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EEC REGULATION REFORM – Subsidy Revisions and Public Comment

November 7, 2011

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EEC Subsidy Regulations

What Are the Subsidy Regulations?

EEC is the Lead Agency responsible for compliance with early education and care services under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (Pub. L. 104-193). As such, EEC is responsible for administering and providing early education and care programs and services to children, through grants, contracts and vouchers. The current regulations (606 CMR 10.00) identify the general provisions and eligibility requirements for families with children seeking subsidized child care in the Commonwealth.

EEC Child Care Subsidy Program GovernanceEEC’s Financial Assistance Program is governed by both federal and state laws and policies:

Federal Statutes -- The Child Care and Development Block Grant Act and the Social Security Act

Federal Regulations -- The Child Care Development Fund

Federal Policies, Program Instructions and Other Guidance

State Regulations -- Subsidized Child Care

State Policies -- EEC Financial Assistance Policy Guide

FY11 EEC Budget Breakdown

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Why Amend the EEC Subsidy Regulations?

Factors contributing to the need to review and amend the Regulations include:

Identifying and Implementing Best Practices• Review regulations every 5 years (last updated in 2006)• Analyze other State child care subsidy laws and policies• Address unique challenges/weaknesses identified due to recent

fiscal constraints/system restructuring (e.g., closure/limited access to EEC financial assistance, CPC transition, Voucher Pilot)

Targeting/maximizing limited resources

Addressing user feedback/achieving efficiencies

Addressing Federal & State Oversight concerns• Reduce opportunities for Fraud, Waste and Abuse

• Address Improper Authorizations for Payment (IAP) results• Respond to ACF regarding EEC’s State Plan• Align with ANF Task Force established to review MA public

assistance programs • Ensure Program Integrity

Technical Regulatory Changes

To ensure compliance with current laws/policies and aid in the interpretation and enforcement of the regulations

•Family Size and Household Composition (codifies existing practice)

o Clarifies verification of household members necessary for purposes of determining eligibility and establishing parent fees.

•Data Sharing/Interfaces Authorization (new)

o Authorizes EEC to request and/or provide information to/from other government agencies, contracted providers, other states and financial institutions for purposes of verifying eligibility.

•Additional Documentation (codifies existing practice)

o Authorizes providers and/or CCR&Rs to request additional documentation, if file indicates application inaccuracies/ contradictions.

•Travel Time (codifies existing practice)

o Requires applicants to present a minimum of 20 hours of service need before allowing travel time to be factored in.

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Technical Regulatory Changes (cont’d)

• Termination and Reduction of Services (amends current regulations)

o Allows for denial or termination upon (1) submission of false or misleading information and/or documentation or (2) outstanding child care debt owed to the Commonwealth.

o Allows for reduction if a change in the total household income results in an increase the parent(s)’ co-payment fee.

• Review Process (codifies existing practice)

o Clarifies scope of review to reflect recoupment process.o Allows for termination of continued subsidized child care when it

is determined that there is no genuine issue of material fact as presented by the parent in the Request for Review.

o Allows for dismissal of a request for informal hearing when parent (1) fails to prosecute his/her claim and (2) has already agreed in writing to repay the debt at issue.

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Substantive Regulatory Changes• Identity, Residency & Citizenship Status

o Requires verification of applicant’s identity and residency, as well as the citizenship/ immigration status of each child seeking assistance.

• Child Support Enforcement Requiremento Requires single parent applicants to submit evidence of child support

and/or cooperation with the Commonwealth’s Child Support Enforcement agency, as a condition of eligibility.

• Child Attendance/Reimbursement Requirementso Requires children to regularly attend early education and care

programs subsidized by the Commonwealth or risk termination and/or non-reimbursement.

• Limitations on Self-Employmento Imposes restrictions on certain work-related service need activities,

in particular, “at home” self-employmento Changes methodology for calculating service need – total earnings

divided by minimum wage to establish amount of care needed.

• Special Needs (Protective Services)o New definition of protective services to include parents and children

with documented disability and/or special need; limits authorization period.

o Eliminates child with special need as a single service need.7

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Identity, Residency & Citizenship Status – Proposal (codifies existing practice)

EEC seeks to formally codify the Citizenship and Immigration Status policy issued in April 2010, in order to:

o Address the deficiency in EEC’s regulations and policies identified by ACF in the 2008-2009 Federal Improper Authorization for Payment review

Massachusetts, along with all other Year 2 States, were given a one time exemption to implement this requirement

o Achieve consistency between regulations and policies and ensure efficient and uniform outcomes for families.

Requires verification of applicant’s identity and residency, as well as the citizenship or immigration status of each child seeking child care financial assistance.

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Child Support Enforcement Requirement – Proposal (new)

• Addresses concerns about the accuracy of household size reported by families and supports the mission of the MA Child Support Enforcement Agency (CSE).

• At least 20 States currently impose a CSE requirement

• Benefits of instituting a Child Support Enforcement policy:o Keep families out of poverty and provide adequate food, shelter

and clothingo Add to the overall stability, security and well-being of families

and childreno Intended to lessen the existing burdens of second parent in the

household documentation

• Key issues to consider during implementation:o Avoid duplicationo Identify exceptions (i.e. domestic violence or child protection)o Identify required documentationo Monitor and evaluate effectiveness

Requires single parent applicants to submit evidence of child support and/or cooperation with the Commonwealth’s Child Support Enforcement agency, as a condition of eligibility.

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Child Attendance Requirement – Proposal (amends current requirements)

• Review of annual billing and current EEC regulations related to absences identified potential abuse/waste (EEC’s annual billing for FY08-10 shows):

o Over each of past 3 years, providers have billed EEC for over $37M related to absent days

o Absence rates for some children approach 50%o Providers acknowledge billing for “regularly scheduled” absences,

such as families that only need 4 days/week

• Research shows that chronic absenteeism in the early years, such as kindergarten, predicted continuing absences in later grades.

• EEC reviewed other states and ESE’s requirement to identify best practice:o Ohio – limits absences to 10 in 6 monthso Maryland – limits absences to 60 in 12 monthso Delaware – limits absences to 5 per montho MA- allows 10 absences per month

Requires children to regularly attend early education and care programs subsidized by the Commonwealth or risk termination by limiting absences to 30 per 6 months*

*Reflects an average of 5 absences/month enforced over a 6 month period.

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Self-Employment – Proposal (amends current requirements)

To improve program integrity and efficiency, EEC proposes tolimit the types of work-related activities that satisfy the service need requirement:

No home-based self-employment, unless the work performed:• creates a clear and present danger to children• requires regular face-to-face meetings or appointments with clients, which

prevents direct supervision of children

Propose a launch/grace period for new self-employment business – 3 month start up

Implement new mechanism for confirming minimum service need• Current practice – service need hours are self-declared• Proposed practice – divide gross income by MA minimum wage rate to

determine service need hours

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Federal regulations establish two foundational requirements for all children seeking CCDF-funded child care services:

1.Children must reside with a family whose income does not exceed 85% of SMI; and

2.Reside with parent(s) who are working, or participating in job training or an education program, or are receiving or need to receive protective services.

In 2009-2010, ACF identified two instances where EEC policies and regulations did not align with these requirements:

1.Children with Special Needs – 1) allowing children to remain in care up to 100% SMI; 2) allowing a categorical waiver of the work, education and training requirement, and 3) not clearly defining such families “in need of protective services.”

2.Parents with Special Needs – 1) allowing children to remain in care up to 100% of SMI, and 2) not clearly defining such families “in need of protective services.”

Special Needs: Federal Regulatory Compliance – General Issues

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CCDF regulations provide some flexibility to States for purposes of defining and implementing laws and policies related to protective services and allows for some exemptions from eligibility requirements:

1.Children residing in a family that is receiving or needs to receive protective intervention services may be eligible for CCDF-funded child care, if they remain in the home, even if the parent(s) is not working or in an education or training program. See 45 CFR 98.20(a)(3)(ii).

2.States have the discretion to waive the 85% SMI limitation if a child is residing in a family that is receiving or needs to receive protective intervention services if determined necessary on a case by case basis. See 45 CFR 98.20(a)(3)(ii)(A).

Massachusetts proposes to define protective services as:

“Families, who have active protective needs documented in a supported report of abuse or neglect within the previous 12 months or when there is a determination of need to begin or continue supportive child care at a Department of Children and Families Progress Supervisory Review, will be deemed to be in need of protective services. Additionally, children may be deemed at risk of needing protective services in special circumstances, wherein families are unable to provide child care for any portion of a 24 hour day due to a situation of domestic violence or homelessness, a physical, mental, emotional or medical condition, or participation in a drug treatment or drug rehabilitation program.”

Special Needs: Federal Regulatory Compliance – General Issues (cont’d)

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Issues:• In practice, “special need of parent” definition misaligned with federal “in

need of protective services” intention.

• Examples identified through central office review: headaches, backaches, carpal tunnel syndrome.

• Data shows inordinate number of special need of parent service need approvals in contract slots.

• “Special need of parent” service need currently approved for indefinite time period irrespective of the stated need.

• Federal laws prohibit use of CCDF funding for respite care.

Research/Best Practices: What do other states do?

• Most states limit eligibility for special need or disabled parents to 2-parent households

• Some states limit eligibility for a short duration (e.g., no more than 6 months for medical illnesses, etc.)

• Some states impose restrictions based on the age of the children in the household (i.e., not a valid service need unless the child is under 8) and limit eligibility for a shorter duration (i.e., no more than 6 months for medical illnesses, etc.)

• At least one state limits eligibility to “continuity of care” for a limited time (i.e., previously employed, upon reassessment disabled – allowable service need not to exceed 30 days)

Special Needs Parents – Unique Issues/Best Practices

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Special Needs – Length of Authorization Consistency

Subsidy Type Initial Duration I/E Continuity

TANF/DTA Up to 12 months, in accordance with DTA authorization

Upon closure of DTA case, must comply with I/E regulations and policies for continuity

Supportive/DCF Up to 6 months One 6 month extension allowed, after which must comply with I/E regulations and policies for continuity

Special Need Parents or Children

Up to 12 months, renewable at the end of each authorization for as long as condition exists

Indefinite. Exempt from I/E regulations and policies and continuity allowed for as long as special need exists

Income Eligible Up to 12 months must comply with I/E regulations and policies for continuity

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Special Needs Parents – Proposal (amends current requirements)

EEC will seek to amend current policies related to Child Care Financial Assistance eligibility requirements for families with special needs parents to:

Only allow for new access through vouchers

Heighten the bar on what is deemed “at risk of needing protective service”

Only allow these to be short term vouchers -- 12 months, renewable once –- with the intended purpose of helping to serve as a bridge while parents seek other resources to address the “protective service” issue and/or become employable; further extensions may be allowed with EEC authorization upon a showing of extraordinary circumstances.

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Special Needs Children – Proposal (amends current requirements)

Issues:• Exemption was originally based on assumption that special needs

children are “educationally at risk”• Misaligned with federal exemption definition of “in need of

protective services”• Research based risk factors show that ALL low-income children are

“educationally at risk”

• Streamlining and coordinating resources:• Other agencies are charged with providing services to special

needs children -- ESE (IEP) or DPH (IFSP)• EEC should support ESE and/or DPH with wrap-around services for

otherwise eligible children

Current MA practice:• Parents are not required to engage in work, education and/or training

activities• Families may enter care at 85% SMI and exit at 100% (no change)• Children are eligible for full-time care regardless of need (no change)

Proposal: Align EEC regulations with Federal regulations and require parents

of children with special needs to participate in work, education or training.

Proposed Policy Statement

EEC proposes that the Board adopt the following policy statement to address this tension and reaffirm its statutory mandate:

The Board of Early Education and Care acknowledges that the federal funding supporting the Commonwealth’s child care financial assistance program is subject to several conditions. These conditions impose certain limitations related to the evaluation of children and families seeking early education and care subsidies in Massachusetts, including, but not limited to, financial thresholds, work, education or training requirements and verification of residency, citizenship and immigration status. In light of the Department of Early Education and Care’s mission to support all children in their development as lifelong learners and in acknowledgement of the limitations of the federal funding, the Board will continue to advocate for a system of early education and care assistance that is accessible for all children, irrespective of the federal funding limitations. The Board acknowledges that this effort is subject to the Commonwealth appropriating additional state-funding to support this endeavor.

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Formal Public Comment Period

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Formal public comment on the proposed amendments began on September 21st and ended October 21, 2011:

•6 Hearings were conducted across the State:

• 10/12: Boston (evening)

• 10/13: Taunton

• 10/14: Lawrence

• 10/17: Holyoke

• 10/18: Quincy, and

• 10/20: Worcester (evening)

Approximately 150 attended; Over 50 individuals testified

Additionally, EEC received 42 written comments

Post-Formal Public Comment Period

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• Post-closure of the formal public comment period, EEC has been analyzing and compiling the comments to present to the Committee on Policy & Research and the Board

• On November 2nd, EEC staff held formal meetings with the Governor’s Council to Address Sexual Assault and Domestic Violence, as well as representatives from legal advocates, including Greater Boston Legal Services and the Massachusetts Law Reform Institute

• In addition, EEC has continued discussions on the proposed amendments with the Procedures Working Team and other Executive Agencies, including the Department of Revenue’s Child Support Enforcement Division.

Summary of Common Themes from Public Comment Received by EEC

Strong Opposition to the following topics:

Imposition of a Child Support Requirement on Single Parents• Impact on families experiencing domestic violence• Complexities and dangers of Family & Probate Court System

Changes to Laws related to Special Needs Families• Time limits imposed on special need/disabled parents• Removal of the single service need for children with special needs/disabilities by

requiring parents to work/educate/train Verification of Citizenship/Immigration Status

• Undocumented children are part of our communities and should not be denied access to early education programs

Home-Based Self-Employment Restrictions• Potential impact on Family Child Care programs• Potential impact on school-aged children, especially during vacations and holidays

Support or Understanding to the following topics:

Child Absences provided that EEC Systems monitor/track absence data Inclusion of Homeless Child Care Program, but sought clarification on HomeBASE

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Common Themes from Public Comment Received by EEC

Child Support Requirement for Single Parent Families

• Providing child support services should not be conditioned on “going to court” – complex adversarial forum; large time commitment may impact employment

• Concern about EEC’s infrastructure to adequately identify and assess good cause exemptions (i.e., domestic violence)

• Voluntary/Informal Child Support, whether monetary or other support arrangements (i.e., absent parent provides evening care, if parent has evening work/school schedule) should be sufficient

• Court requirement imposes risk of physical or emotional harm on victims of domestic violence

• Family may be safely and effectively managing situation, which could be disturbed by court involvement

Alternative Consideration: Explore the use of data matches or other options for purposes of verifying household composition, as opposed to child support.

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Common Themes from Public Comment

Special Needs – Parent:

• Limiting renewals/time limitations inappropriate particularly for those with chronic disabilities

• Criteria for approvals beyond express limitation not stated

Elimination of Separate Special Needs – Child Service Need:

• Change will result in terminations of children w/ high needs• Importance of early education regardless of parent status• Children that experience high needs risk factors require early

education to bridge achievement gap

Note: No alternate considerations suggested. MA is one of three states that uses any CCDF funds to support families with special needs or disabilities. Funds insufficient to serve existing low income, working families.

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Common Themes from Public Comment

Citizenship or Immigration Status Requirement for Children:

• Short-sighted to deprive undocumented children – they live in our communities and attend our public schools

• No child should be denied without prior review by EEC – complexity noted

Note: EEC required to demonstrate compliance with the federal citizenship and immigration requirement during the current improper authorizations for payment audit. ACF-OCC contacted the Department last week to verify requirement implemented.

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Common Themes from Public Comment

Self-Employment – Home-Based Restrictions:

Hardship on families with school-aged children – ineligible for After-School or out of school time subsidies

Involving school-aged children in FCC setting may be inappropriate for educators providing only I/T or Pre-K FCC programs or may put FCC Provider over licensed capacity (i.e., licensed for 6, but 2 SA children enter home during vacations and holidays)

Dangerous or face-to-face limitation – hardship to parents engaged in legitimate home-based employment, such as writing/data processing

Alternative consideration: Consider elimination of age restriction for children of home-based self-employed parents and/or exemption from the requirement for family child care providers.

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Common Themes from Public Comment

Allowable Absence Reductions from 10/month to 30/6 months:

• Amounts to a 50% reduction in billable absent days – too drastic• Impossible to track/monitor unless on-line capabilities exist• Impact on priority populations – DCF/Teens/Homeless – that may

experience a higher incidence of absenteeism• EEC should broaden the definition of “excused” absences AND

not count “excused” absences against families… only unexcused absences should subject child to termination

• Impact of absence limitations and due process rights seeking assurances that will providers be paid if families are absent for 30+ days during appeals

No Alternative Considerations: Commenters recognized the impact of billing for excessive absence - ~$40M/year – but requested assurances that monitoring tracking would be automated, as opposed to current manual system.

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Common Themes from Public Comment

Homeless Family Access:

• Families experiencing homelessness should have access to both contracts AND vouchers homeless contracts may not accessible to all families/regions

• Unclear if involvement in DHCD’s HomeBASE program is included within the definition of “homelessness”

• Parent fees – unclear how/when fees can be waived; why authorize DHCD or DCF to make these case-by-case decisions?

• Express language related to “continuity of care” should be included and allowance of 3 month transition period

• Communication/Knowledge of available slots – inadequate implementation

No Alternative Considerations: There was large support for the Department’s efforts to expressly include Homeless Child Care within its regulations. Commenters expressly requested clarification related to HomeBASE.

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Next Steps

EEC to review recommendations and directions from the Policy & Research Committee of the Board

EEC to review alternative considerations submitted by advocates, particularly related to the areas of child support, special needs and self-employment

EEC to complete review of all regulations, as requested by the Governor’s Office, for purposes of ensuring small business friendly approaches

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Proposed Regulation Promulgation Timeline

Tasks Date

Revisions to proposed regulation changes based upon Board and Committee input

November – December, 2011

Board votes to approve regulations and promulgate

Jan/Feb 2012

Technical Assistance Training Feb 2012 and ongoing

New regulations are promulgated (take effect) March/April 2012

Roll out implementation/trainings April 2012 and ongoing

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