I
106TH CONGRESS
1ST SESSION
H. R. 1119
To enable a greater number of children to receive child care services, and
to improve the quality of child care services.
IN THE HOUSE OF REPRESENTATIVES
MARCH 16, 1999
Mr. CARDIN (for himself, Mr. RANGEL, Mr. MATSUI, Mr. COYNE, Mr. JEF-
FERSON, Mr. LEVIN, Mr. LEWIS of Georgia, Mr. DOGGETT, and Mr.
STARK) introduced the following bill; which was referred to the Com-
mittee on Ways and Means, and in addition to the Committee on Edu-
cation and the Workforce, for a period to be subsequently determined by
the Speaker, in each case for consideration of such provisions as fall with-
in the jurisdiction of the committee concerned
A BILL
To enable a greater number of children to receive child
care services, and to improve the quality of child care
services.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Child Care Improve-
ment Act of 1999’’.
SEC. 2. CHILD CARE SUBSIDY FUNDING.
(a) APPROPRIATION; ALLOCATION.—Section 418 of
the Social Security Act (42 U.S.C. 618) is amended—
(1) by redesignating subsections (b), (c), and
(d) as subsections (d), (e), and (f), respectively; and
(2) by inserting after subsection (a) the fol-
lowing:
‘‘(b) CHILD CARE SUBSIDY FUNDING.—
‘‘(1) APPROPRIATION.—Out of any funds in the
Treasury not otherwise appropriated, there are ap-
propriated for grants and other activities under this
subsection—
‘‘(A) $1,155,000,000 for fiscal year 2000;
‘‘(B) $1,280,000,000 for fiscal year 2001;
‘‘(C) $1,400,000,000 for fiscal year 2002;
‘‘(D) $1,600,000,000 for fiscal year 2003;
and
‘‘(E) $2,065,000,000 for fiscal year 2004.
‘‘(2) 
ALLOTMENT
AND
RESERVATION
OF
FUNDS.—
‘‘(A) ALLOTMENTS FOR INDIAN TRIBES.—
From the amount appropriated pursuant to
paragraph (1) for a fiscal year, the Secretary
shall allot to each Indian tribe that has received
a share for the fiscal year under section
658O(c) of the CCDBG Act, an amount that
bears the same ratio to such sum as the Sec-
retary may determine that is not less than 1
and not more than 2 percent of the amount so
appropriated as the share so received by the
tribe bears to the total of the shares so received
by all Indian tribes.
‘‘(B) RESERVATION FOR SECRETARY’S AC-
TIVITIES.—From the amount appropriated pur-
suant to paragraph (1) for a fiscal year, the
Secretary shall reserve $1,000,000 for expendi-
ture by the Secretary for quality assurance and
quality improvement activities relating to pro-
grams under the CCDBG Act.
‘‘(C) ALLOTMENTS FOR STATES AND TER-
RITORIES.—From the amount appropriated
pursuant to paragraph (1) for a fiscal year that
remains after applying subparagraphs (A) and
(B) of this paragraph for the fiscal year, the
Secretary shall allot to each State and territory
an amount that bears the same ratio to such re-
maining amount as the number of children re-
siding in the State or territory in the second
preceding fiscal year bears to the number of
children residing in the United States in the
second preceding fiscal year.
‘‘(3) MATCHING
PAYMENTS
TO
STATES
AND
TERRITORIES.—
‘‘(A) IN GENERAL.—From the amount al-
lotted to a State or territory for a fiscal year
under paragraph (2), the Secretary shall pay to
the State or territory for the fiscal year an
amount equal to the lesser of the amount so al-
lotted or 80 percent of the amount of eligible
child care expenditures of the State or territory
during the fiscal year.
‘‘(B) ELIGIBLE
CHILD
CARE
EXPENDI-
TURES
DEFINED.—In subparagraph (A), the
term ‘eligible child care expenditures’ means,
with 
respect 
to 
a 
State 
or 
territory,
expenditures—
‘‘(i) made under the approved plan of
the State or territory under the CCDBG
Act;
‘‘(ii) for which Federal matching pay-
ments or reimbursements have not other-
wise been made; and
‘‘(iii) in the case of a State, to the ex-
tent the amount of such expenditures ex-
ceeds the amount necessary to secure pay-
ment of the full amount of the State’s al-
lotment (if any) under subsection (a)(2)
(determined without regard to subsection
(a)(2)(D)).
‘‘(C) 
REDISTRIBUTION.—The 
Secretary
shall, to the extent necessary, determine the
need for redistribution of, and redistribute,
amounts allotted under this subsection to
States, in accordance with the procedures and
formula set forth in subsection (a)(2)(D).
‘‘(4) PAYMENTS TO INDIAN TRIBES.—From the
amount allotted to an Indian tribe for a fiscal year
under paragraph (2), the Secretary shall pay to the
tribe for the fiscal year an amount equal to the less-
er of the amount so allotted or the total amount ex-
pended by the tribe pursuant to the CCDBG Act for
which Federal payments have not otherwise been
made.
‘‘(5) TARGETING
OF
FUNDS
FOR
WORKING
NON-WELFARE
FAMILIES.—Notwithstanding 
sub-
section (e) of this section, a State or territory to
which amounts are provided under this subsection
shall use not less than 70 percent of the amounts for
child care assistance to working families who are not
recipients of assistance under the State or territory
program funded under section 403(a)(1).’’.
(b) INCLUSION OF TERRITORIES IN DEFINITIONS.—
Section 418(f) of such Act, as so redesignated by sub-
section (a)(1) of this section, is amended to read as fol-
lows:
‘‘(f) DEFINITIONS.—As used in this section:
‘‘(1) CCDBG ACT.—The term ‘CCDBG Act’
means the Child Care and Development Block Grant
Act of 1990 (42 U.S.C. 9801 et seq.).
‘‘(2) STATE.—The term ‘State’ means each of
the 50 States, the District of Columbia, and (except
for purposes of subsection (a)) the Commonwealth of
Puerto Rico.
‘‘(3) TERRITORY.—The term ‘territory’ means
the United States Virgin Islands, Guam, American
Samoa, and the Commonwealth of the Northern
Mariana Islands.’’.
(c) CONFORMING AMENDMENTS.—
(1) Section 418(a)(3) of such Act (42 U.S.C.
618(a)(3)) is amended by striking ‘‘this section’’ and
inserting ‘‘this subsection’’.
(2) Section 418(d) of such Act (as so redesig-
nated by subsection (a)(1) of this section) is amend-
ed in paragraphs (1) and (2) by striking ‘‘under this
section’’ each place it appears and inserting ‘‘under
subsection (a)’’.
(3) Section 1108(a)(2) of such Act (42 U.S.C.
1308(a)(2)) is amended by striking ‘‘or 413(f)’’ and
inserting ‘‘413(f), or 418(b)(3)(A)’’.
SEC. 3. CHILD CARE QUALITY AND EARLY LEARNING PRO-
GRAM.
(a) FUNDING.—Section 418 of the Social Security
Act (42 U.S.C. 618), as amended by section 2(b) of this
Act, is amended by inserting after subsection (b) the fol-
lowing:
‘‘(c) APPROPRIATIONS FOR CHILD CARE QUALITY
AND EARLY LEARNING PROGRAM.—
‘‘(1) IN GENERAL.—Out of any funds in the
Treasury not otherwise appropriated, there are ap-
propriated $600,000,000 for each of fiscal years
2000 through 2004 for carrying out activities re-
lated to early learning programs in accordance with
this section and section 658T of the CCDBG Act.
‘‘(2) 
ALLOTMENT
AND
RESERVATION
OF
FUNDS.—
‘‘(A) ALLOTMENTS FOR INDIAN TRIBES.—
From the amount appropriated pursuant to
paragraph (1) for a fiscal year, the Secretary
shall allot to each Indian tribe that has received
a share for the fiscal year under section
658O(c) of the CCDBG Act, an amount that
bears the same ratio to such sum as the Sec-
retary may determine that is not more than 2
percent of the amount so appropriated as the
share so received by the tribe bears to the total
of the shares so received by all Indian tribes.
‘‘(B) ALLOTTMENTS FOR TERRITORIES.—
From the amount appropriated pursuant to
paragraph (1) for a fiscal year, the Secretary
shall allot to each territory an amount that
bears the same ratio to 1⁄2 of 1 percent of the
amount so appropriated as the amount allotted
to the territory for the fiscal year under section
658O(a)(1) of the CCDBG Act bears to the
total amount received by all territories for the
fiscal year under such section.
‘‘(C) RESERVATION FOR SECRETARY’S AC-
TIVITIES.—From the amount appropriated pur-
suant to paragraph (1) for a fiscal year, the
Secretary shall reserve $6,000,000 for expendi-
ture by the Secretary for costs of providing
technical assistance to, and conducting national
evaluations of, State, local, and tribal early
learning programs under such section 658T of
the CCDBG Act.
‘‘(D) ALLOTMENTS TO STATES AND TERRI-
TORIES.—From the amount appropriated pur-
suant to paragraph (1) for a fiscal year that re-
mains after applying subparagraphs (A), (B),
and (C) of this paragraph for the fiscal year,
the Secretary shall allot to each State an
amount based on the formula used for deter-
mining the amount of Federal payments to the
State under section 658O of the CCDBG Act.
‘‘(3) MATCHING
PAYMENTS
TO
STATES
AND
TERRITORIES.—
‘‘(A) IN GENERAL.—From the amount al-
lotted to a State or territory for a fiscal year
under paragraph (2), the Secretary shall pay to
the State or territory for the fiscal year an
amount equal to the lesser of the amount so al-
lotted or 80 percent of the amount expended by
the State or territory during the fiscal year for
an early learning program under a plan ap-
proved under section 658T of the CCDBG Act.
‘‘(B) 
REDISTRIBUTION.—The 
Secretary
shall, to the extent necessary, determine the
need for redistribution of, and redistribute,
amounts allotted under this subsection to
States, in accordance with the procedures and
formula set forth in subsection (a)(2)(D).
‘‘(4) PAYMENTS TO INDIAN TRIBES.—The Sec-
retary shall pay to each Indian tribe for a fiscal year
an amount equal to the lesser of its allotment under
paragraph (2)(A) or the total amount of expendi-
tures by the tribe for an early learning program
under section 658T of the CCDBG Act.’’.
(b) ESTABLISHMENT OF CHILD CARE QUALITY AND
EARLY LEARNING PROGRAM.—
(1) 
STATE
PLAN
REQUIREMENT.—Section
658E(c) of the Child Care and Development Block
Grant Act of 1990 (42 U.S.C. 9858c(c)) is amended
by adding at the end the following new:
‘‘(6) EARLY
LEARNING
PROGRAM
PLAN
RE-
QUIREMENTS.—In the case of a State electing to im-
plement an early learning program under section
658T, the State plan shall meet the requirements
specified in section 658T(b)(2).’’.
(2) EARLY
LEARNING
PROGRAM.—The Child
Care and Development Block Grant Act of 1990 (42
U.S.C. 9858 et seq.) is amended by adding at the
end the following:
‘‘SEC. 658T. EARLY LEARNING PROGRAM.
‘‘(a) PROGRAM PURPOSE.—The purpose of the pro-
gram under this section is to enable States, through
grants to communities, to support activities that—
‘‘(1) promote children’s healthy development
during the earliest years of life;
‘‘(2) improve the quality and safety of child
care for children aged five and under, including
those with disabilities;
‘‘(3) encourage and facilitate emerging literacy
and language development, and school readiness,
based on research-based practices; and
‘‘(4) enhance programs designed to achieve
these goals.
‘‘(b) REQUIREMENTS FOR STATE PARTICIPATION.—
‘‘(1) IN GENERAL.—In order to be eligible for
Federal matching funds under section 418(c) of the
Social Security Act, the State shall have in effect
under its plan under section 658E an early learning
program plan meeting the requirements specified in
paragraph (2).
‘‘(2) EARLY
LEARNING
PROGRAM
PLAN
RE-
QUIREMENTS.—The early learning program plan
shall meet the following requirements:
‘‘(A) LEAD AGENCY.—The plan shall pro-
vide that the program will be administered by
the lead agency designated under 658D.
‘‘(B) COMMUNITY GRANT PROCEDURES.—
The plan shall describe the standards and pro-
cedures to be applied in the review and approval
of community applications, and in setting
amounts, terms, and conditions of community
grants, including the methods to be used to en-
sure that no less than 70 percent of grant
funds are awarded to low-income communities.
‘‘(C) COMMUNITY PARTICIPATION IN PLAN-
NING
AND
MONITORING.—The plan shall de-
scribe the methods to be used to ensure partici-
pation, in planning and monitoring activities
under the community plan, of representatives of
concerned elements of the community, including
parents of young children, child care providers,
child development and mental health profes-
sionals, early intervention specialists, health
care providers, public school representatives,
local interagency coordinating councils for chil-
dren with disabilities, local government, and
business leaders.
‘‘(D) PROGRAM
ACTIVITIES.—The plan
shall specify which of the allowable activities
enumerated in subsection (c) may be carried
out under community grants under the plan.
‘‘(E) PERFORMANCE
GOALS
AND
MEAS-
URES.—The plan shall specify—
‘‘(i) performance goals to be achieved
and the interim and long term performance
measures and timetables, as appropriate,
to be used to assess progress toward each
goal under the plan, which—
‘‘(I) shall be developed pursuant
to guidance provided by the Secretary
and in consultation with local govern-
ment authorities in accordance with
section 658D(b)(2); and
‘‘(II) shall be designed to im-
prove child development through co-
ordination with health care and men-
tal health services; enhanced early
learning 
environments, 
especially
those that promote language skills
and literacy growth of children; qual-
ity of infant and toddler care; paren-
tal involvement; consumer education;
reduced staff turnover; and increased
rates of accreditation by nationally
recognized accreditation organizations;
‘‘(ii) the steps to be taken by the
State or grantees in accordance with guid-
ance provided by the Secretary if the speci-
fied benchmarks are not achieved.
‘‘(F) COORDINATION WITH ACTIVITIES TO
IMPROVE THE QUALITY OF CHILD CARE.—The
State plan shall specify the methods to be used
to coordinate activities under this section and
section 658G(a), including coordination of plan-
ning and of performance goals and measures, in
order to maximize the effectiveness of both pro-
grams.
‘‘(c) ALLOWABLE ACTIVITIES.—An early learning
program under a State plan under this section may pro-
vide for any or all of the following activities to promote
cognitive, social, emotional, and physical development in
order to enhance emerging literacy and language develop-
ment, and school readiness:
‘‘(1) INFORMATION AND RESOURCES.—
‘‘(A) PARENTING
EDUCATION.—Provision
of parenting education, including use of or col-
laboration with Head Start, Even Start or simi-
lar programs, for parents of young children by
means including use of community-based re-
source centers, family literacy programs with
parenting education components, collaboration
with early intervention and preschool providers
of services for children, public elementary
schools, centers that serve children with special
health care needs or disabilities and their fami-
lies, and home visiting programs.
‘‘(B) INFORMATION AND REFERRAL.—Ini-
tiatives to develop or increase the availability of
consumer education information and referral
services and other resources to assist parents to
locate and assess the quality of available child
care services.
‘‘(C) FAMILY CHILD CARE NETWORKS.—
Development of support networks, information
and referral services, and other supportive serv-
ices addressing needs of family child care pro-
viders for access to such resources as education,
training, and community support services.’’.
‘‘(2) QUALITY AND AVAILABILITY.—
‘‘(A) PROVIDER
TRAINING.—Training of
child care personnel, which may include train-
ing in early childhood development, early lit-
‘‘(E) HEALTH
SERVICES.—Improving co-
ordination of child care with appropriate health
services including health and mental health con-
sultations, hearing and vision testing, blood
lead level screening, and immunizations, by
methods such as co-location of health and child
care services, referrals of children in child care
to health care providers or screening services,
and transfer of child health records to public
school at school entry. Services under this sub-
paragraph shall not include direct provision of
or payment for health care services.
‘‘(F) CARE FOR CHILDREN WITH SPECIAL
NEEDS.—Increasing the availability and quality
of child care for young children with special
health care needs, developmental delays, and
disabilities; and coordinating with early inter-
vention and preschool special education services.
‘‘(G) SALARY
AND
BENEFIT
ENHANCE-
MENT.—Assistance to child care programs to
increase the quality and continuity of care by
attracting or retaining highly qualified child
care staff working directly with children
through enhanced compensation.
‘‘(H) MONITORING
AND
TECHNICAL
AS-
SISTANCE.—Technical assistance to grantees,
and monitoring of programs, assisted under this
section. State expenditures under this subpara-
graph shall not exceed a percentage of total
State expenditures for the program under this
section equal to 10 percent for each of fiscal
years 2000 through 2002, and 5 percent for fis-
cal year 2003 and each succeeding fiscal year.’’.
(c) ANNUAL REPORT.—Section 658K(a)(2) of the
Child Care and Development Block Grant Act of 1990 (42
U.S.C. 9858i(a)(2)) is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (D);
(2) by striking the period at the end of sub-
paragraph (E) and inserting a semicolon; and
(3) by inserting after and below subparagraph
(E) the following new subparagraphs:
‘‘(F) the early learning program under sec-
tion 658T, including—
‘‘(i) the number and average dollar
amount of grants awarded;
‘‘(ii) the number, average dollar
amount, and percentage of the total State
award of such grants made to low-income
communities;
‘‘(iii) the number of early learning
programs;
‘‘(iv) the number of children served
with special health care needs, disabilities
or developmental delays;
‘‘(v) the number of early learning pro-
grams that assist children with special
needs;
‘‘(vi) progress toward achievement of
each performance goal, for each specific,
quantifiable and measurable objective;
‘‘(vii) expenditures for each allowable
activity listed in section 658T(c), total ex-
penditures and, to the extent feasible, the
volume or frequency of such activity and
the average expenditure per unit of such
activity; and
‘‘(viii) with respect to any allowable
activity listed in section 658T(c) for which
expenditures are made by the State both
under section 658G(a) and under section
658T, the amount expended under each
such section; and
‘‘(ix) such other data as the Secretary
may require.’’.
SEC. 4. 4% MINIMUM QUALITY EXPENDITURES.
Section 658G of the Child Care and Development
Block Grant Act of 1990 (42 U.S.C. 9858e) is amended—
(1) by striking ‘‘A State’’ and inserting the following:
‘‘(a) 4 PERCENT MINIMUM
QUALITY
EXPENDI-
TURES.—Subject to subsection (b), a State’’; and
(2) by adding at the end the following new subsection:
‘‘(b) DISREGARD
OF EARLY LEARNING PROGRAM
FUNDS.—For purposes of subsection (a), amounts re-
ceived by the State from amounts appropriated under sec-
tion 418(c) of the Social Security Act and expended under
a plan in accordance with section 658T shall be dis-
regarded.’’.
SEC. 5. EXPANSION OF DEPENDENT CARE TAX CREDIT.
(a) IN GENERAL.—Paragraph (2) of section 21(a) of
the Internal Revenue Code of 1986 (relating to expenses
for household and dependent care services necessary for
gainful employment) is amended to read as follows:
‘‘(2) APPLICABLE PERCENTAGE DEFINED.—For
purposes of paragraph (1), the term ‘applicable per-
centage’ means 50 percent reduced (but not below
20 percent) by 1 percentage point for each $1,000
(or fraction thereof) by which the taxpayer’s ad-
justed gross income for the taxable year exceeds
$30,000.’’
(b) MINIMUM CREDIT ALLOWED
FOR STAY-AT-
HOME PARENTS.—Section 21(e) of such Code (relating
to special rules) is amended by adding at the end the fol-
lowing:
‘‘(11) MINIMUM CREDIT ALLOWED FOR STAY-
AT-HOME
PARENTS.—Notwithstanding 
subsection
(d), in the case of any taxpayer with one or more
qualifying 
individuals 
described 
in 
subsection
(b)(1)(A) under the age of 1 at any time during the
taxable year, such taxpayer shall be deemed to have
employment-related expenses with respect to such
qualifying individuals in an amount equal to the
greater of—
‘‘(A) the amount of employment-related ex-
penses incurred for such qualifying individuals
for the taxable year (determined under this sec-
tion without regard to this paragraph), or
‘‘(B) $125 for each month in such taxable
year during which such qualifying individual is
under the age of 1.’’.
(c) 
INFLATION
ADJUSTMENT
OF
DOLLAR
AMOUNTS.—
(1) Section 21 of such Code is amended by re-
designating subsection (f) as subsection (g) and by
inserting after subsection (e) the following new sub-
section:
‘‘(f) INFLATION ADJUSTMENT.—In the case of any
taxable year beginning in a calendar year after 2000, the
$30,000 amount contained in subsection (a), the $2,400
amount in subsection (c), and the $125 amount in sub-
section (e)(11) shall be increased by an amount equal to—
‘‘(1) such dollar amount, multiplied by
‘‘(2) the cost-of-living adjustment determined
under section 1(f)(3) for such calendar year by sub-
stituting ‘calendar year 1999’ for ‘calendar year
1992’ in subparagraph (B) thereof.
If the increase determined under the preceding sentence
is not a multiple of $50 ($5 in the case of the amount
in subsection (e)(11)), such amount shall be rounded to
the next lowest multiple thereof.’’
(2) Paragraph (2) of section 21(c) of such Code
is amended by striking ‘‘$4,800’’ and inserting
‘‘twice the dollar amount applicable under paragraph
(1)’’.
(3) Paragraph (2) of section 21(d) of such Code
is amended by striking ‘‘less than—’’ and all that
follows through the end of the first sentence and in-
serting ‘‘less than 1⁄12 of the amount which applies
under subsection (c) to the taxpayer for the taxable
year.’’
(d) CREDIT ALLOWED BASED
ON RESIDENCY
IN
CERTAIN CASES.—Subsection (e) of section 21 of such
Code is amended by adding at the end the following new
paragraph:
‘‘(12) CREDIT ALLOWED BASED ON RESIDENCY
IN CERTAIN CASES.—In the case of a taxpayer—
‘‘(A) who does not satisfy the household
maintenance test of subsection (a) for any pe-
riod, but
‘‘(B) whose principal place of abode for
such period is also the principal place of abode
of any qualifying individual,
then such taxpayer shall be treated as satisfying
such test for such period but the amount of credit
allowable under this section with respect to such in-
dividual shall be determined by allowing only 1⁄12 of
the limitation under subsection (c) for each full
month that the requirement of subparagraph (B) is
met.’’
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 6. ALLOWANCE OF CREDIT FOR EMPLOYER EXPENSES
FOR CHILD CARE ASSISTANCE.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to business related credits) is amended by
adding at the end the following new section:
‘‘SEC. 45D. EMPLOYER-PROVIDED CHILD CARE CREDIT.
‘‘(a) IN GENERAL.—For purposes of section 38, the
employer-provided child care credit determined under this
section for the taxable year is an amount equal to 25 per-
cent of the qualified child care expenditures of the tax-
payer for such taxable year.
‘‘(b) DOLLAR LIMITATION.—The credit allowable
under subsection (a) for any taxable year shall not exceed
$150,000.
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) QUALIFIED CHILD CARE EXPENDITURE.—
The term ‘qualified child care expenditure’ means
any amount paid or incurred—
‘‘(A) to acquire, construct, rehabilitate, or
expand property—
‘‘(i) which is to be used as part of a
qualified child care facility of the taxpayer,
‘‘(ii) with respect to which a deduction
for depreciation (or amortization in lieu of
depreciation) is allowable, and
‘‘(iii) which does not constitute part of
the principal residence (within the meaning
of section 121) of the taxpayer or any em-
ployee of the taxpayer,
‘‘(B) for the operating costs of a qualified
child care facility of the taxpayer, including
costs related to the training of employees, to
scholarship programs, and to the providing of
increased compensation to employees with high-
er levels of child care training,
‘‘(C) under a contract with a qualified
child care facility to provide child care services
to employees of the taxpayer,
‘‘(D) under a contract to provide child care
resource and referral services to employees of
the taxpayer, or
‘‘(E) for the costs of seeking accreditation
from a child care credentialing or accreditation
entity.
‘‘(2) QUALIFIED CHILD CARE FACILITY.—
‘‘(A) IN
GENERAL.—The term ‘qualified
child care facility’ means a facility—
‘‘(i) the principal use of which is to
provide child care assistance, and
‘‘(ii) which meets the requirements of
all applicable laws and regulations of the
State or local government in which it is lo-
cated, including, but not limited to, the li-
censing of the facility as a child care
facility.
Clause (i) shall not apply to a facility which is
the principal residence (within the meaning of
section 121) of the operator of the facility.
‘‘(B) SPECIAL RULES WITH RESPECT TO A
TAXPAYER.—A facility shall not be treated as a
qualified child care facility with respect to a
taxpayer unless—
‘‘(i) enrollment in the facility is open
to all employees of the taxpayer during the
taxable year,
‘‘(ii) services available at such facility
do not discriminate in favor of employees
of the taxpayer who are highly com-
pensated employees (within the meaning of
section 414(q)), and
‘‘(iii) in the case of a facility which is
owned or operated by the taxpayer, at least
30 percent of the enrollees of such facility