An Act to amend title XX of the Social Security Act so as to permit greater latitude by the States in establishing criteria respecting eligibility for social services, to facilitate and encourage the implementation by States of child day care services programs conducted pursuant to such title, to promote the employment of welfare recipients in the provision of child day care services, and for other purposes.
PL 94-401 (H.R.12455), enacted 09/07/1976

PUBLIC LAW 94-401—SEPT. 7, 1976 
90 STAT. 1215 
Public Law 94-401 
94th Congress 
An Act 
To amend title XX of the Social Security Act so as to permit greater latitude by 
the States in establishing criteria respecting eligibility for social services, to 
facilitate and encourage the implementation by States of child day care services 
programs conducted pursuant to such title, to promote the employment of 
welfare recipients in the provision of child day care services, and for other 
purposes. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States 
of America 
in Congress assembled^ That (a) section 
2002(a) of the Social Security Act is amended by adding at the end 
thereof the following new paragraph: 
"(14) (A) For purposes of paragraphs (5) and (6), an individual 
shall, at the option of the State, be deemed to be an individual 
described in paragraph (5) (B) if, because of the geographic area in 
which any particular service is provided to him, the characteristics 
of the community to which it is provided, the nature of the service, 
the conditions (other than income) of eligibility to receive it, or other 
factors surrounding its provision, the State may reasonably conclude, 
without individual determinations of eligibility, that substantially all 
of the persons who receive the service are members of families with 
a monthly gross income which is not more than 90 per centum of the 
median income of a family of four in the State, adjusted (in accord-
ance with regulations prescribed by the Secretary) to take into account 
the size of the family. 
"(B) The provisions of subparagraph (A) shall not be applicable 
to child day care services furnished to any child other than a child of 
a migratory agricultural worker.". 
(b) Section 2000(a) (4) of such Act is amended by adding at the 
end thereof (after and below subparagraph ( E ) ) the following new 
sentence: 
"In any case in which services are provided to individuals to whom 
the provisions of paragraph (14) are applied, the proportion of the 
expenditures for such services which are attributable to individuals 
described in the preceding sentence may be determined on the basis 
of generally accepted statistical sampling procedures.". 
(c) Section 2002(a) (6) of such Act is amended, in the matter pre-
ceding subparagraph (A), by inserting ", family planning services," 
immediately after "referral service". 
(d) The amendments made by this section shall be effective on and 
after October 1,1975. 
SEC. 2. Effective February 1, 1976, section 7(a) (3) of Public Law 
93-647 is amended by striking out "February 1, 1976" and inserting 
in lieu thereof "October 1,1977". 
SEC. 3. (a) For purposes of title X X of the Social Security Act, the 
amount of the limitation (imposed by section 2002(a)(2) of such 
Act) which is applicable to any State for the fiscal period beginning 
July 1, 1976, and ending September 30, 1976, or which is applicable 
to any State for the fiscal year ending September 30, 1977, shall be 
deemed to be equal to whichever of the following is the lesser: 
(1) an amount equal to— 
(A) 106.4 per centum of the amount of the limitation so 
imposed (as determined without regard to this section) in 
the case of such fiscal period, or 
Sept. 7, 1976 
[H.R. 12455] 
Social Security 
Act, 
amendments. 
42 use 1397a. 
42 use 1397a. 
Effective date. 
42 use 1397a 
note. 
Effective date. 
42 use 1397 
note. 
42 use 1397a 
note. 
42 use 1397. 
RQ 1Q4 n
7 f t — n t 
1 
flO 
90 STAT. 1216 
PUBLIC LAW 94-401—SEPT. 7, 1976 
Grants. 
42 use 1397. 
42 use 1397a. 
(B) 108 per centum of the amount of the limitation so 
imposed (as determined without regard to this section) in the 
case of such fiscal year ending September 30, 1977, or 
(2) an amount equal to (A) 100 per centum of such limitation 
for such fiscal period or fiscal year (as determined without 
regard to this section), plus (B) an amount equal to the sum of 
(i) 75 per centum (in the case of such fiscal period) or 100 per 
centum (in the case of such fiscal year) of the total amount of 
expenditures (I) which are made during such fiscal period or 
year in connection with the provision of any child day care 
service, and (II) with respect to which payment is authorized to 
be made to the State under such title for such fiscal period or 
year, and (ii) the aggregate of the amounts of the grants, made 
by the State during such fiscal period or year, to which the provi-
sions of subsection (c)(1) are applicable, 
(b) The additional Federal funds which become payable to any 
State for the fiscal period or fiscal year specified in subsection (a) by 
reason of the provisions of such subsection shall, to the maximum 
extent that the State determines to be feasible, be employed in such 
a way as to increase the employment of welfare recipients and other 
low-income persons in jobs related to the provision of child day care 
services. 
(c)(1) Subject to paragraph (2), sums granted by a State to a 
qualified provider of child day care services (as defined in paragraph 
(3) (A)) during the fiscal period or fiscal year specified in subsection 
(a), to assist such provider in meeting its Federal welfare recipient 
employment incentive expenses (as defined in paragraph (3)(B)) 
with respect to individuals employed in jobs related to the provision 
of child day care services in one or more child day care facilities of 
such provider, shall be deemed, for purposes of title XX of the Social 
Security Act, to constitute expenditures made by the State, in accord-
ance with the requirements and conditions imposed by such Act, for 
the provision of services directed at one or more of the goals set forth 
in clauses (A) through (E) of the first sentence of section 2002(a) (1) 
of such Act. With respect to sums to which the preceding sentence is 
applicable (after application of the provisions of paragraph (2)), the 
figure "75", as contained in the first sentence of section 2002(a) (1) of 
such Act, shall be deemed to read "100". 
(2) The provisions of paragraph (1) shall not be applicable— 
(A) to the amount, if any, by which the aggregate of the sums 
(as described in such paragraph) granted by any State during 
the fiscal period or fiscal year specified in subsection (a) exceeds 
the amount by which such State's limitation (as referred to in 
subsection (a)) is increased pursuant to such subsection for such 
fiscal period or year, or 
(B) with respect to any grant made to a particular qualified 
provider of child day care services to the extent that (as deter-
mined by the Secretary) such grant is or will be used— 
(i) to pay wages to any employee at an annual rate in 
excess of $5,000, in the case of a public or nonprofit private 
provider, or 
(ii) to pay wages to any employee at an annual rate in 
excess of $4,000, or to pay more than 80 per centum of the 
wages of any employee, m the case of any other provider. 
PUBLIC LAW 94-401—SEPT. 7, 1976 
90 STAT. 1217 
(3) For purposes of this subsection— 
Definitions. 
(A) the term "qualified provider of child day care services", 
when used in reference to a recipient of a grant by a State, includes 
a provider of such services only if, of the total number of children 
receiving such services from such provider in the facility with 
respect to which the grant is made, at least 20 per centum thereof 
have some or all of the costs for the child day care services so 
furnished to them by such provider paid for under the State's 
services program conducted pursuant to title XX of the Social 
Security Act; and 
42 USC 1397. 
(B) the term "Federal welfare recipient employment expenses" 
means expenses of a qualified provider of child day care services 
which constitute Federal welfare recipient employment incentive 
expenses as defined in section SOB (a) (2) of the Internal Revenue 
Code of 1954, or which would constitute Federal welfare recipient 26 USC SOB. 
employment incentive expenses as so defined if the provider were 
a taxpayer entitled to a credit (with respect to the wages involved) 
under section 40 of such Code. 
26 USC 40. 
(d) (1) In the administration of title X X of the Social Security 
Act, the figure "75", as contained in the first sentence of section 2002 
(a) (1) of such Act, shall, subject to paragraph (2), be deemed to read 42 USC 1397a. 
"100" for purposes of applying such sentence to expenditures made 
by a State for the provision of child day care services during the fiscal 
year ending September 30,1977. 
(2) The total amount of Federal payments which may be paid to 
any State for such fiscal year under title XX of the Social Security 
Act at the rate specified in paragraph (1) shall not exceed an amount 
equal to the excess (if any) of— 
(A) the amount by which such State's limitation (as referred 
'''*' 
to in subsection (a)) is increased pursuant to such sulDsection for 
such year, over 
(B) the aggregate of the amounts of the grants, made by the 
State during such year, to which the provisions of subsection 
(c) (1) are applicable. 
SEC. 4. (a) Section 50A(a) of the Internal Revenue Code of 1954 26 USC 50A. 
(relating to amount of credit for work incentive program expenses) 
is amended— 
(1) by adding at the end of paragraph (2) the following new 
sentence: "The preceding sentence shall not apply to so much of 
the credit allowed by section 40 as is attributable to Federal 
welfare recipient employment incentive expenses described in 
subsection (a) (6) (B).", and 
(2) by striking out paragraph (6) and inserting in lieu thereof 
the following: 
"(6) 
LIMITATION WITH RESPECT TO CERTAIN ELIGIBLE EMPLOY-
EES.— 
" (A) 
NONBUSINESS ELIGIBLE EMPLOYEES.—Notwithstanding 
paragraph (1), the credit allowed by section 40 with respect 26 USC 40. 
to Federal welfare recipient employment incentive expenses 
paid or incurred by the taxpayer during the taxable year to 
an eligible employee whose services are not performed in con-
nection with a trade or business of the taxpayer shall not 
exceed $1,000. 
90 STAT. 1218 
PUBLIC LAW 94-401—SEPT. 7, 1976 
26 use 40. 
26 use SOB. 
26 use 50A 
note. 
42 use 1397a. 
Waiver. 
Effective date. 
42 use 1397a 
note. 
"(B) 
CHILD DAY CARE SERVICES ELIGIBLE EMPLOYEES.—Not-
withstanding paragraph (1), the credit allowed by section 
40 with respect to Federal welfare recipient employment 
incentive expenses paid or incurred by the taxpayer during 
the taxable year to an eligible employee whose services are 
performed in connection with a child day care services pro-
gram, conducted by the taxpayer, shall not exceed $1,000.". 
(b) Section 50B(a) (2) of such Code (relating to definitions; spe-
cial rules) is amended to read as follows: 
" (2) DEFINITIONS.—For purposes of this section, the term 'Fed-
eral welfare recipient employment incentive expenses' means the 
amount of wages paid or incurred by the taxpayer for services 
rendered to the taxpayer by an eligible employee— 
"(A) before July 1, 1976, or 
"(B) in the case of an eligible employee whose services are 
performed in connection with a child day care services pro-
gram of the taxpayer, before October 1, 1977.". 
(c) The amendments made by this section with respect to Federal 
welfare recipient employment incentive expenses paid or incurred by 
the taxpayer to an eligible employee whose services are performed in 
connection with a child day care services program of the taxpayer shall 
apply to such expenses paid or incurred by a taxpayer to an eligible 
employee whom such taxpayer hires after the date of the enactment 
of this Act. 
SEC. 5. (a) Section 2002(a) (9) (A) (ii) of the Social Security Act 
is amended— 
(1) by striking out "and" at the end of clause (II), and 
(2) by adding after the comma at the end of clause (III) the 
following: "(IV) the State agency may waive the staffing stand-
ards otherwise applicable in the case of a day care center or group 
day care home in which not more than 20 per centum of the chil-
dren in the facility (or, in the case of a day care center, not more 
than 5 children in the center) are children whose care is being 
paid for (wholly or in part) from funds made available to the 
State under this title, if such agency finds that it is not feasible 
to furnish day care for the children, whose care is so paid for, in 
a day care facility which complies with such staffing standards, 
and if the day care facility providing care for such children 
complies with applicable State standards, and (V) in determin-
ing whether applicable staffing standards are met in the case of 
day care provided in a family day care home, the number of 
children being cared for in such home shall include a child of the 
mother who is operating the home only if such child is under 
age 6,". 
(b) The amendments made by subsection (a) shall, insofar as such 
amendments add a new clause (V) to section 2002(a) (9)(A)(ii) of 
the Social Security Act, be effective for the period beginning October 
1, 1975, and ending September 30, 1977; and on and after October 1, 
1977, section 2002(a) (9) (A) (ii) of the Social Security Act shall read 
as it would if such amendments had not been made. 
PUBLIC LAW 94-401—SEPT. 7, 1976 
90 STAT. 1219 
SEC. 6. Effective February 1,1976, section 4(c) of Public Law 94- Effective date. 
120 is amended by striking out "January 31,1976" and "February 1, "
^
2 U
S
C 1397a 
1976" and inserting in lieu thereof "September 30,1977" and "October °**^' 
1,1977", respectively. 
Approved September 7, 1976, 
LEGISLATIVE HISTORY: 
HOUSE REPORTS: No. 94-903 (Comm. on Ways and Means) and No. 94-1317 (Comm. 
of Conference). 
SENATE REPORT No. 94-857 (Comm. on Finance). 
CONGRESSIONAL RECORD, Vol. 122 (1976): 
Mar. 16, considered and passed House. 
May 20, considered and passed Senate, amended. 
July 1, House receded and concurred in Senate amendments with an amendment. 
Aug. 24, Senate agreed to conference report and concurred in House amendment. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 12, No. 37: 
Sept. 7, Presidential statement.