(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 carry out corresponding activities under this 
subtitle. 
(B) REALLOTMENTS.—The amount of 
such reduction shall be reallotted to States for 
which no reduction in a corresponding allot-
ment, or in a corresponding reallotment, is re-
quired by this subsection, in proportion to the 
original corresponding allotments made under 
subsection (b) to such States for such fiscal 
year. 
(3) AMOUNTS REALLOTTED.—For purposes of 
this subtitle (other than this subsection and sub-
section (b)), any amount reallotted to a State under 
this subsection shall be considered to be part of the 
corresponding allotment made under subsection (b) 
to the State. 
(4) INDIAN
TRIBES
OR
TRIBAL
ORGANIZA-
TIONS.—Any portion of a grant or contract made to 
an Indian tribe or tribal organization under sub-
section (c) that the Secretary determines is not 
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being used in a manner consistent with the provi-
sions of this subtitle in the period for which the 
grant or contract is made available, shall be used by 
the Secretary to make payments to other tribes or 
organizations that have submitted applications under 
subsection (c) in accordance with their respective 
needs. 
(f) COST-SHARING.— 
(1) CHILD CARE PROVIDER DEVELOPMENT AND 
RETENTION GRANTS AND SCHOLARSHIPS.— 
(A) FEDERAL SHARE.—The Federal share 
of the cost of carrying out activities under sec-
tions 226 and 227, with funds allotted under 
this section and distributed by the Secretary to 
a State, shall be— 
(i) not more than 90 percent of the 
cost of each grant made under such sec-
tions, in the first fiscal year for which the 
State receives such funds; 
(ii) not more than 85 percent of the 
cost of each grant made under such sec-
tions, in the second fiscal year for which 
the State receives such funds; 
(iii) not more than 80 percent of the 
cost of each grant made under such sec-
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tions, in the third fiscal year for which the 
State receives such funds; and 
(iv) not more than 75 percent of the 
cost of each grant made under such sec-
tions, in any subsequent fiscal year for 
which the State receives such funds. 
(B) NON-FEDERAL SHARE.— 
(i) IN GENERAL.—The State may pro-
vide the non-Federal share of the cost in 
cash or in the form of an in-kind contribu-
tion, fairly evaluated by the Secretary. 
(ii) IN-KIND CONTRIBUTION.—In this 
subparagraph, the term ‘‘in-kind contribu-
tion’’ means payment of the costs of par-
ticipation of eligible child care providers in 
health insurance programs or retirement 
programs. 
(2) CHILD CARE PROVIDER HEALTH BENEFITS 
COVERAGE.— 
(A) FEDERAL SHARE.—The Federal share 
of the cost of carrying out activities under sec-
tion 228, with funds allotted under this section 
and distributed by the Secretary to a State, 
shall be not more than 50 percent of such cost. 
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(B) NON-FEDERAL
SHARE.—The State 
may provide the non-Federal share of the cost 
in cash or in kind, fairly evaluated by the Sec-
retary, including plant, equipment, or services. 
The State shall provide the non-Federal share 
directly or through donations from public or 
private entities. Amounts provided by the Fed-
eral Government, or services assisted or sub-
sidized to any significant extent by the Federal 
Government, may not be included in deter-
mining the amount of such share. 
(g) AVAILABILITY OF ALLOTTED FUNDS DISTRIB-
UTED TO STATES.—Of the funds allotted under this sec-
tion for activities described in sections 226 and 227 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 226; 
(2) not less than 22.5 percent shall be available 
to the State for grants under section 227; and 
(3) not more than 10 percent shall be available 
to pay administrative costs incurred by the State to 
carry out activities described in sections 226 and 
227. 
(h) DEFINITION.—For the purposes of subsections 
(a) through (e), the term ‘‘State’’ includes only the 50 
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States, the District of Columbia, and the Commonwealth 
of Puerto Rico. 
SEC. 225. APPLICATION AND PLAN. 
(a) APPLICATION.—To be eligible to receive a dis-
tribution of funds allotted under section 224, 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— 
(1) a State plan that satisfies the requirements 
of subsection (b); and 
(2) assurances of compliance satisfactory to the 
Secretary with respect to the requirements of section 
228. 
(b) REQUIREMENTS OF PLAN.— 
(1) LEAD AGENCY.—The State plan shall iden-
tify the lead agency to make grants under this sub-
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 qualified child care providers who are new 
to the child care field and the retention of qualified 
child care providers who have a demonstrated com-
mitment to the child care field. 
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(3) NOTIFICATION OF AVAILABILITY OF GRANTS 
AND BENEFITS.—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 and benefits under this sub-
title. 
(4) DISTRIBUTION
OF
GRANTS.—The State 
plan shall describe how the lead agency will make 
grants under sections 226 and 227 to eligible child 
care providers 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, col-
lectively— 
(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. 
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(B) SELECTION
OF
CHILD
CARE
PRO-
VIDERS
TO
RECEIVE
GRANTS.—In making 
grants under section 226, the State may make 
grants only to eligible child care providers in 
geographical areas selected under subparagraph 
(A), but may give special consideration in such 
areas to eligible child care providers— 
(i) who have attained a higher rel-
evant educational credential; 
(ii) who provide a specific kind of 
child care services; 
(iii) who provide child care services to 
populations who meet specific economic 
characteristics; or 
(iv) who meet such other criteria as 
the State may establish. 
(C) LIMITATION.—The State shall describe 
how the State will ensure that grants made 
under section 226 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 
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each fiscal year for which such State receives a 
grant under section 226— 
(i) include in the report required by 
section 229, detailed information regard-
ing— 
(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 226 for that fiscal 
year; and 
(ii) provide a follow-up report, not 
later than 90 days after the end of the suc-
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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 226. 
(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 226 in 
accordance with the following requirements: 
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(A) SUFFICIENT
AMOUNTS.—The State 
shall demonstrate that the amounts of indi-
vidual grants to be made under section 226 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 eligible child 
care providers who have a child development as-
sociate credential (or equivalent) 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 eligible child care providers 
who have higher levels of education than the 
education required for a credential such as a 
child development associate credential (or equiv-
alent), according to the following requirements: 
(i) PROVIDERS WITH BACCALAUREATE 
DEGREES IN RELEVANT FIELDS.—An eligi-
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ble child care provider who has a bacca-
laureate degree in the area of child devel-
opment or early child education shall re-
ceive a grant under section 226 in an 
amount that is not less than twice the 
amount of the grant that is made under 
section 226 to an eligible child care pro-
vider who has an associate of the arts de-
gree in the area of child development or 
early child education. 
(ii) PROVIDERS WITH ASSOCIATE DE-
GREES.—An eligible 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 sec-
tion 226 in an amount that is not less 
than 150 percent of the amount of the 
grant that is made under section 226 to an 
eligible child care provider who has a child 
development associate credential (or equiv-
alent) and is employed full-time to provide 
child care services. 
(iii) OTHER PROVIDERS WITH BACCA-
LAUREATE DEGREES.— 
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(I) IN GENERAL.—Except as pro-
vided in subclause (II), an eligible 
child care provider who has a bacca-
laureate degree in a field other than 
child development or early child edu-
cation shall receive a grant under sec-
tion 226 in an amount equal to the 
amount of the grant that is made 
under section 226 to an eligible child 
care provider who has an associate of 
the arts degree in the area of child de-
velopment or early child education. 
(II) EXCEPTION.—If an eligible 
child care provider who has such a 
baccalaureate degree obtains addi-
tional educational training in the area 
of child development or early child 
education, as specified by the State, 
such provider shall receive a grant 
under section 226 in an amount equal 
to the amount of the grant that is 
made under section 226 to an eligible 
child care provider who has a bacca-
laureate degree specified in clause (i). 
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(D) 
AMOUNTS
TO
FULL-TIME
PRO-
VIDERS.—The State shall make a grant under 
section 226 to an eligible child care provider 
who works full-time in a greater amount than 
the amount of the grant that is made under 
section 226 to an eligible child care provider 
who works part-time, based on the State defini-
tions of full-time and part-time work. 
(E) AMOUNTS
TO
EXPERIENCED
PRO-
VIDERS.—The State shall make grants under 
section 226 in progressively larger amounts to 
eligible child care providers to reflect the num-
ber 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 227 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 
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(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 eligible child 
care providers who receive grants under section 227. 
(8) SUPPLEMENTATION.—The State plan shall 
provide assurances that amounts received by the 
State to carry out sections 226, 227, and 228 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— 
(A) encourage child care providers to im-
prove their qualifications and that promote the 
retention of qualified child care providers in the 
child care field; or 
(B) provide health benefits coverage for 
child care providers. 
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SEC. 226. CHILD CARE PROVIDER DEVELOPMENT AND RE-
TENTION GRANT PROGRAM. 
(a) IN GENERAL.—A State that receives funds allot-
ted under section 224 and made available to carry out this 
section shall expend such funds to pay for the Federal 
share of the cost of making grants to eligible child care 
providers in accordance with this section, to improve 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 
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100 
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 or benefits under any other provision of this subtitle 
for purposes of selecting eligible child care providers to 
receive grants under this section. 
SEC. 227. CHILD CARE PROVIDER SCHOLARSHIP PROGRAM. 
(a) IN GENERAL.—A State that receives funds allot-
ted under section 224 and made available to carry out this 
section shall expend such funds to pay for the Federal 
share of the cost of making scholarship grants to eligible 
child care providers in accordance with this section, to im-
prove their educational qualifications to provide child care 
services. 
(b) ELIGIBILITY REQUIREMENT FOR SCHOLARSHIP 
GRANTS.—To be eligible to receive a scholarship grant 
under this section, a child care provider shall be employed 
as a child care provider for not less than 1 calendar year, 
or (if the provider is employed 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 
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101 
1 calendar year, ending on the date of the application for 
such grant. 
(c) SELECTION OF GRANTEES.—For purposes of se-
lecting eligible child care providers to receive scholarship 
grants under this section and determining the amounts of 
such grants, a State shall not— 
(1) take into consideration whether a child care 
provider is receiving, may receive, or may be eligible 
to receive any funds or benefits under any other pro-
vision of this subtitle, or under any other Federal or 
State law that provides funds for educational pur-
poses; or 
(2) consider as resources of such provider any 
funds such provider is receiving, may receive, or may 
be eligible to receive under any other provision of 
this subtitle, under any other Federal or State law 
that provides funds for educational purposes, or 
from a private entity. 
(d) COST-SHARING REQUIRED.—The amount of a 
scholarship grant made under this section to an eligible 
child care provider shall be less than the cost of the edu-
cational or training program for which such grant is made. 
(e) 
ANNUAL
MAXIMUM
SCHOLARSHIP
GRANT 
AMOUNT.—The maximum aggregate dollar amount of a 
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102 
scholarship grant made by a State to an eligible child care 
provider under this section in a fiscal year shall be $1,500. 
SEC. 228. CHILD CARE PROVIDER HEALTH BENEFITS COV-
ERAGE. 
(a) SHORT TITLE.—This section may be cited as the 
‘‘Healthy Early Education Workforce Grant Program 
Act’’. 
(b) DEFINITION.—In this section, the terms ‘‘depend-
ent’’, ‘‘domestic partner’’, and ‘‘spouse’’, used with respect 
to a State, have the meanings given the terms by the 
State. 
(c) GENERAL AUTHORITY.—A State that receives 
funds allotted under section 224 and made available to 
carry out this section shall expend such funds to pay for 
the Federal share of the cost of providing access to afford-
able health benefits coverage for— 
(1) eligible child care providers; and 
(2) at the discretion of the State involved, the 
spouses, domestic partners, and dependents of such 
providers. 
(d) PERMISSIBLE ACTIVITIES.—In carrying out sub-
section (c), the State may expend such funds for any of 
the following: 
(1) To reimburse an employer of an eligible 
child care provider, or the provider, for the employ-
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103 
er’s or provider’s share (or a portion of the share) 
of the premiums or other costs for coverage under 
group or individual health plans. 
(2) To offset the cost of enrolling eligible child 
care providers in public health benefits plans, such 
as the medicaid program under title XIX of the So-
cial Security Act (42 U.S.C. 1396 et seq.), the State 
children’s health insurance program under title XXI 
of such Act (42 U.S.C. 1397aa et seq.), or public 
employee health benefit plans. 
(3) To otherwise subsidize the cost of health 
benefits coverage for eligible child care providers. 
(e) ELIGIBILITY CRITERIA FOR HEALTH BENEFITS 
COVERAGE.—The State may establish criteria to limit the 
child care providers who may receive benefits through the 
allotment. 
(f) SELECTION OF GRANTEES.—For purposes of se-
lecting eligible child care providers to receive benefits 
under this section for a fiscal year, a State shall give— 
(1) highest priority to— 
(A) providers that meet any applicable cri-
teria established in accordance with subsection 
(e) and received such assistance during the pre-
vious fiscal year; and 
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104 
(B) at the State’s discretion, the spouses, 
domestic partners, and dependents of such pro-
viders; and 
(2) second highest priority to— 
(A) providers that meet any applicable cri-
teria established in accordance with subsection 
(e) and are accredited by the National Associa-
tion for the Education of Young Children or the 
National Association for Family Child Care; 
and 
(B) at the State’s discretion, the spouses, 
domestic partners, and dependents of such pro-
viders. 
SEC. 229. ANNUAL REPORT. 
A State that receives funds appropriated to carry out 
this subtitle for a fiscal year shall submit to the Secretary, 
not later than 90 days after the end of such fiscal year, 
a report— 
(1) specifying the uses for which the State ex-
pended such funds, and the aggregate amount of 
funds (including State funds) expended for each of 
such uses; and 
(2) containing available data relating to grants 
made and benefits provided with such funds, includ-
ing— 
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105 
(A) the number of eligible child care pro-
viders who received such grants and benefits; 
(B) the amounts of such grants and bene-
fits; 
(C) any other information that describes or 
evaluates the effectiveness of this subtitle; 
(D) the particular geographical areas se-
lected under section 225 for the purpose of 
making such grants; 
(E) with respect to grants made under sec-
tion 226— 
(i) the number of years grant recipi-
ents have been employed as child care pro-
viders; 
(ii) the level of training and education 
of grant recipients; 
(iii) to the extent practicable and 
available to the State, detailed information 
regarding the salaries and other compensa-
tion received by grant recipients to provide 
child care services before, during, and after 
receiving such grants; 
(iv) the number of children who re-
ceived child care services provided by grant 
recipients; 
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106 
(v) information on family demo-
graphics of such children; 
(vi) the types of settings described in 
subparagraphs (A), (B), and (C) of section 
222(1) in which grant recipients are em-
ployed; and 
(vii) the ages of the children who re-
ceived child care services provided by grant 
recipients; 
(F) with respect to grants made under sec-
tion 227— 
(i) the number of years grant recipi-
ents have been employed as child care pro-
viders; 
(ii) the level of training and education 
of grant recipients; 
(iii) to the extent practicable and 
available to the State, detailed information 
regarding the salaries and other compensa-
tion received by grant recipients to provide 
child care services before, during, and after 
receiving such grants; 
(iv) the types of settings described in 
subparagraphs (A), (B), and (C) of section 
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107 
222(1) in which grant recipients are em-
ployed; 
(v) the ages of the children who re-
ceived child care services provided by grant 
recipients; 
(vi) the number of course credits or 
credentials obtained by grant recipients; 
and 
(vii) the amount of time taken for 
completion of the educational and training 
programs for which such grants were 
made; and 
(G) such other information as the Sec-
retary may require by rule. 
SEC. 230. EVALUATION OF HEALTH BENEFITS PROGRAMS 
BY SECRETARY. 
(a) EVALUATION.—The Secretary shall conduct an 
evaluation of several State programs carried out with 
grants made under section 228, representing various ap-
proaches to raising the rate of child care providers with 
health benefits coverage. 
(b) ASSESSMENT OF IMPACTS.—In evaluating State 
programs under subsection (a), the Secretary may con-
sider any information appropriate to measure the success 
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of the programs, and shall assess the impact of the pro-
grams on the following: 
(1) The rate of child care providers with health 
benefits coverage. 
(2) The take-up rate by eligible child care pro-
viders. 
(3) The turnover rate in the child care field. 
(4) The average wages paid to a child care pro-
vider. 
(c) REPORT.—Not later than 3 years after the date 
of enactment of this subtitle, the Secretary shall prepare 
and submit a report to Congress containing the results 
of the evaluation conducted under subsection (a), together 
with recommendations for strengthening programs carried 
out with grants made under section 228. 
SEC. 231. AUTHORIZATION OF APPROPRIATIONS. 
(a) CHILD CARE PROVIDER DEVELOPMENT, RETEN-
TION, AND SCHOLARSHIPS.—There are authorized to be 
appropriated to carry out the activities described in sec-
tions 226 and 227 $500,000,000 for fiscal year 2008 and 
such sums as may be necessary for each of fiscal years 
2008 through 2012. 
(b) CHILD CARE PROVIDER HEALTH BENEFITS COV-
ERAGE.—There is authorized to be appropriated to carry 
out the activities described in section 228 $200,000,000 
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for fiscal year 2007 and such sums as may be necessary 
for each of fiscal years 2008 through 2012. 
Subtitle C—Child Care Construc-
tion and Renovation Incentive 
Grants 
SEC. 241. SHORT TITLE. 
This subtitle may be cited as the ‘‘Child Care Con-
struction and Renovation Incentive Grants Act’’ 
SEC. 242. USE OF COMMUNITY DEVELOPMENT BLOCK 
GRANTS TO ESTABLISH CHILD CARE FACILI-
TIES. 
Section 105(a) of the Housing and Community De-
velopment Act of 1974 (42 U.S.C. 5305(a)) is amended— 
(1) in paragraph (24), by striking ‘‘and’’ at the 
end; 
(2) in paragraph (25), by striking the period at 
the end and inserting ‘‘; and’’; and 
(3) by adding at the end the following: 
‘‘(26) the construction and renovation of child 
care facilities.’’. 
SEC. 243. INSURANCE FOR MORTGAGES ON NEW AND RE-
HABILITATED CHILD CARE FACILITIES. 
Title II of the National Housing Act (12 U.S.C. 1707 
et seq.) is amended by adding at the end the following: 
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‘‘SEC. 257. MORTGAGE INSURANCE FOR CHILD CARE FA-
CILITIES. 
‘‘(a) DEFINITIONS.—In this section: 
‘‘(1) CHILD CARE FACILITY.—The term ‘child 
care facility’— 
‘‘(A) means a public or private facility 
that— 
‘‘(i) has as its purpose the care and 
development of— 
‘‘(I) children who are less than 
16 years of age; or 
‘‘(II) school-age children and 
youth during non-school hours; and 
‘‘(ii) is operated in accordance with all 
applicable State and local laws and regula-
tions; and 
‘‘(B) does not include any facility for 
school-age children that is primarily for use 
during normal school hours. 
‘‘(2) EQUIPMENT.—The term ‘equipment’ in-
cludes— 
‘‘(A) machinery, utilities, and built-in 
equipment, and any necessary enclosure or 
structure to house them; and 
‘‘(B) any other items necessary for the 
functioning of a particular facility as a child 
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care facility, including necessary furniture, 
books, and curricular and program materials. 
‘‘(3) FIRST MORTGAGE.—The term ‘first mort-
gage’— 
‘‘(A) means such classes of first liens as 
are commonly given to secure advances (includ-
ing advances during construction) on, or the 
unpaid purchase price of, real estate under the 
laws of the State in which the real estate is lo-
cated, together with the credit instrument or in-
struments (if any) secured thereby; and 
‘‘(B) includes any mortgage in the form of 
1 or more trust mortgages or mortgage inden-
tures or deeds of trust, securing notes, bonds, 
or other credit instruments, that, by the same 
instrument or by a separate instrument, creates 
a security interest in initial equipment, whether 
or not attached to the realty. 
‘‘(4) MORTGAGE.—The term ‘mortgage’ means 
a first mortgage on real estate in fee simple, or on 
the interest of either the lessor or lessee thereof 
under a lease having a period of not less than 7 
years to run beyond the maturity date of the mort-
gage. 
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‘‘(5) MORTGAGOR.—The term ‘mortgagor’ has 
the meaning given the term in section 207(a). 
‘‘(b) INSURANCE OF MORTGAGES.—In order to facili-
tate the establishment and rehabilitation of child care fa-
cilities, the Secretary may— 
‘‘(1) insure a mortgage that is secured by a 
property or project that is— 
‘‘(A) a new child care facility, including a 
new addition to an existing child care facility 
(regardless of whether the existing facility is 
being rehabilitated); or 
‘‘(B) a substantially rehabilitated child 
care facility, including equipment to be used in 
the operation of the facility; and 
‘‘(2) make a commitment to insure any mort-
gage described in paragraph (1) before the date of 
execution or disbursement of the mortgage. 
‘‘(c) TERMS AND CONDITIONS.— 
‘‘(1) ELIGIBLE CHILD CARE FACILITIES.—Each 
mortgage insured under this section shall be secured 
by a child care facility for which a certification of 
compliance has been issued by the Secretary under 
section 258(c) that is licensed or regulated by the 
State in which it is located (or if there is no State 
law providing for such licensing and regulation by 
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the State, by the municipality or other political sub-
division in which the facility is located) during the 
12-month period preceding the date on which the 
commitment to insure the mortgage is issued under 
this section. 
‘‘(2) APPROVED MORTGAGOR.— 
‘‘(A) IN
GENERAL.—Each mortgage in-
sured under this section shall be executed by a 
mortgagor approved by the Secretary. 
‘‘(B) REGULATION.—The Secretary may— 
‘‘(i) require an approved mortgagor 
who executes a mortgage under subpara-
graph (A) to be regulated with respect to 
charges and methods of financing and, if 
the mortgagor is a corporate entity, with 
respect to capital structure and rate of re-
turn; and 
‘‘(ii) as an aid to the regulation of any 
mortgagor under clause (i), make such 
contracts with and acquire for not more 
than $100 such stock or interest in such 
mortgagor as the Secretary considers to be 
necessary. 
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‘‘(C) STOCK OR INTEREST.—Any stock or 
interest purchased under subparagraph (B)(ii) 
shall be— 
‘‘(i) paid for out of the General Insur-
ance Fund; and 
‘‘(ii) redeemed by the mortgagor at 
par upon the termination of all obligations 
of the Secretary under the insurance. 
‘‘(3) PRINCIPAL OBLIGATION.—Each mortgage 
insured under this section shall involve a principal 
obligation in an amount not to exceed 90 percent of 
the estimated value of the property or project, or 95 
percent of the estimated value of the property or 
project in the case of a mortgagor that is a private 
nonprofit corporation or association (as defined pur-
suant to section 221(d)(3)), including— 
‘‘(A) equipment to be used in the operation 
of the facility when the proposed improvements 
are completed and the equipment is installed; or 
‘‘(B) a solar energy system (as defined in 
subparagraph (3) of the last paragraph of sec-
tion 2(a)) or residential energy conservation 
measures (as defined in subparagraphs (A) 
through (G) and (I) of section 210(11) of the 
National Energy Conservation Policy Act), in 
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