Child Care and Development Fund (CCDF) Program

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Administration for Children and Families

45 CFR Part 98

RIN 0970-AC67

Child Care and Development Fund (CCDF) Program

AGENCY:

Office of Child Care (OCC), Administration for Children and Families (ACF), Department of Health and Human Services (HHS).

ACTION:

Final rule.

SUMMARY:

This final rule makes regulatory changes to the Child Care and Development Fund (CCDF) based on the Child Care and Development Block Grant Act of 2014. These changes strengthen requirements to protect the health and safety of children in child care; help parents make informed consumer choices and access information to support child development; provide equal access to stable, high-quality child care for low-income children; and enhance the quality of child care and the early childhood workforce.

DATES:

Effective:

November 29, 2016.

Compliance date:

States and Territories are expected to be in full compliance by the end of the Fiscal Year (FY) 2016—2018 CCDF Plan period. ACF will determine compliance with provisions in this final rule through review and approval of the FY 2019—2021 CCDF Plans that become effective October 1, 2018 and through the use of federal monitoring of progress in accordance with section 98.90 prior to that date.

For Tribal Lead Agencies, ACF will determine compliance through review and approval of the FY 2020—2022 Tribal CCDF Plans that become effective October 1, 2019. See further discussion of effective and compliance dates in the background section of this rule.

FOR FURTHER INFORMATION CONTACT:

Andrew Williams, Office of Child Care at 202-401-4795 (not a toll-free call). 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:

Contents

I. Executive Summary

II. Background

a. Child Care and Development Fund

b. Statutory Authority

c. Effective Dates

III. Development of the Regulation

IV. General Comments and Cross-Cutting Issues

V. Section by Section Discussion of Comments and Regulatory Provisions

Subpart A—Goals, Purposes and Definitions

Subpart B—General Application Procedures

Subpart C—Eligibility for Services

Subpart D—Program Operations (Child Care Services) Parental Rights and Responsibilities

Subpart E—Program Operations (Child Care Services) Lead Agency and Provider Requirements

Subpart F—Use of Child Care and Development Funds

Subpart G—Financial Management

Subpart H—Program Reporting Requirements

Subpart I—Indian Tribes

Subpart J—Monitoring, Non-Compliance, and Complaints

Subpart K—Error Rate Reporting

VI. Regulatory Process Matters

a. Regulatory Flexibility Act

b. Executive Orders 12866 and 13563

c. Regulatory Impact Analysis

d. Unfunded Mandates Reform Act of 1995

e. Executive Order 13045 on Protection of Children

f. Executive Order 13175 on Consultation with Indian Tribes

g. Paperwork Reduction Act of 1995

h. Congressional Review

i. Executive Order 13132

j. Treasury and General Government Appropriations Act of 1999

I. Executive Summary

Overview.

On November 19, 2014, President Barack Obama signed the Child Care and Development Block Grant (CCDBG) Act of 2014 (Pub. L. 113-186) into law following its passage in the 113th Congress. The CCDBG Act, as amended (42 U.S.C. 9858

et seq.,

and hereinafter referred to as the “Act”), along with Section 418 of the Social Security Act (42 U.S.C. 618) authorizes the Child Care and Development Fund (CCDF), which is the primary Federal funding source devoted to providing low-income families who are working or participating in education or training activities with help paying for child care and improving the quality of child care for all children.

The bipartisan CCDBG Act of 2014 made sweeping statutory changes that require significant reforms to State and Territory CCDF programs to raise the health, safety, and quality of child care and provide more stable child care assistance to families. It expanded the purposes of CCDF for the first time since 1996, ushering in a new era for child care in this country. Since 1996, a significant body of research has demonstrated the importance of early childhood development and how stable, high-quality early experiences can positively influence that development and contribute to children's futures. In particular, low-income children stand to benefit the most from a high-quality early childhood experience. Research has also shown the important role of child care financial assistance in helping parents afford reliable child care in order to obtain and maintain stable employment or pursue education. The reauthorized Act recognizes CCDF as an integral program to promote both the healthy development of children and parents' pathways to economic stability.

In Fiscal Year (FY) 2014, CCDF provided child care assistance to 1.4 million children from nearly 1 million low-income working families in an average month. The Congressional reauthorization of CCDBG made clear that the prior law was inadequate to protect the health and safety of children in care and that more needs to be done to increase the quality of CCDF-funded child care. It also recognized the central importance of access to subsidy continuity in supporting parents' ability to achieve financial stability and children's ability to develop nurturing relationships with their caregivers, which creates the foundation for a high-quality early learning experience.

Purpose of this regulatory action.

The majority of CCDF regulations at 45 CFR parts 98 and 99 were last revised in 1998 (with the exception of some more recent updates related to State match and error reporting). This regulatory action is needed to update the regulations to accord with the reauthorized Act and to reflect what has been learned since 1998 about child care quality and child development.

Legal authority.

This final rule is being issued under the authority granted to the Secretary of Health and Human Services by the CCDBG Act of 1990, as amended, (42 U.S.C. 9858

et seq.

) and Section 418 of the Social Security Act (42 U.S.C. 618).

Major provisions of the final rule.

The final rule addresses the CCDBG Act of 2014, which includes provisions to: (1) Protect the health and safety of children in child care; (2) help parents make informed consumer choices and access information to support child development; (3) provide equal access to stable, high-quality child care for low-income children; and (4) enhance the quality of child care and the early childhood workforce.

Protect Health and Safety of Children in Child Care

This rule provides details on the health and safety standards established in the CCDBG Act of 2014, including health and safety training,

comprehensive background checks, and monitoring. The Act requires States to monitor providers receiving CCDF funds (including those that are license-exempt), at least annually, to determine whether health and safety practices and standards are being followed in the child care setting, including a pre-licensure visit for licensed providers. Regular monitoring of child care settings is necessary to ensure compliance with appropriate standards that protect the health and safety of children. However, this rule allows Lead Agencies to develop alternative monitoring requirements for CCDF-funded care provided in the child's home and exempts relative caregivers from the monitoring and training requirements at the option of Lead Agencies. This flexibility allows Lead Agencies to address the unique characteristics of these care arrangements.

In this final rule, we address the Act's background check requirements by requiring all child care staff members (including prospective staff members) of all licensed, regulated, or registered child care providers and all child care providers eligible to deliver CCDF services to have a comprehensive background check, unless they are related to all children in their care. We extend the background check requirement to all adults residing in family child care homes. All parents, regardless of whether they receive CCDF assistance, deserve this basic protection of knowing that those individuals who have access to their children do not have prior records of behavior that could endanger their children.

The Act requires Lead Agencies to establish standards and training in 10 topic areas related to health and safety that are fundamental for any child care setting, such as first aid, CPR, and safe sleep practices. We added recognizing and reporting child abuse and neglect to this list. The Act also requires Lead Agencies to maintain records of substantiated parental complaints about child care. The final rule requires Lead Agencies to designate a hotline or similar reporting process for parental complaints. Child care providers are required to report serious injuries or deaths that occur in child care settings in order to inform regulatory or other policy changes to improve health and safety.

Help Parents Make Informed Consumer Choices and Access Information To Support Child Development

The Act expanded requirements for the content of consumer education available to parents receiving CCDF assistance, the public, and where applicable, child care providers. By adding providers, Congress recognized the positive role trusted caregivers can play in communicating and partnering with parents on a daily basis regarding their children's development and available resources in the community. Effective consumer education strategies are important to inform parental choice of child care and to engage parents in the development of their children in child care settings—a new purpose of the CCDF added by the CCDBG Act of 2014. States and territories have the opportunity to consider how information can be best provided to low-income parents through their interactions with CCDF, partner agencies, and child care providers, as well as through electronic means such as a Web site. Parents face great challenges in finding reliable information and making informed consumer choices about child care for their children.

The Act requires Lead Agencies to make available via a consumer-friendly and easily accessible Web site, information on policies and procedures regarding: (1) Licensing of child care providers; (2) conducting background checks and the offenses that keep a provider from being allowed to care for children; and (3) monitoring of child care providers. This is done through a single Web site that is easy for families to navigate and provides widest possible access to individuals who speak languages other than English and persons with disabilities. This Web site must give parents receiving CCDF information about the quality of their chosen providers. The final rule also requires Lead Agencies to provide CCDF parents with a consumer statement in hard copy or electronically (such as referral to the consumer education Web site) with specific information about the child care provider they select.

The Act requires Lead Agencies to make results of monitoring available in a consumer-friendly and easily accessible manner. We require posting a minimum of three years of results. If full reports are not in plain language, Lead Agencies must post a plain language summary for each report in addition to the full monitoring and inspection report. Parents should not have to parse through administrative code or understand advanced legal terms to determine whether safety violations have occurred in a child care setting.

Congress added a number of content areas that will support parents in their role as their child's first and most important teacher. In keeping with a new purpose of the CCDF program at Section 658A(b)(3) of the Act to promote involvement by parents and family members in the development of their children in child care settings, Section 658C(2)((E)(i) of the Act requires Lead Agencies to make available information related to best practices in child development and State policies regarding child social and emotional development, including any State policies relevant to preventing expulsion of children under age five from child care settings.

The reauthorized Act also requires Lead Agencies to provide information that can help parents identify other financial benefits and services that may support their pathway to economic stability. Families eligible for child care assistance are often eligible for other supports, and the Act specifies that Lead Agencies provide families with information on several public benefit programs, including Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), Medicaid, and the Children's Health Insurance Program (CHIP). In addition, the Act requires Lead Agencies to provide information on the programs and services that are part of Individuals with Disabilities Education Act (IDEA), such as early intervention and special education services, and that parents are given information on how to obtain a developmental screening for their child. Low-income parents deserve to have easy access to the full range of information, programs, and services that can support them in their parenting efforts. To ensure equal access for persons with limited English proficiency and for persons with disabilities, the final rule requires Lead Agencies to provide child care program information in multiple languages and alternative formats.

Provide Equal Access to High-Quality Child Care for Low-Income Children

Congress established requirements to provide more stable child care financial assistance to families, including extending children's eligibility for child care to a minimum of 12 months, regardless of increases in parents' earnings (as long as income remains at or below the Federal eligibility limit) and temporary changes in participation in work, training, or education. This will enable parents to maintain employment or complete education programs, and supports both family financial stability and the relationship between children and their caregivers. Under the reauthorized Act, Lead Agencies that choose to end assistance prior to 12 months, due to a non-temporary change in a parent's work,

training, or education participation, must continue assistance for a minimum of 3 months to allow parents to engage in job search, resume work, or attend an education or training program, as soon as possible.

This final rule establishes a set of policies intended to stabilize families' access to child care assistance and, in turn, help stabilize their employment or education and their child's care arrangement. These policies also have the potential to stabilize the revenue of child care providers who receive CCDF funds, as they experience more predictable, reliable, and timely payments for services. This rule reduces reporting requirements for families and prevents them from unduly losing their assistance. Parents often find it difficult to navigate administrative processes and paperwork required to maintain their eligibility, and state policies can be inflexible to changes in a family's circumstances. These provisions also make it easier for Lead Agencies to align CCDF policies with other programs serving low-income children. For example, more than half of children receiving CCDF-funded child care are in families with incomes under the federal poverty line, and therefore qualify for Head Start. Children once found eligible for Head Start may remain in the program until they age out, which promotes stability for families and for the Head Start program. The provisions here promote stability of child care programs and allow for greater alignment between child care services and Head Start for families in poverty who rely on child care subsidy to participate in work or education/job training.

Families may be determined to be ineligible within the minimum 12-month eligibility period if their income exceeds 85 percent of state median income (SMI) (taking into account irregular fluctuations in income) or, at Lead Agency option, the family experiences a non-temporary cessation in job, training, or education. We clarify that additional State-imposed eligibility criteria apply only at the time of initial eligibility determination and redetermination and provide examples of changes in parents' scheduling and conditions of employment that meet the statutory intent of stabilizing assistance for families through changes in circumstance. Lead Agencies that set their income eligibility threshold below 85 percent of SMI must allow parents who otherwise qualify for CCDF assistance to continue receiving assistance, at subsequent redeterminations, until their income exceeds a second tier of eligibility set at a level sufficient for the family to reasonably afford quality child care without assistance, based on the typical household budget of a low-income families. This approach promotes continuity of care for children while allowing for wage growth for families to move on a path toward economic stability.

All too often, getting and keeping CCDF assistance is overly burdensome for parents, resulting in short durations of assistance and churning on and off CCDF as parents lose assistance and then later return. This instability disrupts parental employment and education, harms children, and runs counter to nearly all of CCDF's purposes. This full set of provisions that facilitates easier and sustained access to assistance is necessary to strengthen CCDF as a two-generation program that supports work, training, and education, as well as access to high-quality child care.

Congress reaffirmed the core principle that families receiving CCDF-funded child care should have equal access to child care that is comparable to that of non-CCDF families. The Act requires Lead Agencies to set provider payment rates based on a valid market rate survey or alternative methodology. To allow for equal access, the final rule requires Lead Agencies to set base payment rates

at least

at a level sufficient to cover the costs to providers of the health, safety, quality, and staffing requirements included in the Act and the final rule. The Act also requires Lead Agencies to take into account the cost of higher quality when setting rates. We reaffirm our long-standing position that setting payment rates at the 75th percentile of a recent market rate survey remains an important benchmark for gauging equal access. Below market payment rates limit access to high-quality care for children receiving CCDF-funded care and violate the equal access provision that is central to CCDF. Higher provider payment rates are necessary to ensure that providers receiving CCDF funds have the means to provide high-quality care for our country's low-income children.

The final rule provides details on the statutory requirements for Lead Agencies to pay providers in a timely manner based on generally-accepted payment practices for non-CCDF providers and that Lead Agencies delink provider payments from children's absences to the extent practicable. We establish a new Federal benchmark for affordable family co-payments of seven percent of family income and allow Lead Agencies more flexibility to waive co-payments for vulnerable families. Under this rule, Lead Agencies may increase family co-payments only at redetermination or during a period of graduated phase-out when families' incomes have increased above the Lead Agency's initial income eligibility threshold. In addition, if a Lead Agency allows providers to charge amounts more than the required family co-payments, the Lead Agency must provide a rationale for this practice, including how charging such additional amounts will not negatively impact a family's ability to receive care they might otherwise receive taking into consideration a family's co-payment and the provider's payment rate.

This final rule requires Lead Agencies to take into consideration children's development and learning and promote continuity of care when authorizing child care services; offer increased flexibility for determining eligibility of vulnerable children; and clarify that Lead Agencies are not required to restrict a child's care to the hours of a parent's work or education. These changes are important to make the program more child-focused and ensure that the most vulnerable children have access to and benefit from high-quality care. These provisions may be implemented broadly in ways that best support the goals of Lead Agencies.

Enhance the Quality of Child Care and the Early Childhood Workforce

The final rule provides detail on the statutory requirement to increase spending on initiatives that improve the quality of care. The Act increases the share of CCDF funds directed towards quality improvement activities, authorizes a new set-aside for infant-toddler care, and drives investments towards increasing the supply of high-quality care for infants and toddlers, children with special needs, children experiencing homelessness, and other vulnerable populations including children in need of nontraditional hour care and children in poor communities. The Act requires States and Territories to submit an annual report on quality activities, including measures created by the Lead Agency to evaluate progress on quality improvement. This final rule requires Lead Agencies to report data on their progress on those measures. The Act also increases quality through more robust program standards, including training and professional development standards for caregivers, teachers, and directors to help those working with children promote their social, emotional, physical, and cognitive development.

The final rule clarifies the Act's training requirements by requiring that

child care caregivers, teachers, and directors of CCDF providers receive training prior to caring for children, or during an orientation period not to exceed three months, and on an annual basis. In order for the health and safety requirements to be implemented, and because these are areas that the Lead Agency will monitor, this final rule requires that the pre-service or orientation training include the ten basic health and safety topics identified in the Act, as well as recognizing and reporting child abuse and neglect (in order to comply with child abuse reporting requirements) and training in child development for eligible children from birth to 13 years of age.

Lead Agencies must provide for a progression of professional development that may include postsecondary education. The final rule identifies six key components of a professional development State framework, and we encourage, to the extent practicable, that ongoing training yields continuing education units or is credit-bearing. These components advance expert recommendations to improve the knowledge and competencies of those who care for young children, which is central to children's learning experiences and the quality of child care.

In addition, the Act includes a number of provisions to improve access to high-quality child care for children experiencing homelessness. The Act requires Lead Agencies to establish a grace period that allows children experiencing homelessness (and children in foster care) to receive CCDF services while allowing their families (including foster families) a reasonable time to comply with immunization and other health and safety requirements. The final rule requires Lead Agencies to help families by coordinating with licensing agencies and other relevant State and local agencies to provide referrals and support to help families experiencing homelessness comply with immunization and health and safety requirements. This final rule also requires Lead Agencies to use the definition of homeless applicable to school programs from the McKinney-Vento Act to align with other Federal early childhood programs (42 U.S.C. 11434a).

This final rule indicates the extent to which CCDF provisions apply to tribes, since this was not specified in the Act itself. Starting in early 2015, OCC began a series of formal consultations with Tribal leaders to determine how the provisions in the reauthorized Act should apply to Tribes and Tribal organizations. We heard from many Tribal leaders and CCDF Administrators asking for flexibility to implement child care programs that meet the individual needs of their communities. The final rule is intended to preserve Tribal Lead Agency flexibility, in a manner consistent with the CCDF dual goals of promoting families' financial stability and fostering healthy child development. We differentiate and exempt some Tribal grantees from a progressive series of CCDF provisions based on three categories of CCDF grant allocations: Large, medium and small. We are also allowing Tribes flexibility to consider any Indian child in the Tribe's service area to be eligible to receive CCDF funds, regardless of the family's income or work, education, or training status, if a Tribe's median income is below a threshold established by the Secretary. However, the Tribe's provision of services still must be directed to those with the highest need.

Costs, benefits and transfer impacts.

Changes made by the CCDBG Act of 2014 and this final rule have the most direct benefit for the 1.4 million children and their parents who use CCDF assistance to pay for child care. Many of the Act's changes will also positively impact children who do not directly participate in CCDF. Many children who receive no direct assistance from CCDF will benefit from more rigorous health and safety standards, provider inspections, criminal background checks for child care staff, and accessible consumer information and education for their parents and providers. The attention to quality goes beyond health and safety. Caregivers, teachers, and directors of CCDF providers will be supported in their ongoing professional development. Under the Act, States and Territories must direct an increasingly greater share of their CCDF grant towards activities that improve the quality of child care, including a new share dedicated to improving the quality of infant and toddler care. Low-income parents who receive CCDF assistance will benefit from more stable financial assistance as they work toward economic stability and their children will benefit from relationships that are more continuous with their caregivers. Providers will benefit from improved provider payment rates (by certificate or grant or contract), as well as payment practices that support their financial stability. These include timely payments so that providers can sustain their operations and quality and paying providers for a reasonable number of absent days. The positive impacts of the reauthorized Act and this rule will benefit children, families, providers, and employers now and into the future.

The cost of implementing changes made by the Act and this rule vary depending on a State's specific situation. There are a significant number of States, Territories, and Tribes that have already implemented many of these policies. ACF conducted a regulatory impact analysis to estimate costs and benefits of provisions in this final rule, including the new statutory requirements, taking into account current State practices. We evaluated major areas of policy change, including monitoring and inspections (including a hotline for parental complaints), background checks, training and professional development, consumer education (including the Web site and consumer statement), quality spending, minimum 12-month eligibility and related provisions, increased subsidies, and supply building.

Based on our analysis, annualized costs associated with these provisions, averaged over a ten year window, are $235.2 million and the annualized amount of transfers is approximately $839.1 million (both estimated using a 3 percent discount rate), which amounts to a total annualized impact of $1.16 billion. Of that amount, approximately $1.15 billion is directly attributable to the CCDBG Act of 2014, with an annualized cost of only $4 million (or 0.3% of the total estimated impact) directly attributable to discretionary provisions of this regulation. While this analysis does not attempt to fully quantify the many benefits of the reauthorization and this rule, we do conduct a breakeven analysis to compare requirements clarified through this regulation against a potential reduction in child fatalities and injuries. Further detail and explanation can be found in the regulatory impact analysis.

II. Background

a. Child Care and Development Fund.

Nearly 13 million young children, under age 5, regularly rely on child care to support their healthy development and school success. (Census Bureau, Who's Minding the Kids? Child Care Arrangements, Spring 2011). Additionally, more than 10 million children participate in a range of school-age programs, before- and after-school and during summers and school breaks. (Afterschool Alliance, America After 3PM: Afterschool Programs in Demand, 2014). CCDF is the primary Federal funding source devoted to providing low-income families with access to child care and before- and after-school care and improving the quality of care and, thus, is an integral part of the

nation's child care and early education system. Each year, more than $5 billion in Federal CCDF funding is allocated to State, Territory and Tribal grantees. Combined with State funds and transfers from the Temporary Assistance for Needy Families (TANF) program, States and Territories spend nearly $9 billion annually to support child care services to low-income families and to improve the quality of child care. More than $1 billion of this spending is directed towards supporting child care quality improvement activities designed to create better learning environments and more effective caregivers and teachers in child care centers and family child care homes across the country.

CCDF was created 20 years ago, upon the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) in 1996 (Pub. L. 104-193), in which Congress replaced the former Aid to Families with Dependent Children with the framework of TANF block grants, and established a new structure of consolidated funding for child care. This funding, provided under section 418 of the Social Security Act (42 U.S.C. 618), combined with funding from the Child Care and Development Block Grant (CCDBG) Act of 1990 (42 U.S.C. 9858

et seq.

), was designated by HHS as the Child Care and Development Fund (CCDF).

The CCDBG Act of 2014 was the first reauthorization of CCDBG since 1996. The reauthorized Act affirms the importance of CCDF as a two-generation program that supports parents' financial success and children's healthy development. Since PRWORA, the focus of CCDF has shifted from one largely dedicated to the goal of enabling low-income parents to work to one that includes a focus on promoting positive child development as we have learned a great deal about the value of high-quality child care for young children. While low-income parents continue to need access to child care in order to work and gain economic independence, policymakers and the public now recognize that the quality of child care arrangements is also critically important.

Sixteen years ago, HHS (in collaboration with other federal agencies and private partners) funded the National Academies of Sciences to evaluate and integrate the research on early childhood development and the role of early experiences. (National Research Council and Institute of Medicine, From Neurons to Neighborhoods: The Science of Early Childhood Development, Board on Children, Youth, and Families, Commission on Behavioral and Social Sciences and Education, 2000.) An overarching conclusion was that early experiences matter for healthy child development. Nurturing and stimulating care given in the early years of life builds optimal brain architecture that allows children to maximize their enormous potential for learning. On the other hand, hardship in the early years of life can lead to later problems. Interventions in the first years of life are capable of helping to shift the odds for those at risk of poor outcomes toward more positive outcomes. A multi-site study conducted by the Frank Porter Graham Child Development Institute found that, “. . . children who experienced higher quality care are more likely to have more advanced language, academic, and social skills,” and, “. . . children who have traditionally been at risk of not doing well in school are affected more by the quality of child care experiences than other children.” (E. Peisner-Feinberg, M. Burchinal, et al., The Children of the Cost, Quality, and Outcomes Study Go to School: Executive Summary, University of North Carolina at Chapel Hill, Frank Porter Graham Child Development Center, 1999).

Evidence continues to mount regarding the influence that children's earliest experiences have on their later success and the role child care can play in shaping those experiences. The most recent findings from the National Institute of Child Health and Human Development (NICHD) showed that the quality of child care children received in their preschool years had small but statistically significant associations with their academic success and behavior into adolescence. (NICHD, Study of Early Child Care and Youth Development, 2010). Recent follow-up studies to the well-known Abecedarian Project, which began in 1972 and has followed participants from early childhood through young adulthood, found that adults who had participated in a high-quality early childhood education program experienced better educational, employment, and health outcomes. Abecedarian Project participants had significantly more years of education than their control group peers, were four times more likely to earn college degrees, and had lower risk of cardiovascular and metabolic diseases in their mid-30s. (Campbell, Pungello, Burchinal, et al., Adult Outcomes as a Function of an Early Childhood Educational Program: An Abecedarian Project Follow-Up, Frank Porter Graham Child Development Institute, Developmental Psychology, 2012 and Campbell, Conti, Heckman et al, Early Childhood Investments Substantially Boost Adult Health, Science 28 March 2014, Vol. 343).

Research also confirms that consistent time spent in afterschool activities during the elementary school years is linked to narrowing the gap in math achievement, greater gains in academic and behavioral outcomes, and reduced school absences. (Auger, Pierce, and Vandell, Participation in Out-of-School Settings and Student Academic and Behavioral Outcomes, presented at the Society for Research in Child Development Biennial Meeting, 2013). An analysis of over 70 after-school program evaluations found that evidence-based programs designed to promote personal and social skills were successful in improving children's behavior and school performance. (Durlak, Weissberg, and Pachan, The Impact of Afterschool Programs that Seek to Promote Personal and Social Skills in Children and Adolescents, American Journal of Community Psychology, 2010). After-school programs also promote youth safety and family stability by providing supervised settings during hours when children are not in school. Parents with school-aged children in unsupervised arrangements face greater stress that can impact the family's well-being and successful participation in the workforce. (Barnett and Gareis, Parental After-School Stress and Psychological Well-Being, Journal of Marriage and the Family, 2006).

CCDF often operates in conjunction with other programs including Head Start, Early Head Start, State pre-kindergarten, and before-and after-school programs. States and Territories have flexibility to use CCDF to provide children enrolled in these programs full-day, full-year care, which is essential to supporting low-income working parents. CCDF also funds quality improvements for settings beyond those that serve children receiving subsidies. CCDF has helped lay the groundwork for development of State early learning systems. Lead Agencies have used CCDF funds to make investments in professional development systems to ensure a well-qualified and effective early care and education workforce. Lead Agencies have provided scholarships for child care teachers and worked closely with higher education, especially community colleges, to increase the number of teachers with training or a degree in early childhood or youth development. Lead Agencies have used CCDF funds to build quality rating and improvement systems (QRIS) to provide consumer education information to parents, help providers

raise quality, and create a more systemic approach to child care quality improvement efforts and accountability. These investments have likely also generated benefits for children enrolled in unsubsidized child care programs.

Child care is a core early learning and care program and plays an important role within a broad spectrum of early childhood programs supporting young children. The Administration has consistently sought to support State, Territory and Tribal efforts to improve the coordination and alignment of early childhood programs through multiple efforts, including the Race to the Top-Early Learning Challenge and the Early Head Start-Child Care Partnerships. Most recently, ACF published Caring for our Children Basics (

www.acf.hhs.gov/sites/default/files/ecd/caring_for_our_children_basics.pdf

), a set of recommendations intended to create a common framework to align basic health and safety efforts across all early childhood settings. This final rule builds on the alignment and coordination work that has been advanced by the Administration. For example, Lead Agencies are required to collaborate with multiple entities, including State Advisory Councils on Early Childhood Education and Care, authorized by the Head Start Act, or similar coordinating bodies. In addition, minimum 12-month eligibility periods will make it easier to align child care assistance with eligibility periods for other programs, such as Early Head Start, Head Start, and State prekindergarten. Policies that stabilize access to child care assistance for families and bring financial stability to child care providers will play an important role in supporting the success of Early Head Start-Child Care Partnerships.

According to a recent report by the President's Council of Economic Advisors, investments in early childhood development will reap economic benefits now and in the future. Immediate benefits include increased parental earnings and employment. Future benefits come when children who experience high-quality early learning opportunities are prepared for success in school and go on to earn higher wages as adults. (Council of Economic Advisors, Executive Office of the President of the United States, The Economics of Early Childhood Investments, 2014). Decades of research show that the experiences babies and toddlers have in their earliest years shape the architecture of the brain and have long-term impacts on human development. At the same time, increasing the employability and stability of parents reduces the impact of poverty on children and sustains our nation's workforce and economy. Studies have shown that access to reliable child care contributes to increased employment and earnings for parents. (National Research Council and Institute of Medicine, From Neurons to Neighborhoods: The Science of Early Childhood Development, Board on Children, Youth, and Families, Commission on Behavioral and Social Sciences and Education, 2000 and Council of Economic Advisors, The Economics of Early Childhood Investments). In short, high-quality child care is a linchpin to the creation of an educational system that successfully supports the country's workforce development, economic security, and global competitiveness. Successful implementation of the CCDBG Act of 2014 will ensure that child care is not only safe, but also supports children's healthy development and their future academic achievement and success.

b. Statutory authority.

This final rule is being issued under the authority granted to the Secretary of Health and Human Services by the CCDBG Act of 1990, as amended (42 U.S.C. 9858

et seq.

) and Section 418 of the Social Security Act (42 U.S.C. 618).

c. Effective dates.

This final rule will become effective 60 days from the date of its publication, except for provisions with a later effective date as defined in the Act (discussed further below). Compliance with provisions in the Act will be determined through ACF review and approval of CCDF Plans, including State Plan amendments, as well as using Federal monitoring, including on-site monitoring visits as necessary. Lead Agencies must comply with the provisions of the Act, as revised by the CCDBG Act of 2014. Compliance with key statutorily required implementation dates outlined in Program Instruction CCDF-ACF-PI-2015-02 (

http://www.acf.hhs.gov/programs/occ/resource/pi-2015-02

), dated January 9, 2015, remain in effect. In some cases, the CCDBG Act of 2014 specifies a particular date when a provision is effective. Where the Act does not specify a date, the new requirements became effective upon the date of enactment of the Act, and ACF guidance established September 30, 2016 as the deadline for States and Territories to implement the new statutory requirement(s). As discussed below, Tribes and Tribal organizations have different implementation and compliance timelines.

ER30SE16.002

We recognize that States and Territories prepared their FY 2016-2018 CCDF Plans, which were due in March 2016, prior to the issuance of this final rule. States and Territories were to comply with the Act based on their reasonable interpretation of the requirements in the revised Act. With the issuance of this final rule, any State or Territory that does not fully meet the requirements of the Act, as interpreted by these regulations, will need to revise its policies and procedures to come into compliance. Plan amendments for substantial changes must be submitted within 60 days of the effective date of the change, and ACF will track compliance. The Act and this final rule also provide guidance on the process that allows the Secretary to consider whether to approve requests for temporary extensions from States and Territories through waivers. If a State or Territory receives an extension via waiver, ACF still expects full compliance with the Act, as interpreted by this final rule, by the end of the current triennial Plan period (FY 2016-2018). ACF will use federal monitoring in accordance with section 98.90.

Tribal Lead Agencies will submit new 3-year Plans for FY 2020-2022, with an effective date of October 1, 2019, and ACF will use those Plans to determine compliance with the Act, as interpreted by this rule. Tribes may also submit requests, for HHS to consider, seeking temporary extensions via waivers. Tribes that have consolidated CCDF with other employment, training and related programs under Public Law (Pub. L. 102-477), are not required to submit separate CCDF Plans, but will be required to submit amendments to their Public Law 102-477 Plans, along with associated documentation, in accordance with this timeframe to demonstrate compliance with the Act, as interpreted by this final rule.

This final rule is being published well in advance of the October 1, 2018 deadline for States and Territories (and October 1, 2019 deadline for Tribes) to ensure there is enough time to demonstrate compliance with all the statutory interpretations in this final rule. As a result, there is sufficient time for all States, Territories, and Tribes to demonstrate compliance with this rule's interpretations no later than these deadlines. We are not inclined to approve any requests for temporary extensions/waivers due to legislative or transitional purposes in order to comply with this rule's interpretations because the compliance deadlines already provide adequate time.

III. Development of Regulation

After enactment of the CCDBG Act of 2014, the Office of Child Care (OCC) and the Office of the Deputy Assistant Secretary for Early Childhood Development in ACF conducted outreach to engage with a variety of stakeholders to understand better the implications of its provisions. OCC created a CCDF reauthorization page on its Web site to provide public information and an email address to receive questions. OCC received approximately 650 questions and comments through this email address. OCC leadership and staff participated in more than 21 listening sessions with approximately 675 people representing diverse national, State, and local stakeholders regarding the Act, held webinars, and gave presentations at national conferences. Participants included State human services agencies, child care caregivers and providers, parents with children in child care, child care resource and referral agencies, national and State advocacy groups, national stakeholders including faith-based communities, after-school and school-age caregivers and providers, child care researchers, State and local early childhood organizations, provider associations, labor unions, and Head Start grantees. In addition, OCC held five meetings with State and Territory CCDF administrators and a series of consultations with Tribal leaders to describe the Act and to gather input from Federal grantees with responsibility for operating the CCDF program.

ACF published a notice of proposed rulemaking (NPRM) in the

Federal Register

on December 24, 2015, (80 FR 80466) proposing revisions to CCDF regulations consistent with the reauthorized Act and research on child safety, health, and child development in child care and school-age child care. We provided a 60-day comment period during which interested parties could submit comments in writing by mail or electronically.

ACF received 150 comments on the proposed rule (public comments on the proposed rule are available for review on

www.regulations.gov

), including comments from State human services and education agencies, national advocacy groups, State and local early childhood organizations, child care resource and referral agencies, faith-based organizations, provider associations, Tribes and Tribal organizations, labor unions, child care providers, parents, individual members of the public, and a joint letter by two members of the U.S. Congress. We were pleased to receive comments from 41 State and local governments, 1 Territory, and 15 Tribes and Tribal organizations. A number of stakeholders coordinated comments and policy recommendations so that their comments were signed by multiple entities, and there were some membership organizations whose comments were by signed by their individual members. Public comments informed the development of content for this final rule.

Use of terms.

Terminology used to refer to child care settings and the individuals who provide care for children varies throughout the early childhood and afterschool fields. In this rule, the terms caregiver, teacher, and director refer to individuals. The term provider refers to the entity providing child care services. This may be a child care program, such as a child care center, or an individual in the case of family child care or in-home care. Complete descriptions of these terms are included in Subpart A of this rule.

Overview of changes made by CCDBG Act of 2014.

The changes included in this final rule provide detail on major provisions of the CCDBG Act of 2014 to: (1) Protect the health and safety of children in child care; (2) help parents make informed consumer choices and access information to support child development; (3) provide equal access to stable, high-quality child care for low-income children; and (4) enhance the quality of child care and the early childhood workforce.

First, Congress established minimum health and safety standards including mandatory criminal background checks, at least annual monitoring of providers, and health and safety training. Children in CCDF-funded child care will now be cared for by caregivers who have had basic training in health and safety practices and child development. Parents will know that individuals who care for their children do not have prior criminal records that indicate potential endangerment of their children. Health and safety is a necessary foundation for quality child care that supports early learning and development. Research shows that licensing and regulatory requirements for child care affect the quality of care and child development. (Adams, G., Tout, K., Zaslow, M., Early care and education for children in low-income families: Patterns of use, quality, and potential policy implications, Urban Institute, 2007).

Second, Congress increased consumer education requirements for States and Territories and made clear that parents need transparent information about health and safety practices, monitoring

results, and the quality of child care providers. Parents will now be able to easily view on a Web site the standards a child care provider meets and their record of compliance. Most States and Territories administering the CCDF program have already begun building a quality rating and improvement system (QRIS), which make strategic investments to provide pathways for providers to reach higher quality standards. Our rule builds on the reauthorization and Lead Agency efforts to inform parents about the quality of providers by requiring that the consumer education Web site include provider-specific quality information, if available, such as from a QRIS, and that Lead Agencies provide parents receiving CCDF with information about the quality of their chosen provider.

Third, low-income parents need access to stable, high-quality child care for their children, and the Act affirms that they should have equal access to settings that are comparable to those accessible to non-CCDF families. This final rule details the Act's continuity of care provisions, such as extending eligibility for child care for a minimum of 12 months regardless of a parent's temporary change in employment or participation in education or training. Continuity of services contributes to improved job stability and is important to a family's financial health. Family economic stability is undermined by policies that result in unnecessary disruptions to receipt of a subsidy due to administrative barriers or other processes that make it difficult for parents to maintain their eligibility and thus fully benefit from the support it offers. Continuity also is of vital importance to the healthy development of young children, particularly the most vulnerable. Disruptions in services can stunt or delay socio-emotional and cognitive development, and make it harder for children to develop trusting relationships with their caregivers. Safe, stable environments allow young children the opportunity to develop the relationships and trust necessary to comfortably explore and learn from their surroundings. Research has demonstrated a relationship between child care stability and social competence, behavior outcomes, cognitive outcomes, language development, school adjustment, and overall child well-being. (Adams, Rohacek, and Danziger, Child Care Instability, The Urban Institute, 2010.) This area includes a number of changes, including requirements for limiting administrative burdens on parents and enabling families to retain their child care assistance as their income increases in order to move towards economic success.

The final rule also addresses the Act's equal access provisions by requiring that base payment rates be established at least at a level that enables child care providers to meet the health, safety, quality, and staffing requirements in the final rule, ensuring that co-payments are affordable for families, and establishing provider payment practices that support access to high-quality child care.

Finally, this final rule addresses increased quality set-asides in the reauthorized Act, which enhance the quality of child care and the early childhood workforce. States and Territories will report on their investments in quality activities, which will now be a greater share of CCDF spending. They will also expand quality investments in infant-toddler care. High-quality care for children under age 3 is the most expensive and hardest care to find during the most formative years. (National Survey of Early Care and Education, 2015,

www.acf.hhs.gov/sites/default/files/opre/es_price_of_care_toopre_041715_2.pdf

) The Act requires States and Territories to have training and professional development standards in effect for CCDF caregivers, and we build on this requirement by outlining the components of a professional development framework. Research shows the fundamental importance of the caregiver in a high-quality early learning setting, and this rule helps ensure that early childhood professionals have access to the knowledge and skills they need to best support young children and their development.

In developing this rule, we were mindful of CCDF's purpose to allow Lead Agencies maximum flexibility in developing child care policies and programs. In some areas, the final rule adds flexibility to allow Lead Agencies to tailor policies that better meet the needs of the low-income families they serve. For example, the rule provides more flexibility for Lead Agencies to determine when it is appropriate to waive a family's co-pay requirement. In many areas, the rule adds new requirements as dictated by the updated Act or because they advance the revised purposes of the CCDF program.

Changes in the Act, and in this final rule, affect the State, Territorial, and Tribal agencies that administer the CCDF program. The Act requires changes across many areas: Child care licensing, subsidy, quality, workforce, and program integrity and requires coordination across State agencies. Achieving the full visions of reauthorization will be challenging, but this effort is necessary to improve child care in this country for the benefit of our children. ACF has and will continue to consult with State, Territorial, and Tribal agencies and provide technical assistance throughout implementation.

This final rule generally maintains the structure and organization of the current CCDF regulations. The preamble in this final rule discusses the changes to current regulations and contains certain clarifications based on ACF's experience in implementing the prior final rules. Where language of previous regulations remains unchanged, the preamble explanation and interpretation of that language published with all prior final rules also is retained, unless specifically modified in the preamble to this rule. (See 57 FR 34352, Aug. 4, 1992; 63 FR 39936, Jul. 24, 1998; 72 FR 27972, May 18, 2007; 72 FR 50889, Sep. 5, 2007).

IV. General Comments and Cross-Cutting Issues

This final rule includes substantive changes in multiple areas spanning nearly every subpart of CCDF regulations. We received comments on a large majority of the proposed changes, and made significant revisions in this final rule in response to comments. For example, we deleted a proposal that would have required Lead Agencies to make some use of grants and contracts, revised the provision providing a graduated phase-out for certain families, and made a number of adjustments to equal access provisions. We discuss specific comments in the section-by-section analysis later in this final rule.

In general, public response to the proposed rule was positive. There was widespread support for the recognition of the dual purposes of the CCDF program—to support both parental pathways to economic security and stability and children's development. As noted by a joint set of comments by State child care administrators, “[we] share a common interest in increasing access to opportunities for high-quality early care and education for children and recognize the important developmental growth that occurs in early years.” However, many of the commenters had concerns about costs and said more funding is needed to implement the changes. Developing this final rule required balancing both positive and negative comments, and we tried to be thoughtful about looking at the whole by considering the added-value of different provisions. Below we summarize these general comments as well other crosscutting issues raised by commenters.

General Comments

We received a few comments arguing that we lacked authority under the Act to establish some of the final rule's requirements. In developing this final rule, ACF was careful to stay within the authority provided by the reauthorized Act and cognizant of areas where our authority was limited and further changes would require Congressional action. We reviewed previously-existing regulations and identified areas under the CCDBG Act of 2014 where we could incorporate the tremendous amount of recent research on early brain development and best policies and practices to improve access to and the quality of child care being implemented.

Many commenters were concerned about the financial tensions between the objectives of the CCDF program—to provide access to child care for as many low-income families as possible so they can work and build financial stability, and to make sure children are in safe, quality child care settings. Many of these same commenters had concerns about costs and said more funding is needed to implement the statutory and regulatory changes. A letter submitted by 80 national and State organizations cautioned: “We note that CCDBG has been severely underfunded in recent years, resulting in large numbers of eligible children unserved and low provider payment rates, among other consequences. Achieving the goals of the Act to improve the health, safety, and quality of child care and the stability of child care assistance will require additional resources. Congress made a down payment on funding in the recent FY 2016 omnibus budget; however, additional investments will be necessary to ensure the success of the reauthorized Act and to address the gaps that already exist in the system.” Several States and local governments voiced concern about the costs to implement the Act and the rule. They raised concerns about sufficiency of funding to meet requirements within the given period, and that insufficient funding could necessitate serving fewer eligible children.

We recognize that the CCDBG Act of 2014 makes many changes, and that States, Territories, and Tribes are budgeting with a limited amount of funding. Lead Agencies are faced with making difficult tradeoffs about where to direct scarce resources. Over time, some States have struggled to maintain the number of children and families served with child care subsidies, and caseloads declined to an all-time low in 2014. Additionally, the average CCDF subsidy per child is extremely low, approximately $4,800 annually in FY 2014. In inflation adjusted terms, the value of the child care subsidy (per child) has decreased in real dollars by about 20 percent since 2003, while the caseload has declined somewhat over that same period. This is a reflection of the tradeoffs that some States have had to consider due to limited federal and state funding under tight budget constraints, resulting in the erosion of the value of the subsidy and its ability to help families obtain high-quality care. On the other hand, there are States that have made different choices, such as providing an adequate subsidy value as they focused on serving children in settings where training and regulation is in place and oversight is sufficient.

This final rule attempts to bring a basic level of safety to all children whose care is supported with taxpayer funds. We will continue to pursue the goal of preserving and expanding access to quality child care for the many families who are currently unable to access a subsidy due to lack of funding. However, we see this final rule as a critical opportunity to ensure that the subsidized care families' access is of sufficient quality. The Act supports this goal of ensuring quality of care by requiring that providers serving CCDF children have background checks, receive basic training in health and safety, and are monitored on a regular basis. Like Lead Agencies, we have considered these difficult tradeoffs, but we believe that the final rule strikes the appropriate balance of both supporting quality and access and not ensuring one at the expense of the other. We will continue to pursue increased federal funding to increase access to high-quality, affordable child care. We believe that the policies in this final rule appropriately balance a reasonable cost burden while still achieving the goals (and resulting benefits) outlined in the Act and the rule.

We seriously considered concerns about cost, and recognize that the Act and final rule contain provisions that will require some State, Territory, and Tribal Lead Agencies to re-direct CCDF funds to implement specific provisions. Yet, the vast majority of the costs associated with this rule and outlined in the regulatory impact analysis are required by the law itself, and we support these critical investments as our guiding principle has been, and remains, that we cannot in good conscience continue to use any federal taxpayer dollars to support sub-standard child care for our nation's most vulnerable and disadvantaged children. The CCDBG Act of 2014 clearly spells out that its purpose is to improve the health, safety and quality of child care and to increase access to high-quality child care. Many Lead Agencies have already implemented some or most of the provisions in this final rule. In addition, each year, more than $5 billion in federal CCDF funding is allocated to State, Territory and Tribal grantees. The activities to implement requirements in this final rule are allowable costs in the CCDF program. Changes made by this final rule represent a commitment to shoring up quality and accountability in the CCDF program now, to provide a stronger foundation for future growth and investment.

Several States commented on wanting more flexibility to meet some the requirements. Our approach was to look at the provisions of this final rule in their entirety and identify areas where more flexibility is appropriate. While many Lead Agencies have made great strides to fashion the program in a way that emphasizes child development and increasing access to high-quality care, implementation of the CCDF program across the country varies greatly. The previous lack of substantive federal requirements in areas such as health and safety, consumer education, and eligibility policy means there is no uniform national standard that families can count on. All families receiving CCDF assistance, regardless of where they live, should have basic assurances about the safety and quality of services they receive.

This final rule provides more flexibility in areas that were not addressed by the reauthorized Act. For example, it allows Lead Agencies to establish their own criteria for waiving copays, gives flexibility to waive income and work requirements for vulnerable children, and provides the option for alternative monitoring strategies for in-home providers. In addition, there were several areas where we declined to impose a federal standard, even while some commenters asked us to go further. We also eliminated or revised a number of proposals from the NPRM in response to comments.

In addition, we took into consideration a number of comments that asked for more flexibility for Tribes. We continue to balance flexibility for Tribes to address the unique needs of their communities with the need to ensure accountability and quality child care for all children. In response to comments received from Tribes, we have made changes to how this final rule applies to them, including clarifying implementation periods and adding in flexibility around the background check requirements. This

final rule addresses all comments from Tribes and tribal organizations in the preamble discussion for Subpart I.

Finally, we received comments from some States and Tribes on the effective date of the final rule, indicating that time is needed to take administrative or legislative action, or to otherwise fully implement the provisions. While States should have already been proceeding with implementation of reauthorization requirements based on their reasonable interpretation of the reauthorized Act, we recognize that some States may need time to make adjustments to their policies and procedures based on this final rule. Therefore, we have provided delayed compliance dates, discussed in more detail earlier in this preamble, to allow States, Territories and Tribes time to fully implement this rule.

V. Section-by-Section Discussion of Comments and Regulatory Provisions

We received comments about changes we proposed to specific subparts of the regulation. Below, we identify each subpart, summarize the comments, and respond to them accordingly.

Subpart A—Goals, Purposes, and Definitions

§ 98.1 Purposes

The CCDBG Act of 2014 amended and expanded the Act's previous “goals” and renamed them “purposes”. The final rule makes changes to regulatory language at 45 CFR 98.1 to describe the revised purposes of the CCDF program, according to the updated Act.

Comment:

We received multiple comments from national and State organizations and child care worker organizations asking us to explicitly highlight compensation as an integral strategy to retaining a high-quality early childhood workforce in this section and in several other sections of the regulation.

Response:

We agree and § 98.1(b)(8) of the final rule provides that, in providing a progression of professional development and promoting retention of quality early childhood caregivers, teachers, and directors, an important strategy is financial incentives and compensation improvements to align with § 98.44. We note that several States are working to improve compensation to support caregivers, teachers, and directors, generally linked to attaining higher professional credentials and education and as a strategy to retain educators who have these credentials and degrees in early childhood programs. Turnover remains a significant issue in child care, and investments in professional development and training should be coupled with improvements in compensation so that children benefit from teachers with those higher levels of knowledge and skill.

§ 98.2 Definitions

The final rule makes technical changes to definitions at § 98.2 and adds six new definitions. Below we discuss any comments we received to these proposals.

First, the final rule makes technical changes by deleting the definition for group home child care provider. Some States, Territories, and Tribes do not consider group homes to be a separate category of care when administering their CCDF programs or related efforts, such as child care licensing. According to the National Association for Regulatory Administration, at least 13 States do not license group homes as a separate category. Some States and Territories use alternative terminology (

e.g.,

large family child care homes), while others treat all family child care homes similarly regardless of size. Due to this variation, we are deleting the separate definition for group home child care provider, which requires a number of technical changes to the definitions section. We did not receive comments on this section.

Under this final rule, the categories of care are defined to include center based child care, family child care, and in-home care (

i.e.,

an individual caring for a child in the child's home).

This final rule also makes conforming changes to the definitions for categories of care, eligible child care provider, and family child care provider.

The final rule amends the definition for eligible child care provider at § 98.2 to delete a group home child care provider. The revised definition defines an eligible child care provider as a center-based child care provider, a family child care provider, an in-home child care provider, or other provider of child care services for compensation. Group home child care is considered a family child care provider for CCDF purposes.

The final rule also amends the definition for family child care provider at § 98.2 to include larger family homes or group homes. The new definition revises family child care provider to include one or more individuals who provide child care services. The remainder of the definition stays the same, specifying that services are 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.

Lead Agencies may continue to provide CCDF services for children in large family child care homes or group homes, and this is allowable and recognized by the revised definition of family child care provider, which now includes care in private residences provided by more than one individual. This change eliminates group homes as a separately defined category of care for purposes of administering the CCDF—thereby allowing States, Territories, and Tribes to more easily align their practices with Federal requirements. The rule does not require that States and Territories eliminate group homes from their categories of care or change the way they categorize providers for the purposes of analyzing or setting provider payment rates.

The final rule makes one additional change to a pre-existing definition as called for by new statutory language. We are amending the definition of Lead Agency so that it may refer to a State, Territorial or Tribal entity, or a joint interagency office, designated or established under §§ 98.10 and 98.16(a) as indicated at Section 658P(9) of the Act. While the NPRM proposed amending the definition of eligible child, we decided a revision is unnecessary and have reverted to the pre-existing definition that references eligibility requirements at § 98.20.

Finally, the final rule adds five new terms to the definitions due to statutory changes and to include terms commonly used in the child care profession.

Caregiver

The definition of caregiver in the Act and prior regulations remains unchanged.

Comment:

One child care worker organization raised concerns that the term “caregiver” is outdated, and requested deletion of the term.

Response:

The final rule does not delete or alter the definition of “caregiver” that is included in the Act. The final rule, however, adds definitions for “teacher” and “director” to recognize the roles in child care and early childhood education as a professional field. The definitions for these terms are based on a white paper recommending revisions to the U.S. Department of Labor's Standard Occupational Classification. (Proposed Revisions to the Definitions for the Early Childhood Workforce in the Standard Occupational Classification. White Paper Commissioned by the Administration for Children and Families, U.S. Department of Health and Human Services, prepared by the Workgroup on the Early Childhood Workforce and Professional

Development under contract through the Child Care and Early Education Policy and Research Analysis, 2005- 2018. June 18, 2014,

www.acf.hhs.gov/sites/default/files/occ/soc_acf_submittal.pdf

).

Teacher

The final rule defines teacher as `a lead teacher, teacher, teacher assistant or teacher aide who is employed by a child care provider for compensation on a regular basis, or a family child care provider, and whose responsibilities and activities are to organize, guide and implement activities in a group or individual basis, or to assist a teacher or lead teacher in such activities, to further the cognitive, social, emotional, and physical development of children from birth to kindergarten entry and children in school-age child care.' We recognize that the responsibilities and qualifications for lead teachers, teachers, and teacher assistants are different as set by child care licensing, State early childhood professional development systems, and State teacher licensure policies and have added these definitions for simplification in relation to requirements in the Act and this rule. We strongly encourage States and Territories to recognize differentiated roles and qualifications in their requirements and systems.

Director

The final rule defines director as ‘a person who has primary responsibility for the daily operations management for a child care provider, which includes a family child care provider, and which may serve children from birth to kindergarten entry and/or school-age children.’

Comment:

Several comments from national and State organizations and child care worker organizations expressed support for the new definitions for teacher and director and asked for a reorganization of certain words in the proposed definition to ensure that they include family child care providers.

Response:

We agree with the comments, and the final rule makes the requested changes.

Child With a Disability

We define child with a disability as: A child with a disability as defined in section 602 of the Individuals with Disabilities Education Act (20 U.S.C. 1401); a child who is eligible for early intervention services under part C of the Individuals with Disabilities Education Act (20 U.S.C. 1431

et seq.

); a child who is less than 13 years of age and who is eligible for services under section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794); and a child with a disability, as defined by the State. This definition is identical to the definition found at Section 658P(3) of the Act.

Comment:

We received comments from national organizations for individuals with disabilities on the definition of “child with a disability” asking to delete the “or” and an open-ended ability of the State to define the term.

Response:

The final rule's definition is identical to the definition set forth in the Act, which allows States, Territories, and Tribes to include other developmental delays and disabilities if they choose. Consistent with the statute, we are changing “or” (which was proposed in the NPRM) to “and” to indicate that a child meeting at least one of any of the four parts of the definition (

i.e.,

section 602 of IDEA, part C of IDEA, section 504 of the Rehabilitation Act, or definition of State, Territory or Tribe) would be considered a child with a disability.

English Learner

The final rule reiterates Section 658P(5)'s definition of English learner as an individual who is limited English proficient, as defined in section 9101 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7801) or section 637 of the Head Start Act (42 U.S.C. 9832).

Child Experiencing Homelessness

The final rule's definition of a child experiencing homelessness is adopted from section 725 of Subtitle VII-B of the McKinney-Vento Act (42 U.S.C. 11434a). While a definition of child experiencing homelessness was not included in the reauthorized CCDBG Act, we understand the intent of Congress was to apply the McKinney-Vento definition here based on a letter sent to HHS Secretary Sylvia Burwell in February 2015 from Senate and House members.

Comment:

Several comments expressed support for using the definition in the McKinney-Vento Act, section VII-B. One commenter sought to augment the definition to refer to several other federal laws that can be used to support children experiencing homelessness.

Response:

Using the McKinney-Vento Act's definition, without modification here, will lead to better consistency in identifying children and in information collection. This definition is also used by Head Start and education programs.

Subpart B—General Application Procedures

Lead Agencies have considerable latitude in administering and implementing their child care programs. Subpart B of the regulations describes some of the basic responsibilities of a Lead Agency as defined in the Act. A Lead Agency serves as the single point of contact for all child care issues, determines the basic use of CCDF funds and priorities for spending CCDF funds, and promulgates the rules governing overall administration and oversight.

§ 98.10 Lead Agency Responsibilities

This final rule amends the language at § 98.10 in accordance with new statutory language at Section 658D(a) of the Act that a Lead Agency may be a collaborative agency or a joint interagency office, as designated or established by the Governor of the State (or by the appropriate Tribal leader or applicant). Paragraphs (a) through (e) remain unchanged. Paragraph (f) requires that, at the option of an Indian Tribe or Tribal organization in the State, a Lead Agency should consult, collaborate and coordinate in the development of the State Plan with Tribes or Tribal organizations in the State in a timely manner pursuant to § 98.14. Because States also provide CCDF assistance to Indian children, States benefit by coordination with Tribes and we encourage States to be proactive in reaching out to the appropriate Tribal officials for collaboration. The final rule adds “consult” to recognize the need for formal, structured consultation with Tribal governments, including Tribal leadership, and the fact that many States and Tribes have consultation policies and procedures in place. We received one comment on this section.

Comment:

One State and a Tribal organization wrote that they support the requirement to consult, collaborate, and coordinate in the development of the State Plan with Indian Tribes or Tribal organizations.

Response:

The final rule keeps this language.

§ 98.11 Administration Under Contracts and Agreements

Written agreements.

Section 98.11 previously required Lead Agencies that administer or implement the CCDF program indirectly through other local agencies or organizations to have written agreements with such agencies that specify mutual roles and responsibilities. However, it did not address the content of such agreements. This final rule amends regulatory

language at § 98.11(a)(3) to specify that, while the content of the written agreements may vary based on the role the agency is asked to assume or the type of project undertaken, agreements must, at a minimum, include tasks to be performed, a schedule for completing tasks, a budget that itemizes categorical expenditures consistent with CCDF requirements at § 98.65(h), and indicators or measures to assess performance. Many Lead Agencies administer the CCDF program through the use of sub-recipients that have taken on significant programmatic responsibilities, including providing services on behalf of the Lead Agency. For example, some Lead Agencies operate primarily through a county-based system, while others devolve decision-making and administration to local workforce boards, school readiness coalitions or community-based organizations such as child care resource and referral agencies. Through working with grantees to improve program integrity, ACF has learned that the quality and specificity of written agreements vary widely, which hampers accountability and efficient administration of the program. These changes represent minimum, common-sense standards for the basic elements of those agreements, while allowing latitude in determining specific content. The Lead Agency is ultimately responsible for ensuring that all CCDF-funded activities meet the requirements and standards of the program, and thus has an important role to play to ensure written agreements with sub-recipients appropriately support program integrity and financial accountability.

We are cognizant that some States and Territories lack strong requirements to ensure there is transparency in cases where a sub-recipient contracts with a network of family child care providers to serve children receiving CCDF. This rule places a strong emphasis on implementation of provider-friendly payment practices, including a payment agreement or authorization of services for all payments received by child care providers. When a local entity contracts with a family child care network for services, we agree that there should be a clear understanding from the outset regarding payment rates for providers, any fees the provider may be subject to, and payment policies.

Finally, § 98.11(b)(5) adds a reference to the HHS regulations requiring Lead Agencies to oversee the expenditure of funds by sub-recipients and contractors, in accordance with 75 CFR 351 to 353. The final rule changes the term “subgrantee” in the proposed rule to “subrecipients” in this final rule as a technical correction. These regulations implement the Office of Management and Budget's Uniform Administrative Requirements for Federal awards (see ACF, Uniform Administrative Requirements, Cost Principles, and Audit Requirements, Program Instruction: CCDF-ACF-PI-2015-01, January 2015.)

Section 658D(b)(1)(A) of the Act provides Lead Agencies with broad authority to administer the program through other governmental or non-governmental agencies. In addition, CCDF Lead Agencies must comply with requirements for monitoring and management of sub-recipients, including government-wide grant requirements issued by the Office of Management and Budget (OMB) at 2 CFR 200.330 to 200.322 and adopted by HHS at 45 CFR 75.351 to 75.353, which address reporting, auditing and other requirements related to sub-recipients. This final rule adds language at § 98.11 to improve the quality and specificity of written agreements to promote program integrity and efficient administration at all levels. We received three comments on this section.

Comment:

One child care worker organization commented that these requirements should apply in all instances where CCDF funds are sub-granted or passed through to an entity, including arrangements between intermediary entities and individual child care providers.

Response:

This provision applies only to written agreements between lead Agencies and first-level sub-recipients (and not to agreements between first-level sub-recipients and lower-level sub-recipients). The regulation states that the agreement must specify the mutual roles and responsibilities of the Lead Agency and the other agencies—indicating that the Lead Agency is a party to the agreement. This language is intended to be broad as sub-entities may fulfill any number of different roles or projects, including implementing quality improvement activities, determining eligibility for families, or providing consumer education on behalf of the Lead Agency. We strongly encourage lower-level agreements to have similar provisions, but prefer to leave this as an area of flexibility to give State and local agencies discretion over the details, given the wide-range of conditions and circumstances involved. Also, we note that regulations at 98.67(c)(2) require Lead Agencies to have in place fiscal control and accountability procedures that permit the tracing of funds to a level of expenditure adequate to establish that such funds have not been used in violation of the CCDF rules. Therefore, Lead Agencies that devolve program administration to first, second, and third-level entities necessarily must be concerned with the integrity and transparency of all written agreements involving CCDF funds.

The comment also urged ACF to compile and disseminate best practices for written agreements between entities that administer CCDF monies and providers and that the State or local agency develop a model written agreement for networks. This is an area where ACF anticipates providing more technical assistance to assist States in developing model written agreements focused on cases where a sub-recipient contracts with a network of family child care providers to serve children receiving CCDF.

Comment:

We received a comment from one State that some of the items for written agreements do not seem applicable to the administration of child care subsidies. For example, including a schedule for completing tasks does not seem applicable since the tasks of administering child care subsidies are ongoing and do not have end dates. States may have existing methods of ensuring compliance with administration requirements for the program, and should be offered flexibility in how tasks and expenditures are overseen and monitored. Conversely, we received a comment from a child care worker organization in support of requiring a written agreement between a Lead Agency and another agency that must include, at minimum, tasks to be performed, a schedule for completing tasks, a budget which itemizes categorical expenditures consistent with CCDF requirements at 98.65(h), and indicators or measures to assess performance.

Response:

We have maintained the language in this section. Lead Agencies can adopt the required elements, as appropriate, to fit the circumstances. For example, in the schedule for tasks, they can indicate the tasks that are ongoing.

§ 98.14 Plan Process

Coordination.

Section 658E(c)(2)(O) of the Act added language to previously-existing requirements for coordination of programs that benefit Indian children requiring Lead Agencies to also coordinate the provision of programs that serve infants and toddlers with disabilities, children experiencing homelessness, and children in foster care. We include all children with disabilities, not just infants and toddlers, in the regulatory language,

given the critical importance of serving that population of children.

Lead Agencies also are required to consult and coordinate services with agencies responsible for public health, public education, employment services/workforce development, and TANF. The CCDBG Act of 2014 added a requirement for the Lead Agency to develop the Plan in coordination with State Advisory Councils on Early Childhood Education and Care, which are authorized by the Head Start Act (42 U.S.C. 9831

et seq.

) at Section 658E(c)(2)(R).

In this final rule, we amend § 98.14(a)(1) to add the State Advisory Council on Early Childhood Education and Care or similar coordinating body, as well as additional new entities with which Lead Agencies are required to coordinate the provision of child care services. We have added parenthetical language to paragraph (a)(1)(iii) to specify that coordination with public education should also include agencies responsible for pre-kindergarten programs, if applicable, and early intervention and preschool educational services provided under Parts B and C of the Individuals with Disabilities Education Act (IDEA) (20 U.S.C. 1400). Other coordinating entities include agencies responsible for child care licensing; Head Start collaboration; Statewide after-school network or other coordinating entity for out-of-school time care; emergency management and response; the Child and Adult Care Food Program (CACFP); Medicaid and the State children's health insurance program; mental health services agencies; services for children experiencing homelessness, including State Coordinators for the Education of Children and Youth Experiencing Homelessness; and, to the extent practicable, local liaisons designated by local educational agencies (LEAs) in the State as required by the McKinney-Vento Act (42 U.S.C. 11432) and the Department of Housing and Urban Development's Continuum of Care and Emergency Solutions Grantees. In the final rule, we added other relevant nutrition programs in addition to CACFP.

Over time, the CCDF program has become an essential support in local communities to provide access to early care and education in before- and after-school settings and to improve the quality of care. Many Lead Agencies already work collaboratively to develop a coordinated system of planning that includes a governance structure composed of representatives from the public and private sector, parents, schools, community-based organizations, child care, Head Start and Early Head Start, child welfare, family support, public health, and disability services. Local coordinating councils or advisory boards also often provide input and direction on CCDF-funded programs.

This type of coordination frequently is facilitated through entities such as State Advisory Councils on Early Childhood Education and Care. In both Head Start and CCDF, collaboration efforts extend to linking with other key services for young children and their families, such as medical, dental and mental health care; nutrition; services to children with disabilities; child support; refugee resettlement; adult education and postsecondary education; family literacy and English language acquisition; and employment training. These comprehensive services are crucial in helping families progress towards economic stability and in helping parents provide a better future for their young children.

Implementation of the requirements of the CCDBG Act of 2014 will require leadership and coordination between Lead Agencies and other child- and family-serving agencies, services, and supports at the State and local levels, including those identified above. For example, in many States, child care licensing is administered in a different agency than CCDF. In those States, implementation of the inspection and monitoring requirements included in the Act necessitates coordination across agencies.

Comment:

One State noted that it has multiple agencies that serve children experiencing homelessness and asked for a change in the language.

Response:

We recognize that there are many agencies that have responsibilities for serving children experiencing homelessness. The examples of agencies in this provision are not meant to be an exhaustive list. Each Lead Agency will need to identify the appropriate agencies that are responsible for providing services to children experiencing homelessness to comply with the coordination requirement.

Comment:

We received multiple comments from national and State organizations supportive of the list of coordinating partners. We received a few comments suggesting additional coordinating partners to be named in this final rule, including child care resource and referral agencies, specific types of mental health providers, child care provider organizations, and child care providers who are faith-based or use a distinctive early childhood education approach.

Response:

New paragraph 98.14(a)(1)(xiv) includes child care resource and referral agencies, as recommended by commenters. Recognizing that functions typically performed by resource and referral agencies in some instances may be performed by other types of entities, we expanded the regulatory language to also include child care consumer education organizations and providers of early childhood education and professional development. Lead Agencies have the flexibility, and are encouraged, to engage with a wide variety of cross-sector partners when developing the CCDF Plan. Some of the coordinating partners suggested by commenters, such as providers using distinctive approaches to teaching, and faith-based organizations are already assumed to be included in pre-existing regulations at § 98.14(a)(1), which requires coordination with child care and early childhood development programs.

Combined funding.

Section 98.14(a)(3) reiterates the statutory requirement that any Lead Agency that combines funding for CCDF services with any other early childhood programs shall provide a description in the CCDF Plan of how the Lead Agency will combine and use the funding according to Section 658E(c)(2)(O) of the Act. Lead Agencies have the option of combining funding for CCDF child care services with programs operating at the Federal, State, and local levels for children in preschool programs, Tribal early childhood programs, and other early childhood programs, including those serving infants and toddlers with disabilities, children experiencing homelessness, and children in foster care. Combining funds could include blending, layering, or pooling multiple funding streams in an effort to expand and/or enhance services for children and families. For example, Lead Agencies may use multiple funding sources to offer grants or contracts to programs to deliver high-quality child care services; a Lead Agency may allow county or local governments to use coordinated funding streams; or policies may be in place that allow local programs to layer funding sources to provide full-day, full-year child care that meets Early Head Start, Head Start or State/Territory pre-kindergarten standards in addition to child care licensing requirements. As per the OMB Circular A-133 Compliance Supplement 2015,

https://www.whitehouse.gov/omb/circulars/a133_compliance_supplement_2015

, CCDF funds may be used in collaborative efforts with Head

Start programs to provide comprehensive child care and development services for children who are eligible for both programs. In fact, the coordination and collaboration between Head Start and CCDF is strongly encouraged by sections 640(g)(1)(D) and (E), 640(h), 641(d)(2)(H)(v), and 642(e)(3) of the Head Start Act in the provision of full working day, full calendar year of early care and learning and comprehensive services.

In order to implement such collaborative programs, which share, for example, space, equipment or materials, grantees may blend several funding streams so that services are provided seamlessly for the child and family. The same strategy applies to State-funded preschool programs where, working with CCDF funds, eligible children can benefit from a full-day and full-year program. Lead Agencies can layer Early Head Start and CCDF funds for the same child as long as there is no duplication in payments for the exact same part of the service. This is an option that some Lead Agencies are already implementing. Early Head Start-Child Care Partnerships grants, which allow Early Head Start programs to collaborate with local child care centers and family child care providers serving infants and toddlers from low-income families, offer a new important opportunity to implement this strategy to expand access to high-quality child care for infants and toddlers. We do note that, when CCDF funds are combined with other funds, § 98.67 continues to require Lead Agencies to have in place fiscal control and accounting procedures sufficient to prepare required reports and trace funds to a level of expenditure adequate to establish that such funds have been used on allowable activities.

Public-private partnerships.

This final rule adds paragraph (a)(4) to § 98.14 in accordance with Section 658E(c)(2)(P) of the Act, which requires Lead Agencies to demonstrate in their Plan how they encourage public-private partnerships to leverage existing child care and early education service delivery systems and to increase the supply and quality of child care services for children under age 13, such as by implementing voluntary shared services alliance models (

i.e.,

cooperative agreements among providers to pool resources to pay for shared fixed costs and operation). Public-private partnerships may include partnerships among State/Territory and public agencies, Tribal organizations, private entities, faith based organizations and/or community-based organizations.

Public availability of Plans.

The final rule adds language at § 98.14(c)(3) that requires the Lead Agency to post the content of the Plan that it proposes to submit to the Secretary on a Web site as part of the public hearing process. A new § 98.14(d) requires Lead Agencies to make their CCDF Plan and any Plan amendments publicly available. Ideally, Plans and Plan amendments are available on the Lead Agency Web site or other appropriate State/Territory Web sites (such as the consumer education Web site required at § 98.33(a)) to ensure that there is transparency for the public, and particularly for parents seeking assistance, about how the child care program operates. This is especially important for Plan amendments, given that Lead Agencies often make substantive changes to program rules or administration during the Plan period (now three years) through submission of Plan amendments (subject to ACF approval), but were not previously required to proactively make those amendments available to the public.

Comment:

We received comments from disabilities organizations to insert “early intervention” to describe Part C and “preschool” before “Part B” for clarity.

Response:

We agree with a comment recommending a technical fix to language at § 98.14(a)(1)(iii). The Act includes Part C and B of the Individuals with Disabilities Education Act (IDEA) for coordination. Part C provides early intervention services and Part B provides preschool as well as elementary and secondary educational services. The final rule adds “early intervention and preschool” to describe the educational services under IDEA.

Comment:

We received several comments from provider and child care worker organizations supporting the requirement that Lead Agencies make draft and final Plans and Plan amendments publicly available. We received one comment that Lead Agencies should make the Plan available in the language of the community and another comment asking for a timeframe for States and Territories to make these items public.

Response:

In paragraphs (c)(3) and (d) of this section, the final rule adds language that the Plan and any amendments to the Plan, as well as approved requests for temporary relief as discussed at § 98.19, must be made available on a Web site. The final rule does not require that the Plan be made available in multiple languages. However, we strongly encourage States to be mindful of the needs of families with limited English proficiency and to work with families and community groups to give them a voice in program planning and policymaking, for example, by organizing outreach meetings with interpreters, recruiting multilingual eligibility staff, and translating provider-focused documents to ensure a diverse group of providers. CCDF Plans are long, technical documents and there could be significant costs associated with translating them into multiple languages. The CCDF Plan asks States to indicate whether they provide information or services in other non-English languages and most States indicate that they have procedures in place to translate program materials and provide technical assistance to providers. Lead Agencies may decide it is more cost effective to prioritize translating provider contracts, consumer education information, or other key documents that are integral to service delivery than to translate the Plan itself, if resources are limited. We also urge States to publish these items as soon as possible, within a timeframe determined by the Lead Agency, for the greatest transparency to families, providers, and the public.

§ 98.15 Assurances and Certifications

Section 658E(c) of the Act requires Lead Agencies to provide assurances and certifications in its Plan. The final rule adds new assurances based on new statutory language.

The final rule provides that Lead Agencies are required to provide an assurance that training and professional development requirements comply with § 98.44 and are applicable to caregivers, teachers, and directors working for child care providers receiving CCDF funds. They are also required to provide assurance that, to the extent practicable, enrollment and eligibility policies support the fixed costs of providing child care services by delinking provider payment rates from an eligible child's occasional absences in accordance with § 98.45(l). Both of these requirements are discussed in detail in later sections of this rule.

Section 98.15(a)(9) of this final rule adopts the statutory requirement at Section 658E(c)(2)(G) of the Act for Lead Agencies to provide an assurance that they will maintain or implement early learning and developmental guidelines that are developmentally appropriate for all children from birth to kindergarten entry, describing what children should know and be able to do, and covering the essential domains of early childhood development (cognition, including language arts and mathematics; social, emotional and physical development; and approaches toward learning) for use

statewide by child care providers and caregivers. Guidelines should be research-based and developmentally, culturally, and linguistically appropriate, building in a forward developmental progression, and aligned with entry to kindergarten. Guidelines should be implemented in consultation with the State educational agency and the State Advisory Council on Early Childhood Education and Care or similar coordinating body, and in consultation with child development and content experts.

Paragraph (a)(10) of § 98.15 requires Lead Agencies to provide an assurance that funds received to carry out this subchapter will not be used to develop or implement an assessment for children that will be the primary or sole basis for deeming a child care provider ineligible to participate in a program carried out under this subchapter; will be used as the primary or sole basis to provide a reward or sanction for an individual provider; will be used as the primary or sole method for assessing program effectiveness; or will be used to deny children eligibility to participate in the program carried out under this subchapter. The Consolidated and Further Continuing Appropriations Act, 2015, Public Law 113-235, made a correction to the CCDBG Act, adding that the assessments will not be the “primary or” sole basis for a child care provider being determined to be ineligible to participate in CCDF. The statute lays out the acceptable ways of using child assessments, including to support learning or improve a classroom environment; target professional development; determine the need for health, mental health, disability, developmental delay, or family support services; obtain information for the quality improvement process at the State/Territory level; or conduct a program evaluation for the purposes of providing program improvement and parent information. We received one comment on this section, which was supportive.

Finally, § 98.15(a)(11) requires, to the extent practicable and appropriate, an assurance that any code or software for child care information systems or information technology that a Lead Agency, or other agency, expends CCDF funds to develop must be made available to other public agencies for their use in administering child care or related programs upon request. This provision is intended to prevent CCDF funds from being spent multiple times on the same, or similar, technology in order to provide accountability for public dollars.

Section 98.15(b) requires Lead Agencies to include certifications in its CCDF Plan. We are adding new requirements, as proposed in the NPRM, to reflect the following new statutory requirements:

• To develop the CCDF plan in consultation with the State Advisory Council on Early Childhood Education and Care (or similar coordinating body);

• to collect and disseminate to parents of eligible children, the general public, and, where applicable, child care providers, consumer education information that will promote informed child care choices and information on developmental screenings, as required by § 98.33;

• to make public the result of monitoring and inspections reports, as well as the number of deaths, serious injuries, and instances of substantiated child abuse that occurred in child care settings as required by § 98.33(a);

• to require caregivers, teachers, and directors of child care providers to comply with the State's, Territory's or Tribe's procedures for reporting child abuse and neglect as required by section 106(b)(2)(B)(i) of the Child Abuse Prevention and Treatment Act (42 U.S.C. 5106a(b)(2)(B)(i)), if applicable, or other child abuse reporting procedures and laws in the service area, as required by § 98.41(e);

• to have in effect monitoring policies and practices pursuant to § 98.42; and

• to ensure payment practices of child care providers receiving CCDF funds reflect generally-accepted payment practices of child care providers that serve children who do not receive CCDF assistance, pursuant to § 98.45(l).

These requirements are discussed later in this final rule. The final rule also removes “or area served by Tribal Lead Agency” from § 98.15(b)(6), as re-designated, because the rule includes distinct requirements for Tribes to enforce health and safety standards for child care providers. Section 98.15(b)(12), as re-designated, updates the reference to § 98.43, which is now § 98.45. All other paragraphs in this section remain unchanged.

The final rule adds a new paragraph (b)(13) requiring Lead Agencies to certify in the CCDF Plan that they have in place policies to govern the use and disclosure of confidential and personally-identifiable information about children and families receiving CCDF-funded assistance and child care providers receiving CCDF funds. Previously, there were no Federal requirements in statute or regulation governing confidentiality in CCDF, although there are Federal requirements governing information that the CCDF agency may have in its files, such as child abuse and neglect information. The Federal Privacy Act is the primary source of Federal requirements related to client confidentiality (5 U.S.C. 552a note); however, the Privacy Act generally applies to Federal agencies, and is not applicable to State and local government agencies, with some exceptions, such as computer matching issues and requirements related to the disclosure and protection of Social Security numbers. (ACF has previously issued guidance: Clarifying policy regarding limits on the use of Social Security Numbers under the CCDF and the Privacy Act of 1974, Program Instruction: ACYF-PI-CC-00-04, 2000, which remains in effect as of the effective date of this rule.)

This final rule requires that Lead Agencies have policies in place to govern the use and disclosure of confidential and personally identifiable information (PII) about children and families receiving CCDF-funded assistance and child care providers, which should include their staff, receiving CCDF funds. We offer Lead Agencies discretion to determine the specifics of such privacy policies because we recognize many Lead Agencies already have policies in place, and it is not our intention to make them revise such policies, provided the State's policy complies with existing Federal confidentiality requirements. Further, many Lead Agencies are working on data sharing across Federal and State programs and it is not our intention to make these efforts more challenging by introducing a new set of confidentiality requirements. This regulatory addition is not intended to preclude the sharing of individual, case-level data among Federal and State programs that can improve the delivery of services. The ACF Confidentiality Toolkit may be a useful resource for States in addressing privacy and security in the context of information sharing (

https://www.acf.hhs.gov/sites/default/files/assets/acf_confidentiality_toolkit_final_08_12_2014.pdf

).

It is important that personal information not be used for purposes outside of the administration or enforcement of CCDF, or other Federal, State or local programs, and that when information is shared with outside entities (such as academic institutions for the purpose of research) there are safeguards in place to ensure for the non-disclosure of Personally-Identifiable Information, which is information that can be used to link to, or identify, a specific individual. It is at the Lead Agency's discretion whether

they choose to comply with this provision by writing and implementing CCDF-specific confidentiality rules or by ensuring that CCDF data is subject to existing Federal or State confidentiality rules. Further, nothing in this provision should preclude a Lead Agency from making publicly available provider-specific information on the level of quality of a provider or the results of monitoring or inspections as described in § 98.33.

Comment:

We received comments from private and faith-based providers on § 98.15(a)(9) requesting language to name certain pedagogical approaches and other distinctive approaches to teaching in multiple sections, including Lead Agency certification and assurances regarding the State's early learning guidelines.

Response:

We decline to add this language because the request speaks to teaching practices rather than content of what children should learn and be able to do. Further, the Act prohibits the Secretary from requiring any specific curricula, teaching philosophy, or pedagogical approach. We encourage Lead Agencies to coordinate on the Plan development and its implementation with the full range of providers, including those who use distinctive curricula or teaching practices that are grounded in research of child development and learning.

Comment:

Two States and a local government raised concerns that the provision in § 98.15(a)(11)—making available code or software for child care information systems or technology developed with CCDF funds be made available upon request by other agencies—could negatively affect their ability to procure vendors for information systems. The commenters suggested that the provision raised the risk of violating licensing agreements and intellectual property law and asked for clarification whether this provision applies to technology partially funded by CCDF. One comment asked for clarifying statements whether the regulation applies to systems partially funded by CCDF; whether the systems must be shared inter-state or intra-state; and that the child, program, and contractor data itself would be protected under applicable State and federal laws.

Response:

We have modified the language in this provision to provide that the assurance for sharing upon request will be made “to the extent practicable and appropriate.” We also added language to clarify that the CCDF-funded code and software should be shared upon request with other public agencies, “including public agencies in other States”. We considered the regulation for the Medicaid Program's Mechanized Claims Processing and information Retrieval Systems (90/10) (

www.federalregister.gov/articles/2015/12/04/2015-30591/medicai-program-mechanized-claims-processing-and-information-retrieval-systems-90100

and the Office of Child Support Enforcement's Information Memoranda: Use of Enterprise Software in Automated Human Services Information Systems-Use of Enterprise Level Commercial-Off-the-Shelf (COTS) Software in Automated Human Services Information Systems (

www.acf.hhs.gov/programs/css/resource/use-of-enterprise-software-in-automated-human-services-information

).

As a general practice, the reuse and availability of IT code and software allows States to leverage software development funding more effectively. Subsidy child care data systems are being developed using CCDF funding. Thus, this provision applies to code and software developed fully or partially with CCDF funds. As to sharing with other public agencies within the State and across State borders, we expect the widest reuse of IT artifacts as possible. Lastly, data would be protected under applicable federal and State laws. The majority of information system definitions typically include several layers, such as users, business rules, hardware, software, and data. There is specific mention of code and software in the provision, which does not include data.

§ 98.16 Plan Provisions

Submission and approval of the CCDF Plan is the primary mechanism by which ACF works with Lead Agencies to ensure program implementation meets Federal regulatory requirements. All provisions that are required to be included in the CCDF Plan are outlined in § 98.16. Many of the additions to this section correspond to changes throughout the regulations, which we provide explanation and responses to comment for later in this rule. For provisions that do not cross-reference other sections of the rule, we respond to comments here. Paragraph (a) of § 98.16 continues to require that the Plan specify the Lead Agency.

General comments.

We received supportive comments from national and State organizations on the following subsections: Emergency and disaster planning (aa); outreach to English language learner children and children with disabilities and providers who are English language learners (dd); supporting providers in successful family engagement (gg); and responding to complaints to the national hotline (hh).

Comment:

We received comments from a child care worker organization requesting the addition of “higher compensation” as a strategy in several subsections of § 98.16.

Response:

The final rule includes compensation improvements in the goals and purposes section and in the professional development and training sections. We agree that in raising standards, Lead Agencies should consider multiple strategies for raising compensation commensurate with caregivers, teachers, and directors attaining higher level credentials and education to retain highly knowledgeable and skilled educators and leaders. We also encourage Lead Agencies to consider strategies throughout the Plan that can bolster compensation, such as setting reimbursement rates, building the supply of quality child care, and using the quality set-aside dollars specifically to improve compensation in a field that remains undercompensated even when earning higher education and credentials comparable to their counterparts in the public education system.

Written agreements.

A new § 98.16(b), which was proposed in the NPRM, corresponds with changes at § 98.11(a)(3) discussed earlier, related to administration of the program through written agreements with other entities. In the CCDF Plan, the change requires the Lead Agency to include a description of processes it will use to monitor administrative and implementation responsibilities undertaken by agencies other than the Lead Agency including descriptions of written agreements, monitoring, and auditing procedures, and indicators or measures to assess performance. This is consistent with the desire to strengthen program integrity within the context of current Lead Agency practices that devolve significant authority for administering the program to sub-recipients. Prior paragraphs (b) through (f) are re-designated as paragraphs (c) through (g). All paragraphs remain unchanged with the exception of paragraph (e), as re-designated, which has been revised by adding “and the provision of services” to clarify that the Plan's description of coordination and consultation processes should address the provision of services in addition to the development of the Plan. We address comments in discussion of § 98.11.

Continuity of care.

A new § 98.16(h) corresponds with statutory changes in subpart C discussed later to describe

and demonstrate that eligibility determination and redetermination processes promote continuity of care for children and stability for families receiving CCDF services, including a minimum 12-month eligibility redetermination period in accordance with § 98.21(a); a graduated phase out for families whose income exceeds the Lead Agency's threshold to initially qualify for CCDF assistance, but does not exceed 85 percent of State median income, pursuant to § 98.21(b); processes that take into account irregular fluctuation in earnings, pursuant to § 98.21(c); procedures and policies to ensure that parents are not required to unduly disrupt their employment, training, or education to complete eligibility redetermination, pursuant to § 98.21(d); limiting any requirements to report changes in circumstances in accordance with § 98.21(e); policies that take into account children's development and learning when authorizing child care services pursuant to § 98.21(f); and other policies and practices such as timely eligibility determination and processing of applications. Comments on this topic are discussed later.

Child care services.

Section 98.16(i)(2), as re-designated, is amended to reference § 98.30(e)(1)(iii). Section 98.16(i)(5), as re-designated, is amended to require that all eligibility criteria and priority rules, including those at § 98.46, are described in the CCDF Plan. The remaining subparagraphs remain unchanged.

Consumer education.

Section 98.16(j), as re-designated, incorporates statutory changes to provide comprehensive consumer and provider education, including the posting of monitoring and inspection reports, pursuant to § 98.33, changes which are discussed later in this rule.

Co-payments.

Section 98.16(k), as re-designated, requires Lead Agencies to include a description of how co-payments are affordable for families, pursuant to § 98.45(k), including a description of any criteria established by the Lead Agency for waiving contributions for families. This change is discussed in more detail later in the rule.

Health and safety standards and monitoring.

The final rule adds a provision at § 98.16(l), as re-designated, requiring Lead Agencies to provide a description of any exemptions to health and safety requirements for relative providers made in accordance with § 98.41(a)(2), which is discussed later in this rule. We received no comments and have retained this language as proposed in the NPRM.

The final rule adds three new paragraphs, (m) through (o), as proposed in the NPRM, requiring Lead Agencies to describe the child care standards for child care providers receiving CCDF funds, that includes group size limits, child-staff ratios, and required qualifications for caregivers, teachers, and directors, in accordance with § 98.41(d); monitoring and other enforcement procedures to ensure that child care providers comply with applicable health and safety requirements pursuant to § 98.42; and criminal background check requirements, policies, and procedures, including the process in place to respond to other States', Territories', and Tribes' requests for background check results in order to accommodate the 45-day timeframe, in accordance with § 98.43.

Comment:

We received one comment on 98.16(m) that the States should not be required to provide in their Plan the group size, child-staff ratios and required qualifications.

Response:

Although the Act does not allow the Secretary to establish standards for group size, child-staff ratios, and required qualifications, there is nothing that prohibits the Secretary from requesting this information in the Plan. This final rule does not establish group size, ratios, or qualifications. However, this is helpful information in understanding the conditions of care children are experiencing and the child care workforce.

Training and Professional Development.

The final rule adds § 98.16(p) requiring Lead Agencies to describe training and professional development requirements for caregivers, teachers, and directors of child care providers who receive CCDF funds in accordance with § 98.44. We received no comments and have retained the proposed language. Paragraph (q), as re-designated, remains unchanged.

Payment rates.

The final rule revises § 98.16(r), as re-designated, to include the option of using an alternative methodology to set provider payment rates. This provision is described later in this final rule. It also deletes the word “biennial” as the reauthorized Act requires the market rate survey to be conducted every three years.

The final rule revises paragraph (s), as re-designated, to include a detailed description of the State's hotline for complaints and process for substantiating and responding to complaints, including whether or not the State uses monitoring as part of its process for responding to complaints for both CCDF and non-CCDF providers. This provision is described later in the rule at § 98.32. Paragraph (t), as re-designated (previously paragraph (n)), remains unchanged.

The final rule revises § 98.16(u), as re-designated (previously paragraph (o)), to include in the description of the licensing requirements, any exemption to licensing requirements that is applicable to child care providers receiving CCDF funds; a demonstration of why this exemption does not endanger the health, safety, or development of children; and a description of how the licensing requirements are effectively enforced, pursuant to § 98.42. We received no comments on this section.

Building supply and quality.

The final rule adds a new § 98.16(x) based on statutory language at Section 658E(c)(2)(M) of the Act, which requires the Lead Agency to describe strategies to increase the supply and improve the quality of child care services for children in underserved areas, infants and toddlers, children with disabilities, and children who receive care during nontraditional hours. As described in the Act, strategies may include alternative payment rates to child care providers, the provision of direct contracts or grants to community-based organizations, offering child care certificates to parents, or other means determined by the Lead Agency. For grants or contracts to be effective at increasing the supply of high-quality care, they should be funded at levels that are sufficient to meet any higher quality standards associated with that care. Along with increased rates and contracts, we encourage Lead Agencies to consider other strategies, including training and technical assistance to child care providers to increase quality for these types of care. We recommend States, Territories, and Tribes consider the recommendations of different strategies in the Information Memorandum from the Administration for Children and Families,

Building the Supply of High-Quality Child Care

(November 6, 2015).

The final rule at § 98.16(x) adds that the Plan must: Identify shortages in the supply of high-quality child care providers; list the data sources used to identify supply shortages; and describe the method of tracking progress to support equal access and parental choice. In the NPRM, a similar requirement to identify supply shortages was included in the section on grants and contracts (which has been deleted in the final rule). We have moved this requirement to § 98.16(x) since identification of supply gaps of high-quality care is a critical step of building

supply and quality for certain populations, as required by the Act. To identify supply shortages, the Lead Agency may analyze available data from market rate surveys, alternative methodologies (if applicable), child care resource and referral agencies, facilities studies and other community needs assessments, Head Start needs assessments, and other sources. ACF recommends that the Lead Agency examine all localities in its jurisdiction, recognizing that each local child care market has unique characteristics—for example, many rural areas face supply shortages. Further, we recommend that the Lead Agency's analysis consider all categories of care, recognizing that a community with an adequate supply of one category of care (

e.g.,

centers) may face shortages for another category (

e.g.,

family child care).

Comment:

We received a comment from a child care worker organization asking us to include compensation improvements as an example of a supply building strategy.

Response:

We urge Lead Agencies, as they consider setting the rate for certificates and grants or contracts, to examine compensation as a factor in quality and in recruiting and retaining knowledgeable and skilled staff to work in child care, particularly in hard-to-serve communities.

Comment:

One national organization urged us to include supply building strategies that reflect the linguistic and cultural characteristics of the families and children.

Response:

High-quality child care respects and supports linguistic and cultural diversity of children and their families. As well, the building of supply in underserved areas, to serve more infants and toddlers, and to respond to the needs of families who need child care during non-traditional hours will include communities and children who are English language learners. Section 98.16(dd) addresses outreach to English language learner families and facilitates participation of providers who are English language learners in the subsidy system. The final rule also recognizes the importance of home culture and language in other provisions.

Comment:

We received a comment from a multi-state private provider company asking us to modify the language that the strategies to increase supply should be directed to supplying high-quality child care.

Response:

We think that the Act and this final rule will raise the quality of child care, especially for CCDF-funded children. The statutory language focuses on improving the supply and quality of care. Taken together, this means Lead Agencies should focus on building the supply of high-quality care.

Significant concentrations of poverty and unemployment.

A new § 98.16(y), as proposed in the NPRM, requires Lead Agencies to describe how they prioritize increasing access to high-quality child care and development services for children of families in areas that have significant concentrations of poverty and unemployment and that do not have sufficient numbers of such programs, pursuant to § 98.46(b). This provision is discussed later in this rule.

Comment:

We received a comment from a national organization in support of this provision and a recommendation that the Plan describe how the Lead Agency will develop programs and services that are culturally and linguistically relevant and support a diverse child care workforce.

Response:

We decline to add language to § 98.16(y) but we do address issues of cultural and linguistically responsive child care services as well as the diversity of the child care workforce in other sections of this final rule.

Business practices.

This final rule adds a new § 98.16(z) reiterating the statutory requirement for Lead Agencies to describe how they develop and implement strategies to strengthen the business practices of child care providers to expand the supply, and improve the quality of, child care services. Some child care providers need support on business and management practices in order to run their child care businesses more effectively and devote more time and attention to quality improvements. Improved business practices can benefit caregivers and children. An example of a key business practice is providing paid sick leave for caregivers to keep children healthy. Without paid time off, caregivers may come to work sick and risk spreading illnesses to children in care. We also encourage child care providers to provide paid sick leave because it promotes better health for child care employees, which is important to maintaining a stable workforce as well as consistency of care for children. According to The Council of Economic Advisors, “[Pa]id sick leave also induces a healthier work environment by encouraging workers to stay home when they are sick.” (The Economics of Paid and Unpaid Leave, The Council of Economic Advisors, June 2014.)

Shared services is another business practice strategy, particularly for a network of family child care providers or small centers. The hub of the network or alliance provides business services such as billing and accounting, facility management, human resources management, and purchasing. It may also involve shared professional development and coaching and other pedagogical leadership. This business strategy can help providers leverage their limited resources more effectively and efficiently. We received no comments on this provision and have retained the language as proposed in the NPRM.

Emergency preparedness.

The final rule adds a new § 98.16(aa) to the regulation, as proposed in the NPRM, based on Section 658E(c)(2)(U) of the Act, to require the Lead Agency to demonstrate how the Lead Agency will address the needs of children, including the need for safe child care, before, during and after a state of emergency declared by the Governor or a major disaster or emergency (as defined by section 102 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5122) through a Statewide Child Care Disaster Plan (or Disaster Plan for a Tribe's service area). The Disaster Plan must be developed in collaboration with the State/Territory human services agency, the State/Territory emergency management agency, the State/Territory licensing agency, local and State/Territory child care resource and referral agencies, and the State/Territory Advisory Council on Early Childhood Education and Care, or similar coordinating body. Tribes must have similar Disaster Plans, for their Tribal service area, developed in consultation with relevant agencies and partners. The Disaster Plan must include guidelines for continuation of child care subsidies and child care services, which may include the provision of emergency and temporary child care services and temporary operating standards for child care during and after a disaster; coordination of post-disaster recovery of child care services; and requirements that providers receiving CCDF funds and other child care providers, as determined appropriate by the Lead Agency, have in place procedures for evacuation, relocation, shelter-in-place, lock-down, communication and reunification with families, continuity of operations, accommodations of infants and toddlers, children with disabilities, and children with chronic medical conditions; and procedures for staff and volunteer emergency preparedness training and practice drills, including training requirements for caregivers of providers receiving CCDF.

This provision largely reflects statutory language of Section 658E(c)(2)(U) of the Act, but we have

clarified that the Plan must apply, at a minimum, to CCDF providers and may apply to other providers (such as all licensed providers) at the Lead Agency option. We also added language on post-disaster recovery.

In past disasters, the provision of emergency child care services and rebuilding and restoring of child care facilities and infrastructure emerged as an essential service. The importance of the need to improve emergency preparedness and response in child care was highlighted in an October 2010 report released by the National Commission on Children and Disasters. The Commission's report included two primary sets of recommendations for child care: (1) To improve disaster preparedness capabilities for child care; and (2) to improve capacity to provide child care services in the immediate aftermath and recovery from a disaster (2010 Report to the President and Congress, National Commission on Children and Disasters, p. 81, October 2010). Child care has also been recognized by the Federal Emergency Management Agency (FEMA) as an essential service and an important part of disaster response and recovery. (FEMA Disaster Assistance Fact Sheet 9580.107, Public Assistance for Child Care Services Fact Sheet, 2013).

Maintaining the safety of children in child care programs during and after disaster or emergency situations necessitates planning in advance by State/Territory agencies and child care providers. The reauthorization of the CCDBG Act, and this final rule, implement the key recommendation of the National Commission on Children and Disasters by requiring a child care-specific Statewide Disaster Plan. ACF has previously issued guidance (CCDF-ACF-IM-2011-01) recommending that Disaster Plans include five key components: (1) Planning for continuation of services to CCDF families; (2) coordinating with emergency management agencies and key partners; (3) regulatory requirements and technical assistance for child care providers; (4) provision of temporary child care services after a disaster, and (5) rebuilding child care after a disaster. The guidance recommends that disaster plans for child care incorporate capabilities for shelter-in-place, evacuation and relocation, communication and reunification with families, staff training, continuity of operations, accommodation of children with disabilities and chronic health needs, and practice drills. ACF intends to provide updated guidance and technical assistance to States, Territories, and Tribes as they move forward with implementing Disaster Plans as required by the reauthorization. We received no comments on this provision and have retained the language as proposed in the NPRM.

Payment practices.

The final rule adds new § 98.16(bb), requiring Lead Agencies to describe payment practices applicable to child care providers receiving CCDF, pursuant to § 98.45(l), including practices to ensure timely payment for services, to delink provider payments from children's occasional absences to the extent practicable, and to reflect generally-accepted payment practices. This is discussed later in this rule. We received no comments on this provision but have made a conforming citation when referencing section 98.45(l). The rest of the language is retained as proposed in the NPRM.

Program integrity.

The final rule adds new § 98.16(cc), requiring Lead Agencies to describe processes in place to describe internal controls to ensure integrity and accountability; processes in place to investigate and recover fraudulent payments and to impose sanctions on clients or providers in response to fraud; and procedures in place to document and verify eligibility, pursuant to § 98.68. This change corresponds to a new program integrity section included in subpart G of the regulations, which is discussed later in this rule.

Outreach and services for families and providers with limited English proficiency and persons with disabilities.

The final rule adds new § 98.16(dd) to require that the Lead Agency describe how it provides outreach and services to eligible families with limited English proficiency and persons with disabilities, and facilitate participation of child care providers with limited English proficiency and disabilities in CCDF. Currently, the Plan requires Lead Agencies to describe how they provide outreach and services to eligible limited English proficient families and providers. In the FY 2016-2018 CCDF Plans, States and Territories reported a number of strategies to overcome language barriers. Forty-nine States and Territories have bilingual caseworkers or translators, 45 have applications in multiple languages, and 19 offer provider contracts or agreements in multiple languages. The final rule requires Lead Agencies to develop policies and procedures to clearly communicate program information such as requirements, consumer education information, and eligibility information, to families and child care providers of all backgrounds.

Comment:

One comment requested language in the Plan to require a description of how Lead Agencies will develop child care services and programs that are culturally and linguistically relevant to the children and families that they serve, and how it will implement recruitment and workforce development strategies that will seek to increase the number of child care providers who are representative of the communities in which they serve.

Response:

This concern is addressed in § 98.16(dd). We strongly agree that Lead Agencies should support children and families whose native language is not English, and providers who may be English language learners. The Migration Policy Institute's recent study shows that a large segment of the child care workforce, like the children and families they serve, are English language learners and come from a range of cultures. There is a strong body of research on the importance of child care providers respecting and supporting children's home language and culture in order to promote learning achievement.

Suspension and expulsion policies.

The final rule adds a new § 98.16(ee) to require that the Lead Agency describe its policies to prevent suspension, expulsion, and denial of services due to behavior of children from birth to age five in child care and other early childhood programs receiving CCDF funds, which must be disseminated as part of consumer and provider education efforts in accordance with § 98.33(b)(1)(v).

Comment:

We received several comments from national organizations supporting the attention to reducing or eliminating the high rates of suspension and expulsion of young children. We received a comment from one State expressing concern that it will be difficult to enforce such policies. National organizations representing children with disabilities urged language prohibiting the use of suspension and expulsion. They raise concerns that such practices have excluded children with disabilities.

Response:

We added in the rule that the Lead Agency must describe policies

to prevent

suspension and expulsion. Recent data demonstrates a high rate of suspensions and expulsions of children as young as preschool, practices that are associated with negative educational and life outcomes. The data also demonstrates a greater prevalence of suspension and expulsion of children of color and boys. These disturbing trends warrant immediate attention from the early childhood and education fields to prevent expulsion and suspension while

ensuring the safety and well-being of young children (themselves and others) in early learning settings. Furthermore, if administered in a discriminatory manner, suspensions and expulsions of children may violate Federal civil rights laws. In addition, early childhood programs must comply with applicable legal requirements governing the discipline of a child for misconduct caused by, or related to, a child's disability, including, as applicable, implementing reasonable modifications to policies, practices, or procedures to ensure that children with disabilities are not suspended or expelled because of their disability-related behaviors unless a program can demonstrate that making such modifications would result in a fundamental alteration in the nature of a service, program, or activity.

The Child Care and Development Block Grant (CCDBG) Act of 2014 also allows States to target CCDF quality enhancement funds to professional development that includes effective behavior management strategies and training on strategies to promote social-emotional development. These kinds of supports, both through formal coursework, and field-based, ongoing support in the form of coaching, mentoring, or mental health consultation, have been demonstrated to reduce the challenging behavior in children that is associated with expulsions.

We strongly encourage States and child care providers (including school age providers) to utilize the guidance, policy statements, and resources made available by federal agencies. For school-age children, the following resources are available:

•

Supporting and responding to behavior:

Evidence-based classroom strategies for teachers:

https://www.osepideasthatwork.org/evidencebasedclassroomstrategies/

•

Positive Behavioral Interventions & Supports (PBIS) National Technical Assistance Center:

•

Rethinking Discipline 101:

Why it matters (webinar):

https://www.youtube.com/watch?v=Qg-qkilRw18&feature=youtu.be

With regard to young children, we urge States and child care providers to consider the recommendations in the Policy Statement on Expulsion and Suspension Policies in Early Childhood Settings issued by the Secretaries of Health and Human Services and Education at

https://www2.ed.gov/policy/gen/guid/school-discipline/policy-statement-ece-expulsions-suspensions.pdf

.

Reports of serious injuries or death in child care.

The final rule adds a new § 98.16(ff) to require the Lead Agency to designate a State, Territorial, or Tribal entity to which child care providers must submit reports of any serious injuries or deaths of children occurring in child care, regardless of whether or not they receive CCDF assistance. Comments are discussed later under the related requirement at § 98.42(b)(4).

Family engagement.

The final rule adds new § 98.16(gg) to require the Lead Agency to describe how it supports child care providers in the successful engagement of families in children's learning and development. We received no comments on this provision and have left the language unchanged in the final rule.

Complaints received through the national hotline and Web site.

The final rule adds new § 98.16(hh) to require the Lead Agency to describe how it will respond to complaints received through the national hotline and Web site, as required by (Section 658L(b)(2)) of the reauthorized Act. The description must include the designee responsible for receiving and responding to those complaints for both licensed and license-exempt child care providers.

Complaints received through the national hotline and Web site will be sent to the appropriate Lead Agency to make sure that they

are responded to quickly, especially when a child's health or safety is at risk. This provision is aimed at building those connections and ensuring that a process is in place for addressing complaints regarding both licensed and license-exempt child care providers. We received no comments and have left language unchanged in final rule.

Finally, the final rule re-designates paragraph (v) as paragraph (ii) with no other changes. We received no comments on this provision and have retained the language as proposed in the NPRM.

§ 98.17 Period Covered by Plan

This section describes the term of the Plan, which is now three years. We received no comments on this section.

§ 98.18 Approval and Disapproval of Plans and Plan Amendments

This section of the regulations describes processes and timelines for CCDF Plan approvals and disapprovals, as well as submission of Plan amendments. CCDF Plans are submitted triennially and prospectively describe how the Lead Agency will implement the program. To make a substantive change to a CCDF program after the Plan has been approved, a Lead Agency must submit a Plan amendment to ACF for approval. The purpose of Plan amendments is to ensure that grantee expenditures continue to be made in accordance with the statutory and regulatory requirements of CCDF, if the grantee makes changes to the program during the three- year Plan period.

Advance written notice.

In conjunction with the change discussed at § 98.14(d) to make the Plan and any Plan amendments publicly available, the final rule adds a provision at § 98.18(b)(2) to require Lead Agencies to provide advance written notice to affected parties, specifically parents and child care providers, of changes in the program made through an amendment that adversely affect income eligibility, payment rates, and/or sliding fee scales so as to reduce or terminate benefits. The notice should describe the action to be taken (including the amount of any benefit reduction), the reason for the reduction or termination, and the effective date of the action.

Comment:

Two States expressed concerns that the provisions on advance written notice would be administrative burdens. One State asked that its requirements for posting for administrative rule changes meet this requirement. The State also asked for clarification whether the advance written notice is separately required for any Plan amendment. By contrast, child care worker organizations submitted comments in support of this provision and requested additional requirements. They asked us to go further and require a public review and comment process for Plan amendments prior to Lead Agency submission to the federal government. They note that States prepared their three-year CCDF plans prior to the release of the final regulations, and thus there is a likelihood that many Plans will have to be modified in significant ways to fully meet the rule.

Response:

The Lead Agency may choose to issue notification of adverse programmatic changes in a variety of ways, including a mailed letter or email sent to all participating child care providers and families. We are providing Lead Agencies with the flexibility to determine an appropriate time period for advance notice, depending on the type of policy change being implemented or the effective date of that policy change. Advance notice adds transparency to the Plan amendment process and provides a mechanism to ensure that affected parties remain informed of any substantial changes to the Lead Agency's CCDF Plan that may affect their ability to participate in the child

care program. We note that while we encourage Lead Agencies to provide written notice of any changes that affect income eligibility, payment rates, and/or sliding fee scales, we only require written notice of those that adversely impact parents or providers. We do not require the Lead Agency to hold a formal public hearing or solicit comments on each Plan amendment, as is required by regulations at § 98.14(c) for the submission of the CCDF Plan. However, we encourage solicitation of public input whenever possible and consider this regulatory change to be consistent with the spirit and intent of the CCDF Plan public hearing provision. We encourage Lead Agencies to ensure that advanced written notice is provided in multiple languages, as appropriate, so that all parents and child care providers have access and can plan for changes. As noted above, the final rule adds a provision at § 98.16(dd) to require Lead Agencies to include in the Plan a description of processes to provide outreach and services to CCDF families and providers with limited English proficiency.

Comment:

A comment submitted by a group of providers asked for a required time limit on when advance notice is provided to them. A large, multi-state child care provider requested at least 30 days advance written notice to parties.

Response:

We decline to require a specific time period for the Lead Agency to provide written notice. We do urge Lead Agencies to provide this information as soon as possible because of the consequences to families and providers.

§ 98.19 Requests for Temporary Relief From Requirements

Section 658I(c) of the Act indicates that Lead Agencies are allowed to submit a request to the Secretary to waive one or more requirements contained in the Act on a temporary basis: To ensure that effective delivery of services are not interrupted by conflicting or duplicative requirements; to allow for a period of time for a State legislature to enact legislation to implement the provisions of the Act or this part; or in response to extraordinary circumstances, such as a natural disaster or financial crisis. We are extending the waiver option to rules under this part as well. Prior to the enactment of the CCDBG Act of 2014, there was no waiver authority within the CCDF program.

Through the changes in this final rule, we provide guidance and clarity on: The eligibility of States, Territories, and Tribes to request a waiver; what provisions are not eligible for waivers; and how the waiver request and approval (or disapproval) process works. In addition to outlining the requirements detailed in the CCDBG Act of 2014, § 98.19 includes clarifying provisions to provide greater understanding of the intent and implementation of the waiver process as temporary.

This section of the rule details the process by which the Secretary may temporarily waive one or more of the requirements contained in the Act or this part, with the exception of State Match and Maintenance of Effort requirements, consistent with the requirements described in section 658I(c)(1) of the Act. In order for a waiver application to be considered, the waiver request must: Describe circumstances that prevent the State, Territory, or Tribe from complying with any statutory or regulatory requirements of this part; demonstrate that the waiver, by itself, contributes to or enhances the State's, Territory's, or Tribe's ability to carry out the purposes of this part; show that the waiver will not contribute to inconsistency with the objectives of the Act; and meet the additional requirements in this section as described.

The final rule delineates the types of waivers that States, Territories, and Tribes can request into two distinct types: (1) Transitional and legislative waivers and (2) waivers for extraordinary circumstances. States, Territories, and Tribes may apply for temporary transitional and legislative waivers meeting the requirements described in this section that provide temporary relief from conflicting or duplicative requirements preventing implementation, or for a temporary extension in order for a State, Territorial, or Tribal legislature to enact legislation to implement the provisions of this subchapter.

Transitional and legislative waivers are designed to provide States, Territories, and Tribes at most one full legislative session to enact legislation to implement the provisions of the Act or this part, and are limited to a one-year initial period and at most, an additional one-time, one-year renewal from the date of approval of the extension (which may be appropriate for a State with a two-year legislative cycle, for example).

Waivers for extraordinary circumstances address temporary circumstances or situations, such as a natural disaster or financial crisis. Extraordinary circumstance waivers are limited to an initial period of no more than two years from the date of approval, and at most, an additional one-year renewal from the date of approval of the extension.

Both types of waivers are probationary, subject to the decision of the Secretary to terminate a waiver at any time if the Secretary determines, after notice and opportunity for a hearing, that the performance of a State, Territory, or Tribe granted relief under this subsection has been inadequate, or if such relief is no longer necessary to achieve its original purposes. In the final rule, we added language to specify that such a hearing would be based on the rules of procedure in 45 CFR part 99—which contains existing hearing procedures governing CCDF that logically extend to the waiver process.

In order to request a waiver, the Lead Agency must submit a written request, indicating which type of waiver the State, Territory, or Tribe is requesting and why. The request must also provide detail on the provision(s) from which the State, Territory, or Tribe is seeking temporary relief and how relief from that sanction or provision, by itself, will improve delivery of child care services for children and families. If a transitional waiver, the Lead Agency should describe the steps being taken to address the barrier to implementation (

i.e.,

a timeline for legislative action). Furthermore, the Act emphasizes the importance of children's health and safety. Importantly, in the written request, the State, Territory, or Tribe must certify and demonstrate that the health, safety, and well-being of children served through assistance received under this part will not be compromised as a result of the temporary waiver.

Within 90 days of submission of the request, the Secretary will notify the State, Territory, or Tribe of the approval or disapproval. If rejected, the Secretary will provide the State, Territory, or Tribe, the Committee on Education and the Workforce of the House of Representatives, and the Committee on Health, Education, Labor, and Pensions of the Senate of the reasons for the disapproval and give the State, Territory, or Tribe the opportunity to amend the request. If approved, the Secretary will notify and submit a report to the Committee on Education and the Workforce of the House of Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate on the circumstances of the waiver including each specific sanction or provision waived, the reason as given by the State, Territory, or Tribe of the need for a waiver, and the expected impact of the waiver on children served under this program.

No later than 30 days prior to the expiration date of the waiver, a State, Territory, or Tribe, at its option, may make a formal written request to re-certify the provisions described in this section, which must explain the necessity of additional time for relief from such sanction(s) or provisions. The State, Territory, or Tribe also must demonstrate progress toward implementation of the provision or provisions. The Secretary may approve or disapprove a request from a State, Territory, or Tribe for a one-time renewal of an existing waiver under this part for a period no longer than one year. The Secretary will adhere to the same approval or disapproval process for the renewal request as the initial request. Lastly, this final rule makes conforming technical amendments to the pre-existing procedures for a Lead Agency to appeal any ACF disapproval of a Plan or Plan amendment at § 98.18 to indicate that the appeal process also applies to any appeal of a disapproved request for temporary relief under § 98.19.

Comment:

We received comments from many national and State organizations and a State supporting our limitation on the types and number of categories of waivers. For example, a child care worker organization wrote, “To prevent the States from backing out on investing in health, safety and quality standards, we commend the proposal for limiting waivers to reasons concerning transition, legislative action and extraordinary circumstances.” A few States and a national organization had comments on the time limitation on waivers, with some commenters noting that the Act allows waivers for up to three years. A national organization asked for a three-year term for waivers of any type. Two States expressed concern that the two-year period for legislative and transitional waivers may not provide sufficient time for State legislatures to act, particularly legislatures in a few States that only convene in alternating years. Another State asked for a longer time frame to encompass a period for changing forms and processes reflecting newly adopted rules. A few States requested clarification on whether certain circumstances fall under the transitional and legislative category or extraordinary circumstances category.

Response:

The final rule establishes parameters to ensure that States can move quickly to make any necessary legislative or transitional changes. The vast majority of State legislatures meet annually; only four States have a legislature that meets every other year. They have the potential to be approved for a one-year waiver followed by the possibility of being approved for a one-year renewal. Providing a longer base time period for a waiver could lead to delays in making the necessary legislative or transition changes.

Comment:

One State commented that 90 days is too long for a decision by the Secretary and requested ACF to make a decision on a waiver application within 30 days.

Response:

The Act says that the Secretary shall inform the State of approval of disapproval of the request within 90 days after the receipt of a State's request under this subsection. This final rule maintains a 90-day window, which is consistent with the period for reviewing Plan amendments for approval or rejection.

Comment:

One State asked for clarification on the start date of the waiver.

Response:

We refer Lead Agencies to the Office of Child Care's Program Instruction published December 17, 2015 (CCDF-ACF-PI-2015-09) which states: “If a State or Territory is not going to be in compliance with one or more provisions by the deadline required in the Act, then the State/Territory must request a temporary extension/waiver. Once the requirement(s) has been met, the Lead Agency must submit a Plan amendment to ACF for approval.” Until such time, the State should make every effort to be in compliance. The start date of a waiver may vary depending on the circumstances. For example, a legislative or transitional waiver will typically start on the date corresponding with the federal statutory or regulatory deadline for compliance with the relevant requirement (

i.e.,

the requirement for which the Lead Agency is receiving a temporary extension). The start date for a waiver for extraordinary circumstances will typically be related to the timing of those circumstances (

e.g.,

natural disaster or financial crisis).

Comment:

One State asked if ACF would consider delaying the need for a Plan amendment for a minimum of six months in circumstances when the State is submitting a request for a waiver for extraordinary circumstances.

Response:

Lead Agencies need not submit the waiver request and Plan amendment together. Lead Agencies must submit temporary relief or waiver request at least 90 days before an effective date. Lead Agencies must submit Plan amendments within 60 days of a substantial change in the Lead Agency's program. We refer Lead Agencies to the Office of Child Care's Program Instruction published December 17, 2015 (CCDF-ACF-PI-2015-09). We recognize that requests for extension due to extraordinary circumstances will require a case-by-case decision on when the Plan amendment(s) needs to be submitted.

Comment:

One State asked if it may submit a single application that combines multiple waiver requests.

Response:

We have accepted submissions that combine multiple waivers. Each waiver request, however, must address separately each factor required by the Act.

Comment:

Some States remarked on the need for extensions in order to make changes to the electronic systems to implement the rule. One State asked if this would fall into the category of an “extraordinary circumstance.”

Response:

Requests for a waiver relating to electronic system changes should be submitted under the “legislative or transitional” category.

Comment:

One State recommended a third type of waiver when a State's current law may meet or exceed the intent of the regulations, and also in the case of experimental, pilot or demonstration projects, so long as children's health, safety, and well-being are not compromised and the waiver improves efficiency and effectiveness.

Response:

We decline to add a third category of waiver. States and Territories have been innovative in a number of ways with CCDF, such as quality rating and improvement systems and scholarships for child care providers to enroll in college. Waivers are not necessary for States to create pilot or demonstration projects so long as those projects do not jeopardize children's health, safety and well-being and do not contradict requirements in the Act and this final rule. Further, multiple national and Sta

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