[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 2489 Introduced in Senate (IS)]







105th CONGRESS
  2d Session
                                S. 2489

To amend the Child Care and Development Block Grant Act of 1990 and the 
   Higher Education Act of 1965 to establish and improve programs to 
    increase the availability of quality child care, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 17, 1998

 Mr. Wellstone introduced the following bill; which was read twice and 
         referred to the Committee on Labor and Human Resources

_______________________________________________________________________

                                 A BILL


 
To amend the Child Care and Development Block Grant Act of 1990 and the 
   Higher Education Act of 1965 to establish and improve programs to 
    increase the availability of quality child care, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Child Development Act''.

            TITLE I--CHILD CARE AND DEVELOPMENT BLOCK GRANT

SEC. 101. DEFINITIONS.

    (a) Amendments.--Section 658P of the Child Care and Development 
Block Grant Act of 1990 (42 U.S.C. 9858n) is amended--
            (1) by striking paragraph (8) and inserting the following:
            ``(8) Local area.--The term `local area' means a local area 
        referred to in section 658D(d)(1).''; and
            (2) by adding at the end the following:
            ``(15) Child care; child care services.--The terms `child 
        care' and `child care services' include out-of-school care 
        provided under section 658F(a)(2), but do not include other 
        services provided under section 658G or 658H.
            ``(16) General child care provider.--The term `general 
        child care provider' means a provider that meets the licensing 
        requirements (including accreditation requirements) (if any) 
        applicable to child care services provided within the State.
            ``(17) Head start program.--The term `Head Start program' 
        means a program carried out under the Head Start Act (42 U.S.C. 
        9831 et seq.).
            ``(18) Local coordinating board.--The term `local 
        coordinating board' means a local child care coordinating board 
        established under section 658D(d).
            ``(19) Local educational agency; state educational 
        agency.--The terms `local educational agency' and `State 
        educational agency' have the meanings given the terms in 
        section 14101 of the Elementary and Secondary Education Act of 
        1965 (20 U.S.C. 8801).
            ``(20) Out-of-school care.--The term `out-of-school care' 
        means before- and after-school care, weekend, holiday, and 
        vacation care, and care provided on school release days.
            ``(21) State coordinating board.--The term `State 
        coordinating board' means a State child care coordinating board 
        established under section 658D(c).''.
    (b) Redesignation.--The Child Care and Development Block Grant Act 
of 1990 (42 U.S.C. 9858 et seq.) is amended--
            (1) by redesignating section 658P as section 658T; and
            (2) by moving such section 658T to the end of such Act.

SEC. 102. AUTHORIZATION OF APPROPRIATIONS.

    Section 658B of the Child Care and Development Block Grant Act of 
1990 (42 U.S.C. 9858) is amended--
            (1) by inserting before ``There is'' the following: ``(a) 
        Direct Child Care and Quality Improvement Activities.--'';
            (2) by striking ``this subchapter'' and all that follows 
        and inserting ``sections 658F(a)(1) and 658G(a), $1,000,000,000 
        for each of fiscal years 1999 through 2003.''; and
            (3) by adding at the end the following:
    ``(b) Additional Activities.--There are authorized to be 
appropriated and there are appropriated, for each of fiscal years 1999 
through 2003--
            ``(1) $7,500,000,000, in addition to amounts made available 
        under subsection (a) and section 418 of the Social Security Act 
        (42 U.S.C. 618), to carry out section 658F(a)(1);
            ``(2) $1,000,000,000 to carry out section 658F(a)(2);
            ``(3) $800,000,000 to carry out section 658G(b);
            ``(4) $250,000,000 to carry out section 658G(c);
            ``(5) $200,000,000 to carry out section 658G(d); and
            ``(6) $100,000,000 to carry out section 658H.''.

SEC. 103. STATE CHILDREN'S BOARDS AND LOCAL COORDINATING BOARDS.

    Section 658D of the Child Care and Development Block Grant Act of 
1990 (42 U.S.C. 9858b) is amended--
            (1) by striking the section heading and inserting the 
        following:

``SEC. 658D. STATE AND LOCAL COORDINATING BOARDS.'';

            (2) in subsection (a)--
                    (A) by striking ``State agency'' and inserting 
                ``State entity''; and
                    (B) by striking ``to act as the lead agency'' and 
                inserting ``to serve as a State coordinating board'';
            (3) in subsection (b)--
                    (A) in paragraph (1)--
                            (i) in the matter preceding subparagraph 
                        (A), by striking ``lead agency'' and inserting 
                        ``State coordinating board''; and
                            (ii) in subparagraph (D), by inserting 
                        before the period the following: ``, including 
                        developing a plan for the coordination of 
                        services provided under this subchapter and 
                        services provided through such programs in the 
                        State, which plan shall be designed to--
                            ``(i) reduce gaps and duplications in the 
                        services described in the plan;
                            ``(ii) promote continuity in the services;
                            ``(iii) promote the most cost-effective 
                        models for the services; and
                            ``(iv) direct the missions of the State 
                        agencies represented in the Board to meet the 
                        needs of children.''; and
                    (B) in paragraph (2), by striking ``lead agency'' 
                and inserting ``State coordinating board'';
            (4) by adding at the end the following:
    ``(c) State Child Care Coordinating Board.--
            ``(1) In general.--Each Governor of a State that carries 
        out an activity funded under this subchapter shall establish 
        the State child care coordinating board referred to in 
        subsection (a).
            ``(2) Composition.--The board shall include a 
        representative of--
                    ``(A) the State educational agency;
                    ``(B) the State health department or comparable 
                agency;
                    ``(C) the State agency with primary responsibility 
                for human services, as determined by the Governor of 
                the State; and
                    ``(D) any State agencies with primary 
                responsibility for child care (including out-of-school 
                care) programs, pre-kindergarten education programs, 
                Head Start programs, and other early education 
                services, as determined by the Governor of the State.
    ``(d) Local Coordinating Board.--
            ``(1) In general.--Each chief executive officer of a unit 
        of general purpose local government that receives assistance 
        under this subchapter shall establish a local child care 
        coordinating board for the local area served by the local 
        government.
            ``(2) Composition.--Except as provided in paragraph (3), 
        the local coordinating board shall include representatives in 
        the local area of--
                    ``(A) entities carrying out early child care and 
                early education programs, including representatives of 
                family child care providers and center-based child care 
                providers;
                    ``(B) entities carrying out child care resource and 
                referral programs;
                    ``(C) entities carrying out Head Start programs;
                    ``(D) entities carrying out pre-kindergarten 
                education programs;
                    ``(E) the health department or comparable agency 
                for the local area;
                    ``(F) the agency with primary responsibility for 
                human services for the local area, as determined by the 
                chief executive officer;
                    ``(G) the agency with primary responsibility for 
                child welfare for the local area, as determined by the 
                chief executive officer;
                    ``(H) entities carrying out child care programs for 
                children within the compulsory school attendance age 
                range for the State involved;
                    ``(I) the local educational agency;
                    ``(J) the agencies with primary responsibility for 
                economic development, and employment and training 
                services, for the local area, as determined by the 
                chief executive officer; and
                    ``(K) parents.
            ``(3) Organizations.--In establishing a local coordinating 
        board, the chief executive officer may designate a nonpartisan 
        organization such as an entity described in paragraph (2)(B) to 
        serve as the board.
            ``(4) Duties.--The local coordinating board for a local 
        area shall carry out the duties specified for the board under 
        this subchapter and shall oversee the administration of 
        activities carried out in the local area under sections 
        658F(a)(2) and 658G(c) with funds made available to carry out 
        this subchapter.
            ``(5) Services for local coordinating board.--The chief 
        executive officer shall enter into an agreement with an entity 
        described in paragraph (2)(B) or (if no such entity exists in 
        the local area) with a local agency to provide to the local 
        coordinating board, in appropriate cases, services that consist 
        of data collection, community needs assessment, planning, 
        research, and coordination services.''.

SEC. 104. STATE PLAN REQUIREMENTS.

    (a) In General.--Section 658E(c) of the Child Care and Development 
Block Grant Act of 1990 (42 U.S.C. 9858c(c)) is amended--
            (1) in paragraph (1), by striking ``lead agency 
        designated'' and inserting ``State coordinating board 
        established'';
            (2) in paragraph (2)(A)--
                    (A) in clause (i)(II), by striking ``section 
                658P(2)'' and inserting ``section 658T(2)''; and
                    (B) in clause (ii), by striking ``eligible 
                provider'' and inserting ``eligible child care provider 
                (or, in the case of out-of-school care described in 
                section 658F(a)(2), an entity that receives a grant 
                under section 658F(a)(2)(B))'';
            (3) in paragraph (3)--
                    (A) in subparagraph (A), by striking ``(D)'' and 
                inserting ``(E)'';
                    (B) in subparagraph (B), by inserting before ``, 
                and any other activity'' the following: ``(including 
                activities described in subsections (a) through (d) of 
                section 658G), activities described in section 658H'';
                    (C) in subparagraph (C), in the first sentence, by 
                inserting before the period the following: ``, 
                including conducting rate and wage surveys and 
                submitting reports under section 658K(c)'';
                    (D) in subparagraph (D), by striking ``under this 
                subchapter'' and inserting ``under section 658F(a)''; 
                and
                    (E) by adding at the end the following:
                    ``(E) Allocation of funds by activity.--The State 
                plan shall provide that the State will use each of the 
                5 State allotments made under section 658O(b) for the 
                activities for which the allotment is made.'';
            (4) in paragraph (4)--
                    (A) by redesignating subparagraph (B) as 
                subparagraph (E); and
                    (B) by inserting after subparagraph (A) the 
                following:
                    ``(B) Limit.--The State plan shall specify that the 
                payment rates for the provision of the child care 
                services shall be established in a manner that provides 
                for the payment of the market rate for such services, 
                except as provided in subparagraph (C).
                    ``(C) Higher rates for certain types of care.--The 
                State plan may provide that the payment may be higher 
                for--
                            ``(i) child care services for children with 
                        disabilities, or infants and toddlers with 
                        disabilities, as such terms are defined in 
                        section 602 of the Individuals with 
                        Disabilities Education Act (20 U.S.C. 1401) or 
                        for children within age ranges specified by the 
                        State if the State determines that higher 
                        payments are justified for the care of such 
                        children;
                            ``(ii) comprehensive child care services, 
                        as determined by the State;
                            ``(iii) care by types of providers 
                        specified by the State if the State determines 
                        that higher payments are justified for care by 
                        such providers; and
                            ``(iv) care provided through accredited 
                        child care programs, as determined by the 
                        State.
                    ``(D) Federal and non-federal shares.--
                            ``(i) In general.--The State plan shall 
                        provide that the funds made available to the 
                        State from amounts appropriated under section 
                        658B(b) shall be used to pay for the Federal 
                        share of the cost of carrying out the 
                        appropriate activities described in the 
                        provisions referred to in section 658B(b).
                            ``(ii) Federal share.--The Federal share of 
                        the cost is 80 percent.
                            ``(iii) Non-federal share.--The non-Federal 
                        share of the cost may be in cash or in kind, 
                        fairly evaluated, including plant, equipment, 
                        or services.''; and
            (5) by adding at the end the following:
            ``(6) Report, plan, and proposal for child care capital 
        financing program.--The State plan shall include--
                    ``(A) a report described in section 658H(c)(2), 
                based on a study described in section 658H(c)(1);
                    ``(B) a plan with clear measurable goals for 
                addressing the differences and deficiencies described 
                in the report, including addressing the differences and 
                deficiencies through a child care capital financing 
                program carried out under section 658H(b); and
                    ``(C) a proposal for monitoring the impact and 
                effectiveness of the implementation of the plan 
                described in subparagraph (B) under section 658H.''.
    (b) Redesignation and Conforming Amendments.--Section 658F of the 
Child Care and Development Block Grant Act of 1990 (42 U.S.C. 9858d) is 
amended--
            (1) in subsection (b)--
                    (A) in paragraph (1), by striking ``section 
                658O(c)(6)'' and inserting ``sections 658H and 
                658O(c)(6)''; and
                    (B) in paragraph (2), by inserting before 
                ``except'' the following: ``except as provided in 
                section 658H and'';
            (2) by redesignating subsections (a) and (b) as subsections 
        (c) and (d);
            (3) by moving such subsections to the end of section 658M; 
        and
            (4) by striking the section heading.

SEC. 105. SCHOOL-AGE CHILD CARE AND OTHER CHILD CARE PROGRAMS.

    The Child Care and Development Block Grant Act of 1990 (42 U.S.C. 
9858 et seq.) is amended by inserting after section 658E the following:

``SEC. 658F. SCHOOL-AGE CHILD CARE AND OTHER CHILD CARE PROGRAMS.

    ``(a) Child Care Programs.--
            ``(1) General child care programs.--A State that receives 
        an allotment for a fiscal year in accordance with section 
        658O(f)(1) shall use the funds made available through the 
        allotment (less any amounts needed to carry out section 
        658G(a)) for child care services on a sliding fee scale basis.
            ``(2) Out-of-school care programs.--
                    ``(A) State grants.--
                            ``(i) In general.--A State that receives an 
                        allotment for a fiscal year in accordance with 
                        section 658O(f)(2) shall use the funds made 
                        available through the allotment to make grants 
                        to local coordinating boards for out-of-school 
                        care programs.
                            ``(ii) Application.--To be eligible to 
                        receive a grant from a State under clause (i), 
                        a local coordinating board shall submit to the 
                        State an application at such time, in such 
                        manner, and containing such information as the 
                        State may require. At a minimum, the 
                        application shall include an assurance that the 
                        board has issued a request for proposals to 
                        carry out the programs, and shall include a 
                        plan for conducting the programs, based on the 
                        proposals received.
                    ``(B) Local grants.--
                            ``(i) In general.--A local coordinating 
                        board that receives funds under subparagraph 
                        (A) shall use the funds to make grants to 
                        appropriate entities to establish, develop, and 
                        carry out out-of-school care programs.
                            ``(ii) Proposal.--To be eligible to receive 
                        a grant from a local coordinating board under 
                        clause (i), an entity shall submit to the board 
                        a proposal at such time, in such manner, and 
                        containing such information as the board may 
                        require.
                            ``(iii) Selection.--In selecting an entity 
                        to receive a grant under clause (i), a local 
                        coordinating board shall evaluate the 
                        qualifications of the entities submitting 
                        proposals on the basis of the quality 
                        indicators used for accreditation by a national 
                        accreditation association concerned with 
                        school-age child care.
                            ``(iv) Use of funds.--An entity that 
                        receives a grant under clause (i) shall use the 
                        funds made available through the grant to 
                        provide out-of-school care programs for 
                        children (including children with disabilities, 
                        as defined in section 602 of the Individuals 
                        with Disabilities Education Act (20 U.S.C. 
                        1401)) who are not more than age 18 and who 
                        meet the requirements of subparagraphs (B) and 
                        (C) of section 658T(4).
                            ``(v) Services.--In providing an out-of-
                        school care program under this subparagraph, an 
                        entity may use the funds described in clause 
                        (iv) to provide services for children described 
                        in clause (iv), that consist of--
                                    ``(I) recreational activities;
                                    ``(II) community-based service 
                                programs that provide for meaningful 
                                human, educational, environmental, or 
                                public safety service;
                                    ``(III) academic assistance and 
                                tutoring;
                                    ``(IV) mentoring;
                                    ``(V) conflict management;
                                    ``(VI) health and nutrition 
                                services or disease and injury 
                                prevention services;
                                    ``(VII) literacy services;
                                    ``(VIII) child care (other than 
                                another service described in this 
                                clause);
                                    ``(IX) transportation of the 
                                children described in clause (iv) 
                                between--
                                            ``(aa) school or home; and
                                            ``(bb) the facility in 
                                        which the services are 
                                        provided; and
                                    ``(X) such other activities as the 
                                local coordinating board may determine 
                                to be appropriate.
    ``(b) Definition.--For purposes of this subchapter, the term 
`eligible child', used with respect to child care provided under 
subsection (a)(2), includes a child described in subsection 
(a)(2)(B)(iv).''.

SEC. 106. CHILD CARE QUALITY IMPROVEMENT ACTIVITIES.

    Section 658G of the Child Care and Development Block Grant Act of 
1990 (42 U.S.C. 9858e) is amended to read as follows:

``SEC. 658G. CHILD CARE QUALITY IMPROVEMENT ACTIVITIES.

    ``(a) General Quality Improvement Activities.--A State that 
receives an allotment for a fiscal year in accordance with section 
658O(f)(1) shall use not less than 4 percent of the funds made 
available through such allotment for activities that are designed to 
provide comprehensive consumer education to parents and the public, 
activities that increase parental choice, and activities designed to 
improve the quality and availability of child care (such as resource 
and referral services).
    ``(b) Availability of Quality Child Care Services.--
            ``(1) In general.--A State that receives an allotment for a 
        fiscal year in accordance with section 658O(f)(3) shall use the 
        funds made available through the allotment for activities 
        described in paragraph (2) designed to improve the availability 
        of quality child care services.
            ``(2) Activities.--The State may use the funds for--
                    ``(A) assisting general child care providers in the 
                State in bringing provider-child ratios up to standards 
                recommended by nationally recognized child care 
                accrediting bodies;
                    ``(B) improving the enforcement of licensing 
                requirements, including through the use of unannounced 
                inspection of general child care providers;
                    ``(C) conducting background checks on general child 
                care providers;
                    ``(D) improving the compensation of general child 
                care providers;
                    ``(E) assisting general child care providers in 
                becoming licensed (including becoming accredited);
                    ``(F) expanding activities to educate parents on 
                the availability and quality of child care, including 
                the development and operation of resource and referral 
                systems;
                    ``(G) creating support networks for family child 
                care providers;
                    ``(H) establishing linkages between child care 
                services and health care services;
                    ``(I) offering training and education to general 
                child care providers, including offering scholarships 
                to assist with the expenses of obtaining such training 
                and education; and
                    ``(J) providing parent education and family support 
                programs.
            ``(3) Administration.--The State may carry out the 
        activities described in this subsection directly or by grant or 
        contract.
    ``(c) Challenge Grants To Increase the Availability and Quality of 
Child Care.--
            ``(1) Establishment.--The Secretary shall establish a 
        program to award challenge grants to local coordinating boards 
        that demonstrate to the Secretary that the boards can 
        successfully generate the matching funds from the private 
        sector required under paragraph (3) for the purpose of 
        expanding the availability of, and improving the quality of, 
        child care throughout the local areas served by the boards.
            ``(2) Application.--To be eligible to receive a grant under 
        this subsection, a local coordinating board shall prepare and 
        submit to the Secretary an application at such time and in such 
        manner as the Secretary may require, and that includes--
                    ``(A) an assurance that the private sector matching 
                funds required under paragraph (3) will be provided;
                    ``(B) evidence of collaboration with parents, 
                schools, employers, child care agencies, and other 
                State and local government agencies in the preparation 
                of the application;
                    ``(C) an assessment of child care resources and 
                needs within the local area; and
                    ``(D) any additional information that the Secretary 
                may require.
            ``(3) Matching requirement.--To be eligible to receive a 
        grant under this subsection a local coordinating board shall 
        provide assurances to the Secretary that the local area will 
        provide $1 for every $2 provided under the grant, from private 
        sector sources.
            ``(4) Use of funds.--A local coordinating board shall use 
        the matching funds provided under a grant awarded under this 
        subsection only for the purpose described in paragraph (1).
            ``(5) Administration.--A local coordinating board awarded a 
        grant under this subsection may authorize a public or nonprofit 
        entity within the local area to act as the fiscal agent for the 
        administration of the program funded under the grant.
    ``(d) Professional Development Activities and Compensation.--
            ``(1) State use of funds.--A State that receives an 
        allotment for a fiscal year in accordance with section 
        658O(f)(4) shall use the funds made available through the 
        allotment to provide, directly or by grant or contract with an 
        appropriate entity, the professional development activities and 
        compensation described in paragraph (2), in order to improve 
        the availability of quality child care services.
            ``(2) Activities.--The State may use the funds to--
                    ``(A) provide training or classes related to early 
                childhood development for general child care providers;
                    ``(B) provide increased compensation for general 
                child care providers who have completed training or 
                coursework in classes described in subparagraph (A), or 
                additional early childhood development training, that 
                meets such requirements as the State may specify; and
                    ``(C) provide mentoring and apprenticeship programs 
                for general child care providers.''.

SEC. 107. CHILD CARE CAPITAL FINANCING PROGRAM.

    The Child Care and Development Block Grant Act of 1990 (42 U.S.C. 
9858 et seq.) is amended by inserting after section 658G the following:

``SEC. 658H. CHILD CARE CAPITAL FINANCING PROGRAM.

    ``(a) In General.--A State that receives an allotment for a fiscal 
year in accordance with section 658O(f)(5) shall use the funds made 
available through the allotment for the establishment and 
implementation of a child care capital financing program described in 
subsection (b) and for related activities described in subsection (c).
    ``(b) Child Care Capital Financing Program.--
            ``(1) In general.--Each State described in subsection (a) 
        shall establish a child care capital financing program, through 
        which the State shall finance child care capital projects 
        described in paragraph (4), consistent with the plan and 
        proposal approved in the State plan under section 658E(c)(6).
            ``(2) Capital financing mechanisms.--In carrying out the 
        program, the State may use the funds made available through the 
        allotment referred to in subsection (a) to provide capital 
        financing for the child care capital projects by--
                    ``(A) making grants to the entities described in 
                paragraph (3);
                    ``(B) making direct loans to the entities;
                    ``(C) making guarantees for loans assumed by the 
                entities, or purchasing letters of credit from the 
                lenders for such loans;
                    ``(D) entering into contracts to make annual 
                interest and principal payments on behalf of the 
                entities for such loans;
                    ``(E) subsidizing interest payments on behalf of 
                the entities for such loans;
                    ``(F) capitalizing, or assisting in the 
                capitalization of, a child care capital investment 
                fund, which shall be available to provide the financial 
                assistance described in subparagraphs (A) through (E) 
                for the entities; and
                    ``(G) funding a reserve to enhance the ability of 
                the State to issue a revenue bond (including obtaining 
                more favorable underwriting terms for the bond) 
                designed to provide the financial assistance for the 
                entities.
            ``(3) Eligible entities.--
                    ``(A) In general.--Entities eligible to receive 
                assistance through capital financing provided under 
                this subsection for facilities shall be--
                            ``(i) general child care providers who own 
                        the facilities, or lease the facilities as 
                        described in subparagraph (B)(ii); or
                            ``(ii) qualified private entities 
                        developing child care facilities under 
                        agreements with general child care providers 
                        described in clause (i), in any State in which 
                        the Secretary determines that State law governs 
                        such agreements, prohibits fraudulent and other 
                        inappropriate transactions, and is sufficient 
to protect the financial interests of the Federal Government and the 
State.
                    ``(B) Application.--To be eligible to receive 
                assistance through capital financing provided under 
                this subsection, an entity shall submit an application 
                to the State at such time, in such manner, and 
                containing such information as the State may require. 
                At a minimum, the application shall contain--
                            ``(i) the agreement described in paragraph 
                        (4)(E); and
                            ``(ii) if the general child care provider 
                        leases the facility at which the child care 
                        capital project will occur--
                                    ``(I) a copy of a signed and 
                                enforceable lease providing that the 
                                provider may provide child care at the 
                                facility for not less than 5 years 
                                after the completion of the project; 
                                and
                                    ``(II) an agreement by the owner of 
                                the facility and the general child care 
                                provider that the owner and provider 
                                will deliver to the State an executed 
                                assignment of the lease to the State.
            ``(4) Child care capital projects.--An entity that receives 
        assistance under this subsection through capital financing 
        described in paragraph (2) shall use the assistance--
                    ``(A) for a project, carried out in accordance with 
                the plan and proposal described in section 658E(c)(6), 
                that involves the construction, renovation, or repair 
                of a child care facility, or the acquisition or repair 
                of equipment for such a facility;
                    ``(B) for a facility through which a center-based 
                child care provider, a group home child care provider, 
                or a family child care provider provides child care 
                services;
                    ``(C) for a facility through which a provider--
                            ``(i) provides full-time year-round 
                        preschool child care;
                            ``(ii) carries out a Head Start program;
                            ``(iii) carries out a child care program, 
                        for children within the compulsory school 
                        attendance age range for the State, that the 
                        State determines meets the needs of working 
                        parents; or
                            ``(iv) provides a specialized child care 
                        program, such as a program to provide evening 
                        and weekend child care, that the State 
                        determines meets the needs of working parents;
                    ``(D) for a facility in which not less than 30 
                percent of the children receiving child care are 
                children whose family income does not exceed 100 
                percent of the State median family income (for a family 
                of the size involved); and
                    ``(E) only after entering into an agreement with 
                the State specifying that--
                            ``(i) the facility will be used to provide 
                        child care for eligible children, in accordance 
                        with subparagraphs (B), (C), and (D), for at 
                        least 5 years after the completion of the 
                        project; and
                            ``(ii) if the facility is not used as 
                        described in clause (i) for the 5-year period, 
                        the owner of the facility shall reimburse the 
                        State in an amount equal to the product of--
                                    ``(I) the cost of the project;
                                    ``(II) 20 percent; and
                                    ``(III) the number of years in the 
                                5-year period in which the facility is 
                                not used as described in clause (i).
            ``(5) Arrangements.--The State may provide the capital 
        financing described in paragraph (2) directly, or may make 
        grants or enter into contracts with public agencies and other 
        appropriate entities to provide the financing.
            ``(6) Technical assistance.--The State shall provide 
        technical assistance to entities carrying out child care 
        capital projects under this subsection.
    ``(c) Planning Process.--
            ``(1) Study.--Each State described in subsection (a) shall, 
        prior to the submission of the State plan described in section 
        658E, study the demand for and supply of child care throughout 
        the State. In conducting the study, the State shall collect 
        information on the demand and supply and, in particular, on--
                    ``(A) the demand and supply in census tracts in 
                which the median family income does not exceed 100 
                percent of the State median family income (for a family 
                of the size involved); and
                    ``(B) the quality (including the physical 
                condition) of child care facilities in the State.
            ``(2) Report.--The State shall prepare and submit to the 
        Secretary in the State plan a report based on the results of 
        the study and such other information relating to the demand for 
        and supply of child care in the State as the State may 
        determine to be appropriate. The report shall contain an 
        analysis of--
                    ``(A) any differences between the demand and 
                supply; and
                    ``(B) any deficiencies in the quantity and quality 
                of the child care.
    ``(d) Child Care Federal Guarantee Program.--
            ``(1) Guarantees.--
                    ``(A) In general.--The Secretary may, on such terms 
                and conditions as the Secretary may prescribe, 
                guarantee notes and other obligations issued by States 
                for the purposes of assisting entities described in 
                subsection (b)(3)(A) in obtaining financing for 
                projects described in subsection (b)(4)(A).
                    ``(B) Full faith and credit.--The full faith and 
                credit of the United States is pledged to the payment 
                of each guarantee made under this subsection for an 
                obligation. The guarantee shall be conclusive evidence 
                of the eligibility of the obligation for the guarantee 
                with respect to principal and interest. The validity of 
                the guarantee shall be incontestable in the hands of a 
                holder of the obligation.
            ``(2) Conditions on obligations and financing.--A guarantee 
        under this subsection may be used to assist an entity in 
        obtaining financing only if the entity has made efforts to 
        obtain the financing without the guarantee and cannot complete 
        the financing in a manner that allows the timely execution of 
        the project plans without the guarantee. Obligations guaranteed 
        under this subsection shall be in such form and denominations, 
        have such maturities, and be subject to such conditions as the 
        Secretary may prescribe in regulations. The Secretary may not 
        deny a guarantee under this subsection on the basis of the 
        proposed repayment period for the obligation, unless the period 
        is more than 20 years or the Secretary determines that the 
        period causes the guarantee to constitute an unacceptable 
        financial risk.
            ``(3) Maximum guarantee for a state.--The Secretary may not 
        guarantee an obligation for a State under this subsection 
        during a fiscal year if, as a result, the total amount of the 
        outstanding obligations guaranteed for the State under this 
        subsection would exceed 5 times the amount of the allotments of 
        the State under this subchapter for the fiscal year.
            ``(4) Repayment contract; pledge; security.--To assure the 
        repayment of obligations and charges incurred under this 
        subsection, in order for a State to receive a guarantee for an 
        obligation under this subsection the State shall--
                    ``(A) enter into a contract, in a form acceptable 
                to the Secretary, for repayment of the obligation;
                    ``(B) pledge any allotment for which the State may 
                become eligible under this subchapter for the fiscal 
                year during which the obligation is guaranteed, and the 
                4 succeeding fiscal years; and
                    ``(C) furnish, at the request of the Secretary, 
                such other security as the Secretary may determine to 
                be appropriate in making such guarantees.
            ``(5) Pledged allotments for repayments.--Notwithstanding 
        any other provision of this subchapter, the Secretary may apply 
        allotments pledged under paragraph (4)(B) to any repayment due 
        to the United States as a result of a guarantee made under this 
        subsection.
            ``(6) Payment of principal, interest, and costs.--
        Notwithstanding any other provision of this subchapter, a State 
        may use an allotment received under this subchapter (including 
        program income derived from the allotment) to pay for principal 
        and interest due (including such servicing, underwriting, and 
        other costs as the Secretary may specify in regulations) on an 
        obligation guaranteed under this subsection.
            ``(7) Issuance of obligations to secretary of the 
        treasury.--
                    ``(A) Issuance.--The Secretary may issue 
                obligations to the Secretary of the Treasury in an 
                amount outstanding at any one time sufficient to enable 
                the Secretary to carry out the obligations of the 
                Secretary under guarantees authorized by this 
                subsection. The obligations issued under this paragraph 
                shall have such maturities and bear such rates of 
                interest as the Secretary of the Treasury shall 
                determine to be appropriate.
                    ``(B) Purchase.--The Secretary of the Treasury 
                shall purchase any obligations of the Secretary issued 
                under this paragraph. For the purposes of making such a 
                purchase, the Secretary of the Treasury may use as a 
                public debt transaction the proceeds from the sale of 
                any security issued under chapter 31 of title 31, 
                United States Code. The purposes for which such a 
                security may be issued under such chapter are extended 
                to include the purchases of the obligations issued 
                under this paragraph.
            ``(8) Purchase of guaranteed obligations by federal 
        financing bank.--An obligation guaranteed under this subsection 
        may not be purchased by the Federal Financing Bank.
            ``(9) Federal taxation of guaranteed obligations.--The 
        interest paid on an obligation guaranteed under this subsection 
        shall be included in gross income for the purpose of chapter 1 
        of the Internal Revenue Code of 1986.
            ``(10) Maximum total amount of guarantees.--
                    ``(A) Fiscal years.--To the extent provided in 
                appropriations Acts and permitted under this 
                subsection, and notwithstanding any other provision of 
                law, the Secretary may guarantee obligations under this 
                subsection with an aggregate principal amount of 
                $500,000,000 for fiscal year 1999 and $500,000,000 for 
                each subsequent fiscal year.
                    ``(B) Outstanding obligations.--The aggregate 
                principal amount of outstanding obligations guaranteed 
                on a cumulative basis by the Secretary under this 
                subsection shall not exceed $2,500,000,000.
                    ``(C) Monitoring.--The Secretary shall monitor the 
                use of guarantees under this subsection by States. If 
                the Secretary determines that 50 percent of the 
                aggregate guarantee authority described in subparagraph 
                (B) has been committed, the Secretary may impose 
                limitations on the amount of guarantees any State may 
                receive in any fiscal year, or request the enactment of 
                legislation increasing the limit on the authority.
            ``(11) Limitation on imposition of fee or charge.--No fee 
        or charge may be imposed by the Secretary or any other head of 
        a Federal agency on or with respect to a guarantee made by the 
        Secretary under this subsection.
    ``(e) Interagency Agreements.--The Secretary may carry out the 
responsibilities of the Secretary under this section directly or by 
entering into an interagency agreement with the head of another Federal 
agency to carry out such responsibilities.''.

SEC. 108. ADMINISTRATION AND ENFORCEMENT.

    Section 658I(b)(2)(A) of the Child Care and Development Block Grant 
Act of 1990 (42 U.S.C. 9858g(b)(2)(A)) is amended, in the matter 
following clause (ii), by striking ``the State allotment'' and 
inserting ``the appropriate State allotment''.

SEC. 109. PAYMENTS.

    Section 658J of the Child Care and Development Block Grant Act of 
1990 (42 U.S.C. 9858h) is amended--
            (1) in subsection (a), by striking ``its allotment'' and 
        inserting ``each allotment of the State''; and
            (2) in subsection (c), by striking ``the allotment'' and 
        inserting ``an allotment''.

SEC. 110. SURVEYS.

    Section 658K of the Child Care and Development Block Grant Act of 
1990 (42 U.S.C. 9858i) is amended--
            (1) in subsection (a)(2)(A), by striking ``section 
        658P(5)'' and inserting ``section 658T(5)''; and
            (2) by adding at the end the following:
    ``(c) Surveys.--A State that receives allotments to carry out this 
subchapter shall conduct periodic surveys to collect wage and rate 
information referred to in section 658E(c)(3)(C) and shall periodically 
submit to the Secretary reports containing the results of the 
surveys.''.

SEC. 111. ALLOTMENTS.

    (a) Payments for the Benefit of Indian Children.--Section 658O(c) 
of the Child Care and Development Block Grant Act of 1990 (42 U.S.C. 
9858m(c)) is amended--
            (1) in paragraph (2)(A), by striking ``lead agency'' and 
        inserting ``State coordinating board'';
            (2) in paragraph (3)--
                    (A) by striking ``child care services provided'' 
                and inserting ``services provided''; and
                    (B) by striking ``child care services;'' and 
                inserting ``services described in this subchapter;''; 
                and
            (3) in paragraph (6), by inserting ``(other than the 
        amounts provided to carry out section 658H)'' after ``this 
        subsection'' each place it appears.
    (b) Allotments.--Section 658O of the Child Care and Development 
Block Grant Act of 1990 (42 U.S.C. 9858m) is amended--
            (1) by redesignating subsection (f) as subsection (g);
            (2) by inserting before subsection (g) the following:
    ``(f) Relationship Between Appropriated Funds, Reservations, and 
Allotments.--The Secretary shall make 5 sets of reservations described 
in paragraphs (1) and (2) of subsection (a), and of allotments 
described in subsection (b). The Secretary shall make the reservations 
and allotments--
            ``(1) to carry out activities under sections 658F(a)(1) and 
        658G(a), from the amount appropriated under subsections (a) and 
        (b)(1) of section 658B;
            ``(2) to carry out activities under section 658F(a)(2), 
        from the amount appropriated under section 658B(b)(2);
            ``(3) to carry out activities under section 658G(b), from 
        the amount appropriated under section 658B(b)(3);
            ``(4) to carry out activities under section 658G(d), from 
        the amount appropriated under section 658B(b)(5); and
            ``(5) to carry out activities under section 658H, from the 
        amount appropriated under section 658B(b)(6).''; and
            (3) in subsection (g) (as redesignated in paragraph (1)), 
        by striking ``Definition.--'' and all that follows through 
        ``the term'' and inserting the following: ``Definitions.--In 
        this section:
            ``(1) Appropriated amount.--The term `appropriated amount' 
        means, with respect to a set of activities described in a 
        paragraph of subsection (f), the amount described in that 
        paragraph.
            ``(2) State.--The term''.
    (c) Conforming Amendments.--Section 658O (42 U.S.C. 9858m) is 
amended--
            (1) in subsection (a)--
                    (A) in paragraph (1), by striking ``the amount 
                appropriated under this subchapter'' and inserting 
                ``the appropriated amount''; and
                    (B) in paragraph (2), by striking ``the amount 
                appropriated under section 658B'' and inserting ``the 
                appropriated amount'';
            (2) in subsection (b)(1), by striking ``the amounts 
        appropriated under section 658B'' and inserting ``the 
        appropriated amount''; and
            (3) in subsection (e)--
                    (A) in paragraph (1)--
                            (i) by striking ``the allotment under'' and 
                        inserting ``an allotment for an activity made 
                        under''; and
                            (ii) by striking ``the original 
                        allotments'' and inserting ``the original 
                        allotments for the activity'';
                    (B) in paragraph (2)--
                            (i) in subparagraph (A), by striking 
                        ``carry out a State plan'' and inserting 
                        ``carry out the activity involved under a State 
                        plan''; and
                            (ii) in subparagraph (B), by inserting 
                        ``for the activity'' before the period; and
                    (C) in paragraph (3)--
                            (i) by inserting ``for an activity'' before 
                        ``shall be''; and
                            (ii) by inserting ``for the activity'' 
                        before the period.

           TITLE II--SUPPORTING FAMILY CHOICES IN CHILD CARE

SEC. 201. EXPANDING THE DEPENDENT CARE TAX CREDIT.

    (a) Percentage of Employment-Related Expenses Determined by 
Taxpayer Status.--Section 21(a)(2) of the Internal Revenue Code of 1986 
(defining applicable percentage) is amended to read as follows:
            ``(2) Applicable percentage defined.--For purposes of 
        paragraph (1), the term `applicable percentage' means--
                    ``(A) except as provided in subparagraph (B), 50 
                percent reduced (but not below 20 percent) by 1 
                percentage point for each $1,000, or fraction thereof, 
                by which the taxpayers's adjusted gross income for the 
                taxable year exceeds $30,000, and
                    ``(B) in the case of employment-related expenses 
                described in subsection (e)(11), 50 percent reduced 
                (but not below zero) by 1 percentage point for each 
                $800, or fraction thereof, by which the taxpayers's 
                adjusted gross income for the taxable year exceeds 
                $30,000.''.
    (b) Inflation Adjustment for Allowable Expenses.--Section 21(c) of 
the Internal Revenue Code of 1986 (relating to dollar limit on amount 
creditable) is amended by striking ``The amount determined'' and 
inserting ``In the case of any taxable year beginning after 1998, each 
dollar amount referred to in paragraphs (1) and (2) shall be increased 
by an amount equal to such dollar amount multiplied by the cost-of-
living adjustment determined under section 1(f)(3) for the calendar 
year in which the taxable year begins, by substituting `calendar year 
1997' for `calendar year 1992' in subparagraph (B) thereof. If any 
dollar amount after being increased under the preceding sentence is not 
a multiple of $10, such dollar amount shall be rounded to the nearest 
multiple of $10. The amount determined''.
    (c) Effective Date.--The amendments made by this section apply to 
taxable years beginning after December 31, 1998.

SEC. 202. MINIMUM CREDIT ALLOWED FOR STAY-AT-HOME PARENTS.

    (a) In General.--Section 21(e) of the Internal Revenue Code of 1986 
(relating to special rules) is amended by adding at the end the 
following:
            ``(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 
sum of--
                    ``(A) $90 for each month in such taxable year 
                during which at least one of such qualifying 
                individuals is under the age of 1, and
                    ``(B) the amount of employment-related expenses 
                otherwise incurred for such qualifying individuals for 
                the taxable year (determined under this section without 
                regard to this paragraph).''.
    (b) Effective Date.--The amendments made by this section apply to 
taxable years beginning after December 31, 1998.

SEC. 203. CREDIT MADE REFUNDABLE.

    (a) In General.--Part IV of subchapter A of chapter 1 of the 
Internal Revenue Code of 1986 (relating to credits against tax) is 
amended--
            (1) by redesignating section 35 as section 36, and
            (2) by redesignating section 21 as section 35.
    (b) Advance Payment of Credit.--Chapter 25 of such Code (relating 
to general provisions relating to employment taxes) is amended by 
inserting after section 3507 the following:

``SEC. 3507A. ADVANCE PAYMENT OF DEPENDENT CARE CREDIT.

    ``(a) General Rule.--Except as otherwise provided in this section, 
every employer making payment of wages with respect to whom a dependent 
care eligibility certificate is in effect shall, at the time of paying 
such wages, make an additional payment equal to such employee's 
dependent care advance amount.
    ``(b) Dependent Care Eligibility Certificate.--For purposes of this 
title, a dependent care eligibility certificate is a statement 
furnished by an employee to the employer which--
            ``(1) certifies that the employee will be eligible to 
        receive the credit provided by section 35 for the taxable year,
            ``(2) certifies that the employee reasonably expects to be 
        an applicable taxpayer for the taxable year,
            ``(3) certifies that the employee does not have a dependent 
        care eligibility certificate in effect for the calendar year 
        with respect to the payment of wages by another employer,
            ``(4) states whether or not the employee's spouse has a 
        dependent care eligibility certificate in effect,
            ``(5) states the number of qualifying individuals in the 
        household maintained by the employee, and
            ``(6) estimates the amount of employment-related expenses 
        for the calendar year.
    ``(c) Dependent Care Advance Amount.--
            ``(1) In general.--For purposes of this title, the term 
        `dependent care advance amount' means, with respect to any 
        payroll period, the amount determined--
                    ``(A) on the basis of the employee's wages from the 
                employer for such period,
                    ``(B) on the basis of the employee's estimated 
                employment-related expenses included in the dependent 
                care eligibility certificate, and
                    ``(C) in accordance with tables provided by the 
                Secretary.
            ``(2) Advance amount tables.--The tables referred to in 
        paragraph (1)(C) shall be similar in form to the tables 
        prescribed under section 3402 and, to the maximum extent 
        feasible, shall be coordinated with such tables and the tables 
        prescribed under section 3507(c).
    ``(d) Other Rules.--For purposes of this section, rules similar to 
the rules of subsections (d) and (e) of section 3507 shall apply.
    ``(e) Definitions.--For purposes of this section, terms used in 
this section which are defined in section 35 shall have the respective 
meanings given such terms by section 35.''.
    (c) Conforming Amendments.--
            (1) Section 35(a)(1) of such Code, as redesignated by 
        paragraph (1), is amended by striking ``chapter'' and inserting 
        ``subtitle''.
            (2) Section 35(e) of such Code, as so redesignated and 
        amended by subsection (c), is amended by adding at the end the 
        following:
            ``(12) Coordination with advance payments and minimum 
        tax.--Rules similar to the rules of subsections (g) and (h) of 
        section 32 shall apply for purposes of this section.''.
            (3) Sections 23(f)(1) and 129(a)(2)(C) of such Code are 
        each amended by striking ``section 21(e)'' and inserting 
        ``section 35(e)''.
            (4) Section 129(b)(2) of such Code is amended by striking 
        ``section 21(d)(2)'' and inserting ``section 35(d)(2)''.
            (5) Section 129(e)(1) of such Code is amended by striking 
        ``section 21(b)(2)'' and inserting ``section 35(b)(2)''.
            (6) Section 213(e) of such Code is amended by striking 
        ``section 21'' and inserting ``section 35''.
            (7) Section 995(f)(2)(C) of such Code is amended by 
        striking ``and 34'' and inserting ``34, and 35''.
            (8) Section 6211(b)(4)(A) of such Code is amended by 
        striking ``and 34'' and inserting ``, 34, and 35''.
            (9) Section 6213(g)(2)(H) of such Code is amended by 
        striking ``section 21'' and inserting ``section 35''.
            (10) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of such Code is amended by striking 
        the item relating to section 35 and inserting the following:

                              ``Sec. 35. Dependent care services.
                              ``Sec. 36. Overpayments of tax.''.
            (11) The table of sections for subpart A of such part IV is 
        amended by striking the item relating to section 21.
            (12) The table of sections for chapter 25 of such Code is 
        amended by adding after the item relating to section 3507 the 
        following:

                              ``Sec. 3507A. Advance payment of 
                                        dependent care credit.''.
            (13) Section 1324(b)(2) of title 31, United States Code, is 
        amended by inserting before the period ``, or enacted by the 
        Child Care ACCESS (Affordable Child Care for Early Success and 
        Security) Act''.
    (d) Effective Date.--The amendments made by this section apply to 
taxable years beginning after December 31, 1998.

             TITLE III--QUALITY CHILD CARE LOAN FORGIVENESS

SEC. 301. SHORT TITLE.

    This title may be cited as the ``Quality Child Care Loan 
Forgiveness Act''.

SEC. 302. FINDINGS.

    Congress makes the following findings:
            (1) New scientific research shows that the electrical 
        activity of brain cells actually changes the physical structure 
        of the brain, and that without a stimulating environment, a 
        baby's brain suffers.
            (2) 12,000,000 children under age 6, and 17,000,000 school-
        aged children of working parents, need child care. Demand for 
        child care is growing as more mothers enter the workforce.
            (3) Good quality child care, in a safe environment, with 
        trained, caring providers who offer stimulating activities 
        appropriate to the child's age, help children grow and thrive. 
        Recent research shows that most child care needs significant 
        improvement.
            (4) Good quality child care depends largely on the 
        provider. Yet providers of child care earn on average only 
        $6.70 per hour or $11,725 per year. Such earnings cause high 
        turnover, which affects the overall quality of a child care 
        program and causes anxiety for children.
            (5) Children attending lower-quality child care facilities 
        and child care facilities with high staff turnover are less 
        competent in language and social development.
            (6) Low-income and high-income children are more likely 
        than middle-income children to attend child care facilities 
        providing high quality child care.
            (7) The quality of child care is primarily related to high 
        staff-to-child ratios, staff education, and administrators' 
        prior experience. In addition, certain characteristics 
        distinguish poor, mediocre, and good-quality child care 
        facilities, the most important of which are teacher wages, 
        education, and specialized training.

SEC. 303. PURPOSES.

    The purposes of this title are--
            (1) to bring more highly trained individuals into the early 
        child care profession; and
            (2) to keep more highly trained child care providers in the 
        early child care field for longer periods of time.

SEC. 304. LOAN FORGIVENESS FOR CHILD CARE PROVIDERS.

    Part B of the Higher Education Act of 1965 (20 U.S.C. 1071 et seq.) 
is amended by inserting after section 428J of such Act (20 U.S.C. 1078-
10) the following:

``SEC. 428I. LOAN FORGIVENESS FOR CHILD CARE PROVIDERS.

    ``(a) Definitions.--In this section:
            ``(1) Child care facility.--The term `child care facility' 
        means a facility that--
                    ``(A) provides child care services; and
                    ``(B) meets applicable State or local government 
                licensing, certification, approval, or registration 
                requirements, if any.
            ``(2) Child care services.--The term `child care services' 
        means activities and services provided for the education and 
        care of children from birth through age 5 by an individual who 
        has a degree in early childhood education.
            ``(3) Degree.--The term `degree' means an associate's or 
        bachelor's degree awarded by an institution of higher 
        education.
            ``(4) Early childhood education.--The term `early childhood 
        education' means education in the areas of early child 
        education, child care, or any other educational area related to 
        child care that the Secretary determines appropriate.
            ``(5) Institution of higher education.--The term 
        `institution of higher education' has the meaning given the 
        term in section 1201.
    ``(b) Program.--
            ``(1) In general.--The Secretary may carry out a program of 
        assuming the obligation to repay, pursuant to subsection (c), a 
        loan made, insured or guaranteed under this part or part D 
        (excluding loans made under sections 428B and 428C) for any new 
        borrower after October 1, 1994, who completes a degree in early 
        childhood education and obtains full-time employment in a child 
        care facility.
            ``(2) Award basis; priority.--
                    ``(A) Award basis.--Subject to subparagraph (B), 
                loan repayment under this section shall be on a first-
                come, first-served basis and subject to the 
                availability of appropriations.
                    ``(B) Priority.--The Secretary shall give priority 
                in providing loan repayment under this section for a 
                fiscal year to student borrowers who received loan 
                repayment under this section for the preceding fiscal 
                year.
            ``(3) Regulations.--The Secretary is authorized to 
        prescribe such regulations as may be necessary to carry out the 
        provisions of this section.
    ``(c) Loan Repayment.--
            ``(1) In general.--The Secretary shall assume the 
        obligation to repay 15 percent of the total amount of all loans 
        made after October 1, 1994, to a student under this part or 
        part D for each complete year of employment described in 
        subsection (b)(1).
            ``(2) Construction.--Nothing in this section shall be 
        construed to authorize the refunding of any repayment of a loan 
        made under this part or part D.
            ``(3) Interest.--If a portion of a loan is repaid by the 
        Secretary under this section for any year, the proportionate 
        amount of interest on such loan which accrues for such year 
        shall be repaid by the Secretary.
            ``(4) Special rule.--In the case where a student borrower 
        who is not participating in loan repayment pursuant to this 
        section returns to an institution of higher education after 
        graduation from an institution of higher education for the 
        purpose of obtaining a degree in early childhood education, the 
        Secretary is authorized to assume the obligation to repay the 
        total amount of loans made under this part or part D incurred 
        for a maximum of two academic years in returning to an 
        institution of higher education for the purpose of obtaining a 
        degree in early childhood education. Such loans shall only be 
        repaid for borrowers who qualify for loan repayment pursuant to 
        the provisions of this section, and shall be repaid in 
        accordance with the provisions of paragraph (1).
            ``(5) Ineligibility of national service award recipients.--
        No student borrower may, for the same volunteer service, 
        receive a benefit under both this section and subtitle D of 
        title I of the National and Community Service Act of 1990 (42 
        U.S.C. 12601 et seq.).
    ``(d) Repayment to Eligible Lenders.--The Secretary shall pay to 
each eligible lender or holder for each fiscal year an amount equal to 
the aggregate amount of loans which are subject to the repayment 
pursuant to this section for such year.
    ``(e) Application for Repayment.--
            ``(1) In general.--Each eligible individual desiring loan 
        repayment under this section shall submit a complete and 
        accurate application to the Secretary at such time, in such 
        manner, and containing such information as the Secretary may 
        require.
            ``(2) Conditions.--An eligible individual may apply for 
        loan repayment under this section after completing each year of 
        qualifying employment. The borrower shall receive forbearance 
        while engaged in qualifying employment unless the borrower is 
        in deferment while so engaged.
    ``(f) Evaluation.--
            ``(1) In general.--The Secretary shall conduct, by grant or 
        contract, an independent national evaluation of the impact of 
        the program assisted under this section on the field of early 
        childhood education.
            ``(2) Competitive basis.--The grant or contract described 
        in subsection (a) shall be awarded on a competitive basis.
            ``(3) Contents.--The evaluation described in this 
        subsection shall--
                    ``(A) determine the number of individuals who were 
                encouraged by the program assisted under this section 
                to pursue early childhood education;
                    ``(B) determine the number of individuals who 
                remain employed in a child care facility as a result of 
                participation in the program;
                    ``(C) identify the barriers to the effectiveness of 
                the program;
                    ``(D) assess the cost-effectiveness of the program 
                in improving the quality of--
                            ``(i) early childhood education; and
                            ``(ii) child care services;
                    ``(E) identify the reasons why participants in the 
                program have chosen to take part in the program;
                    ``(F) identify the number of individuals 
                participating in the program who received an 
                associate's degree and the number of such individuals 
                who received a bachelor's degree; and
                    ``(G) identify the number of years each individual 
                participates in the program.
            ``(4) Interim and final evaluation reports.--The Secretary 
        shall prepare and submit to the President and the Congress such 
        interim reports regarding the evaluation described in this 
        subsection as the Secretary deems appropriate, and shall 
        prepare and so submit a final report regarding the evaluation 
        by January 1, 2002.
    ``(g) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $200,000,000 for each of fiscal 
years 1999 through 2003.''.

SEC. 305. LOAN CANCELLATION.

    Section 465(a) of the Higher Education Act of 1965 (20 U.S.C. 
1087ee(a)) is amended--
            (1) in paragraph (2)--
                    (A) by redesignating subparagraphs (G), (H), and 
                (I) as subparagraphs (H), (I), and (J), respectively; 
                and
                    (B) by inserting after subparagraph (F), the 
                following:
                    ``(G) as a full-time child care provider or 
                educator--
                            ``(i) in a child care facility operated by 
                        an entity that meets the applicable State or 
                        local government licensing, certification, 
                        approval, or registration requirements, if any; 
                        and
                            ``(ii) who has a degree in early childhood 
                        education;''; and
            (2) in paragraph (3)(A)--
                    (A) in clause (i), by striking ``(G), (H), or (I)'' 
                and inserting ``(H), (I), or (J)''; and
                    (B) in clause (ii), by inserting ``or (G)'' after 
                ``subparagraph (B)''.

                           TITLE IV--OFFSETS

SEC. 401. OFFSETS RELATING TO TAX PROVISIONS.

    (a) Repeal of Oil and Gas Percentage Depletion Allowance.--Section 
613A of the Internal Revenue Code of 1986 is amended by adding at the 
end the following new subsection:
    ``(f) Termination.--This section shall not apply on and after 
January 1, 1999.''.
    (b) Repeal of Enhanced Oil Recovery Credit.--Section 43 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new subsection:
    ``(f) Termination.--In the case of taxable years beginning after 
December 31, 1998, the enhanced oil recovery credit is zero.''.
    (c) Repeal of Exemption From Alternative Minimum Tax for Small 
Corporations.--
            (1) Repeal.--Section 55 of the Internal Revenue Code of 
        1986 is amended by striking subsection (e).
            (2) Effective date.--The repeal made by paragraph (1) shall 
        apply to taxable years beginning after December 31, 1997.
    (d) Repeal of Section 911 Income Exclusion.--Section 911(b) of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new paragraph:
            ``(3) Termination.--In the case of any taxable year 
        beginning after December 31, 1998, foreign earned income shall 
        be zero.''.

SEC. 402. OFFSETS RELATING TO DEFENSE CUTS.

    (a) Termination of F-22 Aircraft Program.--
            (1) Termination.--The Secretary of Defense shall terminate 
        the F-22 aircraft program.
            (2) Termination costs.--On and after the date of the 
        enactment of this Act, funds available for the F-22 aircraft 
        program may be obligated for that program only for the costs of 
        terminating the program.
    (b) Reduction in Inventory of Strategic Nuclear Delivery Systems.--
            (1) Reduction required.--The President shall reduce the 
        United States inventory of strategic nuclear delivery systems 
        to the levels applicable to the United States, within the time 
        provided, in the START II Treaty.
            (2) Start ii treaty defined.--In this section, the term 
        ``START II Treaty'' means the Treaty Between the United States 
        of America and the Russian Federation on Further Reduction and 
        Limitation of Strategic Offensive Arms, signed at Moscow on 
        January 3, 1993, including the following protocols and 
        memorandum of understanding, all such documents being integral 
        parts of and collectively referred to as the ``START II 
        Treaty'' (contained in Treaty Document 103-1):
                    (A) The Protocol on Procedures Governing 
                Elimination of Heavy ICBMs and on Procedures Governing 
                Conversion of Silo Launchers of Heavy ICBMs Relating to 
                the Treaty Between the United States of America and the 
                Russian Federation on Further Reduction and Limitation 
                of Strategic Offensive Arms (also known as the 
                ``Elimination and Conversion Protocol'').
                    (B) The Protocol on Exhibitions and Inspections of 
                Heavy Bombers Relating to the Treaty Between the United 
                States and the Russian Federation on Further Reduction 
                and Limitation of Strategic Offensive Arms (also known 
                as the ``Exhibitions and Inspections Protocol'').
                    (C) The Memorandum of Understanding on Warhead 
                Attribution and Heavy Bomber Data Relating to the 
                Treaty Between the United States of America and the 
                Russian Federation on Further Reduction and Limitation 
                of Strategic Offensive Arms (also known as the 
                ``Memorandum on Attribution'').

SEC. 403. REDUCTION IN AMOUNT AVAILABLE FOR INTELLIGENCE ACTIVITIES IN 
              FISCAL YEAR 1999.

    Notwithstanding any other provision of law, the total amount 
available in fiscal year 1999, 2000, 2001, 2002, or 2003 for the 
conduct of the intelligence and intelligence-related activities of the 
United States Government shall be--
            (1) the amount authorized to be appropriated for the 
        conduct of such activities in such fiscal year; minus
            (2) the amount equal to 5 percent of the amount referred to 
        in paragraph (1).

SEC. 404. RECOUPMENT OF FOREIGN MILITARY SALES COSTS AND EXPENSES.

    (a) Plant and Production Costs; Nonrecurring Costs.--
            (1) In general.--Section 21(e)(1) of the Arms Export 
        Control Act (22 U.S.C. 2761(e)(1)) is amended--
                    (A) by redesignating subparagraphs (B) and (C) as 
                subparagraphs (C) and (D), respectively;
                    (B) by inserting after subparagraph (A) the 
                following:
            ``(B) any use of plant and production equipment in 
        connection with such defense articles;''; and
                    (C) in subparagraph (C) (as redesignated) by 
                striking ``(except for'' and all that follows through 
                ``this Act)''.
            (2) Conforming amendment.--Section 21(e)(2)(A) of the Arms 
        Export Control Act (22 U.S.C. 2761(e)(2)(A)) is amended--
                    (A) in subparagraphs (B) and (C), by striking 
                ``paragraph (1)(B)'' each place it appears and 
                inserting ``paragraphs (1)(B) and (1)(C)''; and
                    (B) in subparagraph (C), by striking ``paragraph 
                (1)(B)'' and inserting paragraph (1)(C)''.
    (b) Administrative Expenses.--Section 43(b)(3) of the Arms Export 
Control Act (22 U.S.C. 2792(b)(3)) is amended--
            (1) by striking ``are neither'' and inserting ``include 
        the''; and
            (2) by striking ``nor represent'' and inserting ``and 
        the''.

SEC. 405. TERMINATION OF UNITED STATES PARTICIPATION IN THE 
              INTERNATIONAL SPACE STATION PROGRAM.

    (a) Termination.--The Administrator of the National Aeronautics and 
Space Administration shall terminate the participation of the United 
States in the International Space Station program.
    (b) Termination Costs.--On and after the date of enactment of this 
Act, the Administrator of the National Aeronautics and Space 
Administration may obligate funds made available to the Administrator 
for the participation of the United States in the International Space 
Station program only for the costs of terminating the participation of 
the United States in that program.
                                 <all>