1. 1 EEC REGULATION REFORM – Subsidy Revisions and Public Comment November 7, 2011

2. 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 Governance EECs 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 3

4. 4 4 Why Amend the EEC Subsidy Regulations? Factors contributing to the need to review and amend the Regulations include: Identifying and Implementing Best Practices Review regulations every 5 years (last updated in 2006) Analyze other State child care subsidy laws and policies Address unique challenges/weaknesses identified due to recent fiscal constraints/system restructuring (e.g., closure/limited access to EEC financial assistance, CPC transition, Voucher Pilot) Targeting/maximizing limited resources Addressing user feedback/achieving efficiencies Addressing Federal & State Oversight concerns Reduce opportunities for Fraud, Waste and Abuse Address Improper Authorizations for Payment (IAP) results Respond to ACF regarding EECs State Plan Align with ANF Task Force established to review MA public assistance programs Ensure Program Integrity

5. Technical Regulatory Changes To ensure compliance with current laws/policies and aid in the interpretation and enforcement of the regulations Family Size and Household Composition (codifies existing practice) o Clarifies verification of household members necessary for purposes of determining eligibility and establishing parent fees. Data Sharing/Interfaces Authorization (new) o Authorizes EEC to request and/or provide information to/from other government agencies, contracted providers, other states and financial institutions for purposes of verifying eligibility. Additional Documentation (codifies existing practice) o Authorizes providers and/or CCR&Rs to request additional documentation, if file indicates application inaccuracies/ contradictions. Travel Time (codifies existing practice) o Requires applicants to present a minimum of 20 hours of service need before allowing travel time to be factored in. 5

6. Technical Regulatory Changes (contd) Termination and Reduction of Services (amends current regulations) o Allows for denial or termination upon (1) submission of false or misleading information and/or documentation or (2) outstanding child care debt owed to the Commonwealth. o Allows for reduction if a change in the total household income results in an increase the parent(s) co-payment fee. Review Process (codifies existing practice) o Clarifies scope of review to reflect recoupment process. o Allows for termination of continued subsidized child care when it is determined that there is no genuine issue of material fact as presented by the parent in the Request for Review. o Allows for dismissal of a request for informal hearing when parent (1) fails to prosecute his/her claim and (2) has already agreed in writing to repay the debt at issue. 6

7. Substantive Regulatory Changes Identity, Residency & Citizenship Status o Requires verification of applicants identity and residency, as well as the citizenship/ immigration status of each child seeking assistance. Child Support Enforcement Requirement o Requires single parent applicants to submit evidence of child support and/or cooperation with the Commonwealths Child Support Enforcement agency, as a condition of eligibility. Child Attendance/Reimbursement Requirements o Requires children to regularly attend early education and care programs subsidized by the Commonwealth or risk termination and/or non-reimbursement. Limitations on Self-Employment 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) o New definition of protective services to include parents and children with documented disability and/or special need; limits authorization period. o Eliminates child with special need as a single service need. 7

8. 8 Identity, Residency & Citizenship Status – Proposal (codifies existing practice) EEC seeks to formally codify the Citizenship and Immigration Status policy issued in April 2010, in order to: o Address the deficiency in EECs regulations and policies identified by ACF in the 2008-2009 Federal Improper Authorization for Payment review Massachusetts, along with all other Year 2 States, were given a one time exemption to implement this requirement o Achieve consistency between regulations and policies and ensure efficient and uniform outcomes for families. Requires verification of applicants identity and residency, as well as the citizenship or immigration status of each child seeking child care financial assistance.

9. 9 Child Support Enforcement Requirement – Proposal (new) Addresses concerns about the accuracy of household size reported by families and supports the mission of the MA Child Support Enforcement Agency (CSE). At least 20 States currently impose a CSE requirement Benefits of instituting a Child Support Enforcement policy: o Keep families out of poverty and provide adequate food, shelter and clothing o Add to the overall stability, security and well-being of families and children o Intended to lessen the existing burdens of second parent in the household documentation Key issues to consider during implementation: o Avoid duplication o Identify exceptions (i.e. domestic violence or child protection) o Identify required documentation o Monitor and evaluate effectiveness Requires single parent applicants to submit evidence of child support and/or cooperation with the Commonwealths Child Support Enforcement agency, as a condition of eligibility.

10. 10 Child Attendance Requirement – Proposal (amends current requirements) Review of annual billing and current EEC regulations related to absences identified potential abuse/waste (EECs annual billing for FY08-10 shows): o Over each of past 3 years, providers have billed EEC for over $37M related to absent days o Absence rates for some children approach 50% o Providers acknowledge billing for regularly scheduled absences, such as families that only need 4 days/week Research shows that chronic absenteeism in the early years, such as kindergarten, predicted continuing absences in later grades. EEC reviewed other states and ESEs requirement to identify best practice: o Ohio – limits absences to 10 in 6 months o Maryland – limits absences to 60 in 12 months o Delaware – limits absences to 5 per month o MA- allows 10 absences per month Requires children to regularly attend early education and care programs subsidized by the Commonwealth or risk termination by limiting absences to 30 per 6 months* * Reflects an average of 5 absences/month enforced over a 6 month period.

11. 11 Self-Employment – Proposal (amends current requirements) To improve program integrity and efficiency, EEC proposes to limit the types of work-related activities that satisfy the service need requirement: No home-based self-employment, unless the work performed: creates a clear and present danger to children requires regular face-to-face meetings or appointments with clients, which prevents direct supervision of children Propose a launch/grace period for new self-employment business – 3 month start up Implement new mechanism for confirming minimum service need Current practice – service need hours are self-declared Proposed practice – divide gross income by MA minimum wage rate to determine service need hours

12. 12 Federal regulations establish two foundational requirements for all children seeking CCDF-funded child care services: 1. Children must reside with a family whose income does not exceed 85% of SMI; and 2. Reside with parent(s) who are working, or participating in job training or an education program, or are receiving or need to receive protective services. In 2009-2010, ACF identified two instances where EEC policies and regulations did not align with these requirements: 1. Children with Special Needs – 1) allowing children to remain in care up to 100% SMI; 2) allowing a categorical waiver of the work, education and training requirement, and 3) not clearly defining such families in need of protective services. 2. Parents with Special Needs – 1) allowing children to remain in care up to 100% of SMI, and 2) not clearly defining such families in need of protective services. Special Needs: Federal Regulatory Compliance – General Issues

13. 13 CCDF regulations provide some flexibility to States for purposes of defining and implementing laws and policies related to protective services and allows for some exemptions from eligibility requirements: 1. Children residing in a family that is receiving or needs to receive protective intervention services may be eligible for CCDF-funded child care, if they remain in the home, even if the parent(s) is not working or in an education or training program. See 45 CFR 98.20(a)(3)(ii). 2. States have the discretion to waive the 85% SMI limitation if a child is residing in a family that is receiving or needs to receive protective intervention services if determined necessary on a case by case basis. See 45 CFR 98.20(a)(3)(ii)(A). Massachusetts proposes to define protective services as: Families, who have active protective needs documented in a supported report of abuse or neglect within the previous 12 months or when there is a determination of need to begin or continue supportive child care at a Department of Children and Families Progress Supervisory Review, will be deemed to be in need of protective services. Additionally, children may be deemed at risk of needing protective services in special circumstances, wherein families are unable to provide child care for any portion of a 24 hour day due to a situation of domestic violence or homelessness, a physical, mental, emotional or medical condition, or participation in a drug treatment or drug rehabilitation program. Special Needs: Federal Regulatory Compliance – General Issues (contd)

14. 14 Issues: In practice, special need of parent definition misaligned with federal in need of protective services intention. Examples identified through central office review: headaches, backaches, carpal tunnel syndrome. Data shows inordinate number of special need of parent service need approvals in contract slots. Special need of parent service need currently approved for indefinite time period irrespective of the stated need. Federal laws prohibit use of CCDF funding for respite care. Research/Best Practices: What do other states do? Most states limit eligibility for special need or disabled parents to 2-parent households Some states limit eligibility for a short duration (e.g., no more than 6 months for medical illnesses, etc.) Some states impose restrictions based on the age of the children in the household (i.e., not a valid service need unless the child is under 8) and limit eligibility for a shorter duration (i.e., no more than 6 months for medical illnesses, etc.) At least one state limits eligibility to continuity of care for a limited time (i.e., previously employed, upon reassessment disabled – allowable service need not to exceed 30 days) Special Needs Parents – Unique Issues/Best Practices

15. 15 Special Needs – Length of Authorization Consistency Subsidy TypeInitial DurationI/E Continuity TANF/DTAUp to 12 months, in accordance with DTA authorization Upon closure of DTA case, must comply with I/E regulations and policies for continuity Supportive/DCFUp to 6 monthsOne 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 EligibleUp to 12 monthsmust comply with I/E regulations and policies for continuity

16. 16 Special Needs Parents – Proposal (amends current requirements) EEC will seek to amend current policies related to Child Care Financial Assistance eligibility requirements for families with special needs parents to: Only allow for new access through vouchers Heighten the bar on what is deemed at risk of needing protective service Only allow these to be short term vouchers -- 12 months, renewable once –- with the intended purpose of helping to serve as a bridge while parents seek other resources to address the protective service issue and/or become employable; further extensions may be allowed with EEC authorization upon a showing of extraordinary circumstances.

17. 17 Special Needs Children – Proposal (amends current requirements) Issues: Exemption was originally based on assumption that special needs children are educationally at risk Misaligned with federal exemption definition of in need of protective services Research based risk factors show that ALL low-income children are educationally at risk Streamlining and coordinating resources: Other agencies are charged with providing services to special needs children -- ESE (IEP) or DPH (IFSP) EEC should support ESE and/or DPH with wrap-around services for otherwise eligible children Current MA practice: Parents are not required to engage in work, education and/or training activities Families may enter care at 85% SMI and exit at 100% (no change) Children are eligible for full-time care regardless of need (no change) Proposal: Align EEC regulations with Federal regulations and require parents of children with special needs to participate in work, education or training.

18. Proposed Policy Statement EEC proposes that the Board adopt the following policy statement to address this tension and reaffirm its statutory mandate: The Board of Early Education and Care acknowledges that the federal funding supporting the Commonwealths child care financial assistance program is subject to several conditions. These conditions impose certain limitations related to the evaluation of children and families seeking early education and care subsidies in Massachusetts, including, but not limited to, financial thresholds, work, education or training requirements and verification of residency, citizenship and immigration status. In light of the Department of Early Education and Cares mission to support all children in their development as lifelong learners and in acknowledgement of the limitations of the federal funding, the Board will continue to advocate for a system of early education and care assistance that is accessible for all children, irrespective of the federal funding limitations. The Board acknowledges that this effort is subject to the Commonwealth appropriating additional state-funding to support this endeavor. 18

19. Formal Public Comment Period 19 Formal public comment on the proposed amendments began on September 21 st and ended October 21, 2011: 6 Hearings were conducted across the State: 10/12: Boston (evening) 10/13: Taunton 10/14: Lawrence 10/17: Holyoke 10/18: Quincy, and 10/20: Worcester (evening) Approximately 150 attended; Over 50 individuals testified Additionally, EEC received 42 written comments

20. Post-Formal Public Comment Period 20 Post-closure of the formal public comment period, EEC has been analyzing and compiling the comments to present to the Committee on Policy & Research and the Board On November 2 nd, EEC staff held formal meetings with the Governors Council to Address Sexual Assault and Domestic Violence, as well as representatives from legal advocates, including Greater Boston Legal Services and the Massachusetts Law Reform Institute In addition, EEC has continued discussions on the proposed amendments with the Procedures Working Team and other Executive Agencies, including the Department of Revenues Child Support Enforcement Division.

21. Summary of Common Themes from Public Comment Received by EEC Strong Opposition to the following topics: Imposition of a Child Support Requirement on Single Parents Impact on families experiencing domestic violence Complexities and dangers of Family & Probate Court System Changes to Laws related to Special Needs Families Time limits imposed on special need/disabled parents Removal of the single service need for children with special needs/disabilities by requiring parents to work/educate/train Verification of Citizenship/Immigration Status Undocumented children are part of our communities and should not be denied access to early education programs Home-Based Self-Employment Restrictions Potential impact on Family Child Care programs Potential impact on school-aged children, especially during vacations and holidays Support or Understanding to the following topics: Child Absences provided that EEC Systems monitor/track absence data Inclusion of Homeless Child Care Program, but sought clarification on HomeBASE 21

22. Common Themes from Public Comment Received by EEC Child Support Requirement for Single Parent Families Providing child support services should not be conditioned on going to court – complex adversarial forum; large time commitment may impact employment Concern about EECs infrastructure to adequately identify and assess good cause exemptions (i.e., domestic violence) Voluntary/Informal Child Support, whether monetary or other support arrangements (i.e., absent parent provides evening care, if parent has evening work/school schedule) should be sufficient Court requirement imposes risk of physical or emotional harm on victims of domestic violence Family may be safely and effectively managing situation, which could be disturbed by court involvement Alternative Consideration: Explore the use of data matches or other options for purposes of verifying household composition, as opposed to child support. 22

23. Common Themes from Public Comment Special Needs – Parent: Limiting renewals/time limitations inappropriate particularly for those with chronic disabilities Criteria for approvals beyond express limitation not stated Elimination of Separate Special Needs – Child Service Need: Change will result in terminations of children w/ high needs Importance of early education regardless of parent status Children that experience high needs risk factors require early education to bridge achievement gap Note: No alternate considerations suggested. MA is one of three states that uses any CCDF funds to support families with special needs or disabilities. Funds insufficient to serve existing low income, working families. 23

24. Common Themes from Public Comment Citizenship or Immigration Status Requirement for Children: Short-sighted to deprive undocumented children – they live in our communities and attend our public schools No child should be denied without prior review by EEC – complexity noted Note: EEC required to demonstrate compliance with the federal citizenship and immigration requirement during the current improper authorizations for payment audit. ACF-OCC contacted the Department last week to verify requirement implemented. 24

25. Common Themes from Public Comment Self-Employment – Home-Based Restrictions: Hardship on families with school-aged children – ineligible for After-School or out of school time subsidies Involving school-aged children in FCC setting may be inappropriate for educators providing only I/T or Pre-K FCC programs or may put FCC Provider over licensed capacity (i.e., licensed for 6, but 2 SA children enter home during vacations and holidays) Dangerous or face-to-face limitation – hardship to parents engaged in legitimate home-based employment, such as writing/data processing Alternative consideration: Consider elimination of age restriction for children of home-based self-employed parents and/or exemption from the requirement for family child care providers. 25

26. Common Themes from Public Comment Allowable Absence Reductions from 10/month to 30/6 months: Amounts to a 50% reduction in billable absent days – too drastic Impossible to track/monitor unless on-line capabilities exist Impact on priority populations – DCF/Teens/Homeless – that may experience a higher incidence of absenteeism EEC should broaden the definition of excused absences AND not count excused absences against families… only unexcused absences should subject child to termination Impact of absence limitations and due process rights seeking assurances that will providers be paid if families are absent for 30+ days during appeals No Alternative Considerations: Commenters recognized the impact of billing for excessive absence - ~$40M/year – but requested assurances that monitoring tracking would be automated, as opposed to current manual system. 26

27. Common Themes from Public Comment Homeless Family Access: Families experiencing homelessness should have access to both contracts AND vouchers homeless contracts may not accessible to all families/regions Unclear if involvement in DHCDs HomeBASE program is included within the definition of homelessness Parent fees – unclear how/when fees can be waived; why authorize DHCD or DCF to make these case-by-case decisions? Express language related to continuity of care should be included and allowance of 3 month transition period Communication/Knowledge of available slots – inadequate implementation No Alternative Considerations: There was large support for the Departments efforts to expressly include Homeless Child Care within its regulations. Commenters expressly requested clarification related to HomeBASE. 27

28. Next Steps EEC to review recommendations and directions from the Policy & Research Committee of the Board EEC to review alternative considerations submitted by advocates, particularly related to the areas of child support, special needs and self-employment EEC to complete review of all regulations, as requested by the Governors Office, for purposes of ensuring small business friendly approaches 28

29. 29 Proposed Regulation Promulgation Timeline TasksDate Revisions to proposed regulation changes based upon Board and Committee input November – December, 2011 Board votes to approve regulations and promulgate Jan/Feb 2012 Technical Assistance TrainingFeb 2012 and ongoing New regulations are promulgated (take effect)March/April 2012 Roll out implementation/trainingsApril 2012 and ongoing 29