vider for the care of a child who receives a subsidy,
are too low to ensure that quality care is accessible
to all families.
(6) Low payment rates directly affect the kind
of care children get and whether families can find
quality child care in their communities. In many in-
stances, low payment rates force child care providers
to cut corners in ways that lower the quality of care
for children, including reducing number of staff,
eliminating staff training opportunities, and cutting
enriching educational activities and services.
(7) Children in low quality child care are more
likely to have delayed reading and language skills,
and display more aggression toward other children
and adults.
(8) Increased payment rates lead to higher
quality child care as child care providers are able to
attract and retain qualified staff, provide salary in-
creases and professional training, maintain a safe
and healthy environment, and purchase basic sup-
plies and developmentally appropriate educational
materials.
(b) PURPOSE.—The purpose of this Act is to improve
the quality of, and access to, child care by increasing child
care payment rates.
SEC. 3. INCENTIVE GRANTS TO IMPROVE THE QUALITY OF
CHILD CARE.
(a) FUNDING.—Section 658B of the Child Care and
Development Block Grant Act of 1990 (42 U.S.C. 9858)
is amended—
(1) by striking ‘‘There’’ and inserting the fol-
lowing:
‘‘(a) 
AUTHORIZATION
OF
APPROPRIATIONS.—
There’’; and
(2) by adding at the end the following:
‘‘(b) APPROPRIATION OF FUNDS FOR GRANTS TO IM-
PROVE THE QUALITY OF CHILD CARE.—Out of any funds
in the Treasury that are not otherwise appropriated, there
are authorized to be appropriated and there are appro-
priated, for each of fiscal years 2000 through 2004,
$300,000,000 for the purpose of making grants under sec-
tion 658H.’’.
(b) GRANTS TO IMPROVE THE QUALITY OF CHILD
CARE.—The Child Care and Development Block Grant
Act of 1990 (42 U.S.C. 9858 et seq.) is amended by in-
serting after section 658G the following:
‘‘SEC. 658H. GRANTS TO IMPROVE THE QUALITY OF CHILD
CARE.
‘‘(a) AUTHORITY.—
‘‘(1) IN GENERAL.—The Secretary shall use the
amount appropriated under section 658B(b) for a
fiscal year to make grants to eligible States in ac-
cordance with this section.
‘‘(2) ANNUAL PAYMENTS.—The Secretary shall
make annual payments to each eligible State out of
the allotment for that State determined under sub-
section (c).
‘‘(b) ELIGIBLE STATES.—
‘‘(1) IN GENERAL.—In this section, the term
‘eligible States’ means a State that—
‘‘(A) has conducted a survey of the market
rates for child care services in the State within
the 2 years preceding the date of the submis-
sion of an application under paragraph (2); and
‘‘(B) submits an application in accordance
with paragraph (2).
‘‘(2) APPLICATION.—
‘‘(A) IN GENERAL.—To be eligible to re-
ceive a grant under this section, a State shall
submit an application to the Secretary at such
time, in such manner, and accompanied by such
information, in addition to the information re-
quired under subparagraph (B), as the Sec-
retary may require.
‘‘(B) INFORMATION REQUIRED.—Each ap-
plication submitted for a grant under this sec-
tion shall—
‘‘(i) detail the methodology and re-
sults of the State market rates survey con-
ducted pursuant to paragraph (1)(A);
‘‘(ii) describe the State’s plan to in-
crease payment rates from the initial base-
line determined under clause (i); and
‘‘(iii) describe how the State will in-
crease payment rates in accordance with
the market survey findings.
‘‘(3) 
CONTINUING
ELIGIBILITY
REQUIRE-
MENT.—The Secretary may make an annual pay-
ment under this section to an eligible State only if—
‘‘(A) the Secretary determines that the
State has made progress, through the activities
assisted under this subchapter, in maintaining
increased payment rates; and
‘‘(B) at least once every 2 years, the State
conducts an update of the survey described in
paragraph (1)(A).
‘‘(4) REQUIREMENT OF MATCHING FUNDS.—
‘‘(A) IN GENERAL.—To be eligible to re-
ceive a grant under this section, the State shall
agree to make available State contributions
from State sources toward the costs of the ac-
tivities to be carried out by a State pursuant to
subsection (d) in an amount that is not less
than 25 percent of such costs.
‘‘(B) DETERMINATION
OF
STATE
CON-
TRIBUTIONS.—State contributions shall be in
cash. Amounts provided by the Federal Govern-
ment may not be included in determining the
amount of such State contributions.
‘‘(c) ALLOTMENTS
TO
ELIGIBLE
STATES.—The
amount appropriated under section 658B(b) for a fiscal
year shall be allotted among the eligible States in the same
manner as amounts are allotted under section 658O(b).
‘‘(d) USE OF FUNDS.—
‘‘(1) PRIORITY USE.—An eligible State that re-
ceives a grant under this section shall use the funds
received to significantly increase the payment rate
for the provision of child care assistance in accord-
ance with this subchapter up to the 100th percentile
of the market rate survey described in subsection
(b)(1)(A).
‘‘(2) ADDITIONAL USES.—An eligible State that
demonstrates to the Secretary that the State has
achieved a payment rate of the 100th percentile of
the market rate survey described in subsection
(b)(1)(A) may use funds received under a grant
made under this section for any other activity that
the State demonstrates to the Secretary will enhance
the quality of child care services provided in the
State.
‘‘(3) PAYMENT RATE.—In this section, the term
‘payment rate’ means the rate of reimbursement to
providers for subsidized child care.
‘‘(4) SUPPLEMENT NOT SUPPLANT.—Amounts
paid to a State under this section shall be used to
supplement and not supplant other Federal, State,
or local funds provided to the State under this sub-
chapter or any other provision of law.
‘‘(e) EVALUATIONS AND REPORTS.—
‘‘(1) STATE EVALUATIONS.—Each eligible State
shall submit to the Secretary, at such time and in
such form and manner as the Secretary may require,
information regarding the State’s efforts to increase
payment rates and the impact increased rates are
having on the quality of, and accessibility to, child
care in the State.
‘‘(2) REPORTS TO CONGRESS.—The Secretary
shall submit biennial reports to Congress on the in-
formation described in paragraph (1). Such reports
shall include data from the applications submitted
under subsection (b)(2) as a baseline for deter-
mining the progress of each eligible State in main-
taining increased payment rates.’’.
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