institutions, other than family or group day care home sponsoring organizations, for meals provided under this section shall be equal to the sum of the products obtained by multiplying the total number of each type of meal (breakfast, lunch, or supper, or supplement) served in such institution in that fiscal year by the applicable national average payment rate for each such type of meal, as determined under subsection (c).

(B) No reimbursement may be made to any institution under this paragraph, or to family or group day care home sponsoring organizations under paragraph (3) of this subsection, for more than two meals and one supplement per day per child, or in the case of an institution (but not in the case of a family or group day care home sponsoring organization), 2 meals and 1 supplement 17-23 per day per child, for children that are maintained in a child care setting for eight or more hours per day. 17-24

(3) 17-25 REIMBURSEMENT OF FAMILY OR GROUP DAY CARE HOME SPONSORING ORGANIZATIONS.—

(A) REIMBURSEMENT FACTOR.

(i) IN GENERAL.-An institution that participates in the program under this section as a family or group day care home sponsoring organization shall be provided, for payment to a home sponsored by the organization, reimbursement factors in accordance with this subparagraph for the cost of obtaining and preparing food and prescribed labor costs involved in providing meals under this section.

(ii) TIER I FAMILY OR GROUP DAY CARE HOMES.—

(I) DEFINITION OF TIER I FAMILY OR GROUP DAY CARE HOME. In this paragraph, the term 'tier I family or group day care home' means

(aa) a family or group day care home that is located in a geographic area, as defined by the Secretary based on census data, in which at least 50 percent of the children residing in the area are members of households whose incomes meet the income eligibility guidelines for free or reduced price meals under section 9;

(bb) a family or group day care home that is located in an area served by a school enrolling elementary students in which at least 50 percent of the total number of children enrolled are certified eligible to receive free or reduced price school meals under this Act or the Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.); or

17-23 Section 708(d) of P.L. 104–193, 110 Stat. 2294, Aug. 22, 1996, amended this subparagraph by striking "two meals and two supplements or three meals and one supplement" and inserting "2 meals and 1 supplement".

17-24 Comma and language after "child" to period added by section 211 of P.L. 100-435, 102 Stat. 1657, Sept. 19, 1988, effective July 1, 1989. Additional period struck by section 310(a)(3)(B) of P.L. 101-147, 103 Stat. 915, Nov. 10, 1989.

17-25 Effective July 1, 1997, section 708(e)(1) of P.L. 104-193, 110 Stat. 2294, Aug. 22, 1996, amended in its entirety "(3)(A) Institutions" and all that follows through the end of subparagraph (A). For regulations, see note 17-11. Previously, this paragraph was amended by section 810 of P.L. 97-35, 95 Stat. 529, Aug. 13, 1981.

(cc) a family or group day care home that is operated by a provider whose household meets the income eligibility guidelines for free or reduced price meals under section 9 and whose income is verified by the sponsoring organization of the home under regulations established by the Secretary.

(II) REIMBURSEMENT.-Except as provided in subclause (III), a tier I family or group day care home shall be provided reimbursement factors under this clause without a requirement for documentation of the costs described in clause (i), except that reimbursement shall not be provided under this subclause for meals or supplements served to the children of a person acting as a family or group day care home provider unless the children meet the income eligibility guidelines for free or reduced price meals under section 9.

(III) FACTORS.-Except as provided in subclause (IV), the reimbursement factors applied to a home referred to in subclause (II) shall be the factors in effect on July 1, 1996.

(IV) ADJUSTMENTS.-The reimbursement factors under this subparagraph shall be adjusted on July 1, 1997, and each July 1 thereafter, to reflect changes in the Consumer Price Index for food at home for the most recent 12-month period for which the data are available. The reimbursement factors under this subparagraph shall be rounded to the nearest lower cent increment and based on the unrounded adjustment in effect on June 30 of the preceding school year.

(iii) TIER II FAMILY OR GROUP DAY CARE HOMES.— (I) IN GENERAL.

(aa) FACTORS.-Except as provided in subclause (II), with respect to meals or supplements served under this clause by a family or group day care home that does not meet the criteria set forth in clause (ii)(I), the reimbursement factors shall be 95 cents for lunches and suppers, 27 cents for breakfasts, and 13 cents for supplements.

(bb) ADJUSTMENTS.-The factors shall be adjusted on July 1, 1997, and each July 1 thereafter, to reflect changes in the Consumer Price Index for food at home for the most recent 12-month period for which the data are available. The reimbursement factors under this item shall be rounded down to the nearest lower cent increment and based on the unrounded adjustment for the preceding 12month period.

(cc) REIMBURSEMENT.-A family or group day care home shall be provided reimburse

ment factors under this subclause without a requirement for documentation of the costs described in clause (i), except that reimbursement shall not be provided under this subclause for meals or supplements served to the children of a person acting as a family or group day care home provider unless the children meet the income eligibility guidelines for free or reduced price meals under section 9.

(II) OTHER FACTORS.-A family or group day care home that does not meet the criteria set forth in clause (ii)(I) may elect to be provided reimbursement factors determined in accordance with the following requirements:

(aa) CHILDREN ELIGIBLE FOR FREE OR REDUCED PRICE MEALS.-In the case of meals or supplements served under this subsection to children who are members of households whose incomes meet the income eligibility guidelines for free or reduced price meals under section 9, the family or group day care home shall be provided reimbursement factors set by the Secretary in accordance with clause (ii)(III).

(bb) INELIGIBLE CHILDREN.—In the case of meals or supplements served under this subsection to children who are members of households whose incomes do not meet the income eligibility guidelines, the family or group day care home shall be provided reimbursement factors in accordance with subclause (I). (III) INFORMATION AND DETERMINATIONS.—

(aa) IN GENERAL.-If a family or group day care home elects to claim the factors described in subclause (II), the family or group day care home sponsoring organization serving the home shall collect the necessary_income information, as determined by the Secretary, from any parent or other caretaker to make the determinations specified in subclause (II) and shall make the determinations in accordance with rules prescribed by the Secretary.

(bb) CATEGORICAL ELIGIBILITY.-In making a determination under item (aa), a family or group day care home sponsoring organization may consider a child participating in or subsidized under, or a child with a parent participating in or subsidized under, a federally or State supported child care or other benefit program with an income eligibility limit that does not exceed the eligibility standard for free or reduced price meals

under section 9 to be a child who is a member of a household whose income meets the income eligibility guidelines under section 9.

(cc) FACTORS FOR CHILDREN ONLY.—A family or group day care home may elect to receive the reimbursement factors prescribed under clause (ii)(III) solely for the children participating in a program referred to in item (bb) if the home elects not to have income statements collected from parents or other caretakers.

(IV) SIMPLIFIED MEAL COUNTING AND REPORTING PROCEDURES.-The Secretary shall prescribe simplified meal counting and reporting procedures for use by a family or group day care home that elects to claim the factors under subclause (II) and by a family or group day care home sponsoring organization that sponsors the home. The procedures the Secretary prescribes may include 1 or more of the following:

(aa) Setting an annual percentage for each home of the number of meals served that are to be reimbursed in accordance with the reimbursement factors prescribed under clause (ii)(III) and an annual percentage of the number of meals served that are to be reimbursed in accordance with the reimbursement factors prescribed under subclause (I), based on the family income of children enrolled in the home in a specified month or other period.

(bb) Placing a home into 1 of 2 or more reimbursement categories annually based on the percentage of children in the home whose households have incomes that meet the income eligibility guidelines under section 9, with each such reimbursement category carrying a set of reimbursement factors such as the factors prescribed under clause (ii)(III) or subclause (I) or factors established within the range of factors prescribed under clause (ii)(III) and subclause (I).

(cc) Such other simplified procedures as the Secretary may prescribe.

(V) MINIMUM VERIFICATION REQUIREMENTS.— The Secretary may establish any minimum verification requirements that are necessary to carry out this clause.

(B) Family or group day care home sponsoring organizations shall also receive reimbursement for their administrative expenses in amounts not exceeding the maximum allowable levels prescribed by the Secretary. Such levels shall be adjusted July 1 of each year

to reflect changes in the Consumer Price Index for all items for the
most recent 12-month period for which such data are available. 17-26
(C) 17-27 (1) 17-28 Reimbursement for administrative expenses
shall also include start-up funds to finance the administrative ex-
penses for such institutions to initiate successful operation under
the program and expansion funds to finance the administrative ex-
penses for such institutions to expand into low-income or rural
areas. Institutions that have received start-up funds may also
apply at a later date for expansion funds. Such start-up funds and
expansion funds shall be in addition to other reimbursement to
such institutions for administrative expenses. Start-up funds and
expansion funds shall be payable to enable institutions satisfying
the criteria of subsection (d) of this section, and any other stand-
ards prescribed by the Secretary, to develop an application for par-
ticipation in the program as a family or group day care home spon-
soring organization or to implement the program upon approval of
the application. Such start-up funds and expansion funds shall be
payable in accordance with the procedures prescribed by the Sec-
retary. The amount of start-up funds and expansion funds payable
to an institution shall be not less than the institution's anticipated
reimbursement for administrative expenses under the program for
one month and not more than the institution's anticipated reim-
bursement for administrative expenses under the program for two
months.

(ii) 17-29 Funds for administrative expenses may be used by
family or group day care home sponsoring organizations assist unli-
censed family or group day care homes in becoming 17-30 licensed.
(D) 17-31 GRANTS TO STATES TO PROVIDE ASSISTANCE TO

FAMILY OR GROUP DAY CARE HOMES.—

(i) IN GENERAL.-

(I) RESERVATION.-From amounts made avail-
able to carry out this section, the Secretary shall
reserve $5,000,000 of the amount made available
for fiscal year 1997.

(II) PURPOSE.-The Secretary shall use the
funds made available under subclause (I) to pro-
vide grants to States for the purpose of provid-
ing-

(aa) assistance, including grants, to fam-
ily and day care home sponsoring organiza-
tions and other appropriate organizations, in
securing and providing training, materials,
automated data processing assistance, and

17-26 Section 708(f)(1)(A) of P.L. 104-193, 110 Stat. 2299, Aug. 22, 1996, amended this sub-
paragraph by striking the third and fourth sentences.

17-27 This sentence designated as clause (C) by section 810 of P.L. 97-35, 95 Stat. 529, Aug.
13, 1981.

Section 105(b)(1) of P.L. 101-147, 103 Stat. 883, Nov. 10, 1989, made multiple amendments
to this subparagraph to require reimbursement for expansion funds.

17-28 Section 116(c) of P.L. 103-448, 108 Stat. 4714, Nov. 2, 1994, amended this subparagraph
by inserting "(i)” after “(C)” and by adding clause (ii).

17-29 See note 17-28.

17-30 Section 708(f)(1)(B) of P.L. 104-193, 110 Stat. 2299, Aug. 22, 1996, amended this clause
by striking "conduct outreach" and all that follows through "may become" and inserting "assist
unlicensed family or group day care homes in becoming".

17-31 Subparagraph (D) added by section 708(e)(2) of P.L. 104-193, 110 Stat. 2297, Aug. 22,