[Federal Register Volume 64, Number 246 (Thursday, December 23, 1999)]
[Proposed Rules]
[Pages 72037-72040]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33150]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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  Federal Register / Vol. 64, No. 246 / Thursday, December 23, 1999 / 
Proposed Rules  

[[Page 72037]]


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OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 792

RIN 3206-AI93


Agency Use of Appropriated Funds for Child Care Costs for Lower 
Income Employees

AGENCY: Office of Personnel Management.

ACTION: Proposed rule.

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SUMMARY: The Office of Personnel Management (OPM) is proposing a rule 
to set forth how agencies may use appropriated funds to reduce child 
care costs for lower income Federal employees. The intended effect of 
this rule is to enable lower income Federal employees to better afford 
child care.

DATES: Comments must be received on or before January 24, 2000.

ADDRESSES: Send written comments to Anice V. Nelson, Office of 
Personnel Management, Room 7315, 1900 E St. N.W., Washington, DC 20415-
1300.

FOR FURTHER INFORMATION CONTACT: Patricia Kinney, Office of Personnel 
Management, 1900 E St. N.W., Room 7315, Washington, DC 20415-1300; 
Phone: (202) 606-1313; Fax: (202) 606-2091.

SUPPLEMENTARY INFORMATION: Federal families are more challenged than 
ever before to meet the expenses of child care. Child care is a labor-
intensive service that requires adequate, trained staff to provide 
child care services that are safe and appropriate for children and 
their families. An increasing number of Federal families are funding 
that affordable child care is getting more difficult to find even when 
their own agencies sponsor on or near-site child care centers. Vacancy 
rates in Federally sponsored child care centers have steadily grown due 
to the affordability problem. Despite efforts of non-profit 
organizations to raise funds through charitable contribution, the 
affordability of child care for lower income Federal employees 
sometimes remains out-of-reach since child care costs can translate up 
to 50 percent of a Federal family's total family income.
    Reduced child care tuition, as a result of agency contributions 
permitted by this law, can have significant impact on employees' 
ability to utilize safe and reliable child care. Benefits to the 
agencies include better recruitment and retention of qualified 
personnel, lower absenteeism, and improved morale. Improved retention 
can result in significant recruitment and training cost savings to 
agencies. Over the past ten years, anecdotal evidence from on-site 
Federally sponsored child care centers has shown that more and more 
employees consider the availability of affordable child care as a major 
reason for choosing one job over another.
    An added benefit for agencies that sponsor on-site child care 
centers at some of their locations is that they can expect to see 
improved Federal employee participation in their centers. For small 
agencies that have been unable to provide agency-sponsored on-site 
child care centers, this law would permit them to assist their 
employees with a variety of other child care choices.
    Sec. 643 of Pub. L. 106-58 authorizes the use of appropriated funds 
to assist lower income Federal workers to access child care services. 
This law, enacted by Congress, became effective on September 29, 1999, 
and remains in effect for one year. The law enables Federal agencies, 
for the first time, to assist their civilian employees with costs of 
child care. Until now, the only financial remedy for Federal employees 
was through limited fundraising conducted by non-profit boards of 
directors for Federal child care centers. That type of assistance has 
been inadequate for lower income Federal employees. Financial 
assistance for Federal employees in non-Federal child care and for 
family child care has been virtually non-existent.
    Child care exists in a variety of forms. Because child care is not 
universally available through agency-sponsored child care centers, Pub. 
L. 106-58 permits agencies to work with a broad range of child care 
providers to ensure that child care is more affordable to lower income 
Federal employees.
    In summary, the rule authorizes Federal agencies to use 
appropriated funds from their salaries and expense accounts to assist 
their lower income Federal employees with the costs of child care in 
child care centers and family child care homes. Agencies can choose 
from a number of models for determining employee eligibility and the 
amount of the tuition assistance subsidy. In light of the fact that 
agencies have differing needs from one location to another, the 
proposed rule allows for maximum flexibility so that agencies can take 
different approaches for making those determinations. Forthcoming 
guidance from OPM instructs agencies on certain basic tuition 
assistance program requirements; provides specific steps for 
implementing the regulation; and includes direction for OPM's reporting 
requirements. OPM will be interested in learning whether or not the 
range of flexibilities and sample models were helpful to agencies in 
determining their definitions of lower income Federal employees.

E.O. 12866, Regulatory Review

    This proposed rule has been reviewed by the Office of Management 
and Budget in accordance with E.O. 12866.

Regulatory Flexibility Act

    I certify that these regulations would not have a significant 
economic impact on a substantial number of small entities because they 
would only apply to Federal agencies and employees.

List of Subjects in 5 CFR Part 792

    Alcohol abuse, Alcoholism, Drug abuse, Government employees.

Office of Personnel Management.
Janice R. Lachance,
Director.

    Accordingly, OPM is proposing to amend part 792 of title 5 of the 
Code of Federal Regulations as follows:

PART 792--FEDERAL EMPLOYEES' HEALTH AND COUNSELING PROGRAMS

    1. The authority citation for part 792 is revised to read as 
follows:

    Authority: Sec. 201 of Pub. L. 91-616, 84 Stat. 1849, as amended 
and transferred to sec. 520 of the Public Health Services Act by 
sec. 2(b)(13) of Pub. L. 98-24 (42 U.S.C. 290dd-1) and sec. 413 of 
Pub. L. 92-255, 86 Stat. 84, as amended and transferred to sec. 525 
of the Public Health Service Act by sec. 2(b)(16)(A) of Pub. L. 98-
24 (42 U.S.C.

[[Page 72038]]

290ee-1); sec. 643, Pub. L. 106-58, 113 stat. 477.

    2. Subpart B is added to read as follows:

Subpart B--Agency Use of Appropriated Funds for Child Care Costs for 
Lower Income Employees--What is the new child care legislation and to 
whom does it apply?

Sec.
792.200  To whom do ``we'', ``you'', and their variants refer?
792.201  What does the new law permit?
792.202  What is the purpose of the new law?
792.203  Should we notify anyone of our intention to make such a 
disbursement?
792.204  Are there sample memoranda and other documents available to 
assist us with this process?
792.205  Are there additional materials necessary for the 
implementation of this process and are there any special reporting 
and oversight requirements related to this law?
792.206  What are the benefits to an agency of providing such 
assistance to its lower income employees?
792.207  Which agency funds can be used for the purpose of this law?
792.208  Is the use of appropriated funds for this purpose 
mandatory?
792.209  How can agencies take advantage of this new law and when 
does this law become effective?
792.210  What is the definition of Executive agency?
792.211  What is the definition of tuition assistance program?
792.212  What is the definition of civilian employee?
792.213  What is the definition of a Federally sponsored child care 
center?
792.214  What is the definition of contractor?
792.215  What is the definition of a child?
792.216  What children are eligible for this subsidy??
792.217  Are children enrolled in summer programs and part-time 
programs eligible?
792.218  Are part-time Federal employees eligible?
792.219  Does the law apply only to on-site Federal child care 
centers that are utilized by Federal families?
792.220  What is the process for helping lower income employees with 
child care tuition?
792.221  Are agencies required to negotiate with their Federal labor 
organizations about the provisions of this law?
792.222  Are there any conditions which the child care provider must 
meet in order to participate in this program?
792.223  Is there a statutory cap on the amount or the percentage of 
child care tuition that will be subsidized?
792.224  What is the definition of a lower income Federal employee 
and how is the amount of the tuition assistance subsidy determined?
792.225  Who determines if a Federal employee qualifies as a lower 
income employee and how is the program administered?
792.226  Do child care subsidies get paid to the Federal employee 
using the child care?
792.227  May we disburse funds to a child care provider or to an 
organization that administers our program prior to the time the 
employee utilizing the reduced tuition has enrolled his or her child 
in the child care center or family child care home?
792.228  How will this work where there is a Federally sponsored 
child care center in a multi-tenant building?
792.229  For how long will tuition assistance be in effect for a 
Federal employee?
792.230  Can these funds be used for children of Federal employees 
who are already enrolled in child care?
792.231  Can we place special restrictions or requirements on the 
use of these funds, how else can we use these funds, and can we 
restrict the disbursement of such funds to only one type of child 
care or to one location?
792.232  May we use the funds to improve the physical space of the 
family child care homes or child care centers?
792.233  For how long is the law effective?
792.234  Who will oversee the disbursement and use of these funds?

Subpart B--Agency Use of Appropriate Funds for Child Care Costs for 
Lower Income Employees--What Is the New Child Care Legislation and 
to Whom Does it Apply?


Sec. 792.200  To whom do ``we'', ``you'', and their variants refer?

    Use of pronouns ``we'', ``you'', and their variants throughout this 
part refers to the agency. OPM is always referred to as ``OPM''.


Sec. 792.201  What does the new law permit?

    Public Law 106-58 (the law) permits agencies to use appropriated 
funds from their salaries and expense accounts to assist lower income 
Federal employees with the costs of child care. Employees can benefit 
from reduced tuition rates at Federal child care centers, non-Federal 
child care centers, and in family child care homes.


Sec. 792.202  What is the purpose of the new law?

    The law is intended to make child care more affordable for lower 
income Federal employees through the use of agency appropriated funds.


Sec. 792.203  Should we notify anyone of our intention to make such a 
disbursement?

    Yes, you must provide prior notice to the House Subcommittee on 
Treasury, Postal Service and General Government and to the Senate 
Subcommittee on Treasury and General Government and to your 
appropriations subcommittees. This is a Congressional notification 
requirement. You must also notify OPM of your intention.


Sec. 792.204  Are there sample memoranda and other documents available 
to assist us with his process?

    Yes, when you notify OPM of your intent to initiate a program, OPM 
will provide you with guidance that contains sample memoranda of 
understanding, sample marketing tools, sample tuition assistance 
applications, and models for determining tuition assistance 
eligibility. OPM will also provide agencies with the mandatory 
reporting form.


Sec. 792.205  Are there additional materials necessary for the 
implementation of this process and are there any special reporting and 
oversight requirements related to this law?

    Yes, you are responsible for tracking the utilization of your funds 
and reporting the results to OPM. OPM will provide you with a mandatory 
reporting form. OPM is required to provide a report to the 
appropriations committees no later than September 1, 2000. Therefore, 
you are required to report your results to OPM no later than August 1, 
2000. OPM will provide you with guidance on this subpart.


Sec. 792.206  What are the benefits to an agency of providing such 
assistance to its lower income employees?

    There are several benefits for the agencies beginning with improved 
recruitment and retention. Cost savings in recruitment and training 
costs can be significant. In addition, absenteeism rates related to 
child care problems can be reduced. Providing such subsidies can also 
increase morale, particularly among families who cannot afford the 
child care located at or near a child care center that is sponsored by 
their agency. The use of funds for lower income families who are 
enrolled or wish to enroll in Federal child care centers will increase 
the Federal participation rates where there is a regulatory requirement 
that at least 50 percent of the children enrolled have parents or 
guardians who are Federal employees.


Sec. 792.207  Which agency funds can be used for the purpose of this 
law?

    You are permitted to use funds from your salaries and expense 
account for the purpose of this law


Sec. 792.208  Is the use of appropriated funds for this purpose 
mandatory?

    No, the decision to use appropriated funds for the purpose of this 
law is left to the discretion of the agency.

[[Page 72039]]

Sec. 792.209  How can agencies take advantage of this new law and when 
does this law become effective?

    The law became effective as of September 29, 1999. Agencies are 
permitted to spend funds beginning on [effective date of final rule].


Sec. 792.210  What is the definition of Executive agency?

    The term Executive agency is defined by section 105 of title 5, 
United States Code, but does not include the General Accounting Office.


Sec. 792.211  What is the definition of tuition assistance program?

    The term tuition assistance program, for the purposes of this 
regulation, means the program that results from the expenditure of 
agency funds to assist lower income Federal employees with child care 
costs, including, but not limited to, such activities as: determining 
which employees receive a subsidy, and the size of the subsidy each 
employee receives; distributing agency funds to participating 
providers; and tracking and reporting to OPM information such as total 
cost and employee utilization of the program.


Sec. 792.212  What is the definition of civilian employee?

    The term civilian employee, for the purposes of this regulation, 
means all appointive positions in an executive agency.


Sec. 792.213  What is the definition of a Federally sponsored child 
care center?

    A Federally sponsored child care center is a child care center that 
is located in a building or space that is owned or leased by the 
Federal government.


Sec. 792.214  What is the definition of contractor?

    Sec. 643 of Pub. L. 106-58 says that child care services provided 
by contract are covered by this provision. The term contractor applies 
to an organization or individual who provides child care services for 
which Federal families are eligible. The definition includes center-
based child care and family child homes. The term provider is typically 
used to denote contractor in the child care industry. For the purposes 
of this subpart, the term provider is used to denote both center-based 
child care and family child care homes.


Sec. 792.215  What is the definition of a child?

    For the purposes of this subpart, a child is considered to be:
    (a) A recognized natural child who lives with the Federal employee 
in a regular parent-child relationship;
    (b) An adopted child;
    (c) A stepchild;
    (d) A foster child;
    (e) A recognized natural child for whom a judicial determination of 
support has been obtained; or
    (f) A recognized natural child to whose support the Federal 
employee makes regular and substantial contributions.


Sec. 792.216  What children are eligible for this subsidy?

    The law covers Federal employees' children from birth through age 
13.


Sec. 792.217  Are children enrolled in summer programs and part-time 
programs eligible?

    Yes, employees with school-age children (13 years of age and 
younger) who are enrolled in summer school programs and part-time 
programs are eligible.


Sec. 792.218  Are part-time Federal employees eligible?

    Yes, Federal employees who work part-time are eligible.


Sec. 792.219  Does the law apply only to on-site Federal child care 
centers that are utilized by Federal families?

    No. The bill is broad in scope and includes non-Federal center-
based child care as well as care in family child care homes, as long as 
they are licensed and/or regulated by the State and/or local regulating 
authorities.


Sec. 792.220  What is the process for helping lower income employees 
with child care tuition?

    (a) OPM guidance includes further explanation, but the process can 
be summarized in 8 steps:
    (1) After completing your collective bargaining obligations, where 
applicable, notify the Congressional committees and OPM of your 
decision to use a specific amount of appropriated funds for this 
purpose;
    (2) Determine how you will structure the program and which tuition 
assistance model you will use;
    (3) Determine how you will administer the program;
    (4) Advertise the program;
    (5) Conduct the application process;
    (6) Make the tuition assistance determinations and notify the 
employees (parents are then charged a reduced tuition rate by the 
provider);
    (7) Provide the funds to the provider or to an organization that 
will administer the program for you; and
    (8) Report the results to OPM on the mandatory reporting form.
    (b) [Reserved]


Sec. 792.221  Are agencies required to negotiate with their Federal 
labor organizations about the provisions of this law?

    You are reminded of your obligation to negotiate or consult, as 
appropriate, with the exclusive representatives of your employees on 
the implementation of these regulations under 5 U.S.C. 7117.


Sec. 792.222  Are there any conditions which the child care provider 
must meet in order to participate in this program?

    Yes, the provider, whether center-based or family child care, must 
be licensed and/or regulated by the State and/or local authorities 
where the child care service is delivered.


Sec. 792.223  Is there a statutory cap on the amount or the percentage 
of child care tuition that will be subsidized?

    No, the law does not specify a cap.


Sec. 792.224  What is the definition of a lower income Federal; 
employee and how is the amount of tuition assistance subsidy 
determined?

    Each agency makes the determination of the definition of lower 
income Federal employee. Lower income Federal employee can be defined 
by an agency in a number of ways. The process for determining both 
eligibility and the amount of tuition assistance subsidy for each 
family involves consideration of total family income along with other 
factors, depending on the tuition assistance model you use. In their 
guidance to the regulations, OPM will provide examples of models with 
detailed explanations.
    (a) If the model or models you select includes a total family 
income threshold, you can use criteria such as those from:
    (1) The Child Care Development Block Grant as defined (42 U.S.C. 
Sec. 9858);
    (2) A formula based on a percentage of the State poverty level (as 
many States do for certain programs); or
    (3) A set amount of total family income the agency chooses 
depending on the agency demographics and need to assist lower income 
Federal employees.
    (b) Some models do not require a threshold amount, since 
eligibility is determined as a function of the relationship between 
total family income, actual child care tuition costs, and an amount or 
percentage the agency is willing to pay.
    (c) In order to determine the amount of tuition assistance subsidy 
by which tuition will be reduced for a Federal employee, a number of 
approaches can be taken. The size of the subsidy is dependent on 
different income levels. It

[[Page 72040]]

can be based on a tuition sliding scale such as that used in the 
military formula (10 U.S.C. 1791-1798); a formula based on a specific 
percentage of total family income the family is expected to pay with 
the agency paying the remaining amount; or a formula based on a 
specific percentage of child care tuition the family is expected to pay 
with the agency paying the remaining amount. Each of these approaches 
is based on different philosophical assumptions and it will be up to 
the agency to determine which model or models best fits its needs. The 
models are described in detail in OPM's guidance.
    (d) Besides total family income, you may consider extraordinary 
financial situations to determine eligibility and the subsidy amount.


Sec. 792.225  Who determines if a Federal employee qualifies as a lower 
income employee and how is the program administered?

    The agency or another appropriately identified organization 
determines eligibility using certain income and/or tuition criteria 
chosen by the agency. If the agency itself does not administer the 
program, it must select another organization to do so, using procedures 
that are in accordance with the Federal Acquisition Regulations. 
Regardless of what organization administers the program, the model for 
determining both the tuition assistance eligibility and the amount of 
the subsidy is always determined by the Federal agency.


Sec. 792.226  Do child care subsidies get paid to the Federal employee 
using the child care?

    No. The child care subsidy is paid to the child care provider. If 
you choose to have an organization administer your program (see 
Sec. 792.225), the subsidy is paid to the organization and they, in 
turn, pay the provider. In any case, the provider will invoice the 
organization that administers the program.


Sec. 792.227  May we disburse funds to a child care provider or to an 
organization that administers our program prior to the time the 
employee utilizing the reduced tuition has enrolled his or her child in 
the child care center or family child care home?

    Yes, you may wish to disburse one lump sum to the organization 
administering the tuition assistance program and they will be 
responsible for tracking the utilization and providing you with regular 
reports.


Sec. 792.228  How will the disbursement covered by Sec. 792.227 work 
where there is a Federally sponsored child care center in a multi-
tenant building?

    In a multi-tenant building, funds from the agencies would be pooled 
together for the benefit of the employees qualified for tuition 
assistance and whose children are enrolled at the Federally sponsored 
child care center. The designated organization administering the 
program (Sec. 792.225) would then make the individual tuition 
assistance determinations for the eligible Federal employees based on 
the tuition assistance model chosen by the agencies. Agencies in the 
multi-tenant space must agree on the selection of one tuition 
assistance model for that particular child care center. If an agency 
chooses to administer its own program, it would not be required to pool 
its funds with the other agencies or use the model they have chosen for 
pooled funds. In either case, because the law requires that your funds 
be used for your civilian employees, the tracking system must include 
information about the number and income level of your employees who 
were able to make use of child care services as a result of this law.


Sec. 792.229  For how long will the tuition assistance be in effect for 
a Federal employee?

    The tuition assistance, in the form of a reduced tuition rate, will 
be in effect from the time the decision for a particular Federal 
employee is made and the child is enrolled in the program, until the 
child is no longer enrolled, but not later than September 30, 2000.


Sec. 792.230  Can these funds be used for children of Federal employees 
who are already enrolled in child care?

    Yes, the funds can be used for children currently enrolled in child 
care as long as their families meet the tuition assistance eligibility 
requirements established by your agency.


Sec. 792.231   Can we place special restrictions or requirements on the 
use of these funds, how else can we use these funds, and can we 
restrict the disbursement of such funds to only one type of child care 
or to one location?

    (a) Yes, depending on your staffing needs and your employees' 
situations, including the local availability of child care, you may 
choose to place restrictions on the use of your funds in one of the 
following ways:
    (1) Fund Federal employees using family child care homes;
    (2) Fund Federal employees using your on-site child care center;
    (3) Fund Federal families using community, non-Federal child care 
centers; or
    (4) Restrict the use of such funds to one or more locations.
    (b) It is up to you to determine whether there will be any 
restrictions on the use of your appropriated funds for child care 
tuition costs.


Sec. 792.232   May we use the funds to improve the physical space of 
the family child care homes or child care centers?

    No, the legislation specifically addresses making the child care 
more affordable for lower income Federal employees.


Sec. 792.233   For how long is the law effective?

    The law is effective for one year, ending September 30, 2000.


Sec. 792.234   Who will oversee the disbursement and use of funds?

    You will be responsible for tracking the utilization of these 
funds. OPM's guidance contains details about the oversight of this 
program and the mandatory reporting requirements.

[FR Doc. 99-33150 Filed 12-20-99; 4:37 pm]
BILLING CODE 6325-01-M