Rule2024-04139
Improving Child Care Access, Affordability, and Stability in the Child Care and Development Fund (CCDF)
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
March 1, 2024
Effective
April 30, 2024
Issuing agencies
Health and Human Services Department
Abstract
This final rule makes regulatory changes to the Child Care and Development Fund (CCDF). These changes lower child care costs for families participating in CCDF, improve the program's child care provider payment rates and practices, and simplify enrollment in the child care subsidy program. The final rule also includes technical and other changes to improve clarity and program implementation.
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<title>Federal Register, Volume 89 Issue 42 (Friday, March 1, 2024)</title>
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[Federal Register Volume 89, Number 42 (Friday, March 1, 2024)]
[Rules and Regulations]
[Pages 15366-15417]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-04139]
[[Page 15365]]
Vol. 89
Friday,
No. 42
March 1, 2024
Part IV
Department of Health and Human Services
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45 CFR Part 98
Improving Child Care Access, Affordability, and Stability in the Child
Care and Development Fund (CCDF); Final Rule
Federal Register / Vol. 89 , No. 42 / Friday, March 1, 2024 / Rules
and Regulations
[[Page 15366]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Part 98
RIN 0970-AD02
Improving Child Care Access, Affordability, and Stability in the
Child Care and Development Fund (CCDF)
AGENCY: Office of Child Care (OCC), Administration for Children and
Families (ACF), Department of Health and Human Services (HHS).
ACTION: Final rule.
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SUMMARY: This final rule makes regulatory changes to the Child Care and
Development Fund (CCDF). These changes lower child care costs for
families participating in CCDF, improve the program's child care
provider payment rates and practices, and simplify enrollment in the
child care subsidy program. The final rule also includes technical and
other changes to improve clarity and program implementation.
DATES: Effective: April 30, 2024.
Temporary Waivers: States and Territories that are not in
compliance with the provisions of this final rule on the effective date
may request a temporary waiver for an extension of up to two years if
needed to come into compliance. For Tribal Lead Agencies, ACF will
determine compliance through review and approval of the FY 2026-2028
Tribal CCDF Plans that become effective October 1, 2025.
FOR FURTHER INFORMATION CONTACT: Megan Campbell, Office of Child Care,
202-690-6499 or <a href="/cdn-cgi/l/email-protection#2a474f4d4b4404494b475a484f46466a4b494c04424259044d455c"><span class="__cf_email__" data-cfemail="89e4eceee8e7a7eae8e4f9ebece5e5c9e8eaefa7e1e1faa7eee6ff">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Statutory Authority
II. Background
III. Executive Summary
Effective Dates
Costs, benefits, and transfer impacts
Severability
IV. Development of Regulation
V. General Comments and Cross-Cutting Issues
VI. Section-by-Section Discussion of Comments and Regulatory Provisions
Subpart A--Goals, Purposes, and Definitions
Subpart B--General Application Procedures
Subpart C--Eligibility for Services
Subpart D--Program Operations (Child Care Services) Parental Rights
and Responsibilities
Subpart E--Program Operations (Child Care Services) Lead Agency and
Provider Requirements
Subpart F--Use of Child Care and Development Funds
Subpart G--Financial Management
Subpart H--Program Reporting Requirements
Subpart I--Indian Tribes
Subpart K--Error Rate Reporting
VII. Regulatory Process Matters
Paperwork Reduction Act
Regulatory Flexibility Act
Unfunded Mandates Reform Act of 1995
Executive Order 13132
Assessment of Federal Regulations and Policies on Families
VIII. Regulatory Impact Analysis
List of Subjects in 45 CFR Part 98
I. Statutory Authority
This final rule is being issued under the authority granted to the
Secretary of Health and Human Services by the CCDBG Act of 1990, as
amended (42 U.S.C. 9857, et seq.), and section 418 of the Social
Security Act (42 U.S.C. 618).
II. Background
The Child Care and Development Block Grant Act (CCDBG), hereafter
referred to as the ``Act'' (42 U.S.C. 9857 et seq.), together with
section 418 of the Social Security Act (42 U.S.C. 618), authorize the
Child Care and Development Fund (CCDF), which is the primary federal
funding source devoted to supporting families with low incomes afford
child care and to increasing the quality of child care for all
children. CCDF plays a vital role in supporting child development and
family well-being, facilitating parents' employment, training, and
education, and improving the economic well-being of participating
families. Families with children under age 5 and incomes below the
federal poverty line who pay for child care spend 36 percent of their
income on child care on average, which leaves insufficient funding for
food, housing, and other basic costs.\1\ Households with incomes just
above the federal poverty level spend more than 20 percent of their
income on child care, on average.\2\ Even school-age care can amount to
8 to 11.5 percent of family income.\3\ Without help paying for child
care, the cost can drive parents to exit the workforce or seek out less
expensive care, which may be unlicensed or unregulated, have less
rigorous quality or safety standards, and be less reliable.\4\ In
fiscal year (FY) 2021, the most current available data, CCDF helped
nearly 800,000 families and more than 1.3 million children under age 13
with financial assistance for child care each month.\5\ CCDF also
promotes the quality of child care for all children, requiring CCDF
Lead Agencies to spend at least 12 percent of their CCDF funding each
year on activities to improve child care quality for all children in
care.
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\1\ Madowitz, M. et al. (2016). Calculating the Hidden Cost of
Interrupting a Career for Child Care. Washington, DC: Center for
American Progress. <a href="https://www.americanprogress.org/article/calculating-the-hidden-cost-of-interrupting-a-career-for-child-care/">https://www.americanprogress.org/article/calculating-the-hidden-cost-of-interrupting-a-career-for-child-care/</a>.
\2\ National Survey of Early Care and Education Project Team
(2022): E. Hardy, J.E. Park. 2019 NSECE Snapshot: Child Care Cost
Burden in U.S. Households with Children Under Age 5. OPRE Report No.
2022-05, Washington DC: Office of Planning, Research and Evaluation
(OPRE), Administration for Children and Families (ACF), U.S.
Department of Health and Human Services (HHS). <a href="https://www.acf.hhs.gov/opre/report/2019-nsece-snapshot-child-care-cost-burden-us-households-children-under-age-5">https://www.acf.hhs.gov/opre/report/2019-nsece-snapshot-child-care-cost-burden-us-households-children-under-age-5</a>.
\3\ Landivar, L.C., Graf, N.L., & Rayo, G.A. (2023). Childcare
prices in local areas: Initial findings from the national database
of childcare prices. Women's Bureau Issue Brief. U.S. Department of
Labor, Washington, DC. Issued January.
\4\ Hill, Z., Bali, D., Gebhart, T., Schaefer, C., & Halle, T.
(2021) Parents' reasons for searching for care and results of
search: An analysis using the Access Framework. OPRE Report #2021-
39. Washington, DC: Office of Planning, Research, and Evaluation,
Administration for Children and Families, U.S. Department of Health
and Human Services. <a href="https://www.acf.hhs.gov/opre/report/parents-reasons-searching-early-care-and-education-and-results-search-analysis-using">https://www.acf.hhs.gov/opre/report/parents-reasons-searching-early-care-and-education-and-results-search-analysis-using</a>.
\5\ Unpublished FY 2021 ACF administrative data.
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Access to affordable high-quality child care has numerous short-
and long-term benefits for children, families, and society, supporting
child and family well-being in a manner that fuels prosperity and
strengths communities and the economy. Child care is a necessity for
most families with young children and reliable access leads to better
parental earnings and employment and supports parents' educational
attainment.\6\ Specifically, maternal employment increases in response
to more available and more affordable child care \7\ and drops when
child care becomes more expensive for families.\8\ Moreover, children
with stably employed parents are far less likely to experience poverty
than
[[Page 15367]]
children whose parents have less consistent employment.\9\ The positive
effects of high-quality child care are especially pronounced for
families with low incomes and families experiencing adversity.\10\
High-quality child care environments can also be important for
children's cognitive, behavioral, and socio-emotional development,
helping chart a pathway to success in school and beyond.\11\
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\6\ Gault, B. and Reichlin Cruse, L. (2017). Access to Child
Care Can Improve Student Parent Graduation Rates. Washington, DC:
Institute for Women's Policy Research. <a href="https://iwpr.org/iwpr-general/access-to-child-care-can-improve-student-parent-graduation-rates/">https://iwpr.org/iwpr-general/access-to-child-care-can-improve-student-parent-graduation-rates/</a>.
\7\ Herbst, C. (2022). ``Child Care in the United States:
Markets, Policy, and Evidence.'' Journal of Policy Analysis and
Management. <a href="https://doi.org/10.1002/pam.22436">https://doi.org/10.1002/pam.22436</a>.; Herbst, C., and E.
Tekin, 2011. ``Do Child Care Subsidies Influence Single Mothers'
Decision to Invest in Human Capital? '' Economics of Education
Review 30, no. 5: 901-12. <a href="https://doi.org/10.1016/j.econedurev.2011.03.006">https://doi.org/10.1016/j.econedurev.2011.03.006</a>.
\8\ Landivar, L.C., Graf, N.L., and Altamirano Rayo, G. (2023).
Childcare Prices in Local Areas: Initial Findings from the National
Database of Childcare Prices. Women's Bureau Issue Brief. U.S.
Department of Labor. <a href="https://www.dol.gov/sites/dolgov/files/WB/NDCP/508_WB_IssueBrief-NDCP-20230213.pdf">https://www.dol.gov/sites/dolgov/files/WB/NDCP/508_WB_IssueBrief-NDCP-20230213.pdf</a>.
\9\ Thomson, D., Ryberg, R., Harper, K., Fuller, J., Paschall,
K., Franklin, J., & Guzman, L. (2022). Lessons From a Historic
Decline in Child Poverty. Bethesda, MD: Child Trends. <a href="https://www.childtrends.org/publications/lessons-from-a-historic-decline-in-child-poverty">https://www.childtrends.org/publications/lessons-from-a-historic-decline-in-child-poverty</a>.
\10\ Bustamante et al. (2022). Adult outcomes of sustained high-
quality early learning child care and education: Do they vary by
family income? Child Development, 93(2), 502-523. <a href="https://srcd.onlinelibrary.wiley.com/doi/10.1111/cdev.13696">https://srcd.onlinelibrary.wiley.com/doi/10.1111/cdev.13696</a>.; Davis Schoch,
A., Simons Gerson, C., Halle, T., & Bredeson, M. (2023). Children's
learning and development benefits from high-quality early care and
education: A summary of the evidence. OPRE Report #2023-226. Office
of Planning, Research, and Evaluation, Administration for Children
and Families, U.S. Department of Health and Human Services.
\11\ Shonkoff, J.P., & Phillips, D.A. (Eds.). (2000). From
neurons to neighborhoods: The science of early childhood
development. National Academy Press.
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Despite the importance of access to high-quality child care to
children, families, communities, and our country's economic growth,
child care remains a fundamentally broken system due to chronic
underinvestment. As a result of this underinvestment, the child care
system relies on a very poorly compensated workforce and unaffordable
parent fees, causing most families to struggle to find or afford high-
quality child care that meets their needs.\12\ There are not enough
child care programs to serve families who need care and many programs
do not offer care during the hours or days families require.\13\ More
than half of families in the United States live in communities where
potential demand for child care outstrips supply by at least three to
one.\14\ In the 2019 National Household Education Survey on Early
Childhood Program Participation, parents of children under the age of 6
reported the lack of available child care as the second biggest barrier
to finding child care, with cost being the first.\15\
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\12\ U.S. Department of the Treasury (September 2021). The
Economics of Child Care Supply in the United States, <a href="https://home.treasury.gov/system/files/136/The-Economics-of-Childcare-Supply-09-14-final.pdf">https://home.treasury.gov/system/files/136/The-Economics-of-Childcare-Supply-09-14-final.pdf</a>.
\13\ Federal Reserve Bank of St. Louis. The Economic Impact of
Child Care by State. <a href="https://www.stlouisfed.org/community-development/child-care-economic-impact">https://www.stlouisfed.org/community-development/child-care-economic-impact</a>.
\14\ Malik, R. et al., (2018). America's Child Care Deserts in
2018. Washington, DC: Center for American Progress. <a href="https://www.americanprogress.org/article/americas-child-care-deserts-2018/">https://www.americanprogress.org/article/americas-child-care-deserts-2018/</a>.
\15\ Cui, J., and Natzke, L. (2021). Early Childhood Program
Participation: 2019 (NCES 2020-075REV), National Center for
Education Statistics, Institute of Education Sciences, U.S.
Department of Education. Washington, DC. <a href="http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2020075REV">http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2020075REV</a>.
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The COVID-19 public health emergency exacerbated these challenges,
highlighting both the fragility of the child care sector and the
central role child care plays in the broader economy.\16\ Numerous
child care programs closed their doors permanently between the
widespread onset of COVID-19 in March 2020 and the federal supports in
the American Rescue Plan (ARP) in 2021. With ARP Child Care
Stabilization funding, HHS invested $24 billion in the child care
sector to help child care providers keep their doors open and to
provide child care workers with higher pay, bonuses, and other
benefits. These efforts helped over 225,000 child care programs serving
as many as 10 million children across the country; saved families with
young children who rely on paid child care approximately $1,250 per
child per year; and helped hundreds of thousands of women with young
children enter or re-enter the workforce more quickly, increasing the
labor force participation and employment of mothers of young children
by an additional 3 percentage points.\17\
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\16\ Connecticut Association for Human Services. (July 2022).
Child Care at a Breaking Point: The Cost for Parents to Work <a href="https://cahs.org/pdf/child-care-survey-report7-15-22.pdf">https://cahs.org/pdf/child-care-survey-report7-15-22.pdf</a>.; Powell, L. and
Kravitz, D. (August 2022). ``Michigan's child care crisis is worse
than policymakers have estimated,'' Chalkbeat Detroit. <a href="https://detroit.chalkbeat.org/2022/8/31/23329007/michigan-child-care-crisis-deserts-worse-policymakers-day-care">https://detroit.chalkbeat.org/2022/8/31/23329007/michigan-child-care-crisis-deserts-worse-policymakers-day-care</a>.
\17\ <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2023/11/07/fact-sheet-historic-biden-harris-administration-investments-in-child-care-recovery-lowered-costs-for-millions-of-families-helped-speed-the-return-to-work-of-hundreds-of-thousands-mothers-and-grew-t/">https://www.whitehouse.gov/briefing-room/statements-releases/2023/11/07/fact-sheet-historic-biden-harris-administration-investments-in-child-care-recovery-lowered-costs-for-millions-of-families-helped-speed-the-return-to-work-of-hundreds-of-thousands-mothers-and-grew-t/</a>.
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Despite these investments, workforce shortages resulting in part
from a tight labor market and a fundamentally broken child care market
that forces low wages continue to put additional strains on child care
supply across the country.\18\
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\18\ ASPE unpublished analyses using U.S. Bureau of Labor
Statistics, Current Employment Statistics--CES.
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In the years since the 2014 reauthorization of the Act (P.L. 113-
186) and the accompanying regulations in 2016 (81 FR 67438, Sept. 30,
2016), CCDF Lead Agencies have worked hard to strengthen child care
policies and practices to make the child care subsidy system more
affordable and accessible to families and to support the continuity of
care for children and working families. However, regulatory changes to
the CCDF program are needed to address some of the programmatic and
systemic challenges described here and to ensure the program properly
addresses the needs of children and families it serves. Though
significant new investments and fundamental system reform are needed to
fully realize affordable high-quality child care for all who need it,
it is clear more must be done now within the federal child care program
to help parents with low incomes that participate in the CCDF program
access affordable high-quality child care that meets their families'
needs.
III. Executive Summary
The final rule amends the CCDF regulations to: (1) lower families'
costs for child care, to increase access to child care and improve
family well-being; (2) strengthen CCDF payment practices to child care
providers, to expand parents' child care options and better support
child care operations; and (3) reduce program bureaucracy for families,
to make it easier for families to enroll in CCDF. The rule also makes
some technical and other changes for improved clarity.
Currently, some families participating in CCDF have co-payments
that are a significant and destabilizing financial strain on family
budgets and a barrier to participating in the CCDF program and
maintaining employment.\19\ Many current CCDF provider payment rates
and practices limit parent choice in child care arrangements,
destabilize provider operations, contribute to supply issues,
disincentivize provider participation in CCDF, and do not adequately
cover the cost of care. This final rule includes important changes to
the CCDF program to help participating families access the child care
they need and better support child care providers in the essential work
they do.
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\19\ Landivar, L.C., Graf, N.L., & Rayo, G.A. (2023). Childcare
Prices in Local Areas: Initial Findings from the National Database
of Childcare Prices. U.S. Department of Labor.; 81 FR 67515 (<a href="https://www.govinfo.gov/content/pkg/FR-2016-09-30/pdf/2016-22986.pdf">https://www.govinfo.gov/content/pkg/FR-2016-09-30/pdf/2016-22986.pdf</a>).
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Lowering Families' Costs for Child Care
Once implemented, HHS projects that the rule will lower the cost of
child care for over 100,000 families participating in CCDF, improving
family well-being and economic stability and better supporting parent
employment. First, this final rule requires States and Territories to
establish co-payment policies for families receiving CCDF assistance to
be no more than 7 percent of family income to help ensure family
[[Page 15368]]
co-payments are not a barrier to accessing child care. HHS established
7 percent of a family's income as the benchmark for an affordable co-
payments in 2016 \20\ based on data from the U.S. Census Bureau that
showed on average families spent 7 percent of income on child care, but
that poor families on average spent approximately four times the share
of their income on child care compared to higher income families.\21\
According to ACF data, average CCDF co-payments in 11 States exceed 7
percent of family income,\22\ 20 States have policies that allow some
family co-payments above 7 percent (which can even rise as high as 27
percent of family income),\23\ and 16 States do not have clear policies
in place to restrict co-payments to any percentage of family
income.\24\ CCDF family co-payments increased at a rate higher than
inflation between 2005-2021, with an average 18 percent increase (after
adjusting for inflation) for families during this period.\25\
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\20\ 81 FR 67515.
\21\ Laughlin, Lynda. 2013. Who's Minding the Kids? Child Care
Arrangements: Spring 2011. Current Population Reports, P70-135. U.S.
Census Bureau, Washington, DC. <a href="https://www2.census.gov/library/publications/2013/demo/p70-135.pdf">https://www2.census.gov/library/publications/2013/demo/p70-135.pdf</a>.
\22\ FFY 2021 ACF-801 data report.
\23\ FFY 2022-2024 CCDF State Plans.
\24\ Ibid.
\25\ ASPE tabulations of the ACF-801 database. FY 2005 to FY
2018 were tabulated using the public-use files. FY 2019 to FY 2021
were tabulated using the restricted-use files. FY 2021 data were
preliminary.
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The Act requires States and Territories to establish and
periodically revise co-payment policies that are ``not a barrier to
families receiving'' CCDF assistance. (42 U.S.C. 9858c(5)). High co-
payments can be a significant and destabilizing financial strain on
family budgets, a barrier to families participating in the CCDF
program, and a barrier to parent employment.\26\ Unaffordable co-
payments can limit family participation in the CCDF program, cause
parents to cut work hours or exit the workforce entirely, and may lead
families to patch together informal, unregulated care that is less
expensive, less reliable, and less likely to meet children's
developmental needs. Even families receiving child care subsidies
continue to experience substantial financial burden in meeting their
portion of child care costs.\27\ According to a 2023 survey of families
that participated in CCDF without a co-pay, 56 percent of parents
reported that they would disenroll their children from the subsidized
child care program if co-payments were required.\28\ Surveyed parents
explained that needing to pay a co-payment would cause strain on their
family budget, with one parent explaining, ``I would have to choose
which minimum necessities to afford that month--rent, utilities, or
food . . . the choice is impossible,'' and another sharing, ``I would
not be able to work.'' \29\ We retain the 7 percent cap in this final
rule because we believe amounts in excess of this threshold pose a
barrier to child care access in the CCDF program. ACF notes that 7
percent of family income is not affordable for many families
participating in CCDF. ACF encourages Lead Agencies to adopt lower co-
payment caps and minimize or waive co-payments when possible and this
rule makes it easier to do so.
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\26\ Landivar, L.C., Graf, N.L., & Rayo, G.A. (2023). Childcare
Prices in Local Areas: Initial Findings from the National Database
of Childcare Prices. U.S. Department of Labor. <a href="https://www.dol.gov/sites/dolgov/files/WB/NDCP/508_WB_IssueBrief-NDCP-20230213.pdf">https://www.dol.gov/sites/dolgov/files/WB/NDCP/508_WB_IssueBrief-NDCP-20230213.pdf</a>.; 81
FR 67515 (<a href="https://www.govinfo.gov/content/pkg/FR-2016-09-30/pdf/2016-22986.pdf">https://www.govinfo.gov/content/pkg/FR-2016-09-30/pdf/2016-22986.pdf</a>).; National Survey of Early Care and Education
Project Team (2022): Hardy, E. Park, J.E. 2019 NSECE Snapshot: Child
Care Cost Burden in U.S. Households with Children Under Age 5. OPRE
Report No. 2022-05, Washington DC: Office of Planning, Research and
Evaluation (OPRE), Administration for Children and Families (ACF),
U.S. Department of Health and Human Services (HHS). <a href="https://www.acf.hhs.gov/opre/report/2019-nsece-snapshot-child-care-cost-burden-us-households-children-under-age-5">https://www.acf.hhs.gov/opre/report/2019-nsece-snapshot-child-care-cost-burden-us-households-children-under-age-5</a>.; Scott, E.K., Leymon,
A.S., & Abelson M. (2011). Assessing the Impact of Oregon's 2007
Changes to Child-Care Subsidy Policy. Eugene, Oregon: University of
Oregon. <a href="https://health.oregonstate.edu/early-learners/research/assessing-impacts-oregon%E2%80%99s-2007-changes-child-care-subsidy-policy">https://health.oregonstate.edu/early-learners/research/assessing-impacts-oregon%E2%80%99s-2007-changes-child-care-subsidy-policy</a>.; Grobe, D., Weber, R., Davis, E. & Scott, E. (2012).
Struggling to Pay the Bills: Using Mixed-Methods to Understand
Families' Financial Stress and Child Care Costs. Contemporary
Perspectives in Family Research (6), 93-121. <a href="https://health.oregonstate.edu/sites/health.oregonstate.edu/files/sbhs/pdf/struggling-to-pay-the-bills-using-mixed-methods-to-understand-families-financial-stress-and-child-care-costs.pdf">https://health.oregonstate.edu/sites/health.oregonstate.edu/files/sbhs/pdf/struggling-to-pay-the-bills-using-mixed-methods-to-understand-families-financial-stress-and-child-care-costs.pdf</a>.; Morrissey, T.W.
(2017). ``Child care and parent labor force participation: a review
of the research literature.'' Review of Economics of the Household
15.1: 1-24. <a href="https://link.springer.com/content/pdf/10.1007/s11150-016-9331-3.pdf">https://link.springer.com/content/pdf/10.1007/s11150-016-9331-3.pdf</a>.
\27\ Scott, E.K., Leymon, A.S., & Abelson M. (2011). Assessing
the Impact of Oregon's 2007 Changes to Child-Care Subsidy Policy.
Eugene, Oregon: University of Oregon. <a href="https://health.oregonstate.edu/early-learners/research/assessing-impacts-oregon%E2%80%99s-2007-changes-child-care-subsidy-policy">https://health.oregonstate.edu/early-learners/research/assessing-impacts-oregon%E2%80%99s-2007-changes-child-care-subsidy-policy</a>.; Grobe,
D.,Weber, R., & Davis, E. & Scott, E. (2012). Struggling to Pay the
Bills: Using Mixed-Methods to Understand Families' Financial Stress
and Child Care Costs. Contemporary Perspectives in Family Research
(6), 93-121. <a href="https://health.oregonstate.edu/sites/health.oregonstate.edu/files/sbhs/pdf/struggling-to-pay-the-bills-using-mixed-methods-to-understand-families-financial-stress-and-child-care-costs.pdf">https://health.oregonstate.edu/sites/health.oregonstate.edu/files/sbhs/pdf/struggling-to-pay-the-bills-using-mixed-methods-to-understand-families-financial-stress-and-child-care-costs.pdf</a>.
\28\ EveryChild California. (April 2, 2023). EveryChild CA
Family Fee Survey Results.
\29\ Ibid.
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The rule makes it easier for Lead Agencies to waive co-payments for
additional families, specifically for families living at or below 150
percent of the federal poverty level, families with children in foster
and kinship care, families with children with disabilities, families
experiencing homelessness, and children enrolled in Head Start or Early
Head Start. ACF believes making it easier for Lead Agencies to waive
parent co-payments for these populations will increase uptake of an
existing program flexibility and lower child care costs for more
families participating in CCDF, especially those with lower incomes and
vulnerable children, as well as making it easier to coordinate with
Head Start and Early Head Start. Lead Agencies report that families
with low incomes in their jurisdictions are still struggling to afford
child care, even when they receive child care subsidies.\30\
Eliminating child care costs for additional families will better
support parents' education, training, and work opportunities and
families' financial stability and well-being. As just noted, co-
payments, even very low co-payments, remain a barrier for some families
to make ends meet, especially families struggling to afford housing
costs.\31\ This policy will shift costs that currently burden
participating families to Lead Agencies and does not impact the total
payment made to the child care provider.
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\30\ Rohacek, M., & Adams, G. (2017). Providers in the child
care subsidy system. Washington, DC: Urban Institute. <a href="https://www.urban.org/sites/default/files/publication/95221/providers-and-subsidies.pdf">https://www.urban.org/sites/default/files/publication/95221/providers-and-subsidies.pdf</a>.
\31\ Scott, E.K., Leymon, A.S., & Abelson M. (2011). Assessing
the Impact of Oregon's 2007 Changes to Child-Care Subsidy Policy.
Eugene, Oregon: University of Oregon. <a href="https://health.oregonstate.edu/early-learners/research/assessing-impacts-oregon%E2%80%99s-2007-changes-child-care-subsidy-policy">https://health.oregonstate.edu/early-learners/research/assessing-impacts-oregon%E2%80%99s-2007-changes-child-care-subsidy-policy</a>.; Grobe,
D.,Weber, R., & Davis, E. & Scott, E.. (2012). Struggling to Pay the
Bills: Using Mixed-Methods to Understand Families' Financial Stress
and Child Care Costs. Contemporary Perspectives in Family Research
(6), 93-121. <a href="https://health.oregonstate.edu/sites/health.oregonstate.edu/files/sbhs/pdf/struggling-to-pay-the-bills-using-mixed-methods-to-understand-families-financial-stress-and-child-care-costs.pdf">https://health.oregonstate.edu/sites/health.oregonstate.edu/files/sbhs/pdf/struggling-to-pay-the-bills-using-mixed-methods-to-understand-families-financial-stress-and-child-care-costs.pdf</a>.; Anderson, T. et al. (January 2022). Balancing
at the Edge of the Cliff: Experiences and Calculations of Benefit
Cliffs, Plateaus, and Trade-Offs. Washington, DC: Urban Institute.
<a href="https://www.urban.org/research/publication/balancing-edge-cliff">https://www.urban.org/research/publication/balancing-edge-cliff</a>.
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These new flexibilities should not discourage States and
Territories from taking steps to eliminate or significantly reduce co-
payments for additional families who do not fall within one of the
categories listed in this rule for pre-approved waiving of co-payments.
Lead Agencies may still propose a higher income threshold for waiving
co-payments, at their discretion, utilizing existing authority in the
statute.
[[Page 15369]]
Strengthening CCDF Payment Practices to Child Care Providers and
Increasing Families' Options
This final rule will strengthen Lead Agency payment rates and
practices to more than 150,000 child care providers to better cover the
cost of care, increase the financial stability of child care providers
that accept CCDF subsidies, and encourage more providers to accept
subsidies. These policies will expand available child care options to
parents participating in CCDF so they can find child care that meets
their families' needs. Despite the importance of access to high-quality
child care to children, families, and communities, there is not enough
child care to serve families who need it.\32\ A 2018 analysis found
that 51 percent of families with children under age 5 lived in a
``child care desert''--an area where there are three times as many
children under age 5 than there are spaces in licensed settings.\33\ A
2019 analysis of 35 States found only 7.8 million child care slots for
the 11.1 million children under the age of 5 with the potential need
for child care.\34\ Parents have long struggled to find child care that
meets their needs, and the decline in child care options, especially
family child care homes, has perpetuated the problem. Between 2012 and
2019, the number of family child care providers decreased by 25 percent
\35\ without a complementary increase in center-based programs.\36\
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\32\ Federal Reserve Bank of St. Louis. The Economic Impact of
Child Care by State. <a href="https://www.stlouisfed.org/community-development/child-care-economic-impact">https://www.stlouisfed.org/community-development/child-care-economic-impact</a>.
\33\ Malik, R. et al., (2018). America's Child Care Deserts in
2018. Washington, DC: Center for American Progress. <a href="https://www.americanprogress.org/article/americas-child-care-deserts-2018/">https://www.americanprogress.org/article/americas-child-care-deserts-2018/</a>.
\34\ Smith, L., Bagley, A., and Wolters, B. (November 2021).
Child Care in 35 States: What we know and don't know. Washington,
DC: Bipartisan Policy Center.
\35\ Datta, A.R., Milesi, C., Srivastava, S., Zapata-Gietl, C.
(2021). NSECE Chartbook--Home-based Early Care and Education
Providers in 2012 and 2019: Counts and Characteristics. OPRE Report
No. 2021-85, Washington DC: Office of Planning, Research and
Evaluation, Administration for Children and Families, U.S.
Department of Health and Human Services. <a href="https://www.acf.hhs.gov/opre/report/nsece-hb-chartbook-counts-and-characteristics">https://www.acf.hhs.gov/opre/report/nsece-hb-chartbook-counts-and-characteristics</a>.
\36\ Datta, A.R., Gebhardt, Z., Zapata-Gietl, C. (2021). Center-
based Early Care and Education Providers in 2012 and 2019: Counts
and Characteristics. OPRE Report No. 2021-222, Washington DC: Office
of Planning, Research and Evaluation, Administration for Children
and Families, U.S. Department of Health and Human Services. <a href="https://www.acf.hhs.gov/sites/default/files/documents/opre/cb-counts-and-characteristics-chartbook_508_2.pdf">https://www.acf.hhs.gov/sites/default/files/documents/opre/cb-counts-and-characteristics-chartbook_508_2.pdf</a>.
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A key contributor to this lack of supply is that child care
providers usually operate with profit margins of less than 1
percent.\37\ To remain open, child care providers must keep costs low
enough so families are not priced out of care, but because labor is the
main business expense, most providers can only remain operational if
they pay low wages and offer minimal benefits for this essential and
skilled work overwhelmingly done by women and disproportionately by
women of color.\38\ These working conditions lead to high turnover,
with an estimated 26 to 40 percent of the child care workforce leaving
their job each year.\39\ Children in underserved geographic areas
especially have less access to high-quality child care options and
parents struggle to find high-quality child care that is reliably
available and affordable.\40\
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\37\ U.S. Department of the Treasury. (2021). The Economics of
Child Care Supply in the United States. <a href="https://home.treasury.gov/system/files/136/The-Economics-of-Childcare-Supply-09-14-final.pdf">https://home.treasury.gov/system/files/136/The-Economics-of-Childcare-Supply-09-14-final.pdf</a>.
\38\ Ibid.
\39\ Ibid.
\40\ Ibid.
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CCDF must do more to help address supply challenges and ensure
parents have a wide range of child care choices that meet their needs,
a core purpose of the program. The final rule includes key changes to
address some of the challenges experienced by families and providers
participating in CCDF. The rule: (1) requires Lead Agencies to pay
providers prospectively and based on child enrollment to align with
generally accepted payment practices in the private market and better
reflect the fixed costs of child care; (2) requires Lead Agencies to
use some grants and contracts for direct services, at a minimum for
children in underserved geographic areas, infants and toddlers, and
children with disabilities; and (3) clarifies that Lead Agencies are
allowed and encouraged to pay child care providers the full established
payment rate, even if it is higher than the price the provider charges
privately paying families.
First, the rule requires Lead Agencies use timely and enrollment-
based payment practices for child care providers to align with
generally accepted payment practices in the private sector. The Act
requires States and Territories to certify that ``the payment practices
of child care providers in the State that serve children who receive
[CCDF] assistance . . . reflect generally accepted payment practices of
child care providers in the State that serve children who do not
receive [CCDF] assistance . . ., so as to provide stability of funding
and encourage more child care providers to serve children who receive
[CCDF] assistance . . .'' (42 U.S.C. 9858c(c)(2)(S)). The Act also
requires States and Territories to show how they ``provide for timely
payment for child care services provided under [CCDF]'' (42 U.S.C.
9858c(c)(4)(B)(iv)). The revisions promulgated by this rule will help
account for some of the fixed costs of providing child care, support
better provider stability, and increase child care options for families
participating in CCDF. Generally accepted payment practices for parents
who do not receive subsidies (which are most parents) require a set
fee, are based on a child's enrollment, and are paid in advance of when
services are provided. This is necessary because the fixed costs of
providing child care, including staff wages, rent, and utilities do not
decrease when a child is absent and must be budgeted prior to service
delivery. The Act requires Lead Agencies to use generally accepted
payment practices, because it makes it easier for child care providers
to serve children receiving assistance from CCDF and fosters equal
access to child care for participating parents, which is a central
purpose of the CCDF program. Providers often mention delayed payments
and their destabilizing effect on child care operations as a key reason
why they do not participate in the CCDF program.\41\ But according to
FY 2022-2024 CCDF State and Territory Plans, only eight States and
Territories pay prospectively and only 36 pay providers based on
enrollment. Providers in States that pay based on attendance either
absorb the lost revenue associated with a child's occasional absences
or choose not to participate in the subsidy system, which limits parent
choices. An August 2023 survey of child care providers found 80 percent
of child care center directors/administrators and family child care
owners/operators who responded to the survey would be more likely to
serve families using subsidies if the State paid based on enrollment
rather than attendance, and 73 percent said they would be more likely
if the State paid prospectively.\42\
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\41\ U.S. Department of Health and Human Services. Office of the
Inspector General. (August 2019). States' Payment Rates Under the
Child Care and Development Fund Program Could Limit Access to Child
Care Providers (Report in Brief OEI-03-15-00170). <a href="https://oig.hhs.gov/oei/reports/oei-03-15-00170.pdf">https://oig.hhs.gov/oei/reports/oei-03-15-00170.pdf</a>.
\42\ <a href="https://www.naeyc.org/sites/default/files/wysiwyg/user-73607/naeyc_nprm_comments.final.pdf">https://www.naeyc.org/sites/default/files/wysiwyg/user-73607/naeyc_nprm_comments.final.pdf</a>.
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Second, the rule requires Lead Agencies to use some grants and
contracts for direct child care services to enable CCDF to better
address child care
[[Page 15370]]
supply issues for participating families. The Act requires States and
Territories to offer parents of eligible children the option to either
``enroll such child with a child care provider that has a grant or
contract for the provision of such services; or to receive a child care
certificate'' (42 U.S.C. 9858c(c)(2)(A)). Grants and contracts
represent agreements between the subsidy program and child care
providers to designate slots for subsidy-eligible children and are an
important tool for building child care supply.\43\ However, only 10
States and Territories report using any grants and contracts for direct
services, and only 6 States and Territories report supporting more than
5 percent of children receiving subsidy via a grant or contract.\44\
Sufficiently funded grants and contracts for direct services are more
likely to increase stability for child care providers than
certificates, helping them remain in business, and thereby maintaining
or increasing the supply of child care.\45\ One survey of providers
found 80 percent of center-based directors and administrators and
family child care owner/operators would be interested in applying for
grants or contracts to serve populations identified in the final
rule.\46\ An evaluation of an infant and toddler contracted slot pilot
in Pennsylvania found that participating programs experienced increased
classroom quality and had greater financial stability than providers
solely paid through certificates. Contracts led to more stable
enrollment for infants and toddlers receiving child care subsidies.\47\
They also found evidence that providers were better able to hire and
retain qualified staff and establish better coordination between local
and State systems. Georgia also used grants and contracts to build the
supply of care for infants and toddlers. Providers reported an increase
in enrollment of children from families who would have normally
struggled to pay for care because the program was better able to
connect the families with a contract-funded subsidy.\48\ They also
reported that the higher reimbursement rate paid with the contracts was
closer to the true cost of providing care and allowed providers to
invest in quality improvements.
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\43\ Child Care Technical Assistance Network. (October 2021).
Implementation Guide: Strategies to Support Use of Contracts and
Grants for Child Care Slots. U.S. Department of Health and Human
Services, Administration for Children and Families, Office of Child
Care. <a href="https://childcareta.acf.hhs.gov/sites/default/files/new-occ/resource/files/implementation_guide_use_of_contracts_508.pdf">https://childcareta.acf.hhs.gov/sites/default/files/new-occ/resource/files/implementation_guide_use_of_contracts_508.pdf</a>;
Morrissey, T. and Workman, S. (August 4, 2020). Grants and
Contracts: A Strategy for Building the Supply of Subsidized Infant
and Toddler Child Care. Washington, DC: Center for American
Progress. <a href="https://cdn.americanprogress.org/content/uploads/2020/08/03112628/Grants-and-Contracts.pdf">https://cdn.americanprogress.org/content/uploads/2020/08/03112628/Grants-and-Contracts.pdf</a>.
\44\ <a href="https://www.acf.hhs.gov/occ/data/fy-2020-preliminary-data-table-2">https://www.acf.hhs.gov/occ/data/fy-2020-preliminary-data-table-2</a>.
\45\ Slicker, G., Barbieri, C.A., and Hustedt, J.T. (2023) The
role of state subsidy policies in early education programs'
decisions to accept subsidies: evidence from nationally
representative data. Early Education and Development, DOI: 10.1080/
10409289.2023.2244859. <a href="https://www.tandfonline.com/doi/full/10.1080/10409289.2023.2244859">https://www.tandfonline.com/doi/full/10.1080/10409289.2023.2244859</a>.; Weber, R.B. and Grobe, D. (2015), Contracted
slots pilot program evaluation. <a href="https://health.oregonstate.edu/sites/health.oregonstate.edu/files/early-learners/pdf/research/contracted_slots_pilot_evaluation_-_executive_summary.pdf">https://health.oregonstate.edu/sites/health.oregonstate.edu/files/early-learners/pdf/research/contracted_slots_pilot_evaluation_-_executive_summary.pdf</a>; Giapponi
Schneider, K., Erickson Warfield, M., Joshi, P., Ha, Y., & Hodgkin,
D. (2017). Insights into the black box of child care supply:
Predictors of provider participation in the Massachusetts child care
subsidy system. <a href="https://www.sciencedirect.com/science/article/abs/pii/S0190740917300750">https://www.sciencedirect.com/science/article/abs/pii/S0190740917300750</a>.
\46\ <a href="https://www.naeyc.org/sites/default/files/wysiwyg/user-73607/naeyc_nprm_comments.final.pdf">https://www.naeyc.org/sites/default/files/wysiwyg/user-73607/naeyc_nprm_comments.final.pdf</a>.
\47\ Dorn, C. (August 2020). Infant and Toddler Contracted Slots
Pilot Program: Evaluation Report. Pennsylvania Office of Childhood
Development and Early Learning. <a href="https://s35729.pcdn.co/wp-content/uploads/2020/11/IT-Pilot-Evaluation-Report_PA_Final.V2.pdf">https://s35729.pcdn.co/wp-content/uploads/2020/11/IT-Pilot-Evaluation-Report_PA_Final.V2.pdf</a>.
\48\ Sotolongo, J., et al. (May 2017). Voices from the Field:
Providers' Experiences with Implementing DECAL's Quality Rated
Subsidy Grant Pilot Program. Chapel Hill, NC: Child Trends. <a href="https://www.decal.ga.gov/documents/attachments/VoicesFromtheField.pdf">https://www.decal.ga.gov/documents/attachments/VoicesFromtheField.pdf</a>.
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The rule specifically requires Lead Agencies to use some grants and
contracts for children in underserved geographic areas, infants and
toddlers, and children with disabilities--populations that the statute
identifies Lead Agencies must develop and implement strategies to
increase the supply and quality of care. 42 U.S.C. 9858c(c)(2)(M).
Finding care for infants and toddlers and children with disabilities is
particularly difficult for parents. Higher operational costs per child,
the need for specialized training, and physical space needs generally
require additional funding and planning and make supply issues
particularly acute. At the same time, these populations constitute a
sizable portion of the population of children potentially eligible for
CCDF: infants and toddlers constitute about one-third of children
receiving CCDF,\49\ and 17 percent of children have a developmental
disability.\50\ For infants and toddlers, the potential demand far
exceeds the available supply. A 2020 analysis of 19 States and the
District of Columbia, representing close to 40 percent of the U.S.
population, found there were at least three infants or toddlers for
every child care slot for children under three in 80 percent of the
counties analyzed.\51\ For children with disabilities, data from the
2016 Early Childhood Program Participation Survey showed that 34
percent of parents of children with disabilities had at least some
difficulty finding child care compared to 25 percent of parents of
children without disabilities.\52\ Despite Lead Agencies' obligation to
develop strategies to serve this population, approximately twenty
states report serving no children with disabilities.\53\
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\49\ Unpublished FY 2021 ACF Administrative Data.
\50\ Cogswell, M.E., Coil, E., Tian, L.H., Tinker, S.C.,
Ryerson, A.B., Maenner, M.J, Rice, C.E., Peacock, G. (2022). Health
Needs and Use of Services Among Children with Developmental
Disabilities--United States, 2014-2018. Morbidity and Mortality
Weekly Report. 71(12):453-458.
\51\ The White House (March 2023). Economic Report of the
President. <a href="https://www.whitehouse.gov/wp-content/uploads/2023/03/ERP-2023.pdf">https://www.whitehouse.gov/wp-content/uploads/2023/03/ERP-2023.pdf</a>.
\52\ Novoa, C. (2020). The child care crisis disproportionately
affects children with disabilities. Washington, DC: Center for
American Progress. <a href="https://www.americanprogress.org/article/child-care-crisis-disproportionately-affects-children-disabilities">https://www.americanprogress.org/article/child-care-crisis-disproportionately-affects-children-disabilities</a>.
\53\ <a href="https://www.acf.hhs.gov/occ/data/fy-2020-preliminary-data-table-21">https://www.acf.hhs.gov/occ/data/fy-2020-preliminary-data-table-21</a>.
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Third, the rule clarifies that Lead Agencies are allowed and
encouraged to pay child care providers the full agency-established
payment rate to account for the actual cost of care, even if it is
higher than the price the provider charges private pay families. The
Act requires States and Territories to ``certify that payment rates for
the provision of child care services for which [CCDF] assistance is
provided . . . are sufficient to ensure equal access for eligible
children to child care services that are comparable to child care
services in the State or substate area involved that are provided to
children whose parents are not eligible to receive [CCDF] assistance.''
(42 U.S.C. 9858c(c)(4)). States and Territories must also set rates in
accordance with market rate surveys that reflect ``variations in the
cost of child care services by geographic area, type of provider and
age of child,'' and take into consideration ``the cost of providing
higher quality child care services that were provided . . . before
November 19, 2014.'' (42 U.S.C. 9858c(c)(4)(B)).
Because child care providers' price for services reflects what
private-pay families enrolling in their programs can afford and not
necessarily the (higher) cost of providing services, payment rates are
artificially constrained by affordability, particularly in low-income
neighborhoods. Under CCDF, Lead Agencies set payment rates using a
market rates survey or a cost-based alternative methodology, but some
Lead Agencies pay below their established rate to match the constrained
price a
[[Page 15371]]
provider charges parents paying privately. Not only does this practice
contribute to instability in the child care sector, it also creates
pressure on providers to raise rates on private pay families. The rule
codifies this existing flexibility to pay above the private rate to
encourage more Lead Agencies to adopt this practice, which will promote
equal access for participating families, increase parent options in
care arrangements, and help increase the number and percentage of
children from families with low incomes in high-quality child care
settings, all central purposes of the Act.
Easier Enrollment for Families Through Reduced Bureaucracy
Finally, this rule includes changes to encourage easier enrollment
and re-enrollment processes for families applying for child care
subsidies. First, this rule establishes parameters for Lead Agencies
that choose to implement presumptive eligibility with the goal of
reducing barriers for Lead Agency uptake for this existing program
flexibility and helping more families receive child care assistance
faster. The rule also requires Lead Agencies to implement eligibility
policies and procedures that minimize disruptions to parent employment,
education, or training opportunities. These rules align with section
658E(c)(2)(N) the Act, requiring States and Territories to develop
procedures and policies that ``ensure that working parents. . .are not
required to unduly disrupt their employment in order to comply with the
State's or designated local entity's requirements for redetermination
of eligibility for [CCDF] assistance.'' (42 U.S.C. 9858c(c)(2)(N)).
These changes will help address what can be a slow and difficult
process for initial CCDF eligibility determination.\54\ Burdensome
application processes discourage families from applying for child care
assistance, delay access to child care, and cause substantial stress to
parents.\55\ They can also derail or delay employment, education, or
training, harm family economic well-being, and lead parents to pay for
care that is either unaffordable, unregulated, or lower quality.\56\
Evidence suggests presumptive eligibility can be implemented with
relatively low levels of financial risk for Lead Agencies, and the
potential benefits for families are substantial.\57\ Families reported
it helped them obtain full verification documents more easily and that
providers were more willing to enroll children because payments were
already guaranteed.
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\54\ Lee, R., Gallo, K., Delaney, S., Hoffman, A., Panagari, Y.,
et al. (2022). Applying for child care benefits in the United
States: 27 families' experiences. US Digital Response. <a href="https://www.usdigitalresponse.org/projects/applying-for-child-care-benefits-in-the-united-states-27-families-experiences">https://www.usdigitalresponse.org/projects/applying-for-child-care-benefits-in-the-united-states-27-families-experiences</a>.
\55\ Adams, G., Snyder, K., & Banghart, P. (2008). Designing
subsidy systems to meet the needs of families: An overview of policy
research findings. Washington, DC: Urban Institute. <a href="https://www.urban.org/research/publication/designing-subsidy-systems-meet-needs-families">https://www.urban.org/research/publication/designing-subsidy-systems-meet-needs-families</a>.
\56\ Ibid.
\57\ Ibid.
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Flexibility for Tribal Lead Agencies
For the most part, Tribal Lead Agencies are exempt from the new
requirements included in this final rule, but the rule includes two
important new flexibilities for Tribes. First, it updates the
definition for major renovation in a manner that will reduce the types
of projects for which Tribal Lead Agencies must submit applications.
Second, it provides all CCDF Tribal Lead Agencies the flexibility to
waive parent co-payments for all parents receiving CCDF assistance.
These exemptions and flexibilities are discussed in Subpart I.
On July 27, 2023, ACF released a Request for Information (RFI) to
seek extensive input on whether existing CCDF requirements,
regulations, and processes are appropriate for Tribal Nations to
implement CCDF in a manner that best meets the needs of the children,
families, and child care providers in their Nations and communities and
that properly recognizes the principals of strong government-to-
government relationships and Tribal sovereignty. The public comment
period ended January 2, 2024, and ACF hosted multiple listening
sessions and two Tribal consultations to solicit comments. ACF will
consider the need for potential further regulatory changes as part of
this broader RFI effort.
Effective Dates
This final rule will become effective 60 days from the date of its
publication. Compliance with provisions in the rule will be determined
through ACF review and approval of CCDF Plans, including CCDF Plan
amendments, as well as through federal monitoring, including on-site
monitoring visits as necessary.
We recognize that at the time of publication of this final rule,
States and Territories are in the process of completing their FFY 2025-
2027 CCDF Plans, which are due July 1, 2024. With the issuance of this
final rule, any State or Territory that does not fully meet the
requirements of these regulations, will need to revise its policies and
procedures to come into compliance. We are allowing Lead Agencies to
request temporary transitional waivers for up to two years to ensure
there is enough time to execute the steps necessary to be in compliance
with this final rule. This final rule revises the process to request
temporary transitional waivers on the updated provisions in this final
rule as described at Sec. 98.19. This waiver authority does not extend
past two years. We also note that requests for extensions through
legislative or transitional waivers will only be considered for
provisions substantively updated in this final rule. ACF will use
federal monitoring in accordance with Sec. 98.90.
Tribal Lead Agencies will describe any changes made in response to
this final rule in new triennial Plans for FFY 2026-2028, with an
effective date of October 1, 2025. Tribes that have consolidated CCDF
with other employment, training, and related programs under Public Law
102-477, are not required to submit separate CCDF Plans, but will be
required to demonstrate compliance with this final rule in their next
Public Law 102-477 Plan submission, along with associated
documentation.
Costs, Benefits, and Transfer Impacts
Changes made by this final rule will have the most direct benefit
for the nearly 800,000 families and 1.3 million children who use CCDF
assistance to pay for child care. Families who receive CCDF assistance
will benefit from lower parent co-payments, more parent choice in care
arrangements, and simplified eligibility determination processes, which
will increase child care access and affordability. Greater access and
affordability will improve the ability of families to participate in
the labor market and benefit the overall economy. Research has
demonstrated that increased access to child care increases maternal
labor force participation.\58\ In particular, child care subsidies have
been found to increase employment among single mothers.\59\
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\58\ Morrissey, T.W. (2017). ``Child care and parent labor force
participation: a review of the research literature.'' Review of
Economics of the Household 15.1: 1-24. <a href="https://link.springer.com/content/pdf/10.1007/s11150-016-9331-3.pdf">https://link.springer.com/content/pdf/10.1007/s11150-016-9331-3.pdf</a>.
\59\ Blau, D., Tekin, E. (2007). The determinants and
consequences of child care subsidies for single mothers in the USA.
Journal of Population Economics 20, 719-741. <a href="https://doi.org/10.1007/s00148-005-0022-2">https://doi.org/10.1007/s00148-005-0022-2</a>.; Morrissey, T.W. 2017. Child care and
parent labor force participation: a review of the research
literature. Review of Economics of the Household 15, 1-24. <a href="https://doi.org/10.1007/s11150-016-9331-3">https://doi.org/10.1007/s11150-016-9331-3</a>.; Shonkoff, J. P., & Phillips, D.
A. (Eds.). (2000). From neurons to neighborhoods: The science of
early childhood development. National Academy Press.; Herbst, C.
(2017). Universal Child Care, Maternal Employment, and Children's
Long-Run Outcomes: Evidence from the US Lanham Act of 1940. Journal
of Labor Economics, 35 (2). <a href="https://doi.org/10.1086/689478">https://doi.org/10.1086/689478</a>.
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[[Page 15372]]
Providers will benefit from this rule's payment practice
requirements that support providers' financial stability, including
prospective payments based on enrollment and payments that more closely
reflect the cost of providing high-quality care, which could lead to
higher wages for providers and their staff.\60\ This rule will also
yield benefits in terms of child development outcomes. The provisions
in this rule expand child care access and some children who might have
not received subsidized care under the current rule (e.g., those whose
parents could not pay the co-pay) would receive subsidized care under
this new final rule. For these children, they are likely to receive
higher quality care than they otherwise would have. Research
demonstrates clear linkages between high quality child care and
positive child outcomes, including school readiness, social-emotional
outcomes, educational attainment, employment, and earnings.\61\
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\60\ Borowsky, J., et al (2022). An equilibrium model of the
impact of increased public investment in early childhood education.
Working Paper 30140. <a href="http://www.nber.org/papers/w30140">http://www.nber.org/papers/w30140</a>.
\61\ Deming, D. 2009. ``Early Childhood Intervention and Life-
Cycle Skill Development: Evidence from Head Start.'' American
Economic Journal: Applied Economics, 1 (3): 111-34.; Duncan, G.J.,
and Magnuson, K. 2013. ``Investing in Preschool Programs.'' Journal
of Economic Perspectives, 27 (2): 109-132; Heckman, J., and Kautz,
T. ``Fostering and Measuring Skills Interventions That Improve
Character and Cognition.'' In The Myth of Achievement Tests: The GED
and the Role of Character in American Life. Edited by James J.
Heckman, John Eric Humphries, and Tim Kautz (eds). University of
Chicago Press, 2014. Chicago Scholarship Online, 2014. <a href="https://doi.org/10.7208/chicago/9780226100128.003.0009">https://doi.org/10.7208/chicago/9780226100128.003.0009</a>.; Weiland, C.,
Yoshikawa, H. 2013. ``Impacts of a Prekindergarten Program on
Children's Mathematics, Language, Literacy, Executive Function, and
Emotional Skills.'' Child Development, 86(6), 2112-2130.
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The cost of implementing changes made by this rule would vary
depending on a Lead Agency's specific situation and implementation
choices. ACF conducted a regulatory impact analysis (RIA) to estimate
costs, transfers, and benefits of provisions in this final rule,
considering current State and Territory practices. Due to limitations
in data, we did not include Tribal Lead Agency practices in the RIA. We
evaluated major areas of policy change, including reduced parent co-
payments, paying providers based on enrollment, paying providers
prospectively, paying providers the full subsidy rate, presumptive
eligibility for families, and streamlined family eligibility processes.
In response to feedback received during the public comment period, we
have further refined these estimates for the final rule, making key
changes including adding a systems' cost to account for necessary
information technology changes and updating calculations to use the
most recent CCDF administrative data. Due to limited data related to
children with disabilities in the relevant policy areas, for the
purposes of this RIA, we did not conduct separate cost estimates
specific to children with disabilities.
Based on the calculations in the RIA, we estimate the quantified
annualized impact of the rule to be about $206.6 million in transfers,
$13.1 million in costs, and $15.3 million in benefits. Further detail
and explanation can be found in the RIA.
Severability
The provisions of this final rule are intended to be severable,
such that, in the event a court were to invalidate any particular
provision or deem it to be unenforceable, the remaining provisions
would continue to be valid. The changes address a variety of issues
relevant to child care. None of the provisions in the final rule
contained herein are central to an overall intent of the final rule,
nor are any provisions dependent on the validity of other, separate
provisions.
IV. Development of Regulation
Throughout the period since 2016 when the last CCDF Rule was
published, HHS has learned from Lead Agencies, families, and child care
providers; assessed the evolving child care landscape; examined the
successes and challenges in the reauthorized Act's implementation; and
tracked the impact and implications of the COVID-19 public health
emergency on the child care sector. The policies in this final rule are
informed by these lessons and are designed to improve on the work of
the past and build a stronger CCDF program that more effectively
supports the development of children, the economic well-being of
families, and the stability of child care providers.
ACF published a notice of proposed rulemaking (NPRM) in the Federal
Register on July 13, 2023, (88 FR 45022) proposing revisions to CCDF
regulations. We provided a 45-day comment period during which
interested parties could submit comments in writing electronically.
ACF received 1,796 comments, of which 1,639 were unique comments,
on the proposed rule (public comments on the proposed rule are
available for review on <a href="http://www.regulations.gov">www.regulations.gov</a>), including comments from
state human services and educational agencies, Tribal Nations and
Tribal organizations, national, state, and local early childhood and
family-focused organizations, including, child care resource and
referral agencies, faith-based organizations, provider organizations,
as well as labor unions, child care providers, parents, individual
members of the public, and members of the U.S. Congress. We were
pleased to receive comments from 29 State and local governments and 13
Tribes and Tribal organizations. Some commenters coordinated comments
and policy recommendations so that their comments were signed by
multiple entities, and there were some member organizations that each
submitted the same comments separately. We also processed form comments
from hundreds of individuals, including parents and child care staff.
Public comments informed the development of content for this final
rule.
Changes in this final rule affect the State, Territory, and Tribal
agencies that administer the CCDF. ACF has and will continue to consult
with State, Territory, and Tribal agencies and provide technical
assistance throughout implementation.
This final rule maintains the structure and organization of the
current CCDF regulations. The preamble in this final rule discusses the
changes to current regulations and contains certain clarifications
based on ACF's experience in implementing the prior final rules. Where
language of previous regulations remains unchanged, the preamble
explanation and interpretation of that language published with all
prior final rules also is retained, unless specifically modified in the
preamble to this rule. (See 57 FR 34352, Aug. 4, 1992; 63 FR 39936,
Jul. 24, 1998; 72 FR 27972, May 18, 2007; 72 FR 50889, Sep. 5, 2007; 81
FR 67438, Sept. 30, 2016).
V. General Comments and Cross-Cutting Issues
This final rule includes substantive changes in several key policy
areas in the CCDF regulations. We received comments on all the
significant proposed changes and made some revisions in this final rule
in response to these comments. We discuss specific comments in the
section-by-section analysis later in this final rule.
The vast majority of the 1,639 unique public comments were
supportive of the proposals and validated their future benefits to
children, families, and child care providers. Each major proposal
received much more support than opposition. Commenters strongly
supported the need to lower child care
[[Page 15373]]
costs for families, noting the importance of ensuring co-payments are
not a barrier to child care access. Commenters also strongly supported
the need for CCDF payment practices to providers that would better
cover the cost of care, help stabilize operations, and incentivize
child care providers to accept families with child care subsidies.
Some supporters also expressed concerns about potential unintended
consequences of the rule without additional resources, called for
additional guidance and technical assistance on the proposed changes,
recommended consideration of the implementation timeline, and stressed
the need for major long-term funding increases for child care beyond
regulatory changes. Some supporters expressed concerns that without
additional investments to accompany a final rule, the costs of the
proposal inadvertently could be passed on to child care providers or
result in fewer families receiving subsidies, particularly in the
context of supplemental COVID-19 funding coming to a close.
We seriously considered concerns about cost and recognize that the
final rule contains provisions that will require some States and
Territories to direct CCDF funds to implement specific provisions. Many
Lead Agencies have already implemented some of the provisions in this
final rule. In addition, each year, approximately $11.6 billion in
federal funding is allocated for CCDF. The activities to implement
requirements in this final rule are all allowable costs in the CCDF
program. Changes made by this final rule represent a commitment to
ensuring the goals of the 2014 reauthorization of the Act are realized,
including making child care more affordable and accessible to families
and improving stability for child care providers. ACF will continue our
regular work of supporting CCDF Lead Agencies through guidance and
technical assistance in partnership with the CCDF-funded Child Care
Technical Assistance Network.
Several commenters noted that Lead Agencies will need time to
implement the requirements included in this final rule, including time
to take administrative or legislative actions, and some commenters
noted the potential misalignment between the timing of publication of
this final rule and submission to OCC of the FFY 2025-2027 CCDF State
and Territory Plans. Some commenters suggested delaying the FFY 2025-
2027 CCDF Plans or having an additional comment period to cover an
amendment process for the rule's requirements. ACF is aware that some
provisions in the final rule will require a range of internal processes
for Lead Agencies before full implementation and that other provisions
will require IT and data system changes that can take some time.
Therefore, we are allowing Lead Agencies to request temporary
transitional waivers for extensions of up two years if needed to
implement provisions of the rule. The waivers are discussed in greater
detail elsewhere in this preamble.
We considered several options to align the timing of the FFY 2025-
2027 State and Territory Plans and the effective and compliance dates
of this final rule. We have chosen not to adjust the CCDF Plan timeline
because all changes included in this final rule have been incorporated
into the forthcoming final FFY 2025-2027 CCDF State and Territory Plan
Preprint--which outlines the required elements of a plan submission.
The FFY 2025-2027 CCDF State and Territory Plans must be submitted to
ACF by July 1, 2024 and will be effective October 1, 2024.
Finally, we received comments from several national organizations
focused on school-age and out-of-school time care, requesting we
include additional data related to school-age care. We have
incorporated this data in the preamble.
VI. Section-by-Section Discussion of Comments and Regulatory Provisions
We received comments about changes we proposed to specific subparts
of the regulation. Below, we identify each subpart, summarize the
comments, and respond to them accordingly.
Subpart A--Goals, Purposes, and Definitions
Sec. 98.2 Definitions
The final rule includes three technical changes to definitions at
Sec. 98.2 and the addition of two new definitions. In this section,
italics indicate defined terms.
Major Renovation
This final rule defines major renovation as any renovation with a
cost equal to or exceeding $350,000 in federal CCDF funds for child
care centers and $50,000 in federal CCDF funds for family child care
homes, with annual adjustments for inflation posted on the OCC website.
Renovations that exceed these thresholds but do not make significant
changes to the structure, function, or purpose of the child care
facility while improving the health, safety and/or quality of child
care services are considered minor renovation. This definition applies
to all CCDF Lead Agencies and will be used to determine which projects
are considered major renovation and which are therefore not permitted
with State or Territorial CCDF or may be permitted for Tribal Lead
Agencies with prior approval from ACF in accordance with Sec.
98.84(b). As before, CCDF prohibits States and Territories from using
CCDF funds for major renovation. Tribes may continue to request to use
their CCDF funds for construction and major renovation (Section
658O(c)(6), 42 U.S.C. 9858m(c)(6)). In response to comments described
below, this definition provides greater flexibility to Lead Agencies
than the definition proposed in the NPRM.
Comment: A few commenters were fully supportive of the original
proposal and noted it would provide a more informative definition, but
most commenters on this proposal expressed support while also
requesting more clarity and raising significant concerns about regional
variations in construction costs, focusing on the impact of the change
on Tribal Lead Agencies. They noted that the previous definition
provided needed flexibility for Tribal programs to address their
facility needs.
Response: We retain the proposed change to the definition of major
renovation to be based on the cost of renovations for better clarity
and consistent implementation but have incorporated components from the
prior definition to better distinguish between minor and major
renovations. The previous definition for major renovation, established
in the 1998 CCDF regulation, focused exclusively on the type of change
to the facility.\62\ The definition from the 1998 CCDF rule has led to
confusion in the field, insufficient flexibility and inconsistent
guidance for Lead Agencies and child care providers.
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\62\ 63 FR 39980 (<a href="https://www.govinfo.gov/content/pkg/FR-1998-07-24/pdf/98-19418.pdf">https://www.govinfo.gov/content/pkg/FR-1998-07-24/pdf/98-19418.pdf</a>).
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The final rule accounts for Tribal comments on the benefits of
keeping the description of structural change from the previous
definition by taking a combined approach for the definition, such that
renovations exceeding the cost threshold that do not make changes to
the structure, function, or purpose of the child care facility while
improving the health, safety and/or quality of child care services are
still considered minor renovations. This will provide greater
flexibility than what we originally proposed to properly address
geographical differences among Tribal Lead Agencies and to help avoid
increased burden for Tribal Lead Agencies making minor renovations that
are costly due to higher-than-average
[[Page 15374]]
construction prices in their region.\63\ Moreover, in general, this
rule provides greater flexibility for Tribal Lead Agencies to make
needed renovations by eliminating the need for construction
applications in some instances.
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\63\ <a href="https://www.cbre.com/insights/reports/united-states-construction-market-trends">https://www.cbre.com/insights/reports/united-states-construction-market-trends</a>.
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This final rule also provides more flexibility for States and
Territories to use CCDF funds for allowable minor renovations. This
clarification may be particularly helpful for Territories who only
recently started receiving mandatory funds and may be looking for
opportunities to use those funds to increase and improve the supply of
child care in their areas.
Comment: Some commenters noted that the proposed threshold for
major renovation of $250,000 for child care centers and $25,000 for
family child care homes was too low and did not account for geographic
variations in construction and materials costs, suggesting specific
higher thresholds, including $350,000 for centers and $50,000 for
family child care homes. While commenters expressed concerns about
relying on a specific threshold, they were generally supportive of the
proposal for annual adjustments to the threshold based on economic
indicators.
Response: In response to comments, we increased the thresholds from
the levels proposed in the NPRM ($250,000 for centers and $25,000 for
family child care providers) to $350,000 for centers and $50,000 family
child care providers in the final rule. We retained the proposal to
adjust the thresholds annually based on inflation and post that
information on the OCC website.
Comment: A few commenters expressed concern about the proposed
definition of collective renovation proposed in the NPRM, which stated,
``Renovation activities that are intended to occur concurrently or
consecutively, or altogether address a specific part or feature of a
facility, are considered a collective group of renovation activities.''
These commenters argued that applying the proposed renovation
thresholds to collective renovations could undermine development and
financial planning and needed a more nuanced approach.
Response: We appreciate commenters providing additional information
and input on defining collective renovations in the regulatory
language. Given the complexity of defining collective renovations and
the potential unintended consequences, the final rule does not include
a definition of collective renovation.
State
The final rule amends the definition of State to mean ``any of the
States and the District of Columbia and includes Territories and Tribes
unless otherwise specified.'' The change conforms this definition with
the new definition of Territory included in this final rule. This
change is technical and does not make substantive changes to
requirements for States, Territories, or Tribes.
Comment: A commenter noted that Tribes should not be included in
the definition of State.
Response: We share the commenter's concern with including Tribes in
the definition of State. However, we are declining to remove Tribes
from the definition of State at this time. Removing Tribes from the
definition of State may impact the requirements for Tribal Nations, and
we do not want to make such policy changes without the opportunity for
public comment. As discussed earlier, ACF released a Tribal RFI on July
27, 2023 to solicit extensive feedback on the regulations and processes
for Tribal CCDF programs. As ACF considers the information gathered
through the RFI process, we may consider potential regulatory changes,
including revising the definition of State.
Territory
This final rule adds a definition of Territory to mean ``the
Commonwealth of Puerto Rico, the United States Virgin Islands, Guam,
American Samoa, and the Commonwealth of the Northern Mariana Islands.''
This new definition aims to streamline the CCDF regulations,
particularly where Territory funding and allocations are discussed but
does not change policy requirements for Territories. We did not receive
comments on this change and have retained the definition as proposed.
Territory and Tribal Mandatory Funds
This final rule updates definitions to include the terms Territory
mandatory funds and Tribal mandatory funds to reflect changes made to
CCDF mandatory and matching funds in the ARP Act of 2021 (Pub. L. 117-
2). Section 9801 of the ARP Act amended section 418 of the Social
Security Act (42 U.S.C. 618(a)(3)) by permanently increasing the
matching funding for States (including the District of Columbia),
changing the tribal set-aside for mandatory funds from between 1 and 2
percent of funds to a flat $100 million each fiscal year, and
appropriating CCDF mandatory funds ($75 million) to Territories for the
first time.\64\ To align the CCDF regulation with the new Territory
mandatory funding statute, the final rule adds a new definition for
Territory mandatory funds at Sec. 98.2 to mean ``the child care funds
set aside at section 418(a)(3)(C) of the Social Security Act (42 U.S.C.
618(a)(3)(C)) for payments to the Territories'' and revises the
definition for Tribal mandatory funds to be ``the child care funds set
aside at section 418(a)(3)(B) of the Social Security Act (42 U.S.C.
618(a)(3)(B)) for payments to Indian Tribes and tribal organizations.''
We did not receive comments on this technical change and have retained
the definition as proposed.
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\64\ For additional information about changes made to CCDF
mandatory and matching funds in the ARP Act of 2021, see CCDF-ACF-
IM-2021-04 <a href="https://www.acf.hhs.gov/occ/policy-guidance/arp-act-increased-mandatory-and-matching-funds">https://www.acf.hhs.gov/occ/policy-guidance/arp-act-increased-mandatory-and-matching-funds</a>.
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Subpart B--General Application Procedures
Subpart B of the regulations describes some of the basic
responsibilities of a Lead Agency as defined in the Act. A Lead Agency
serves as the single point of contact for the child care subsidy
program, determines the basic use of CCDF funds and priorities for
spending CCDF funds, and promulgates the rules governing overall
administration and oversight.
Under Subpart B, this final rule makes changes to CCDF Plan
provisions, including related to assessing child care supply and
parameters for requesting temporary extensions for certain provisions.
Sec. 98.13--Applying for Funds
This final rule includes a technical change to the regulatory
citation at Sec. 98.13(b)(4) from 45 CFR 76.500 to 2 CFR 180.300 to
accurately reflect current regulations at 2 CFR 180.300 governing
grants management. We did not receive comments on this change.
Sec. 98.16 Plan Provisions
Submission and approval of the CCDF Plan is the primary mechanism
by which ACF works with Lead Agencies to ensure program implementation
meets federal regulatory requirements. All provisions required to be
included in the CCDF Plan are outlined in Sec. 98.16. The additions
and changes to this section correspond to changes throughout the
regulations, which provide explanation and responses to comment for
later in this rule.
Technical Change. This final rule includes a technical change at
Sec. 98.16(ee) as redesignated. The previous regulatory language
incorrectly said, ``verity eligibility.'' This was an
[[Page 15375]]
error, and the final rule is corrected to read ``verify eligibility.''
We did not receive comments on this change.
Presumptive Eligibility. The final rule adds a provision at new
paragraph Sec. 98.16(h)(5) to require Lead Agencies to describe if
they have implemented presumptive eligibility and, if applicable, to
describe their presumptive eligibility policies and procedures, and how
they ensure minimal barriers for families and safeguard funds for
eligible children. The NPRM proposed additional reporting components at
Sec. 98.16(h)(5). This final rule keeps the reporting requirement but
includes it as part of the ACF-800 annual administrative data report at
Sec. 98.71 instead of under the CCDF Plan. Comments are addressed
later under the related requirement at Sec. 98.21(e).
Supply of Child Care. The final rule amends Sec. 98.16(x) and adds
new paragraphs at (y) and (z) to clarify section 658E(c)(2)(M) of the
Act (42 U.S.C. 9858c(c)(2)(M)), which addresses the lack of supply of
child care for certain populations, how Lead Agencies will identify
shortages, and how grants or contracts will be used. The final rule
separates former paragraph (x) into three provisions to better convey
data requirements and strategies to meet the statutory requirement for
Lead Agencies to take steps to increase the supply of child care
services for children in underserved geographic areas, infants and
toddlers, children with disabilities, and children who receive care
during nontraditional hours. At revised paragraph (x), we continue to
require Lead Agencies to include in their CCDF Plans a description of
the supply of care relative to the population of children requiring
care regardless of subsidy participation, including specifically care
for infants and toddlers, children with disabilities as defined by the
Lead Agency, children who receive care during nontraditional hours, and
underserved geographic areas. Lead Agencies must also list the data
sources used to identify the shortages.
At new paragraph (y), the final rule requires Lead Agencies to
describe their strategies and actions to address supply shortages
identified in paragraph (x) and specifically to improve parent choice
for families eligible to participate in CCDF, including for care during
nontraditional hours (y)(1), infant and toddler care (y)(2), and care
for children with disabilities (y)(3), and in underserved geographic
areas (y)(4). This description must include the Lead Agency's method
for tracking progress to increase the supply and support parental
choice for families eligible for CCDF. Supply building for each of
these types of care is specifically required by the statute because of
the high need and, as the final rule reinforces, states must take steps
to ensure these populations have access to child care.
At new paragraph (z), the final rule requires Lead Agencies to
describe how they will use grants or contracts to build supply for
children participating in CCDF in underserved geographic areas, for
infants and toddlers, and for children with disabilities. The final
rule makes clear in paragraph (y)(1) that Lead Agencies must increase
the supply of nontraditional hour care for children participating in
CCDF, but paragraph (z) of this section and Sec. 98.30(b) do not
require Lead Agencies to use grants or contracts as a mechanism for
building supply for this type of care.
This final rule also adds paragraph (aa) to require Lead Agencies
to provide a description of their activities to improve the quality of
child care services for children in underserved geographic areas,
infants and toddlers, children with disabilities as defined by the Lead
Agency, and children who receive care during nontraditional hours. This
is an existing requirement that was previously included in paragraph
(x) of this section.
Comments: Commenters were supportive of collecting additional
information and data on the supply of available child care, especially
to identify the supply shortages that will inform the use of grants or
contracts to increase supply.
Response: Lead agencies need clear data and strategies to address
gaps in the supply of child care. Therefore, we have revised (x) and
(y) to collect additional information about the data States and
Territories use to identify supply shortages and the strategies used to
address them and added (z) to specifically address how some of these
supply shortages will be addressed through grants and contracts. This
final rule will allow Lead Agencies and ACF to better identify supply
shortages and determine how Lead Agencies are addressing them through
various methods, including with grants or contracts. In agreement with
commenters, we revised the proposed provisions to require that Lead
Agencies assess the need for care among the subgroups identified (i.e.,
children in underserved geographic areas, infants and toddlers,
children with disabilities as defined by the Lead Agency, and those
needing care during nontraditional hours) and then determine what
proportion of that need for children in underserved geographic areas,
infants and toddlers, and children with disabilities would be served
with grants or contracts. As stated, Lead Agencies may also use this
data to use contracts or grants for those families who would benefit
from nontraditional hour care.
Comments: Some commenters were concerned the proposed removal of
``If the Lead Agency chooses to employ grants and contracts to meet the
purposes of this section, the Lead Agency must provide CCDF families
the option to choose a certificate for the purposes of acquiring care''
at Sec. 98.16(x) meant that ACF intended to give preference to the use
of grants or contracts over certificates.
Response: We appreciate commenters noting the sentence was removed
in the NPRM. This omission was an error, and in response to these
comments, ACF has added language at Sec. 98.16(z). The regulations do
not give preference to the use of grants or contracts over
certificates. The final rule expands parents' options by requiring some
usage of grants or contracts for direct services.
Sec. 98.19 Requests for Temporary Waivers
In response to comments expressing concerns Lead Agencies would not
be able to implement this rule's changes within the 60-day effective
date, this final rule amends the temporary transitional and legislative
waivers at Sec. 98.19(b)(1), which are authorized by section 658I(c)
of the Act (42 U.S.C. 9858g(c)). The rule extends the waivers at (i)
from a one-year initial period to up to a two-year period and amends
(ii) to specify that the transitional and legislative waivers cannot be
extended and are limited to two years. The final rule also revises
Sec. 98.19(f) to clarify that waiver extensions only apply where
permitted. These revisions do not change the existing parameters
associated with the transitional and legislative waivers, including
that waivers must be approved by the Secretary and are conditional and
dependent on progress towards implementation of the changes included in
this final rule and should be narrowly targeted to those provisions
with a specific legislative or administrative barrier. ACF expects that
such requests will be limited in scope and tied to a specific timeline
for implementation. Lead Agencies will be expected to demonstrate they
have a plan to implement the requirement for which they are granted a
waiver and must provide regular progress updates.
We emphasize that Lead Agencies are expected to move quickly to
implement the critical policy changes included in
[[Page 15376]]
this final rule. Parents urgently need relief from high co-payments and
more child care options and child care providers urgently need more
stabilizing payments and practices. However, we are allowing for the
use of transitional and legislative waivers for the new provisions
because we recognize that some changes will require legislative,
regulatory changes, and/or IT systems investments that can delay full
implementation. As noted above, transitional and legislative waivers
will only be considered for changes made in this final rule.
Subpart C--Eligibility for Services
This subpart establishes parameters for Lead Agency child
eligibility determination and re-determination procedures. This final
rule includes changes related to incorporating additional children into
the family, presumptive eligibility, subsidy enrollment and
applications, and verifying CCDF eligibility using other programs.
Sec. 98.21 Eligibility Determination Processes
Additional Siblings. This final rule clarifies at Sec. 98.21(d)
that the minimum 12-month eligibility requirement described in Sec.
98.21(a) applies when children are newly added to the case of a family
already participating in the subsidy program. This is not a new policy:
Section 658E(c)(2)(N) (42 U.S.C. 9858c(c)(2)(N)) of the Act and Sec.
98.21(a) do not provide exceptions to the 12-month minimum eligibility
requirement. However, the lack of clarity in the 2016 final rule
created confusion for Lead Agencies and inconsistent implementation
leading to additional children (e.g., newborn or school age child
needing after school care) in the family sometimes receiving less than
12 months of care before redetermination. The final rule addresses the
confusion around the policy. A conforming change at Sec. 98.16(h)(4)
requires Lead Agencies to describe their policy related to additional
children in the CCDF Plan.
In cases where multiple children in the same family have initial
eligibility determined at different points in time, we encourage Lead
Agencies to align eligibility periods to the new child's eligibility
period so that all the children's re-determinations can occur at the
same point in time to limit burden on the family and the Lead Agency.
This alignment can be done by extending the eligibility period for the
existing child or children beyond 12 months. Lead Agencies are not
required to conduct a full eligibility determination when adding an
additional child to the family's case and recommends the Lead Agency
leverage existing eligibility verification about the family and require
only necessary information about the additional child (e.g., proof of
relationship, provider payment information).
Comment: Most commenters on this provision endorsed ACF's
recommendation to align the eligibility periods of all the family's
children to the additional child's eligibility period so re-
determinations can occur at the same point in time. A few expressed
concerns about logistical barriers and technical changes required for
systems to track eligibility at the child-level rather than the family-
level. In addition, one Lead Agency asked for clarification of the
expectations of this policy.
Response: We are encouraged that most commenters on this proposed
change endorsed extending the eligibility period for children in a
family already receiving child care subsidies to align with an
additional child's eligibility period. Under the Act in Section
658E(c)(2)(N)(i), once determined eligible, children must receive a
minimum of 12 months of child care services, unless family income rises
above 85 percent of state median income (SMI) or, at Lead Agency
option, the family experiences a non-temporary cessation of work,
education, or training. Lead Agencies that implement policies that
result in eligibility periods of less than 12 months for additional
children would be out of compliance with the minimum 12-month
eligibility requirement. We have made no change to the proposed
language.
Lead Agencies have the flexibility to establish eligibility periods
longer than 12 months, a flexibility that allows the eligibility period
for existing children to align with an additional child's eligibility
period. Alternatively, Lead Agencies may track separate eligibility
periods for each individual child in the family receiving child care
subsidies, though ACF discourages this approach because it can confuse
families and be administratively burdensome for families, providers,
and Lead Agencies.
Comment: Commenters supported our recommendation to leverage
existing family information to verify an additional child's eligibility
for child care subsidies.
Response: As we described in the proposal, our intention is to
reduce the administrative burden for families and Lead Agencies. We
encourage Lead Agencies to implement additional policies that require
only the minimum amount of information from families to verify an
additional child's eligibility. Lead Agencies may assume that family
information collected at the time of an existing child's eligibility
determination (e.g., family income, working or attending job training
or educational program) applies to an additional child's eligibility.
Comment: Commenters supported adding the requirement for Lead
Agencies to describe their additional child policies in their triennial
CCDF Plans.
Response: We agree that including a description of additional
children or sibling policies in the CCDF Plans will lead to more
transparency, more consistent implementation, and reduce confusion
among families, providers, and Lead Agencies. No changes were made to
the proposed language.
Presumptive Eligibility. This final rule adds a provision at Sec.
98.21(e) to clarify that, at a Lead Agency's option, a child may be
considered presumptively eligible for subsidy prior to full
documentation and verification of the Lead Agency's eligibility
criteria and eligibility determination. Presumptive eligibility is an
important tool Lead Agencies can use to reduce burden on families and
ensure timely access to reliable child care assistance. At least six
CCDF Lead Agencies currently allow presumptive eligibility. The rule
makes changes to encourage more Lead Agencies to implement presumptive
eligibility by improving clarity about CCDF rules, including that
payments made with CCDF funds are allowable for any child ultimately
determined eligible except in cases of fraud or intentional program
violations.
Therefore, this final rule clarifies that Lead Agencies may define
a minimum presumptive eligibility criteria and verification requirement
for considering a child eligible for child care services for up to
three months, while full eligibility verification is underway. To be
determined presumptively eligible, a child must be plausibly assumed to
meet each of the basic federal requirements, and at the Lead Agency's
option, the basic requirements defined in the Lead Agency's CCDF Plan,
in accordance with Sec. 98.20 (i.e., age; income; qualifying work,
education, or training activity or receiving or needing to receive
protective services; and child citizenship). Lead Agencies have the
flexibility to collect minimal information to determine presumptive
eligibility and are not required to fully verify the simplified
eligibility information at the time of presumptive eligibility
determination.
The final rule further specifies that federal CCDF payments may be
made
[[Page 15377]]
for presumptively eligible children and those payments, up to the point
of final eligibility determination, will not be considered an error or
improper payment if a child is ultimately determined to be ineligible
and will not be subject to disallowance, except in cases of fraud or
intentional program violation so long as the payment was not for a
service period longer than the period of presumptive eligibility. Lead
Agencies adopting presumptive eligibility are required to implement a
minimum verification process that incorporates criteria that reduces
the likelihood of error and fraud. A conforming change at Sec.
98.71(b)(5) requires Lead Agencies implementing presumptive eligibility
to track and report in their annual aggregate administrative report the
number of presumptively eligible children ultimately determined to be
fully eligible, the number for whom the family does not complete the
documentation for full eligibility verification, and the number who
turn out to be ineligible. We recommend Lead Agencies use these and
other sources of data to ensure funds are safeguarded for eligible
children and negative impacts on providers are minimized. In addition,
the final rule includes a conforming change at Sec. 98.16(h)(5)
requiring Lead Agencies to describe their presumptive eligibility
policies and procedures in their CCDF Plans, including information on
how they ensure minimal barriers for families and safeguard funds for
eligible children.
The change at Sec. 98.21(e) allows Lead Agencies to use
presumptive eligibility to provide quicker access to child care
assistance for families, while reducing perceived financial risk and
administrative burden for the Lead Agency by clarifying that CCDF funds
may be used to cover presumptive eligibility payments if appropriate
safeguards are in place. This policy further reduces financial risk by
requiring Lead Agencies to limit the presumptive eligibility period to
three months, to set presumptive eligibility criteria and minimum
verification requirements that ensure families receiving care during a
period of presumptive eligibility are feasibly eligible and minimize
the likelihood that they are later found to be ineligible for CCDF, and
to track the number of families who do not submit documentation and
both the number of children ultimately determined eligible and
ineligible. We note that the three-month period is a maximum
presumptive eligibility period. Lead Agencies may establish presumptive
eligibility policies for shorter periods and establish distinct periods
for families to submit documentation and for Lead Agencies to process
applications, provided that the combined duration does not exceed three
months. Lead Agencies must end assistance for families once they are
determined to be ineligible, even if that determination is completed in
under three months.
As part of the proposed changes associated with implementing
presumptive eligibility, the NPRM proposed adding a new paragraph at
Sec. 98.21(a)(5)(iv) that included a final determination of
ineligibility after an initial determination of presumptive eligibility
as one of the limited reasons a Lead Agency may choose to end
assistance before the end of the 12-month eligibility period. We have
not included this change in the final rule. As proposed, this language
suggested that it was Lead Agency option whether to terminate
assistance for a child once they were found ineligible. Rather, as
stated above, Lead Agencies must end federal CCDF assistance once a
child is determined to be federally ineligible according to Sec.
98.21(a).
Effective internal controls around presumptive eligibility
processes are important to safeguard funds for CCDF eligible children.
As described in Sec. 98.21(e)(5), when a Lead Agency is under a
corrective action plan for error rate reporting, ACF will consider
contextual factors around the error rate findings and other sources of
information to determine if the Lead Agency can continue to use CCDF
funds for direct services under presumptive eligibility. ACF recommends
that Lead Agencies have a continuous quality assurance process to
ensure their presumptive eligibility policies meet the needs of their
eligible population while also ensuring effective internal controls.
When children are newly added to the case of a family already
participating in the subsidy program (e.g., new siblings) as discussed
at Sec. 98.21(d), Lead Agencies may implement presumptive eligibility
for the additional child while waiting for necessary additional
information (e.g., proof of relationship, provider payment
information), but, as discussed earlier, ACF recommends that Lead
Agencies leverage existing family eligibility verification as much as
possible to determine the additional child's presumptive and full
eligibility and add the additional children to the program.
Comment: Most comments received on this proposal supported the
presumptive eligibility provisions. Some commenters requested ACF
clarify if the intent of presumptive eligibility is a strategy to
reduce stress for families already enrolled or to increase the number
of families entering the subsidy system. A few commenters opposed the
proposal due to concerns about limited funding and supply, as well as
increased work for eligibility staff.
Response: We are pleased by the support for the presumptive
eligibility provisions. The primary intention of presumptive
eligibility policies is to minimize family burden to quickly access
child care services for children who are feasibly federally eligible
for CCDF. We understand that Lead Agencies will need to consider
potential benefits and costs when deciding whether to institute a
presumptive eligibility policy and when crafting such policies. As a
reminder, Lead Agencies are not required to adopt presumptive
eligibility, and, for those who do, there are significant flexibilities
to establish specific policies and procedures, as discussed in more
detail below. As stated before, there is evidence of the substantial
benefit to families if Lead Agencies implement presumptive eligibility,
and the modifications to this policy in the final rule are meant to
ensure that the level of risk to the Lead Agency is minimal in doing
so. Therefore, Lead Agencies are encouraged to consider presumptive
eligibility policies among other strategies to reduce barriers to
enrollment, particularly for vulnerable populations, including families
experiencing homelessness.
Comment: We requested comment on whether three months was an
appropriate length of time for presumptive eligibility. We also asked
for data on the average amount of time it currently takes to process
applications. We received many comments endorsing three months as an
appropriate length of time. One commenter indicated that 90 days for
verification seemed too long and recommended 60 days as a more
reasonable timeframe, but also acknowledged that some situations
including self-employment and homelessness may warrant more time for
verifications. One State Lead Agency recommended flexibility to
determine an appropriate length up to three months. Two commenters
recommended a timeline for families to submit documentation to be
separate from a timeline for Lead Agencies to process applications.
Data received around the average amount of time taken to process
applications was varied: estimates ranged from one
[[Page 15378]]
month, two months, or more to process applications.
Response: We appreciate commenters providing data and support for
the proposed timeframe and have decided to retain the three-month
presumptive eligibility period. If a Lead Agency chooses to allow
presumptive eligibility, they may establish shorter timeframes, but
cannot exceed three months. ACF encourages Lead Agencies to consider
the timing for the families they serve to submit documentation and for
application processing when making decisions about the total length of
time within a three-month period they would like to establish for their
presumptive eligibility policies and processes.
Comment: Multiple commenters endorsed allowing Lead Agencies
flexibilities for implementing presumptive eligibility, including
defining criteria for awarding presumptive eligibility and setting a
period shorter than three months. Other commenters argued that
presumptive eligibility should be a requirement, not a state option.
Other commenters expressed concerns about unintended consequences on
other policies or processes, including concerns about existing wait
times that approach the three-month limit for presumptive eligibility
and enrollment in other benefits programs.
Response: We agree with commenters that Lead Agencies should have
flexibility in whether and how they implement presumptive eligibility
and have kept these flexibilities in the final rule. While the
potential benefit to families could be substantial with its adoption,
Lead Agencies are not required to use presumptive eligibility and will
not be subject to penalties if they do not offer it. Lead Agencies also
have the flexibility to define the documentation and verification
necessary to determine a child's presumptive eligibility in such a way
to increase the likelihood that eligible families are receiving
presumptive eligibility. For example, Lead Agencies may choose to use
eligibility criteria for a family's enrollment in another benefits
program as verification for presumptive eligibility for CCDF benefits
(see a discussion of how enrollment in other benefits programs applies
to full eligibility verification below).
Lead Agencies also have flexibility to establish the duration of
presumptive eligibility, provided it does not extend beyond 3 months,
or how frequently a family could be approved for presumptive
eligibility. Much like the flexibilities for full eligibility
determination, Lead Agencies have the flexibility of defining when
presumptive eligibility begins, such as allowing presumptive
eligibility on the date it is determined or on the date that the child
care services begin. Lead Agencies also have flexibility on for whom
they allow it (e.g., children with disabilities, children receiving or
needing to receive protective services, other priority populations),
though we would recommend that Lead Agencies thoughtfully consider why
presumptive eligibility would be allowed for some groups and not
others.
We understand several Lead Agencies already use presumptive
eligibility, and our intention is not to require burdensome changes to
existing presumptive eligibility policies. However, we do expect that
Lead Agencies implementing presumptive eligibility, both those with new
and existing policies, regularly evaluate the effectiveness of their
presumptive eligibility policies and employ the flexibilities in such a
way to ensure that CCDF funding is safeguarded for eligible children.
Comment: Multiple commenters endorsed the requirement to track and
assess the number of presumptively eligible children who are ultimately
determined ineligible as a commitment to accountability and continuous
improvement. A few commenters recommended also requiring Lead Agencies
to track the number of presumptively-eligible families who do not
submit paperwork to prove their eligibility. Another commenter
recommended gathering disaggregated demographic data related to
tracking presumptive eligibility to reveal equity gaps in access and
requiring Lead Agencies to report the child care supply by specific
demographic variables (e.g., race and ethnicity, geographic location,
disability).
Response: In response to these comments, the final rule adds a
requirement at Sec. 98.71(b)(5) for Lead Agencies that choose to offer
presumptive eligibility in their CCDF program to report in the ACF-800
(annual aggregate report) the number of presumptively eligible children
ultimately determined eligible, the number for whom the family does not
complete documentation, and the number who are determined ineligible.
This was initially proposed as an addition to the CCDF Plan Preprint at
Sec. 98.16(h)(5), but we have determined the ACF-800 is a more
appropriate reporting mechanism for this information. Although we
considered requiring additional disaggregated demographic and supply
data to evaluate equity in presumptive eligibility, we are not making
other changes so as to minimize administrative burden and encourage
Lead Agency uptake. Nonetheless, we encourage Lead Agencies to collect
these types of data to better assess whether their presumptive
eligibility policies and procedures support equitable access to child
care across the populations of eligible children they serve.
Comment: Multiple commenters expressed concerns about disruptions
in care if a presumptively-eligible family is found ineligible, and the
potential harm to children, families, and providers. One commenter
questioned if Lead Agencies could use full eligibility determination
processes with multiple sets of criteria when determining eligibility
for children receiving child care services under presumptive
eligibility. Another commenter asked how presumptive eligibility would
interact with paying providers in advance of delivery of care if a
final ineligibility determination were made after a payment was issued
but before the period of service closes.
Response: Presumptive eligibility is intended to support feasibly
eligible children to receive child care benefits more quickly than
waiting for a complete review of full eligibility, but Lead Agencies
are expected to execute full eligibility determination and use the same
opportunities for verification for families who do not enter the
program with presumptive eligibility. We understand concerns about the
potential negative impact on families and providers if a child is
ultimately found to be ineligible after receiving benefits under a
presumptive eligibility period or if the presumptive eligibility period
ends prior to a final determination, but the benefits of presumptive
eligibility benefits to families are considerable.
If a child is found to be ineligible due to eligibility
requirements established by the Lead Agency, but still qualifies under
federal requirements (i.e., if the Lead Agency sets income eligibility
below 85 percent of SMI, but the family income is still lower than the
federal threshold), the Lead Agency could implement a policy allowing
CCDF funds to be used to provide child care benefits for the remainder
of the presumptive eligibility period for up to three months. The
prohibition on using CCDF funds to provide child care assistance to
children who are not eligible under federal limits does not preclude
the Lead Agency from using other funds, such as State general revenue
funds or federal funds like Social Services Block Grant funds, to
provide a grace period of care for families to make other arrangements
before their child care benefits end. We
[[Page 15379]]
note that State funds used to provide subsidies for children who do not
meet federal eligibility requirements cannot be used to meet the
required maintenance of effort or State portion of the CCDF match.
Regarding interactions between presumptive eligibility and provider
payment policies, the requirement for provider payment policies to
reflect generally-accepted payment policies at Sec. 98.45(m) applies
to payments for children receiving care during a period of presumptive
eligibility. This includes being paid prospectively and based on
enrollment not attendance. If a child is ultimately determined to be
federally ineligible for CCDF, the Lead Agency cannot require the child
care provider to return funds if the child was properly enrolled,
except for in cases of fraud.
Comment: One commenter expressed concerns that a corrective action
finding for improper payments would preclude a Lead Agency from
adopting presumptive eligibility unless the cause of the errors is
related to the Lead Agency's ability to perform presumptive eligibility
for purposes of CCDF.
Response: Our intent was to use error rate findings as a proxy for
sufficient internal controls to adequately execute the increased
complexity of incorporating presumptive eligibility, not abruptly deny
a Lead Agency's ability to offer presumptive eligibility because of
unrelated error rate findings. As a result of this comment, we revised
this language in the final rule to allow for a more considered approach
to determining if a Lead Agency has effective internal controls to
justify a more complex eligibility policy that includes presumptive
eligibility. While we retain the authority to deny a Lead Agency with a
corrective action finding for improper payments the option to implement
presumptive eligibility if warranted by an analysis of the Lead
Agency's internal controls, the revised language allows flexibility for
ACF to evaluate the contextual factors around the error rate reporting
as well as other sources of data to approve the use of presumptive
eligibility policies and develop a robust corrective action plan in
partnership with the Lead Agency that will ensure funds are safeguarded
for CCDF eligible children.
Comment: Several commenters endorsed the proposal that payments to
providers would not be deemed improper payments if a child is
ultimately determined to be ineligible after the full determination
process. During our consultation with Tribal Leaders and Tribal
communities, one Tribal Leader expressed concern about whether Tribal
Lead Agencies would be responsible for funds determined to be spent in
cases of fraud and intentional program violations.
Response: We agree with the commenters and retained this language
in the final rule to be explicit that if a child meets the Lead Agency
defined policies for presumptive eligibility enrollment and
verification, then the child is considered eligible for CCDF during the
period of presumptive eligibility. A final determination of
ineligibility for CCDF would not retroactively alter this initial
period of eligibility or require the Lead Agency to return CCDF funds
to ACF, nor would a family or provider who acted in good faith be
responsible for these payments. CCDF funds are allowed to be used to
pay for provider payments as long as the child meets the requirements
for presumptive eligibility, has not been determined ineligible to
receive CCDF benefits from the Lead Agency, and has not been receiving
CCDF benefits under presumptive eligibility for more than three months.
The final rule adds a clarification that these flexibilities apply so
long as the payment for services for a presumptively eligible child was
not for a period longer than the period of presumptive eligibility.
In cases of fraud or intentional program violation, the
requirements for presumptive eligibility remain the same as for full
eligibility. Regulations at Sec. 98.60(i) require Lead Agencies to
recover child care payments that are the result of fraud. The payments
shall be recovered from the party responsible for committing the fraud.
For other overpayments that do not result from fraud, the Lead Agency
has flexibility under federal rules regarding whether to recoup the
funds.
Comment: We received a few comments related to best practices for
communicating with and supporting families navigating the presumptive
eligibility process to avoid unwarranted findings of being ineligible.
Response: The commenters' suggestions align with the consumer
education goals of CCDF as well as with the newly amended redesignated
provision at Sec. 98.21(f), aimed to reduce family burden around
application processes. Lead Agency requirements for consumer education
at Sec. 98.33 and application processes are applicable to presumptive
eligibility child care services. Therefore, we did not make any
additional changes based on these comments.
Comment: A commenter requested clarification about whether the
intent is to allow presumptive eligibility when adding a child to an
existing family receiving subsidy or only during the initial
application period for the household.
Response: Our primary intent is for Lead Agencies to implement
presumptive eligibility for a family's initial application for child
care subsidies to hasten their access to child care benefits. As
discussed above, we encourage Lead Agencies to implement additional
child policies that require the minimum amount of information to verify
an additional child's eligibility. However, incorporating presumptive
eligibility policies while waiting to verify that minimum information
(i.e., proof of relationship, provider payment information) is
consistent with our goals of reducing bureaucratic hurdles for
families.
Reducing Family Burden in Application Processes: To make it easier
for eligible families to access child care services, and in alignment
with provisions of the Act requiring States and Territories to develop
procedures and policies that ``ensure that working parents . . . are
not required to unduly disrupt their employment in order to comply with
the State's or designated local entity's requirements for
redetermination of eligibility for [CCDF] assistance,'' (42 U.S.C.
9858c(c)(2)(N)) the final rule at Sec. 98.21(f) as redesignated,
requires Lead Agencies to implement eligibility policies and procedures
that minimize disruptions to parent employment, education, or training
opportunities, to the extent practicable. Policies that lessen the
burden of CCDF administrative requirements on families applying for
child care assistance increase access to child care and can improve
families' economic well-being. Parents report that some of the biggest
challenges are long waits at inconvenient times to apply in-person and
gathering and submitting the necessary documents.\65\ Not surprisingly,
parents also report online application options can be more convenient,
less stressful, and prove especially useful in reducing the burden of
document submission.
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\65\ Lee, R., Gallo, K., Delaney, S., Hoffman, A., Panagari, Y.,
et al. (2022). Applying for child care benefits in the United
States: 27 families' experiences. US Digital Response. <a href="https://www.usdigitalresponse.org/projects/applying-for-">https://www.usdigitalresponse.org/projects/applying-for-</a> child-care-
benefits-in-the-united-states-27-families- experiences.
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Thus, the final rule provides that Lead Agencies seek strategies to
reduce these administrative burdens on families, including, to the
extent practicable, by offering an online subsidy application option.
Currently, only 33 States offer online subsidy applications. OCC
released a CCDF model application in 2022, which includes practices for
[[Page 15380]]
defining, collecting, and verifying eligibility information, using best
practices that limit burden on families.\66\ Lead Agencies without
online subsidy applications will be expected to demonstrate in their
CCDF Plans why implementation of an online subsidy application is
impracticable. Nevertheless, OCC urges Lead Agencies that do not yet
offer online applications to consider doing so given the substantial
benefit to families and the Lead Agencies' ability to benefit from the
model application developed by OCC.
---------------------------------------------------------------------------
\66\ <a href="https://childcareta.acf.hhs.gov/full-model-application">https://childcareta.acf.hhs.gov/full-model-application</a>.
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Additionally, as Lead Agencies consider ways to lessen the burden
on families seeking assistance from CCDF, they are encouraged to
develop screening tools to help families determine whether they are
eligible for CCDF assistance, or other publicly available benefits
(e.g., Temporary Assistance for Needy Families (TANF) or Supplemental
Nutrition Assistance Program (SNAP)) and then link directly to
applications for these programs.\67\
---------------------------------------------------------------------------
\67\ Meade, E., Gillibrand, S., & Weeden, J. (2023). Lost in the
Labyrinth: Helping Parents Navigate Early Care and Education
Programs, Washington, DC: New America Foundation. <a href="https://www.newamerica.org/new-practice-lab/briefs/lost-in-the-labyrinth-helping-parents-navigate-early-care-and-education-programs/">https://www.newamerica.org/new-practice-lab/briefs/lost-in-the-labyrinth-helping-parents-navigate-early-care-and-education-programs/</a>.
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Comment: Most commenters supported the proposal related to
simplified enrollment and easing burden of application processes and
offered additional proposals to support the goal. Several commenters
who supported the proposal also urged ACF to require all Lead Agencies
offer, at a minimum, both paper and online applications. In addition,
commenters offered suggestions about how to increase accessibility and
availability of applications for families seeking child care subsidies.
Some commenters recommended that online applications be accessible via
mobile devices given families' reliance on mobile phones to access
online content. Some commenters also recommended that applications be
available in multiple languages and through verbal and case note
documentation for non-English speaking applicants, accessible for
individuals with disabilities, in plain language or at an appropriate
literacy level, and subject to usability testing where feasible. We
received several comments calling for in-person or individualized
support to help parents through the application process and one
commenter mentioned the importance of customer service training.
Several commenters offered suggestions to cross-link the application
with other resources so that prospective families can have access to
information on additional resources as well. These suggestions included
linking the application to the consumer education and provider search
websites and making information about services for families
experiencing homelessness more prominent in the materials. Commenters
also suggested making more flexible documentation requirements for
income verification for people with informal employment or gig workers
and for grandfamilies and the use of documents like tax returns and pay
stubs to verify eligibility.
Response: We recognize burdensome application processes discourage
families from applying for child care assistance, delay access to child
care, and can cause substantial stress to parents. While we decline to
require Lead Agencies use mobile-friendly or linked applications, we
strongly encourage Lead Agencies to carefully consider implementing
processes that make it easier for families to access and navigate
enrolling in CCDF, including mobile-friendly applications. As
previously noted, States and Territories that do not use online
applications will be required to describe why it is impracticable in
their CCDF Plans.
We also remind Lead Agencies that CCDF expenditures for the
establishment and maintenance of child care information systems,
including the development of an online application, are an allowable
CCDF expenditure and are not considered child care administrative
activities and thus do not apply to the administrative activities cap
for CCDF funds. Likewise, activities that provide one-on-one support
for families in submitting applications and providing access to
transparent and easy to understand consumer education resources are
considered quality expenditures. We also recommend Lead Agencies
consider flexibilities for families that may have difficulties
obtaining standard documentation. Lead Agencies have considerable
flexibility in establishing the eligibility and verification
requirements for families. We recommend Lead Agencies consider a wide
range of circumstances in which families may be able to verify their
eligibility.
Comment: Several commenters requested that we reiterate existing
flexibilities meant to ease administrative burdens and support
continuity of care that were not addressed in the NPRM. Some commenters
specifically called for the final rule to clarify that hours of care do
not have to match the hours of the eligible activity.
Response: We appreciate the recommendations to remind Lead Agencies
of their considerable flexibilities in implementing their CCDF programs
but did not make additional changes to the rule. Section 98.21(g) of
the rule remains unchanged from current regulations and explicitly
states that Lead Agencies are not required to limit authorized child
care services strictly based on the work, training, or educational
schedule of the parent(s) or the number of hours the parent(s) spend in
qualifying activities. We therefore reiterate that Lead Agencies do not
have to match the hours of care for a child participating in CCDF with
the parent's work, training, or education schedule, which may limit
participating children's access to high-quality settings and does not
support the fixed costs of providing care so it can contribute to
provider instability and reluctance to serve families with subsidies.
Eligibility Verification through Other Programs: This final rule
describes at Sec. 98.21(g), as redesignated, some Lead Agency options
to simplify eligibility verification. Families receiving child care
assistance are likely to be receiving or eligible to receive services
from other benefits programs and coordination with other benefit
programs can simplify eligibility determinations, ensure families can
access all available benefits, and better support family well-being.
Using enrollment in other benefit programs to verify CCDF eligibility
reduces duplication of effort on the part of families and streamlines
the eligibility determination process for Lead Agencies, thereby
reducing burden on both sides. Such policies can also reduce the amount
of time families have to wait to access child care services while Lead
Agencies process eligibility determinations that are redundant to
determinations made by other benefit programs. This policy is also a
logical next step if Lead Agencies act on the encouragement in this
final rule to develop screening tools to help families determine
whether they are eligible for CCDF assistance, or other publicly
available benefits (e.g., TANF or Supplemental Nutrition Assistance
Program (SNAP)). Twenty-three States and Territories currently use
documentation from and enrollment in other benefit programs to
determine CCDF eligibility for at least one eligibility component,
based on data from the FFY 2022-2024 CCDF State and Territory Plan.
This final rule clarifies in Sec. 98.21(g)(1) and (2), as
redesignated, that Lead Agencies have flexibility to use enrollment in
other benefit programs to satisfy specific components of CCDF
[[Page 15381]]
eligibility without additional documentation (e.g., income eligibility,
work, participation in education or training activities, or residency)
or to satisfy CCDF eligibility requirements in full if eligibility
criteria for other benefit programs is completely aligned with CCDF
requirements. In Sec. 98.21(g)(2), Lead Agencies are expressly
permitted to examine eligibility criteria of benefit programs in their
jurisdictions to predetermine which benefit programs have eligibility
criteria aligned with CCDF. Once programs are identified as being
aligned with CCDF income and other eligibility requirements, Lead
Agencies have the option to use the family's enrollment in such public
benefit program to verify the family's CCDF eligibility according to
Sec. 98.68(c) or to limit the documentation required to fulfill CCDF
eligibility if the programs are not in complete alignment. For example,
income eligibility for TANF cash assistance (42 U.S.C. 601 et seq.)
meets the federal CCDF income eligibility requirements and enrollment
in either program could demonstrate income eligibility for CCDF without
any additional documentation from a family. Due to State, Territory,
and Tribal variation in eligibility thresholds by individual benefit
programs, the first step to streamlining eligibility is for Lead
Agencies to use their own jurisdiction-specific information on income
eligibility to determine if a child is eligible for subsidy based on
enrollment in that other program.
Comment: Commenters were generally supportive of encouraging Lead
Agencies to verify eligibility through families' enrollment in other
benefits programs, noting several Lead Agencies were already
implementing or preparing to use this flexibility to varying degrees.
Some commenters appreciated the flexibility for Lead Agencies to self-
identify which verification requirements aligned between CCDF and other
benefits programs. Many commenters supported the flexibility that if
the eligibility criteria for other benefit programs within the Lead
Agency's jurisdiction are completely aligned with CCDF requirements,
this can satisfy CCDF eligibility requirements in full for those
families or establish CCDF eligibility policies using the criteria of
other public benefits programs.
Response: We are encouraged by support for reducing bureaucratic
barriers for families and Lead Agencies and the benefits that
streamlining program will have for families. In response, we retained
the proposed language.
Comment: One commenter cautioned against adding requirements to
CCDF eligibility verification that increase the bureaucratic burden for
families and providers.
Response: We agree with the commenter, which is why this rule seeks
to reduce bureaucratic and paperwork burdens for families and Lead
Agencies in determining a child's eligibility to receive child care
subsidies. CCDF regulations at Sec. 98.20(b)(4) allow the Lead Agency
to establish additional eligibility conditions or priority rules so
long as they do not ``impact eligibility other than at the time of
eligibility determination or re-determination.'' We recommend Lead
Agencies reconsider families' engagement with other benefits programs,
such as child support, as preconditions for CCDF eligibility as this
likely increases the bureaucratic burden for families and Lead
Agencies. Moreover, when Lead Agencies use data from other benefits
programs to verify CCDF eligibility requirements, Lead Agencies must
ensure that the information is only acted upon at eligibility
determination or re-determination and cannot be used to discontinue
child care subsidies during the eligibility period. For example, a Lead
Agency that requires child support cooperation as an additional CCDF
eligibility requirement, can only assess cooperation at the time of
CCDF eligibility determination or re-determination and cannot use
failure to cooperate as a reason to discontinue child care subsidies
between eligibility determination or re-determination.
Technical Change: This final rule corrects a grammatical error by
adding the word ``on'' at Sec. 98.21(a)(2)(iii). The revised language
now reads, ``If a Lead Agency chooses to initially qualify a family for
CCDF assistance based on a parent's status of seeking employment or
engaging in job search'' (emphasis added). We did not receive comments
on this correction.
Subpart D--Program Operations (Child Care Services) Parental Rights and
Responsibilities
Subpart D of the regulations describes parental rights and
responsibilities and provisions related to parental choice, including
parental access to their children, requirements that Lead Agencies
maintain a record of parental complaints, and consumer education
activities carried out by Lead Agencies to increase parental awareness
about the range of available child care options. This final rule amends
this subpart to require Lead Agencies use some grants or contracts for
direct services, post information about sliding fee scales on consumer
education websites, and it clarifies requirements on posting full
monitoring reports and aggregate data.
Sec. 98.30 Parental Choice
Section 98.30(b) clarifies section 658E(c)(2)(A) of the Act (42
U.S.C. 9858c(c)(2)(A)), which identifies the use of grants or contracts
as a key element of parental choice of child care providers. This
statutory provision states that a parent shall have the option ``to
enroll such child with a child care provider that has a grant or
contract for the provision of such services,'' or to receive a child
care certificate. As well, section 658E(c)(2)(M) (42 U.S.C.
9858c(c)(2)(M)) requires Lead Agencies to ``develop and implement
strategies (which may include . . . the provision of direct contracts
or grants to community-based organizations . . .) to increase the
supply and improve the quality of child care services'' for certain
underserved populations. Only 10 States and Territories report using
any grants and contracts for direct services, and only six States and
Territories report supporting more than 5 percent of children receiving
subsidy via a grant or contract even though they are required by the
Act and can be one of the most effective tools to build supply in
underserved geographic areas and for underserved populations.\68\
Therefore, the final rule at Sec. 98.30(b) clarifies the statutory
requirement by stating that States and Territories are required to
provide some direct child care services through grants or contracts,
including at a minimum, using some grants or contracts for children in
underserved geographic areas, infants and toddlers, and children with
disabilities. The final rule requires some use of grants or contracts
for each of these populations because of the particularly stark supply
issues that lead to minimal parent choice. ACF encourages Lead Agencies
to also consider other populations that may benefit from grants or
contracts, including care for children during nontraditional hours.
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\68\ <a href="https://www.acf.hhs.gov/occ/data/fy-2020-preliminary-data-table-2">https://www.acf.hhs.gov/occ/data/fy-2020-preliminary-data-table-2</a>.
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Comment: Commenters strongly supported the proposal to require Lead
Agencies use some grants and contracts for direct services, noting they
support a more stable and equitable child care system, and many
requested additional clarifications and suggested revisions. A
bicameral Congressional comment also supported this provision and
specifically noted ACF's authority to require some use of grants or
contracts.
[[Page 15382]]
Response: We appreciate the validation of the importance of this
policy and have retained the requirement for Lead Agencies to use some
grants or contracts for direct services and have made some changes
based on commenter suggestions described below. Grants and contracts
for direct services can play a critical role in increasing parent
options for child care, particularly in underserved geographic areas
and for underserved populations like infants and toddlers and children
with disabilities. They increase stability for child care providers and
encourage them to participate in the subsidy program. Since
insufficient child care supply greatly limits parents' choices in child
care arrangements, requiring some use of grants or contracts to help
more parents find the child care they need.
Comment: The NPRM proposed to require the use of grants and
contracts at least to provide some child care services for infants and
toddlers, children with disabilities, and children who need care during
nontraditional hours. Some commenters recommended requiring Lead
Agencies to use grants or contracts for additional underserved or
under-resourced communities and populations, and several commenters
recommended removing the requirement to use grants or contracts for
nontraditional hour care because families may use license-exempt home-
based care for nontraditional hours either because they prefer it or
because few child care centers and family child care providers operate
outside of traditional business hours. Commenters indicated grants or
contracts are less appropriate for license-exempt home-based child
care.
Response: Based on these comments, the final rule adds ``children
in underserved geographic areas'' to the list of groups required to be
served with grants or contracts and removes the requirement to use
grants or contracts for nontraditional hour care. Some parents prefer
informal care by family or friends, often in the child's home, during
nontraditional hours of care.\69\ While it is important to address the
stark supply issues for this type of care, commenter feedback and
additional review of existing State policies leads us to believe
mechanisms other than grants or contracts, such as higher payment
rates, engaging with home-based child care networks, and partnering
with employers that have employees working nontraditional hours, may
also be effective for increasing the availability of care during
nontraditional hours. As delineated in Sec. 98.16(y), Lead Agencies
must take action to build availability of nontraditional hour care for
families participating in CCDF. Though the rule does not require it, we
encourage Lead Agencies to consider whether contracted slots for
extended hour care in the morning and evening would be a useful
strategy for improving parent choice in care that meets their needs.
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\69\ Adams, G. et al., ``Executive Summary: What Child Care
Arrangements Do Parents Want during Nontraditional Hours? '':
<a href="https://www.urban.org/projects/informing-policy-decisions-about-nontraditional-hour-child-care">https://www.urban.org/projects/informing-policy-decisions-about-nontraditional-hour-child-care</a>.
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Comment: Some commenters requested clarification as to whether each
group listed needed to be served with grants or contracts or if serving
only one of the listed groups would satisfy the requirement.
Response: The final rule leaves in place the language to require
each of three identified groups (i.e., children in underserved
geographic areas, infants and toddlers, and children with disabilities)
be served with grants or contracts. The significant supply shortages in
each of these types of care limit parents' child care options and would
benefit from grants or contracts.
Comments: Some commenters wanted clarification as to what is meant
by ``some'' grants or contracts and if ACF has a specific threshold in
mind, stressing the importance of using data to determine the number of
grants or contracts for direct services. Some of these commenters
thought we should set a minimum threshold and others recommended
against setting a minimum or maximum threshold or a formula for
calculating the appropriate percentage of grant or contracts slots.
Response: ACF declines to set thresholds for ``some'' grants or
contracts in this rule and encourages Lead Agencies to implement the
provision sufficiently to improve supply for these types of care.
However, in response to comments requesting clarification about the
number of grants or contracts, we revised the language in paragraphs
Sec. 98.16 (x) and (y) to improve transparency around Lead Agency
policies and require Lead Agencies to provide data on the extent to
which they are serving subsidy-eligible children across the identified
groups. Additionally, ACF revised the language in paragraph (y) to
clarify that Lead Agencies should describe in their CCDF Plan what
proportion of shortages identified in Sec. 98.16(x) would be filled
with grant or contracted slots.
Comment: Commenters recommended ACF include additional populations
of children and families to be served by grants or contracts while
others noted new requirement should not shift attention from one
underserved group to another.
Response: ACF strongly encourages Lead Agencies to use grants or
contracts for additional groups recommended by commenters, but declines
to require Lead Agencies use this strategy to serve additional
populations. Additional groups recommended by commenters include
children experiencing homelessness, children involved with the child
welfare system (including those in foster care and kinship care),
adolescent parents, out-of-school time care/school age, dual language
learners, 2-generation programs, children whose parents have been
incarcerated, providers in rural or remote communities, and areas with
an insufficient supply of licensed child care. ACF further encourages
Lead Agencies use data collected through supply analysis to direct
grants or contracts towards identified areas of need.
Comment: Commenters recommended that ACF specify Lead Agencies use
grants or contracts across different child care settings, including
family child care and networks of home-based care providers.
Response: ACF strongly encourages Lead Agencies to define and use
an equity-focused distribution process for grants or contracts that
includes family child care and small child care centers to support
parents having a range of child care options. Many Lead Agencies
successfully used such a process to target and distribute ARP Act
Stabilization Grant funds. While grants or contracts are traditionally
seen as a strategy for center-based care, some Lead Agencies have
effective grants or contracts with family child care providers and
home-based provider networks.\70\Additionally, research shows that
families utilize family child care settings for infants and toddlers at
higher rates than older children.\71\
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\70\ Bipartisan Policy Center. (January 2021). Payment Practices
to Stabilize Child Care. <a href="https://bipartisanpolicy.org/download/?file=/wp-content/uploads/2021/01/BPC-ECH_Payment-practices_RV5.pdf">https://bipartisanpolicy.org/download/?file=/wp-content/uploads/2021/01/BPC-ECH_Payment-practices_RV5.pdf</a>.; Bromer, J., Ragonese-Barnes, M. & Porter, T.
(2020). Inside family child care networks: Supporting quality and
sustainability. Chicago, IL: Herr Research Center, Erikson
Institute. <a href="https://www.erikson.edu/wp-content/uploads/2020/12/Inside-FCC-networks-Case-Studies-2020.pdf">https://www.erikson.edu/wp-content/uploads/2020/12/Inside-FCC-networks-Case-Studies-2020.pdf</a>.
\71\ Datta, A.R., Milesi, C., Srivastava, S., & Zapata-Gietl, C.
(2021). NSECE Chartbook- Home-based Early Care and Education
Providers in 2012 and 2019: Counts and Characteristics. OPRE Report
No. 2021-85, Washington, DC: Office of Planning, Research, and
Evaluation, Administration for Children and Families, U.S.
Department of Health and Human Services. <a href="https://www.acf.hhs.gov/opre/report/home-based-early-care-and-education-providers-2012-and-2019-counts-and-characteristics">https://www.acf.hhs.gov/opre/report/home-based-early-care-and-education-providers-2012-and-2019-counts-and-characteristics</a>.
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[[Page 15383]]
Comment: Some commenters wanted clarification about the intended
definition of ``grants and contracts,'' if the requirement was specific
to direct services, and if best practices for contracting and equity
could be included in a definition.
Response: We provide clarification on the definition of grants or
contracts and direct services at Sec. 98.50. We agree with commenters
that grants or contracts for direct service slots should at a minimum
adhere to the same requirements as certificates, including paying
providers prospectively. While the final rule does not include
additional regulatory language to this effect, new and existing
regulations at Sec. 98.45(m) apply to both grant or contracted slots
and certificates, and therefore reaffirms these expectations. In
addition, we strongly encourage Lead Agencies to design their grants or
contracts with best practices in mind. Specifically, we strongly
encourage Lead Agencies to pay a rate based on cost of care, offer
higher rates for grant or contracted slots, and provide opportunities
for additional technical assistance, coaching, mentoring, and other
supports to child care programs.
Comment: A few commenters, including one member of Congress,
opposed this requirement and expressed concerns that any requirement
for grants or contracted slots reduced parent choice, specifically
because faith-based providers may not be able to receive grants or
contracts.
Response: ACF disagrees with the contention that requiring grants
or contracts for populations that the statute itself requires Lead
Agencies to prioritize would reduce parent choice. Section
658E(c)(2)(M) of the Act clearly states that direct contracts or grants
are a strategy to increase the supply and quality of child care for
underserved populations, including infants and toddlers, children with
disabilities, and children who need child care during nontraditional
hours. Some parents do not have meaningful choice currently,\72\ and
integrating some grants and contracts into direct service options will
expand parents' choices. Nothing in federal law prohibits faith-based
child care providers from receiving grants or contracts to provide
direct child care services. Faith-based providers receiving grants or
contracts are restricted from using the funds for sectarian purposes or
activities, including sectarian worship or instruction (42 U.S.C.
9858k(a). Further, because families must still be offered the option of
a certificate or voucher, this rule will not limit a family's ability
to choose a faith-based provider and we do not expect the requirement
to materially reduce the amount of funding available to faith-based
child care providers through certificates or vouchers.
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\72\ RAPID, (2022) ``Overdue: A new child care system that
supports children, families and providers,'' <a href="https://static1.squarespace.com/static/5e7cf2f62c45da32f3c6065e/t/63a1d9582916181ff4b729be/1671551320275/overdue_new_child_care_system_factsheet_dec2022.pdf">https://static1.squarespace.com/static/5e7cf2f62c45da32f3c6065e/t/63a1d9582916181ff4b729be/1671551320275/overdue_new_child_care_system_factsheet_dec2022.pdf</a>.
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Comment: Some commenters suggested ACF allow Lead Agencies to opt-
out of the requirement for grants or contracts if they could
demonstrate there was no need or desire for grants or contracts.
Response: For the reasons listed above, including limitations in
parents' choice in child care arrangements for some parents
participating in CCDF, significant supply shortages, and research
demonstrating the benefits of grants or contracts on supply and for
providers, we decline to accept this recommendation.
Sec. 98.33 Consumer and Provider Education
Clarifying full monitoring reports and aggregate data. This final
rule adds Sec. 98.33(a)(4)(ii) to clarify what information Lead
Agencies must post on consumer education websites. Section
658E(c)(2)(D) of the Act (42 U.S.C. 9858c(c)(2)(D)) requires monitoring
and inspection reports of child care providers be made available
electronically to the public. Previous regulations at Sec. 98.33(a)(4)
require Lead Agencies to post ``full monitoring and inspection reports,
either in plain language or with a plain language summary,'' but the
regulation did not define a ``full monitoring and inspection report.''
This lack of clarity has led to varied implementation, with many Lead
Agencies only posting violations. While it is critical for parents to
be aware of how a provider did not meet a health and safety
requirement, it is also useful for parents to understand the full scope
of a monitoring inspection, so they have the information needed to make
informed child care decisions. Section 98.33(a)(4)(ii) through (iv) are
redesignated accordingly without changes.
The final rule also amends paragraph (a)(5) to require the CCDF
consumer education websites include the total number of children in
care each year disaggregated by the type of child care provider because
it provides necessary context for parents and the public to understand
the aggregate data on serious injuries and fatalities in child care
settings. Sec. 98.33(a)(5) requires Lead Agencies to post the annual
aggregate number of deaths and serious injuries by provider type and
licensing status and instances of substantiated child abuse that
occurred in child care settings each year, for eligible child care
providers, on the State or Territories child care website. Lead
Agencies are required to post the total number of children in care by
provider category and licensing status. However, the requirement to
include the total number of children in care by provider category and
licensing status was only included in the preamble to the 2016 CCDF
final rule and not the regulatory language itself (81 FR 67477). This
omission has led to confusion and unclear expectations for Lead Agency
compliance. We also separate the existing requirements in paragraph
(a)(5) without change into multiple subprovisions to improve clarity.
Comment: Commenters supported the proposed clarification to the
definition of ``full monitoring and inspection report'' at Sec.
98.33(a)(4)(ii).
Response: We received no other comments on Sec. 98.33(a)(4)(ii)
and have retained the language as proposed in the NPRM.
Comment: Commenters supported the requirement for States to post
the total number of children in care to their consumer education
websites. Several commenters proposed that States be required to post
the number of children in care by child age, licensing status, and
quality rating, noting these data are needed to understand the supply
of care available to families.
Response: Though we agree this disaggregated data would provide
useful information about child care supply and could help parent
decision-making, we understand some States may not have the capacity to
publish this information. Therefore, we retained the language as
proposed to ensure this new requirement does not add additional burden
to States.
Comment: A few Lead Agencies commented that posting the total
number of children in care would be burdensome for States. These
commenters had concerns about how often Lead Agencies would be expected
to collect this data and from which types of providers they would need
to collect these counts. Additionally, commenters noted that collecting
this data could necessitate changes to State computer tracking systems.
Response: States are already required to post this data under CCDF
and ACF has created multiple technical resources to help States publish
these counts on
[[Page 15384]]
their websites.\73\ Lead Agencies already must post the total number of
children in care by provider category and licensing status on their
consumer education websites and the language changes at Sec.
98.33(a)(5) only clarify that these data, along with the counts of
deaths or serious injuries, are posted annually for all eligible
providers. For licensed care, States and Territories can provide an
estimated number of children in care based on the capacity of licensed
program, rather than actual enrollment or attendance numbers. ACF will
continue to offer flexibilities if States do not have a way to estimate
the number of children in license-exempt care. The language was
retained as proposed.
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\73\ Child Care State Capacity Building Center. (September 29,
2023). Consumer Education website Requirements Infographic. U.S.
Department of Health and Human Services, Administration for Children
and Families. Office of Child Care. <a href="https://childcareta.acf.hhs.gov/sites/default/files/new-occ/resource/files/consumer_education_website_requirements.pdf">https://childcareta.acf.hhs.gov/sites/default/files/new-occ/resource/files/consumer_education_website_requirements.pdf</a>.; Child Care State
Capacity Building Center. (August 2021). Template for Displaying
Serious Injuries, Deaths, and Instances of Substantiated Child Abuse
in Child Care. U.S. Department of Health and Human Services,
Administration for Children and Families, Office of Child Care.
<a href="https://childcareta.acf.hhs.gov/sites/default/files/new-occ/resource/files/aggregate_data_template_for_posting_serious_injuries.pdf">https://childcareta.acf.hhs.gov/sites/default/files/new-occ/resource/files/aggregate_data_template_for_posting_serious_injuries.pdf</a>.
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Posting sliding fees scales. To help ensure families are aware of
co-payment policies, the final rule retains a new requirement at Sec.
98.33(a)(8) that States and Territories post information about their
co-payment sliding fee scales. Section 658E(c)(2)(E) of the Act (42
U.S.C. 9858c(c)(2)(E)) requires Lead Agencies to collect and
disseminate consumer education information that will promote informed
child care choices for parents of eligible children, the public, and
providers. Consumer education is a crucial part of parental choice
because it helps parents better understand their child care options and
incentivizes providers to improve the quality of their services. Since
Congress expanded the Act's focus on consumer education in 2014, all
States and Territories have launched consumer education websites
providing parents and the general public with critical information
about child care in their community and improving transparency around
the use of federal child care funds. However, many of these websites
still overlook key areas that impact family decisions about child care
and applying for child care subsidies. For example, it remains
difficult for parents in many communities to learn about co-payment
rates in the subsidy program and what their family might expect to pay.
Therefore, the final rule requires Lead Agencies to post current
information about their system of cost-sharing (co-payments) based on
family size and income. Under this new requirement, Lead Agencies are
required to post about their sliding fee scale for parent co-payments,
including policies related to waiving co-payments and estimated co-
payment amounts for families at Sec. 98.33(a)(8).
Comment: Commenters recognized and supported the need for the
proposed consumer education requirement at Sec. 98.33(a)(8). In
general, they expressed that requiring Lead Agencies to post clear
information about their co-payment policies improves access to
information that is useful for families making decisions about child
care.
In response to our request for comments on the type of information
related to co-payments that should be included on consumer education
websites, the majority of commenters on this proposal stated that
consumer education websites should explain how co-payments are
calculated and how co-payments might differ based on the type of
provider a family chooses. Other commenters proposed that websites
should include information about weekly or monthly amounts that
families might pay, as well as details about co-payments when enrolling
multiple children, changing a co-payment amount, and populations for
which co-payments are waived entirely.
Response: This new provision at Sec. 98.33(a)(8) clarifies that
consumer education websites must help families determine the co-payment
amount that they can expect to pay. We agree that it may be valuable
for parents to see this information broken into weekly and/or monthly
amounts, and States have the flexibility to use this approach. It may
also be helpful for consumer education websites to include details
about how co-payment amounts are impacted when multiple children are
enrolled and outline the State-specific process for requesting a change
to a co-payment amount. We appreciate these recommendations and
reiterate that Lead Agencies have flexibility to inform parents about
what they should expect to pay in the way that best makes sense within
the context of their policies and processes. The final rule clarified
with the added requirement at Sec. 98.33(a)(8) that State websites
must provide information about waiving co-payments, and we agree with
commenters that posted information about populations for which co-
payments are waived (e.g., incomes are at or below 150 percent of the
poverty level, children with disabilities) is necessary to meet this
requirement.
Comment: We requested comments specifically on the type of
information related to eligibility that should be included on the
consumer education websites. One commenter recommended that additional
eligibility information should be included on websites, specifically
information about the hours required for full-time care and about the
education and/or work requirements for parents participating in CCDF.
We also received recommendations for consumer education websites
that were unrelated to co-payment or eligibility policies. Several
commenters suggested that websites should provide information about
child care waitlists, license-exempt care, Head Start eligibility,
program contact information, and the language proficiency of child care
staff.
Response: We appreciate the consumer education proposals related to
eligibility and agree that posting about the hours required for full-
time care and about the education and/or work requirements for CCDF are
examples of best practices. To ensure that Lead Agencies continue to
have flexibility, we opted not to make any regulatory changes to the
consumer education section related to eligibility.
Comment: Some commenters recommended co-payment information posted
as part of the new requirement at Sec. 98.33(a)(8) be available to
families in multiple languages. Several commenters recommended we
require Lead Agencies post sliding fee scale information in multiple
languages or for websites to have a translation option. Some commenters
also suggested that consumer education websites should include co-
payment calculators.
Response: The regulation already requires at Sec. 98.33(a) that
consumer education websites are ``easily accessible websites that
ensures the widest possible access to services for families who speak
languages other than English and persons with disabilities.''
Therefore, the information posted on the website, including the
information about sliding fee scales, must be easily accessible and
ensure the widest possible access to services for families who speak
languages other than English. We agree that online co-payment
calculators can be a helpful tool for families to access child care
information, and we encourage Lead Agencies to follow the example of
the States that have already implemented these tools on their websites.
However, we declined to add a regulatory requirement for States to add
co-payment calculators, as to maintain flexibility for States.
[[Page 15385]]
Comment: Commenters also suggested other information dissemination
strategies in addition to the new website requirement at Sec.
98.33(a)(8). Several commenters suggested we require States provide
families a copy of the sliding fee scale that includes a plain-language
explanation of how co-payments are calculated in their home language.
Some commenters wanted Lead Agencies to require providers post the
sliding fee scale prominently in child care facilities. They also
supported the effort to expand information dissemination strategies but
wanted to go further and encourage States to adopt additional forms of
communication (e.g., pamphlets at community-based spaces) and to
utilize search engine optimization. Commenters focused on increasing
access to people with low literacy and encouraged the adoption of
mobile-friendly information as much as possible.
Response: We appreciated commenters providing additional
suggestions for information dissemination strategies. While we opted
not to add additional requirements to provide copies of the sliding fee
scale to families, to post sliding fee scale information in child care
facilities, to utilize search engine optimization, or to adopt
additional forms of communication beyond websites, we encourage all
Lead Agencies to utilize various communication methods to reach
families with low-literacy or without access to computers. We encourage
states to create websites that are mobile-friendly. It is essential for
child care information to be accessible to all families, and we
recognize that no single information dissemination strategy will work
for all Lead Agencies.
Subpart E--Program Operations (Child Care Services) Lead Agency and
Provider Requirements
Subpart E of the regulations describes Lead Agency and provider
requirements related to applicable health and safety requirements,
monitoring and inspections, and criminal background checks. It also
includes provisions requiring the Lead Agency to set payment rates for
providers serving children receiving subsidies that ensure equal access
to the child care market and to establish a sliding fee scale that
provides for affordable cost-sharing for families receiving child care
assistance.
This final rule includes changes to this subpart related to family
co-payments and Lead Agency payment rates and practices to providers,
as well as technical changes to criminal background checks.
Sec. 98.43 Criminal Background Checks
Section 658H(b) of the Act (42 U.S.C. 9858f(b)) and Sec. 98.43(b)
require a child care staff member to complete a comprehensive
background check to be eligible for employment by a child care provider
that is licensed, regulated, or registered or eligible to participate
in CCDF. The comprehensive check must include a Federal Bureau of
Investigation (FBI) fingerprint check, a search of the National Crime
Information Center's National Sex Offender Registry (NCIC NSOR), a
fingerprint-based search of the state criminal registry, a search of
the state sex offender registry, and a search of the state-based child
abuse and neglect registry in the state where the child care staff
member resides and each state where such staff member resided during
the preceding 5 years.
Section Sec. 98.43(d)(4) allows prospective child care staff to
begin working for a child care provider after receiving results from
either the FBI fingerprint check or a fingerprint check of the state
criminal registry or repository in the state where the staff member
resides. Staff members that are hired before all background check
components required at Sec. 98.43(b) are completed must be supervised
at all times by an individual who has already received qualifying
results. This process is often referred to as ``provisional
employment.'' The intent in establishing the provisional employment
requirement in the 2016 Final Rule was to help staff begin work quickly
while ensuring child safety by prohibiting prospective staff who have
not completed the FBI or the fingerprint in-state criminal background
checks from working directly with children.
Since its inclusion in the 2016 CCDF Final Rule, States,
Territories, Tribes, and child care providers have expressed concerns
with the background check requirements, including those related to the
provisional employment requirement, stating that they cause hiring
delays and exacerbate staffing challenges. Many states continue to be
out of compliance with one or more of the background check
requirements, including provisional hiring.
While we acknowledge the operational challenges associated with the
Act's background check provisions, the vast majority of the
requirements are established in the Act and cannot be changed through
regulations. This final rule makes a few technical changes to sections
of the regulation that were previously unclear.
Responsibility for eligibility determination. This final rule makes
a technical change at Sec. 98.43(a)(1)(i) to clarify that States,
Territories, and Tribes must have requirements, policies, and
procedures that require the entity to make a determination of
eligibility for child care staff based on the background check and
cannot simply provide results to the child care provider to make the
determination. This is consistent with the statutory requirement at
section 658H(e)(2)(A) (42 U.S.C. 9858f(e)(2)(A)) that ``[t]he State
shall provide the results of the criminal background check to the
provider in a statement that indicates whether a child care staff
member (including a prospective child care staff member) is eligible or
ineligible for employment described in subsection (c), without
revealing any disqualifying crime or other related information
regarding the individual.'' Previously there has been some confusion as
to whether the Lead Agency should simply give the results to child care
providers to then make the determination. Relatedly, the final rule
amends Sec. 98.43(c)(1) to clarify that it is the State, Territory,
Tribe, and Lead Agency's responsibility to determine a prospective
staff member's eligibility for employment as a result of the background
check requirements and that a child care provider does not have a role
in reviewing background check results and determining a staff member's
employment eligibility. This does not preclude child care providers
from using additional discretion for hiring after the State, Territory,
or Tribe's determination of eligibility based on the comprehensive
background check.
Comment: Commenters supported these proposed clarifications. Some
expressed concerns that the change at Sec. 98.43(a)(1)(i) when
combined with the proposed change related to qualifying results at
Sec. 98.43(d)(3)(i) would change policies related to provisional
employment.
Response: As discussed in more detail below, we are not making any
substantive changes to requirements related to provisional hiring.
Rather, this change is meant to clarify that States, Territories, and
Tribes must have processes related to determining a staff member's
eligibility. Previous regulatory language did not include that
requirement and led to confusion about who was responsible for
determining eligibility. Therefore, we kept the change as proposed.
Comment: One commenter requested clarification on whether this
provision would impact existing State hiring practices, especially
those that allow child care providers to make a final hiring decision
after the State has made
[[Page 15386]]
an employment eligibility determination based on State and federal
regulations.
Response: Our intention is to clarify the role of the State,
Territory, Tribe, and Lead Agency as it relates to making
determinations of employment eligibility. Previous regulatory language
made it unclear whether child care providers could make determinations
of eligibility, and Lead Agencies had varying interpretations of this
requirement. In response to comments, we revised the proposed change to
also remove reference to child care providers in the introductory
language at Sec. 98.43(c)(1) to reinforce that child care providers do
not have a role in the employment eligibility determination process.
State, Territory, and Tribal regulations and procedures may allow a
child care provider to establish its own criteria for unsuitability
even after the State, Territory, or Tribe determines that the
individual is eligible for employment based on CCDF regulations and
State Code. This means that it is possible for a child care provider to
decide not to hire an individual, even when that individual has been
deemed eligible for employment by the state, territory, or Tribe.
However, as mentioned in the 2016 Final Rule Preamble, we continue to
strongly encourage States, Territories, and Tribes and child care
providers to ensure that hiring practices meet the recommendations of
the U.S. Equal Employment Opportunity Commission for any additional
disqualifying crimes.\74\
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\74\ U.S. Equal Employment Opportunity Commission, Enforcement
Guidance on the Consideration of Arrest and Conviction Records in
Employment Decisions under Title VII of the Civil Rights Act of
1964, <a href="https://www.eeoc.gov/laws/guidance/upload">https://www.eeoc.gov/laws/guidance/upload</a>.
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Disqualifying Crimes. Section 658H(c) of the Act (42 U.S.C.
9858f(c)) and Sec. 98.43(c)(1) of the regulations specify
disqualifying crimes for child care staff members of providers serving
children receiving CCDF assistance. The disqualification at Sec.
98.43(c)(1)(v) is for a conviction of a violent misdemeanor as an adult
against a child, including a misdemeanor involving child pornography.
There has been some confusion as to whether a misdemeanor involving
child pornography needed to be classified as violent or non-violent to
be a considered a background check disqualifier. To address these
questions, the final rule amends Sec. 98.43(c)(1)(v) to classify any
misdemeanor involving child pornography as a disqualifier under CCDF,
regardless of whether the crime is classified as violent or non-
violent.
Comment: Commenters requested additional clarification about which
misdemeanors involving child pornography must be considered
disqualifying offenses under CCDF.
Response: To address comments, we revised the proposed change at
Sec. 98.43(c)(1)(v) to further clarify that any misdemeanor conviction
involving child pornography must be considered a disqualifying crime
whether considered violent or not.
Comments: One commenter requested we define the term ``violent.''
Response: We decline to define the term ``violent'' in the
regulation. Section 658H(c) of the Act separately defines felonies
involving child pornography as being a disqualifying ``crime against
children'' (42 U.S.C. 9858f(c)(1)(D)(iii) and (E)). Felonies are listed
at subparagraph (D) and misdemeanors are listed at subparagraph (E).
Lead Agencies should define ``violent'' in accordance with their own
State, Territory, or Tribal law.
Receiving Qualifying Results. Section 658H(d) of the Act (42 U.S.C.
9858f(d)) and Sec. 98.43(d) of the regulations require child care
providers to submit requests for background checks prior to when an
individual becomes a staff member and at least once every five years.
Sec. 98.43(d)(3)(i) makes an exception if a staff member already
received a background check within the past five years. The final rule
amends Sec. 98.43(d)(3)(i) to clarify those results must be qualifying
results. This is consistent with how OCC has supported and overseen
this provision since 2016.
In response to comments, the final rule also clarifies at Sec.
98.43(d)(4) that a prospective staff member may begin working with
children only after they receive qualifying results for either the FBI
fingerprint check or the in-state fingerprint check (as long as their
work with children is supervised by a staff member whose background
check is complete). Simply submitting the fingerprint for the FBI check
or the in-state check is not sufficient for a prospective staff member
to be provisionally employed to work with children. This is consistent
with how OCC has enforced and provided guidance for the provisional
hire requirement since 2016, but the underlying regulation wording has
caused some confusion. In both these instances, submitting background
checks is insufficient for working with children because it is
necessary to first receive qualifying results.
Comment: Commenters were generally supportive of the clarification
in Sec. 98.43(d)(3)(i), but some raised concerns about whether this
technical change would impact the existing provisional hire flexibility
at Sec. 98.43(d)(4), which commenters noted was a critical
flexibility.
Response: In this final rule, the provisional hire flexibility
remains unchanged from the 2016 Final Rule: States, Territories, and
Tribes may permit child care providers to provisionally hire
individuals for whom there are qualifying results on either the FBI
fingerprint check or the in-state fingerprint check as long as their
work with children is supervised by a staff member whose background
check is complete. We amended Sec. 98.43(d)(4) for clarity in response
to comments and make no substantive changes to the provisional hire
rule.
Sec. 98.45 Equal Access
Demonstrating Equal Access. Section 98.45(b) requires Lead Agencies
to summarize in their CCDF Plans the data and evidence relied on to
ensure that families participating in CCDF have equal access to child
care services comparable to those provided to families not eligible to
receive child care assistance. The final rule amends (b)(5) to require
Lead Agencies describe how co-payments ``do not exceed 7 percent of
income for all families.'' This change aligns with the new requirement
at redesignated Sec. 98.45(l)(3) to limit family co-payments to 7
percent of family income. Fuller discussion of this change, including
comments and responses, are later in this preamble at Sec. 98.45(l).
Market Rate Survey Reports. This final rule requires at new Sec.
98.45(f)(1)(iv) that States and Territories include data on the extent
to which CCDF child care providers charge amounts to families more than
the required family co-payment in instances where the provider's price
exceeds the subsidy payment, including data on the size and frequency
of any such amounts. States and Territories have the discretion to
determine how they present this data in their reports. As States and
Territories have already been required to examine this data as part of
their market rate survey or approved alternative methodology, we do not
expect this requirement to create new burdens for the Lead Agencies.
This requirement was not proposed in the NPRM but is being added in
this final rule in response to comments noting that the new requirement
capping family co-payments made it more important to have transparent
and timely data about the true out of pocket costs for families
receiving subsidies. The comments received are discussed at Sec.
98.71.
[[Page 15387]]
Paying the Established Subsidy Rate. This final rule codifies at
Sec. 98.45(g) existing policy that allows Lead Agencies to pay
eligible child care providers caring for children receiving CCDF
subsidies the Lead Agency's established subsidy payment rate to account
for the actual cost of care, even if that amount is greater than the
price the provider charges parents who do not receive subsidy. The
preamble to the 2016 CCDF Final Rule states that Lead Agencies may pay
amounts above the provider's private pay rate if they are designed to
pay providers for additional costs associated with offering higher-
quality care or types of care that are not produced in sufficient
amounts by the market. (81 FR 67514). However, this language was not
included in the regulation, which has led to misunderstanding in the
field and led some Lead Agencies to prohibit paying child care
providers the full established payment rate.
Section 658E(c)(4) of the Act (42 U.S.C. 9858c(c)(4) and Sec.
98.45 require Lead Agencies to set child care provider payment rates
based on findings from a market rate survey or an approved alternative
methodology to ensure children eligible for subsidies have equal access
to child care services comparable to children whose parents are not
eligible to receive child care assistance because their family income
exceeds the eligibility limit. Lead Agencies must also complete a
narrow cost analysis, regardless of whether they used a market rate
survey or approved alternative methodology to set rates. A market rate
survey is the collection and analysis of prices and fees charged by
child care providers for services in the priced market, and a narrow
cost analysis estimates the true cost of care, not just price. Lead
Agencies must analyze price and cost data together to determine
adequate child care provider subsidy rates to meet health, safety, and
staffing requirements and meeting these standards relies on child care
providers receiving the full established payment rate. ACF strongly
encourages Lead Agencies to set payment rates high enough so that child
care providers can retain a skilled workforce and deliver higher-
quality care to children receiving subsidies and the policies can
achieve the equal access standard required by law. The preamble to the
2016 CCDF final rule restated the importance of setting higher payment
rates and recommended the 75th percentile as a benchmark to gauge equal
access for Lead Agencies, stating ``Established as a benchmark for CCDF
by the preamble to the 1998 Final Rule (63 FR 39959), Lead Agencies and
other stakeholders are familiar with [the 75th percentile] as a proxy
for equal access.'' (81 FR 67512)
ACF has prioritized the importance of setting higher payment rates
and in April 2023 determined that any payment rates set at less than
the 50th percentile were insufficient to meet the equal access
requirements of CCDF. ACF noted that the 50th percentile is not an
equal access benchmark, nor is it a long-term solution to gauge equal
access, and thus may not be considered sufficient for compliance in
future cycles. But the value of setting higher payment rates is
undermined if a Lead Agency does not pay the full established rate.
Though allowable under CCDF, it undermines parent choice and likely
limits the number of participating children in higher quality care.
Paying all CCDF providers at the Lead Agency-established rate is a
key payment practice that reflects the actual cost of child care,
fosters parent choice, increases child care quality, and supports
better child care supply. This is existing policy under CCDF but
because of its importance to achieving the main purposes of the Act,
this Final Rule codifies the policy in the regulatory language to
reduce confusion.
Comment: Comments on this proposal were overwhelmingly positive in
support of the codification and clarification on paying the established
rate, although a few commenters offered suggestions for implementation
support or some reasons for caution. Commenters stated that paying the
full established payment rate will increase provider stability,
encourage provider participation in the subsidy program, and encourage
Lead Agencies to pursue cost-based alternative methodologies and set
payment rates closer to the true cost of care. Several commenters
supported our assessment that paying the full established rate will
help address inequities that arise when providers in low-income
communities cannot raise fees because families who do not receive CCDF
are not able to pay more for child care. Additionally, several comments
noted that paying the established rate will also benefit middle-income
families who are not eligible for CCDF because program income would
increase without passing costs to parents. Moreover, commenters
provided evidence from States that pay the full rate, including showing
that in one State following the repeal of the law prohibiting payment
above the private rate in 2019 improved access to quality child care,
reduced bureaucratic requirements for the state, and removed one
incentive for providers to raise rates for private pay families.
Response: We appreciate commenters' strong support for this
critical policy clarification, especially related to the role it can
play in addressing inequities in the child care system and its benefit
to families that do not receive subsidies and have not made changes to
the proposed language. While the 2016 CCDF Final Rule stated in the
preamble that Lead Agencies had the ability to pay child care providers
above their established private-pay tuition, it is clear from comments
that this clarification in the rule is necessary to ensure Lead
Agencies are aware of this option and encouraged to implement this
practice.
Comment: A few commenters requested ACF articulate clearly that
paying the established rate is encouraged, but not required. In
addition, one commenter noted that obtaining legislative approval to
pay the established rate could be challenging for Lead Agencies in
States that prohibit this practice. On the other hand, a few commenters
recommended ACF require Lead Agencies to pay child care providers the
full rate established rate.
Response: ACF reiterates this policy is encouraged but not required
and acknowledges States will have different internal processes should
they decide to newly implement this policy.
Comment: Additionally, commenters emphasized paying the established
rate for children receiving subsidy does not address the funding
limitations faced by child care providers who serve families with
different levels of income.
Response: ACF acknowledges this provision does not fully address
the broader issues about the funding and stability of the child care
system.
Capping Family Co-payments. Section 658E(c)(5) of the Act (42
U.S.C. 9858c(c)(5)) establishes that Lead Agencies cost-sharing and
sliding fee policies cannot be a ``barrier to families receiving
assistance.'' This final rule clarifies at Sec. Sec. 98.45(b)(5) and
98.45(l)(3) as redesignated that co-payments cannot exceed 7 percent of
a family's income because ACF considers co-payments above that rate to
be an impermissible barrier to a family receiving assistance and
therefore not permissible under CCDF. If a family receives CCDF for
multiple children, their total co-payment amount also could not exceed
7 percent of the family's income. We anticipate these changes will
lower child care costs for many families, reduce a barrier to child
care access, and improve family well-being and economic stability.
The preamble (81 FR 67515) of the 2016 CCDF Final Rule established
7 percent as the federal benchmark for an
[[Page 15388]]
affordable co-payment for families receiving CCDF but did not make it a
mandatory ceiling. According to federal fiscal year (FFY) 2022-2024
CCDF State and Territory Plans, 15 Lead Agencies have set all their co-
payments to 7 percent or less. Among the rest of Lead Agencies, co-
payments rise as high as 27 percent of family income. In limiting
family co-payments to no more than 7 percent of household income, the
child care costs for families with low incomes will better align with
cost burdens for higher income families. Families with lower incomes
pay a higher portion of income for child care than those with higher
incomes. For example, the President's Council of Economic Advisers
found that households with annual incomes below $25,000 pay between 9
and 31 percent of their income for child care, while households with
annual incomes above $150,000 pay between 6 and 8 percent of their
annual income for child care.\75\
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\75\ <a href="https://www.whitehouse.gov/cea/written-materials/2023/07/18/improving-access-affordability-and-quality-in-the-early-care-and-education-ece-market/">https://www.whitehouse.gov/cea/written-materials/2023/07/18/improving-access-affordability-and-quality-in-the-early-care-and-education-ece-market/</a>.
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In response to comments, the final rule includes a clarification at
newly designated Sec. 98.45(n)(5) to require Lead Agencies to
demonstrate in their CCDF Plan that the total payment to a provider
(subsidy payment amount and family co-payment) is not impacted by cost-
sharing policies. Lead Agencies must continue to set payment rates at
levels that provide equal access to care for families receiving child
care subsidies, and ACF expects to closely monitor Lead Agency payment
rates to ensure reductions in family co-payments transfer the cost to
Lead Agencies and not providers.
Comment: Most commenters on this proposal supported the 7 percent
limit, with many comments validating that child care co-payments can
act as a barrier to child care access. Commenters, including a
bicameral letter from members of Congress, reaffirmed the need to
require the 7 percent cap to meet statutory equal access requirements
rather than continuing to defer to Lead Agency discretion.
In general, many commenters acknowledged the negative consequences
high co-payments can pose for CCDF families and providers, citing
research that the cost of child care is a barrier to access at any co-
payment level.\76\ One commenter shared how they have witnessed how
waived co-payments under COVID-19 supplemental funds benefited
families, including helping them cover other bills and pay off debt.
Other commenters acknowledged the importance of supporting affordable
co-payments for families, and the importance of removing barriers that
undermine parental choice.
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\76\ Adams, G., & Pratt, E. ``Assessing child care subsidies
through an equity lens.'' (2021). Urban Institute.
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Some commenters provided data on the negative economic impact that
the lack of affordable child care poses for their State and the
country. According to a 2023 statewide survey of 800 registered voters
in Ohio, 70 percent of nonworking or part-time working mothers
indicated that they would reenter the workforce or work more hours if
they had access to affordable child care.\77\ The same survey found 83
percent of Ohio small business owners citing child care as a barrier to
hiring.\78\ Similar concerns regarding child care affordability were
found in Maine from a 2021 Statewide Community Needs Assessment
conducted by the Maine Community Action Partnership,\79\ and multiple
Portland Regional Chamber of Commerce member surveys showed that lack
of child care was a significant barrier to hiring, training, and
retaining employees for small and large employers throughout the
State.\80\ Speaking to national trends, another comment highlighted
data from the U.S. Chamber of Commerce showing that half of all workers
and nearly 60 percent of parents cite lack of child care as their
reason for leaving the workforce, and research shows that once women
leave the workforce, it is challenging for them to return.\81\
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\77\ Slideshow summarizing study findings retrieved from <a href="https://www.groundworkohio.org/_files/ugd/d114b9_956a4a95f16d44819696f1594fe98ce0.pptx?dn=POS_Groundwork%20Ohio%20Presentation%20Deck_Final.pptx">https://www.groundworkohio.org/_files/ugd/d114b9_956a4a95f16d44819696f1594fe98ce0.pptx?dn=POS_Groundwork%20Ohio%20Presentation%20Deck_Final.pptx</a>.
\78\ Ibid.
\79\ 2021 Statewide Community Needs Assessment, Maine Community
Action Partnership, December 2021. Retrieved from <a href="https://mecap.org/wp-content/uploads/2022/01/MeCAP-Statewide-Community-Needs-Assessment-Report-with-Appendices-FINAL-12032021-2.pdf">https://mecap.org/wp-content/uploads/2022/01/MeCAP-Statewide-Community-Needs-Assessment-Report-with-Appendices-FINAL-12032021-2.pdf</a>.
\80\ Portland Regional Chamber of Commerce, December 2021.
Retrieved from <a href="https://legislature.maine.gov/testimony/resources/AFA20220303Dundon132906387075472062.pdf">https://legislature.maine.gov/testimony/resources/AFA20220303Dundon132906387075472062.pdf</a>.
\81\ Ferguson, S. & Lucy, I. ``Data Deep Dive: A Decline of
Women in the Workforce.'' U.S. Chamber of Commerce, April 27, 2022.
Retrieved from <a href="https://www.uschamber.com/workforce/data-deep-dive-a-decline-of-women-in-the-workforce">https://www.uschamber.com/workforce/data-deep-dive-a-decline-of-women-in-the-workforce</a>.
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Response: We have retained the prohibition on Lead Agencies setting
co-payments above 7 percent of family income because such co-payments
would be a barrier to child care access for families and appreciate
commenters' support.
Comment: In the NPRM, we requested comment on whether 7 percent is
the correct threshold for determining a barrier to child care access,
including data on child care affordability. Some organizations noted
that 7 percent of family income would not be affordable for many
families and recommended a lower cap, while others supported the 7
percent proposal but preferred we set a lower cap. Commenters also
noted that some States have already taken steps to significantly limit
family co-payments, including one State that plans to implement a
policy that would cap co-payments to a lower standard of 1 percent of a
family's income. We also received a small number of comments
questioning whether 7 percent is the correct benchmark for
affordability and recommending further study of affordability, and/or
funding a commission of experts or creating an advisory board with
parents and providers before establishing the requirement. Others
supported the requirement to limit co-payments but recommended that we
continue to conduct research on an appropriate affordability threshold
to update the cap in the future.
Response: We retain the 7 percent cap in this final rule because we
believe amounts above this threshold pose a barrier to child care
access in the CCDF program. We further note that 7 percent of family
income is not affordable for many families participating in CCDF and
encourage Lead Agencies to adopt lower co-payment caps and minimize or
waive co-payments for more families. As discussed above, families with
low incomes on average pay 31 percent of their incomes for child care,
while families with higher incomes pay between 6 and 8 percent. As CCDF
assistance is intended to offset the disproportionate share of income
that families with low incomes pay for child care, families
participating in CCDF should not be required to pay a greater share of
their income than higher income families.
Finally, we agree that supporting research to better understand
child care cost burden and affordability for families is important. The
National Academies of Sciences, Engineering, and Medicine published a
consensus report in 2018 that included discussion of affordability for
families that detailed the inherent complexity in defining what is
affordable for families.\82\ The ACF Office of Planning, Research, and
Evaluation supports ongoing research on child care affordability.
However, the
[[Page 15389]]
need to lower family child care costs is urgent for those with children
in child care now. The final rule does not alter Lead Agency
flexibility to set co-payment caps lower than 7 percent of family
income, and we encourage Lead Agencies to ensure co-payments support
affordability with lower co-payments.
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\82\ National Academies of Sciences, Engineering, and Medicine.
(2018). Transforming the Financing of Early Care and Education.
Washington, DC: The National Academies Press. <a href="https://doi.org/10.17226/24984">https://doi.org/10.17226/24984</a>.
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Comment: We received four comments, including one from a member of
Congress, opposing our proposal to lower co-payments and questioning
our regulatory authority to do so.
Response: Section 658E(c)(5) of the Act requires Lead Agencies to
establish and periodically revise a sliding fee scale that provides for
cost-sharing for families receiving CCDF funds. The 2014
reauthorization of the Act newly clarified that CCDF cost-sharing
policies should not be ``a barrier to families receiving assistance''
under CCDF, and as noted above, high co-payments above 7 percent are a
barrier to families accessing child care assistance. Twenty-two members
of Congress wrote in support of the proposal and indicated this
regulatory change reflected statutory requirements.
Comment: A few commenters shared concerns that limiting co-payments
for CCDF families would increase child care costs for the middle class.
Response: We anticipate that limiting co-payments for CCDF families
will not change the amount the provider will receive for that child.
Rather, it will transfer costs from parents who receive CCDF assistance
to Lead Agencies so there is no reason to anticipate this will increase
child care costs for families without subsidies, the middle class, or
other families. Moreover, a recent study of child care subsidies in
Minnesota demonstrated that child care subsidies increased the supply
of child care while having a de minimis impact on child care costs.\83\
When the supply of child care increases in a community, all families
benefit because they have more options and can more easily access child
care.
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\83\ Lee, Won Fy, Aaron Sojourner, Elizabeth E. Davis, and
Jonathan Borowsky. 2024. ``Effects of Child Care Vouchers on Price,
Quantity, and Provider Turnover in Private Care Markets.'' Upjohn
Institute Working Paper 24-394. Kalamazoo, MI: W.E. Upjohn Institute
for Employment Research. <a href="https://doi.org/10.17848/">https://doi.org/10.17848/</a> wp24-394.
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Comment: We received a few comments requesting clarity on the
definition of family income used to implement the requirement.
Response: We decline to provide a definition of family income in
this final rule and continue to allow Lead Agencies the flexibility to
specify how to define family income, which has implications for both a
family's eligibility for CCDF assistance and the family's required co-
payment amount. This flexibility allows Lead Agencies to determine how
they want to define family unit and income.
Comment: A few commenters requested flexibility to set co-payments
above the 7 percent requirement for CCDF families with higher incomes
or with multiple children in care.
Response: We decline to permit family co-payments higher than 7
percent of family income. The 7 percent of family income co-payment cap
applies regardless of the number of children in a family in need of
care to minimize the likelihood that cost is a barrier to child care
access for that family. In addition, families participating in CCDF
have low incomes, even those with incomes on the higher end of the
eligibility threshold, making 7 percent of family income a substantial
financial burden. If we were to allow the requested flexibility,
families at the higher end of the CCDF eligibility threshold could be
faced with child care costs well above the 7 percent threshold. For
example, analyses show that the average household with income between
$35,000 and $49,000 spends approximately 18 percent of their income on
child care for their young children. This estimate excludes households
that use child care but do not pay for it. When including all
households (those paying for child care and those who do not pay), the
average household in this income bracket still spends 8 percent of
their income on child care.\84\
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\84\ Council of Economic Advisors (CEA) analysis of the 2019
National Survey of Early Care and Education (NSECE). <a href="https://www.whitehouse.gov/cea/written-materials/2023/07/18/improving-access-affordability-and-quality-in-the-early-care-and-education-ece-market/#_ftn2">https://www.whitehouse.gov/cea/written-mate
[…truncated; see source link]Indexed from Federal Register on March 1, 2024.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.