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(g) STATE-LEVEL ACTIVITIES.—A State may not re-
tain more than 3 percent of the amount described in sub-
section (c) for State administration and other State-level
activities.
(h) ADMINISTRATION.—
(1) STATE RESPONSIBILITY.—A State shall have
responsibility for administering a grant awarded for
the State under this section and for monitoring cov-
ered entities that receive assistance under such grant.
(2) AUDITS.—A State shall require each covered
entity receiving assistance under the grant awarded
under this section to conduct an annual audit with
respect to the activities of the covered entity. Such au-
dits shall be submitted to the State.
(3) MISUSE OF FUNDS.—
(A) REPAYMENT.—If the State determines,
through an audit or otherwise, that a covered en-
tity receiving assistance under a grant awarded
under this section has misused the assistance, the
State shall notify the Secretary of the misuse.
The Secretary, upon such a notification, may
seek from such a covered entity the repayment of
an amount equal to the amount of any such mis-
used assistance plus interest.
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(B) APPEALS
PROCESS.—The Secretary
shall by regulation provide for an appeals proc-
ess with respect to repayments under this para-
graph.
(i) REPORTING REQUIREMENTS.—
(1) 2-YEAR STUDY.—
(A) IN GENERAL.—Not later than 2 years
after the date on which the Secretary first
awards grants under this section, the Secretary
shall conduct a study to determine—
(i) the capacity of covered entities to
meet the child care needs of communities
within States;
(ii) 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
(iii) who is using the programs funded
under this section and the income levels of
such individuals.
(B) REPORT.—Not later than 28 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
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the study conducted in accordance with subpara-
graph (A).
(2) 4-YEAR STUDY.—
(A) IN GENERAL.—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 cov-
ered entities that received assistance through a
grant awarded under this section and that re-
main in operation, and the extent to which such
facilities are meeting the child care needs of the
individuals served by such facilities.
(B) REPORT.—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 subpara-
graph (A).
(j) DEFINITIONS.—In this section:
(1) COVERED ENTITY.—The term ‘‘covered enti-
ty’’ means a small business or a consortium formed
in accordance with subsection (d)(3).
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(2) INDIAN
COMMUNITY.—The term ‘‘Indian
community’’ means a community served by an In-
dian tribe or tribal organization.
(3) INDIAN TRIBE; TRIBAL ORGANIZATION.—The
terms ‘‘Indian tribe’’ and ‘‘tribal organization’’ have
the meanings given the terms in section 658P of the
Child Care and Development Block Grant Act of 1990
(42 U.S.C. 9858n).
(4) SMALL BUSINESS.—The term ‘‘small busi-
ness’’ means an employer who employed an average
of at least 2 but not more than 50 employees on the
business days during the preceding calendar year.
(5) STATE.—The term ‘‘State’’ has the meaning
given the term in section 658P of the Child Care and
Development Block Grant Act of 1990 (42 U.S.C.
9858n).
(k) APPLICATION TO INDIAN TRIBES AND TRIBAL OR-
GANIZATIONS.—In this section:
(1) IN GENERAL.—Except as provided in sub-
section (f)(1), and in paragraphs (2) and (3), the
term ‘‘State’’ includes an Indian tribe or tribal orga-
nization.
(2) 
GEOGRAPHIC
REFERENCES.—The 
term
‘‘State’’ includes an Indian community in subsections
(c) (the second and third place the term appears),