[Federal Register Volume 62, Number 141 (Wednesday, July 23, 1997)]
[Proposed Rules]
[Pages 39610-39657]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-19062]
[[Page 39609]]
_______________________________________________________________________
Part II
Department of Health and Human Services
_______________________________________________________________________
Administration for Children and Families
_______________________________________________________________________
45 CFR Parts 98 and 99
Child Care and Development Fund Block Grant Regulations Amendments;
Proposed Rule
Federal Register / Vol. 62, No. 141 / Wednesday, July 23, 1997 /
Proposed Rules
[[Page 39610]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Administration for Children and Families
45 CFR Parts 98 and 99
RIN 0970-AB74
Child Care and Development Fund
AGENCY: Administration for Children and Families (ACF), HHS.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Administration for Children and Families (ACF) proposes to
amend the Child Care and Development Block Grant (CCDBG) regulations at
45 CFR Part 98. In large part, the proposed amendments respond to the
amendments made to the CCDBG Act and the Social Security Act by the
Personal Responsibility and Work Opportunity Reconciliation Act
(PRWORA) of 1996 (Pub. L. 104-193). This proposed rule additionally
includes certain selected amendments and preamble clarifications
originally proposed for the CCDBG regulations on May 11, 1994 (59 FR
24510-24527) but never issued as a final rule due to the welfare reform
initiative that resulted in PRWORA.
DATES: Interested persons and agencies are invited to submit written
comments concerning these proposed regulations no later than September
22, 1997.
ADDRESSES: An electronic version of this proposed rule can be found at
http://www.acf.dhhs.gov/programs/ccb/policy/nprm.htm for your review.
Comments on the regulation can be submitted electronically following
the directions at the site, and will be posted according to those
directions. Comments received from State Lead Agencies for child care
will also be posted on the web site as a service to the public,
regardless of the method of submission. Printed copies of the
electronic comments will be added to the file of written comments and
be available for public review during the hours described below.
Comments may also be mailed (facsimile transmissions will not be
accepted) to the Assistant Secretary for Children and Families,
Attention: Child Care Bureau, Hubert Humphrey Building, Room 320F, 200
Independence Avenue, SW, Washington, DC 20201 or delivered to that
address between 8 a.m. and 4:30 p.m on regular business days. Comments
received may be inspected during the same hours by making arrangements
with the contact person shown below.
FOR FURTHER INFORMATION CONTACT: Barbara Binker, Director, Policy
Division, Child Care Bureau, Hubert Humphrey Building, Room 320F, 200
Independence Avenue, SW, Washington, DC 20201, telephone (202) 401-
5145. Deaf and hearing-impaired individuals may call the Federal Dual
Party Relay Service at 1-800-877-8339 between 8 a.m. and 7 p.m. Eastern
time.
SUPPLEMENTARY INFORMATION:
Background
Section 103(c) of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (PRWORA) repealed the child care programs
authorized under title IV-A of the Social Security Act--AFDC Child
Care, Transitional Child Care and At-Risk Child Care. In addition,
PRWORA amended section 418 of the Social Security Act to provide new
Federal child care funds and transfer them to the Lead Agency under the
amended Child Care and Development Block Grant Act. The funding under
section 418 is now subject to the CCDBG Act. PRWORA also amended the
CCDBG Act.
PRWORA also reformed the Federal welfare program, replacing the Aid
to Families with Dependent Children (AFDC) program with the Temporary
Assistance for Needy Families (TANF) program. Under TANF, States have
great flexibility to design programs that promote work, responsibility
and self-sufficiency, and strengthen families.
In preparing to draft this proposed rule, ACF consulted extensively
with grantees and with organizations interested in child care. In these
early, pre-drafting consultations we met with representatives of State-
level organizations, such as the National Governors' Association and
the American Public Welfare Association. We also met with
representatives of national organizations of local governments such as
the National Association of Counties, and with national organizations
such as the Children's Defense Fund and the National Association of
Child Care Resource and Referral Agencies. We held a national
teleconference with State child care administrators, and held extensive
discussions regarding the new statute at ACF's national child care
conference held in September 1996. We consulted with two on-going Child
Care Bureau work groups composed of State and tribal child care
administrators, held 10 regional conference calls with our tribal
grantees, and conducted two workshops on tribal child care issues at
ACF's Tribal Welfare Reform Conference, held in Seattle, Washington, in
October 1996. We also received a number of letters touching on possible
regulatory approaches to implementing the child care provisions of
PRWORA.
The PRWORA provides several child care funds to support low-income
families, transfers these funds to the CCDBG Lead Agency, and amended
the CCDBG Act to ensure the consistent quality of child care services
provided with these Federal funds. Therefore, consistent with the
intent of the statute, we have named the combined funds the Child Care
and Development Fund (CCDF). In this proposed rule, references to the
CCDBG have been revised to refer to the CCDF.
Goals and Purpose of the Proposed Rule
In developing this proposed rule, our primary goals were to:
--amend the CCDBG regulations in light of the child care amendments
under title VI of PRWORA,
--achieve a balance between program flexibility and accountability,
--assure the health and safety of children in child care,
--recognize that child care is a key support for work, as envisioned in
TANF, and
--clarify, streamline, simplify, and unify the Federal child care
program.
Our specific efforts toward achieving these primary goals include:
assuring that States have adequate information upon which to base their
child care payments; promoting public involvement in the Plan process;
strengthening health and safety in child care by requiring children
receiving CCDF subsidies to be age-appropriately immunized; requiring
coordination between child care Lead Agencies and agencies
administering TANF, health, education and employment programs;
streamlining the CCDF application and Plan; and providing
clarifications based on experience operating both the CCDBG program and
the now-repealed title IV-A programs.
We believe that our proposed regulatory changes respond to the
statutory changes and also represent a balancing of viewpoints in cases
where there were multiple views on a single issue. For example, in our
consultations we asked for information on how the statutory amendments
around payment rates and the concept of ``equal access'' should be
implemented. In the responses we received, there was a central tension
between the desire for complete flexibility by States to establish
child care subsidy payment
[[Page 39611]]
rates and the need to assure that the established rates promoted both
work and parental choice. To achieve balance on the issue, we propose
to give Lead Agencies the flexibility to set payments, but to require
that the rates be based on a market survey conducted no earlier than
two years prior to the effective date of the currently approved CCDF
Plan. Using this approach, we assure that Lead Agencies have an
appropriate frame of reference for establishing payments that meet the
needs of work and family.
Another issue on which we heard opposing views was the amended
public hearing requirements concerning the CCDF Plan. States and their
organizations desired complete flexibility, i.e., no further regulation
beyond the requirements that the hearing be announced with sufficient
time and statewide notice. Others with whom we consulted wanted
regulations that specified both the timing and the manner of the
notice, as well as details on the locations of the hearing. Our
proposed rule contains basic requirements on the timing of the notice
and the hearing, but we provided flexibility regarding the number,
location(s), and other details of the hearings. Here we believe we have
established a balance between the flexibility of Lead Agencies to take
into account such considerations as variations in geography and the
calendars of State legislatures, and the statute's strengthening of the
basic accountability of Lead Agencies to the public during the child
care planning process.
We continue to believe in the need for immunization of children in
child care as an essential part of health and safety. Immunization is a
critical part of what we consider to be a natural connection between
child care and healthy children, and we again propose, as we did in
1994, that children in subsidized care be age-appropriately immunized.
Since there is a natural connection between child care and healthy
children, we also are proposing a specific requirement that Lead
Agencies for child care coordinate with public health agencies,
including those responsible for immunization.
We also propose specifically to require coordination between child
care Lead Agencies and other entities that we believe are crucial to
supporting a strong child care program. Since the relationship between
the CCDF and the TANF program is especially important, we would be
requiring coordination between the CCDF agency and the TANF agency. We
also propose to require that child care consumer information provided
by the CCDF Lead Agency include information regarding the TANF agency's
implementation of the TANF exception to sanctioning a single custodial
parent with a child under age six who refuses to work due to lack of
appropriate, accessible, or affordable child care.
In addition to our proposed requirements regarding coordination
with TANF, our proposed rules include specific requirements relating to
coordination between CCDF Lead Agencies and public education,
employment, and public health agencies, including those agencies
responsible for immunizations. There are numerous opportunities for
linkages between child care and these agencies. We believe that the
connections between child care programs and these agencies are pivotal
in promoting family self-sufficiency and general well-being. It is
important, for example, that such coordination support the linkage of
families to a system of continuous, accessible health care.
Our goals in developing these proposed amendments included
clarification, simplification, and streamlining to support the strong,
unified child care system that PRWORA provides. Further, since the
changes under PRWORA necessitated Plan revisions, we chose to use this
as an additional opportunity to reorganize and simplify the application
and CCDF Plan document, and to create a separate Plan document
specifically for Tribes. We have aimed for clarity in this regulation
on a number of points. In the regulations at subparts F, Use of Child
Care and Development Funds, and G, Financial Management, we clarified
new statutory provisions regarding such areas as administrative costs,
quality, matching (including the use of pre-kindergarten funds as
match), maintenance-of-effort, and reallotment.
Finally, we are again proposing certain changes and clarifications
that were contained in an earlier proposed rule (59 FR 24510-24527, May
11, 1994). The 1994 proposed rule was published in response to requests
from States, child care providers, and organizations for certain
amendments to promote the health and safety of children receiving
subsidized care and to enable the improved coordination between the now
repealed title IV-A child care programs and the Child Care and
Development Block Grant. The enactment of the child care provisions of
PRWORA provided even greater opportunities for unifying the Federal
child care programs and made many of those proposed child care
amendments unnecessary. However, we are carrying over into this
proposed rule the changes to the CCDBG health and safety standards
included in the earlier proposed rule, and we also include the
clarification contained in the preamble to the 1994 proposed rule
regarding the availability of child care certificates. We have again
offered the clarification contained in the 1994 proposed rule regarding
inclusion of foster care in the definition of protective services and
have added clarifications regarding respite care and parental choice in
protective services cases, which we felt were necessary based on our
experience with the CCDBG program. Also, as we did in 1994, we propose
to give Lead Agencies additional flexibility in offering in-home child
care.
The rules and clarifications that we proposed in 1994 and repeated
in this proposed rule received public support at the time they were
originally proposed. In view of this support, the changes had been
planned for publication as final rule. However, our plans for
publication were overtaken by the welfare reform legislative agenda
that culminated in the passage of PRWORA. Since over two years have
passed from the date of these original proposals, however, ACF is again
soliciting comments on the amendments and clarifications that we
carried over from our 1994 proposed rule.
Statutory Authority
Section 658E of the Child Care and Development Block Grant Act of
1990 requires that the Secretary shall by rule establish the
information needed in the Block Grant Plan.
Regulatory Impact Analysis
This proposed rule has been reviewed by the Office of Management
and Budget (OMB) pursuant to Executive Order 12866. Executive Order
12866 requires that regulations be reviewed to ensure that they are
consistent with the priorities and principles set forth in the
Executive Order. The Department has determined that this rule is
consistent with these priorities and principles. An assessment of the
costs and benefits of available regulatory alternatives (including not
regulating) demonstrated that the approach taken is the most cost-
effective and least burdensome while still achieving the regulatory
objectives.
For the most part, the proposed regulations are required by PRWORA
and represent changes to the existing regulations or deletions from the
existing regulations.
As in 1994, we are again proposing a requirement that children be
immunized in order to receive services under the Child Care and
Development
[[Page 39612]]
Fund and clarifying that such immunizations be age-appropriate. The
CCDBG health and safety regulations currently require grantees to
include provisions about immunizations in their CCDBG Plans and to
provide assurances that requirements with respect to immunizations are
in place. In addition, most States already include immunizations in
their child care standards.
We do not anticipate that our proposal will have a significant
negative impact on either grantees or families, since grantees will not
be required to provide immunizations directly. The Vaccines for
Children Program, an important component of the Childhood Immunization
Initiative (CII), provides immunizations to eligible children,
including those without insurance coverage, those eligible for
Medicaid, and American Indians and Alaskan Natives. In addition, every
State receives grant funds for immunization activities, including
hiring nurses, expanding clinic hours, assessing coverage levels, and
conducting outreach. Immunization levels of children 19-35 months of
age are measured by the National Immunization Survey, the first ever
survey conducted throughout the U.S. that provides comparable State
vaccination coverage estimates.
The immunization provision was considered the most cost-effective
and least burdensome approach because: (1) it helps ensure that
vulnerable young children are age-appropriately immunized; (2)
immunization of such children is highly cost-effective; and (3) it
provides flexibility to grantees in determining how to implement the
provision.
Regulatory Flexibility Analysis
The Regulatory Flexibility Act (Pub. L. 96-354) requires the
Federal government to anticipate and reduce the impact of rules and
paperwork requirements on small businesses and other small entities.
The primary impact of these proposed rules is on State, tribal and
territorial governments. To a lesser extent the regulation could affect
individuals and small businesses. However, the number of small
businesses affected should be limited, and the expected economic impact
on these businesses would not be so significant that a full regulatory
flexibility analysis is indicated.
First, the regulations retain many provisions designed to
ensure broad participation by small businesses in the program. The
regulations still require that parents have a choice among a variety of
providers including family day care providers. These and other
provisions in the current rules will help ensure that States exercise
restraint in imposing any additional requirements on small entities
providing child care.
The proposed rule contains a number of provisions that
could result in some decrease in the regulatory and economic burdens on
providers that are small businesses. Most importantly, because States
will be required to operate their programs under a more consistent set
of program rules, participating providers will face a simpler and more
streamlined set of Federal regulatory requirements.
The providers who would potentially be most affected by
this rule are in-home providers. These providers are generally not
operating as small businesses, but as domestic employees; thus, any
impact on them need not be specifically addressed under this Act.
The regulation could ultimately result in some additional
State or tribal regulatory requirements or health and safety standards
for other providers, such as family day care providers that are small
businesses. However, the impacts on small businesses, if any, would not
be directly attributable to this regulation. With the possible
exception of the immunization provision, the regulation does not direct
any expansion of Federal, State or tribal regulatory requirements or
health and safety standards for providers; thus, any impacts on
providers should arise only as the result of independent State and/or
local decisions to impose additional requirements.
State, local and tribal governments already have authority to set
general regulatory requirements and health and safety standards for
child care providers. If States (or other grantees) believe that there
was a substantial need for additional requirements (to protect the
well-being of children in care), we would have expected them to act
under this general authority.
While States generally have immunization requirements for children
in child care, the proposed immunization provision might result in some
additional children being subject to immunization requirements or
stronger requirements for some children. However, States have
flexibility in deciding how immunization requirements are to be
implemented. Our proposal does not dictate that States impose
requirements on providers; rather, States can choose to impose them on
eligible families. Thus, the immunization provision in this proposed
rule does not necessarily affect small businesses. Further, where
States do choose to impose additional requirements on providers related
to the immunization provision, such requirements would be basically
administrative in nature (e.g., documentation); we expect the costs of
immunization to be covered through other funding sources. Thus, this
provision would not have a significant economic impact on providers.
Thus, the number of entities affected, and the net economic impact
on them, should not be significant.
Paperwork Reduction Act
Sections 98.16 and 98.81 contain the Lead Agency Plan information
requirements of the ACF-118 and ACF-118-A respectively. Sections 98.70
and 98.71 contain the information required by both the ACF-800 and ACF-
801 child care data collections. As required by the Paperwork Reduction
Act of 1995 (44 U.S.C. 3507 (d)), the Administration for Children and
Families has submitted a copy of these sections to the Office of
Management and Budget (OMB) for its review.
Title: State/Territorial Plan Pre-Print (ACF-118) and Tribal Plan
Pre-print (ACF-118-A) for the Child Care and Development Fund (Child
Care and Development Block Grant).
Description: These legislatively-mandated plans serve as the
agreement between the Lead Agency and the Federal Government as to how
CCDF programs will be administered in conformance with legislative
requirements, pertinent Federal regulations, and other applicable
instructions and guidelines issued by ACF. This information will be
used for Federal oversight of the Child Care and Development Fund.
Respondents: State governments and territories, Tribal
organizations
[[Page 39613]]
Annual Burden Estimates
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Number of
Number of responses Average Total burden
Instrument respondents per burden hours hours
respondent per response
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ACF-118................................................. 56 .5 30 840
ACF-118................................................. 240 .5 30 3,600
Estimated Total Annual Burden Hours................. ............ ............ ............ 4,440
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Title: Child Care Biannual Aggregate Report--ACF-800.
Description: This legislatively mandated report collects program
and participant data on all children and families receiving direct CCDF
services. Aggregate data will be collected and will be used to
determine the scope, type, and methods of child care delivery, and to
provide a report to Congress.
Respondents: State governments, Guam, Virgin Islands, Puerto Rico
and the District of Columbia.
Annual Burden Estimates
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Number of
Number of responses Average Total burden
Instrument respondents per burden hours hours
respondent per response
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ACF-800................................................. 54 2 40 4,320
Estimated Total Annual Burden Hours................. ............ ............ ............ 4,320
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Title: Child Care Quarterly Unit Report, ACF-801
Description: This legislatively-mandated report collects program
and participant data on children and families receiving direct CCDF
services. Disaggregate data will be collected and will be used to
determine the participant and program characteristics as well as cost
and level of child care services. The data will be used to provide a
report to Congress. Form ACF 801 represents the data elements to be
collected and reported to ACF.
Respondents will be asked to sample the population of families
receiving benefits on a monthly basis and submit the three most current
monthly samples to ACF quarterly. Each monthly sample is drawn
independent of the other samples and retained for submission within a
quarterly report. ACF is not issuing specifications on how respondents
compile overall database(s) from which samples are drawn. ACF will
provide to the respondents a sampling plan which will specify minimum
sample size. It is expected to be a monthly sample of approximately 150
cases for large States with smaller samples based on population size
adjustments for smaller respondents.
Respondents: States, D.C., Guam, Virgin Islands and Puerto Rico
Annual Burden Estimates
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Number of
Number of responses Average Total
Instrument respondents per burden hours burden
respondent per response hours
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ACF-801................................................. 54 4 20 4,320
Estimated Total Annual Burden Hours:................ ............ ............ ............ 4,320
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The Administration for Children and Families will consider comments
by the public on these proposed collections of information in:
--Evaluating whether the proposed collections are necessary for the
proper performance of the functions of ACF, including whether the
information will have practical utility;
--Evaluating the accuracy of the ACF's estimate of the burden of the
proposed collections of information, including the validity of the
methodology and assumptions used;
--Enhancing the quality, usefulness, and clarity of the information to
be collected; and
--Minimizing the burden of the collection of information on those who
are to respond, including through the use of appropriate automated,
electronic, mechanical, or other technology, e.g., permitting
electronic submission of response.
OMB is required to make a decision concerning the collections of
information in these proposed regulations between 30 and 60 days after
publication of this document in the Federal Register. Therefore, a
comment is best assured of having its full effect if OMB receives it
within 30 days of publication. This does not affect the deadline for
the public to comment to the Department on the proposed regulations.
Written comments to OMB for the proposed information collection should
be sent directly to the following: Office of Management and Budget,
Paperwork Reduction Project, 725 17th Street, N.W., Washington, D.C.
20503, Attn: Laura Oliven.
Proposed Amended Regulations, 45 CFR Part 98
We have chosen to present the proposed amendments by publishing a
proposal to completely revise 45 CFR Part 98. We believe that the
publication of the whole text of Part 98 will facilitate understanding
of the impact of the amendments on the regulations that are retained.
The preamble discussion
[[Page 39614]]
in this proposed rule primarily discusses the changed regulations. It
also contains certain clarifications based on ACF's experience in
implementing the prior final rule. Where regulations are retained, the
preamble explanation and interpretation of those regulations published
with the prior final rule (57 FR 34352-413, August 4, 1992) is also
retained unless specifically modified in the preamble to this proposed
rule. The following table describes in detail the substantive changes
to the amended sections. In addition, we made a number of other minor
editorial changes throughout the regulations to enhance clarity, to
reflect the change of program name from the Child Care and Development
Block Grant (CCDBG) to the Child Care and Development Fund (CCDF), and
to reflect the change from ``Grantee'' to ``Lead Agency'' for reasons
explained in this preamble at Sec. 98.2.
We have made the following changes to the regulations.
Title/heading: Part 98; Subparts--A, E and F; Sections--98.1,
98.13, 98.15, 98.43, 98.45, 98.51, 98.52, 98.53, 98.61, 98.62, 98.63,
98.64, 98.65, 98.70, 98.71, and 98.81.
Definitions: Sec. 98.2 is now an alphabetical listing.
Removed: (e), (f), (n), (o), (s), (gg), (nn) and (oo).
Added: Child Care and Development Fund (CCDF), Construction,
Discretionary Fund, Facility, Major Renovation, Mandatory Funds,
Matching Funds, Modular unit, Real property, and Tribal Mandatory
Funds.
Assurances and Certifications: Sec. 98.15 has been reorganized to
reflect the statute intent that states ``assure'' they meet certain
requirements and ``certify'' that they meet others.
Tribes: We have consolidated tribal regulations from
Secs. 98.16(b), 98.17(b) and 98.60(g) into Subpart I.
The following distribution table summarizes what has been added,
removed, revised and redesignated in 45 CFR Part 98.
------------------------------------------------------------------------
Existing section Action New section
------------------------------------------------------------------------
Added............ 98.1(a)
98.1 (a) and (b).............. Redesignated..... 98.1 (b) and (c)
98.1(b)(7).................... Removed.......... .....................
98.1(b)(8).................... Redesignated..... 98.1(c)(7)
98.2(a), (j), (q), (mm)....... Revised.......... 98.2--Alphabetical
98.10 (b) and (e)............. Revised.......... 98.10 (b) and (e)
98.11(a) and (b)(8)........... Revised.......... 98.11 (a) and (b)(8)
98.12 (a) and (c)............. Revised.......... 98.12 (a) and (c)
Added............ 98.12 Introductory
text
98.13(a)...................... Revised.......... 98.13 (a) and (b)
98.13 (b) and (c)............. Removed
98.13(a)(10).................. Redesignated..... 98.13(c)
98.13(a)(11).................. Redesignated..... 98.13(d)
98.14 (a)-(c)................. Revised.......... 98.14(a)-(c)
98.15......................... See note above
98.16(a)...................... Redesignated..... 98.16 Introductory
text
98.16(a) (1)-(12)............. Revised.......... 98.16 (a)-(l)
98.16(a) (13)-(16)............ Removed
Added............ 98.16 (m)-(q)
98.16(a)(17).................. Redesignated..... 98.16(r)
98.17(a)...................... Revised.......... 98.17(a)
98.17(c)...................... Redesignated..... 98.17(b)
98.20(a)...................... Revised.......... 98.20(a)
98.21......................... Removed
Added............ 98.30(c)(3)
98.30(c) (3)-(5).............. Redesignated..... 98.30(c) (4)-(6)
98.30(d)...................... Removed
98.30 (e)-(g)................. Redesignated..... 98.30 (d)-(f)
98.31......................... Revised.......... 98.31
Added............ 98.32(c)
98.33......................... Revised.......... 98.33
98.40(a)...................... Revised.......... 98.40(a)
98.41(a)(1)................... Revised.......... 98.41(a)(1)
98.41 (c) and (d)............. Removed
98.41 (e)-(g)................. Redesignated..... 98.41 (c)-(e)
98.42(d)...................... Removed
98.43 (a) and (b)............. Revised.......... 98.43 (a) and (b)
Added............ 98.43(c)
98.43 (c) and (d)............. Redesignated..... 98.43 (d) and (e)
98.43 (e) and (f)............. Removed
98.45......................... Revised.......... 98.45
98.50 (a) and (c)............. Revised.......... 98.50 (a) and (c)
98.50(d)...................... Removed
Added............ 98.50 (d)-(f)
98.51 (a) and (b)............. Revised.......... 98.51(a)
98.51 (c)-(f)................. Removed
98.51(g)...................... Redesignated..... 98.51(b)
Added............ 98.51(c)
98.52 (a) and (b)............. Revised.......... 98.52(a)
98.52(c)...................... Revised.......... 98.52(c)
98.53......................... Revised.......... 98.53
98.54(a)...................... Revised.......... 98.54(a)
Added............ 98.54(b)(3)
[[Page 39615]]
98.60 (a), (d) and (f)........ Revised.......... 98.60 (a), (c) and
(e)
98.60(b)...................... Removed
98.60 (c)-(f)................. Redesignated..... 98.60 (b)-(e)
98.60 (h)-(j)................. Redesignated..... 98.60 (g)-(i)
98.61 (a) and (b)............. Revised.......... 98.61(a)
98.62(a)-(c).................. Redesignated..... 98.61 (b)-(d)
Added............ 98.61(e)
Added............ 98.62 (a) and (b)
98.63 (a) and (b)............. Redesignated..... 98.64(b)
Added............ 98.63 (a)-(c)
98.64 (a)-(d)................. Removed
Added............ 98.64 (a), (c) and
(d)
Added............ 98.65 (f) and (g)
98.67(c)...................... Revised.......... 98.67(c)
98.70......................... Revised.......... 98.70
98.71......................... Revised.......... 98.71
98.80 Introductory text....... Revised.......... 98.80 Introductory
text
98.80 (b) and (f)............. Revised.......... 98.80 (b) and (f)
98.81(a)...................... Revised.......... 98.81(a)
Added............ 98.81(b)
98.81(b)...................... Redesignated..... 98.81(c)
98.82 Introductory text....... Revised.......... 98.82 Introductory
text
98.83 (c)-(f)................. Revised.......... 98.83 (c)-(f)
98.83 (g) and (h)............. Removed
98.83(i)...................... Redesignated..... 98.83(g)
Added............ 98.84
98.90(e)...................... Revised.......... 98.90(e)
98.92(a)...................... Revised.......... 98.92(a)
98.92(b)...................... Removed
98.92(c)...................... Revised.......... 98.92(b)
98.92 (d) and (e)............. Redesignated..... 98.92 (c) and (d)
Added............ 98.92(e)
------------------------------------------------------------------------
Subpart A--Goals, Purposes and Definitions
Goals and Purposes (Section 98.1)
This section of the regulations has been modified to incorporate
the goals for the Child Care and Development Fund (CCDF) contained in
section 658A of the amended CCDBG Act. We incorporated the goals as
Sec. 98.1(a), and we retained but moved the subparagraphs on the
purpose of the CCDF program and the regulations to Sec. 98.1 (b) and
(c), respectively.
In subparagraph (c), we eliminated the items relating to non-
supplantation and administrative costs. The PRWORA amendments
eliminated the non-supplantation requirement and, for the first time,
placed statutory limits on administrative costs. The new regulations
relating to the statutory limits on administrative costs are proposed
at Sec. 98.52.
Definitions (Section 98.2)
The amendments proposed for this section are related to changes
necessitated by the new statute, including additions and deletions. We
have made the following changes: updated the definition of the Child
Care and Development Block Grant Act to reflect it as amended; amended
the definition of a child care certificate to reflect the new statutory
language allowing the use of a certificate as a required deposit for
child care services; and amended the definition of relative child care
provider to reflect the statutory addition of great grandparents and
siblings (if living in a separate residence) as relative providers.
Since the new statute created a multi-part child care fund subject
to the provisions of the Act, we have substituted the term ``Child Care
and Development Fund (CCDF)'' for ``Block Grant.'' Use of the term
``CCDF'' reflects the multiple sources of monies with a shared purpose.
We have also defined the constituent parts of the CCDF: Mandatory
Funds, Matching Funds, Discretionary Funds, and Tribal Mandatory Funds.
The new section 658O(c)(6) of the Act provides for Tribes to use
CCDF funds for construction and renovation of child care facilities,
with the Secretary's approval. Therefore, we have proposed definition
of several new terms related to this provision: construction, facility,
major renovation, modular unit, and real property. ACF especially seeks
comments on this proposed terminology, which is a first step towards
developing program instructions on tribal applications for use of CCDF
funds for construction and renovation.
The amended Act deleted the terms ``elementary school'' and
``secondary school'' formerly found at sections 658P(3) and (10).
Therefore, we have also deleted these terms from our regulatory
definitions. In so doing, we want to emphasize that child care services
to school-aged children are still allowable under the CCDF, and we
strongly encourage Lead Agencies to continue providing such services.
Although the definitions of these terms have been removed as
unnecessary, the Lead Agency has the flexibility to retain these very
necessary services.
We have replaced separate terms for ``Grantee'' and ``Lead Agency''
with the single term ``Lead Agency.'' We did this for a number of
reasons. First, there was not a meaningful difference between those
terms. Second, we wished to remove any ambiguity that could result from
the use of two different terms. Third, we wanted to emphasize the
streamlined administration of all child care programs in a State that
resulted from PRWORA. We believe that use of the term ``Lead Agency''
conveyed that sense of unified and expanded responsibility better than
the term ``Grantee.'' Lastly, we wanted to avoid any confusion that
could arise when the State uses subgrantees in implementing the CCDF.
We have replaced the specific term ``Grantee,'' as formerly defined,
[[Page 39616]]
with ``Lead Agency'' throughout these regulations, although there
remain some instances where the word ``grantee'' appears in its common
usage.
Finally, we have eliminated the numbering to conform with Federal
Register style which requires only alphabetical order for definitions.
This will simplify any future additions or deletions to this section.
Subpart B--General Application Procedures
Lead Agency Responsibilities (Section 98.10)
The new statute did not change the responsibilities of the Lead
Agency. The amended statute at section 658D(b)(1)(A), however, expands
the CCDF Lead Agency's ability to administer the CCDF program through
other agencies. This change broadens the ability of the Lead Agency to
administer the CCDF program through governmental or non-governmental
entities, not just ``other State agencies'' as provided in the original
CCDBG Act. These entities could include local governmental agencies and
private organizations. The new statute and the Conference Agreement
report (H.R. Rep. No. 725, 104th Cong., 2d Sess. (1996)) are silent
regarding whether the non-governmental agencies cited in this statutory
change must be non-profit organizations, so ACF has not regulated on
the characteristics of the agencies through which the Lead Agency may
administer the program.
Administration Under Contracts and Agreements (Section 98.11)
Under the latest statutory amendments, the Lead Agency remains the
single point of contact and retains overall responsibility for the
administration of the CCDF program. We have amended this section,
however, to reflect the statutory change discussed at Sec. 98.10
regarding the Lead Agency's additional flexibility to administer the
program through other governmental or non-governmental agencies.
Further, since we made revisions corresponding to the added
administrative flexibility granted to the Lead Agency, we also wanted
to align the wording of this section more closely with the statute
concerning the overall, lead responsibility of the Lead Agency. Thus,
we have re-worded the paragraphs in this section that suggested that
the Lead Agency ``shares'' administration of the program with other
entities, because the relationship between the Lead Agency and other
entities through which it administers the CCDF is not co-equal.
Coordination and Consultation (Section 98.12)
Section 658D(b)(1)(D) of the Act requires the Lead Agency to
coordinate the provision of CCDF child care services with other
Federal, State, and local child care and early childhood development
programs. Coordination is crucial to the successful implementation of
child care programs and quality improvement activities. Therefore, we
propose at Sec. 98.12(a) to require the Lead Agency to coordinate its
child care services with the specific entities required at
Sec. 98.14(a) to be involved in the CCDF Plan development process:
Temporary Assistance for Needy Families (TANF), public health,
employment services, and public education.
The statutory changes under PRWORA significantly heighten the need
for enhanced coordination between TANF and child care. The new
temporary assistance program, TANF, imposes increased work requirements
both regarding the number of TANF families participating in work and
the number of hours they must work. At the same time, the guarantee of
child care for families who are in work or approved education and
training and the guarantee of Transitional Child Care program
assistance were eliminated when PRWORA repealed the title IV-A child
care programs.
Moreover, the new statute provides new child care funding and gives
the CCDF Lead Agency administrative oversight over the new funds in
addition to the funds authorized under the amended Child Care and
Development Block Grant Act. The law requires that States dedicate 70
percent of these new funds to the child care needs of families who are
receiving assistance under a State program under Part A of title IV of
the Social Security Act, families who are attempting through work
activities to transition from such assistance, and families who are at
risk of becoming eligible for such assistance. Under the new law,
Tribes also receive additional child care funding and have the option
to operate TANF programs. Tribes that operated tribal programs under
the now-repealed Job Opportunities and Basic Skills Training (JOBS)
program, may continue to operate work programs. Considered together,
these changes present both an opportunity and a challenge for Lead
Agencies to serve the child care needs of TANF families.
It is extremely important that children and their families be
linked to a system of continuous and accessible health care services,
and there are numerous opportunities for linkages between health and
child care programs. Overall coordination between child care programs
and agencies responsible for children's health is key to supporting the
healthy development of children. An ongoing Departmental initiative
encourages the linkage between child care and health care. In May 1995,
Secretary Shalala initiated the Healthy Child Care America Campaign,
which encourages States and localities to forge linkages between the
health and child care communities. Recognizing their mutually
beneficial roles, we propose to require that the Lead Agency, as part
of its health and safety provisions, assure that children in subsidized
care be age-appropriately immunized. We believe that children will
benefit substantially from this enhanced linkage we are making between
child care and health services.
Employment is the goal of most TANF families and employment
services are critical to the low-income working families served by the
CCDF. Therefore, we believe that it is only prudent that the Lead
Agency coordinate with those State agencies that are responsible for
providing employment and employment-related services. But child care is
also emerging as an important workforce development issue for the
entire population. As such, we believe that Lead Agencies should also
undertake policies that support and encourage public-private
partnerships that promote high quality child care.
Linkages with education agencies are crucial for leveraging
additional services and enhancing child development. One important
aspect of this linkage is the role played by public schools as a
critical on-site resource for child care. Although PRWORA repealed
section 658H of the Child Care and Development Block Grant Act, which
directly addressed before- and after-school child care, in the fiscal
year 1997 budget Congress nevertheless set aside $19 million
specifically to use for before- and after-school child care activities
and child care resource and referral. We, therefore, believe that the
repeal of section 658H should not result in a lessening of coordination
with before- and after-school programs. We have included requirements
to coordinate with public education agencies, both for the purpose of
child care planning and development, as well as for more general
coordination initiatives.
Aside from proposing to require Lead Agency coordination with
specific entities discussed above, we also
[[Page 39617]]
strongly encourage coordination with other agencies with potential
impact on child care, including: Head Start collaborative offices,
child support, child protective services (especially when the Lead
Agency chooses to include children receiving protective services among
the families eligible for CCDF subsidies), transportation, National
Service, and housing.
The Head Start comprehensive model of health, parent involvement,
family support and education, when linked with child care, can provide
parents and children with quality comprehensive full day/full year
services. Promising models that fund Head Start-eligible children in
community-based child care provided in child care centers and homes are
emerging across the country, and we encourage Lead Agencies to explore
and support such efforts.
Partnerships with National Service programs present promising
opportunities for collaborations that can expand and enhance child care
for both young children and school-aged children. National Service
programs have developed several effective and replicable models for
providing the tools and skills necessary to build the capacity and
sustainability of local child care programs, involving parents and
community volunteers in child care activities, and enlisting private
sector participation in meeting community needs, including child care.
The availability of transportation is key to enabling families to
access child care services and, ultimately, work. Coordination with
transportation agencies and planning groups can ensure that child care
facilities are located near major transportation modes for easier
access and that systems of public transportation support travel
patterns of low-income workers. Alleviating transportation difficulties
for child care cuts down on travel time and stress, and allows parents
to focus on achieving self-sufficiency through work and education.
Child care and child support enforcement programs serve many of the
same families and have a shared mission--to promote self-sufficiency of
families and the well-being of children. As a result, we encourage
collaborative outreach initiatives between these programs. For example,
child care programs can disseminate information to parents about
paternity establishment and child support enforcement. We also
encourage the two programs to coordinate on policy issues. For example,
the programs have a common interest in assuring that the State
guidelines used to calculate child support awards adequately consider
the cost of child care.
Coordinating with housing agencies is crucial for the millions of
TANF recipients and low-income workers who receive child care subsidies
and reside in public housing. Locating child care facilities in or near
public housing makes services more accessible, and can provide parents
with a more stable and familiar environment for their children's care.
Lead Agencies can work with public housing authorities to identify
opportunities where co-located housing and child care can serve as an
employment or entrepreneurial strategy, and a support service for
residents.
We also wish to highlight that the regulation at Sec. 98.12(c),
which requires States to coordinate, to the maximum extent feasible,
with any Indian Tribes that receive CCDF funds has new meaning in the
context of the changes made by PRWORA. As we have noted above, Tribes
are eligible to directly receive additional child care funding, and to
operate TANF as well as continue to operate work programs if they
operated a JOBS program. Nonetheless, the new law did not amend section
6580(c)(5), which specifically provides tribal children with dual
eligibility for both tribal and State child care programs funded under
CCDF. A broad range of options for implementing and designing programs
is available to both States and Tribes. States and Tribes, therefore,
have a mutual responsibility to undertake meaningful coordination in
designing child care services for Indian families.
Applying for Funds (Section 98.13)
We are proposing to simplify the application process in order to
reduce the administrative burdens of duplicative information requests
and to provide budget information in the CCDF Plan, which is a public
document. The current regulations require an annual ``application,''
separate from the Plan. This separate application must indicate the
amount of funds requested, broken down by proposed use (e.g., direct
services, administration, quality activities, etc.). A Plan that
describes the entire child care program in detail is also required, but
only once every two years. The Plan currently does not provide a
``fiscal context'' for the program, since it does not include budgetary
information.
In the past, the separate application requested extensive budget
information, largely due to the requirements related to the now-
discontinued 25 percent setaside of funds for quality and supply
building. Because we knew that the budget data was preliminary, we had
not required its inclusion in the Plan or made it subject to the
compliance process. More importantly, the budget information was not
subject to the public hearing process.
We believe that the Lead Agency, in setting the goals and
objectives of the program and in determining how to achieve them, must
consider the allocation of funds, as well as the program and
administrative activities that will be undertaken. We also believe that
public knowledge of how funds might be allocated among activities and
eligible populations is critical to the planning process. Therefore, we
are requiring the Lead Agency to include in its Plan an estimate of the
percent or amount of funds that it will allocate to direct services,
quality activities, and administration. These estimates are for the
public's consideration in the hearing process; they will not be used to
award funds. The ACF 696, when approved by OMB, will be the formal
vehicle for providing estimates to ACF for the purpose of awarding
funds.
These Plan estimates will be macro-level estimates. That is, the
Plan will reflect an estimated amount (or percentage) of funds that the
Lead Agency proposes to use for: all direct services, for all quality
activities and for administration. We will not ask that these estimates
be broken down into subcategories as we had in the separate
application. We wish to reiterate that we recognize that these are
estimates and, as such, will not be subject to compliance actions. Nor
will approval of a Plan be withheld based on the Lead Agency's
allocation of funds among activities, unless the Plan indicates that
the requirements for administrative cost or quality expenditures will
be violated.
It is because of our strong belief in full public participation in
the planning process for CCDF-funded child care services that we make
this requirement. We remind Lead Agencies that, pursuant to section
658K of the Act, they must provide information on the actual use and
distribution of funds at the end of the program period to ACF.
At Sec. 98.13(a) we have retained the requirement that the Lead
Agency apply for funds. We intend to use the financial form ACF-696 to
fulfill this requirement, so that the need for a separate application
is obviated.
We continue to request the various certifications and assurances
that are required by other statutes or regulations and that apply to
all applicants for Federal financial assistance, specifically:
Pursuant to 45 CFR part 93, Standard Form LLL (SF-LLL),
which assures that the funds will not be used
[[Page 39618]]
for lobbying purposes. (Tribal applicants are not required to submit
this form.)
Pursuant to 45 CFR 76.600, an assurance (including any
required forms) that the grantee provides a drug-free workplace.
Pursuant to 45 CFR 76.500, certification that no
principals have been debarred.
Assurances that the grantee will comply with the
applicable provisions regarding nondiscrimination at 45 CFR part 80
(implementing title VI of the Civil Rights Act of 1964, as amended), 45
CFR part 84 (implementing section 504 of the Rehabilitation Act of
1973, as amended), 45 CFR part 86 (implementing title IX of the
Education Amendments of 1972, as amended) and 45 CFR part 91
(implementing the Age Discrimination Act of 1975, as amended).
We have retained but sightly modified the requirement at Sec. 98.13
to provide that the Lead Agency, not the Chief Executive Officer, must
supply the requested information. While the Chief Executive Officer
designates the Lead Agency, we feel that it is unnecessary for the
Chief Executive Officer to thereafter apply for funding each year. This
proposed change gives grantees the flexibility to simplify the
application process further.
In summary, the proposed CCDF application process for States and
Territories consists of the two-year CCDF Plan as required in
Sec. 98.17 and such other information as may be specified by the
Secretary. For the second year of the Plan, the Lead Agency will use
financial reporting forms to provide ACF with its estimates of funds
needed quarterly--there is no longer a separate ``application'' needed
from States and Territories in the second year of the Plan period.
Accordingly, we have changed the title of this section from
``Application Content and Procedures'' to ``Applying for Funds.''
The requirements for Tribes have been moved to Subpart I and are
discussed there. We have separated the tribal requirements in order
that the discussion of tribal requirements may be more focused and
coherent.
Plan Process (Section 98.14)
Section 658D(b) of the Act requires the Lead Agency in developing
the Plan to: (1) coordinate the provision of services with Federal,
State and local child care and early childhood development programs;
(2) consult with appropriate representatives of local governments; and
(3) hold at least one hearing in the State with sufficient time and
statewide notification to provide an opportunity for the public to
comment on the provision of child care services.
In amending the CCDBG Act to require that the Lead Agency provide
``sufficient time and Statewide distribution'' of the notice of
hearing, Congress established a higher standard for public comment than
previously existed in the Act. Affording the public a meaningful
opportunity to comment on the provision of child care services advances
public participation, Lead Agency accountability and the overall goals
of welfare reform. Accordingly, we have established a minimum 20-day
notice-of-hearing requirement at Sec. 98.14(c). That is, the Lead
Agency must allow a minimum of 20 days from the date of the statewide
distribution of the notice of the hearing before holding the hearing.
Many Lead Agencies have ongoing planning processes with broad community
involvement that convene regularly during the year. We applaud such
broad participatory approaches as they are especially responsive to
changing needs and these approaches may fulfil the requirements of
Sec. 98.16.
In the interest of State flexibility, we have established only a
minimum amount of time that the public should be notified of the
hearing. However, we encourage Lead Agencies to consider providing
longer lead times that would allow the public more time to prepare for
hearings, especially when only a single hearing is held in the State.
Although the Act requires the Lead Agency to hold only one public
hearing, the Lead Agency may, of course, hold additional public
hearings.
We considered establishing regulations around the newly added
statutory language that requires ``statewide distribution of the notice
of hearing.'' Clearly, the expanded Child Care and Development Fund
potentially impacts a much wider segment of the population than may
have been the case under the CCDBG. In light of the stronger statutory
language about public hearings, we considered, for example, a
regulation to require the Lead Agency to employ specific media in
publicizing its hearing or to ensure that specific portions of the
population be potentially exposed to the hearing notice.
We rejected these and other alternatives as restricting State
flexibility. Nevertheless, we remain concerned that some Lead Agencies
may not respond to the heightened statutory requirement. We, therefore,
expect the Lead Agency to describe how it achieved statewide
distribution of the notice of hearing in its description of the hearing
process required in the Plan by Sec. 98.16(e). Although we decline to
propose a prescriptive rule in this matter at this time, we
specifically reserve the authority to regulate further if Lead Agency
Plans or actions indicate a less than ``statewide distribution of the
notice of hearing'' as exemplified above.
Similarly, we have not established a specific requirement
concerning written comments from the public. We believe, however, that
a meaningful public comment process must consider written comments from
persons or organizations, especially those who are unable to attend a
hearing.
At Sec. 98.14(c)(2) we have proposed that the hearing be held
before the Plan is submitted to ACF, but no earlier than nine months
prior to the effective date of a Plan. We recognize that States may
have established public comment mechanisms that coincide with their
budgetary cycle but not with our usual time frames for public hearings
and Plan submittal. Therefore, we wish to clarify our intention in this
area.
It is our expectation that the Lead Agency will submit at least a
draft of the Plan for public comment through a hearing. We believe
that, in some instances, the CCDF Plan may be the only public document
that summarizes the child care policy of the State. As such, the Plan
is an important part of the effort to keep the public well informed of
State policies and programs.
ACF does not believe that the public hearing is held for the
purposes of ``approving'' the Plan as it will be submitted, but rather
to solicit public comment and input into the services that will be
provided through the CCDF. For this reason, we are proposing a flexible
process that does not create an undue burden on Lead Agencies, yet
insures that the statutorily required public input is obtained.
The Plan that is submitted to ACF must reflect the program that
will be conducted and must incorporate any changes to the program that
the Lead Agency chooses to adopt as a result of the input received
during the public hearing. We advise the Lead Agency to retain a copy
of the draft Plan that it made available for public comment in
fulfillment of this requirement. We also remind Lead Agencies that
substantive changes in their programs, after their Plans are submitted
to ACF, must be reflected by amending the Plan per Sec. 98.18(b).
The potential impact of PRWORA on the child care programs in every
State cannot be underestimated. We believe the public should be
involved in creating the flexible child care systems allowed by PRWORA.
Therefore, the Plan to be submitted to ACF for the Federal Fiscal Year
beginning October 1,
[[Page 39619]]
1997, is subject to the amended statutory hearing requirement. All Lead
Agencies must conduct a new public hearing before submitting the Plan
to ACF.
As discussed above at Sec. 98.12, we believe that ongoing
coordination and consultation processes are vital to the design of a
successful program. Therefore, at Sec. 98.14(a) we have included a
minimum list of State agencies with which the Lead Agency must
coordinate the provision of services under the CCDF. The results of the
coordination with these State agencies must be reflected in each
biennial Plan submitted to ACF.
Both the public hearing and the coordination and consultation
processes must be undertaken each time the entire Plan is required to
be submitted. Although an amendment to the Plan is not subject to the
regulatory hearing requirement, State rules may require a hearing or
public comment period.
Assurances and Certifications (Section 98.15)
The PRWORA amendments made a number of changes to the assurances
under the CCDBG. In several instances the term ``assure'' was replaced
by the term ``certify.'' Also, as described below, the amendments
changed the content of two of the former assurances and some assurances
were eliminated.
While ACF believes that there is no practical difference between an
assurance or certification, when both are given in writing, the
proposed amendments have grouped the assurances together at
Sec. 98.15(a) and the certifications together at Sec. 98.15(b).
Regarding specific substantive changes, the new section
658E(c)(2)(D) of the Act replaces the former assurance regarding
consumer education. The proposed corresponding regulatory amendment at
Sec. 98.15(b)(3) uses the statutory language requiring the Lead Agency
to certify it ``will collect and disseminate to parents of eligible
children and the general public, consumer education information that
will promote informed child care choices.''
The new section 658E(c)(2)(E) does not contain prior language
requiring Lead Agencies to have in place a registration process for
unregulated care providers that provided care to children receiving
subsidized care under the CCDBG Act. We, therefore, removed the
assurance formerly found at Sec. 98.15(i). We note, however, that the
Lead Agency has the flexibility to continue to maintain a registration
process for providers if it chooses. This process has enabled States to
maintain an efficient payment system. In addition it has provided a
means to transmit relevant information, such as health and safety
requirements and training opportunities, to providers who might
otherwise be difficult to reach.
The Act also revises the requirement that providers meet all
licensing and regulatory requirements applicable under State and local
law. The revised requirement proposed at Sec. 98.15(b)(4) mirrors the
new statutory language that there be ``in effect licensing requirements
applicable to child care services provided within the State.''
For tribal programs, the amendments specifically provide that, ``in
lieu of any licensing and regulatory requirements applicable under
State and local law, the Secretary, in consultation with Indian tribes
and tribal organizations, shall develop minimum child care standards
(that appropriately reflect tribal needs and available resources) that
shall be applicable to Indian tribes and tribal organizations receiving
assistance under this subchapter'' (section 658E(c)(2)(E)(ii)). ACF is
in the process of arranging those consultations.
The PRWORA deleted requirements formerly found in the statute at
section 658E(c)(2)(H), (I), and (J). These provisions, which related to
reporting reductions in standards, reviewing State licensing and
regulatory requirements, and non-supplantation would therefore be
deleted by this proposed revised rule.
Finally, we propose at Sec. 98.15(a)(6) that States provide an
assurance that they have not reduced their level of effort in full-day/
full-year services if they use pre-K expenditures to meet the MOE
requirement, as discussed further at Sec. 98.53.
Plan Provisions (Section 98.16)
We have amended Sec. 98.16 to reflect changes in the Plan resulting
from PRWORA. For example, we have deleted the language on registration
and the calculation of base-year level-of-effort previously found at
Sec. 98.16(a)(13), (14) and (16). We substituted for them the statutory
requirements for the Lead Agency to provide detailed descriptions of
its parental complaints process at Sec. 98.16(m) and its procedures for
parental access at Sec. 98.16(n). Similarly, we have modified some
language to reflect new statutory language. For example, Sec. 98.16(h)
now discusses the additional purposes for which funds may be used, and
Sec. 98.16(l) now requests the summary of facts upon which payment
rates were determined, including the conduct of a market rate survey.
Section 98.16(c) has been expanded to include the entities designated
to receive private donated funds pursuant to Sec. 98.53(f). We have
also modified the language at Sec. 98.16(g)(2) to reflect broader
flexibility concerning the use of in-home care. This change is
addressed more fully under our discussion of parental choice later in
this Preamble. The other changes in Plan provisions are more fully
discussed in the related sections that follow.
We take this opportunity to correct the wording of Sec. 98.16(j),
formerly Sec. 98.16(a)(10), concerning health and safety requirements.
We have removed the word ``minimum'' here since the legislation
contains no such qualification, nor do our regulations limit the
flexibility to establish such requirements. We note that Sec. 98.41
remains unaffected by this correction since that section did not
include the use of the word ``minimum.''
We have also proposed to add Sec. 98.16(p), which would require the
Lead Agency to include in the CCDF Plan the definitions or criteria
used to implement the exception to TANF work requirement penalties that
applies when a single custodial parent with a child under age six has
demonstrated an inability to locate needed child care. Among others,
the definitions or criteria would include ``appropriate child care,''
and ``affordable child care arrangements.'' We elaborate on this
requirement in the discussion of consumer education at Sec. 98.33.
Finally, we propose to add Sec. 98.16(q), which provides that the
Lead Agency describe State efforts to ensure that pre-Kindergarten
programs, for which Federal matching funds are claimed, meet the needs
of working parents. This requirement is discussed at Sec. 98.53.
Period Covered by Plan (Section 98.17)
The statute was amended at section 658E(b) to eliminate the three-
year initial period for State Plans. We therefore made corresponding
amendments in this proposed rule to provide that all Lead Agencies for
States, Territories, and Tribes must submit new Plans every two years.
This process begins with the Plans to be submitted in summer 1997 for
approval for implementation on October 1, 1997. Those Plans, when
approved, will be applicable for Federal Fiscal Years 1998 and 1999.
All current Lead Agencies must submit new Plans if they wish to receive
the CCDF funds that become available on October 1, 1997.
[[Page 39620]]
Subpart C--Eligibility for Services
A Child's Eligibility for Child Care Services (Section 98.20)
General eligibility. The amended statute at 658P(4)(B) expands the
definition of ``eligible child'' to include families whose income does
not exceed 85 percent of the State median income for a family of the
same size, instead of the 75 percent level previously stipulated.
Therefore, Sec. 98.20(a)(2) is amended to reflect that change.
We amended the regulation at Sec. 98.20(a)(1)(ii) regarding the
option to serve dependent children age 13 and over who are physically
or mentally incapacitated or under court supervision. We retained the
State option to serve older children. However, our amendment removes
the reference to the definition of ``dependent child'' in the State
plan under title IV-A of the Social Security Act, since the amended
title IV-A of the Social Security Act no longer requires a State to
adopt a single definition of ``dependent child.'' We are proposing
instead that States may elect to serve children age 13 or older who are
physically or mentally incapacitated or under court supervision up to
age 19, if they include the age limit in the eligibility and priority
terminology section of their CCDF Plan.
Additionally, the statute eliminates the requirement for States to
reserve a specific portion of their funds for activities designed to
establish or expand and conduct early childhood development or before-
and after-school care programs. Therefore, the regulations providing
additional conditions for eligibility for before- and after-school and
early childhood development services at Sec. 98.21 are deleted. ACF
believes that the setaside enabled many States to develop and expand
such services. Further, the FY 1997 Appropriations Bill included $19
million in Discretionary funds which, according to the Conference
Report, H.Rpt. 104-863 (1996), were targeted specifically for resource
and referral activities and for school-age child care activities. This
action acknowledges the important role that school-age child care plays
in the lives of families. With the added flexibility under the amended
CCDBG Act States can continue to provide child care services to all
eligible children, including these targeted populations, without a
requirement that specific portions must go to any particular program.
Foster Care and Protective Services
We are clarifying that grantees have the flexibility to include
foster care in their definition of protective services in their Plan
and thus provide child care services to children in foster care in the
same manner in which they provide services to children in protective
services.
We previously distinguished between children in protective services
and children in foster care by allowing child care subsidies for foster
care only when the foster parent is working, in education or in
training. The distinction was made only in the preamble language; the
regulatory and statutory language provides for child protective
services as a separate eligibility criterion but is silent about foster
care. Therefore, this change in interpretation does not require a
regulatory change.
Under the existing regulations, a child in a family that is
receiving, or needs to receive, protective intervention is eligible for
child care subsidies if he or she remains in his or her own home even
if the parent is not working, in education or in training. In these
instances, child care serves the child's needs as much or more than the
parent's needs. In many States, Territories and Tribes, however, foster
care is an integral part of the protective services system. Some
grantees do not differentiate between protective services for families
who remain intact and for those children who are in a foster placement.
Lead Agencies electing to include foster care in their definition
of protective services are required to state so in their CCDF Plan. If
Lead Agencies do not include foster care in their definition of
protective services, they must tie eligibility for CCDF child care of
children in foster care to the status of the foster parent's work,
education or training.
We also wish to clarify the type of CCDF-funded child care services
allowable for families who also receive protective services. In the
preamble to the current regulations (57 FR 34360, Aug 4, 1992), we gave
Lead Agencies the option to allow child care for more than 24
consecutive hours when it is due to the nature of the parent's work,
and as long as the care is actually child care, not ``institutional''
services. Thus, child care normally covers a less than 24-hour period
except in instances where the work schedule of the parent(s) requires
longer periods of care.
Regarding respite child care, we said in the preamble (57 FR 34368,
Aug. 4, 1992), ``Grantees have the flexibility to allow a child
receiving, or in need of, protective services, to receive respite child
care.'' We wish to clarify that respite child care is allowable for
only brief, occasional periods in excess of the normal ``less than 24
hour period'' in instances where protective services parent(s)--
including foster parents where the Lead Agency has defined protective
service families to include foster care--need relief from caretaking
responsibilities. For example, a child care arrangement by someone
other than the custodial parent for one weekend a month to give relief
to the custodial parent(s) that are protective service families is
acceptable. We believe that this kind of respite child care, if
necessary for support to families with children in protective services,
would be an acceptable use of CCDF funds.
If a State or Tribe uses CCDF funds to provide respite child care
service, i.e., for more than 24 consecutive hours, to families
receiving protective services (including foster families when defined
as protective services families), the CCDF Plan must include a
statement to that effect in the definition of protective services. We
note this definition of ``respite child care'' may differ from how
States or Tribes define it for other purposes (e.g., child welfare).
Thus, respite child care must be specified in the Lead Agency's Plan if
it is to be considered an allowable expenditure under CCDF.
Finally, we have reconsidered our position concerning the selection
of providers in child protective services (CPS) cases. In the preamble
at 57 FR 34369, Aug. 4, 1992 we suggested that the CPS caseworker could
question, but only on a case-by-case basis, a parent's choice of
provider and could determine that the choice of provider is not in the
best interest of the child.
The children and families who receive, or who need to receive,
protective services are obviously in crisis. The CPS system must
respond quickly and appropriately, yet sensitively, to the needs of
such families--the need to protect the child should be foremost.
To meet these needs, some States have higher licensing standards
for, or established networks of, specially trained child care providers
to be used in CPS cases. In such instances, we believe that the State's
obligation to protect the child would best be accomplished by allowing
the State to require the use of such providers as the norm in CPS
cases, if the State so chooses. The parent could, nevertheless, request
another provider, which the CPS caseworker would consider on a case-by-
case basis. Because our policy was originally only stated in preamble,
no change to the regulations is required.
[[Page 39621]]
Subpart D--Program Operations (Child Care Services)--Parental Rights
and Responsibilities
Parental Choice (Section 98.30)
Cash as a certificate. Since welfare reform has raised issues about
methods of paying for child care, we wish to provide clarification with
respect to child care certificates provided in the form of cash. In
defining the term ``certificate,'' the statute at 658P(2) says, ``The
term `child care certificate' means a certificate (that may be a check
or other disbursement) that is issued by a State or local government *
* * directly to a parent who may use such certificate only as payment
for child care services or as a deposit for child care services if such
a deposit is required of other children being cared for by the
provider.''
With a certificate or two-party check, the Lead Agency can ensure
that money is paid to a provider who meets applicable health and safety
requirements. This is not the case when a Lead Agency provides cash to
a parent. We strongly discourage a cash system, because providers must
meet health and safety standards, and we believe that the use of cash
can severely curtail the Lead Agency's ability to conform with this
statutory requirement.
If, nevertheless, a Lead Agency chooses to provide cash, it must be
able to demonstrate that: (1) CCDF funds provided to parents are spent
in conformity with the goals of the child care program as stated at
section 658A of the Act, i.e., that the money is used for child care;
and (2) that child care providers meet all applicable licensing and
health and safety standards, as required by section 658E(c)(2) (E) and
(F) of the Act. Lead Agencies, therefore, may wish to consider having
parents who receive cash attest that the funds were used for child care
and to identify the provider. Such a statement would help assure that
the funds were expended as intended by the statute and lessen the
possibilities for fraud. Finally, Lead Agencies are reminded that they
must establish procedures to ensure that all providers, including those
receiving cash payments from parents, meet applicable health and safety
standards.
Availability of certificates. Section 658E(c)(2)(A) of the Act
requires States to provide assurances that parents of each eligible
child who receives or is offered CCDF child care services are given the
option of (1) enrolling their children with a provider who has a grant
or contract to provide services; or (2) receiving a child care
certificate. The Act also requires that children who are to be enrolled
in contracted slots must be placed with the provider of their parents'
choice whenever possible. This statutory requirement is reflected in
the regulations at Sec. 98.30(a). The requirement basically is repeated
at Sec. 98.30(d) (formerly Sec. 98.30(e)).
Based on our experience administering the CCDBG program, we have
found that the duplication of the certificate option in the regulations
has created some misunderstanding that the CCDBG Act gives preeminence
to certificates. We wish to clarify that repetition of the provision
should not be interpreted as giving preeminence to certificates. Both
the statute and the regulations promote parental choice, not a specific
method for achieving choice. Neither the statute nor the regulation can
be interpreted accurately as giving a preference to certificates or to
contracted slots.
If a choice of providers is denied to parents to whom services are
offered, the complaints process set forth in Sec. 98.93 provides an
appropriate mechanism for redress. The Administration for Children and
Families will respond to all complaints filed through this process.
We want to clarify that, although certificates must be an option
for parents whenever services are offered, it may not be necessary to
offer certificates whenever services are being used. For example, a
local program might not offer new child care services during some
portion of the program year because all available funds have been
assigned to participating eligible children and are being used or
``reserved'' for those specific children. Availability of funding will
continue to determine when child care subsidies are to be offered.
We want to emphasize that Lead Agencies are not precluded from
entering into grants or contracts for child care services. Depending
upon the child care needs of the eligible population in discrete
geographic markets, grants and contracts may be necessary to ensure a
stable supply of child care services. In essence, the Lead Agency must
make a good faith effort to balance the funding for grants or contracts
and certificates to ensure that parents have optimum choice among
quality child care options as stipulated in the legislation and
reinforced in the existing regulation.
In conducting on-site program reviews, we have found that Lead
Agencies are operating certificate programs that provide for parental
choice. While some offer only certificates, others commit funds on a
proportional basis between certificates and contracts based on the
particular needs of individual areas or populations. Some Lead
Agencies, for example, have found that stable child care is more
difficult to find in rural or inner-city areas, for infants, or for
children with special needs and have therefore contracted with
competent providers to address these specific shortages.
In planning the distribution of funds for grants or contracts and
certificates, Lead Agencies should ensure that parents who choose
certificates are not placed on a waiting list while substantial numbers
of contracted slots in the same area remain unutilized.
Child care administrators have told us that there are areas where
the need for subsidized low-income child care exceeds the available
resources. Thus, if certificate funds are fully reserved for children
who are already enrolled, and no subsidized slots are available, it may
be necessary to begin a waiting list for certificates. Similarly,
because many Lead Agencies allocate funds on a locality-by-locality
basis, there may be waiting lists in some areas, while services are
still available in others.
In addition to a certificate's being used for child care services,
the statute at amended section 658P(2) stipulates that a certificate
can also serve as a deposit for child care services, if such a deposit
is required of other children being served by the provider. We have
added regulations at Sec. 98.30(c)(3) to reflect this new provision.
The amendments eliminated language at section 658E(c)(2)(A)(iii)
requiring a certificate program to be in place by October 1, 1992,
since all Lead Agencies must now have a certificate program in place,
except for Tribes that are exempt under Sec. 98.83(f). We have amended
Sec. 98.30 of the regulations accordingly.
We have also amended Sec. 98.30 to reflect that section
658E(c)(2)(E) of the Act no longer requires registration of providers.
For further discussion about registration, see the preamble at
Sec. 98.45.
In-home care. In-home child care is still a required category of
care; however, since this care is provided in the child's own home it
has unique characteristics that deserve special attention. First, in-
home care is affected by interaction with other laws and regulations.
For example, in-home providers are classified as domestic service
workers under the Fair Labor Standards Act (FLSA) (29 U.S.C. Section
206(a)) and are therefore covered under minimum wage. As employees, in-
home child care providers are also subject to tax requirements. In
highlighting these special considerations, we also note that
[[Page 39622]]
whenever the FLSA and other worker protections apply, ACF is committed
to maintaining the integrity of these protections. A strong commitment
to work, and therefore to worker protections, is critical to welfare
reform.
Second, child care administrators have faced a number of special
challenges in monitoring the quality of care and the appropriateness of
payments to in-home providers. For that reason, we propose to give Lead
Agencies greater latitude to impose conditions and restrictions on in-
home care. We have revised Sec. 98.16(g)(2) to require that Lead
Agencies, in their CCDF Plans, specify any limitations on in-home care
and the rationale for those limitations.
We are mindful that in-home care plays a valid and important role
in meeting the needs of working parents, and that many participants in
subsidized care programs rely on such care to meet their family needs.
Access to care that meets the needs of individual families is
critically important to parents and children, to schools and the
workplace, and to other community institutions that interface with the
family. While in-home care represents only a small proportion of all
available care in most communities, it may be the best or only option
for some families and may prove valuable, necessary and cost-effective
when compared to other options. There are a number of situations in
which in-home care may be the most practical solution to a family's
child care needs. For example, the child's own home may be the only
practical setting in rural areas or in areas where transportation is
particularly difficult. Employees who work nights, swing shifts,
rotating shifts, weekends or other non-standard hours may experience
considerable difficulty in locating and maintaining satisfactory
center-based or family day care arrangements. Part-time employees often
find it more difficult to make child care arrangements than do those
who work full-time. Similarly, families with more than one child or
children of very different ages might be faced with multiple child care
arrangements if in-home care were unavailable. Many families also
believe that very young children are often best served in their own
homes. Given the general scarcity of school-age child care in many
communities, in-home care may enable some families to avoid latchkey
situations before school, after school, and when school is not in
session. For many families, in-home care by relatives also reflects
important cultural values and may promote stability, cohesion and self-
sufficiency in nuclear and extended families.
We urge child care administrators to consider the capacity of local
child care markets to meet existing demand and the role that in-home
care may play in the ability of parents to manage work and family life.
Although in-home care does not represent a large share of the national
supply, it fills an important niche in the structure and functioning of
local child care markets by extending the ability of parents to care
for children within their own families, closing gaps in the supply of
community facilities, and creating a bridge between adult care and
self- or sibling-care as children near adolescence.
Some Lead Agencies may choose to limit in-home care because of cost
factors. For example, a State might determine that minimum wage
requirements result in payments for in-home care serving only one or
two children that are much higher than the payments for other
categories of care. Therefore, the Lead Agency could elect to limit in-
home care to families in which three or more children require care. The
payment to the in-home provider would then be similar to the payment
for care of the three children in other settings. This ability to limit
in-home care allows Lead Agencies to recognize the same cost restraints
that families whose care is unsubsidized must face.
However, since in-home care has proven to be an important resource,
we expect Lead Agencies to consider family and community circumstances
carefully before limiting its availability. For that reason, we are
proposing that CCDF Plans specify any limitations placed on in-home
care and the rationale for those limitations.
ACF recognizes that giving Lead Agencies greater latitude to impose
conditions and restrictions on in-home care may affect parents' ability
to make satisfactory child care arrangements and thus their ability to
participate in work, education or training. We also recognize the
challenges of implementing health and safety requirements in the
child's own home, monitoring in-home providers, and complying with
Federal wage and tax laws governing domestic workers. Therefore, we are
seeking focused comments on our regulatory proposals for in-home care
and would especially appreciate suggestions on how to balance parental
choice, cost effectiveness, and adherence to other Federal and State
provisions, such as the FLSA, that are unique to in-home settings.
Parental Access (Section 98.31)
We have amended the regulations at Secs. 98.31 and 98.16(n) to
reflect the new statutory requirement at section Sec. 658E(c)(2)(B)
that Lead Agencies have in effect procedures to ensure unlimited
parental access and to provide a detailed description of those
procedures. We have also amended Sec. 98.15(b)(1) to reflect the
statutory change to certify rather than assure that procedures are in
effect to ensure unlimited access.
Parental Complaints (Section 98.32)
We have added paragraph (c) to the regulations at Sec. 98.32 and
amended Sec. 98.16 by adding paragraph (m) to reflect the new statutory
requirements at Sec. 658E(c)(2)(C) on parental complaints. Under the
changes, Lead Agencies must provide a detailed description of how a
record of substantiated parental complaints is maintained and made
available to the public on request. We have also amended the regulation
at Sec. 98.15(b)(2) to reflect the requirement of the statute at
658E(c)(2)(C) that a Lead Agency ``certify'' rather than ``assure''
that it will maintain a record of substantiated parental complaints.
Consumer Education (Section 98.33)
We have amended the regulation at Secs. 98.33 and 98.15(b)(3) to
reflect the statutory requirement at section 658E(c)(2)(D) that the
Lead Agency ``certify'' that it ``will collect and disseminate to
parents of eligible children and the general public, consumer education
information that will promote informed child care choices.'' It is
important to emphasize that the use of the words ``collect and
disseminate'' is more proactive and forceful than the former
requirement that consumer education ``be made available'' to parents
and the public. We also believe that by changing the wording, Congress
wished to emphasize the importance of consumer education as a service
to be provided by Lead Agencies. This emphasis is also stressed by the
third goal of the CCDF, listed at section 658A(b) of the amended
statute, ``to encourage States to provide consumer education
information to help parents make informed choices about child care.''
Moreover, the amendment to the reporting requirements at section
658K(a)(2)(D)--reflected in the revised regulations at
Sec. 98.71(b)(3)--requires Lead Agencies to report twice a year on the
manner in which consumer education information was provided to parents
and the number of parents that received such information.
[[Page 39623]]
The statute previously specified the type of consumer education
information that the Lead Agency had to provide: ``licensing and
regulatory requirements, complaint procedures, and policies and
practices relative to child care services within the State.'' The
statute now is less prescriptive. Consumer education information is
defined as that which ``will promote informed child care choices.''
Thus, the statute leaves it up to the Lead Agency to determine the type
of information that will help the public and parents make informed
child care choices.
While Lead Agencies have flexibility in providing consumer
education, ACF strongly encourages Lead Agencies to promote informed
child care choices by offering information about: the various
categories of care; the freedom of parents to choose the type of care
that best meets their needs; the Lead Agency's certificate system; the
rates for the various categories of care; the sliding fee scale; a
checklist of what to look for in choosing quality care; providers with
whom the Lead Agency has contracts for care; the basic health and
safety regulations that all providers must meet; the Lead Agency's
policy regarding its file of substantiated complaints by parents that
is available upon request as required by Sec. 98.32; and local resource
and referral agencies that can assist parents in choosing appropriate
child care.
The best child care arrangements are developed in one-on-one
consultation with trained or experienced counselors. Professional help
with locating child care is time-and cost-efficient for both families
and Lead Agencies. Thus, it may be in the Lead Agency's interest to
invest in strategies such as co-location of child care resource and
referral counselors in work development offices or agencies. Economists
make the argument that good consumer information is critical to making
the child care market function more like other markets. Moreover,
experience has shown that printed materials alone may not always be a
sufficient information source, particularly if parents have low
literacy rates.
Exception to Individual Penalties in the TANF Work Requirement
Title I of the PRWORA amends Title IV-A of the Social Security Act
and replaces the Aid to Dependent Children (AFDC) with a new block
grant program entitled Temporary Assistance for Needy Families, or
TANF. The new section 407(e)(2) addresses an exception to the work
requirement in the TANF program and provides that a State may not
reduce or terminate TANF assistance to a single custodial parent who
refuses to work when she demonstrates an inability to obtain needed
child care for a child under six, because of one or more of the
following reasons:
(1) Unavailability of appropriate child care within a reasonable
distance from the individual's home or work site;
(2) Unavailability or unsuitability of informal child care by a
relative or under other arrangements;
(3) Unavailability of appropriate and affordable formal child care
arrangements.
The TANF penalty exception underscores the pivotal role of child
care in supporting work and also recognizes that the unavailability of
appropriate, affordable child care can create unacceptable hardships on
children and families. Since Congress provided that the new Mandatory
and Matching child care funding be transferred to the Lead Agency under
the CCDF and also provided that at least 70 percent of the new funding
must be spent on families receiving temporary assistance, in transition
from public assistance, or at risk of becoming eligible for public
assistance, the Lead Agencies will be playing a dominant role in
providing the child care necessary to support the strong work
provisions found in TANF. It is critical, therefore, that CCDF Lead
Agencies help disseminate information about the TANF exception.
Knowledge of this exception on the part of parents also will be very
important in promoting informed child care choices.
Therefore, we propose to require that Lead Agencies include
information about it in their consumer education programs. This
responsibility entails informing parents that: (1) TANF benefits cannot
be reduced or terminated for parents who meet the conditions as
specified in the statute and as defined by the TANF agency; and (2) the
time during which an eligible parent receives the exception will count
toward the time limit on benefits stipulated by the statute at section
408(a)(7).
In order for a Lead Agency to comply with this requirement, it will
need to understand how the TANF agency defines and applies the terms of
the statute to determine that the parent has a demonstrated inability
to obtain needed child care. The elements that require definition
consist of: ``appropriate child care,'' ``reasonable distance,''
``unsuitability of informal care,'' and ``affordable child care
arrangements.''
In our pre-regulatory consultations, some groups urged us not only
to ensure that the CCDF agency disseminates information about the TANF
penalty exception but to regulate the content of the definitions or
criteria used to determine if a family is unable to obtain needed child
care. The approach we have taken in this proposed rule provides
flexibility and strikes an appropriate balance between the roles of the
CCDF and TANF agencies. We recognize the flexibility of the TANF
program to define the terms established by the statute. However, we
strongly encourage TANF agencies to define ``appropriate care,'' at a
minimum, as care that meets the health and safety standards of the CCDF
program, specified at Sec. 98.41. The definition should also take into
account the results of many studies that show the value of quality
child care for low-income children and the benefits to many of these
children from more enriched child care.
We are requiring, under Sec. 98.12 of the regulations, that Lead
Agencies coordinate with TANF programs to ensure, pursuant to
Sec. 98.33(b), that case workers, eligibility workers, and others who
work with TANF recipients in both the TANF and the CCDF programs will
inform families with young children of their right not to be sanctioned
if they meet the criteria set forth in the statute and plan. As part of
this coordination, at Sec. 98.16(p) we are requiring that the Lead
Agency include in its plan the definitions or criteria the TANF program
has adopted in implementing this exception to the work requirement.
The new section 409(a)(11) of the SSA specifies that if the TANF
program sanctions parents who are eligible for this exception to the
individual penalties associated with the TANF work requirements, it may
incur a penalty of up to five percent of its grant. Therefore,
coordination between the Lead Agency and the TANF program in this
matter will serve the best interests both of the recipients of TANF
benefits and the service agencies themselves. ACF will issue proposed
rules on the TANF penalty provisions later this year.
Subpart E--Program Operations (Child Care Services)--Lead Agency and
Provider Requirements
Compliance with Applicable State and Local Regulatory Requirements
(Section 98.40)
We have amended the regulations at Sec. 98.40(a) to reflect a
change in Section 658E(c)(2)(E)(i) of the Act. The amendment requires
Lead Agencies to certify that they have in effect licensing
requirements applicable to child care services, and to provide a
detailed description of those requirements and of how they are
effectively enforced. This
[[Page 39624]]
change is also reflected in Secs. 98.15 and 98.16. The statute notes,
however, that these licensing requirements need not be applied to
specific types of providers of child care services.
Because amendments to section 658P(5)(B) have eliminated the
requirement for registration of unlicensed providers serving families
receiving subsidized child care, we have deleted the former regulation
Sec. 98.40(a)(2) requiring registration. This change, however, does not
prevent Lead Agencies from continuing to register unlicensed or
unregulated providers, and we encourage them to do so. Those Lead
Agencies that choose not to have a registration process will be
required to maintain a list of providers. We discuss this in more
detail at Sec. 98.45.
Health and Safety Requirements (Section 98.41)
Section 658E(c)(2)(F), as amended, requires a Lead Agency to
certify, rather than assure, that health and safety regulations
applicable to child care providers are in place. We have amended the
regulations at Secs. 98.41(a) and 98.15(b)(5) to conform with the
amended statute.
We propose to amend the regulation at Sec. 98.41(a)(1) to require
that States and Territories incorporate in their health and safety
provisions (by reference or otherwise) the latest recommendations for
childhood immunizations of their respective State or territorial public
health agency. While many State and territorial public health agencies
adopt the recommendations of the Advisory Committee on Immunization
Practices (ACIP) of the Centers for Disease Control and Prevention
(CDC), we wish to emphasize that this proposed new requirement does not
impose Federal standards for immunization but allows for decision of
the individual State or Territory regarding immunization requirements.
The proposed new immunization requirements at Sec. 98.41(a)(1)
apply only to States and Territories. While tribal Lead Agencies must
meet health and safety requirements that address the prevention and
control of infectious diseases (including immunizations), they do not
have to meet the specific immunization requirements that apply to
States and Territories. In the proposed rule published May 11, 1994 (59
FR 24510), which was never finalized, ACF proposed specific
immunization requirements for Tribes. However, consistent with the
amendments in PRWORA, we have not included those specific requirements
in this proposed rule. We anticipate that tribal immunization
requirements will be addressed in the minimum child care standards that
are being developed by ACF in consultation with Indian Tribes and
tribal organizations. New section 658E(c)(2)(E)(ii) of the CCDBG Act
requires the development of minimum child care standards for Indian
Tribes and tribal organizations.
Our youngest and most vulnerable children remain at risk for
vaccine-preventable diseases. The measles epidemic of 1989-1991
resulted in more than 55,000 reported cases of the disease, 11,000
hospitalizations, and more than 130 deaths. Half of those who died were
infants. Although immunization rates for two-year-olds are now at an
all-time high of 76 percent, and vaccine-preventable diseases are at an
all-time low, more than one million two-year-olds still are not
adequately protected. Childhood vaccines protect young children against
infectious diseases that could lead to serious illness and deaths. Data
reveal that by age two, when children should have received most of
their vaccines, more than 24 percent of American children are not
adequately protected against childhood diseases. Over one million
children need at least one dose of polio vaccine; 640,000 children
require a dose of MMR (measles/mumps/rubella); and about 530,000
children have not received all their pertussis shots.
Since a large percentage of children receiving child care
assistance are under five years of age, we believe that the
immunization requirement will have a positive impact in reducing the
incidence of infectious diseases among preschool age children. Vaccines
are the most cost-effective way to prevent childhood diseases.
Nationally, approximately $10.00 are saved in direct medical costs for
every dollar spent on the measles/mumps/and rubella (MMR) vaccine,
$6.00 are saved for every dollar spent on the diphtheria/tetanus/
pertussis (DTP) vaccine, and $3.00 are saved for every dollar spent on
the oral polio vaccine (OPV). For every dollar spent on immunization,
as much as $29.00 can be saved in direct and indirect medical costs.
In requiring children to be age-appropriately immunized, we
considered that parents may not always be able to access immunizations
easily. However, a number of national initiatives are under way to
promote immunizations for all children. In response to disturbing gaps
in the immunization rates for young children in America, a
comprehensive Childhood Immunization Initiative (CII) was developed.
CII addresses five areas:
--Improving immunization services for needy families, especially in
public health clinics;
--Reducing vaccine costs for lower-income and uninsured families,
especially for vaccines provided in private physician offices;
--Building community networks to reach out to families and ensure that
young children are vaccinated as needed;
--Improving systems for monitoring diseases and vaccinations; and
--Improving vaccines and vaccine use.
The CDC and its partners in the public and private sectors are
working to build a comprehensive vaccination delivery system. The goals
of the CII are to ensure that at least 90 percent of all two-year-olds
receive each of the initial and most critical doses, to reduce diseases
preventable by childhood vaccination to zero, and put in place a system
to sustain high immunization coverage. Since 1994, the National
Immunization Survey (NIS) has been used to provide immunization
coverage estimates for all 50 States and 28 large urban areas.
As part of the efforts in the CII, immunization programs on the
State and local level are collaborating with WIC programs (Special
Supplemental Food Program for Women, Infants, and Children) to focus on
children's immunization. For example, local WIC clinics check the
immunization records of WIC participants, assist families to find a
primary health care provider, and provide immunization information. On-
site immunization services are sometimes also provided at local WIC
clinics.
On September 30, 1996, the CDC awarded funds ranging from $130,000
to $250,000, to education agencies in four States (New York, South
Dakota, West Virginia, and Wisconsin) to deliver immunization services
to preschool-aged children in health centers at elementary schools.
Over the past four years, welfare reform waivers were granted to 18
States to allow them to require parents to immunize their children as a
condition of receiving assistance.
Surveys of licensed child care facilities indicate that the
majority of States require some proof of immunizations for children
enrolled in licensed or regulated child care centers and family day
care homes. However, individual States differ in their specific
requirements and regulatory approaches, and requirements for the
immunization of children in child care settings that are exempt from
licensure or other regulatory provisions vary widely.
[[Page 39625]]
Lead Agencies have the flexibility to determine the method they
will use to implement the immunization requirement. For example, they
may require parents to provide proof of immunization as part of the
initial eligibility determination and again at redetermination, or they
may require child care providers to maintain proof of immunization for
children enrolled in their care. The requirements established by the
Lead Agency will generally be applicable to all children receiving CCDF
assistance and in all child care settings. However, States have the
option to exempt the following groups:
Children who are cared for by relatives (defined as
grandparents, great grandparents, siblings--if living in a separate
residence--aunts and uncles);
Children who receive care in their own homes;
Children whose parents object on religious grounds; and
Children whose medical condition contraindicates
immunization.
While families are taking the necessary actions to comply with the
immunization requirements, Lead Agencies must establish a grace period
during which children can continue to receive child care services.
Finally, we encourage all Lead Agencies to consider requirements
that provide for documenting regular updates of a child's
immunizations.
Section 98.30(f) (2) and (3) prohibit any health and safety
requirements from having the effect of limiting parental access or
choice of providers, or of excluding a significant number of providers.
We do not think these new immunization requirements will have such an
effect. Rather, we are convinced that, when applied to all providers,
they will have the effect of enhancing parental choice of providers,
since all providers will have the same requirements. More importantly,
however, the requirements will promote better health for children,
their families, and the public.
Other revisions. Based on former statutory provisions,
Sec. 98.41(c) of the 1992 regulations required a Lead Agency to include
in its annual report a rationale for any reduction it might have made
in standards applicable to child care, and paragraph (d) required each
Lead Agency to review the licensing requirements of each licensing
agency in the area served by the Lead Agency and report its findings in
its first or second annual report. We have deleted both these
requirements because of changes in the statute at section 658E(c)(2)
(H) and (I).
Pursuant to section 658P(5)(B) of the amended statute, we have
added ``great grandparents, and siblings (if such providers live in a
separate residence)'' to the list of relatives who, at State option,
may be exempted from the health and safety requirements at
Sec. 98.41(e) and to the definition of ``eligible child care provider''
at Sec. 98.2.
Sliding Fee Scales (Section 98.42)
We have simplified Sec. 98.42 of the regulations by removing
separate references to services under Secs. 98.50 and 98.51.
For a further discussion of copayments, see Sec. 98.43.
Equal Access (Section 98.43)
We have changed the title of this section to ``Equal Access,'' from
``Payment Rates,'' because the amended CCDBG Act now focuses on equal
access for families receiving subsidies to child care services. Under
the amendments, Lead Agencies are required to certify that payment
rates are sufficient to provide access to child care services for
eligible families that are comparable to those provided to ineligible
families. The amended section 658E(c)(4)(A) also requires the Lead
Agency to provide a summary of the facts relied on to determine that
its payment rates are sufficient to ensure equal access.
The proposed regulation at Sec. 98.43(b) requires a Lead Agency to
show that it considered the following three key elements in determining
that its child care program provides equal access for eligible families
to child care services:
1. Choice of the full range of categories and types of providers,
e.g., the categories of center-based, group, family, in-home care, and
types of providers such as for-profit and non-profit providers,
sectarian providers, and relative providers as already required by
Sec. 98.30.
2. Adequate payment rates, based on a local market survey conducted
no earlier than two years prior to the effective date of the current
Plan; and
3. Affordable copayments. These elements must be addressed in the
summary of facts submitted in a Lead Agency's biennial Plan, pursuant
to Sec. 98.16(l).
1. Full range of providers. All working parents, regardless of
income, need a full range of categories and types of providers from
which they may choose their child care services, because their child
care needs vary considerably according to the child's age and special
needs, the parents' work schedule, provider proximity, cultural values
and expectations. Therefore, we believe that the statutory requirement
of equal access means that low-income working parents receiving CCDF-
subsidized care must have a full range of the categories and types of
providers from which to choose care that they believe best meets their
needs and those of their children. The parental choice requirements at
Sec. 98.30 already require that parents who receive certificates be
afforded such variety.
2. Adequate payment rates. The statute at section 658E(c)(4)(A)
eliminated the requirement that, in establishing payment rates, the
Lead Agency take into account variations in the cost of providing care
in different categories of care, to different age groups, and to
children with special needs. We have amended Sec. 98.43 to conform with
the statute. However, while eliminating the requirement for different
payment rates for different categories of care, Congress added a
requirement that Lead Agencies provide ``a summary of the facts relied
on by the State to determine that such rates are sufficient to ensure
such [equal] access.''
The statute suggests that if families receiving child care
subsidies under the CCDF are to have equal access to child care, the
payment rates established by a Lead Agency should be comparable to
those paid by families who are not eligible for subsidies. In other
words, the payment rates should reflect the child care market. Although
the statute has changed, the reality remains that the market reflects
differences along several dimensions, and we do not believe that
Congress expected Lead Agencies to establish a single payment rate for
all types of child care.
Child care is often the major factor in whether families are able
to work--and access to a variety of child care arrangements is
necessary both to support today's increasingly diverse workforce and
workplace demands, and to ensure that the healthy development of
children is not compromised. The focus of PRWORA on work further
highlights the need for CCDF Lead Agencies, which now are required by
statute to administer the new Mandatory and Matching Funds, to
establish payment rates that support work as well as enable the
developmental needs of children to be met.
The major variable in the cost of child care is the age of the
child, especially the added expense of caring for infants and very
young children. Under PRWORA, many more families with infants and pre-
school-aged children will be required to participate in work activities
for longer hours per week. Payments that do not reflect the expense of
caring for very young children will frustrate the ability of families
to work. In providing the exception to the
[[Page 39626]]
individual penalties under TANF for single custodial parents with a
child under age six who cannot obtain needed child care, Congress
recognized the special difficulties of locating care for young
children. We have proposed a consumer education provision at Sec. 98.33
that recognizes the relationship between the TANF provision and the
responsibilities of the CCDF Lead Agency. Consequently, we also expect
Lead Agencies to ensure that their payment rates reflect the market
rate variations in the cost of providing child care to different age
groups as well as the additional costs of providing care to children
with special needs. We anticipate that market rate surveys will also
show variations in rates among categories of care, and we expect any
significant variations to be reflected in the Lead Agency's payments.
A system of child care payments that does not reflect the demands
of the market makes it economically infeasible for many providers to
serve low-income children. This undermines the statutory and regulatory
requirements of equal access and parental choice. Experience with the
now-repealed title IV-A child care programs and the CCDBG suggests that
providers limit their enrollment of children with subsidies because the
subsidy payments were too low. Similarly, failing to compensate
providers timely or not reimbursing them for days when children are
absent also causes providers to refuse care to children with subsidies.
At Sec. 98.43(c) we have added a provision prohibiting different
payment rates based on a family's eligibility status or circumstances.
This provision means that the Lead Agency may not establish payments
for TANF families that differ from the payments for the families of the
working poor, or for families in education or training, for example. We
believe that multiple payment rates based on an eligibility status
precludes the statutorily-required equal access to child care for
families receiving CCDF subsidies. Additionally, such multiple payment
rates would frustrate one of the main intents in amending the Act--to
have a unified child care system with only a single set of rules. This
purpose would be undercut if different payment rates based on
eligibility criterion were permitted.
With the exception of payments for children with special needs, who
sometimes require services on a highly individualized basis, we believe
that a survey of market rates is the only methodologically sound way
for Lead Agencies to gather the facts necessary to establish payments
that are realistic and thus provide the required equal access for low
income families. Implementation of this provision should not be a
burden to States, which were required to conduct local market surveys
in implementing the now-repealed title IV-A child care programs. We
also know from comparing State plans for the two programs, that the
great majority of States used the IV-A payment rates for subsidies
provided under the Child Care and Development Block Grant. Thus, States
have had a number of years' experience with the survey process. States
retain the flexibility to design such surveys; we have not proposed a
survey methodology.
We propose that Lead Agencies conduct such a survey biennially to
ensure that their payments reflect reasonably current market
conditions. We have amended the regulations at Secs. 98.43(b)(2) and
98.16(l) to include this proposed requirement. Lead Agencies must
provide evidence in the biennial Plan to show that a local market rate
survey was conducted no earlier than two years prior to the effective
date of the currently approved Plan, together with an explanation of
how the survey was conducted.
We have not established specific requirements for the payments
established by Lead Agencies. Lead Agencies have the flexibility to
establish payments, based on a biennial survey, which provide CCDF-
subsidized families with equal access to the full range of care in
their areas. We would consider parents to have equal access, however,
if payments are established at least at the 75th percentile of the rate
in the child care market. States and families have both recognized that
the 75th percentile, which we required in the now-repealed title IV-A
child care programs, generally provided families receiving subsidies
with a range of care that was adequate to support their work schedules
and the needs of their children.
Since the requirement to conduct a market survey biennially is
intended to ensure that payments reflect reasonably current market
conditions, lengthy delays between the survey and basing the payments
on that survey would undermine the intent of the requirement.
Therefore, we propose that a Lead Agency conduct its survey no earlier
than two years prior to the effective date of the currently approved
Plan; and payments derived from that survey must be in place no later
than the beginning of the second year of the Plan for which the survey
was conducted. The survey will be the basis for payments for only two
years.
We propose to revise Secs. 98.43 and 98.16 to remove the ten
percent limit on payment differences within a category of care. We also
propose to remove the reference to limits on payment differences in
Sec. 98.16. This revision recognizes the change in focus of the statute
to a factual basis for the establishment of payments and the
elimination of the requirement to establish payment rates by category
of care. It will also provide Lead Agencies the flexibility to
recognize and compensate higher quality child care facilities and
providers, including those that have obtained nationally recognized
accreditation or special credentials. This will also give the Lead
Agency the flexibility to address possible shortages of certain types
of care--for example, care during non-traditional hours or on
weekends--when the survey results for this care are incomplete, not
obtainable, or contradict the agency's experience in providing such
care.
3. Affordable copayments. The third essential element of equal
access is that any copayment or fee paid by the parent is affordable
for the family and sliding fee scales should not be designed in a way
that limits parental choice. We wish to emphasize that Lead Agencies
have flexibility in establishing their sliding fee scales. However, in
our view, copayment scales that require a low-income family to pay no
more than ten percent of its income for child care, no matter how many
children are in care, will help ensure equal access.
Recent reports by the Census Bureau indicate that families with
income below the poverty level pay a disproportionate share of their
income--18 percent--for child care; whereas families above the poverty
level pay only seven percent of their income for child care. The size
of the fee paid by a low-income working parent can be crucial in
determining whether she and her family become, and remain, self-
sufficient. When devising the fee scale Lead Agencies should try to
ensure that small wage increases do not trigger large increases in
copayments, lest continuation on the path to self-sufficiency be
jeopardized for any family. The size of a fee increase is an especially
important consideration because recent changes in the Food Stamp,
housing assistance, Medicaid, SSI, and the Earned Income Credit
programs may also affect the resources now available to a low-income
working family.
Sliding fee scales must continue to be based on family size and
income, as currently required at Sec. 98.42(b). While Lead Agencies
have flexibility to take
[[Page 39627]]
additional elements into consideration when designing their fee scales,
basing fees on the cost or category of care could violate the statutory
requirements of equal access and parental choice. Similarly, multiple
fee scales based on factors such as a family's eligibility status would
be precluded.
List of Providers (Section 98.45)
We have renamed this section ``List of Providers'' because the
amendments to section 658(E)(c)(2)(E) of the Act eliminated the
language on the registration of unlicensed or unregulated providers. We
have also deleted the requirement at Sec. 98.16 to describe the
registration process in the biennial Plan.
At Sec. 98.45, however, we propose to require any Lead Agency not
having a registration process to maintain a list of the names and
addresses of all unregulated providers. It is essential that Lead
Agencies have some simple, standardized system to record the names and
addresses of unlicensed providers in order to pay them and to provide
them with pertinent information about health and safety regulations and
training.
The regulations would no longer specifically require Lead Agencies
to have a registration process for providers not licensed or regulated
under State or local law before paying them for child care services.
However, Lead Agencies should note that they may continue such a
system, and we strongly encourage them to do so.
Subpart F--Use of Block Grant Funds
Child Care Services (Section 98.50)
The 70 percent requirement. Section 418(b)(2) of the PRWORA
specifically requires the State to ensure that not less than 70 percent
of the funds received by the State are used to provide child care
assistance to families who are receiving assistance under a State
program under Part A of title IV of the Social Security Act, families
who are attempting through work activities to transition off of such
assistance program and families that are at risk of becoming dependent
on such assistance program. We wish to clarify that the 70 percent
requirement applies only to the Mandatory and Matching Funds. Further,
the amended statute at 658E(c)(2)(H) requires the State to demonstrate
in its CCDF plan the manner in which the State will meet the specific
child care needs of these families.
States have great flexibility in designing a single comprehensive
program to serve families. The need to coordinate and consult closely
with the TANF program has been discussed at length in Subpart A of the
preamble. In our consultation process we heard concerns that further
regulations regarding the 70 percent requirement could hamper the
State's ability to coordinate and develop a comprehensive program. We
therefore will not regulate beyond the statutory language of this
provision but have amended the regulation by adding the statutory
provisions at Sec. 98.50 (e) and (f).
Serving other low-income working families. Section 658E(c)(3)(D) as
amended directs the State to ensure that a ``substantial portion'' of
the amounts available (after a State has complied with the 70 percent
requirement discussed above) is used to provide assistance to low-
income working families other than those who are receiving assistance,
transitioning off assistance or at risk of becoming dependent on
assistance under Part A of title IV of the Social Security Act.
Since the income level for eligible children is increased in the
statute to 85 percent of the State median income, it is clear that
Congress intended for child care assistance to be available to more
low-income working families than were previously eligible. We believe,
however, that families whose income is less than 85 percent of the
State median income may well be at risk of becoming dependent on
assistance. Thus the two populations overlap.
The regulation at Sec. 98.50(e) now provides the statutory
description of the families who are to be served under the 70 percent
provision. In addition Sec. 98.50(f) is added to require the State,
pursuant to the statute, to specify in its plan how the State will meet
the needs of these families. We believe, based on our consultations,
that the circumstances of low-income working families (whose income is
below 85 percent of the State median income) are no different than the
families specifically mentioned in those regulations and thus would
expect that they would be treated similarly.
Since States are required to collect and report data concerning
family income, including the number of families who are receiving
temporary assistance under title IV of the Social Security Act, ACF
will have the opportunity to monitor such reports to determine whether
States are serving both welfare and at-risk families as the statute
intends. Additionally, ACF will have the CCDF Plan, which includes the
manner in which the State will meet the needs of families receiving
assistance, transitioning off assistance or at risk of becoming
dependent on assistance under Part A of title IV of the Social Security
Act.
We therefore do not plan to require additional definitions of these
populations. However, if the State elects to have a specific
description of at-risk families, it could, for example, be included
when defining very low income or in providing additional terminology
related to conditions of eligibility or priority in the CCDF plan.
Activities to Improve the Quality of Child Care (Section 98.51)
Not less than four percent. Section 658G of the CCDBG Act was
amended to direct that a State that receives CCDF funds shall use not
less than four percent of the amount of such funds for activities to
improve the quality of child care and availability of child care (such
as resource and referral services). Section 98.51(a) provides that the
not less than four percent requirement for quality applies to the
aggregate amount of expenditures (i.e., Discretionary, Mandatory, and
both the Federal and State share of Matching funds); it need not be
applied individually to each of the component funds. Section 98.51(a)
also provides that the four percent requirement applies to the funds
expended, rather than the total of funds that are available but may not
be used. Lead Agencies, however, have the flexibility to spend more
than four percent on quality activities. Section 98.51(c) provides that
the quality expenditure requirement does not apply to the maintenance-
of-effort expenditures required by Sec. 98.53(c) in order to claim from
the Matching Fund.
The statute details specific activities that may be undertaken:
activities designed to provide consumer education to parents and the
public; activities that increase parental choice; and activities
designed to improve the overall quality and availability of child care.
ACF believes that activities that provide parents and the public with
information about child care options will help to improve the quality
of child care. As the public learns more about the need for and
benefits of quality child care, we expect that the availability of
quality child care will also expand, creating increased choices for
parents.
The statute formerly provided five examples of activities to
improve the quality of child care. These included resource and referral
programs (cited in the amended statute), grants or loans to assist in
meeting state and local standards, monitoring of compliance with
licensing and regulatory requirements, training, and compensation.
These activities continue
[[Page 39628]]
to be allowable quality activities under this minimum four percent
requirement.
Lead Agencies have used these activities over the years to improve
the quality of child care and we believe that they can continue to be
used successfully. We also want to provide Lead Agencies with increased
flexibility to develop other successful strategies by not restricting
their options. We have added, therefore, regulations at Sec. 98.51(a)
based on the broad statutory language, while retaining the former
options for specific activities. We will continue to collect, in the
plan, descriptions of activities to improve the quality of child care
services. We encourage Lead Agencies to evaluate the success of their
efforts to improve quality and will disseminate promising practices.
States will need flexibility to design a child care delivery system
that is customized to the needs of their families and that includes
flexibility in the choice of activities that will improve the quality
of child care. Since the requirement is expressed as a baseline it is
clear that quality activities are important and must be included in
developing a comprehensive plan.
Administrative Costs (Section 98.52)
Section 658E(c)(3)(C) of the amended Act limits the amount of funds
available for the administrative costs of the CCDF program to ``not
more than five percent of the aggregate amount of funds available to
the State.'' Section 98.52(a) provides that the five percent limitation
on administrative costs applies to the funds expended, rather than to
the total of funds that are available but which may not be granted or
used. Thus, Lead Agencies may not use five percent of the total funds
available to them for administrative costs unless they use all the
available funds including Matching Funds.
This provision also makes clear that the five percent limitation
applies to the total Child Care and Development Fund. The five percent
limitation need not be applied individually to each of the component
funds--the Discretionary, Mandatory, and Matching (including the State
share) Funds. We believe this flexibility will streamline the overall
administration of the Fund. The limitation does not apply to the
maintenance-of-effort expenditures required by Sec. 98.53(c) in order
to claim from the Matching Fund.
Section 98.52(a) lists administrative activities and is derived
from the current regulations as modified by the PRWORA amendments and
the Conference Agreement (H.R. Rep. 104-725 at 411). While the statute
does not define administrative costs, it does preclude ``the costs of
providing direct services'' from any definition of administrative
costs.
The Conference Agreement specifies that the following activities
``should not be considered administrative costs'':
(1) Eligibility determination and redetermination;
(2) Preparation and participation in judicial hearings;
(3) Child care placement;
(4) The recruitment, licensing, inspection, reviews and supervision
of child care placements;
(5) Rate setting;
(6) Resource and referral services;
(7) Training [of child care staff]; and
(8) The establishment and maintenance of computerized child care
information systems.
Therefore, we have deleted from the current regulation's list of
administrative activities at Sec. 98.52(a) three activities:
determining eligibility, establishing and operating a certificate
program, and developing systems (formerly Sec. 98.52(b)(1) (i), (iii),
and (vi) respectively). We deleted ``establishing and operating a
certificate program'' as an administrative activity, even though it was
not listed in the Conference Agreement, because it appears that most of
the components of a certificate program would not be considered to be
administrative costs per the Conference Agreement. For example,
certificate programs must determine and redetermine eligibility,
provide the public with information about the program, develop and
maintain computer systems, place children, offer resource and referral
services, etc. Although we believe that many of the costs of a
certificate program are not administrative, Lead Agencies must examine
their certificate programs and ascribe to administrative cost those
activities that are clearly administrative per Sec. 98.52(a). Lead
Agencies may wish to examine the components of other activities in this
manner to ensure that they are correctly considering administrative
costs in accordance with Sec. 98.52(a) and the Conference Agreement.
While these proposed regulations reflect the Conference Agreement
language, we are nevertheless concerned that States will misinterpret
the intent of the change and re-direct a disproportionate amount of
expenditures on these redesignated activities rather than on direct
services to children. We wish to emphasize that services to children is
the purpose for which the CCDF was created. Therefore, we would not
expect a large increase in costs to activities that are not direct
services to children. We will closely monitor such expenditures to
determine if States are overspending for such activities at the expense
of services. As one method of monitoring, we intend to require that the
proposed CCDF financial reporting forms separately collect the amounts
that are expended on developing systems and other kinds of non-direct
service activities. If we determine that there are problems, we reserve
the right to re-visit the policy and regulate in the future.
Nevertheless, States should know that any administrative components of
the activities that have been re-designated as non-administrative in
nature are subject to the CCDF administrative cost cap.
Lastly, we clarify in Sec. 98.52(c) that the non-Federal
expenditures required of the State in order to meet its maintenance-of-
effort threshold for receiving matching funds are not subject to the
five percent limitation on administrative costs. Nevertheless, audits
of State reports of maintenance-of-effort expenditures should indicate
that administrative expenditures included in those MOE amounts are
reasonable, necessary for carrying out the services provided, and
consistent with other provisions of law.
Administrative costs for Tribes. We have specifically noted at
Sec. 98.52(b) that Tribes, and tribal organizations are exempt from the
five percent cap on administrative costs as it applies only to the
entities defined as ``States.'' Tribes and tribal organizations are not
currently subject to the administrative cost limitation at
Sec. 98.50(d) and we wanted to codify this existing exemption. Tribes,
however, are subject to the requirements at Sec. 98.83(g) regarding
limits on administrative expenditures.
Matching Fund Requirements (Section 98.53)
Section 98.53 used to describe non-supplantation requirements. As
those have been repealed by the PRWORA amendments, we are now using
this section to discuss the Matching Fund requirements.
Terminology and general requirements. In this section we have used
the phrase ``expenditures in the State'' to encompass not only local
expenditures on child care but also private, donated funds that meet
the requirements at Sec. 98.53(e)(2), as explained below. Whenever the
term ``State funds,'' ``State expenditures'' or ``non-Federal
expenditures'' is used it should be understood to include State, local
or permissible private donated funds that meet these requirements and
[[Page 39629]]
are expended for allowable child care purposes.
Section 418(a)(2)(C) of the Social Security Act creates a two-part
matching requirement. First, a State must expend an amount that at
least equals its allowable expenditures for the title IV-A child care
programs during 1994 or 1995, whichever is greater. We refer to this
amount as the ``maintenance-of-effort'' (MOE) threshold.
State expenditures in excess of its MOE threshold, up to a maximum
determined by the statute, are matched at the 1995 Federal medical
assistance rate. The total amount that can be matched rises each year
and is equal to the sum appropriated for that year, less the amounts of
the Mandatory Fund, the tribal allocation and the allocation for
technical assistance. The maximum to be matched for each State is its
share of that total based upon the proportion of the State's children
under age 13 in 1995 to the national total of children under age 13 in
1995.
Section 98.53(c) lists the requirements that States must meet if
they wish to claim Federal Matching Funds. In summary, this section
requires that the State obligate all of its Mandatory Funds by the end
of the fiscal year (FY) they are granted. Mandatory Funds need not be
obligated before Matching Funds are claimed, provided that all
Mandatory Funds will be obligated by the end of that FY. Second, they
must expend State-only dollars in an amount that equals the State's MOE
threshold described at Sec. 98.53(c)(1). And third, they must obligate
the Federal and State share of the Matching Fund by the end of the FY.
Section 98.53(b)(1) provides that all costs are matched at the
Federal Medical Assistance Percentage (FMAP) for FY 1995, irrespective
of the year of expenditure as directed by the statute. The FMAP rate
pertains to both child care services and administrative expenditures.
State expenditures allowable for MOE and Federal Matching Funds.
State expenditures on any activities or services that meet the goals of
the CCDBG Act and that are described in the approved CCDF Plan, if
appropriate, may be used to meet the MOE requirement or may be claimed
for Federal Matching Funds (proposed Secs. 98.53(c)(2) and (b)(2)). For
MOE, these proposed regulations offer greater flexibility than we
offered in our interim guidance provided in our Program Instruction,
ACYF-PI-CC-96-17, dated October 30, 1996. However, as provided at
Sec. 98.53(d), the same expenditure still may not be counted for both
MOE and match purposes.
Under the regulations we propose, States will have flexibility to
define child care services, so long as those services meet the
requirements of the statute. For example, State expenditures for child
care for those populations previously served by the title IV-A or CCDBG
child care programs would be eligible for Federal match. Similarly,
State investments in child care through the use of State funds to
expand Head Start programs or to otherwise enhance the quality or
comprehensiveness of full-day/full-year child care would also be
eligible for Federal Matching funds since these activities meet the
goals of the Act.
Sections 98.53(e) and (f) contain additional qualifications on what
constitutes an expenditure in the State for purposes of this Part.
These qualifications are the same that generally apply to Federal
programs that provide for matching State expenditures, with two
important clarifications.
First, the proposed Sec. 98.53(e)(1)(i) would allow public
agencies, other than the Lead Agency, to certify their expenditures as
eligible for Federal match. This provision allows States, for example,
to use pre-kindergarten (pre-K) expenditures to meet the MOE
requirement (when the regulatory provisions for use of pre-K funds are
met) and/or receive Federal Matching funds. The second clarification,
proposed at Sec. 98.53(f), concerns the treatment of private donated
funds. It provides greater flexibility than previously offered as
interim guidance under ACF Program Instruction, ACYF-PI-CC-96-17, dated
October 30, 1996.
In our consultations we were asked several questions about the
relationship between the child care and certain TANF requirements.
Regarding the MOE requirements, the same State expenditure may be used
to meet both the child care and TANF MOE requirements provided the
expenditure meets the requirements of both programs. However, pursuant
to section 409(a)(7)(B)(iv) of PRWORA, expenditures which States make
as a condition of receiving Federal funds under other programs (e.g.,
expenditures for which the State receives CCDF Matching Funds) may not
be included as part of the State MOE for TANF. ACF's Office of Family
Assistance issued preliminary guidance concerning these questions in
their policy announcement dated January 31, 1997 (TANF-ACF-PA-97-1).
Since these questions relate to the TANF provisions of PRWORA no
regulations are proposed for Parts 98 or 99.
Use of private agencies to receive donated funds. Historically,
private donations to State-level programs have been very limited;
locally controlled donations have been somewhat more prevalent.
Frequently cited reasons for this lack of public support for seemingly
worthwhile programs have included suspicion of government, in general,
especially government outside the immediate community, coupled with
regulations that appeared to limit the State's ability to assure the
donor that the donated funds will be used in a specific area or for the
donor's intended purpose.
At a time when child care programs face increased demands, and
State budgets face constraints, we realize that we must reexamine prior
ACF policies on donated funds. We have tried to respond to the issues
that we were told have inhibited private donations in the past by
proposing to include in the definition of State expenditures donated
funds that meet the qualifications at Sec. 98.53(e)(2) even though they
are not under direct State control. At Sec. 98.53(f) we have added that
private donated funds need not be transferred to or under the
administrative control of the Lead Agency to be eligible for Federal
match. Instead they may be donated to an entity designated by the State
to receive donated funds. Both the Lead Agency and the donor must,
however, certify that the donated funds are available and eligible for
Federal match. In addition to this dual certification requirement, we
want to ensure Lead Agency accountability for funds that may not be
under its direct control. Therefore, we also propose that the Lead
Agency separately report the amount of private donated funds it claims
as match. And finally, Lead Agencies should be aware that private
donated funds claimed as match are also subject to the audit
requirements at Sec. 98.65.
This proposed rule will allow Lead Agencies to cooperate more
closely with various organizations, foundations, and associations that
already support high quality child care and related activities. It will
also allow the Lead Agency to leverage private funds in order to serve
more families, while working within State and Federal budget
restrictions.
We also take this opportunity to clarify the regulation at
Sec. 98.53(e)(2)(i) which requires that private funds be donated
without restriction on their use for a specified individual,
organization, facility or institution. Under this clarification a donor
could designate a specific geographic location for the receipt of
funds. Such a geographic specification can be broad, such as within the
limits of a specific city, or
[[Page 39630]]
extremely narrow, such as a single neighborhood. Such geographic
specification is possible whenever funds are donated, whether the funds
are donated to the Lead Agency or to an entity specially designated to
receive private donations.
Lead Agencies will be asked to identify those entities that are
designated to receive private donated funds and the purposes for which
those donated funds are expended in their Plan, pursuant to
Sec. 98.16(c)(2).
Claims for pre-K expenditures for MOE and match purposes. Many
States fund pre-K programs for young children. These are important
early childhood services that contribute to school readiness.
Expenditures for State-funded public pre-K services to children from
families who meet the CCDF eligibility criteria (as outlined in the
Plan) may meet the requirements for allowable child care services
expenditures for MOE and match purposes. The pre-K program must meet
each of the following four conditions:
Attendance in the pre-K program must not be mandatory.
The pre-K program must meet applicable standards of State,
local or tribal law.
The pre-K program must allow parental access.
The pre-K program must not be Federally funded (unless
funded with ``exempt'' Federal funds for matching purposes), and its
State funding may not be used as basis for claiming other Federal
funding.
In addition, the pre-K program must serve families who are at or
below 85 percent of the State median income (SMI) (or lower SMI
established as the CCDF eligibility criterion by the Lead Agency) and
who meet other State eligibility criteria.
During our consultations we heard the full range of issues around
allowing States to use their pre-K expenditures to meet the matching
and MOE requirements of the CCDF. We came away from those consultations
with some reservations about the use of pre-K expenditures, but we also
came away with increased respect for the importance of these programs.
A chief concern to working parents is that many pre-K services are
only part-day and or part-year and such programs may not serve the
family's real needs. Some have expressed concerns that an excessively
broad approach to counting pre-K expenditures might result in a real
reduction in full-day child care services to potentially eligible
working families. The potential exists for a State with a sufficiently
large pre-K program to divert all state funds away from other child
care programs and fulfill its MOE and Matching requirements solely
through pre-K expenditures. On the other hand, allowing pre-K
expenditures to be counted toward MOE or match could provide a critical
incentive for States to more closely link their pre-K and child care
systems. This could result in a coordinated system that would better
meet the needs of working families for full-day/full-year services that
prepare children to enter school ready to learn. We struggled with
these issues and considered various alternative approaches to counting
pre-K expenditures in the CCDF.
In the end, we decided on a policy that attempts to balance
concerns about the use of pre-K expenditures in meeting CCDF
requirements. At Sec. 98.53(h) (3) and (4) we have addressed our
concerns about balance by proposing a maximum amount of State
expenditures for pre-K services that can be claimed for match or MOE.
Expenditures for pre-K programs may constitute no more than 20% of the
State's expenditures which are matched. Similarly, expenditures for
pre-K programs may constitute no more than 20% of the State's
expenditures counted in fulfilling the MOE requirement. However, if a
State intends to exceed 10% of either its MOE or matching requirements
with pre-K expenditures, its CCDF plan, which is subject to approval,
must reflect that intent. Additionally, if a State intends to exceed
10% of either MOE or matching with pre-K expenditures, the CCDF plan
must describe how the State will coordinate its pre-K and child care
services to expand the availability of child care. We propose the 20%
limits because they approximate the proportion of pre-school age
children nationwide currently receiving services under the CCDBG. (This
level also approximates the average monthly proportion of pre-school
age children of JOBS participants who received child care assistance in
the past.)
States may count only those pre-K expenditures that meet the
criteria as allowable child care services explained above (i.e.,
attendance is not mandatory, the program meets applicable standards,
allows parental access, serves CCDF eligible families as provided in
the Plan, etc.). We also intend to require the Lead Agency, using
financial forms to be proposed later, to separately report the amount
of pre-K expenditures it claims as match or uses to meet the MOE
requirement.
In addition, for MOE purposes, we propose at Sec. 98.53(h)(1) that
States cannot reduce their level of effort in full-day/full-year child
care services if they use pre-K expenditures to meet the MOE
requirement. And, States will be required to provide an assurance of
this, pursuant to Sec. 98.15(a)(6). Our proposal reflects the fact that
although the statute eliminated the non-supplantation requirement
formerly found at section 658E(c)(2)(J) of the CCDBG Act, another non-
supplantation requirement was created by section 418(a)(2)(C) of the
Social Security Act. That non-supplantation requirement--the MOE
requirement--requires States to continue to spend at least the same
amount on child care services that they spent on the repealed title IV-
A child care programs, in order to receive the new Matching Fund. Such
a provision would be meaningless if States used MOE expenditures for
services that were not responsive to the real child care needs of
working families that the CCDF was intended to assist, i.e., the State
``buys out'' with pre-K expenditures the full-day/full year child care
services it previously provided under title IV-A. In the interest of
State flexibility we have not otherwise regulated on the types of
services that may be counted in meeting the MOE requirement and, as
discussed below, have eased the burden on the State in calculating the
amount of pre-K expenditures that may be used to meet the MOE and
matching requirements.
In contrast, we have not proposed a similar requirement if pre-K
expenditures are claimed for match. We view the Matching Fund, since it
is ``new money,'' as not subject to the same requirements as
expenditures that are used to meet a non-supplantation requirement.
However, we are proposing at Secs. 98.53(h)(2) and 98.16(q) that States
describe in their CCDF Plan any efforts they will undertake to ensure
that pre-K programs meet the needs of working parents if pre-K
expenditures are claimed for match. Our different treatment of pre-K
expenditures in the MOE and matching requirements, then, reflects a
balance between the principles of non-supplantation and state
flexibility.
Furthermore, ACF will permit States to use a different method for
calculating the amount of pre-K services claimed for both MOE and
matching purposes than was required under the former title IV-A child
care programs. Under the now repealed title IV-A child care programs,
ACF required States wishing to claim Federal match for their pre-K
expenditures to base their claim on the number of title IV-A-eligible
(or potentially eligible) children who actually participated in the
pre-K program. As many school districts did not have the information to
identify
[[Page 39631]]
whether pre-K participants were members of IV-A-eligible families, it
was difficult for States to claim Federal matching funds for these
programs. In fact, only a handful of States claimed Federal Match under
title IV-A for their pre-K expenditures. In our consultations we were
asked to loosen this child-by-child approach to counting pre-K
expenditures.
In the interest of easing administrative burdens on the Lead
Agency, we will adopt the following policy toward calculating pre-K
expenditures for purposes of claiming MOE and Matching funds. For pre-K
expenditures to be claimed, States must ensure that children receiving
pre-K services meet the eligibility requirements established in the
CCDF plan. In cases where States do not have exact information,
however, they must develop a sound methodology for estimating the
percentage of children served in the pre-K program who are CCDF-
eligible. Expenditure claims must reflect these estimates.
Although the methodology should be documented, we will not require
that the methodology be submitted to ACF for prior review or approval.
In documenting their methodology, Lead Agencies are reminded of the
requirement at Sec. 98.67(c), which provides that fiscal control and
accounting procedures must be sufficient to permit the tracing of funds
to a level of expenditure adequate to establish that such funds have
not been used in violation of the Act or regulations.
We specifically request comments on the amounts of pre-K
expenditures that may be counted in meeting CCDF requirements and the
basis for placing limits on such expenditures. While we have eased
policies regarding calculating the amounts of pre-K funds used for MOE
and matching, we have also capped the amounts that can be used for each
purpose. We have no historical base for predicting the impact that the
relaxed calculation requirements will have on the availability of child
care services. Therefore we are soliciting broad public comment on our
proposed approach to striking a balance of child care services that are
used for CCDF MOE and match. We especially want comments on: (1) The
20% maximum on both funds; (2) the interplay between the relaxation of
the methodology for calculating the amounts and the cap; (3) the impact
of the proposed pre-K policy on both parental choice and the overall
goals and purposes of the CCDF; and (4) the proposed requirement for
notification in the CCDF plan if a State intends to use pre-K
expenditures in excess of 10%.
Family fees and the Matching Fund. Section 98.53(g)(2) clarifies
that family contributions to the cost of care as required by Sec. 98.42
are not considered eligible State expenditures under this subpart. This
policy is based on the fact that family fees are not State
expenditures.
Restrictions on Use of Funds (Section 98.54)
Section 103(c) of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (PRWORA) repealed the three title IV-A child
care programs--the AFDC child care program, the Transitional Child Care
program and the At-Risk Child Care program. However, in appropriating
new child care funds under section 418 of the Social Security Act, the
PRWORA provides that these funds must be spent in accordance with the
provisions of the Child Care and Development Block Grant Act as
amended. This requirement is incorporated into Sec. 98.54(a). This
section also provides that TANF funds that are transferred to the Lead
Agency under the provision of the new section 404(d) of the Social
Security Act are treated as Discretionary Funds for the purposes of
Sec. 98.60.
Other Federal funds expended for child care, unless transferred to
the Lead Agency, are not required to be spent in accordance with the
amended CCDBG Act. This means, for example, that child care provided
with title XX funds or TANF funds that are not transferred to the Lead
Agency might be subject to different requirements. However, ACF
cautions States about the administrative and policy problems associated
with operating a variety of Federally-funded child care programs, e.g.,
one program subject to CCDBG requirements and others not. The
amendments to the CCDBG Act contained in the PRWORA are intended to
create a single child care program with consistent standards and
requirements and to counteract the fragmentation and conflicting
requirements that had arisen under prior law.
We have also added a new section at Sec. 98.54(b)(3) which
clarifies the special provisions on use of funds for construction that
apply to Tribes and tribal organizations under the PRWORA amendments.
Subpart G--Financial Management
Availability of Funds (Section 98.60)
Section 418 of the Social Security Act, which was added by PRWORA,
requires that all Federal child care funds appropriated therein be
spent in accordance with the provisions of the amended Child Care and
Development Block Grant. In consolidating the Federal child care
programs under a single set of eligibility requirements, Congress
nevertheless instituted three funding sources. We have chosen to refer
to the combined funding as the Child Care and Development Fund--CCDF.
This term recognizes the different sources of Federal monies flowing
into child care but the common purposes for which they may be expended.
Section 418 of the Social Security Act appropriates Federal funds
for the 50 States, the District of Columbia and Indian Tribes in the
form of formula grants which we refer to as the Mandatory Fund. A
specified amount of Federal funds is also made available under a
different formula to the 50 States and the District of Columbia to
match their allowable child care expenditures. We refer to this amount
as the Matching Fund. Section 658B of the Child Care and Development
Block Grant (CCDBG) Act authorizes funds to States, Tribes and
Territories according to a third formula. We refer to the funds
authorized under the CCDBG Act as Discretionary Funds. The formulas for
allocating each of the Funds and requirements unique to each Fund are
discussed at Secs. 98.61, 98.62 and 98.63.
Both the Mandatory and Discretionary Funds are 100 percent Federal
Funds--no match is required to use these Funds. Section 418(a)(2)(C) of
the Social Security Act, however, makes the availability of Matching
Funds contingent on a State's child care expenditures.
We have deleted the regulation formerly at Sec. 98.60(g) concerning
start-up planning costs associated with the initial implementation of
the CCDBG and have redesignated the remaining regulations. All of the
States began operating a CCDBG program in FY 1991, therefore the
regulation at Sec. 98.60(g) is obsolete since the time frames for
obligating and expending start-up funds have passed. We recognize that
there still may be Tribes that wish to begin a CCDF program and for
which the question of start-up funds still applies. Accordingly, we
have addressed the availability of funds for planning purposes for new
tribal Lead Agencies at Sec. 98.83(h) in subpart I.
We have also clarified the wording of Sec. 98.60(f) to indicate
that 31 CFR part 205 applies only to State Lead Agencies.
Obligation period/liquidation periods. The following table shows
the obligation and liquidation periods for the various Funds and the
maintenance-of-effort (MOE) requirements.
[[Page 39632]]
----------------------------------------------------------------------------------------------------------------
Must be obligated by the
These funds end of the And, must be liquidated by the end of the
----------------------------------------------------------------------------------------------------------------
Discretionary.................... 2nd FY................... 3rd FY.
Mandatory (State)................ 1st FY--only if Matching NA, no limit.
is requested.
Mandatory (Tribes)............... 2nd FY................... 3rd FY.
Matching......................... 1st FY................... 2nd FY.
MOE.............................. 1st FY, and expended in NA, must be liquidated in 1st FY
that FY.
----------------------------------------------------------------------------------------------------------------
The PRWORA amended the CCDBG Act to require States and Territories
to obligate their Discretionary allotments in the fiscal year in which
they are received, or in the succeeding fiscal year. These amendments
return the statutory language to its status before the Juvenile Justice
and Delinquency Prevention Amendments of 1992 (Pub. L. 102-586). Since
the final regulations which would have incorporated the changes from
the Juvenile Justice and Delinquency Prevention Amendments of 1992 were
never published, no change is needed in the regulatory language.
The FY 1997 Health and Human Services appropriation (Pub. L. 104-
208) changed the date that the CCDF Discretionary Funds will become
available from September 30 of the fiscal year in which the funds are
appropriated to October 1 of the following fiscal year. As a result,
when existing regulatory language is applied, States and Territories
have two full fiscal years to obligate their CCDF Discretionary Funds,
instead of the year and a day which resulted under earlier
appropriations. States and Territories continue to have until the end
of the third fiscal year to liquidate these funds.
Section 418(b)(1) of the Social Security Act provides that the
Mandatory Fund is available without fiscal year limitation. However,
section 418(a)(2)(C) of the Social Security Act, which describes the
conditions for receiving Matching Funds, indicates they are paid to a
State for expenditures that exceed the State's Mandatory grant and MOE
level, and are only available on an annual basis. Moreover, section
418(a)(2)(D) of the Social Security Act requires that Matching Funds
that are not used in the fiscal year be made available for
redistribution in the following fiscal year. Therefore, we propose that
a State wishing to claim Matching Funds must obligate its Mandatory
Funds before the end of the fiscal year for which the Mandatory Funds
are awarded. States not wishing to claim Federal Matching Funds have no
obligation or liquidation deadline for their Mandatory Funds.
Also, the amount of a State's MOE requirement must be obligated and
liquidated before the end of the fiscal year for which Matching Funds
are awarded. Non-Federal expenditures (exceeding the MOE threshold) for
which the State wishes to claim monies from the Matching Fund must also
be obligated before the end of the fiscal year for which they are
awarded.
For the tribal funds, we have proposed the same obligation and
liquidation periods that apply to the State Discretionary Funds. While
the FY 1997 appropriation changed the date Discretionary Funds become
available, under the revision Tribes will continue to have two full
years to obligate the child care funds they receive. Further, under
these proposed changes, Tribes will receive an additional year to
liquidate these Funds. Retaining current regulations would have had the
consequence of providing three full years to obligate and liquidate
tribal child care grants.
The amendments to the Discretionary Fund under PRWORA for the first
time provide that tribal funds are subject to reallotment. The two-year
approach to obligation will encourage Tribes to plan for the timely
commitment of funds and, at the same time, make uncommitted funds
available on a timely basis to those Tribes that are in need of
additional child care monies.
Section 98.60(d)(3) lists the obligation and liquidation periods
for States that receive Matching Funds. In order to accommodate the
redistribution required by section 418(a)(2)(D) of the Social Security
Act, the regulation requires that Matching Funds must be obligated in
the fiscal year in which they are granted and liquidated within two
years.
Returned funds. We propose to amend the regulation formerly at
Sec. 98.60(h)--now (g)--concerning the treatment of returned funds. As
a result of the changes made by PRWORA and the change in the date of
availability of the CCDF Discretionary Funds made by the FY 1997 HHS
appropriation, we are proposing that funds returned to the Lead Agency
after the end of the applicable obligation period must be returned to
the Federal government. Under this proposed revision, however, and as
previous regulations permitted, funds returned during the obligation
period may be re-obligated for activities specified in the Plan,
provided they are obligated by the end of the obligation period. The
re-obligation of funds will not result in any extension of the
obligation period.
The initial CCDBG regulations allowed States to follow State or
local law or procedures regarding funds returned after the end of the
obligation period. The provision was applicable only to what now are
the Discretionary Funds part of the CCDF. It recognized that although
section 685J(c) of the Act provided for a two-year obligation period
for those funds, the Departments of Labor, Health and Human Services
and Related Agencies Appropriations Act, 1991 (Pub. Law 101-517)
provided that FY 1991 funds became available on September 7, 1991. The
impact of that appropriation was that CCDBG funds (now called
Discretionary Funds) were available for obligation only for barely over
a year, instead of for two full years. The provision regarding returned
funds at former Sec. 98.60(h) reflected ACF's desire that States not be
put in the position of having to make premature decisions regarding
obligations in a new program due to a truncated obligation period.
Also, our reasoning for the former provision included the consideration
that, even though the Act contained a reallotment provision for these
funds, there appeared to be little likelihood that the States would
return them for redistribution since they were 100 percent Federal
funds.
The FY 1992 HHS appropriation (Pub. Law 102-170) moved the
availability of CCDBG funds to the last day of the fiscal year, and the
CCDBG funds continued to be paid on the last day of the fiscal year in
subsequent years, until the Departments of Labor, Health and Human
Services and Related Agencies Appropriations Act, 1997 (Pub. L. 104-
208) again changed the date of the availability of these funds. The
1997 appropriation provides that, starting with the FY 1998
Discretionary Funds, Discretionary Funds will be made available on the
first day of each fiscal year. The result of this change is that there
now will be two full years to obligate Discretionary Funds.
Further, the regulations at the former Sec. 98.60(h) would have
been inappropriate to the new Mandatory and
[[Page 39633]]
Matching Funds provided under PRWORA. The law, at section 418 of the
Social Security Act, requires redistribution of the Matching Funds to
other States, if the State to which they were granted does not use them
in the fiscal year in which they are granted. Also, the Secretary must
determine the amount of Matching Funds available for redistribution by
the end of the first quarter of the fiscal year following the year the
grant was awarded. The law links use of Matching Funds to use of the
Mandatory Funds--and, as provided in the regulations at Sec. 98.60,
Mandatory Funds must be obligated in the year in which they are granted
if a State requests Matching Funds. Unlike the Discretionary and
Mandatory Funds, the Matching Funds are not 100 percent Federal funds,
and there seems to be a greater possibility that some of these funds
would be returned for redistribution. Thus, the former returned funds
regulations would not have been workable for these funds.
Allotments From the Discretionary Fund (Section 98.61)
The allotment formulas for the CCDBG, which we now refer to as the
Discretionary Fund, are essentially unchanged. We made only minor
wording changes to the regulations to reflect the existence of other
funding sources. We also deleted the Trust Territory of the Pacific
Islands (Palau) from the formula for allotting funds to the
Territories, to reflect an amendment to section 658P(13) of the CCDBG
Act.
In response to an amendment to section 658P(14) of the CCDBG Act,
we have added a provision allowing for Discretionary Fund grants to a
Native Hawaiian Organization and to a private nonprofit organization
established for the purpose of serving Indian or Native Hawaiian youth.
This provision is discussed below.
ACF has also reconsidered its policy regarding the data sources for
allotting Discretionary Funds to Tribes. This policy also impacts the
allocation of Tribal Mandatory Funds; and we discuss that policy below.
Data sources. On October 25, 1996 (51 FR 55305), ACF proposed a
self-certification process for tribal child counts used to calculate
tribal allotments under the Child Care and Development Block Grant. The
purpose of utilizing a self-certification process for tribal grantees
is to assist ACF in fulfilling its mandate to serve low-income Indian
children through the CCDF.
The CCDBG statute requires the Secretary to obtain the most recent
data and information necessary, from each appropriate Federal agency,
to determine State funding allotments. There is no similar statutory
requirement for determining tribal allotments.
The preamble to the current regulations for the CCDBG program
stated that the BIA Indian Service Population and Labor Force Estimates
Report, published biennially, was determined to be the most suitable,
available data source for CCDBG purposes. However, problems have
developed in its use. For example, the fiscal year (FY) 1997 CCDF
Tribal Mandatory Fund allotments were based on 1993 data since the
scheduled 1995 Report had not yet been published.
In addition, the BIA Report is limited because it does not include
Alaska-specific data. Consequently, ACF uses Census data to determine
CCDBG allotments for Alaskan tribal grantees. Thus, for purposes of
CCDBG allocations, child count data are currently collected from two
separate data sources which are not compatible with respect to timing
or types of information collected.
After a thorough review of the available data options, ACF has
determined that it would be in the best interest of the Tribes, as well
as ACF, to utilize a self-certification process since this would afford
Tribes the opportunity to select a data source, or utilize a method for
counting tribal children, which most accurately reflects its child
population.
Further, through a tribal self-certification process, the child
count data will be available with minimal lag time and will more
accurately reflect the natural fluctuations in child population. With
current national sources, it can take 2 to 3 years for changes in
population (such as reaching a child population of 50) to be reflected.
This approach supports the President's April 29, 1994, mandate to
Federal agencies reaffirming the government-to-government relationship
between Tribes and the Federal government and directing agencies to
design solutions and tailor Federal programs, in appropriate
circumstances, to address specific or unique needs of tribal
communities.
ACF will issue instructions for Tribes to follow in submitting
their self-certified child counts. Each tribal grantee and each Tribe
participating in a consortium will be required to submit a declaration
signed by the governing body of the Tribe or an individual authorized
to act on behalf of the applicant Tribe or organization. For FY 1998
funds the declaration must certify the number of Indian children under
age 16 who reside on or near the reservation or other tribal service
area in the Tribe's most recent count. Beginning with funding that
becomes available in FY 1999, tribal child count declarations will
include only children under age 13, in accordance with the CCDBG
statute. We have allowed self-certified counts for FY 1998 to be based
on the number of children under age 16 since previous data sources
included children under age 16. This allows a one-year transitional
period for tribal Lead Agencies to plan for a self-certified child
count of children under age 13.
Grants to a Native Hawaiian Organization and a Private Nonprofit
Organization Serving Indian or Native Hawaiian Youth
Section 658P(14) of the amended CCDBG Act adds the following second
definition to the term ``tribal organization'' which are potentially
eligible for Discretionary Funds:
Other organizations--Such term includes a Native Hawaiian
Organization, as defined in section 4009(4) of the Augustus F.
Hawkins-Robert T. Stafford Elementary and Secondary School
Improvement Amendments of 1988 and a private nonprofit organization
established for the purpose of serving youth who are Indians or
Native Hawaiians.
Section 4009(4) of the Augustus F. Hawkins-Robert T. Stafford
Elementary and Secondary School Improvement Amendments of 1988 defines
a Native Hawaiian Organization as:
A private nonprofit organization that serves the interests of
Native Hawaiians, and is recognized by the Governor of Hawaii for
the purpose of planning, conducting, or administering programs (or
parts of programs) for the benefit of Native Hawaiians.
No other changes were made in the Act with respect to Native
Hawaiians or Native Hawaiian Organizations (NHOs) or private nonprofit
organizations (PNOs) established for the purpose of serving youth who
are Indians or Native Hawaiians; nor is the Conference Agreement
instructive as to Congressional intent. However, given the statutory
language, we propose at Sec. 98.61(e) that only a single NHO and a
single PNO will be funded.
Several options were considered for allocating funds in accordance
with this expanded definition of tribal organization. We considered,
for example, treating NHOs and PNOs in the same manner for allocation
purposes as other tribal organizations (i.e., a base amount plus a per
child amount, or only a per child amount).
Based on an analysis of the statute, however, we believe the
Congress intended for a NHO and a PNO to be
[[Page 39634]]
treated differently from Indian Tribes and tribal organizations which
are eligible to receive CCDF funding. CCDF funds are awarded on a
formula basis to all eligible Tribes and consortia. However, only a
single NHO and a single PNO are to be awarded grants. Determination of
those entities requires a discretionary grant process rather than the
formula basis used for Indian Tribes and tribal consortia.
Eligible NHOs and PNOs, as well as the States, are reminded that
under Sec. 98.80(d), Indian children continue to have dual eligibility
to receive services funded by CCDF. Indian children and Native Hawaiian
children will continue to be eligible for services provided under a
grant awarded to a NHO or PNO and from the State of Hawaii (or other
State in the case of a PNO awarded to a grantee not located in Hawaii).
Therefore, through a grant award to a NHO and a PNO, additional
child care services (from the Discretionary Fund) will be made
available to children who are currently eligible to be served under a
State CCDF program. A more detailed explanation of dual eligibility is
provided in the Preamble at Subpart I.
For these reasons, up to $2 million will be reserved from the total
amount reserved for Tribes under the Discretionary Fund for two grants.
We believe that such an amount is substantial enough to meaningfully
serve populations that may have been under-served in the past, without
jeopardizing existing tribal programs. In choosing to award these
grants on a competitive basis, we are seeking comments about the
selection criteria that the Secretary should establish pursuant to
Sec. 98.61(e) and the funding amounts which should be reserved for this
purpose.
Allotments From the Mandatory Fund (Section 98.62)
Section 418(a) of the Social Security Act creates a capped
entitlement for the 50 States and the District of Columbia. The amounts
allotted to each State and the District are based on the Federal share
of expenditures for child care under prior programs under title IV-A of
the Social Security Act (i.e., the AFDC/JOBS, Transitional and At-Risk
Child Care programs) in FY 1994, FY 1995, or the average of FY 1992-
1994, whichever is greatest. Before funds are allocated to the
individual States, one-quarter of one percent of the total is reserved
for the provision of technical assistance and up to two percent is
reserved for grants to Tribes.
For Indian Tribes and tribal organizations we have chosen to
allocate Mandatory Funds solely according to the number of children in
each Tribe. That is, unlike the Discretionary Fund, there is no base
amount provided to Tribes under the Mandatory Fund.
We propose this approach in response to tribal arguments for
increased funding for direct services. We agree that tribal child care
programs would especially benefit from additional service funds, and we
did not wish to divert any new funds into non-service activities.
Tribes have the flexibility to expend their base amount on
administration or direct services, including quality activities.
However, we are concerned that many large consortia already receive
substantial sums of base amount monies. According to the program
reports from those consortia, it appears that these large base amounts
often do not translate into direct child care services for tribal
children. We do not believe that tribal children would benefit from
augmenting the existing base amount in lieu of direct child care
services.
Lastly, we listed the 13 entities in Alaska that are eligible to
receive Mandatory Funds pursuant to the amended section 419(4)(B) of
the Social Security Act. We listed those eligible entities in this
section of the regulation rather than have two different definitions of
Tribes at Sec. 98.2.
Allotments From the Matching Fund (Section 98.63)
As provided in the statute, allotments to each of the 50 States and
the District of Columbia are based on the formula used to distribute
funds under the now-repealed At-Risk child care program. The Matching
Fund consists of the amount remaining from a fiscal year's
appropriation under section 418(a)(3) of the Social Security Act after
reserving amounts for technical assistance and for Tribes and awarding
Mandatory Funds.
Reallotment and Redistribution of Funds (Section 98.64 of the Proposed
Regulations)
This section formerly addressed financial reporting requirements.
We have deleted those requirements since they refer to forms, the SF
269 and SF 269A, which ACF has proposed to replace. The proposed
replacement form, the ACF 696, will better reflect the unique nature of
the CCDF. Financial reporting instructions for the new form will be
issued separately following approval by OMB. A general financial
reporting requirement has been reincorporated as a new Sec. 98.65(g).
Section 418(a)(2)(D) of the Social Security Act provides for the
redistribution of Federal Matching Funds which are granted to a State,
but not used. This provision is added to the regulations at
Sec. 98.64(c)(1). We have adopted the statutory term ``redistribute''
when discussing the Matching Fund in the regulation. However, we
believe that the term is comparable to the ``reallotment'' term used
for redistribution of the Discretionary Funds and have therefore
adopted a comparable process. For example, at Sec. 98.64(c)(3) we have
applied the language from the reallotment process at Sec. 98.64(b)(2)
to describe the same limits on the amounts of unobligated Matching
grants that will be redistributed to other States that currently apply
to the Discretionary Fund. That is, no redistribution will be made if
the total to be redistributed is less than $25,000. Nor will any grant
be made to an individual State if it would be less than $500. As
provided in the statute, redistribution of the Matching Funds will be
based on a formula similar to that used for the original allotments to
the 50 States and the District of Columbia.
At Sec. 98.64(c)(1) we have proposed that Matching Funds granted to
a State, but not obligated by the end of that fiscal year, be
redistributed to the other States which did obligate all of the
Matching Funds allocated to them. Unused Matching Funds, then, would be
made available only to those States which demonstrated their ability to
use the entire amount already granted to them. According to the
statute, such States must request the redistributed funds; the Funds
will not automatically be redistributed to all qualifying States. We
considered redistributing unused Matching Funds among each of the 50
States and the District of Columbia, including the States that returned
the money being reallotted. We rejected that approach since it raised
the possibility that States which were unable to use all of their funds
in one year would again be unable to use them in the following year.
This would result in funds reverting to the Federal Treasury rather
than being used to assist families.
The regulation at Sec. 98.64(c)(2) restates the statutory language
that funds which are not granted to a State are not redistributed. That
is, if a State applies for only a portion of its allotment of the
Matching Fund only that amount will be granted. The difference between
the amount granted to that State and the State's allotment reverts to
the Treasury and is not redistributed. As discussed above, it is the
difference between the amount of the State's grant of Matching Funds--
not the amount allotted for it--and the amount that is not obligated
within the required time frame, that will
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be redistributed to the other States. This regulation is based on the
statutory language that provides that it is the amounts that remain
unused ``under any grant awarded'' that are redistributed, not the
amounts that might be available to the State but are not awarded.
We have also proposed a simplified process by which States notify
us of any unobligated Matching Funds available for redistribution.
Similarly, although we decided not to automatically redistribute
Matching Funds among all eligible States, we propose a simple process
for them to request redistributed Matching Funds. At Sec. 98.64(c) (3)
and (4) we propose that States use the regular financial reporting
form, rather than requiring a separate, additional notification from
the State.
Section 98.64(c)(6) reflects the statutory language that
redistributed Matching Funds are to be considered as part of the grant
for the fiscal year in which the redistribution occurs, not as a part
of the grant for the year in which the funds were first awarded. This
is in contrast to reallotment of Discretionary Funds; for Discretionary
Funds the obligation period is based on the award year and is not
extended.
An amendment to section 658O of the Act provides for the
reallotment of tribal Discretionary Funds. That amendment, at
658O(e)(4), requires the Secretary to reallot any portion of a tribal
grant that she determines ``is not being used in a manner consistent
with the provision of [the Act].''
Although the statutory language seems to suggest that the Secretary
may make a determination which is separate and apart from the usual
audit practice on the manner of use of funds by Tribes, there is no
discussion in the Conference Agreement to indicate such an
interpretation. Furthermore, we believe that Congress would have been
more explicit if it desired the Secretary to create a separate audit or
investigatory process. Therefore, we have proposed at Sec. 98.64(d) a
reallotment process that exactly parallels the State process. That is,
we will determine the amounts to be reallotted based upon reports
submitted by the Tribes, pursuant to paragraph (d)(1) of this section.
Each Tribe must submit a report to the Secretary indicating either the
amount of funds from the previous year's grant it will be unable to
obligate timely pursuant to Sec. 98.64(d), or that it will obligate all
funds in a timely manner. These reallotment reports, which must be
submitted by April 1 of each year, may be in the form of a letter. We
chose the April 1st deadline to allow the Secretary the necessary time
to reallot the funds and to allow Tribes the necessary time to obligate
such funds on a timely basis.
We will reallot funds that Tribes indicate are available for
reallotment to the other Tribes, in proportion to their original
allotment, if the total amount available for reallotment is $25,000 or
more. If the total amount is less than $25,000, we will not reallot
these funds; instead, they will revert to the Federal treasury. It is
administratively impractical for the Department to issue small awards.
Likewise, the Secretary will not award any reallotted funds to a Tribe
if its individual grant award is less than $500, as it is
administratively impractical to do so. These are the same thresholds
that apply to the States.
If a Tribe does not submit a reallotment report by the deadline for
report submittal, we will determine that the Lead Agency does not have
any funds available for purposes of the reallotment. If a report is
postmarked after April 1, we will not reallot the amount of funds
reported to be available for reallotment; instead, such funds will
revert to the Federal treasury. As previously discussed, late reports
do not allow the Secretary sufficient time to reallot the funds nor do
they allow the Tribes sufficient time to obligate such funds timely as
required by Sec. 98.64(d). We anticipate the Secretary will reallot
funds made available for reallotment by May 1. Reallotted funds must
meet the same programmatic and financial requirements as funds made
available to Tribes in their initial allotments.
The statute, and hence the regulations, remain unchanged regarding
the reallotment of Discretionary Funds to the Territories. That is,
there is no reallotment of Territorial Discretionary Funds.
Audits and Financial Reporting (Section 98.65)
At Sec. 98.65(a) we have clarified that the Single Audit Act, as
well as OMB Circular A-128, provide the basis for the required audits.
We also added a new Sec. 98.65(f) to the requirements for audits.
Audits must now be conducted by an agency that is independent of the
State, Territory or Tribe as required by the amended section 658K of
the CCDBG Act.
We recognize that in the past some States may have used a State
audit agency that is independent of the Lead Agency. Such audit
agencies do not meet the new requirement because they are,
nevertheless, part of State government. The Lead Agency is reminded
that the costs of audits are an allowable administrative expense.
Although we could not envision another regulatory approach that
would give meaning to the change Congress made in the Act, we still
welcome focused comments on this provision.
Finally, we reincorporated from the former Sec. 98.64 a general
financial reporting requirement. This provision is at Sec. 98.65(g).
Accordingly we have renamed this section to ``Audits and Financial
Reporting.''
Subpart H--Program Reporting Requirements
Reporting Requirements (98.70 of the Regulations)
Section 658K(a) of the amended Act requires each State receiving Child
Care and Development Fund funding to submit two reports: quarterly
disaggregate data for family units and biannual aggregate data.
Territories are considered States for reporting purposes. The first
biannual aggregate report must be submitted by December 31, 1997, and
every six months thereafter.
Section 658L of the Act requires the Secretary to summarize
biennially for Congress the data and information required at section
658K of the Act and Sec. 98.71 of the regulation.
Section 658O(c)(2)(C) of the Act specifies that Tribes will report
on programs and activities under CCDF. We require Tribes to submit
annual aggregate data appropriate to tribal programs as they have
previously in the CCDBG program.
Principles for data reporting. The amended Act significantly
revised the reporting requirements for all child care services. As a
result, ACF developed principles to guide the implementation of
reporting requirements. ACF, in concert with the Lead Agencies, will:
1. Meet the statutory mandate for data reporting;
2. Streamline data collection and reporting procedures from the
previous four programs into a single integrated program;
3. Build on data collection systems from the former four child care
programs;
4. Apply flexibility in phasing in the implementation of the data
collection requirements;
5. Apply flexibility in meeting data needs outside the Federal
requirements;
6. Provide technical assistance to Lead Agencies in the design of
new or revised data collection systems and reporting processes,
encouraging linkages to TANF information systems and to other relevant
Federal reporting systems;
7. Provide sampling specifications to Lead Agencies as part of the
data collection process;
[[Page 39636]]
8. Provide technical assistance to Lead Agencies in the design and
use of data for the development of program performance measures; and
9. Commit to making the data useful for Lead Agencies.
Content of the Reports (Section 98.71)
For States and Territories. Consistent with the requirements of
section 658K of the amended Act, we require States to collect monthly
samples of family unit disaggregated data which are reported to ACF
quarterly. In order to provide for adequate time for the approval
process for sampling plans, we are proposing at Sec. 98.70(a)(3) that
States be required to submit their sampling plan to ACF for approval 60
days prior to the submission of the first quarterly report. States are
not precluded from submitting disaggregate data for the entire
population of children served under the CCDF. Specific aggregate
information is required in the biannual report.
We are proposing to use the Social Security Number of the head of
the family unit receiving child care assistance as the case identifier.
This would facilitate the use of the data for research tied to TANF,
employment, and other family- and child-related programs. Public
comment on this issue is specifically invited.
Although the statute requires that cost of care information be
provided in both the disaggregate and aggregate reports
(658K(a)(1)(B)(ix) and 658K(a)(2)(B)), we will collect this information
through the disaggregate report only and we will compile the
information into the aggregate. This will eliminate duplicative
reporting for the biannual aggregate report. Public comment on this
issue is specifically invited.
The statute at 658K(a)(1)(B)(x) requires collection of the average
hours per week of care. In consultation with the States, we learned
that it would be less burdensome to report the total hours of service
per month. We therefore propose to collect the total hours of care per
month in lieu of the average hours per week. We will be able to
calculate the average hours of service per week based on this number.
We propose to continue a data element concerning the reasons care
was provided. In previous CCDBG data reports, ACF collected the reasons
for care, i.e. working, education/training, and protective services.
This is valuable information for State and Federal planning efforts.
The statute at 658K(a)(2)(C) requires that the number of payments
made through various methods by type of provider be reported
biannually. Most States pay providers monthly; a few pay more
frequently. If the statutory language is strictly interpreted, States
would be required to report as many as 12-24 payments or more for each
subsidized child throughout the year. Because this information would be
of limited value, we are proposing at Sec. 98.71(b)(2) that the Lead
Agency's report reflect the number of children served by payment method
and primary type of provider during the final month of the report
period only (or for the last month of service for those children
leaving the program before the end of the report period). Changes in
payment method or primary provider type over the report period should
be ignored and only the last arrangement reported.
Information concerning child care disregards is required by the
statute at 658K(a)(2)(C); however, disregards, if used, would be
provided under the TANF programs, not child care programs. As a result,
information on the use of the disregard will be collected through TANF
reporting procedures, since TANF agencies can collect this information
more reliably.
To have a complete picture of child care services in the States,
quarterly disaggregate and biannual aggregate information will be
collected on all funds of the Child Care and Development Fund,
including Federal Discretionary Funds (which includes any funds
transferred from the TANF Block Grant), Mandatory, and Matching Funds
and State Matching and MOE Funds. For States that choose to pool CCDF
funds with non-CCDF funds (e.g. title XX, or State or local funds not
part of the CCDF MOE) we will allow reporting and/or sampling on all
children served by the pooled funds, but will require States to
indicate percentages of CCDF and non-CCDF funds in the pool of funds.
Detailed instructions on how to construct sampling frames for States
which pool funds will be included in the sampling specifications
developed by ACF. Technical assistance will be provided to States
regarding collecting data across funding streams.
Additionally, States have indicated a desire to compare data which
are not a part of the mandatory reporting requirements. To meet this
need and to make the available child care data more useful to State
planning efforts, the Department will collaborate with States regarding
a set of standardized optional data elements. The reporting of these
data elements will not be required of any grantee.
We will send additional information to Lead Agencies concerning
specific reporting requirements, sampling specifications for the
quarterly disaggregate report, and the submission process. We will
issue detailed instructions in the future, including approved data
definitions and reporting formats. Before we issue such instructions,
however, we will solicit additional comments and secure necessary OMB
approval.
For Tribes. Tribes are neither required to submit the new aggregate
biannual report nor the new disaggregate quarterly report. Instead,
Tribes will continue to annually submit the ACF-700 which is currently
in use. They will include information on all children served under the
Discretionary and Tribal Mandatory funds. As of fiscal year 2000,
Tribes will no longer be required to submit the second page of the ACF-
700 (fiscal programmatic data), as fiscal information for Tribes will
be collected on a separate tribal financial reporting form.
Subpart I--Indian Tribes
Subpart I addresses requirements and procedures for Indian Tribes
and tribal organizations applying for or receiving CCDF funds. In light
of unique tribal circumstances, Subpart I balances flexibility for
Tribes with the need to ensure accountability and quality child care
for children.
Subpart I specifies the extent to which general regulatory
requirements apply to Tribes. In accordance with Sec. 98.80(a), a Tribe
shall be subject to all regulatory requirements in Parts 98 and 99,
unless otherwise indicated. Subpart I lists general regulatory
requirements that apply to Tribes. It also identifies requirements that
do not apply to Tribes.
Most programmatic issues that apply to Tribes are consolidated in
Subpart I. However, financial management issues that apply to Tribes,
including the allotment formulas and underlying data sources, are
addressed separately in Subpart G--Financial Management.
Tribes have the option to consolidate their CCDF funds under a plan
authorized by the Indian Employment, Training and Related Services
Demonstration Act of 1992 (Pub. L. 102-477). This law permits tribal
governments to integrate a number of their federally funded employment,
training, and related services programs into a single, coordinated
comprehensive program.
Since Senate Committee Report language for that Act prohibits the
creation of new regulations for tribal programs operating under the
102-477 initiative (S. Rep. No. 188, 102 Cong. 2d Sess. (1992)), ACF
does not propose any additional regulations for the Indian
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Employment, Training and Related Services application and plan process.
Instead, ACF publishes annual program instructions for Tribes wishing
to consolidate CCDF funds under an Indian Employment, Training and
Related Services plan. The Bureau of Indian Affairs, Department of the
Interior, has lead responsibility for administration of Public Law 102-
477 programs.
General Procedures and Requirements (Section 98.80)
Demonstrations from consortia. The regulation at Sec. 98.80(c)(1)
continues to provide that a consortium must adequately demonstrate that
each participating Tribe authorizes the consortium to receive CCDF
funds on its behalf. This demonstration would normally be required once
every two years through the two-year tribal CCDF Plan. However, it is
the responsibility of each consortium to inform ACF, through an
amendment to its Plan, of any changes in membership.
Consortia can demonstrate members' agreement to participate in a
number of ways. A resolution is acceptable. We will also accept an
agreement signed by the tribal leader or evidence that a tribal leader
participated in a vote adopting such an agreement.
Special requirements for Alaska Native grantees. By statute
(section 419 of the Social Security Act), only specified Alaska Native
entities may receive Tribal Mandatory Funds. The Metlakatla Indian
Community of the Annette Islands Reserve and the 12 Alaska Native
Regional Nonprofit Corporations are eligible to receive Tribal
Mandatory Funds. The law provides that Discretionary Funds, however,
will continue to be available to all the eligible Alaska Native
entities that could apply under old CCDBG rules.
For purposes of Discretionary funding, Alaska Native Regional
Nonprofit Corporations, which are eligible to apply on behalf of their
constituent villages, would need to demonstrate agreement from each
constituent village.
In the absence of such demonstration of agreement from a
constituent village, the Corporation would not receive the per-child
amount or the base amount associated with that village. This changes
the policy stated in the preamble to the final rule issued August 4,
1992 (57 FR 34406). The former policy permitted Alaska Native Regional
Nonprofit Corporations to receive the per-child amount (but not the
base amount) for a constituent village in the absence of a demonstrated
agreement from the village that the Corporation was applying for
funding on its behalf. Since all other tribal consortia are required to
demonstrate agreement from their member Tribes in order to receive
Discretionary funding, this change makes the funding requirements
consistent for all consortia grantees.
For purposes of Tribal Mandatory Funds, since the statute
specifically cited the 12 Alaska Native Regional Nonprofit Corporations
as eligible entities, demonstrations are not required by member
villages for these entities to be funded.
Since the law provides that only designated Alaska Native entities
may receive the Tribal Mandatory Funds, there is a difference between
which Alaska Native entities can be direct grantees for the two tribal
parts of the CCDF. Our analysis indicates, however, that each of the
Alaska tribal entities that are eligible to receive Discretionary Funds
are served by one of the 12 Alaska Native Regional Nonprofit
Corporations that by law can be direct grantees for the Tribal
Mandatory Funds. In instances where there are different Alaska Native
grantees for the two parts of the fund, we strongly encourage grantees
to work together to ensure a coordinated tribal child care system in
Alaska.
Dual Eligibility. Under Sec. 98.80(d), Indian children continue to
have dual eligibility to receive child care services funded by CCDF.
Section 658O(c)(5) of the Act asserts that, for child care services
funded by CCDF, the eligibility of Indian children for a tribal program
does not affect their eligibility for a State program. To receive
services under a program, the child must still meet the other specific
eligibility criteria of that program.
This provision was in the original Act, and it was not affected by
the recent PRWORA amendments. Regulations at Sec. 98.20(b)(1) continue
to provide that Lead Agencies may establish eligibility requirements,
in addition to Federal eligibility requirements, so long as they do not
``discriminate against children on the basis of race, national origin,
ethnic background, sex, religious affiliation, or disability.'' As a
result, States cannot have a blanket policy of refusing to provide
child care services to Indian children.
At the same time, tribal CCDF programs are a valuable source of
child care for Indian children, including children whose families
receive TANF assistance. In particular, a Tribe that operates its own
TANF or work program (or both) will have an important role in promoting
self-sufficiency for its low-income families, including the provision
of adequate child care. However, Indian children have dual eligibility
for CCDF child care services regardless of whether a Tribe operates its
own TANF or work program. Therefore, we encourage States and Tribes to
work closely together in planning for child care services. Coordination
of child care resources will be needed to ensure adequate child care
for eligible Indian children.
Eligibility. Under Sec. 98.80(f), tribal Lead Agencies continue to
have the option of using either the State's median income or the tribal
median income in determining eligibility for services. However, ``75
percent of median income'' has been replaced with ``85 percent of
median income'' to reflect the change to the Act at section 658P(4)(B).
As a result, in determining eligibility for services pursuant to
Sec. 98.20(a)(2), a tribal program may use either: (1) up to 85 percent
of the State median income for a family of the same size; or (2) up to
85 percent of the median income for a family of the same size residing
in the area served by the tribal grantee.
Application and Plan Procedures (Section 98.81)
Section 98.81 contains application and Plan requirements for Tribes
and tribal consortia. In accordance with Sec. 98.81(a), Tribes must
apply for funds pursuant to Sec. 98.13, except that the requirement at
Sec. 98.13(b)(2) does not apply.
A tribal Lead Agency must submit a CCDF Plan, as described at
Sec. 98.16, with the additions and exceptions described in
Sec. 98.81(b).
At Sec. 98.81(b)(1), we have proposed a new requirement that Tribes
include a tribal resolution or similar demonstration which identifies
the tribal Lead Agency. In the past there have been instances where a
Tribe has left a consortium and requested direct funding. It was
unclear to us whether the request for direct funding was legitimate
since the Tribe's resolution to join the consortium was not rescinded.
The consortium claimed to represent the Tribe, but the Tribe claimed it
did not. Similarly, some tribal members have voiced concerns that an
organization could apply for and receive funds on behalf of a Tribe
without the Tribe's being aware that funds had been requested.
The proposed requirement is parallel to the requirement that a
State's chief executive officer must identify the State Lead Agency.
Requiring a tribal resolution to identify the Lead Agency is not
burdensome. To the contrary, it raises the profile and importance of
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child care services to the Tribe and offers both ACF and the Tribes a
measure of protection from erroneous disbursements that does not now
exist. We invite comments on this proposed requirement.
Section 98.81(b)(3) requires definitions of ``Indian child'' and
``Indian reservation or tribal service area'' for purposes of
determining eligibility.
Section 98.81(b)(5) requires information necessary for determining
the number of children for fund allocation purposes and grant
eligibility requirements (i.e., the requirement that a Tribe must have
at least 50 children under 13 years of age in order to directly apply
for funding). The preamble discussion to Subpart G summarizes the data
sources used to determine tribal allotments.
Other changes in Plan provisions are more fully discussed in
related sections under Subpart I.
Coordination (Section 98.82)
Requirements regarding coordination at Sec. 98.82 remain unchanged
except for a proposed clarification that tribal Lead Agencies must also
meet coordination requirements at Secs. 98.12 and 98.14.
In addition to coordinating with other agencies and programs,
tribal Lead Agencies must also meet planning requirements at
Sec. 98.14--including the public hearing requirement at Sec. 98.14(c).
A Tribe must distribute notice of the hearing throughout its service
area (rather than statewide).
Requirements for Tribal Programs (Section 98.83)
In recognition of the unique social and economic circumstances of
many tribal communities, we are proposing to exempt tribal Lead
Agencies from a number of the CCDF requirements which apply to State
Lead Agencies.
Administrative costs. Based on input from several tribal
organizations and tribal representatives, we are providing greater
flexibility for tribal Lead Agencies by exempting them from the five
percent State administrative cost cap at Sec. 98.52(a). Because of the
varying infrastructural capabilities of many Indian Tribes, we are
proposing to permit tribal Lead Agencies to use up to 15 percent of
their total CCDF per child amount (including funds used for
construction or major renovation in accordance with Sec. 98.84) for
administrative costs. A 15 percent administrative limit for tribal Lead
Agencies was recommended by several tribal organizations during the
course of our pre-drafting consultations.
Section 98.52(a) provides a list of administrative activities which
are subject to the 15 percent cost limitation. The preamble discussion
of section 98.52(a) provides an additional list of activities which are
not considered administrative activities for purposes of the 15 percent
cost cap.
We recognize that many Federal programs permit Indian Tribes and
tribal organizations to include an indirect cost rate in their grant
awards. This rate is arrived at through negotiation between an Indian
Tribe or tribal organization and the appropriate Federal agency.
Through the list of activities which are not considered administrative
costs, the exemption from the five percent State administrative cost
cap, and the base amount under the Discretionary Fund, tribal Lead
Agencies will have sufficient flexibility in determining their
administrative and/or indirect costs to run effective CCDF programs.
Exempt Tribes. We also realize that many smaller tribal grantees do
not have the infrastructure in place to support certain requirements.
As a result, we are exempting Lead Agencies of smaller Tribes and
tribal organizations (with total CCDF allocations less than an amount
established by the Secretary) from certain requirements specified at
Sec. 98.83(f). Exempt tribal grantees are not required to comply with
the four percent quality requirement at Sec. 98.51(a) or to run a
certificate program. Non-exempt tribal grantees are required to comply
with these requirements.
The dollar threshold for determining which Tribes are exempt will
be established by the Secretary. The threshold will be set to include
as non-exempt all Tribes which were non-exempt prior to PRWORA. Some
Tribes which were previously exempt may move into the non-exempt
category due to the allocation of Tribal Mandatory funding, which does
not include a base amount but rather is calculated solely on a per-
child basis. Under interim procedures which are in effect until final
regulations are issued, all Tribes that were previously exempt (prior
to PRWORA) continue to be exempt. However, if the threshold had been
set for FY 1997 in accordance with the parameters described above, the
amount would have been approximately $460,000 (i.e., tribal Lead
Agencies with total CCDF allocations below $460,000 would have been
exempt). The threshold for future fiscal years will likely be somewhat
different because of changes in the CCDF appropriation. We welcome
comments on the criteria for setting the exempt/non-exempt threshold.
Although in the proposed rule we are keeping the existing
``exempt'' and ``non-exempt'' categories, we are requesting comments on
whether to eliminate this distinction and have one set of requirements
for all tribal Lead Agencies. Under such an approach, all tribal Lead
Agencies would be exempt from: the assurance of giving parents the
option of enrolling their child with a contracted provider or receiving
a certificate (at Sec. 98.15(a)(2); the requirement for certificates
(at Sec. 98.30(a) and (d)); and the requirement for minimum quality
expenditures at Sec. 98.51(a).
By exempting all Tribes from these requirements, Tribes would be
afforded greater flexibility in implementing their CCDF programs.
Tribes would have the opportunity to determine their own needs and
design program services which more appropriately reflect their unique
circumstances.
We strongly encourage Tribes to consider operating certificate
programs, as appropriate, since it promotes parental choice. Many
exempt Tribes currently operate certificate programs, as well as expend
funds for quality activities, even though they are not required to do
so by Federal regulation.
70 percent requirement. The new section 418(b)(2) of the Social
Security Act provides that States ensure that not less than 70 percent
of the total amount of the State Mandatory and Matching funds received
in a fiscal year be used to provide child care assistance to families
receiving assistance under a State program under Part A of title IV of
the Social Security Act, families who are attempting through work
activities to transition from such assistance, and families at risk of
becoming dependent such assistance. The provision at section 418(b)(2)
does not apply to tribal Lead Agencies. Nonetheless, Tribes have a
responsibility to ensure that their child care services provide a
balance in meeting the needs of families listed in section 418(b)(2)
and the child care needs of the working poor.
Tribes that apply for grants from the new Tribal Mandatory Fund
will have new direct child care resources for providing services, since
they will receive substantially increased grants. Also, as we pointed
out in our discussion on dual eligibility of tribal children, Tribes
now have the option under title IV of the Social Security Act to
operate their own TANF programs. Additionally, Tribes that operated a
tribal Job Opportunities and Basic Skills Training (JOBS) program in
1994 may choose to continue a tribal work program. Whatever the mixture
of child care, TANF, and work services a Tribe
[[Page 39639]]
chooses to administer, child care services should be designed to ensure
that all eligible families receive a fair share of services within the
tribal service area.
Base amount. A base amount is included in tribal grant awards under
the Discretionary Fund. As referenced at Sec. 98.83(e), the base amount
of any tribal grant is not subject to the administrative costs
limitation at Sec. 98.83(g) or the quality expenditure requirement at
Sec. 98.51(a).
The base amount for each tribal grant may be used for any activity
consistent with the purposes of the CCDF, including the administrative
costs of implementing a child care program. For examples of
administrative costs, refer to Sec. 98.52(a). While we encourage exempt
tribal Lead Agencies to expend CCDF funds on quality activities, they
are not required to meet this provision.
Lead agency. Tribal grantees, like States, must designate a Lead
Agency to administer the CCDF. If a tribal grantee applies for both
Tribal Mandatory Funds and Discretionary funds, the programs must be
integrated and administered by the same Lead Agency.
Consortia. If a Tribe participating in a consortium arrangement
elects to receive only part of the CCDF (e.g., Discretionary Funds), it
may not join a different consortium to receive the other part of the
CCDF (Tribal Mandatory Funds), or apply as a direct grantee to receive
the other part of the fund. In this situation, individual tribal
consortium members must remain with the consortium they have selected
for the fiscal year in which they are receiving any part of CCDF funds.
(However, an Alaska Native village that must receive Tribal Mandatory
Funds indirectly through an Alaska Native Regional Nonprofit
Corporation may still apply directly for Discretionary Funds).
We have added language in Sec. 98.83(c) to require that a tribal
consortium include in its two-year CCDF Plan a brief description of the
direct child care services being provided for each of its participating
Tribes. We have included this provision for three reasons: (1) It helps
ensure that services are being delivered to the member Tribes; (2)
since in some cases consortia receive sizeable base amounts, it will
provide documentation of the actual services being delivered to member
Tribes through consortia arrangements; and (3) it provides the
opportunity for public comment, as part of the public hearing process
required by Sec. 98.14(c), on the services provided to member Tribes.
Child care standards. A new section of the Act (section
658E(c)(2)(E)(ii)) requires the development of minimum child care
standards for Indian Tribes and tribal organizations. Based on input
from tribal leaders and tribal child care administrators, we are
developing a process for Tribes to establish minimum child care
standards that appropriately reflect tribal needs and available
resources. Until the minimum standards are developed, Tribes must have
in effect tribal and/or State licensing requirements applicable to
child care services pursuant to Sec. 98.40. Tribes must also have in
place requirements designed to protect the health and safety of
children (in accordance with Sec. 98.41 of the regulations), including,
but not limited to: (1) The prevention and control of infectious
diseases (including immunization); (2) building and physical premises
safety; and (3) minimum health and safety training appropriate to the
provider setting.
Planning costs for initial plan. Former Sec. 98.60(g) regarding
planning costs associated with the submission of an initial CCDF Plan
has been revised and moved to Sec. 98.83(h). This provision provides
that CCDF funds are available for costs incurred by a tribal Lead
Agency only after the funds are made available by Congress for Federal
obligation unless costs are incurred for planning activities related to
the submission of an initial CCDF Plan. Federal obligation of funds for
planning costs is subject to the actual availability of the
appropriation.
We propose to move this provision from Subpart G (Financial
Management) to Subpart I (Indian Tribes) because it applies only to
Tribes. All States and eligible Territories are currently CCDF
grantees, but some Tribes are not current grantees and are eligible to
submit initial CCDF Plans.
Construction and Renovation (Section 98.84)
Upon requesting and receiving approval from the Secretary of the
Department of Health and Human Services, a tribal Lead Agency may use
amounts from its CCDF allocation for construction and major renovation
of child care facilities (pursuant to new section 6580(c)(6) of the Act
and proposed regulations at Sec. 98.84(a)).
Under the proposed rule, these payments could cover costs of
amortizing the principal and paying interest on loans for construction
and major renovation. This policy is consistent with Head Start
procedures for construction and renovation--which allow use of funds to
pay for principal and interest on loans. Loans are an essential part of
many construction and renovation projects.
Proposed Sec. 98.84(b) reflects the statutory requirement that, to
be approved by the Secretary, a request to use CCDF funds for
construction or major renovation must be made in accordance with
uniform procedures developed by the Secretary. These uniform procedures
will be provided to tribal Lead Agencies via program instructions.
By statute (and proposed Sec. 98.84(b)), such requests must
demonstrate that: (1) Adequate facilities are not otherwise available
to enable the tribal Lead Agency to carry out child care programs; (2)
the lack of such facilities will inhibit the operation of child care
programs in the future; and (3) the use of funds for construction or
major renovation will not result in a decrease in the level of child
care services provided by the tribal Lead Agency as compared to the
level of services provided by the tribal Lead Agency in the preceding
fiscal year. In light of the requirement that a Tribe cannot reduce the
level of child care services, a tribal Lead Agency should plan in
advance for anticipated construction and renovation costs.
Proposed Sec. 98.84(c) allows tribal Lead Agencies to use CCDF
funds for reasonable and necessary planning costs associated with
assessing the need for construction or renovation or for preparing a
request, in accordance with the uniform procedures established by
program instruction, to spend CCDF funds on construction or major
renovation. However, a tribal Lead Agency may not use CCDF funds to pay
for the costs of an architect, engineer, or other consultant until its
request is approved by the Secretary.
Proposed Sec. 98.84(d) requires tribal Lead Agencies which receive
approval from the Secretary to use CCDF funds for construction or major
renovation to comply with specified requirements in 45 CFR Part 92 and
any additional requirements established by program instruction. Title
45 CFR Part 92 does not generally apply to the Child Care and
Development Fund. However, we are proposing to make specified sections
applicable for purposes of construction and renovation only.
The ACF has an interest in property that is constructed or
renovated with CCDF funds. This interest takes the form of restrictions
on use and disposition of the property. The Federal interest also is
manifested in the requirement that ACF receive a share of the proceeds
from any sale of property. These requirements regarding Federal share
and the use and disposition of property are found at 45 CFR 92.31 (b)
and (c).
Title requirements at 45 CFR 92.31(a) provide that title to a
facility
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constructed or renovated with CCDF funds vests with the grantee upon
acquisition.
Title 45 CFR 92.22 concerns cost principles and allowable cost
requirements. Consistent with these cost principles, reasonable fees
and costs associated with and necessary to the construction or
renovation of a facility are payable with CCDF funds, but require
prior, written approval from ACF.
Title 45 CFR 92.25 governs program income. Program income derived
from real property constructed or renovated with CCDF funds must be
deducted from the total allowable costs of the budget period in which
it was produced.
All facility construction and renovation transactions must comply
with the procurement procedures in 45 CFR 92.36, and must be conducted
in a manner to provide, to the maximum extent practicable, open and
free competition.
Tribal Lead Agencies must also comply with any additional
requirements established by program instruction. These requirements may
include, but are not limited to, requirements concerning: The recording
of a Notice of Federal Interest in property; rights and
responsibilities in the event of a grantee's default on a mortgage;
insurance and maintenance; submission of plans, specifications,
inspection reports, and other legal documents; and modular units.
The proposed definition of ``facility'' at Sec. 98.2 would allow
tribal Lead Agencies to use CCDF funds for the construction or
renovation of modular units as well as real property. Proposed
regulations at Sec. 98.2 would define ``construction'' as the building
of a facility that does not currently exist. The proposed rule would
define ``major renovation'' as: (1) Structural changes to the
foundation, roof, floor, exterior or load-bearing walls of a facility,
or the extension of a facility to increase its floor area; or (2)
extensive alteration of a facility such as to significantly change its
function and purpose, even if such renovation does not include any
structural change. The proposed definitions of ``facility,''
``construction,'' and ``major renovation'' are the same definitions
used in Head Start construction and renovation procedures.
Section 98.84(e) proposes that, in lieu of obligation and
liquidation requirements at Sec. 98.60(e), tribal Lead Agencies must
liquidate CCDF funds used for construction or major renovation by the
end of the second fiscal year following the fiscal year for which the
grant is awarded. This will give tribal Lead Agencies three years to
liquidate funds approved by the Secretary for use on construction or
major renovation with no separate obligation period. We are proposing
these requirements to allow sufficient time for construction and
renovation projects. We invite comments on this proposal.
While a tribal Lead Agency must request approval from the Secretary
before spending CCDF funds on construction or major renovation,
approval is not necessary for minor renovation pursuant to section
658F(b) of the Act and proposed regulations at Sec. 98.84(f). For
tribal Lead Agencies, minor renovation includes all renovation other
than major renovation or construction.
Amounts used for construction and major renovation are not
considered administrative costs for the purpose of the 15 percent
administrative cost limit under proposed Sec. 98.83(g). We do not
believe that Congress intended for us to unnecessarily limit a tribal
Lead Agency's ability to use CCDF funds on construction and renovation
projects which meet the requirements necessary for Secretarial
approval.
Finally, the new statutory provision allowing tribal construction
with CCDF funds provides an opportunity for tribal grantees to leverage
resources for quality facilities and services by coordinating with
their Tribe's Head Start program.
Subpart J--Monitoring, Non-Compliance and Complaints
Penalties and Sanctions (Section 98.92)
We have amended paragraphs (1) and (2) of Sec. 98.92(a), because
the statutory amendments changed the penalty for a Lead Agency found to
have failed to substantially comply with the statute, the regulations,
or its own Plan. We also have deleted the former Sec. 98.92(b) as
redundant due to the statutory amendments. In keeping with prior
statutory language, the former regulations authorized the withholding
of further payments to a grantee as a penalty for non-compliance. The
amendments at section 658I(b)(2)(A)(ii) give the Secretary the option
to disallow improperly expended funds or to deduct an amount equal to
or less than an improperly expended amount from the administrative
portion of the Lead Agency's allotment for the following fiscal year.
The Secretary can also impose a penalty that is a combination of these
two options.
Paragraph (c), concerning other penalties has been revised and
redesignated as paragraph (b) in light of the amended statute. We also
propose a new regulation at paragraph (b)(2) to establish a penalty on
the Lead Agency for: (1) a failure to implement any part of the CCDF
program in accordance with the Act or regulations or its Plan; or (2) a
violation of the Act or regulations. Such penalty would be invoked when
a failure or violation by the Lead Agency does not result in an clearly
identifiable amount of improperly expended funds. For example, the
failure to provide the reports required under subpart H or the
inappropriate limitation of access to a particular type of provider in
violation of the parental choice provisions of Subpart D do not result
in a clearly identifiable amount of improperly expended funds. Hence,
the penalties at paragraph (a) could not be applied. However, our
stewardship of the program since its creation indicates the need for a
more effective means of ensuring conformity with the statute and
regulations than is offered by the existing regulations. Section
658I(b)(2)(B) of the CCDBG Act provides for an ``additional sanction''
if the Secretary finds there has been non-compliance with the plan or
any requirement of the program.
Because a failure or violation which would cause the penalty under
(b)(2) to be imposed may not have an amount of improperly expended
funds associated with it, we needed to determine what amount of penalty
should be imposed. We considered the range of TANF penalties found at
section 409 of the Social Security Act and decided to use the TANF
penalty provisions for failure to report at section 409(a)(2) of the
Social Security Act as guidance. Accordingly, our proposed
Sec. 98.92(b)(2) provides that a penalty equal to four percent of the
annual Discretionary allotment will be withheld no earlier than the
second full quarter following the quarter in which the Lead Agency was
notified of the proposed penalty.
Since the TANF penalties provisions include provisions for good
cause and corrective action, we have proposed to include similar
provisions in Sec. 98.92(b)(2). The penalty will not be applied if the
Lead Agency corrects the failure or violation before the penalty is to
be applied or if it submits a plan for corrective action that is
accepted by the Secretary. Waiting at least one full quarter before
applying the penalty provides sufficient time to remedy the situations
which we envision would cause the penalty to be invoked. The Lead
Agency may, during that time, show cause to the Secretary why the
amount of the penalty, if imposed, should be reduced. We are especially
[[Page 39641]]
seeking comments on the penalty option proposed at Sec. 98.92(b)(2).
The paragraphs formerly located at Sec. 98.92 (d) and (e) are
relocated at Sec. 98.92 (c) and (d), respectively. We have added a new
Sec. 98.92(e) providing that it is at the Secretary's sole discretion
to choose the penalty to be imposed.
List of Subjects
45 CFR Part 98
Child care, Grant program--social programs, Parental choice,
Reporting and record keeping requirements.
45 CFR Part 99
Administrative practice and procedure, Child care, Grant program--
social programs.
(Catalog of Federal Domestic Assistance Programs: 93.037, Child Care
and Development Block Grant; 93.596, Child Care Mandatory and
Matching Funds)
Dated: March 7, 1997.
Olivia A. Golden,
Principal Deputy Assistant Secretary for Children and Families.
Approved: April 21, 1997.
Donna E. Shalala,
Secretary, Department of Health and Human Services.
For the reasons set forth in the preamble, Parts 98 and 99 of
Subtitle A of Title 45 of the Code of Federal Regulations are proposed
to be amended as follows:
PART 98--CHILD CARE AND DEVELOPMENT FUND
1. Part 98 is proposed to be revised as follows:
Subpart A--Goals, Purposes and Definitions
Sec.
98.1 Goals and purposes.
98.2 Definitions.
98.3 Effect on State law.
Subpart B--General Application Procedures
98.10 Lead Agency responsibilities.
98.11 Administration under contracts and agreements.
98.12 Coordination and consultation.
98.13 Applying for funds.
98.14 Plan process.
98.15 Assurances and certifications.
98.16 Plan provisions.
98.17 Period covered by Plan.
98.18 Approval and disapproval of Plans and Plan amendments.
Subpart C--Eligibility for Services
98.20 A child's eligibility for child care services.
Subpart D--Program Operations (Child Care Services)--Parental Rights
and Responsibilities
98.30 Parental choice.
98.31 Parental access.
98.32 Parental complaints.
98.33 Consumer education.
98.34 Parental rights and responsibilities.
Subpart E--Program Operations (Child Care Services)--Lead Agency and
Provider Requirements
98.40 Compliance with applicable State and local regulatory
requirements.
98.41 Health and safety requirements.
98.42 Sliding fee scales.
98.43 Equal access.
98.44 Priority for child care services.
98.45 List of providers.
98.46 Nondiscrimination in admissions on the basis of religion.
98.47 Nondiscrimination in employment on the basis of religion.
Subpart F--Use of Child Care and Development Funds
98.50 Child care services.
98.51 Activities to improve the quality of child care.
98.52 Administrative costs.
98.53 Matching Fund requirements.
98.54 Restrictions on the use of funds.
98.55 Cost allocation.
Subpart G--Financial Management
98.60 Availability of funds.
98.61 Allotments from the Discretionary Fund.
98.62 Allotments from the Mandatory Fund.
98.63 Allotments from the Matching Fund.
98.64 Reallotment and redistribution of funds.
98.65 Audits and financial reporting.
98.66 Disallowance procedures.
98.67 Fiscal requirements.
Subpart H--Program Reporting Requirements
98.70 Reporting requirements.
98.71 Content of reports.
Subpart I--Indian Tribes
98.80 General procedures and requirements.
98.81 Application and Plan procedures.
98.82 Coordination.
98.83 Requirements for tribal programs.
98.84 Construction and renovation of child care facilities.
Subpart J--Monitoring, Non-Compliance and Complaints
98.90 Monitoring.
98.91 Non-compliance.
98.92 Penalties and sanctions.
98.93 Complaints.
Authority: 42 U.S.C. 618, 9858.
Subpart A--Goals, Purposes and Definitions
Sec. 98.1 Goals and purposes.
(a) The goals of the CCDF are to:
(1) Allow each State maximum flexibility in developing child care
programs and policies that best suit the needs of children and parents
within the State;
(2) Promote parental choice to empower working parents to make
their own decisions on the child care that best suits their family's
needs;
(3) Encourage States to provide consumer education information to
help parents make informed choices about child care;
(4) Assist States to provide child care to parents trying to
achieve independence from public assistance; and
(5) Assist States in implementing the health, safety, licensing,
and registration standards established in State regulations.
(b) The purpose of the CCDF is to increase the availability,
affordability, and quality of child care services. The program offers
Federal funding to States, Territories, Indian Tribes, and tribal
organizations in order to:
(1) Provide low-income families with the financial resources to
find and afford quality child care for their children;
(2) Enhance the quality and increase the supply of child care for
all families, including those who receive no direct assistance under
the CCDF;
(3) Provide parents with a broad range of options in addressing
their child care needs;
(4) Strengthen the role of the family;
(5) Improve the quality of, and coordination among, child care
programs and early childhood development programs; and
(6) Increase the availability of early childhood development and
before- and after-school care services.
(c) The purpose of these regulations is to provide the basis for
administration of the Fund. These regulations provide that Lead
Agencies:
(1) Maximize parental choice through the use of certificates and
through grants and contracts;
(2) Include in their programs a broad range of child care
providers, including center-based care, family child care, in-home
care, care provided by relatives and sectarian child care providers;
(3) Provide quality child care that meets applicable requirements;
(4) Coordinate planning and delivery of services at all levels;
(5) Design flexible programs that provide for the changing needs of
recipient families;
[[Page 39642]]
(6) Administer the CCDF responsibly to ensure that statutory
requirements are met and that adequate information regarding the use of
public funds is provided; and
(7) Design programs that provide uninterrupted service to families
and providers, to the extent statutorily possible.
Sec. 98.2 Definitions.
For the purpose of this part and part 99:
The Act refers to the Child Care and Development Block Grant Act of
1990, section 5082 of the Omnibus Budget Reconciliation Act of 1990,
Pub. L. 101-508, as amended and codified at 42 U.S.C. 9858 et seq.
ACF means the Administration for Children and Families;
Application is a request for funding that includes the information
required at Sec. 98.13;
Assistant Secretary means the Assistant Secretary for Children and
Families, Department of Health and Human Services;
Caregiver means an individual who provides child care services
directly to an eligible child on a person-to-person basis;
Categories of care means center-based child care, group home child
care, family child care and in-home care;
Center-based child care provider means a provider licensed or
otherwise authorized to provide child care services for fewer than 24
hours per day per child in a non-residential setting, unless care in
excess of 24 hours is due to the nature of the parent(s)' work;
Child care certificate means a certificate (that may be a check, or
other disbursement) that is issued by a grantee directly to a parent
who may use such certificate only as payment for child care services or
as a deposit for child care services if such a deposit is required of
other children being cared for by the provider, pursuant to Sec. 98.30.
Nothing in this part shall preclude the use of such certificate for
sectarian child care services if freely chosen by the parent. For the
purposes of this part, a child care certificate is assistance to the
parent, not assistance to the provider;
Child Care and Development Fund (CCDF) means the child care
programs conducted under the provisions of the Child Care and
Development Block Grant Act, as amended. The Fund consists of
Discretionary Funds authorized under section 658B of the amended Act,
and Mandatory and Matching Funds appropriated under section 418 of the
Social Security Act;
Child care provider that receives assistance means a child care
provider that receives Federal funds under the CCDF pursuant to grants,
contracts, or loans, but does not include a child care provider to whom
Federal funds under the CCDF are directed only through the operation of
a certificate program;
Child care services, for the purposes of Sec. 98.50, means the care
given to an eligible child by an eligible child care provider;
Construction means the erection of a facility that does not
currently exist;
The Department means the Department of Health and Human Services;
Discretionary funds means the funds authorized under section 658B
of the Child Care and Development Block Grant Act. The Discretionary
funds were formerly referred to as the Child Care and Development Block
Grant;
Eligible child means an individual who meets the requirements of
Sec. 98.20;
Eligible child care provider means:
(1) A center-based child care provider, a group home child care
provider, a family child care provider, an in-home child care provider,
or other provider of child care services for compensation that--
(i) Is licensed, regulated, or registered under applicable State or
local law as described in Sec. 98.40; and
(ii) Satisfies State and local requirements, including those
referred to in Sec. 98.41 applicable to the child care services it
provides; or
(2) A child care provider who is 18 years of age or older who
provides child care services only to eligible children who are, by
marriage, blood relationship, or court decree, the grandchild, great
grandchild, sibling (if such provider lives in separate residence),
niece, or nephew of such provider, and complies with any applicable
requirements that govern child care provided by the relative involved;
Facility means real property or modular unit appropriate for use by
a grantee to carry out a child care program;
Family child care provider means one individual who provides child
care services for fewer than 24 hours per day per child, as the sole
caregiver, in a private residence other than the child's residence,
unless care in excess of 24 hours is due to the nature of the
parent(s)' work;
Group home child care provider means two or more individuals who
provide child care services for fewer than 24 hours per day per child,
in a private residence other than the child's residence, unless care in
excess of 24 hours is due to the nature of the parent(s)' work;
Indian Tribe means any Indian Tribe, band, nation, or other
organized group or community, including any Alaska Native village or
regional or village corporation as defined in or established pursuant
to the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq) that
is recognized as eligible for the special programs and services
provided by the United States to Indians because of their status as
Indians;
In-home child care provider means an individual who provides child
care services in the child's own home;
Lead agency means the State, territorial or tribal entity
designated under Secs. 98.10 and 98.16(a) to which a grant is awarded
and that is accountable for the use of the funds provided;
Licensing or regulatory requirements means requirements necessary
for a provider to legally provide child care services in a State or
locality, including registration requirements established under State,
local or tribal law;
Liquidation period means the applicable time period during which a
fiscal year's grant shall be liquidated pursuant to the requirements at
Sec. 98.60.;
Major renovation means: (1) Structural changes to the foundation,
roof, floor, exterior or load-bearing walls of a facility, or the
extension of a facility to increase its floor area; or
(2) Extensive alteration of a facility such as to significantly
change its function and purpose, even if such renovation does not
include any structural change;
Mandatory funds means the general entitlement child care funds
described at section 418(a)(1) of the Social Security Act;
Matching funds means the remainder of the general entitlement child
care funds that are described at section 418(a)(2) of the Social
Security Act;
Modular unit means a portable structure made at another location
and moved to a site for use by a grantee to carry out a child care
program;
Obligation period means the time period during which a fiscal
year's grant shall be obligated pursuant to Sec. 98.60;
Parent means a parent by blood, marriage or adoption and also means
a legal guardian, or other person standing in loco parentis;
The Plan means the Plan for the implementation of programs under
the CCDF;
Program period means the time period for using a fiscal year's
grant and does not extend beyond the last day to liquidate funds;
Programs refers generically to all activities under the CCDF,
including child care services and other activities pursuant to
Sec. 98.50 as well as quality
[[Page 39643]]
and availability activities pursuant to Sec. 98.51;
Provider means the entity providing child care services;
Real property means land, including land improvements, structures
and appurtenances thereto, excluding movable machinery and equipment;
The regulation refers to the actual regulatory text contained in
parts 98 and 99 of this chapter;
Secretary means the Secretary of the Department of Health and Human
Services;
Sectarian organization or sectarian child care provider means
religious organizations or religious providers generally. The terms
embrace any organization or provider that engages in religious conduct
or activity or that seeks to maintain a religious identity in some or
all of its functions. There is no requirement that a sectarian
organization or provider be managed by clergy or have any particular
degree of religious management, control, or content;
Sectarian purposes and activities means any religious purpose or
activity, including but not limited to religious worship or
instruction;
Services for which assistance is provided means all child care
services funded under the CCDF, either as assistance directly to child
care providers through grants, contracts, or loans, or indirectly as
assistance to parents through child care certificates;
Sliding fee scale means a system of cost sharing by a family based
on income and size of the family, in accordance with Sec. 98.42;
State means any of the States, the District of Columbia, the
Commonwealth of Puerto Rico, the Virgin Islands of the United States,
Guam, American Samoa, the Commonwealth of the Northern Mariana Islands,
and includes Tribes unless otherwise specified;
Tribal Mandatory funds means the child care funds set aside at
section 418(a)(4) of the Social Security Act. The funds consist of
between one and two percent of the aggregate Mandatory and Matching
child care funds reserved by the Secretary in each fiscal year for
payments to Indian Tribes and tribal organizations; and
Types of providers means the different classes of providers under
each category of care. For the purposes of the CCDF, types of providers
include non-profit providers, for-profit providers, sectarian providers
and relatives who provide care.
Sec. 98.3 Effect on State law.
(a) Nothing in the Act or this part shall be construed to supersede
or modify any provision of a State constitution or State law that
prohibits the expenditure of public funds in or by sectarian
organizations, except that no provision of a State constitution or
State law shall be construed to prohibit the expenditure in or by
sectarian institutions of any Federal funds provided under this part.
(b) If a State law or constitution would prevent CCDF funds from
being expended for the purposes provided in the Act, without
limitation, then States shall segregate State and Federal funds.
Subpart B--General Application Procedures
Sec. 98.10 Lead Agency responsibilities.
The Lead Agency, as designated by the chief executive officer of
the State (or by the appropriate Tribal leader or applicant), shall:
(a) Administer the CCDF program, directly or through other
governmental or non-governmental agencies, in accordance with
Sec. 98.11;
(b) Apply for funding under this part, pursuant to Sec. 98.13;
(c) Consult with appropriate representatives of local government in
developing a Plan to be submitted to the Secretary pursuant to
Sec. 98.14(b);
(d) Hold at least one public hearing in accordance with
Sec. 98.14(c); and
(e) Coordinate CCDF services pursuant to Sec. 98.12.
Sec. 98.11 Administration under contracts and agreements.
(a) The Lead Agency has broad authority to administer the program
through other governmental or non-governmental agencies. In addition,
the Lead Agency can use other public or private local agencies to
implement the program; however:
(1) The Lead Agency shall retain overall responsibility for the
administration of the program, as defined in paragraph (b) of this
section;
(2) The Lead Agency shall serve as the single point of contact for
issues involving the administration of the grantee's CCDF program; and
(3) Administrative and implementation responsibilities undertaken
by agencies other than the Lead Agency shall be governed by written
agreements that specify the mutual roles and responsibilities of the
Lead Agency and the other agencies in meeting the requirements of this
part.
(b) In retaining overall responsibility for the administration of
the program, the Lead Agency shall:
(1) Determine the basic usage and priorities for the expenditure of
CCDF funds;
(2) Promulgate all rules and regulations governing overall
administration of the Plan;
(3) Submit all reports required by the Secretary;
(4) Ensure that the program complies with the approved Plan and all
Federal requirements;
(5) Oversee the expenditure of funds by subgrantees and
contractors;
(6) Monitor programs and services;
(7) Fulfill the responsibilities of any sub-grantee in any:
disallowance under subpart G; complaint or compliance action under
subpart J; or hearing or appeal action under part 99 of this chapter;
and
(8) Ensure that all State and local or non-governmental agencies
through which State administers the program, including agencies and
contractors that determine individual eligibility, operate according to
the rules established for the program.
Sec. 98.12 Coordination and consultation.
The Lead Agency shall:
(a) Coordinate the provision of services for which assistance is
provided under this part with the agencies listed in Sec. 98.14(a).
(b) Consult, in accordance with Sec. 98.14(b), with representatives
of general purpose local government during the development of the Plan;
and
(c) Coordinate, to the maximum extent feasible, with any Indian
Tribes in the State receiving CCDF funds in accordance with subpart I
of this part.
Sec. 98.13 Applying for funds.
The Lead Agency of a State or Territory shall apply for Child Care
and Development funds by providing the following:
(a) The amount of funds requested at such time and in such manner
as prescribed by the Secretary.
(b) The following assurances or certifications:
(1) An assurance that the Lead Agency will comply with the
requirements of the Act and this part;
(2) A lobbying certification that assures that the funds will not
be used for the purpose of influencing pursuant to 45 CFR part 93, and,
if necessary, a Standard Form LLL (SF-LLL) that discloses lobbying
payments;
(3) An assurance that the Lead Agency provides a drug-free
workplace pursuant to 45 CFR 76.600, or a statement that such an
assurance has already been submitted for all HHS grants;
(4) A certification that no principals have been debarred pursuant
to 45 CFR 76.500;
[[Page 39644]]
(5) Assurances that the Lead Agency will comply with the applicable
provisions regarding nondiscrimination at 45 CFR part 80 (implementing
title VI of the Civil Rights Act of 1964, as amended), 45 CFR part 84
(implementing section 504 of the Rehabilitation Act of 1973, as
amended), 45 CFR part 86 (implementing title IX of the Education
Amendments of 1972, as amended) and 45 CFR part 91 (implementing the
Age Discrimination Act of 1975, as amended), and;
(6) Assurances that the Lead Agency will comply with the applicable
provisions of Public Law 103-277, Part C--Environmental Tobacco Smoke,
also known as the Pro-Children Act of 1994, regarding prohibitions on
smoking.
(c) The Child Care and Development Fund Plan, at times and in such
manner as required in Sec. 98.17; and
(d) Such other information as specified by the Secretary.
Sec. 98.14 Plan process.
In the development of each Plan, as required pursuant to
Sec. 98.17, the Lead Agency shall:
(a) Coordinate the provision of services funded under this Part
with other Federal, State, and local child care and early childhood
development programs, including such programs for the benefit of Indian
children. At a minimum, the Lead Agency shall coordinate with the
State, and if applicable, tribal agencies responsible for:
(1) Public health, including the agency responsible for
immunizations;
(2) Employment services/workforce development;
(3) Public education; and
(4) Providing Temporary Assistance for Needy Families, and provide
a description of the results of the coordination with each of these
agencies in the CCDF Plan.
(b) Consult with appropriate representatives of local governments;
(c)(1) Hold at least one hearing in the State, after at least 20
days of statewide public notice, to provide to the public an
opportunity to comment on the provision of child care services under
the Plan.
(2) The hearing required by paragraph (c)(1) shall be held before
the Plan is submitted to ACF, but no earlier than nine months before
the Plan becomes effective.
Sec. 98.15 Assurances and certifications.
(a) The Lead Agency shall include the following assurances in its
CCDF Plan:
(1) Upon approval, it will have in effect a program that complies
with the provisions of the CCDF Plan, and that is administered in
accordance with the Child Care and Development Block Grant Act of 1990,
as amended, section 418 of the Social Security Act, and all other
applicable Federal laws and regulations;
(2) The parent(s) of each eligible child within the area served by
the Lead Agency who receives or is offered child care services for
which financial assistance is provided is given the option either:
(i) To enroll such child with a child care provider that has a
grant or contract for the provision of the service; or
(ii) To receive a child care certificate as defined in Sec. 98.2;
(3) In cases in which the parent(s), pursuant to Sec. 98.30, elects
to enroll their child with a provider that has a grant or contract with
the Lead Agency, the child will be enrolled with the eligible provider
selected by the parent to the maximum extent practicable;
(4) In accordance with Sec. 98.30, the child care certificate
offered to parents shall be of a value commensurate with the subsidy
value of child care services provided under a grant or contract;
(5) With respect to State and local regulatory requirements (or
tribal regulatory requirements), health and safety requirements,
payment rates, and registration requirements, State or local (or
tribal) rules, procedures or other requirements promulgated for the
purpose of the CCDF will not significantly restrict parental choice
from among categories of care or types of providers, pursuant to
Sec. 98.30(g).
(6) That if expenditures for pre-Kindergarten services are used to
meet the maintenance-of-effort requirement, the State has not reduced
its level of effort in full-day/full-year services, pursuant to
Sec. 98.53(h)(1).
(b) The Lead Agency shall include the following certifications in
its CCDF Plan:
(1) In accordance with Sec. 98.31, it has procedures in place to
ensure that providers of child care services for which assistance is
provided under the CCDF, afford parents unlimited access to their
children and to the providers caring for their children, during the
normal hours of operations and whenever such children are in the care
of such providers;
(2) As required by Sec. 98.32, it maintains a record of
substantiated parental complaints and makes information regarding such
complaints available to the public on request;
(3) It will collect and disseminate to parents of eligible children
and the general public, consumer education information that will
promote informed child care choices, as required by Sec. 98.33;
(4) There are in effect licensing requirements applicable to child
care services provided within the State (or area served by tribal Lead
Agency), pursuant to Sec. 98.40;
(5) There are in effect within the State (or other area served by
the Lead Agency), under State or local (or tribal) law, requirements
designed to protect the health and safety of children that are
applicable to child care providers that provide services for which
assistance is made available under the CCDF, pursuant to Sec. 98.41;
(6) In accordance with Sec. 98.41, procedures are in effect to
ensure that child care providers of services for which assistance is
provided under the CCDF comply with all applicable State or local (or
tribal) health and safety requirements; and
(7) Payment rates for the provision of child care services, in
accordance with Sec. 98.43, are sufficient to ensure equal access for
eligible children to comparable child care services in the State or
sub-State area that are provided to children whose parents are not
eligible to receive assistance under this program or under any other
Federal or State child care assistance programs.
Sec. 98.16 Plan provisions.
A CCDF Plan shall contain the following:
(a) Specification of the Lead Agency whose duties and
responsibilities are delineated in Sec. 98.10;
(b) The assurances and certifications listed under Sec. 98.15;
(c)(1) A description of how the CCDF program will be administered
and implemented, if the Lead Agency does not directly administer and
implement the program;
(2) Identification of the entities designated to receive private
donated funds and the purposes for which such funds will be expended,
pursuant to Sec. 98.53(f);
(d) A description of the coordination and consultation processes
involved in the development of the Plan, including a description of
public-private partnership activities that promote business involvement
in meeting child care needs pursuant to Sec. 98.14 (a) and (b);
(e) A description of the public hearing process, pursuant to
Sec. 98.14(c);
(f) Definitions of the following terms for purposes of determining
eligibility, pursuant to Secs. 98.20(a) and 98.44:
(1) Special needs child;
(2) Physical or mental incapacity (if applicable);
(3) Attending (a job training or educational program);
[[Page 39645]]
(4) Job training and educational program;
(5) Residing with;
(6) Working;
(7) Protective services (if applicable);
(8) Very low income; and
(9) in loco parentis.
(g) For child care services pursuant to Sec. 98.50:
(1) A description of such services and activities;
(2) Any limits established for the provision of in-home care and
the justification of such limits pursuant to Sec. 98.30(e)(1)(iv);
(3) A list of political subdivisions in which such services and
activities are offered, if such services and activities are not
available throughout the entire service area;
(4) A description of how the Lead Agency will meet the needs of
certain families specified at Sec. 98.50(e).
(5) Any additional eligibility criteria, priority rules and
definitions established pursuant to Sec. 98.20(b);
(h) A description of the activities to improve the quality and
availability of child care, to provide comprehensive consumer
education, and to increase parental choice, pursuant to Sec. 98.51;
(i) A description of the sliding fee scale(s) (including any
factors other than income and family size used in establishing the fee
scale(s)) that provide(s) for cost sharing by the families that receive
child care services for which assistance is provided under the CCDF,
pursuant to Sec. 98.42;
(j) A description of the health and safety requirements, applicable
to all providers of child care services for which assistance is
provided under the CCDF, in effect pursuant to Sec. 98.41;
(k) A description of the child care certificate payment system(s),
including the form or forms of the child care certificate, pursuant to
Sec. 98.30(c);
(l) Payment rates and a summary of the facts, including a biennial
local market rate survey, relied upon to determine that the rates
provided are sufficient to ensure equal access pursuant to Sec. 98.43;
(m) A detailed description of how the Lead Agency maintains a
record of substantiated parental complaints and how it makes
information regarding those complaints available to the public on
request, pursuant to Sec. 98.32;
(n) A detailed description of the procedures in effect for
affording parents unlimited access to their children whenever their
children are in the care of the provider, pursuant to Sec. 98.31;
(o) A detailed description of the licensing requirements applicable
to child care services provided, and a description of how such
licensing requirements are effectively enforced, pursuant to
Sec. 98.40;
(p) Pursuant to Sec. 98.33(b), the definitions or criteria used to
implement the exception, provided in section 407(e)(2) of the Social
Security Act, to individual penalties in the TANF work requirement
applicable to a single custodial parent caring for a child under age
six;
(q) A description of the efforts to ensure that pre-Kindergarten
programs, for which funds under Sec. 98.53(b) are claimed, meet the
needs of working parents; and
(r) Such other information as specified by the Secretary.
Sec. 98.17 Period covered by Plan.
(a) For States, Territories, and Indian Tribes the Plan shall cover
a period of two years.
(b) The Lead Agency shall submit a new Plan prior to the expiration
of the time period specified in paragraph (a) of this section, at such
time as required by the Secretary in written instructions.
Sec. 98.18 Approval and disapproval of Plans and Plan amendments.
(a) Plan approval. The Assistant Secretary will approve a Plan that
satisfies the requirements of the Act and this part. Plans will be
approved not later than the 90th day following the date on which the
Plan submittal is received, unless a written agreement to extend that
period has been secured.
(b) Plan amendments. Approved Plans shall be amended whenever a
substantial change in the program occurs. A Plan amendment shall be
submitted within 60 days of the effective date of the change. Plan
amendments will be approved not later than the 90th day following the
date on which the amendment is received, unless a written agreement to
extend that period has been secured.
(c) Appeal of disapproval of a Plan or Plan amendment.
(1) An applicant or Lead Agency dissatisfied with a determination
of the Assistant Secretary pursuant to paragraphs (a) or (b) of this
section with respect to any Plan or amendment may, within 60 days after
the date of receipt of notification of such determination, file a
petition with the Assistant Secretary asking for reconsideration of the
issue of whether such Plan or amendment conforms to the requirements
for approval under the Act and pertinent Federal regulations.
(2) Within 30 days after receipt of such petition, the Assistant
Secretary shall notify the applicant or Lead Agency of the time and
place at which the hearing for the purpose of reconsidering such issue
will be held.
(3) Such hearing shall be held not less than 30 days, nor more than
90 days, after the notification is furnished to the applicant or Lead
Agency, unless the Assistant Secretary and the applicant or Lead Agency
agree in writing on another time.
(4) Action pursuant to an initial determination by the Assistant
Secretary described in paragraphs (a) and (b) of this section that a
Plan or amendment is not approvable shall not be stayed pending the
reconsideration, but in the event that the Assistant Secretary
subsequently determines that the original decision was incorrect, the
Assistant Secretary shall certify restitution forthwith in a lump sum
of any funds incorrectly withheld or otherwise denied. The hearing
procedures are described in part 99 of this chapter.
Subpart C--Eligibility for Services
Sec. 98.20 A child's eligibility for child care services.
(a) In order to be eligible for services under Sec. 98.50, a child
shall:
(1)(i) Be under 13 years of age; or,
(ii) At the option of the Lead Agency, be under age 19 and
physically or mentally incapable of caring for himself or herself, or
under court supervision;
(2) Reside with a family whose income does not exceed 85 percent of
the State's median income for a family of the same size; and
(3)(i) Reside with a parent or parents (as defined in Sec. 98.2)
who are working or attending a job training or educational program; or
(ii) Receive, or need to receive, protective services and reside
with a parent or parents (as defined in Sec. 98.2) other than the
parent(s) described in paragraph (a)(3)(i) of this section. At grantee
option, the requirements in paragraph (a)(2) of this section and in
Sec. 98.42(c) may be waived for families eligible for child care
pursuant to this paragraph, if determined to be necessary on a case-by-
case basis by, or in consultation with, an appropriate protective
services worker.
(b) Pursuant to Sec. 98.16(g)(5), a grantee or other administering
agency may establish eligibility conditions or priority rules in
addition to those specified in this section and Sec. 98.44 so long as
they do not:
(1) Discriminate against children on the basis of race, national
origin, ethnic background, sex, religious affiliation, or disability;
(2) Limit parental rights provided under Subpart D; or
[[Page 39646]]
(3) Violate the provisions of this section, Sec. 98.44, or the
Plan. In particular, such conditions or priority rules may not be based
on a parent's preference for a category of care or type of provider. In
addition, such additional conditions or rules may not be based on a
parent's choice of a child care certificate.
Subpart D--Program Operations (Child Care Services)--Parental
Rights and Responsibilities
Sec. 98.30 Parental choice.
(a)(1) The parent or parents of an eligible child who receives or
is offered child care services shall be offered a choice:
(i) To enroll the child with an eligible child care provider that
has a grant or contract for the provision of such services, if such
services are available; or
(ii) To receive a child care certificate as defined in Sec. 98.2.
(2) Such choice shall be offered any time that child care services
are made available to a parent.
(b) When a parent elects to enroll the child with a provider that
has a grant or contract for the provision of child care services, the
child will be enrolled with the provider selected by the parent to the
maximum extent practicable.
(c) In cases in which a parent elects to use a child care
certificate, such certificate:
(1) Will be issued directly to the parent;
(2) Shall be of a value commensurate with the subsidy value of the
child care services provided under paragraph (a)(1) of this section;
(3) May be used as a deposit for child care services if such a
deposit is required of other children being cared for by the provider;
(4) May be used for child care services provided by a sectarian
organization or agency, including those that engage in religious
activities, if those services are chosen by the parent;
(5) May be expended by providers for any sectarian purpose or
activity that is part of the child care services, including sectarian
worship or instruction;
(6) Shall not be considered a grant or contract to a provider but
shall be considered assistance to the parent.
(d) Child care certificates shall be made available to any parents
offered child care services.
(e)(1) For child care services, certificates under paragraph
(a)(1)(ii) of this section shall permit parents to choose from a
variety of child care categories, including:
(i) Center-based child care;
(ii) Group home child care;
(iii) Family child care; and
(iv) In-home child care, with limitations, if any, imposed by the
Lead Agency and described in its plan at Sec. 98.16(g)(2).
(2) Under each of the categories in paragraph (e)(1) of this
section, care by a sectarian provider may not be limited or excluded.
(3) Lead Agencies shall provide information regarding the range of
provider options under paragraph (e)(1) of this section, including care
by sectarian providers and relatives, to families offered child care
services.
(f) With respect to State and local regulatory requirements under
Sec. 98.40, health and safety requirements under Sec. 98.41, and
payment rates under Sec. 98.43, CCDF funds will not be available to a
Lead Agency if State or local rules, procedures or other requirements
promulgated for purposes of the CCDF significantly restrict parental
choice by:
(1) Expressly or effectively excluding:
(i) Any category of care or type of provider, as defined in
Sec. 98.2; or
(ii) Any type of provider within a category of care; or
(2) Having the effect of limiting parental access to or choice from
among such categories of care or types of providers, as defined in
Sec. 98.2; or
(3) Excluding a significant number of providers in any category of
care or of any type as defined in Sec. 98.2.
Sec. 98.31 Parental access.
Lead Agencies shall have in effect procedures to ensure that
providers of child care services for which assistance is provided
afford parents unlimited access to their children, and to the providers
caring for their children, during normal hours of provider operation
and whenever the children are in the care of the provider. Lead
Agencies shall provide a detailed description of such procedures.
Sec. 98.32 Parental complaints.
Lead Agencies shall:
(a) Maintain a record of substantiated parental complaints;
(b) Make information regarding such parental complaints available
to the public on request; and
(c) Provide a detailed description of how such record is maintained
and is made available.
Sec. 98.33 Consumer education.
Lead Agencies shall:
(a) Certify that they will collect and disseminate to parents and
the general public consumer education information that will promote
informed child care choices;
(b) Inform parents about the requirement at section 407(e)(2) of
the Social Security Act that the TANF agency make an exception to the
individual penalties associated with the work requirement for any
single custodial parent who has a demonstrated inability to obtain
needed child care for a child under six years of age. The information
provided shall include:
(1) The procedures the TANF agency uses to determine if the parent
has a demonstrated inability to obtain needed child care;
(2) The criteria or definitions applied by the TANF agency to
determine the whether the parent has a demonstrated inability to obtain
needed child care, including:
(i) ``Appropriate child care'';
(ii) ``Reasonable distance'';
(iii) ``Unsuitability of informal child care'';
(iv) ``Affordable child care arrangements'';
(3) The clarification that the time during which an eligible parent
receives the exception referred to in paragraph (b) will count toward
the time limit on benefits required at section 408(a)(7) of the Social
Security Act.
(c) Include in the biennial plan the definitions or criteria the
TANF agency uses in implementing the exception to the work requirement
specified in paragraph (b).
Sec. 98.34 Parental rights and responsibilities.
Nothing under this part shall be construed or applied in any manner
to infringe on or usurp the moral and legal rights and responsibilities
of parents or legal guardians.
Subpart E--Program Operations (Child Care Services)--Lead Agency
and Provider Requirements
Sec. 98.40 Compliance with applicable State and local regulatory
requirements.
(a) Lead Agencies shall:
(1) Certify that they have in effect licensing requirements
applicable to child care services provided within the area served by
the Lead Agency;
(2) Provide a detailed description of the requirements under
paragraph (a) (1) of this section and of how they are effectively
enforced.
(b)(1) This section does not prohibit a Lead Agency from imposing
more stringent standards and licensing or regulatory requirements on
child care providers of services for which assistance is provided under
the CCDF than the standards or requirements imposed on other child care
providers.
[[Page 39647]]
(2) Any such additional requirements shall be consistent with the
safeguards for parental choice in Sec. 98.30(f).
Sec. 98.41 Health and safety requirements.
(a) Although the Act specifically states it does not require the
establishment of any new or additional requirements if existing
requirements comply with the requirements of the statute, each Lead
Agency shall certify that there are in effect, within the State (or
other area served by the Lead Agency), under State, local or tribal
law, requirements designed to protect the health and safety of children
that are applicable to child care providers of services for which
assistance is provided under this part. Such requirements shall
include:
(1) The prevention and control of infectious diseases (including
immunizations) as follows:
(i) States and Territories shall establish immunization
requirements as part of their health and safety provisions that assure
that children receiving services under the CCDF are age-appropriately
immunized. Health and safety provisions shall incorporate (by reference
or otherwise) the latest recommendation for childhood immunizations of
the respective State or territorial public health agency.
(ii) Notwithstanding paragraph (a)(1)(i) of this section, Lead
Agencies may exempt:
(A) Children who are cared for by relatives (defined as
grandparents, great grandparents, siblings [if living in a separate
residence], aunts, and uncles);
(B) Children who receive care in their own homes;
(C) Children whose parents object to immunization on religious
grounds; and
(D) Children whose medical condition contraindicates immunization;
(iii) Lead Agencies shall establish a grace period in which
children can receive services while families are taking the necessary
actions to comply with the immunization requirements;
(2) Building and physical premises safety; and
(3) Minimum health and safety training appropriate to the provider
setting.
(b) Lead Agencies may not set health and safety standards and
requirements under paragraph (a) of this section that are inconsistent
with the parental choice safeguards in Sec. 98.30(f).
(c) The requirements in paragraph (a) of this section shall apply
to all providers of child care services for which assistance is
provided under this part, within the area served by the Lead Agency,
except the relatives specified in paragraph (e) of this section.
(d) Each Lead Agency shall certify that procedures are in effect to
ensure that child care providers of services for which assistance is
provided under this part, within the area served by the Lead Agency,
comply with all applicable State, local, or tribal health and safety
requirements described in paragraph (a) of this section.
(e) For the purposes of this section, the term ``child care
providers'' does not include grandparents, great grandparents, siblings
(if such providers live in a separate residence), aunts, or uncles,
pursuant to Sec. 98.2.
Sec. 98.42 Sliding fee scales.
(a) Lead Agencies shall establish, and periodically revise, by
rule, a sliding fee scale(s) that provides for cost sharing by families
that receive CCDF child care services.
(b) A sliding fee scale(s) shall be based on income and the size of
the family and may be based on other factors as appropriate.
(c) Lead Agencies may waive contributions from families whose
incomes are at or below the poverty level for a family of the same
size.
Sec. 98.43 Equal access.
(a) The Lead Agency shall certify that the payment rates for the
provision of child care services under this part are sufficient to
ensure equal access, for eligible families in the area served by the
Lead Agency, to child care services comparable to those provided to
families not eligible to receive CCDF assistance or child care
assistance under any other Federal, State, or tribal programs.
(b) The Lead Agency shall provide a summary of the facts relied on
to determine that its payment rates ensure equal access. At a minimum,
the summary shall include those facts that show:
(1) How a choice of the full range of providers, e.g., center,
group, family, and in-home care, is made available;
(2) How payment rates are adequate based on a local market rate
survey conducted no earlier than two years prior to the effective date
of the currently approved Plan;
(3) How copayments based on a sliding fee scale are affordable, as
stipulated at Sec. 98.42.
(c) A Lead Agency may not establish different payment rates based
on a family's eligibility status or circumstances.
(d) Payment rates under paragraph (a) of this section shall be
consistent with the parental choice requirements in Sec. 98.30.
(e) Nothing in this section shall be construed to create a private
right of action.
Sec. 98.44 Priority for child care services.
Lead Agencies shall give priority for services provided under
Sec. 98.50(a) to:
(a) Children of families with very low family income (considering
family size); and
(b) Children with special needs.
Sec. 98.45 List of providers.
If a Lead Agency does not have a registration process for child
care providers who are unlicensed or unregulated under State, local, or
tribal law, it is required to maintain a list of the names and
addresses of unlicensed or unregulated providers of child care services
for which assistance is provided under this part.
Sec. 98.46 Nondiscrimination in admissions on the basis of religion.
(a) Child care providers (other than family child care providers,
as defined in Sec. 98.2) that receive assistance through grants and
contracts under the CCDF shall not discriminate in admissions against
any child on the basis of religion.
(b) Paragraph (a) of this section does not prohibit a child care
provider from selecting children for child care slots that are not
funded directly (i.e., through grants or contracts to providers) with
assistance provided under the CCDF because such children or their
family members participate on a regular basis in other activities of
the organization that owns or operates such provider.
(c) Notwithstanding paragraph (b) of this section, if 80 percent or
more of the operating budget of a child care provider comes from
Federal or State funds, including direct or indirect assistance under
the CCDF, the Lead Agency shall assure that before any further CCDF
assistance is given to the provider,
(1) The grant or contract relating to the assistance, or
(2) The admission policies of the provider specifically provide
that no person with responsibilities in the operation of the child care
program, project, or activity will discriminate, on the basis of
religion, in the admission of any child.
Sec. 98.47 Nondiscrimination in employment on the basis of religion.
(a) In general, except as provided in paragraph (b) of this
section, nothing in this part modifies or affects the provision of any
other applicable Federal law and regulation relating to
[[Page 39648]]
discrimination in employment on the basis of religion.
(1) Child care providers that receive assistance through grants or
contracts under the CCDF shall not discriminate, on the basis of
religion, in the employment of caregivers as defined in Sec. 98.2.
(2) If two or more prospective employees are qualified for any
position with a child care provider, this section shall not prohibit
the provider from employing a prospective employee who is already
participating on a regular basis in other activities of the
organization that owns or operates the provider.
(3) Paragraphs (a) (1) and (2) of this section shall not apply to
employees of child care providers if such employees were employed with
the provider on November 5, 1990.
(b) Notwithstanding paragraph (a) of this section, a sectarian
organization may require that employees adhere to the religious tenets
and teachings of such organization and to rules forbidding the use of
drugs or alcohol.
(c) Notwithstanding paragraph (b) of this section, if 80 percent or
more of the operating budget of a child care provider comes from
Federal and State funds, including direct and indirect assistance under
the CCDF, the Lead Agency shall assure that, before any further CCDF
assistance is given to the provider,
(1) The grant or contract relating to the assistance, or
(2) The employment policies of the provider specifically provide
that no person with responsibilities in the operation of the child care
program will discriminate, on the basis of religion, in the employment
of any individual as a caregiver, as defined in Sec. 98.2.
Subpart F--Use of Child Care and Development Funds
Sec. 98.50 Child care services.
(a) Of the funds remaining after applying the provisions of
Sec. 98.50 (c), (d) and (e) the Lead Agency shall spend a substantial
portion to provide child care services to low-income working families.
(b) Child care services shall be provided:
(1) To eligible children, as described in Sec. 98.20;
(2) Using a sliding fee scale, as described in Sec. 98.42;
(3) Using funding methods provided for in Sec. 98.30; and
(4) Based on the priorities in Sec. 98.44.
(c) Of the aggregate amount of funds expended (i.e., Discretionary,
Mandatory, and Federal and State share of Matching Funds), no less than
four percent shall be used for activities to improve the quality of
child care as described at Sec. 98.51.
(d) Of the aggregate amount of funds awarded (i.e., Discretionary,
Mandatory, and Federal and State share of Matching Funds), no more than
five percent may be used for administrative activities as described at
Sec. 98.52.
(e) Not less than 70 percent of the Mandatory and Matching Funds
shall be used to meet the child care needs of families who:
(1) Are receiving assistance under a State program under Part A of
title IV of the Social Security Act,
(2) Are attempting through work activities to transition off such
assistance program, and
(3) Are at risk of becoming dependent on such assistance program.
(f) Pursuant to Sec. 98.16(g)(4), the Plan shall specify how the
State will meet the child care needs of families described in paragraph
(e) of this section.
Sec. 98.51 Activities to improve the quality of child care.
(a) No less than four percent of the aggregate funds expended by
the Lead Agency for a fiscal year, and including the amounts expended
in the State pursuant to Sec. 98.53(b), shall be expended for quality
activities.
(1) These activities may include but are not limited to:
(i) Activities designed to provide comprehensive consumer education
to parents and the public;
(ii) Activities that increase parental choice; and
(iii) Activities designed to improve the quality and availability
of child care, including, but not limited to those described in
paragraph (a)(2) of this section.
(2) Activities to improve the quality of child care services may
include, but are not limited to:
(i) Operating directly or providing financial assistance to
organizations (including private non-profit organizations, public
organizations, and units of general purpose local government) for the
development, establishment, expansion, operation, and coordination of
resource and referral programs specifically related to child care;
(ii) Making grants or providing loans to child care providers to
assist such providers in meeting applicable State, local, and tribal
child care standards, including applicable health and safety
requirements, pursuant to Secs. 98.40 and 98.41;
(iii) Improving the monitoring of compliance with, and enforcement
of, applicable State, local, and tribal requirements pursuant to
Secs. 98.40 and 98.41;
(iv) Providing training and technical assistance in areas
appropriate to the provision of child care services, such as training
in health and safety, nutrition, first aid, the recognition of
communicable diseases, child abuse detection and prevention, and care
of children with special needs;
(v) Improving salaries and other compensation (such as fringe
benefits) for full- and part-time staff who provide child care services
for which assistance is provided under this part; and
(vi) Any other activities that are consistent with the intent of
this section.
(b) Pursuant to Sec. 98.16(h), the Lead Agency shall describe in
its Plan the activities it will fund under this section.
(c) Non-Federal expenditures required by Sec. 98.53(c) (i.e., the
maintenance-of-effort amount) are not subject to the requirement at
paragraph (a) of this section.
Sec. 98.52 Administrative costs.
(a) Not more than five percent of the aggregate funds expended by
the Lead Agency for a fiscal year, and including the amounts expended
in the State pursuant to Sec. 98.53(b), shall be expended for
administrative activities. These activities may include but are not
limited to:
(1) Salaries and related costs of the staff of the Lead Agency or
other agencies engaged in the administration and implementation of the
program pursuant to Sec. 98.11. Program administration and
implementation include the following types of activities:
(i) Planning, developing, and designing the Child Care and
Development Fund program;
(ii) Providing local officials and the public with information
about the program, including the conduct of public hearings;
(iii) Preparing the application and Plan;
(iv) Developing agreements with administering agencies in order to
carry out program activities;
(v) Monitoring program activities for compliance with program
requirements;
(vi) Preparing reports and other documents related to the program
for submission to the Secretary;
(vii) Maintaining substantiated complaint files in accordance with
the requirements of Sec. 98.32;
(viii) Coordinating the provision of Child Care and Development
Fund services with other Federal, State, and local child care, early
childhood development programs, and before- and after-school care
programs;
[[Page 39649]]
(ix) Coordinating the resolution of audit and monitoring findings;
(x) Evaluating program results; and
(xi) Managing or supervising persons with responsibilities
described in paragraphs (a)(1)(i) through (x) of this section;
(2) Travel costs incurred for official business in carrying out the
program;
(3) Administrative services, including such services as accounting
services, performed by grantees or subgrantees or under agreements with
third parties;
(4) Audit services as required at Sec. 98.65;
(5) Other costs for goods and services required for the
administration of the program, including rental or purchase of
equipment, utilities, and office supplies; and
(6) Indirect costs as determined by an indirect cost agreement or
cost allocation plan pursuant to Sec. 98.55.
(b) The five percent limitation at paragraph (a) of this section
applies only to the States and Territories. The amount of the
limitation at paragraph (a) of this section does not apply to Tribes or
tribal organizations.
(c) Non-Federal expenditures required by Sec. 98.53(c) (i.e., the
maintenance-of-effort amount) are not subject to the five percent
limitation at paragraph (a) of this section.
Sec. 98.53 Matching Fund requirements
(a) Federal matching funds are available for expenditures in a
State based upon the formula specified at Sec. 98.63(a).
(b) Expenditures in a State under paragraph (a) of this section
will be matched:
(1) At the Federal medical assistance rate for the fiscal year 1995
irrespective of the fiscal year in which the funds are available; and
(2) If they are for allowable activities, as described in the
approved State Plan, that meet the goals and purposes of the Act.
(c) In order to receive Federal matching funds for a fiscal year
under paragraph (a) of this section:
(1) States shall also expend an amount of non-Federal funds for
child care activities in the State that is at least equal to the
State's share of expenditures for fiscal year 1994 or 1995 (whichever
is greater) under sections 402 (g) and (i) of the Social Security Act
as these sections were in effect before October 1, 1995; and
(2) The expenditures shall be for allowable services or activities,
as described in the approved State Plan if appropriate, that meet the
goals and purposes of the Act.
(3) All Mandatory Funds are obligated in accordance with
Sec. 98.60(d)(2)(i).
(d) The same expenditure may not be used to meet the requirements
under both paragraphs (b) and (c) of this section in a fiscal year.
(e) An expenditure in the State for purposes of this subpart may
be:
(1) Public funds when the funds are:
(i) Appropriated directly to the Lead Agency specified at
Sec. 98.10, or transferred from another public agency to that Lead
Agency and under its administrative control, or certified by the
contributing public agency as representing expenditures eligible for
Federal match;
(ii) Not used to match other Federal funds; and
(iii) Not Federal funds, or are Federal funds authorized by Federal
law to be used to match other Federal funds; or
(2) Donated from private sources when the donated funds:
(i) Are donated without any restriction that would require their
use for a specific individual, organization, facility or institution;
(ii) Do not revert to the donor's facility or use; and
(iii) Are not used to match other Federal funds;
(iv) Shall be certified both by the donor and by the Lead Agency as
available and representing expenditures eligible for Federal match; and
(v) Shall be subject to the audit requirements in Sec. 98.65 of
these regulations.
(f) Donated funds need not be transferred to or under the
administrative control of the Lead Agency in order to qualify as an
expenditure eligible to receive Federal match under this section. They
may be given to an entity designated by the State to receive donated
funds pursuant to Sec. 98.16(c)(2).
(g) The following are not counted as an eligible State expenditure
under this Part:
(1) In-kind contributions; and
(2) Family contributions to the cost of care as required by
Sec. 98.42.
(h) Public pre-kindergarten (pre-K) expenditures:
(1) May be used to meet the maintenance-of-effort requirement only
if the State has not reduced its expenditures for full-day/full-year
child care services; and
(2) May be eligible for Federal match if the State includes in its
Plan, as provided in Sec. 98.16(q), a description of the efforts it
will undertake to ensure that pre-K programs meet the needs of working
parents.
(3) In any fiscal year, a State may use public pre-K funds for up
to 20% of the funds serving as maintenance-of-effort under this
subsection. In any fiscal year, a State may use other public pre-K
funds for up to 20% of the expenditures serving as the State's matching
funds under this subsection.
(4) If applicable, the CCDF plan shall reflect the State's intent
to use public pre-K funds in excess of 10%, but not for more than 20%,
of either its maintenance-of-effort or State matching funds in a fiscal
year. Also, the plan shall describe how the State will coordinate its
pre-K and child care services to expand the availability of child care.
(i) Matching funds are subject to the obligation and liquidation
requirements at Sec. 98.60(d)(3).
Sec. 98.54 Restrictions on the use of funds.
(a) General. (1) Funds authorized under section 418 of the Social
Security Act and section 658B of the Child Care and Development Block
Grant Act, and all funds transferred to the Lead Agency pursuant to
section 404(d) of the Social Security Act, shall be expended consistent
with these regulations. Funds transferred pursuant to section 404(d) of
the Social Security Act shall be treated as Discretionary Funds;
(2) Funds shall be expended in accordance with applicable State and
local laws, except as superseded by Sec. 98.3.
(b) Construction. (1) For State and local agencies and nonsectarian
agencies or organizations, no funds shall be expended for the purchase
or improvement of land, or for the purchase, construction, or permanent
improvement of any building or facility. However, funds may be expended
for minor remodeling, and for upgrading child care facilities to assure
that providers meet State and local child care standards, including
applicable health and safety requirements.
(2) For sectarian agencies or organizations, the prohibitions in
paragraph (b)(1) of this section apply; however, funds may be expended
for minor remodeling only if necessary to bring the facility into
compliance with the health and safety requirements established pursuant
to Sec. 98.41.
(3) Tribes and tribal organizations are subject to the requirements
at Sec. 98.84 regarding construction.
(c) Tuition. Funds may not be expended for students enrolled in
grades 1 through 12 for:
(1) Any service provided to such students during the regular school
day;
(2) Any service for which such students receive academic credit
toward graduation; or
(3) Any instructional services that supplant or duplicate the
academic program of any public or private school.
[[Page 39650]]
(d) Sectarian Purposes and Activities. Funds provided under grants
or contracts to providers may not be expended for any sectarian purpose
or activity, including sectarian worship or instruction. Pursuant to
Sec. 98.2, assistance provided to parents through certificates is not a
grant or contract. Funds provided through child care certificates may
be expended for sectarian purposes or activities, including sectarian
worship or instruction when provided as part of the child care
services.
(e) The CCDF may not be used as the non-Federal share for other
Federal grant programs.
Sec. 98.55 Cost allocation.
(a) The Lead Agency and subgrantees shall keep on file cost
allocation plans or indirect cost agreements, as appropriate, that have
been amended to include costs allocated to the CCDF.
(b) Subgrantees that do not already have a negotiated indirect rate
with the Federal government should prepare and keep on file cost
allocation plans or indirect cost agreements, as appropriate.
(c) Approval of the cost allocation plans or indirect cost
agreements is not specifically required by these regulations, but these
plans and agreements are subject to review.
Subpart G--Financial Management
Sec. 98.60 Availability of funds.
(a) The CCDF is available, subject to the availability of
appropriations, in accordance with the apportionment of funds from the
Office of Management and Budget as follows:
(1) Discretionary Funds are available to States, Territories, and
Tribes,
(2) Mandatory and Matching Funds are available to States;
(3) Tribal Mandatory Funds are available to Tribes.
(b) Subject to the availability of appropriations, in accordance
with the apportionment of funds from the Office of Management and
Budget, the Secretary:
(1) May withhold no more than one-quarter of one percent of the
CCDF funds made available for a fiscal year for the provision of
technical assistance; and
(2) Will award the remaining CCDF funds to grantees that have an
approved application and Plan.
(c) The Secretary may make payments in installments, and in advance
or by way of reimbursement, with necessary adjustments due to
overpayments or underpayments.
(d) The following obligation and liquidation provisions apply to
States and Territories:
(1) Discretionary Fund allotments shall be obligated the fiscal
year in which funds are awarded or in the succeeding fiscal year.
Unliquidated obligations as of the end of the succeeding fiscal year
shall be liquidated within one year.
(2)(i) Mandatory Funds for States requesting Matching Funds per
Sec. 98.53 shall be obligated in the fiscal year in which the funds are
granted and are available until expended.
(ii) Mandatory Funds for States that do not request Matching Funds
are available until expended.
(3) Both the Federal and non-Federal share of the Matching Fund
shall be obligated in the fiscal year in which the funds are granted
and liquidated no later than the end of the succeeding fiscal year.
(4) Except for paragraph (d)(5) of this section, determination of
whether funds have been obligated and liquidated will be based on:
(i) State or local law; or,
(ii) If there is no applicable State or local law, the regulation
at 45 CFR 92.3, Obligations and Outlays (expenditures).
(5) Obligations may include subgrants or contracts that require the
payment of funds to a third party (e.g., subgrantee or contractor).
However, the following are not considered third party subgrantees or
contractors:
(i) A local office of the Lead Agency;
(ii) Another entity at the same level of government as the Lead
Agency; or
(iii) A local office of another entity at the same level of
government as the Lead Agency.
(6) For purposes of the CCDF, funds for child care services
provided through a child care certificate will be considered obligated
when a child care certificate is issued to a family in writing that
indicates:
(i) The amount of funds that will be paid to a child care provider
or family, and
(ii) The specific length of time covered by the certificate, which
is limited to the date established for redetermination of the family's
eligibility, but shall be no later than the end of the liquidation
period.
(7) Any funds not obligated during the obligation period specified
in paragraph (d) of this section will revert to the Federal government.
Any funds not liquidated by the end of the applicable liquidation
period specified in paragraph (d) of this section will also revert to
the Federal government.
(e) The following obligation and liquidation provisions apply to
Tribal Discretionary and Tribal Mandatory Funds:
(1) Tribal grantees shall obligate all funds by the end of the
fiscal year following the fiscal year for which the grant is awarded.
Any funds not obligated during this period will revert to the Federal
government.
(2) Obligations that remain unliquidated at the end of the
succeeding fiscal year shall be liquidated within the next fiscal year.
Any tribal funds that remain unliquidated by the end of this period
will also revert to the Federal government.
(f) Cash advances shall be limited to the minimum amounts needed
and shall be timed to be in accord with the actual, immediate cash
requirements of the State Lead Agency, its subgrantee or contractor in
carrying out the purpose of the program in accordance with 31 CFR part
205.
(g) Funds that are returned (e.g., loan repayments, funds
deobligated by cancellation of a child care certificate, unused
subgrantee funds) as well as program income (e.g., contributions made
by families directly to the Lead Agency or subgrantee for the cost of
care where the Lead Agency or subgrantee has made a full payment to the
child care provider) shall, if received after the end of the applicable
obligation period described at paragraphs (d) and (e), be returned to
the Federal government.
(h) Repayment of loans, pursuant to Sec. 98.51(a)(2)(ii), may be
made in cash or in services provided in-kind. Payment provided in-kind
shall be based on fair market value. All loans shall be fully repaid.
(i) Lead Agencies shall recover child care payments that are the
result of fraud. These payments shall be recovered from the party
responsible for committing the fraud.
Sec. 98.61 Allotments from the Discretionary Fund.
(a) To the 50 States, the District of Columbia, and the
Commonwealth of Puerto Rico an amount equal to the funds appropriated
for the Child Care and Development Block Grant, less amounts reserved
for technical assistance and amounts reserved for the Territories and
Tribes, pursuant to Secs. 98.60(b) and 98.61 (b) and (c), shall be
allotted based upon the formula specified in section 658O(b) of the
Act.
(b) For the U.S. Territories of Guam, American Samoa, the Virgin
Islands of the United States, and the Commonwealth of the Northern
Mariana Islands an amount up to one-half of one percent of the amount
appropriated for the Child Care and Development Block Grant shall be
reserved.
(1) Funds shall be allotted to these Territories based upon the
following factors:
[[Page 39651]]
(i) A Young Child factor--the ratio of the number of children in
the Territory under five years of age to the number of such children in
all Territories; and
(ii) An Allotment Proportion factor--determined by dividing the per
capita income of all individuals in all the Territories by the per
capita income of all individuals in the Territory.
(A) Per capita income shall be:
(1) Equal to the average of the annual per capita incomes for the
most recent period of three consecutive years for which satisfactory
data are available at the time such determination is made; and
(2) Determined every two years.
(B) Per capita income determined, pursuant to paragraph
(b)(1)(ii)(A) of this section, will be applied in establishing the
allotment for the fiscal year for which it is determined and for the
following fiscal year.
(C) If the Allotment Proportion factor determined at paragraph
(b)(1)(ii) of this section:
(1) Exceeds 1.2, then the Allotment Proportion factor of the
Territory shall be considered to be 1.2; or
(2) Is less than 0.8, then the Allotment Proportion factor of the
Territory shall be considered to be 0.8.
(2) The formula used in calculating a Territory's allotment is as
follows:
[GRAPHIC] [TIFF OMITTED] TP23JY97.001
(ii) For purposes of the formula specified at paragraph (b)(2)(i)
of this section, the term ``YCFt'' means the Territory's
Young Child factor as defined at paragraph (b)(1)(i) of this section.
(iii) For purposes of the formula specified at paragraph (b)(2)(i)
of this section, the term ``APFt'' means the Territory's
Allotment Proportion factor as defined at paragraph (b)(1)(ii) of this
section.
(c) For Indian Tribes and tribal organizations, including any
Alaskan Native Village or regional or village corporation as defined in
or established pursuant to the Alaska Native Claims Settlement Act (43
U.S.C. 1601 et seq) an amount up to two percent of the amount
appropriated for the Child Care and Development Block Grant shall be
reserved.
(1) Except as specified in paragraph (c)(2) of this section, grants
to individual tribal grantees will be equal to the sum of:
(i) A base amount as set by the Secretary; and
(ii) An additional amount per Indian child under age 13 (or such
similar age as determined by the Secretary from the best available
data), which is determined by dividing the amount of funds available,
less amounts set aside for eligible Tribes, pursuant to paragraph
(c)(1)(i) of this section, by the number of all Indian children living
on or near tribal reservations or other appropriate area served by the
tribal grantee, pursuant to Sec. 98.80(e).
(2) Grants to Tribes with fewer than 50 Indian children that apply
as part of a consortium, pursuant to Sec. 98.80(b)(1), are equal to the
sum of:
(i) A portion of the base amount, pursuant to paragraph (c)(1)(i)
of this section, that bears the same ratio as the number of Indian
children in the Tribe living on or near the reservation, or other
appropriate area served by the tribal grantee, pursuant to
Sec. 98.80(e), does to 50; and
(ii) An additional amount per Indian child, pursuant to paragraph
(c)(1)(ii) of this section.
(3) Tribal consortia will receive grants that are equal to the sum
of the individual grants of their members.
(d) All funds reserved for Territories at paragraph (b) of this
section will be allotted to Territories, and all funds reserved for
Tribes at paragraph (c) of this section will be allotted to tribal
grantees. Any funds that are returned by the Territories after they
have been allotted will revert to the Federal government.
(e) For other organizations, up to $2,000,000 may be reserved from
the tribal funds reserved at Sec. 98.61(c). From this amount the
Secretary may award a grant to a Native Hawaiian Organization, as
defined in section 4009(4) of the Augustus F. Hawkins-Robert T.
Stafford Elementary and Secondary School Improvement Amendments of 1988
(20 U.S.C. 4909(4)) and to a private non-profit organization
established for the purpose of serving youth who are Indians or Native
Hawaiians. The Secretary will establish selection criteria and
procedures for the award of grants under this subsection by notice in
the Federal Register.
Sec. 98.62 Allotments from the Mandatory Fund.
(a) Each of the 50 States and the District of Columbia will be
allocated from the funds appropriated under section 418(a)(3) of the
Social Security Act, less the amounts reserved for technical assistance
pursuant to Sec. 98.60(b)(1) and the amount reserved for Tribes
pursuant to paragraph (b), an amount of funds equal to the greater of:
(1) the Federal share of its child care expenditures under sections
402 (g) and (i) for fiscal year 1994 or 1995 (whichever is greater); or
(2) the average of the Federal share of its child care expenditures
under sections 402 (g) and (i) for fiscal years 1992 through 1994.
(b) For Indian Tribes and tribal organizations up to 2 percent of
the amount appropriated under section 418(a)(3) of the Social Security
Act, less the amounts reserved for technical assistance pursuant to
Sec. 98.60(b)(1), shall be allocated according to the formula at
paragraph (c). In Alaska, only the following 13 entities shall receive
allocations under this subpart, in accordance with the formula at
paragraph (c):
(1) The Metlakatla Indian Community of the Annette Islands Reserve:
(2) Arctic Slope Native Association;
(3) Kawerak, Inc.;
(4) Maniilaq Association;
(5) Association of Village Council Presidents;
(6) Tanana Chiefs Conference;
(7) Cook Inlet Tribal Council;
(8) Bristol Bay Native Association;
(9) Aleutian and Pribilof Islands Association;
(10) Chugachmuit;
(11) Tlingit and Haida Central Council;
(12) Kodiak Area Native Association; and
(13) Copper River Native Association.
(c)(1) Grants to individual Tribes with 50 or more Indian children,
and to Tribes with fewer than 50 Indian children that apply as part of
a consortium pursuant to Sec. 98.80(b)(1), will be equal to an amount
per Indian child under age 13 (or such similar age as determined by the
Secretary from the best available data), which is determined by
dividing the amount of funds available, by the number of all Indian
children living on or near tribal reservations or other appropriate
area served by the tribal grantee, pursuant to Sec. 98.80(e).
(2) Tribal consortia will receive grants that are equal to the sum
of the individual grants of their members.
Sec. 98.63 Allotments from the Matching Fund.
(a) To each of the 50 States and the District of Columbia there is
allocated an amount equal to its share of the total available under
section 418(a)(3) of the Social Security Act. That amount is based on
the same ratio as the number of children under age 13 residing in the
State bears to the national total of children under age 13. The number
of children under 13 is derived from the best data available to the
Secretary for the second preceding fiscal year.
[[Page 39652]]
(b) For purposes of this subsection, the amounts available under
section 418(a)(3) of the Social Security Act excludes the amounts
reserved and allocated under Sec. 98.60(b)(1) for technical assistance
and under Sec. 98.62 (a) and (b) for the Mandatory Fund.
(c) Amounts under this subsection are available pursuant to the
requirements at Sec. 98.53(c).
Sec. 98.64 Reallotment and redistribution of funds.
(a) According to the provisions of this section State and Tribal
Discretionary Funds are subject to reallotment, and State Matching
Funds are subject to redistribution. State funds are reallotted or
redistributed only to States as defined for the original allocation.
Tribal funds are reallotted only to Tribes. Funds granted to the
Territories are not subject to reallotment. Any funds granted to the
Territories that are returned after they have been allotted will revert
to the Federal government.
(b) Any portion of a State's Discretionary Fund allotment that is
not required to carry out its Plan, in the period for which the
allotment is made available, shall be reallotted to other States in
proportion to the original allotments. For purposes of this paragraph
the term ``State'' means the 50 States, the District of Columbia, and
the Commonwealth of Puerto Rico. The other Territories and the Tribes
may not receive reallotted State Discretionary Funds.
(1) Each year, the State shall report to the Secretary either the
dollar amount from the previous year's grant that it will be unable to
obligate by the end of the obligation period or that all funds will be
obligated during such time. Such report shall be postmarked by April
1st.
(2) Based upon the reallotment reports submitted by States, the
Secretary will reallot funds.
(i) If the total amount available for reallotment is $25,000 or
more, funds will be reallotted to States in proportion to each State's
allotment for the applicable fiscal year's funds, pursuant to
Sec. 98.61(a).
(ii) If the amount available for reallotment is less than $25,000,
the Secretary will not reallot any funds, and such funds will revert to
the Federal government.
(iii) If an individual reallotment amount to a State is less than
$500, the Secretary will not issue the award, and such funds will
revert to the Federal government.
(iv) If a State does not accept its share of the reallotted funds,
those funds will be returned to the Federal government.
(3) If a State does not submit a reallotment report by the deadline
for report submittal, either:
(i) The Secretary will determine that the State does not have any
funds available for reallotment; or
(ii) In the case of a report postmarked after April 1st, any funds
reported to be available for reallotment shall revert to the Federal
government.
(4) States receiving reallotted funds shall obligate and expend
these funds in accordance with Sec. 98.60. The reallotment of funds
does not extend the obligation period or the program period for
expenditure of such funds.
(c)(1) Any portion of the Matching Fund granted to a State that is
not obligated in the period for which the grant is made shall be
redistributed. Funds, if any, will be redistributed on the request of,
and only to, those other States that have met the requirements of
Sec. 98.53(c) in the period for which the grant was first made. For
purposes of this paragraph the term ``State'' means the 50 States and
the District of Columbia. Territorial and tribal grantees may not
receive redistributed Matching Funds.
(2) Matching Funds allotted to a State under Sec. 98.63(a), but not
granted, revert to the Federal government.
(3) The amount of Matching Funds granted to a State that will be
made available for redistribution will be based on the State's
financial report to ACF for the Child Care and Development Fund (ACF-
696) and is subject to the monetary limits at paragraph (b)(2).
(4) A State eligible to receive redistributed Matching Funds will
also use the ACF-696 to request its share of the redistributed funds,
if any.
(5) A State's share of redistributed Matching Funds is based on the
same ratio as the number of children under 13 residing in the State to
the number of children residing in all States eligible to receive and
that request the redistributed Matching Funds.
(6) Redistributed funds are considered part of the grant for the
fiscal year in which the redistribution occurs.
(d) Any portion of a Tribe's allotment of Discretionary Funds that
is not required to carry out its Plan, in the period for which the
allotment is made available, shall be reallotted to other tribal
grantees in proportion to their original allotments. States and
Territories may not receive reallotted tribal funds.
(1) Each year, the Tribe shall report to the Secretary either the
dollar amount from the previous year's grant that it will be unable to
obligate by the end of the obligation period or that all funds will be
obligated during such time. Such report shall be postmarked by April
1st.
(2) Based upon the reallotment reports submitted by Tribes, the
Secretary will reallot Tribal Discretionary Funds among the other
Tribes.
(i) If the total amount available for reallotment is $25,000 or
more, funds will be reallotted to other tribal grantees in proportion
to each Tribe's original allotment for the applicable fiscal year
pursuant to Sec. 98.62(c).
(ii) If the total amount available for reallotment is less than
$25,000, the Secretary will not reallot any funds, and such funds will
revert to the Federal government.
(iii) If an individual reallotment amount to an applicant Tribe is
less than $500, the Secretary will not issue the award, and such funds
will revert to the Federal government.
(3) If a Tribe does not submit a reallotment report by the deadline
for report submittal, either:
(i) The Secretary will determine that Tribe does not have any funds
available for reallotment; or
(ii) In the case of a report received after April 1st, any funds
reported to be available for reallotment shall revert to the Federal
government.
(4) Tribes receiving reallotted funds shall obligate and expend
these funds in accordance with Sec. 98.60. The reallotment of funds
does not extend the obligation period or the program period for
expenditure of such funds.
Sec. 98.65 Audits and financial reporting.
(a) Each Lead Agency shall have an audit conducted after the close
of each program period in accordance with OMB Circular A-128 and the
Single Audit Act.
(b) Lead Agencies are responsible for ensuring that subgrantees are
audited in accordance with appropriate audit requirements.
(c) Not later than 30 days after the completion of the audit, Lead
Agencies shall submit a copy of their audit report to the legislature
of the State or, if applicable, to the Tribal Council(s). Lead Agencies
shall also submit a copy of their audit report to the HHS Inspector
General for Audit Services, as well as to their cognizant agency, if
applicable.
(d) Any amounts determined through an audit not to have been
expended in accordance with these statutory or regulatory provisions,
or with the Plan, and that are subsequently disallowed by the
Department shall be repaid to the Federal Government, or the Secretary
will offset such amounts against any other CCDF funds to which the Lead
Agency is or may be entitled.
[[Page 39653]]
(e) Lead Agencies shall provide access to appropriate books,
documents, papers and records to allow the Secretary to verify that
CCDF funds have been expended in accordance with the statutory and
regulatory requirements of the program, and with the Plan.
(f) The audit required in paragraph (a) shall be conducted by an
agency that is independent of the State, Territory or Tribe.
(g) The Secretary shall require financial reports as necessary.
Sec. 98.66 Disallowance procedures.
(a) Any expenditures not made in accordance with the Act, the
implementing regulations, or the approved Plan, will be subject to
disallowance.
(b) If the Department, as the result of an audit or a review, finds
that expenditures should be disallowed, the Department will notify the
Lead Agency of this decision in writing.
(c)(1) If the Lead Agency agrees with the finding that amounts were
not expended in accordance with the Act, these regulations, or the
Plan, the Lead Agency shall fulfill the provisions of the disallowance
notice and repay any amounts improperly expended; or
(2) The Lead Agency may appeal the finding:
(i) By requesting reconsideration from the Assistant Secretary,
pursuant to paragraph (f) of this section; or
(ii) By following the procedure in paragraph (d) of this section.
(d) A Lead Agency may appeal the disallowance decision to the
Departmental Appeals Board in accordance with 45 CFR part 16.
(e) The Lead Agency may appeal a disallowance of costs that the
Department has determined to be unallowable under an award. A grantee
may not appeal the determination of award amounts or disposition of
unobligated balances.
(f) The Lead Agency's request for reconsideration in (c)(2)(i) of
this section shall be postmarked no later than 30 days after the
receipt of the disallowance notice. A Lead Agency may request an
extension within the 30-day time frame. The request for
reconsideration, pursuant to (c)(2)(i) of this section, need not follow
any prescribed form, but it shall contain:
(1) The amount of the disallowance;
(2) The Lead Agency's reasons for believing that the disallowance
was improper; and
(3) A copy of the disallowance decision issued pursuant to
paragraph (b) of this section.
(g)(1) Upon receipt of a request for reconsideration, pursuant to
(c)(2)(i) of this section, the Assistant Secretary or the Assistant
Secretary's designee will inform the Lead Agency that the request is
under review.
(2) The Assistant Secretary or the designee will review any
material submitted by the Lead Agency and any other necessary
materials.
(3) If the reconsideration decision is adverse to the Lead Agency's
position, the response will include a notification of the Lead Agency's
right to appeal to the Departmental Appeals Board, pursuant to
paragraph (d) of this section.
(h) If a Lead Agency refuses to repay amounts after a final
decision has been made, the amounts will be offset against future
payments to the Lead Agency.
(i) The appeals process in this section is not applicable if the
disallowance is part of a compliance review, pursuant to Sec. 98.90,
the findings of which have been appealed by the Lead Agency.
(j) Disallowances under the CCDF program are subject to interest
regulations at 45 CFR part 30. Interest will begin to accrue from the
date of notification.
Sec. 98.67 Fiscal requirements.
(a) Lead Agencies shall expend and account for CCDF funds in
accordance with their own laws and procedures for expending and
accounting for their own funds.
(b) Unless otherwise specified in this part, contracts that entail
the expenditure of CCDF funds shall comply with the laws and procedures
generally applicable to expenditures by the contracting agency of its
own funds.
(c) Fiscal control and accounting procedures shall be sufficient to
permit:
(1) Preparation of reports required by the Secretary under this
subpart and under subpart H; and
(2) The tracing of funds to a level of expenditure adequate to
establish that such funds have not been used in violation of the
provisions of this part.
Subpart H--Program Reporting Requirements
Sec. 98.70 Reporting requirements.
(a) Quarterly Disaggregate Report--
(1) State and territorial Lead Agencies that receive assistance
under the CCDF shall prepare and submit to the Department, in a manner
specified by the Secretary, a quarterly disaggregate report of monthly
family unit data. Data shall be collected monthly and submitted
quarterly.
(2) The information shall be reported for the three-month federal
fiscal period preceding the required report. The first report shall be
submitted no later than February 15, 1998, and quarterly thereafter.
The first report shall include data from the first quarter of FFY 1998
(October 1997 through December 1997).
(3) State and territorial Lead Agencies choosing to submit data
based on a sample shall submit a sampling plan to ACF for approval 60
days prior to the submission of the first quarterly report. States are
not prohibited from submitting disaggregate data for the entire
population receiving CCDF services.
(4) Quarterly disaggregate family unit reports to the Secretary
shall include the information listed in Sec. 98.71(a).
(b) Biannual Report--
(1) State and territorial Lead Agencies that receive assistance
under CCDF shall prepare and submit to the Secretary a biannual report.
The report shall be submitted, in a manner specified by the Secretary,
by June 30 and December 31 of each year and shall cover the most recent
six-month federal fiscal period (October through March or April through
September, as appropriate).
(2) The first biannual aggregate report shall be submitted no later
than December 31, 1997, and every six months thereafter.
(3) Biannual reports to the Secretary shall include the information
listed in Sec. 98.71(b).
(c) Tribal Annual Report
(1) Tribal Lead Agencies that receive assistance under CCDF shall
prepare and submit to the Secretary an annual report.
(2) The report shall be submitted in the manner specified by the
Secretary by December 31 of each year and shall cover services for
children and families served with CCDF funds during the preceding
Federal Fiscal Year.
(3) Annual reports to the Secretary shall include the information
listed in Sec. 98.71(c).
Sec. 98.71 Content of reports.
(a) At a minimum, a State or territorial Lead Agency's quarterly
disaggregate report to the Secretary, as required in Sec. 98.70, shall
include the following information on services provided under CCDF grant
funds, including Federal Discretionary (which includes any funds
transferred from the TANF Block Grant), Mandatory, and Matching Funds;
and State Matching and Maintenance-of-Effort (MOE) Funds:
(1) family income;
(2) county of residence;
(3) gender and month/year of birth of children;
(4) race of children;
(5) whether the family includes only one parent;
(6) the sources of family income, including the amount obtained
from
[[Page 39654]]
employment (including self-employment), cash or other assistance under
Part A of title IV of the Social Security Act, housing assistance,
assistance under the Food Stamp Act of 1977; child support payments,
and other assistance programs;
(7) the number of months the family has received benefits;
(8) the type(s) of child care in which the child was enrolled (such
as family child care, in-home care, or center-based child care);
(9) whether the child care provider involved was a relative;
(10) the cost of child care for such families;
(11) the total expected dollar amount per month to be received by
the provider for each child;
(12) the total hours per month of such care;
(13) Social Security Number of the head of the family unit
receiving child care assistance;
(14) reasons for receiving care; and
(15) any additional information that the Secretary shall require.
(b) At a minimum, a State or territorial Lead Agency's biannual
aggregate report to the Secretary, as required in Sec. 98.70(b), shall
include the following information on services provided through all CCDF
grant funds, including Federal Discretionary (which includes any funds
transferred from the TANF Block Grant), Mandatory, and Matching Funds;
and State Matching and MOE Funds:
(1) the number of child care providers that received funding under
CCDF as separately identified based on the types of providers listed in
section 658P(5) of the amended Child Care and Development Block Grant
Act;
(2) the number of children served by payments through certificates
or vouchers, contracts or grants, and cash under public benefit
programs, listed by the primary type of child care services provided
during the last month of the report period (or the last month of
service for those children leaving the program before the end of the
report period);
(3) the manner in which consumer education information was provided
to parents and the number of parents to whom such information was
provided;
(4) the total number (without duplication) of children and families
served under CCDF; and
(5) any additional information that the Secretary shall require.
(c) At a minimum, a tribal Lead Agency's annual report to the
Secretary, as required in Sec. 98.70(c), shall include the following
information on services provided through all CCDF tribal grant awards:
(1) unduplicated number of families and children receiving
services;
(2) children served by age;
(3) children served by reason for care;
(4) children served by payment method (certificate/voucher or
contract/grants);
(5) average number of hours of care provided per week;
(6) average hourly amount paid for care;
(7) children served by level of family income; and
(8) children served by type of child care providers.
Subpart I--Indian Tribes
Sec. 98.80 General procedures and requirements.
An Indian Tribe or tribal organization (as described in Subpart G
of these regulations) may be awarded grants to plan and carry out
programs for the purpose of increasing the availability, affordability,
and quality of child care and childhood development programs subject to
the following conditions:
(a) An Indian Tribe applying for or receiving CCDF funds shall be
subject to all the requirements under this part, unless otherwise
indicated.
(b) An Indian Tribe applying for or receiving CCDF funds shall:
(1) Have at least 50 children under 13 years of age (or such
similar age, as determined by the Secretary from the best available
data) in order to be eligible to operate a CCDF program. This
limitation does not preclude an Indian Tribe with fewer than 50
children under 13 years of age from participating in a consortium that
receives CCDF funds; and
(2) Demonstrate its current service delivery capability, including
skills, personnel, resources, community support, and other necessary
components to satisfactorily carry out the proposed program.
(c) A consortium representing more than one Indian Tribe may be
eligible to receive CCDF funds on behalf of a particular Tribe if:
(1) The consortium adequately demonstrates that each participating
Tribe authorizes the consortium to receive CCDF funds on behalf of each
Tribe or tribal organization in the consortium; and
(2) The consortium consists of Tribes that each meet the
eligibility requirements for the CCDF program as defined in this part,
or that would otherwise meet the eligibility requirements if the Tribe
or tribal organization had at least 50 children under 13 years of age;
and
(3) All the participating consortium members are in geographic
proximity to one another (including operation in a multi-State area) or
have an existing consortium arrangement; and
(4) The consortium demonstrates that it has the managerial,
technical and administrative staff with the ability to administer
government funds, manage a CCDF program and comply with the provisions
of the Act and of this part.
(d) The awarding of a grant under this section shall not affect the
eligibility of any Indian child to receive CCDF services provided by
the State or States in which the Indian Tribe is located.
(e) For purposes of the CCDF, the determination of the number of
children in the Tribe, pursuant to paragraph (b)(1) of this section,
shall include Indian children living on or near reservations, with the
exception of Tribes in Alaska, California and Oklahoma.
(f) In determining eligibility for services pursuant to
Sec. 98.20(a)(2), a tribal program may use either:
(1) 85 percent of the State median income for a family of the same
size; or
(2) 85 percent of the median income for a family of the same size
residing in the area served by the tribal Lead Agency.
Sec. 98.81 Application and Plan procedures.
(a) In order to receive CCDF funds, a tribal Lead Agency shall
apply for funds pursuant to Sec. 98.13, except that the requirement at
Sec. 98.13(b)(2) does not apply.
(b) A tribal Lead Agency shall submit a CCDF Plan, as described at
Sec. 98.16, with the following additions and exceptions:
(1) The Plan shall be accompanied by a tribal resolution
identifying the Lead Agency, pursuant to Sec. 98.83(a).
(2) The Plan shall include the basis for determining family
eligibility pursuant to Sec. 98.80(f).
(3) For purposes of determining eligibility, the following terms
shall also be defined:
(i) Indian child; and
(ii) Indian reservation or tribal service area.
(4) The tribal Lead Agency shall also assure that:
(i) The applicant shall coordinate, to the maximum extent feasible,
with the Lead Agency in the State in which the applicant shall carry
out CCDF programs or activities, pursuant to Sec. 98.82; and
(ii) In the case of an applicant located in a State other than
Alaska, California, or Oklahoma, CCDF programs and activities shall be
carried out on an Indian reservation for the benefit of Indian
children, pursuant to Sec. 98.83(b).
(5) The Plan shall include any information, as prescribed by the
[[Page 39655]]
Secretary, necessary for determining the number of children in
accordance with Secs. 98.61(c), 98.62(c), and 98.80(b)(1).
(6) Plans for those Tribes specified at Sec. 98.83(f) (i.e., Tribes
with small grants) are not subject to the requirements in
Sec. 98.16(g)(2) or Sec. 98.16(k) unless the Tribe chooses to include
such services, and, therefore, the associated requirements, in its
program.
(7) The Plan is not subject to requirements in Sec. 98.16(f)(8) or
Sec. 98.16(g)(4).
(8) In its initial Plan, an Indian Tribe shall describe its current
service delivery capability pursuant to Sec. 98.80(b)(2).
(9) A consortium shall also provide the following:
(i) A list of participating or constituent members, including
demonstrations from these members pursuant to Sec. 98.80(c)(1);
(ii) A description of how the consortium is coordinating services
on behalf of its members, pursuant to Sec. 98.83(c)(1); and
(iii) As part of its initial Plan, the additional information
required at Sec. 98.80(c)(4).
(c) When initially applying under paragraph (a) of this section, a
tribal Lead Agency shall include a Plan that meets the provisions of
this part and shall be for a two-year period, pursuant to
Sec. 98.17(a).
Sec. 98.82 Coordination.
Tribal applicants shall coordinate as required by Secs. 98.12 and
98.14 and:
(a) To the maximum extent feasible, with the Lead Agency in the
State or States in which the applicant will carry out the CCDF program;
and
(b) With other Federal, State, local, and tribal child care and
childhood development programs.
Sec. 98.83 Requirements for tribal programs.
(a) The grantee shall designate an agency, department, or unit to
act as the tribal Lead Agency to administer the CCDF program.
(b) With the exception of Alaska, California, and Oklahoma,
programs and activities shall be carried out on an Indian reservation
for the benefit of Indian children.
(c) In the case of a tribal grantee that is a consortium:
(1) A brief description of the direct child care services funded by
CCDF for each of their participating Tribes shall be provided by the
consortium in their two-year CCDF Plan; and
(2) Variations in CCDF programs or requirements and in child care
licensing, regulatory and health and safety requirements shall be
specified in written agreements between the consortium and the Tribe.
(d) Tribal Lead Agencies shall not be subject to the requirements
at Secs. 98.41(a)(1)(i), 98.44(a), 98.50(e) 98.52(a), 98.53 and 98.63.
(e) The base amount of any tribal grant is not subject to the
administrative cost limitation at paragraph (g) of this section or the
quality expenditure requirement Sec. 98.51(a). The base amount may be
expended for any costs consistent with the purposes and requirements of
the CCDF.
(f) Tribal Lead Agencies whose total CCDF allotment pursuant to
Secs. 98.61(c) and 98.62(b) is less than an amount established by the
Secretary shall not be subject to the following requirements:
(1) The assurance at Sec. 98.15(a)(2);
(2) The requirement for certificates at Sec. 98.30(a) and
Sec. 98.30(d); and
(3) The requirements for quality expenditures Sec. 98.51(a).
(g) A tribal Lead Agency may use up to 15 percent of its total CCDF
per child amount provided under Secs. 98.61(c) and 98.62(b) (including
funds used for construction or major renovation in accordance with
Sec. 98.84) for administrative costs. Amounts used for construction and
major renovation in accordance with Sec. 98.84 are not considered
administrative costs.
(h)(1) CCDF funds are available for costs incurred by the tribal
Lead Agency only after the funds are made available by Congress for
Federal obligation unless costs are incurred for planning activities
related to the submission of an initial CCDF Plan.
(2) Federal obligation of funds for planning costs, pursuant to
paragraph (h)(1) of this section is subject to the actual availability
of the appropriation.
Sec. 98.84 Construction and renovation of child care facilities.
(a) Upon requesting and receiving approval from the Secretary,
tribal Lead Agencies may use amounts provided under Secs. 98.61(c) and
98.62(b) to make payments for construction or major renovation of child
care facilities (including paying the cost of amortizing the principal
and paying interest on loans).
(b) To be approved by the Secretary, a request shall be made in
accordance with uniform procedures established by program instruction
and, in addition, shall demonstrate that:
(1) Adequate facilities are not otherwise available to enable the
tribal Lead Agency to carry out child care programs;
(2) The lack of such facilities will inhibit the operation of child
care programs in the future; and
(3) The use of funds for construction or major renovation will not
result in a decrease in the level of child care services provided by
the tribal Lead Agency as compared to the level of services provided by
the tribal Lead Agency in the preceding fiscal year.
(c)(1) Tribal Lead Agencies may use CCDF funds for reasonable and
necessary planning costs associated with assessing the need for
construction or renovation or for preparing a request, in accordance
with the uniform procedures established by program instruction, to
spend CCDF funds on construction or major renovation.
(2) A tribal Lead Agency may not use CCDF funds to pay for the
costs of an architect, engineer, or other consultant before its request
is approved by the Secretary.
(d) Tribal Lead Agencies that receive approval from the Secretary
to use CCDF funds for construction or major renovation shall comply
with the following:
(1) Federal share requirements and use of property requirements at
45 CFR 92.31;
(2) Transfer and disposition of property requirements at 45 CFR
92.31(c);
(3) Title requirements at 45 CFR 92.31(a);
(4) Cost principles and allowable cost requirements at 45 CFR
92.22;
(5) Program income requirements at 45 CFR 92.25;
(6) Procurement procedures at 45 CFR 92.36; and;
(7) Any additional requirements established by program instruction,
including requirements concerning:
(i) The recording of a Notice of Federal Interest in the property;
(ii) Rights and responsibilities in the event of a grantee's
default on a mortgage;
(iii) Insurance and maintenance;
(iv) Submission of plans, specifications, inspection reports, and
other legal documents; and
(v) Modular units.
(e) In lieu of obligation and liquidation requirements at
Sec. 98.60(e), tribal Lead Agencies shall liquidate CCDF funds used for
construction or major renovation by the end of the second fiscal year
following the fiscal year for which the grant is awarded.
(f) Tribal Lead Agencies may expend funds, without requesting
approval pursuant to paragraph (a), for minor renovation.
[[Page 39656]]
Subpart J--Monitoring, Non-Compliance and Complaints
Sec. 98.90 Monitoring.
(a) The Secretary will monitor programs funded under the CCDF for
compliance with:
(1) The Act;
(2) The provisions of this part; and
(3) The provisions and requirements set forth in the CCDF Plan
approved under Sec. 98.18;
(b) If a review or investigation reveals evidence that the Lead
Agency, or an entity providing services under contract or agreement
with the Lead Agency, has failed to substantially comply with the Plan
or with one or more provisions of the Act or implementing regulations,
the Secretary will issue a preliminary notice to the Lead Agency of
possible non-compliance. The Secretary shall consider comments received
from the Lead Agency within 60 days (or such longer period as may be
agreed upon between the Lead Agency and the Secretary).
(c) Pursuant to an investigation conducted under paragraph (a) of
this section, a Lead Agency shall make appropriate books, documents,
papers, manuals, instructions, and records available to the Secretary,
or any duly authorized representatives, for examination or copying on
or off the premises of the appropriate entity, including subgrantees
and contractors, upon reasonable request.
(d)(1) Lead Agencies and subgrantees shall retain all CCDF records,
as specified in paragraph (c) of this section, and any other records of
Lead Agencies and subgrantees that are needed to substantiate
compliance with CCDF requirements, for the period of time specified in
paragraph (e) of this section.
(2) Lead Agencies and subgrantees shall provide through an
appropriate provision in their contracts that their contractors will
retain and permit access to any books, documents, papers, and records
of the contractor that are directly pertinent to that specific
contract.
(e) Length of retention period. (1) Except as provided in paragraph
(e)(2) of this section, records specified in paragraph (c) of this
section shall be retained for three years from the day the Lead Agency
or subgrantee submits the Financial Reports required by the Secretary,
pursuant to Sec. 98.65(g), for the program period.
(2) If any litigation, claim, negotiation, audit, disallowance
action, or other action involving the records has been started before
the expiration of the three-year retention period, the records shall be
retained until completion of the action and resolution of all issues
that arise from it, or until the end of the regular three-year period,
whichever is later.
Sec. 98.91 Non-compliance.
(a) If after reasonable notice to a Lead Agency, pursuant to
Secs. 98.90 or 98.93, a final determination is made that:
(1) There has been a failure by the Lead Agency, or by an entity
providing services under contract or agreement with the Lead Agency, to
comply substantially with any provision or requirement set forth in the
Plan approved under Sec. 98.16; or
(2) If in the operation of any program for which funding is
provided under the CCDF, there is a failure by the Lead Agency, or by
an entity providing services under contract or agreement with the Lead
Agency, to comply substantially with any provision of the Act or this
part, the Secretary will provide to the Lead Agency a written notice of
a finding of non-compliance. This notice will be issued within 60 days
of the preliminary notification in Sec. 98.90(b), or within 60 days of
the receipt of additional comments from the Lead Agency, whichever is
later, and will provide the opportunity for a hearing, pursuant to part
99.
(b) The notice in paragraph (a) of this section will include all
relevant findings, as well as any penalties or sanctions to be applied,
pursuant to Sec. 98.92.
(c) Issues subject to review at the hearing include the finding of
non-compliance, as well as any penalties or sanctions to be imposed
pursuant to Sec. 98.92.
Sec. 98.92 Penalties and sanctions.
(a) Upon a final determination that the Lead Agency has failed to
substantially comply with the Act, the implementing regulations, or the
Plan, one of the following penalties will be applied:
(1) The Secretary will disallow the improperly expended funds;
(2) An amount equal to or less than the improperly expended funds
will be deducted from the administrative portion of the State allotment
for the following fiscal year; or
(3) A combination of the above options will be applied.
(b) In addition to imposing the penalties described in paragraph
(a) of this section, the Secretary may impose other appropriate
sanctions, including:
(1) Disqualification of the Lead Agency from the receipt of further
funding under the CCDF; or
(2)(i) A penalty of not more than four percent of the funds
allotted under Sec. 98.61 (i.e., the Discretionary Funds) for a Fiscal
Year shall be withheld if the Secretary determines that the Lead Agency
has failed to properly implement a provision of the Act, these
regulations, or the Plan required under Sec. 98.16;
(ii) This penalty will be withheld no earlier than the second full
quarter following the quarter in which the Lead Agency was notified of
the proposed penalty;
(iii) This penalty will not be applied if the Lead Agency corrects
the failure or violation before the penalty is to be applied or if it
submits a plan for corrective action that is acceptable to the
Secretary; and
(iv) The Lead Agency may show cause to the Secretary why the amount
of the penalty, if applied, should be reduced.
(c) If a Lead Agency is subject to additional sanctions as provided
under paragraph (b) of this section, specific identification of any
additional sanctions being imposed will be provided in the notice
provided pursuant to Sec. 98.91.
(d) Nothing in this section, or in Secs. 98.90 or 98.91, will
preclude the Lead Agency and the Department from informally resolving a
possible compliance issue without following all of the steps described
in Secs. 98.90, 98.91 and 98.92. Penalties and/or sanctions, as
described in paragraphs (a) and (b) of this section, may nevertheless
be applied, even though the issue is resolved informally.
(e) It is at the Secretary's sole discretion to choose the penalty
to be imposed under paragraphs (a) and (b).
Sec. 98.93 Complaints.
(a) This section applies to any complaint (other than a complaint
alleging violation of the nondiscrimination provisions) that a Lead
Agency has failed to use its allotment in accordance with the terms of
the Act, the implementing regulations, or the Plan. The Secretary is
not required to consider a complaint unless it is submitted as required
by this section. Complaints with respect to discrimination should be
referred to the Office of Civil Rights of the Department.
(b) Complaints with respect to the CCDF shall be submitted in
writing to the Assistant Secretary for Children and Families, 370
L'Enfant Promenade, S.W., Washington, D.C. 20447. The complaint shall
identify the provision of the Plan, the Act, or this part that was
allegedly violated, specify the basis for alleging the violation(s),
and include all relevant information known to the person submitting it.
[[Page 39657]]
(c) The Department shall promptly furnish a copy of any complaint
to the affected Lead Agency. Any comments received from the Lead Agency
within 60 days (or such longer period as may be agreed upon between the
Lead Agency and Department) shall be considered by the Department in
responding to the complaint. The Department will conduct an
investigation of complaints, where appropriate.
(d) The Department will provide a written response to complaints
within 180 days after receipt. If a final resolution cannot be provided
at that time, the response will state the reasons why additional time
is necessary.
(e) Complaints that are not satisfactorily resolved through
communication with the Lead Agency will be pursued through the process
described in Sec. 98.90.
PART 99--PROCEDURE FOR HEARINGS FOR THE CHILD CARE AND DEVELOPMENT
FUND
2. The heading of part 99 is revised to read as set forth above.
3. The authority citation for part 99 is revised to read as
follows:
Authority: 42 U.S.C. 618, 9858
PART 99--[AMENDED]
4. In part 99 make the following changes:
a. Remove the words ``Child Care and Development Block Grant'' and
add in their place, wherever they appear, the words ``Child Care and
Development Fund.''
b. Remove the word ``Grantees'' and add in its place, wherever it
appears, the words ``Lead Agencies.''
c. Remove the word ``Grantee'' and add in its place, wherever it
appears, the words ``Lead Agency.''
d. Remove the words ``Block Grant Plan'' and add in their place,
wherever they appear, the words ``CCDF Plan.''
[FR Doc. 97-19062 Filed 7-22-97; 8:45 am]
BILLING CODE 4184-01-P