Section 98.50 - Child care services(a) Direct child care services shall be provided:(1) To eligible children, as described in § 98.20 ;(2) Using a sliding fee scale, as described in § 98.45(l) ;(3) Using funding methods provided for in § 98.30 including grants or contracts for slots for children in underserved geographic areas, for infants and toddlers, and children with disabilities. Grants solely to improve the quality of child care services like those in (b) of this section would not satisfy the requirements at § 98.30(b) ; and(4) Based on the priorities in § 98.46 .(b) Of the aggregate amount of funds expended by a State or Territory (i.e., Discretionary, Mandatory, and Federal and State share of Matching funds):(1) No less than nine percent shall be used for activities designed to improve the quality of child care services and increase parental options for, and access to, high-quality child care as described at § 98.53 ; and(2) No less than three percent shall be used to carry out activities at § 98.53(a)(4) as such activities relate to the quality of care for infants and toddlers.(3) Nothing in this section shall preclude the State or Territory from reserving a larger percentage of funds to carry out activities described in paragraphs (b)(1) and (2) of this section.(4) Amounts reserved pursuant to this subsection may not be used to satisfy requirements at § 98.30(b) .(c) Funds expended from each fiscal year's allotment on quality activities pursuant to paragraph (b) of this section:(1) Must be in alignment with an assessment of the Lead Agency's need to carry out such services and care as required at § 98.53(a) ;(2) Must include measurable indicators of progress in accordance with § 98.53(g) ; and(3) May be provided directly by the Lead Agency or through grants or contracts with local child care resource and referral organizations or other appropriate entities.(d) Of the aggregate amount of funds expended (i.e., Discretionary, Mandatory, and Federal and State share of Matching Funds), no more than five percent may be used for administrative activities as described at § 98.54 .(e) Not less than 70 percent of the State and Territory Mandatory and Federal and State share of State Matching Funds shall be used to meet the child care needs of families who: (1) Are receiving assistance under a State program under Part A of title IV of the Social Security Act;(2) Are attempting through work activities to transition off such assistance program; and(3) Are at risk of becoming dependent on such assistance program.(f) From Discretionary amounts provided for a fiscal year, the Lead Agency shall: (1) Reserve the minimum amount required under paragraph (b) of this section for quality activities, and the funds for administrative costs described at paragraph (d) of this section; and(2) From the remainder, use not less than 70 percent to fund direct services (provided by the Lead Agency).(g) Of the funds remaining after applying the provisions of paragraphs (a) through (f) of this section, the Lead Agency shall spend a substantial portion of funds to provide direct child care services to low-income families who are working or attending training or education.(h) Pursuant to § 98.16(i)(4) , the Plan shall specify how the State will meet the child care needs of families described in paragraph (e) of this section.81 FR 67587, Sept. 30, 2016, as amended at 89 FR 15415, Mar. 1, 2024; 89 FR 52397, June 24, 2024 81 FR 67587, 11/29/2016; 89 FR 15415, 4/30/2024; 89 FR 52397, 6/24/2024