Early Education and Support Division
Subject: Compliance with Applicable State and Federal Rules Necessary to Improve Performance in Federal Reviews
Date: November 2008
Expires: When Rescinded
Authority: Federal Regulations (45 CFR Part 98, sections 98.70 and 98.71; California Code of Regulations, Title 5 (5 CCR) sections 18056 and 18070; Federal Register, Volume 63, Number 142, Page 39950; State Plan for Child Care and Development Fund Services, Section 3.1.3.
Attention: Executive Officers and Program Directors of all Child Care and Development Programs
The purpose of this Management Bulletin (MB) is to reiterate the importance of statewide compliance with specific existing state and federal rules as a method of reducing California’s improper payments rate. Specifically, this MB will address: (1) the importance of reporting data accurately on the Early Education and Support Division (EESD) CDD-801A form; and (2) the federal requirement that states receiving Child Care Development Funds (CCDF) ensure that in-home, license-exempt providers receive minimum wage.
This MB does not describe new regulatory requirements. Its purpose is to identify compliance requirements critical to improving California’s performance in future federal reviews. The MB also describes how these requirements will be incorporated into Categorical Program Monitoring/Contract Monitoring Review (CPM/CMR) reviews conducted by state staff. We are requesting prompt attention from the contractors regarding these issues because the first sample month for the next federal review and report is October 2009.
Background — Reporting
The Federal Improper Payments Information Act and implementing regulations require that each lead agency measure and report error rates triennially to the federal government. Each report must also contain a proposed plan and methodology for reducing the improper payments rate. California’s first report was completed in June 2008. The sample of files for the federal reviews is selected from the CDD-801A Monthly Population Report (MB 07-02). Therefore, it is important that data in the report be accurate.
The federal government requires all states receiving federal funds from the CCDF to report children and families receiving subsidized child care and development services. The Federal Administration for Children and Families (ACF) has mandated the 801A and 801B data collection procedures for this purpose. The data collected from these reports is used by state and federal legislators to develop public policy for child care and development services and to request increased funds to expand child care availability in unserved and underserved areas in California. The CDD-801A is also part of the Child Development Management Information System (CDMIS).
Federal regulations implementing the Improper Payments Information Act require each state to select a sample of files to review and measure the rate of improper payments. The sample is selected for each month of the federal fiscal year from the CDD-801A report for Alternative Payment (AP), CalWORKs, and General Child Care programs. Federal regulations provide limited authority to “replace” any case selected in the sample for review. Cases may be replaced only when the case was subject to a fraud investigation or conviction or was damaged in a natural disaster. All other cases selected in the federal sample must be reviewed.
During the last two years, EESD staff who monitor AP and CalWORKs programs have selected files for review based from the children reported on the CDD-801A. However, an examination of the files indicated that in many cases no services were provided during the report month. This experience was repeated during the recently completed federal review; i.e., a significant portion of the children’s files selected for the federal sample indicated they did not receive services in the sample month.
Background — Minimum Wage
Federal law (Fair Labor Standards Act) and regulations implementing the CCDF require that in-home, license-exempt providers are reimbursed for child care services in an amount at least equal to the minimum wage. California’s plan for implementation of the CCDF provides specific direction regarding how the state will ensure these requirements are met.
In addition, federal rules developed to implement the CCDF in 1997 specifically required that states reimbursing in-home, license-exempt providers ensure that those providers receive at least the minimum wage. The discussion of this requirement in the Federal Register authorizes states to place limitations on the use of in-home providers to ensure they receive minimum wage.
During the last two years, EESD staff who monitor AP and CalWORKs programs have also encountered instances in which contractors did not have and/or were not implementing policies to meet the federal minimum wage requirement. Rather than determine these cases to be in error, staff have worked with contractors to comply with federal rules. However, in the recently completed federal review, several cases were selected with in-home providers in which agencies had no policies or were not implementing policies to ensure that minimum wage requirements were met.
Regulatory Requirements — Reporting
5 CCR Section 18070 requires that contractors report as directed by CDE to meet federal reporting requirements. The CDE has directed contractors to accurately report those children and families receiving services on the CDD-801A report.
5 CCR Section 18056 authorizes CDE to “reduce, withhold, or cancel” apportionments when “the contractor has not submitted the reports required by” 5 CCR Section 18070.
Contractors are reminded that children should be reported on the CDD-801A report only when they have received services in the report month, and should not be reported when they do not receive services. This reporting standard is fundamentally different than reporting children based on “enrollment.” There are many situations, such as limited-term service leaves, when children may be enrolled, but do not receive services in the report month. Only those children receiving services should be reported on the CDD-801A report. In addition, not including a child on the CDD-801A report, based on lack of service does not indicate that the contractor has disenrolled the child or is intending to disenroll the child.
For some children enrolled in AP programs, contractors may not receive the attendance records in time to include the child on the monthly CDD-801A report. These children should not be included on the CDD-801A report for months in which no attendance records have been received. If the contractor subsequently receives attendance records for the child after the CDD-801A report is submitted, the contractor may amend the CDD-801A report for up to six months after its original submittal. Contractors should not report the child as receiving services in any month until the contractor has evidence that the child actually did receive services in the report month.
Regulatory Requirements — Minimum Wage
The California State Plan for CCDF Services, Section 3.1.3 states, “In-home care is limited by state regulations for license-exempt care and to situations where there is a sufficient number of children requiring payment for care to ensure that the federal wage laws are met as specified in the grant approval letter received in October 1997 from the Administration for Children and Families.” Because regional market rate ceilings for license-exempt providers vary by county, the EESD has allowed each contractor to set their own standards for the minimum number of children, by age, that are necessary to achieve a reimbursement amount equivalent to the minimum wage. Provided that the agency can explain the basis of its standard, the EESD’s inclination is to conclude that their standard complies with federal rules. The EESD also advises all agencies within a single county to use the same standard.
Implementation of Federal Rules — Reporting
At the present time, the EESD believes we must improve the reliability of the data in our CDD-801A data system. Therefore, the accuracy of CDD-801A data has been integrated into CPM/CMR process and has been included in the 2008-09 CPM/CMR instrument and On-going Program Self-Evaluation Tool (OPSET). Consultants will now select a sample of files for review from the CDD-801A data. If that sample contains children who were mistakenly reported and did not receive services in the report month, the consultant and agency staff shall determine whether the misreported cases were aberrations or a result of a deficiency in contractor policies or procedures. If an improvement in the contractor’s policies or procedures is indicated, the consultant will assist the contractor’s staff in constructing a corrective action plan. After implementing the corrective action plan, the contractor will be required to select a sample of cases, determine whether cases were reported accurately, and communicate the results to their assigned field consultant.
In addition, consultants will be informed of agencies that had invalid cases selected during the federal review. These agencies will be required to examine their procedures in concert with their field consultant and develop corrective action plans, when appropriate. All agencies that had invalid files selected during the federal review will be required to pull their own samples to test the accuracy of reporting.
The next sample cases for the federal review will be selected from the month of October 2009. Therefore, all agencies not identified based on the federal review or the CPM/CMR process are requested to pull their own sample of cases and examine them for accuracy. Information about selecting a random sample of CDD-801A cases can be obtained by contacting your assigned field consultant.
Implementation of Federal Rules — Minimum Wage
The CDE also believes that conforming local practice to federal standards for in-home, license-exempt providers could contribute to a reduction in California’s improper payment rate in the next federal review. To do this, we have included federal standards regarding minimum wage in the 2008-09 CPM/CMR instrument and OPSET, and will review Alternative Payment and CalWORKs contractors for compliance with this federal requirement beginning this year. In addition, contractors who had an error determined during the federal review based on minimum wage issues will be contacted by their consultants to ensure that appropriate policies and procedures are established and adhered to by the contractor. Please be advised that the federal requirement is not met by recording the parent’s or provider’s address as a post office box when both the parent and provider share the same residence.
Finally, because a sample of cases will be drawn from October 2009 for the next federal review, consultants may ask AP and CalWORKs contractors not identified in the federal review and not receiving a review this year to submit copies of their current policies regarding minimum wage to ensure that appropriate policies are in place.
Resources for Assistance
The CDE CDMIS Web page at https://www4.cde.ca.gov/cdmis/default.aspx contains detailed instructions, examples, answers to frequently asked questions and related information to assist contractors. Additionally, when using the system there are detailed help screens so that users can quickly identify how to complete the various reporting requirements. Periodically, CDMIS staff issues “CDMIS Updates” that provide important information about system improvements and features as well as clarification of how to report specific program-related issues. Agencies are encouraged to regularly check for new CDMIS Updates when they enter the system each month to upload data; an archive of all CDMIS updates is located on the CDE Child Development Contractor Information Web page at http://www.cde.ca.gov/sp/cd/ci/update.asp. The CDMIS staff is available to assist contractors via telephone and e-mail. Questions regarding the completion of the CDD-801A may be directed to CDMIS staff at 916-445-1907 or by e-mail at email@example.com.
The field consultant assigned to each agency is available by phone to clarify any questions or to make available copies of federal instructions or the CCDF State Plan. Some contractors may wish to discuss alternatives to establishing minimum numbers of children in care, by age, to comply with federal minimum wage requirements. While consultants are prepared to discuss alternatives with contractors; we do not believe it appropriate for consultants to provide legal advice in this matter. As the lead agency for receipt of CCDF funds, the CDE is to ensure that the requirements of the Fair Labor Standards Act are being met in CCDF State programs. Establishing minimum numbers of children in care is recognized in the Federal Register and has been approved in the CCDF State Plan as complying with federal minimum wage requirements. Alternatives should be discussed extensively with the contractor’s legal counsel prior to presenting them to EESD staff.
The amended eligibility and need regulations can be found on the CDE Laws, Regulations and Requirements Web page at http://www.cde.ca.gov/sp/cd/lr/. If you have any questions regarding this subject, please contact your assigned Child Development Field Services Consultant (http://www.cde.ca.gov/sp/cd/ci/assignments.asp) or contact the Early Education and Support Division at 916-322-6233.
This Management Bulletin is mandatory only to the extent that it cites a specific statutory and/or regulatory requirement. Any portion of this Management Bulletin that is not supported by a specific statutory and/or regulatory requirement is not prescriptive pursuant to California Education Code Section 33308.5.