[Federal Register Volume 65, Number 50 (Tuesday, March 14, 2000)]
[Rules and Regulations]
[Pages 13659-13663]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-6192]



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  Federal Register / Vol. 65, No. 50 / Tuesday, March 14, 2000 / Rules 
and Regulations  

[[Page 13659]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 792

RIN 3206-A193


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

AGENCY: Office of Personnel Management.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Office of Personnel Management (OPM) is issuing final 
regulations implementing legislation which was enacted September 29, 
1999. The legislation permits agencies in the Executive branch to use 
appropriated funds to reduce child care costs for their lower income 
Federal employees. The intended effect of the law is to make child care 
more affordable for lower income Federal employees.

DATES: Effective March 14, 2000.

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

SUPPLEMENTARY INFORMATION: Section 643 of Public Law 106-58, September 
29, 1999, requires the Office of Personnel Management to regulate 
Federal agency use of appropriated funds for child care costs for lower 
income employees. The Act allows Federal agencies in the Executive 
branch to assist their lower income employees with their costs of child 
care. The Act addresses the need for affordable child care for Federal 
employees. 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 finding 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 contributions, the affordability of child care for lower 
income Federal employees remains out-of-reach since child care costs 
can translate to 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. 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 permits them to assist their employees 
with a variety of other child care choices.
    Sec. 643 of Public Law 106-58 authorizes the use of appropriated 
funds, otherwise available for salaries, to improve the affordability 
of child care for lower income Federal employees. This law, enacted by 
Congress, became effective on September 29, 1999, and remains in effect 
for one year. Funds can be obligated upon the promulgation of the 
regulations.
    In summary, the rule authorizes Federal agencies to use 
appropriated funds, including revolving funds, that are otherwise 
available to the agencies for salaries, to assist their lower income 
Federal employees with the costs of child care in child care centers 
and family child care homes that are licensed. 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. OPM guidance materials 
provide agencies with a variety of models and approaches for 
determining tuition assistance eligibility and other components of 
their tuition assistance programs.
    On December 23, 1999, OPM published proposed regulations (64 FR 
72037) to establish the child care subsidy program. Under the proposed 
regulations, OPM would be responsible for providing agencies with 
guidance toward implementation of the law. OPM is responsible for 
providing Congress with a report on the results of the implementation 
no later than September 1, 2000.
    OPM received comments from 12 agencies, 2 labor organizations, 1 
child care provider, and 2 individuals. Following is summary of the 
comments:

Flexibility for Agency Implementation

    Many agencies and 2 labor organizations supported the flexibility 
to choose their own model in defining ``lower income employee.'' Two 
agencies felt that there should be a uniform definition of ``lower 
income employee'' because of concerns that there would be inequities 
across agencies and that some employees would not receive the benefit. 
We did not choose to provide a specific definition in the regulation 
because many agencies expressed the view that flexibility would enable 
them to tailor a program that best suits their needs and they pointed 
out that their needs could be different from one situation to another.

Definition of Child

    One agency suggested that we modify the definition of ``child'' 
because our definition seemed to imply that an adopted, step or foster 
child did not have a ``regular parent-child relationship,'' as did a 
natural child. We changed the definition to incorporate the suggestion. 
Based on other comments, we expanded the definition of ``child'' to 
include children who are supported by legal guardians as well as 
disabled children through age 18.

Time Frame

    Many of the respondents were concerned about the short time frame 
for implementation and urged OPM to seek immediate legislative relief 
from the expiration date of the law. After the proposed regulations 
were published,

[[Page 13660]]

the President, in his FY2001 budget proposal, has requested a 
continuation of authorization from Congress.

Agencies Without Appropriations

    Two agencies asked for clarification on whether the law applied to 
them. We have clarified the issue by stating that agencies may use 
appropriated funds, including revolving funds, that are otherwise 
available to the agency for salaries.

Effective Date and Notice to Congress and OPM

    A few respondents requested that the agencies be able to provide 
tuition subsidies retroactively to the date of passage of the law. It 
was the intent of Congress that funds could be obligated only after 
final regulations were published by OPM in the Federal Register and 
after notification to Congress has occurred. One agency asked for 
clarification about notification and suggested a change that would 
specify that Congress be notified of intention to initiate a program. 
That change has been made.

Types of Programs to Which the Law Applies

    Two agencies asked for clarification about program eligibility and 
whether school-type programs were included. Programs that are licensed 
and/or regulated are eligible regardless of where they are housed. This 
has been clarified in the regulation.

Using OPM's Models

    One agency suggested the regulations be clear that agencies are not 
required to use one of the models suggested by OPM and that suggestion 
has been incorporated.

Pooling Funds in Multi-Tenant Buildings

    Two agencies made comments about pooling funds in a multi-tenant 
building. One agency provided revised language which would result in 
more flexibility and the language has been adopted in the final rule.

Restricting Funds

    A few agencies made suggestions about restricting funds to one 
group or another. For example, one agency suggested limiting the 
eligibility to full-time employees. The proposed rule was written to 
permit maximum flexibility by the agencies and, therefore, the language 
was not changed. The same principle applied to suggestions there be a 
statutory cap on the amount of subsidies awarded. Agencies have the 
flexibility to restrict funds and to choose eligibility models that 
meet their needs.

Child Care Boards of Directors

    One agency suggested a section be added which would advise 
Government employees who sit on the board of directors of Federally 
sponsored child care centers. That guidance will appear, as suggested, 
in our guidance related to the law.

Executive Order 12866, Regulatory Review

    The final rule has been reviewed by the Office of Management and 
Budget in accordance with Executive Order 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, Day care, Drug abuse, Government 
employees.
U.S. Office of Personnel Management

Janice R. Lachance,
Director.
    Accordingly, OPM is amending 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. 290ee-l); 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 apply?
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 initiate a 
program and when can the obligation be made?
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   Are agencies required to participate in this program?
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   What is a disabled child?
792.218   Are children enrolled in summer programs and part-time 
programs eligible?
792.219   Are part-time Federal employees eligible?
792.220   Does the law apply only to on-site Federal child care 
centers that are utilized by Federal families?
792.221   What is the process for helping lower income employees 
with child care tuition?
792.222   Are agencies required to negotiate with their Federal 
labor organizations about the provisions of this law?
792.223   Are there any conditions which the child care provider 
must meet in order to participate in this program?
792.224   Is there a statutory cap on the amount or the percentage 
of child care tuition that will be subsidized?
792.225   What is the definition of a lower income Federal employee 
and how is the amount of the tuition assistance subsidy determined?
792.226   Who determines if a Federal employee qualifies as a lower 
income employee and how is the program administered?
792.227   Are child care subsidies paid to the Federal employee 
using the child care?
792.228   May we disburse funds to a child care provider or to an 
organization that administers our program prior to the time the 
employee receiving tuition assistance has enrolled his or her child 
in the child care center or family child care home?
792.229   How will the disbursement covered by Sec. 792.227 work 
where there is a Federally sponsored child care center in a multi-
tenant building?
792.230   For how long will the tuition assistance be in effect for 
a Federal employee?
792.231   Can these funds be used for children of Federal employees 
who are already enrolled in child care?

[[Page 13661]]

792.232   Can we place special restrictions or requirements on the 
use of these funds, and can we restrict the disbursement of such 
funds to only one type of child care or to one location?
792.233   May we use the funds to improve the physical space of the 
family child care homes or child care centers?
792.234   For how long is the law effective?
792.235   Who will oversee the disbursement and use of these funds?
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 apply?

    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 (113 Stat. 477) permits agencies to use 
appropriated funds, including revolving funds, that are otherwise 
available to the agency for salaries, to improve the affordability of 
child care for lower income Federal employees. 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 initiate a 
program and when can the obligation be made?

    Yes, you must provide 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 prior to the obligation of funds. This is a Congressional 
notification requirement. You must also notify OPM of your intention. 
Funds can be obligated immediately after notifications have occurred.


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

    Yes, 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. These materials can be found in ``Guide for Implementing 
Child Care Legislation--Pub. L. 106-58, Sec. 643.'' The Guide is 
available on OPM's website, http://www.opm.gov/wrkfam. You may also 
obtain a copy by writing to OPM at: U.S. Office of Personnel 
Management, Family-Friendly Workplace Advocacy Office, 1900 E Street, 
NW., Room 7315, Washington, DC 20415.


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 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 may help to 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 appropriated funds, including revolving 
funds, that are otherwise available to the agency for salaries.


Sec. 792.208  Are agencies required to participate in this program?

    Agencies are not required to participate in this program. The 
decision to participate is left to the discretion of the agency. If an 
agency chooses to participate, it may not use funds other than those 
specified in Sec. 792.207.


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 obligate funds beginning on March 14, 2000. Agencies can 
take advantage of this new law by notifying Congress and OPM of their 
intent.


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 
subpart, 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 subpart, means 
all appointive positions in an Executive agency.


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

    The term Federally sponsored child care center, for the purposes of 
this subpart, 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 Public Law 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. Child care providers 
that may provide services under contract include center-based child 
care and family child care 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.

[[Page 13662]]

Sec. 792.215  What is the definition of a child?

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


Sec. 792.216  What children are eligible for this subsidy?

    The law covers the children of Federal employees, excluding 
contract employees, from birth through age 13 and disabled children 
through age 18.


Sec. 792.217  What is a disabled child?

    For the purposes of this subpart a disabled child is defined as one 
who is unable to care for himself or herself based on a physical or 
mental incapacity as determined by a physician or licensed or certified 
psychologist.


Sec. 792.218  Are children enrolled in summer programs and part-time 
programs eligible?

    Yes, Federal employees with children (birth through age 13 and 
disabled children through age 18) who are enrolled in summer care 
programs and part-time programs are eligible.


Sec. 792.219  Are part-time Federal employees eligible?

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


Sec. 792.220  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. 792.221  What is the process for helping lower income employees 
with child care tuition?

    OPM guidance includes further explanation, but the process for the 
tuition assistance program can be summarized in 8 steps:
    (a) After completing your collective bargaining obligations, where 
applicable, notify the Congressional committees (see Sec. 792.203) and 
OPM of your decision to use a specific amount of appropriated funds for 
this purpose;
    (b) Determine how you will structure the program and which tuition 
assistance model you will use;
    (c) Determine how you will administer the program;
    (d) Advertise the program;
    (e) Conduct the application process;
    (f) Make the tuition assistance determinations and notify the 
employees (parents are then charged a reduced tuition rate by the 
provider);
    (g) Provide the funds to the provider or to an organization that 
will administer the program for you; and
    (h) Report the results to OPM on the mandatory reporting form.


Sec. 792.222  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 the regulations in this subpart under 5 U.S.C. 
7117.


Sec. 792.223  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. 792.224  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. 792.225  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 will usually involve consideration of total family income along 
with other factors such as total child care costs, depending on the 
tuition assistance model(s) you use. Agencies are not required to use 
one of the models that OPM suggests. If an agency uses a model OPM has 
suggested in its guidance, you may wish to change the threshold 
amounts, or percentages of total family income or other factors. In 
their guidance to this subpart, OPM will provide examples of models 
with detailed explanations. OPM's guidance on this subpart is a 
supplement to this subpart.
    (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. 
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 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. 792.226  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. 792.227  Are child care subsidies 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. 792.226), the subsidy is

[[Page 13663]]

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. 792.228  May we disburse funds to a child care provider or to an 
organization that administers our program prior to the time the 
employee receiving tuition assistance 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. An agency contract should specify that any unexpended funds 
shall be returned to the agency after contract completion.


Sec. 792.229  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 could be pooled 
together for the benefit of the employees qualified for tuition 
assistance.


Sec. 792.230  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. 
These funds are not available to pay for services performed after 
September 30, 2000.


Sec. 792.231  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. 792.232  Can we place special restrictions or requirements on the 
use of 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 a number of 
ways including, but not limited to:
    (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. 792.233  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. 792.234  For how long is the law effective?

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


Sec. 792.235  Who will oversee the disbursement and use of these funds?

    You will be responsible for tracking the utilization of these 
funds. OPM's guidance which was issued on December 23, 1999, and which 
was reissued with updates on March 14, 2000, contains details about the 
oversight of this program and the mandatory reporting requirements. The 
guidance contains sample marketing materials, sample tuition assistance 
documents, the OPM reporting form, as well as suggestions for 
determining eligibility.
[FR Doc. 00-6192 Filed 3-9-00; 3:45 pm]
BILLING CODE 6325-01-P