) describe how the State 
                                will provide for timely payment 
                                for child care services, and 
                                set payment rates for child 
                                care services, for which 
                                assistance is provided under 
                                this subchapter in accordance 
                                with the results of the market 
                                rates survey conducted pursuant 
                                to subclause (I) without 
                                reducing the number of families 
                                in the State receiving such 
                                assistance under this 
                                subchapter, relative to the 
                                number of such families on the 
                                date of introduction of the 
                                Caring for Children Act of 
                                2003; and
                                  (IV) describe how the State 
                                will, not later than 30 days 
                                after the completion of the 
                                survey described in subclause 
                                (I), make the results of the 
                                survey widely available through 
                                public means, including posting 
                                the results on the Internet.
                          (ii) Equal access.--The State plan 
                        shall include a certification that the 
                        payment rates are sufficient to ensure 
                        equal access for eligible children to 
                        child care services comparable to child 
                        care services in the State or substate 
                        area that are provided to children 
                        whose parents are not eligible to 
                        receive child care assistance under any 
                        Federal or State program.
                  (B) Construction.--[Nothing]
                          (i) No private right of action.--
                        Nothing in this paragraph shall be 
                        construed to create a private right of 
                        action.
                          (ii) No prohibition of certain 
                        different rates.--Nothing in this 
                        subchapter shall be construed to 
                        prevent a State from differentiating 
                        the payment rates described in 
                        subparagraph (A) on the basis of--
                                  (I) geographic location of 
                                child care providers (such as 
                                location in an urban or rural 
                                area);
                                  (II) the age or particular 
                                needs of children (such as 
                                children with special needs and 
                                children served by child 
                                protective services); and
                                  (III) whether the providers 
                                provide child care during 
                                weekend and other 
                                nontraditional hours.

           *       *       *       *       *       *       *

[SEC. 658G. ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE.

    [A State that receives funds to carry out this subchapter 
for a fiscal year, shall use not less than 4 percent of the 
amount of such funds for activities that are designed to 
provide comprehensive consumer education to parents and the 
public, activities that increase parental choice, and 
activities designed to improve the quality and availability of 
child care (such as resource and referral services).]

SEC. 658G. ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE.

    (a) In General.--
          (1) Reservation.--Each State that receives funds to 
        carry out this subchapter for a fiscal year shall 
        reserve and use not less than 6 percent of the funds 
        for activities provided directly, or through grants or 
        contracts with resource and referral organizations or 
        other appropriate entities, that are designed to 
        improve the quality of child care services.
          (2) Activities.--The funds reserved under paragraph 
        (1) may only be used to--
                  (A) develop and implement voluntary 
                guidelines on pre-reading and language skills 
                and activities, for child care programs in the 
                State, that are aligned with State standards 
                for kindergarten through grade 12 or the 
                State's general goals for school preparedness;
                  (B) support activities and provide technical 
                assistance in Federal, State, and local child 
                care settings to enhance early learning for 
                young children, to promote literacy, and to 
                foster school preparedness;
                  (C) offer training, professional development, 
                and educational opportunities for child care 
                providers that relate to the use of 
                developmentally appropriate and age-appropriate 
                curricula, and early childhood teaching 
                strategies, that are scientifically based and 
                aligned with the social, emotional, physical, 
                and cognitive development of children, 
                including--
                          (i) developing and operating distance 
                        learning child care training 
                        infrastructures;
                          (ii) developing model technology-
                        based training courses;
                          (iii) offering training for 
                        caregivers in informal child care 
                        settings; and
                          (iv) offering training for child care 
                        providers who care for infants and 
                        toddlers and children with special 
                        needs.
                  (D) engage in programs designed to increase 
                the retention and improve the competencies of 
                child care providers, including wage incentive 
                programs and initiatives that establish tiered 
                payment rates for providers that meet or exceed 
                child care services guidelines, as defined by 
                the State;
                  (E) evaluate and assess the quality and 
                effectiveness of child care programs and 
                services offered in the State to young children 
                on improving overall school preparedness; and
                  (F) carry out other activities determined by 
                the State to improve the quality of child care 
                services provided in the State and for which 
                measurement of outcomes relating to improved 
                child safety, child well-being, or school 
                preparedness is possible.
    (b) Certification.--Beginning with fiscal year 2004, the 
State shall annually submit to the Secretary a certification in 
which the State certifies that the State was in compliance with 
subsection (a) during the preceding fiscal year and describes 
how the State used funds made available to carry out this 
subchapter to comply with subsection (a) during that preceding 
fiscal year.
    (c) Strategy.--The State shall annually submit to the 
Secretary--
          (1) beginning with fiscal year 2004, an outline of 
        the strategy the State will implement during that 
        fiscal year to address the quality of child care 
        services for which financial assistance is made 
        available under this subchapter, including--
                  (A) a statement specifying how the State will 
                address the activities carried out under 
                subsection (a);
                  (B) a description of quantifiable, objective 
                measures that the State will use to evaluate 
                the State's progress in improving the quality 
                of the child care services (including measures 
                regarding the impact, if any, of State efforts 
                to improve the quality by increasing payment 
                rates, as defined in section 658II(c)), 
                evaluating separately the impact of the 
                activities listed in each of such subparagraphs 
                on the quality of the child care services; and
                  (C) a list of State-developed child care 
                services quality targets quantified for such 
                fiscal year for such measures; and
          (2) beginning with fiscal year 2005, a report on the 
        State's progress in achieving such targets for the 
        preceding fiscal year.
    (d) Improvement Plan.--If the Secretary determines that a 
State failed to make progress as described in subsection (c)(2) 
for a fiscal year--
          (1) the State shall submit an improvement plan that 
        describes the measures the State will take to make that 
        progess; and
          (2) the State shall comply with the improvement plan 
        by a date specified by the Secretary but not later than 
        1 year after the date of the determination.
    (e) Construction.--Nothing in this subchapter shall be 
construed to require that the State apply measures for 
evaluating quality of child care services to specific types of 
child care providers.

           *       *       *       *       *       *       *

SEC. 658H. OPTIONAL PRIORITY USE OF ADDITIONAL FUNDS.

    (a) In General.--If a State receives funds to carry out 
this subchapter for a fiscal year, and the amount of the funds 
exceeds the amount of funds the State received to carry out 
this subchapter for fiscal year 2003, the State shall consider 
using a portion of the excess--
          (1) to support payment rate increases in accordance 
        with the market rate survey conducted pursuant to 
        section 658E(c)(4);
          (2) to support the establishment of tiered payment 
        rates as described in section 658G(a)(2)(D); and
          (3) to support payment rate increases for care for 
        children in communities served by local educational 
        agencies that have been identified for improvement 
        under section 1116(e)(3) of the Elementary and 
        Secondary Education Act of 1965 (20 U.S.C. 6316(c)(3)).
      (b) No Requirement To Reduce Child Care Services.--
Nothing in this section shall be construed to require a State 
to take an action that the State determines would result in a 
reduction of child care services to families of eligible 
children.
      (c) Payment Rate.--In this section, the term payment rate 
means the rate of State payment or reimbursement to providers 
for subsidized child care.

           *       *       *       *       *       *       *

[SEC. 658K. REPORTS AND AUDITS.]
SEC. 658K. REPORTS AND AUDITS.

    [(a) Reports.--
          [(1) Collection of information by states.--
                  [(A) In general.--A State that receives funds 
                to carry out this subchapter shall collect the 
                information described in subparagraph (B) on a 
                monthly basis.
                  [(B) Required information.--The information 
                required under this subparagraph shall include, 
                with respect to a family unit receiving 
                assistance under this subchapter information 
                concerning--
                          [(i) family income;
                          [(ii) county of residence;
                          [(iii) the gender, race, and age of 
                        children receiving such assistance;
                          [(iv) whether the head of the family 
                        unit is a single parent;
                          [(v) the sources of family income, 
                        including--
                                  [(I) employment, including 
                                self-employment;
                                  [(II) cash or other 
                                assistance under--
                                          [(aa) the temporary 
                                        assistance for needy 
                                        families program under 
                                        part A of title IV of 
                                        the Social Security Act 
                                        (42 U.S.C. 601 et 
                                        seq.); and
                                          [(bb) a State program 
                                        for which State 
                                        spending is counted 
                                        toward the maintenance 
                                        of effort requirement 
                                        under section 409(a)(7) 
                                        of the Social Security 
                                        Act (42 U.S.C. 
                                        609(a)(7));
                                  [(III) housing assistance;
                                  [(IV) assistance under the 
                                Food Stamp Act of 1977; and
                                  [(V) other assistance 
                                programs;
                          [(vi) the number of months the family 
                        has received benefits;
                          [(vii) the type of child care in 
                        which the child was enrolled (such as 
                        family child care, home care, or 
                        center-based child care);
                          [(viii) whether the child care 
                        provider involved was a relative;
                          [(ix) the cost of child care for such 
                        families; and
                          [(x) the average hours per month of 
                        such care; during the period for which 
                        such information is required to be 
                        submitted.
                  [(C) Submission to secretary.--A State may 
                described in subparagraph (A) shall, on a 
                quarterly basis, submit the information 
                required to be collected under subparagraph (B) 
                to the Secretary.
                  [(D) Use or samples.--
                          [(i) Authority.--A State may comply 
                        with the requirement to collect the 
                        information described in subparagraph 
                        (B) through the use of disaggregated 
                        case record information on a sample of 
                        families selected through the use of 
                        scientifically acceptable sampling 
                        methods approved by the Secretary.
                          [(ii) Sampling and other methods.--
                        The Secretary shall provide the States 
                        with such case sampling plans and data 
                        collection procedures as the Secretary 
                        deems necessary to produce 
                        statistically valid samples of the 
                        information described in subparagraph 
                        (B). The Secretary may develop and 
                        implement procedures for verifying the 
                        quality of data submitted by the 
                        States.
          [(2) Annual reports.--Not later than December 31, 
        1997, and every 12 months thereafter, a State described 
        in paragraph (1)(A) shall prepare and submit to the 
        Secretary a report that includes aggregate data 
        concerning--
                  [(A) the number of child care providers that 
                received funding under this subchapter as 
                separately identified based on the types of 
                providers listed in section 658P(5);
                  [(B) the monthly cost of child care services, 
                and the portion of such cost that is paid for 
                with assistance provided under this subchapter, 
                listed by the type of child care services 
                provided;
                  [(C) the number of payments made by the State 
                through vouchers, contracts, cash, and 
                disregards under public benefit programs, 
                listed by the type of child care services 
                provided;
                  [(D) the manner in which consumer education 
                information was provided to parents and the 
                number of parents to whom such information was 
                provided; and
                  [(E) the total number (without duplication) 
                of children and families served under this 
                subchapter;
        during the period for which such report is required to 
        be submitted.]
    (a) Reports.--
          (1) In general.--A State that receives funds to carry 
        out this subchapter shall collect the information 
        described in paragraph (2) on a monthly basis.
          (2) Required information.--The information required 
        under this paragraph shall include, with respect to a 
        family unit receiving assistance under this subchapter, 
        information concerning--
                  (A) family income;
                  (B) county of residence;
                  (C) the gender, race, and age of children 
                receiving such assistance;
                  (D) whether the head of the family unit is a 
                single parent;
                  (E) the sources of family income, including--
                          (i) employment, including self-
                        employment; and
                          (ii) assistance under a State program 
                        funded under part A of title IV of the 
                        Social Security Act (42 U.S.C. 601 et 
                        seq.) and a State program for which 
                        State spending is counted toward the 
                        maintenance of effort requirement under 
                        section 409(a)(7) of the Social 
                        Security Act (42 U.S.C. 609(a)(7));
                  (F) the type of child care in which the child 
                was enrolled (such as family child care, home 
                care, center-based child care, or other types 
                of child care described in section 658T(5));
                  (G) whether the child care provider involved 
                was a relative;
                  (H) the cost of child care for such family, 
                separately stating the amount of the subsidy 
                payment of the State and the amount of the co-
                payment of the family toward such cost;
                  (I) the average hours per month of such care;
                  (J) household size;
                  (K) whether the parent involved reports that 
                the child has an individualized education 
                program or an individualized family service 
                plan described in section 602 or 636 of the 
                Individuals with Disabilities Education Act (20 
                U.S.C. 1401 and 1436); and
                  (L) the reason for any termination of 
                benefits under this subchapter, including 
                whether the termination was due to--
                          (i) the child's age exceeding the 
                        allowable limit;
                          (ii) the family income exceeding the 
                        State eligibility limit;
                          (iii) the State recertification or 
                        administrative requirements not being 
                        met;
                          (iv) parent work, training, or 
                        education status no longer meeting 
                        State requirements;
                          (v) a nonincome related change in 
                        status; or
                          (vi) other reasons;
        during the period for which such information is 
        required to be submitted.
          (3) Submission to secretary.--A State described in 
        paragraph (1) shall, on a quarterly basis, submit to 
        the Secretary the information required to be collected 
        under paragraph (2) and the number of children and 
        families receiving assistance under this subchapter 
        (stated on a monthly basis). Information on the number 
        of families receiving the assistance shall also be 
        posted on the website of such State. in the fourth 
        quarterly report of each year, a State described in 
        paragraph (1) shall also submit to the Secretary 
        information on the annual number and type of child care 
        providers (as described in section 658T(5)) that 
        received funding under this subchapter and the annual 
        number of payments made by the State Through vouchers, 
        under contracts, or by payment to parents reported by 
        type of child care provider.
          (4) Use of samples.--
                  (A) Authority.--A State may comply with the 
                requirement to collect the information 
                described in paragraph (20 through the use of 
                disaggregated ease record information on a 
                sample of families selected through the use of 
                scientifically acceptable sampling methods 
                approval by the Secretary.
                  (B) Sampling and other methods.--The 
                Secretary shall provide the State with such 
                case sampling plans and data collection 
                procedures as the Secretary determines 
                necessary to produce statistically valid 
                samples of the information described in 
                paragraph (2). The Secretary may develop and 
                implement procedures for verifying the quality 
                of data submitted by the States.

           *       *       *       *       *       *       *

[SEC. 658L. REPORT BY SECRETARY.

    [Not later than July 31, 1998, and biennially thereafter, 
the Secretary shall prepare and submit to the Committee on 
Economic and Educational Opportunities of the House of 
Representatives and the Committee on Labor and Human Resources 
of the Senate a report that contains a summary and analysis of 
the data and information provided to the Secretary in the State 
reports submitted under section 658K. Such report shall include 
an assessment, and where appropriate, recommendations for the 
Congress concerning efforts that should be undertaken to 
improve the access of the public to quality and affordable 
child care in the United States.]

SEC. 658L. NATIONAL ACTIVITIES.

    (a) Report.--
          (1) In general.--The Secretary shall, not later than 
        April 30, 2004, and annually thereafter, prepare and 
        submit to the Committee on Education and the Workforce 
        of the House of Representatives and the Committee on 
        Health, Education, Labor, and Pensions of the Senate, 
        and, not later than 30 days after the date of such 
        submission, post on the Department of Health and Human 
        Services website, a report that contains the following:
                  (A) A summary and analysis of the data and 
                information provided to the Secretary in the 
                State reports submitted under sections 658E, 
                658G(c), and 658K.
                  (B) Aggregated statistics on and an analysis 
                of the supply of, demand for, and quality of 
                child care, early education, and nonschool-hour 
                programs.
                  (C) An assessment and, where appropriate, 
                recommendations for Congress concerning efforts 
                that should be undertaken to improve the access 
                of the public to quality and affordable child 
                care in the United States.
                  (D) A progress report describing the progress 
                of the States in streamlining data reporting, 
                the Secretary's plans and activities to provide 
                technical assistance to States, and an 
                explanation of any barriers to getting data in 
                an accurate and timely manner.
          (2) Collection of information.--The Secretary may 
        make arrangements with resource and referral 
        organizations, to utilize the child care data system of 
        the resource and referral organizations at the 
        national, State, and local levels, to collect the 
        information required by paragraph (1)(B).
    (b) Grants To Improve Quality and Access.--
          (1) In general.--The Secretary shall award grants to 
        States, from allotments made under paragraph (2), to 
        improve the quality of and access to child care for 
        infants and toddlers, subject to the availability of 
        appropriations for this purpose.
          (2) Allotments.--From funds reserved under section 
        658O(a)(3) for a fiscal year, the Secretary shall allot 
        to each State an amount that bears the same 
        relationship to such funds as the amount the State 
        receives for the fiscal year under section 658O bears 
        to the amount all States receive for the fiscal year 
        under section 658O.
    (c) Toll-Free Hotline.--The Secretary shall award a grant 
or a contract, or enter into a cooperative agreement for the 
operation of a national toll-free hotline to assist families in 
accessing local information on child care options and providing 
consumer education materials, subject to the availability of 
appropriations for this purpose.
    (d) Technical Assistance.--The Secretary shall provide 
technical assistance to States on developing and conducting the 
State market rates survey described in section 
658E(c)(4)(A)(i).

           *       *       *       *       *       *       *

SEC. 6580. AMOUNTS RESERVED; ALLOTMENTS.

    (a) Amounts Reserved.--
          (1) Territories and possessions.--The Secretary shall 
        reserve not to exceed one half of 1 percent of the 
        amount appropriated under this subchapter in each 
        fiscal year for payments to Guam, American Samoa, the 
        Virgin Islands of the United States, and the 
        Commonwealth of the Northern Mariana Islands to be 
        allotted in accordance with their respective needs.
          (2) Indian tribes.--The Secretary shall reserve not 
        less than 1 percent, and not more than 2 percent, of 
        the amount appropriated under section 658B in each 
        fiscal year for payments to Indian tribes and tribal 
        organizations with applications approved under 
        subsection (c).
          (3) Grants to improve quality and access.--The 
        Secretary shall reserve an amount not to exceed 
        $100,000,000 for each fiscal year to carry out section 
        658L(b), subject to the availability of appropriations 
        for this purpose.
          (4) Toll-free hotline.--The Secretary shall reserve 
        an amount not to exceed $1,000,000 to carry out section 
        658L(c), subject to the availability of appropriations 
        for this purpose.

           *       *       *       *       *       *       *

SEC. 658P. RULES OF CONSTRUCTION.

    Nothing in this subchapter shall be construed to require a 
State to impose State child care licensing requirements on any 
type of early childhood provider, including any such provider 
who is exempt from State child care licensing requirements on 
the date of enactment of the Caring for Children Act of 2003.

           *       *       *       *       *       *       *

SEC. 658[P]T. DEFINITIONS.

    As used in this subchapter:
          (1) Caregiver.--The term ``caregiver'' means an 
        individual who provides a service directly to an 
        eligible child on a person-to-person basis.
          (2) Child care certificate.--The term ``child care 
        certificate'' means a certificate (that may be a check 
        or other disbursement) that is issued by a State or 
        local government under this subchapter directly to a 
        parent who may use such certificate only as payment for 
        child care services or as a deposit for child care 
        services if such a deposit is required of other 
        children being cared for by the provider. Nothing in 
        this subchapter shall preclude the use of such 
        certificates for sectarian child care services if 
        freely chosen by the parent. For purposes of this 
        subchapter, child care certificates shall not be 
        considered to be grants or contracts.
          (3) Child with special needs.--The term ``child with 
        special needs'' means--
                  (A) a child with a disability, as defined in 
                section 602 of the Individuals with 
                Disabilities Education Act (20 U.S.C. 1401); 
                and
                  (B) a child who is eligible for early 
                intervention services under part C of the 
                Individuals with Disabilities Education Act (20 
                U.S.C. 1431 et seq.).
          (4) Eligible child.--The term ``eligible child'' 
        means an individual--
                  (A) who is less than 13 years of age;
                  (B) whose family income does not exceed [85 
                percent of the State median income for a family 
                of the same size] an income level determined by 
                the State involved, with priority based on need 
                as defined by the State; and
                  (C) who--
                          (i) resides with a parent or parents 
                        who are working or attending a job 
                        training or educational program; or
                          (ii) is receiving, or needs to 
                        receive, protective services and 
                        resides with a parent or parents not 
                        described in clause (i).

           *       *       *       *       *       *       *

          (8) Lead agency.--The term ``lead agency'' means the 
        agency designated under [section 658B(a)] section 
        658D(a).

           *       *       *       *       *       *       *

          (14) Tribal organization.--
                  (A) In general.--The term ``tribal 
                organization'' has the meaning given it in 
                section 4(l) of the Indian Self-Determination 
                and Education Assistance Act (25 U.S.C. 
                450b(l)).
                  (B) Other organizations.--Such term includes 
                a [Native Hawaiian Organization, as defined in 
                section 4009(4) of the Augustus F. Hawkins-
                Robert T. Stafford Elementary and Secondary 
                School Improvement Amendments of 1988 (20 
                U.S.C. 4909(4))] Native Hawaiian organization, 
                as defined in section 7207 of the Elementary 
                and Secondary Education Act of 1965 (20 U.S.C. 
                7517) and a private nonprofit organization 
                established for the purpose of serving youth 
                who are Indians or Native Hawaiians.

                                
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