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‘‘(B) IF
ADVANCE
PAYMENTS
EXCEED
TAXES DUE.—If for any calendar quarter the
aggregate amount of advance earned income
payments made by the responsible State agency
under a State Advance Payment Program ex-
ceeds the sum of the amounts referred to in
subparagraph (A)(ii) (without regard to para-
graph (6)(A)), each such advance earned in-
come payment shall be reduced by an amount
which bears the same ratio to such excess as
such advance earned income payment bears to
the aggregate amount of all such advance
earned income payments.
‘‘(6) STATE
REPAYMENT
OF
EXCESSIVE
AD-
VANCE EARNED INCOME PAYMENTS.—
‘‘(A) IN GENERAL.—Notwithstanding any
other provision of law, in the case of an exces-
sive advance earned income payment a State
shall be treated as having deducted and with-
held under section 3401 (relating to wage with-
holding), and as being required to pay to the
United States, the repayment amount during
the repayment calendar quarter.
‘‘(B) EXCESSIVE
ADVANCE
EARNED
IN-
COME PAYMENT.—For purposes of this section,
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the term ‘excessive advance income payment’
means that portion of any advance earned in-
come payment that, when combined with other
advance earned income payments previously
made to the same participating resident during
the same calendar year, exceeds the amount of
earned income tax credit to which that partici-
pating resident is entitled under section 32 for
that year.
‘‘(C) REPAYMENT AMOUNT.—For purposes
of this subsection, the term ‘repayment amount’
means an amount equal to 50 percent of the ex-
cess of—
‘‘(i) excessive advance earned income
payments made by a State during a par-
ticular calendar year, over
‘‘(ii) the sum of—
‘‘(I) 4 percent of all advance
earned income payments made by the
State during that calendar year, and
‘‘(II) 
the 
excessive 
advance
earned income payments made by the
State during that calendar year that
have been collected from participating
residents by the Secretary.
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‘‘(D) REPAYMENT CALENDAR QUARTER.—
For purposes of this subsection, the term ‘re-
payment calendar quarter’ means the second
calendar quarter of the third calendar year be-
ginning after the calendar year in which an ex-
cessive earned income payment is made.
‘‘(7) DEFINITIONS.—For purposes of this sub-
section—
‘‘(A) STATE
ADVANCE
PAYMENT
PRO-
GRAM.—The term ‘State Advance Payment
Program’ means the program described in a
proposal submitted for designation under para-
graph (1) and designated by the Secretary
under paragraph (2).
‘‘(B) RESPONSIBLE STATE AGENCY.—The
term ‘responsible State agency’ means the sin-
gle State agency that will be making the ad-
vance earned income payments to residents of
the State who elect to participate in a State Ad-
vance Payment Program.
‘‘(C) ADVANCE
EARNED
INCOME
PAY-
MENTS.—The term ‘advance earned income
payments’ means an amount paid by a respon-
sible State agency to residents of the State pur-
suant to a State Advance Payment Program.
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‘‘(D) 
PARTICIPATING
RESIDENT.—The
term ‘participating resident’ means an individ-
ual who—
‘‘(i) is a resident of a State that has
in effect a designated State Advance Pay-
ment Program,
‘‘(ii) makes the election described in
paragraph (3)(D) pursuant to guidelines
prescribed by the State,
‘‘(iii) certifies to the State the number
of qualifying children the individual has,
and
‘‘(iv) provides to the State the certifi-
cations and statement described in sub-
sections (b)(1), (b)(2), (b)(3), and (b)(4)
(except that for purposes of this clause,
the term ‘any employer’ shall be sub-
stituted for ‘another employer’ in sub-
section (b)(3)), along with any other infor-
mation required by the State.’’.
(b) TECHNICAL ASSISTANCE.—The Secretaries of the
Treasury and Health and Human Services shall jointly en-
sure that technical assistance is provided to State Advance
Payment Programs and that these programs are rigor-
ously evaluated.
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(c) ANNUAL REPORTS.—The Secretary shall issue
annual reports detailing the extent to which—
(1) residents participate in the State Advance
Payment Programs,
(2) participating residents file Federal and
State tax returns,
(3) participating residents report accurately the
amount of the advance earned income payments
made to them by the responsible State agency dur-
ing the year, and
(4) recipients of excessive advance earned in-
come payments repay those amounts.
The report shall also contain an estimate of the amount
of advance earned income payments made by each respon-
sible State agency but not reported on the tax returns of
a participating resident and the amount of excessive ad-
vance earned income payments.
(d) AUTHORIZATION OF APPROPRIATIONS.—For pur-
poses of providing technical assistance described in sub-
section (b), preparing the reports described in subsection
(c), and providing grants to States in support of des-
ignated State Advance Payment Programs, there are au-
thorized to be appropriated in advance to the Secretary
of the Treasury and the Secretary of Health and Human
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Services a total of $1,400,000 for fiscal years 1997
through 2000.
SEC. 9205. CONSOLIDATED CHILD CARE DEVELOPMENT
BLOCK GRANT.
(a) PURPOSE.—It is the purpose of this section to—
(1) eliminate program fragmentation and create
a seamless system of high quality child care that al-
lows for continuity of care for children as parents
move from welfare to work;
(2) provide for parental choice among high
quality child care programs; and
(3) increase the availability of high quality af-
fordable child care in order to promote self suffi-
ciency and support working families.
(b) AMENDMENTS TO CHILD CARE AND DEVELOP-
MENT BLOCK GRANT ACT OF 1990.—
(1) APPROPRIATIONS.—Section 658B of the
Child Care and Development Block Grant Act of
1990 (42 U.S.C. 9858) is amended to read as fol-
lows:
‘‘SEC. 658B. APPROPRIATION.
‘‘(a) AUTHORIZATION
OF
APPROPRIATIONS
OF
BLOCK GRANT FUNDS.—For the purpose of providing
child care services for eligible children through the award-
ing of grants to States under this subchapter (other than
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the grants awarded under subsection (b)) by the Sec-
retary, there are authorized to be appropriated,
$1,000,000,000 for fiscal year 1996 and such sums as
may be necessary for fiscal years 1997 through 2002.
‘‘(b) APPROPRIATIONS
OF
FEDERAL
MATCHING
FUNDS.—For the purpose of providing child care services
for eligible children through the awarding of matching
grants to States under section 658J(d) by the Secretary,
there are authorized to be appropriated and are hereby
appropriated, baseline plus $500,000,000 for fiscal year
1996, baseline plus $500,000,000 for fiscal year 1997,
baseline plus $500,000,000 for fiscal year 1998, baseline
plus $500,000,000 for fiscal year 1999, baseline plus
$500,000,000 for fiscal year 2000, baseline plus
$500,000,000 for fiscal year 2001, and baseline plus
$500,000,000 for fiscal year 2002.’’.
(2) USE OF FUNDS.—Section 658E(c)(3)(B) of
the Child Care and Development Block Grant Act of
1990 (42 U.S.C. 9858c(c)(3)(B)) is amended—
(A) in clause (i), by striking ‘‘with very low
family incomes (taking into consideration family
size)’’ and inserting ‘‘described in clause (ii) (in
the order so described)’’;
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(B) by redesignating clauses (i) and (ii) as
subclauses (I) and (II), respectively, and re-
aligning the margins accordingly;
(C) by striking ‘‘Subject’’ and inserting the
following:
‘‘(i) IN GENERAL.—Subject’’; and
(D) by adding at the end the following new
clause:
‘‘(ii) 
FAMILIES
DESCRIBED.—The
families described in this clause are the fol-
lowing:
‘‘(I) Families containing an indi-
vidual receiving assistance under a
State plan approved under part A of
title IV of the Social Security Act and
participating in education, job search,
job training, work, or workfare pro-
grams.
‘‘(II) Families containing an indi-
vidual who—
‘‘(aa) no longer qualifies for
child care assistance under sec-
tion 405(b) of the Social Security
Act because such individual has
ceased to receive assistance under
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the temporary employment as-
sistance program under part A of
title IV of the Social Security Act
as a result of increased hours of,
or increased income from, em-
ployment; and
‘‘(bb) the State determines
requires such child care assist-
ance in order to continue such
employment (but only for the 1-
year period beginning on the date
that the individual no longer
qualifies for child care assistance
under section 405(b) of such Act,
and, at the option of the State,
for the additional 1-year period
beginning after the conclusion of
the first 1-year period).
‘‘(III) Families containing an in-
dividual who—
‘‘(aa) is not described in
subclause (I) or (II); and
‘‘(bb) has an annual income
for a fiscal year below 75 percent
of the State median income.’’.
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(3) SET-ASIDES
FOR
QUALITY
AND
EXPAN-
SION.—Section 658E(c)(3) of the Child Care and
Development Block Grant Act of 1990 (42 U.S.C.
9858c(c)(3)) is amended in subparagraph (C), by
striking ‘‘25 percent’’ and inserting ‘‘10 percent’’.
(4) SLIDING FEE SCALE.—Section 658E(c)(5)
of the Child Care and Development Block Grant Act
of 1990 (42 U.S.C. 9858c(c)(5)) is amended by in-
serting ‘‘described in subclauses (II) and (III) of
paragraph (3)(B)(ii)’’ after ‘‘families’’.
(5) 
MATCHING
REQUIREMENT
FOR
NEW
FUNDS.—
‘‘SEC. 418. FUNDING FOR CHILD CARE.
‘‘(a) GENERAL CHILD CARE ENTITLEMENT.—
‘‘(1) GENERAL ENTITLEMENT.—Subject to the
amount appropriated under 658(B)(b), each State
shall, for the purpose of providing child care assist-
ance, be entitled to payments under a grant under
this subsection for a fiscal year in an amount equal
to—
‘‘(A) the sum of the total amount required
to be paid to the State under former section
403 for fiscal year 1994 with respect to
amounts expended for child care under sec-
tion—
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‘‘(i) 402(g) of this Act (as such sec-
tion was in effect before October 1, 1995);
and
‘‘(ii) 403(i) of this Act (as so in ef-
fect); or
‘‘(B) the average of the total amounts re-
quired to be paid to the State for fiscal years
1992 through 1994 under the sections referred
to in subparagraph (A);
whichever is greater.
‘‘(2) REMAINDER.—
‘‘(A) GRANTS.—The Secretary shall use
any amounts appropriated for a fiscal year
under 658(B)(b)(3), and remaining after the
reservation described in paragraph (3) and
after grants are awarded under paragraph (1),
to make grants to States under this paragraph.
‘‘(B) AMOUNT.—Subject to subparagraph
(C), the amount of a grant awarded to a State
for a fiscal year under this paragraph shall be
based on the formula used for determining the
amount of Federal payments to the State under
section 658(o).
‘‘(C) MATCHING REQUIREMENT.—The Sec-
retary shall pay to each eligible State in a fiscal
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year an amount, under a grant under subpara-
graph (A), equal to the Federal medical assist-
ance percentage for such State for fiscal year
1994 (as defined in section 1905(b)) of so
much of the expenditures by the State for child
care in such year as exceed the State set-aside
for such State under subparagraph (A) for such
year and the amount of State expenditures in
fiscal year 1994 that equal the non-Federal
share for the programs described in subpara-
graphs (A), (B) and (C) of paragraph (1).
‘‘(3) REDISTRIBUTION.—With respect to any
fiscal year, if the Secretary determines that amounts
under any grant awarded to a State under this sub-
section for such fiscal year will not be used by such
State for carrying out the purpose for which the
grant is made, the Secretary shall make such
amounts available for carrying out such purpose to
1 or more other States which apply for such funds
to the extent the Secretary determines that such
other States will be able to use such additional
amounts for carrying out such purpose. Such avail-
able amounts shall be redistributed to a State pursu-
ant to section 402(i) (as such section was in effect
before October 1, 1995) by substituting ‘the number
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of children residing in all States applying for such
funds’ for ‘the number of children residing in the
United States in the second preceding fiscal year’.
Any amount made available to a State from an ap-
propriation for a fiscal year in accordance with the
preceding sentence shall, for purposes of this part,
be regarded as part of such State’s payment (as de-
termined under this subsection) for such year.
‘‘(e) AMOUNTS RESERVED FOR INDIAN TRIBES.—
The Secretary shall reserve not more than 3 percent of
the amount appropriated under section 658B in each fis-
cal year for payments to Indian tribes and tribal organiza-
tions with applications approved under section 6580(c).
The amounts reserved under the prior sentence shall be
available to make grants to or enter into contracts with
Indian tribes or tribal organizations consistent with sec-
tion 6580(c) without a requirement of matching funds by
the Indian tribes or tribal organizations.
‘‘(f) SAME TREATMENT AS ALLOTMENTS.—Amounts
paid to a State or Indian tribe under subsections (d) and
(e) shall be subject to the same requirements under this
subchapter as amounts paid from the allotment under sec-
tion 658O.’’.
(B) CONFORMING AMENDMENTS.—Section
658O of the Child Care and Development Block
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‘‘(B) in the case of specified Federal as-
sistance described in section 91(b)(1)(B), the
head of the State agency administering the pro-
gram under which such assistance is provided,
and
‘‘(C) in the case of specified Federal assist-
ance described in section 91(b)(1)(C), the Sec-
retary of Health and Human Services.
‘‘(2) SPECIFIED
FEDERAL
ASSISTANCE.—The
term ‘specified Federal assistance’ has the meaning
given such term by section 91(b).
‘‘(3) AMOUNTS TREATED AS PAID.—The rules
of section 91(c) shall apply for purposes of deter-
mining to whom specified Federal assistance is
paid.’’
(2) PENALTIES.—
(A) 
Subparagraph 
(B) 
of 
section
6724(d)(1) of such Code is amended by redesig-
nating clauses (ix) through (xiv) as clauses (x)
through (xv), respectively, and by inserting
after clause (viii) the following new clause:
‘‘(ix) section 6050Q (relating to pay-
ments of certain Federal assistance),’’.
(B) Paragraph (2) of section 6724(d) of
such Code is amended by redesignating sub-