(B) LIMITATIONS.—For purposes of this
subsection, if an allotment percentage deter-
mined under subparagraph (A)—
(i) is more than 1.2 percent, the allot-
ment percentage of that State shall be con-
sidered to be 1.2 percent; and
(ii) is less than 0.8 percent, the allot-
ment percentage of the State shall be con-
sidered to be 0.8 percent.
(C) PER CAPITA INCOME.—For purposes
of subparagraph (A), per capita income shall
be—
(i) determined at 2-year intervals;
(ii) applied for the 2-year period be-
ginning on October 1 of the first fiscal
year beginning after the date such deter-
mination is made; and
(iii) equal to the average of the an-
nual per capita incomes for the most re-
cent period of 3 consecutive years for
which satisfactory data are available from
the Department of Commerce at the time
such determination is made.
(c) PAYMENTS TO INDIAN TRIBES AND TRIBAL OR-
GANIZATIONS.—
(1) RESERVATION OF FUNDS.—From amounts
reserved under subsection (a)(2), the Secretary may
make grants to or enter into contracts with Indian
tribes and tribal organizations that submit applica-
tions under this subsection, to plan and carry out
programs and activities to encourage child care pro-
viders to improve their qualifications and to retain
qualified child care providers in the child care field.
(2) APPLICATIONS
AND
REQUIREMENTS.—To
be eligible to receive a grant or contract under this
subsection, an Indian tribe or tribal organization
shall submit an application to the Secretary at such
time, in such manner, and containing such informa-
tion as the Secretary may require. The application
shall provide that the applicant—
(A) will coordinate the programs and ac-
tivities involved, to the maximum extent prac-
ticable, with the lead agency in each State in
which the applicant will carry out such pro-
grams and activities; and
(B) will make such reports on, and conduct
such audits of the funds made available through
the grant or contract for, programs and activi-
ties under this title as the Secretary may re-
quire.
(d) DATA AND INFORMATION.—The Secretary shall
obtain from each appropriate Federal agency, the most re-
cent data and information necessary to determine the al-
lotments provided for in subsection (b).
(e) REALLOTMENTS.—
(1) IN GENERAL.—Any portion of the allotment
under subsection (b) to a State for a fiscal year that
the Secretary determines will not be distributed to
the State for such fiscal year shall be reallotted by
the Secretary to other States in proportion to the
original allotments made under such subsection to
such States for such fiscal year.
(2) LIMITATIONS.—
(A) REDUCTION.—The amount of any re-
allotment to which a State is entitled under this
subsection shall be reduced to the extent that
such amount exceeds the amount that the Sec-
retary estimates will be distributed to the State
to make grants under this title.
(B) REALLOTMENTS.—The amount of
such reduction shall be reallotted to States for
which no reduction in an allotment, or in a real-
lotment, is required by this subsection, in pro-
portion to the original allotments made under
subsection (b) to such States for such fiscal
year.
(3) AMOUNTS REALLOTTED.—For purposes of
this title (other than this subsection and subsection
(b)), any amount reallotted to a State under this
subsection shall be considered to be part of the allot-
ment made under subsection (b) to the State.
(f) COST-SHARING.—
(1) FEDERAL SHARE.—The Federal share of
the cost of making grants under sections 207 and
208, with funds allotted under this section and dis-
tributed by the Secretary to a State, shall be—
(A) not more than 90 percent of the cost
of each grant made under such sections, in the
1st fiscal year for which the State receives such
funds;
(B) not more than 85 percent of the cost
of each grant made under such sections, in the
2d fiscal year for which the State receives such
funds;
(C) not more than 80 percent of the cost
of each grant made under such sections, in the
3d fiscal year for which the State receives such
funds; and
(D) not more than 75 percent of the cost
of each grant made under such sections, in any
subsequent fiscal year for which the State re-
ceives such funds.
(2) STATE SHARE.—The non-Federal share of
the cost of making such grants shall be paid by the
State in cash or in the form of an in-kind contribu-
tion, fairly evaluated by the Secretary.
(g) AVAILABILITY OF ALLOTTED FUNDS DISTRIB-
UTED TO STATES.—Of the funds allotted under this sec-
tion and distributed by the Secretary to a State for a fiscal
year—
(1) not less than 67.5 percent shall be available
to the State for grants under section 207;
(2) not less than 22.5 percent shall be available
to the State for grants under section 208; and
(3) not more than 10 percent shall be available
to pay administrative costs incurred by the State to
carry out this title.
SEC. 206. APPLICATION AND PLAN.
(a) APPLICATION.—To be eligible to receive a dis-
tribution of funds allotted under section 205, a State shall
submit to the Secretary an application at such time, in
such manner, and containing such information as the Sec-
retary may require by rule and shall include in such appli-
cation a State plan that satisfies the requirements of sub-
section (b).
(b) REQUIREMENTS OF PLAN.—
(1) LEAD AGENCY.—The State plan shall iden-
tify the lead agency to make grants under this title
for the State.
(2) RECRUITMENT AND RETENTION OF CHILD
CARE
PROVIDERS.—The State plan shall describe
how the lead agency will encourage both the recruit-
ment of eligible child care providers who are new to
the child care field and the retention of eligible child
care providers who have a demonstrated commit-
ment to the child care field.
(3) NOTIFICATION OF GRANT AVAILABILITY.—
The State plan shall describe how the lead agency
will identify all eligible child care providers in the
State and notify the providers of the availability of
grants under this title.
(4) DISTRIBUTION
OF
GRANTS.—The State
plan shall describe how the lead agency will make
grants under sections 207 and 208 to child care pro-
viders in selected geographical areas in the State in
compliance with the following requirements:
(A) 
SELECTION
OF
GEOGRAPHICAL
AREAS.—For the purpose of making such
grants for a fiscal year, the State shall—
(i) select a variety of geographical
areas, determined by the State, that,
collectively—
(I) include urban areas, suburban
areas, and rural areas; and
(II) are areas whose residents
have diverse income levels; and
(ii) give special consideration to geo-
graphical areas selected under this sub-
paragraph for the preceding fiscal year.
(B) SELECTION
OF
CHILD
CARE
PRO-
VIDERS
TO
RECEIVE
GRANTS.—In making
grants under section 207, the State may make
grants only to eligible child care providers in
geographical areas selected under subparagraph
(A), but—
(i) may give special consideration in
such areas to eligible child care providers
who have attained a higher relevant edu-
cational credential, who provide a specific
kind of child care services, who provide
child care services to populations who meet
specific economic characteristics, or who
meet such other criteria as the State may
establish; and
(ii) shall give special consideration to
eligible child care providers who received a
grant under such section in the preceding
fiscal year.
(C) LIMITATION.—The State shall describe
how the State will ensure that grants made
under section 207 to child care providers will
not be used to offset reductions in the com-
pensation of such providers.
(D) REPORTING REQUIREMENT.—With re-
spect to each particular geographical area se-
lected under subparagraph (A), the State shall
provide an assurance that the State will, for
each fiscal year for which such State receives a
grant under section 207—
(i) include in the report required by
section 
209, 
detailed 
information
regarding—
(I) the continuity of employment
of the grant recipients as child care
providers with the same employer;
(II) with respect to each em-
ployer that employed such a grant re-
cipient, whether such employer was
accredited by a recognized national or
State accrediting body during the pe-
riod of employment; and
(III) to the extent practicable
and available to the State, the rate
and frequency of employment turnover
of 
qualified 
child 
care 
providers
throughout such area,
during the 2-year period ending on the
deadline for submission of applications for
grants under section 207 for that fiscal
year; and
(ii) provide a follow-up report, not
later than 90 days after the end of the suc-
ceeding fiscal year that includes informa-
tion regarding—
(I) the continuity of employment
of the grant recipients as child care
providers with the same employer;
(II) with respect to each em-
ployer that employed such a grant re-
cipient, whether such employer was
accredited by a recognized national or
State accrediting body during the pe-
riod of employment; and
(III) to the extent practicable
and available to the State, detailed in-
formation regarding the rate and fre-
quency of employment turnover of
qualified child care providers through-
out such area,
during the 1-year period beginning on the
date on which the grant to the State was
made under section 207.
(5) CHILD CARE PROVIDER DEVELOPMENT AND
RETENTION GRANT PROGRAM.—The State plan shall
describe how the lead agency will determine the
amounts of grants to be made under section 207 in
accordance with the following requirements:
(A) SUFFICIENT
AMOUNTS.—The State
shall demonstrate that the amounts of indi-
vidual grants to be made under section 207 will
be sufficient—
(i) to encourage child care providers
to improve their qualifications; and
(ii) to retain qualified child care pro-
viders in the child care field.
(B) AMOUNTS
TO
CREDENTIALED
PRO-
VIDERS.—Such grants made to child care pro-
viders who have a child development associate
credential and who are employed full-time to
provide child care services shall be in an
amount that is not less than $1,000 per year.
(C) AMOUNTS TO PROVIDERS WITH HIGH-
ER LEVELS OF EDUCATION.—The State shall
make such grants in amounts greater than
$1,000 per year to child care providers who
have higher levels of education than the edu-
cation required for a credential such as a child
development associate credential, according to
the following requirements:
(i) PROVIDERS WITH BACCALAUREATE
DEGREES IN RELEVANT FIELDS.—A child
care provider who has a baccalaureate de-
gree in the area of child development or
early child education shall receive a grant
under section 207 in an amount that is not
less than twice the amount of the grant
that is made under section 207 to a child
care provider who has an associate of the
arts degree in the area of child develop-
ment or early child education.
(ii) PROVIDERS WITH ASSOCIATE DE-
GREES.—A child care provider who has an
associate of the arts degree in the area of
child development or early child education
shall receive a grant under section 207 in
an amount that is not less than 150 per-
cent of the amount of the grant that is
made under section 207 to a child care
provider who has a child development asso-
ciate credential and is employed full-time
to provide child care services.
(iii) OTHER PROVIDERS WITH BACCA-
LAUREATE DEGREES.—
(I) IN GENERAL.—Except as pro-
vided in subclause (II), a child care
provider who has a baccalaureate de-
gree in a field other than child devel-
opment or early child education shall
receive a grant under section 207 in
an amount equal to the amount of the
grant that is made under section 207
to a child care provider who has an
associate of the arts degree in the
area of child development or early
child education.
(II) EXCEPTION.—If a child care
provider who has such a baccalaureate
degree obtains additional educational
training in the area of child develop-
ment or early child education, as spec-
ified by the State, such provider shall
receive a grant under section 207 in
an amount equal to the amount of the
grant that is made under section 207
to a child care provider who has a
baccalaureate 
degree 
specified 
in
clause (i).
(D) 
AMOUNTS
TO
FULL-TIME
PRO-
VIDERS.—The State shall make a grant under
section 207 to a child care provider who works
full-time in a greater amount than the amount
of the grant that is made under section 207 to
a child care provider who works part-time,
based on the State definitions of full-time and
part-time work.
(E) AMOUNTS
TO
EXPERIENCED
PRO-
VIDERS.—The State shall make grants under
section 207 in progressively larger amounts to
child care providers to reflect the number of
years worked as child care providers.
(6) DISTRIBUTION OF CHILD CARE PROVIDER
SCHOLARSHIPS.—The State plan shall describe how
the lead agency will make grants for scholarships in
compliance with section 208 and shall specify the
types of educational and training programs for
which the scholarship grants made under such sec-
tion may be used, including only programs that—
(A) are administered by institutions of
higher education that are eligible to participate
in student financial assistance programs under
title IV of the Higher Education Act of 1965
(20 U.S.C. 1070 et seq.); and
(B) lead to a State or nationally recog-
nized credential in the area of child develop-
ment or early child education, an associate of
the arts degree in the area of child development
or early child education, or a baccalaureate de-
gree in the area of child development or early
child education.
(7) EMPLOYER
CONTRIBUTION.—The State
plan shall describe how the lead agency will encour-
age employers of child care providers to contribute
to the attainment of education goals by child care
providers who receive grants under section 208.
(8) SUPPLEMENTATION.—The State plan shall
provide assurances that amounts received by the
State to carry out sections 207 and 208 will be used
only to supplement, and not to supplant, Federal,
State, and local funds otherwise available to support
existing services and activities (as of the date the
amounts are used) that encourage child care pro-
viders to improve their qualifications and that pro-
mote the retention of qualified child care providers
in the child care field.
SEC. 207. CHILD CARE PROVIDER DEVELOPMENT AND RE-
TENTION GRANT PROGRAM.
(a) IN GENERAL.—A State that receives funds allot-
ted under section 205 and made available to carry out this
section shall expend such funds to make grants to eligible
child care providers in accordance with this section, to im-
prove the qualifications and promote the retention of
qualified child care providers.
(b) ELIGIBILITY TO RECEIVE GRANTS.—To be eligi-
ble to receive a grant under this section, a child care pro-
vider shall—
(1) have a child development associate creden-
tial or equivalent, an associate of the arts degree in
the area of child development or early child edu-
cation, a baccalaureate degree in the area of child
development or early child education, or a bacca-
laureate degree in an unrelated field; and
(2) be employed as a child care provider for not
less than 1 calendar year, or (if the provider is em-
ployed on the date of the eligibility determination in
a child care program that operates for less than a
full calendar year) the program equivalent of 1 cal-
endar year, ending on the date of the application for
such grant, except that not more than 3 months of
education related to child development or to early
child education obtained during the corresponding
calendar year may be treated as employment that
satisfies the requirements of this paragraph.
(c) PRESERVATION OF ELIGIBILITY.—A State shall
not take into consideration whether a child care provider
is receiving, may receive, or may be eligible to receive any
funds under section 208 for purposes of selecting eligible
child care providers to receive grants under this section.
SEC. 208. CHILD CARE PROVIDER SCHOLARSHIP PROGRAM.
(a) IN GENERAL.—A State that receives funds allot-
ted under section 205 and made available to carry out this
section shall expend such funds to make scholarship
grants to eligible child care providers in accordance with
this section, to improve their educational qualifications to
provide child care services.