1

EEC REGULATION REFORM – Subsidy Revisions

Policy and Fiscal CommitteeMarch 7, 2011

2

EEC Subsidy Regulations

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

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

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

Federal Regulations -- The Child Care Development Fund

Federal Policies, Program Instructions and Other Guidance

State Regulations -- Subsidized Child Care

State Policies -- EEC Financial Assistance Policy Guide

3

FY11 EEC Budget Breakdown

4

Financial Assistance – Table of Contents for both EEC Regulations and Policy Guide

55

Why Amend the EEC Subsidy Regulations?

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

Identifying and Implementing Best Practices• Review regulations every 5 years (Subsidy Regulations last

updated in 2006)• Analyze other State child care subsidy laws and policies• Address unique challenges/ weaknesses identified due to

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

Targeting/ maximizing limited resources

Addressing user feedback/ achieving efficiencies

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

66

Addressing Federal & State Oversight concerns

● Program Integrity and Fraud, Waste and Abuse Prevention

● GAO and OIG findings related to CCDF, TANF and Head Start subsidized child care identify several issues and best practices on a national scale, not MA specific, related to eligibility verifications and lack of resources:

● Unreliable internal controls to oversee/manage applications and billing processes – vulnerable to fraud:

● Excessive billing;● Documentation falsification;● Fictitious children; and● Collusion between parents and providers

● Insufficient data sharing agreements to verify eligibility● Insufficient resources – staff and technology

Improper Authorizations for Payment (IAP) exercise results

Response from ACF regarding our State Plan

ANF established a Task Force on Fraud Waste and Abuse to review public assistance programs

77

Addressing User Feedback/ Achieving Efficiencies

As EEC providers, CCR&Rs and internal staff have used the Guide, issues have been identified, including:

Ability to update and communicate changed or new policies

Structure of and clarity of policy information Documentation of eligibility requirements Outdated, confusing policies Missing policies Ease of finding needed information

CCR&R and Provider Feedback

Confirms need to improve Financial Assistance Polices and regulations, including the Request for Review process, Recoupment procedure, and Documentation requirements

Raises other concerns regarding improving Communication (w/ EEC, DTA and DCF staff)

Subsidy Regulation Changes - Required

While many of the issues identified to date have been addressed by revising the Policy Manual, and improving the process for updating policies, some regulation revisions are necessary, including:

Redefine Special needs of parent/ child Reduce Allowable Absences Redefine Self Employment Allow for eligibility verifications through inter-agency

data matches Streamline Review Process and recoupment process

8

9

Status of policy updates requested

Quick Fixes – Policies Updated Long Term Fixes – Regulation Changes or Data Exchanges Needed

Break in service need of parent

Eligibility self reporting “significant changes” in income (20% rule)

Travel time for calculation of service need

Waitlist management enhancements

Redraft Provider voucher manual and agreement (Jan roll out)

Identity/ legal immigration status documentation

Codified Variance Process

Special Need Forms (Child/Parent)

Self Employment Verification

Special Need Access Regulations

Streamline Review Process

Child Support Requirement

Second parent in Household

Clarify Recoupment Process

Redraft Financial Assistance agreement/ termination notices

Excessive Absences of Children

Schedule of Care

Interfaces with other agencies: RMV, DOR (wage matches) or other agency systems

9

Key

= Policy issue reviewed and updated = Policy issue reviewed and requires regulation change to update

10

Summary of Proposed Changes to Subsidy

Regulations

11

Technical Amendments to Subsidy Definitions, 606 CMR 10.02

The addition of new or revised definitions are necessary to ensure compliance with current laws/policies and to aid in the interpretation and enforcement of the regulations:

•Child Care Educator/Provider•Contracted Child Care Educator/Provider•Excessive Absence•Explained Absence•Full Time Care•Protective Services

12

• Family Size and Household Composition (codifies existing practice)

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

• Identity, Residency & Citizenship Status (codifies existing practice)

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

• Child Support Enforcement Requirement (new)

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

• Child Attendance/Reimbursement Requirements (amends current requirements)o Requires children to regularly attend early education and care

programs subsidized by the Commonwealth or risk termination.

• Data Sharing/Interfaces Authorization (new)

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

Amendments to the General Eligibility Provisions, 606 CMR 10.03

13

Identity, Residency & Citizenship Status – Issue and Proposed Remedy

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

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

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

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

Comments from Advisory Council and Providers

Questions regarding the impact of citizenship requirement on Head Start programs and Public School districts

Recognition that this is a federal requirement and is not optional for federal reimbursement

14

15

Child Support Enforcement Requirement – Issue and Proposed Remedy

• Due to concerns about the accuracy of household size reported by families and in support of the mission of the MA Child Support Enforcement Agency (CSE), EEC proposes a requirement to mandate “cooperation” with CSE agency OR other proof of child support as a condition for child care assistance for single parent families

• At least 20 States currently impose a CSE requirement

• Benefits of instituting a Child Support Enforcement policy:

o Keep families out of povertyo Provide adequate food, shelter and clothingo Increased access to medical services & sense of securityo Add to the overall stability, security and well-being of families

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

household documentation

• Key issues to consider during implementation of policy:

o How many families seeking assistance are currently enrolled – avoid duplication

o Identify exceptions (i.e., domestic violence or child protection)o Required documentationo Monitoring and evaluation of effectiveness

Comments from Advisory Council and Providers

Recognize that particular circumstances lend themselves to waiver (e.g. domestic violence)

Just because other states are utilizing this approach does not mean that it makes sense for Massachusetts

May cause programs to lose clients because the regulations will become too intimidating

May incentivize parents to “disappear” from their children’s lives

Current regulation enables parents not to take responsibility for their own children

Request to solicit feedback from parents and other stakeholders through public comment process

Implementation questions regarding how requirement be enforced and how parents will be able to file with DOR

16

17

Strengthen Child Attendance Requirement - Issue

• Review of annual billing and current EEC regulations related to absences identified potential abuse/waste.

• Current Regulatory Definitions, 606 CMR 10.02:

o Excessive absence = more than 3 consecutive unexplained absences or 11 or more explained absences w/in a 30 day period.

o Explained absences = any absence due to illness, emergency, or max. of 10 days vacation/ year.

• Current utilization and annualized billing (EEC’s annual billing for FY08-10 shows):

o Average annual billing by the CCR&Rs - $18.5Mo Average annual billing by contract providers - $18.5Mo Over each of past 3 years, providers have billed EEC for over

$37M related to absent dayso Absence rates for some children approach 50%o Providers acknowledge billing for “regularly scheduled” absences,

such as families that only need 4 days/week

18

Strengthening Child Attendance Requirement – Best Practices

• In preparing its recommendations, EEC reviewed research which shows that chronic absenteeism in the early years, such as kindergarten, predicted continuing absences in later grades.

• In addition, we looked at other states to identify best practice:

o Ohio – limits absences to 10 in 6 monthso Maryland – limits absences to 60 in 12 monthso Delaware – limits absences to 5 per month

• MA public schools limit absences to 7 in 6 months

• These examples have ramifications on both families (termination) and providers (billing) giving incentive for proper use of funds and encouraging attendance/ good outcomes for children

19

Strengthening Child Attendance Requirement – Proposed Remedy

• Options for implementation – excused absences:

Limit absences to 5 per month Limit absences to 15 per 3 months Limit absences to 30 per 6 months* Limit absences to 60 per 12 months Limit absences to 7 in 6 months, in accordance

with ESE policies

*The Recommendation above reflects an average of 5 absences per month enforced over a 6 month period.

• EEC does not propose any changes related to the definition of “excessive” absence.

Comments from Advisory Council and Providers

Good change; very supportive of 30 absences/6 mos. Support for reducing the number of absences Be clear on medical documentation needed to

substantiate approved absences Need to counsel families on why attendance is

important; may want to look at Head Start policies Questions regarding exceptions (i.e. children who are

hospitalized for an extensive period of time, children with chronic conditions, children with contagious diseases, etc.) and how these situations would be handled

20

21

• Limitations on Self-Employment (amends current requirements)

o Imposes restrictions on certain work-related service need activities, in particular “at home” self-employment

o Changes methodology for calculating service need – total earnings divided by minimum wage to establish amount of care needed.

• Special Needs (Protective Services) (amends current requirements)

o New definition of protective services to include parents and children with documented disability and/or special need.

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

• Additional Documentation (codifies existing practice)

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

• Travel Time (codifies existing practice)

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

Amendments to Financial & Service Need Eligibility Criteria, 606 CMR 10.04(1)

22

Self-Employment – Issue and Proposed Remedy

• Feedback from stakeholders identified inconsistent and inefficient policies for assessing eligibility for self-employed parents AND increased terminations, reductions and recoupment due to false, misleading or inaccurate documentation submitted.

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

1. No home-based self-employment, unless the work performed:

• creates a clear and present danger to children• requires regular face-to-face meetings or appointments with

clients, which prevents direct supervision of children

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

3. Implement new mechanism for confirming minimum wage

• Current practice – divide gross income by estimated hours to determine hourly rate

• Proposed practice – divide gross income by MA minimum wage rate to determine hours

Comments from Advisory Council and Providers

Generally supportive of change

Question whether income taxes would still be required for self-employed

Concerns regarding whether people who work at home can provide an educationally rich environment for children

23

24

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

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

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

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

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

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

Special Needs: Federal Regulatory Compliance – General Issues

25

CCDF regulations provide some flexibility to States for purposes of defining and implementing laws and policies related to protective services. Specifically, families within the State definition of protective services, may be exempt from some eligibility requirements:

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

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

Special Needs: Federal Regulatory Compliance – General Issues

26

States are required to define “protective services” in the CCDF State Plan, if they choose to fund services to this population. See 45 CFR 98.16(e)(7)

Currently, Massachusetts defines “protective services” as:

Families are eligible for supportive child care services when they have active protective needs documented in a supported report of abuse or neglect within the previous 12 months or when there is a determination of need to begin or continue supportive child care at a Department of Children and Families Progress Supervisory Review.”

Proposed definition:

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

Special Needs: Federal Regulatory Compliance – Proposed Remedy

27

Special Needs Children – Unique Issues

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

training activities• Families may enter care at 85% SMI and exit at 100%• Children are eligible for full-time care regardless of need

Utilization and Estimated Annual Cost (based on 10/2010 data):•Parents with special need – 1,845 children/$12.17M•Children with special need – 902 children/$5.95M•Total annual cost – over $18M

Issues:• Exemption was originally based on assumption special needs

children are “educationally at risk”•Misaligned with federal exemption definition of “in need of protective services”•Research based risk factors show that ALL low-income children are “educationally at risk”

• Streamlining and coordinating resources:•Other agencies are charged with providing services to special needs children -- ESE (IEP) or DPH (IFSP)•EEC should support ESE and/or DPH with wrap-around services, for otherwise eligible children

28

Special Needs Children – Proposed Remedy

Proposed change:• Align EEC regulations with Federal

regulations and require parents of children with special needs to participate in work, education or training

No Change:• Families will continue to remain eligible at

the 85%/100% income levels• Eligible children may continue to qualify for

full-time care, regardless of their parents’ service need

• EEC will continue to work with other state agencies to provide the necessary wrap-around support for eligible children

Comments from Advisory Council and Providers

Providers and CCR&Rs Very supportive of proposed change

Request not to accept any and all children who present with an IEP; there are services out there that are a better match

However, may create a gap when children leave IEP but are unable to get picked up by public schools

Current regulation has pushed out working families and changed the balance of classrooms; unable to meet the needs of all working Income Eligible families

Question regarding who will connect parents to other services and whether case workers will be trained regarding special needs

Question whether new requirement should include reviewing multiple risk factors for children, including environmental risk factors or using an assessment tool to verify eligibility

29

30

The Department has identified the following concerns when reviewing its child care subsidy regulations and policies and makes the following findings/observations – for Parents:

• In practice, “special need of parent” definition misaligned with federal “in need of protective services” intention.• Examples identified through central office review:

headaches, backaches, carpal tunnel syndrome.

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

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

• Federal laws prohibit use of CCDF funding for respite care

Special Needs Parents – Unique Issues

3131

Special Needs of Parents – Research/Best Practices

In response to a nationwide survey of CCDF Program administrators in January 2011, 8 states described policies and procedures for assessing the eligibility of special need or disability of parents.

Highlights from the responses:

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

Some states impose further restrictions based on the age of the children in the household (i.e., not a valid service need unless the child is under 8)

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

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

32

Special Needs – Length of Authorization Consistency

Subsidy Type Initial Duration I/E Continuity

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

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

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

Special Need Parents or Children

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

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

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

33

Special Needs Parents – Proposed Remedy

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

Only allow for new access through vouchers

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

Only allow these to be short term vouchers -- 12 months, renewable once –- with the intended purpose of helping to serve as a bridge while parents seek other resources to address the “protective service” issue and/or become employable.

Comments from Advisory Council and Providers

Observation that many of these children are in care under this service need because DCF cases have closed and parents are marginal (i.e. mental health issues, substance abuse issues)

Some voiced support for focusing on helping parents achieve self sufficiency as existing regulation creates a conflict between enabling parent versus protecting the child

Must allow exceptions for parents with permanent, documented disabilities

Concern as to who is going to help these families get additional resources after 12 months and care ends

Concern that other resources may not be available upon the expiration of the 12 month vouchers

12 months may not be long enough– will there be an exception/ waiver process

34

35

OVERVIEW OF REVIEW PROCESS

36

Review Process: Issues

Caseload volume (by calendar year)• 2008 = 756 Requests for Review• 2009 = 1,438 Requests for Review • 2010 = 847 Requests for Review

Incomplete documentation Significant lag times within caseload processing Appellants have several “bites of the same apple” Child care may continue for several additional

weeks or months pending the outcome of the review and/or the informal hearing

37

Review Process: Proposal

Proposed updates to EEC Review Process regulations include:

Dismissals for failure to prosecuteClarify appropriate grounds for appealClarify documentation timelinesGrant opportunity for appeal related

to recoupment amounts

38

GOALS FOR THE REVIEW PROCESS

EEC seeks to revise the Termination and Reduction of Services and the Review Process sections to:

Streamline and Manage Efficiencies Address Federal and State Mandates to Recoup

Fees Parent recoupments (by calendar year)• 2008: 4 repayment agreements; 7 referrals to BSI/

AGO referrals. • 2009: 196 repayment agreements; 5 BSI/ AGO

referrals. • 2010: 359 repayment agreements; 1 BSI/AGO referral

Provide clarification for Parents, CCR&Rs and Contracted Providers

39

10.12 Termination and Reduction of Services

(1) Reasons for Denial or Termination: Currently, there are 6 reasons for issuing a denial or termination of subsidized child care:

• Lack of continuing service need

• Lack of financial eligibility

• Non-payment or late payment of fees

• Unexplained or excessive absence

• Failure to submit the required documentation at reassessment

• Failure to comply with EEC’s, CCR&R’s or contracted provider’s policies

EEC seeks to add two additional reasons:

• Submission of False or Misleading Information and/or Documentation to the contracted provider, CCR&R or EEC

• Outstanding child care debt owed to the Commonwealth

40

10.12 Termination and Reduction of Services (cont’d)

(2) Reasons for Reduction: EEC seeks to modify the existing reason for reduction:

• Parent(s)’ service need changes from full time to part time

and add a new reason for reduction:

• If a change in the total household income results in an increase to the parent(s)’co-payment fee, in accordance with EEC’s fee schedule

41

10.13 Review Process

(1) Reasons for Review: EEC seeks to add an additional reason for review:

assesses a fee or an outstanding child care debt that the parent believes is not in accordance with EEC policy

(2) Scope of Review: EEC seeks to clarify scope of review by adding a new scope to reflect recoupment:

Requests for Review that are solely related to the existence and/or the amount of a debt owed are outside the scope of the review process, if:

  (a) the parent(s) has already entered into an agreement to repay the outstanding debt; or

(b) the parent(s)’ claim is limited to financial hardship imposed by the agreement to repay

42

10.13 Review Process (cont’d)

(6) Termination of Continued Subsidized Child Care: Currently there are 3 bases as to when subsidized child care can be terminated during the review process or subsequent appeal:

• a determination is made that the sole issue is a challenge to the validity of a particular law or regulation

• a change affecting the parent’s subsidy occurs subsequent to the filing of the request for review that makes the previously filed request moot

• the parent fails to comply with the requirements for continuing subsidized child care.

EEC seeks to add the following as an additional basis:

• a determination is made that there is no genuine issue of material fact as presented by the parent in his/her request for review

43

10.13 Review Process (cont’d)

(7) Preliminary Review:

(d) Decisions:

1. How Made. Currently the EEC Review Officer reviews all information submitted by the parent and the provider or CCR&R and seeks clarification from the parties, if necessary. The Review Officer may take administrative notice of general, technical or scientific facts within his/her specialized knowledge and may use his or her experience and specialized knowledge in the evaluation of the evidence presented.

EEC seeks to add the following provisions:

The Review Officer may take administrative notice of public records or any information provided by other state agencies, the State Auditor’s Office and/or its Bureau of Special Investigations. If during the evaluation of the evidence presented, the EEC Review Officer determines that additional reasons for termination/reduction as enumerated in 606 CMR 10.12 (1) and (2) are supported by the evidence, the Review Officer will identify these in the written decision.

44

10.13 Review Process (cont’d)

(8) Informal Hearing:

(e) Reasons for Dismissal: Currently there are 2 reasons as to when a request for informal hearing may be dismissed. EEC seeks to modify this provision and add two more reasons for dismissal as follows:

1. fails to appear at the informal hearing;2. fails to prosecute his/her claim;3. has already agreed in writing to repay the debt at

issue; or

4. withdraws the request for Informal Hearing in writing or on the record at the hearing.

45

Proposed Regulation Promulgation Timeline

Tasks Date

Vet Regulation Changes with Providers/ CCR&Rs; continue to make policy changes/ clarifications that do not require regulation changes

Fall 2010

Board reviews draft of proposed regulation changes; Committee discussions

Feb/March 2011

Board vote to put regulations out for public comment

March/April 2011

Public comment period; meetings with stakeholders/providers/ advocates

May/June2011

Board vote to promulgate regulations;Roll out implementation/ trainings

June/Sept.2011

45