Improving Child Care Access, Affordability, and Stability in the Child Care and Development Fund (CCDF)

<RULE> DEPARTMENT OF HEALTH AND HUMAN SERVICES <CFR>45 CFR Part 98</CFR> <RIN>RIN 0970-AD02</RIN> <SUBJECT>Improving Child Care Access, Affordability, and Stability in the Child Care and Development Fund (CCDF)</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Office of Child Care (OCC), Administration for Children and Families (ACF), Department of Health and Human Services (HHS). <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> This final rule makes regulatory changes to the Child Care and Development Fund (CCDF). These changes lower child care costs for families participating in CCDF, improve the program's child care provider payment rates and practices, and simplify enrollment in the child care subsidy program. The final rule also includes technical and other changes to improve clarity and program implementation. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> <E T="03">Effective:</E> April 30, 2024. <E T="03">Temporary Waivers:</E> States and Territories that are not in compliance with the provisions of this final rule on the effective date may request a temporary waiver for an extension of up to two years if needed to come into compliance. For Tribal Lead Agencies, ACF will determine compliance through review and approval of the FY 2026-2028 Tribal CCDF Plans that become effective October 1, 2025. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Megan Campbell, Office of Child Care, 202-690-6499 or <E T="03">megan.campbell@acf.hhs.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <FP SOURCE="FP-2">I. Statutory Authority</FP> <FP SOURCE="FP-2">II. Background</FP> <FP SOURCE="FP-2">III. Executive Summary</FP> <FP SOURCE="FP1-2"> <E T="03">Effective Dates</E> </FP> <FP SOURCE="FP1-2"> <E T="03">Costs, benefits, and transfer impacts</E> </FP> <FP SOURCE="FP1-2"> <E T="03">Severability</E> </FP> <FP SOURCE="FP-2">IV. Development of Regulation</FP> <FP SOURCE="FP-2">V. General Comments and Cross-Cutting Issues</FP> <FP SOURCE="FP-2">VI. Section-by-Section Discussion of Comments and Regulatory Provisions</FP> <FP SOURCE="FP1-2"> <E T="03">Subpart A—Goals, Purposes, and Definitions</E> </FP> <FP SOURCE="FP1-2"> <E T="03">Subpart B—General Application Procedures</E> </FP> <FP SOURCE="FP1-2"> <E T="03">Subpart C—Eligibility for Services</E> </FP> <FP SOURCE="FP1-2"> <E T="03">Subpart D—Program Operations (Child Care Services) Parental Rights and Responsibilities</E> </FP> <FP SOURCE="FP1-2"> <E T="03">Subpart E—Program Operations (Child Care Services) Lead Agency and Provider Requirements</E> </FP> <FP SOURCE="FP1-2"> <E T="03">Subpart F—Use of Child Care and Development Funds</E> </FP> <FP SOURCE="FP1-2"> <E T="03">Subpart G—Financial Management</E> </FP> <FP SOURCE="FP1-2"> <E T="03">Subpart H—Program Reporting Requirements</E> </FP> <FP SOURCE="FP1-2"> <E T="03">Subpart I—Indian Tribes</E> </FP> <FP SOURCE="FP1-2"> <E T="03">Subpart K—Error Rate Reporting</E> </FP> <FP SOURCE="FP-2">VII. Regulatory Process Matters</FP> <FP SOURCE="FP1-2"> <E T="03">Paperwork Reduction Act</E> </FP> <FP SOURCE="FP1-2"> <E T="03">Regulatory Flexibility Act</E> </FP> <FP SOURCE="FP1-2"> <E T="03">Unfunded Mandates Reform Act of 1995</E> </FP> <FP SOURCE="FP1-2"> <E T="03">Executive Order 13132</E> </FP> <FP SOURCE="FP1-2"> <E T="03">Assessment of Federal Regulations and Policies on Families</E> </FP> <FP SOURCE="FP-2">VIII. Regulatory Impact Analysis</FP> <FP SOURCE="FP1-2">List of Subjects in 45 CFR Part 98</FP> <HD SOURCE="HD1">I. Statutory Authority</HD> 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. 9857, <E T="03">et seq.</E> ), and section 418 of the Social Security Act (42 U.S.C. 618). <HD SOURCE="HD1">II. Background</HD> The Child Care and Development Block Grant Act (CCDBG), hereafter referred to as the “Act” (42 U.S.C. 9857 <E T="03">et seq.</E> ), together with section 418 of the Social Security Act (42 U.S.C. 618), authorize the Child Care and Development Fund (CCDF), which is the primary federal funding source devoted to supporting families with low incomes afford child care and to increasing the quality of child care for all children. CCDF plays a vital role in supporting child development and family well-being, facilitating parents' employment, training, and education, and improving the economic well-being of participating families. Families with children under age 5 and incomes below the federal poverty line who pay for child care spend 36 percent of their income on child care on average, which leaves insufficient funding for food, housing, and other basic costs. <SU>1</SU> <FTREF/> Households with incomes just above the federal poverty level spend more than 20 percent of their income on child care, on average. <SU>2</SU> <FTREF/> Even school-age care can amount to 8 to 11.5 percent of family income. <SU>3</SU> <FTREF/> Without help paying for child care, the cost can drive parents to exit the workforce or seek out less expensive care, which may be unlicensed or unregulated, have less rigorous quality or safety standards, and be less reliable. <SU>4</SU> <FTREF/> In fiscal year (FY) 2021, the most current available data, CCDF helped nearly 800,000 families and more than 1.3 million children under age 13 with financial assistance for child care each month. <SU>5</SU> <FTREF/> CCDF also promotes the quality of child care for all children, requiring CCDF Lead Agencies to spend at least 12 percent of their CCDF funding each year on activities to improve child care quality for all children in care. <FTNT> <SU>1</SU>  Madowitz, M. et al. (2016). Calculating the Hidden Cost of Interrupting a Career for Child Care. Washington, DC: Center for American Progress. <E T="03">https://www.americanprogress.org/article/calculating-the-hidden-cost-of-interrupting-a-career-for-child-care/.</E> </FTNT> <FTNT> <SU>2</SU>  National Survey of Early Care and Education Project Team (2022): E. Hardy, J.E. Park. 2019 NSECE Snapshot: Child Care Cost Burden in U.S. Households with Children Under Age 5. OPRE Report No. 2022-05, Washington DC: Office of Planning, Research and Evaluation (OPRE), Administration for Children and Families (ACF), U.S. Department of Health and Human Services (HHS). <E T="03">https://www.acf.hhs.gov/opre/report/2019-nsece-snapshot-child-care-cost-burden-us-households-children-under-age-5.</E> </FTNT> <FTNT> <SU>3</SU>  Landivar, L.C., Graf, N.L., & Rayo, G.A. (2023). Childcare prices in local areas: Initial findings from the national database of childcare prices. Women's Bureau Issue Brief. U.S. Department of Labor, Washington, DC. Issued January. </FTNT> <FTNT> <SU>4</SU>  Hill, Z., Bali, D., Gebhart, T., Schaefer, C., & Halle, T. (2021) Parents' reasons for searching for care and results of search: An analysis using the Access Framework. OPRE Report #2021-39. Washington, DC: Office of Planning, Research, and Evaluation, Administration for Children and Families, U.S. Department of Health and Human Services. <E T="03">https://www.acf.hhs.gov/opre/report/parents-reasons-searching-early-care-and-education-and-results-search-analysis-using.</E> </FTNT> <FTNT> <SU>5</SU>  Unpublished FY 2021 ACF administrative data. </FTNT> Access to affordable high-quality child care has numerous short- and long-term benefits for children, families, and society, supporting child and family well-being in a manner that fuels prosperity and strengths communities and the economy. Child care is a necessity for most families with young children and reliable access leads to better parental earnings and employment and supports parents' educational attainment. <SU>6</SU> <FTREF/> Specifically, maternal employment increases in response to more available and more affordable child care  <SU>7</SU> <FTREF/> and drops when child care becomes more expensive for families. <SU>8</SU> <FTREF/> Moreover, children with stably employed parents are far less likely to experience poverty than children whose parents have less consistent employment. <SU>9</SU> <FTREF/> The positive effects of high-quality child care are especially pronounced for families with low incomes and families experiencing adversity. <SU>10</SU> <FTREF/> High-quality child care environments can also be important for children's cognitive, behavioral, and socio-emotional development, helping chart a pathway to success in school and beyond. <SU>11</SU> <FTREF/> <FTNT> <SU>6</SU>  Gault, B. and Reichlin Cruse, L. (2017). Access to Child Care Can Improve Student Parent Graduation Rates. Washington, DC: Institute for Women's Policy Research. <E T="03">https://iwpr.org/iwpr-general/access-to-child-care-can-improve-student-parent-graduation-rates/.</E> </FTNT> <FTNT> <SU>7</SU>  Herbst, C. (2022). “Child Care in the United States: Markets, Policy, and Evidence.” Journal of Policy Analysis and Management. <E T="03">https://doi.org/10.1002/pam.22436.;</E> Herbst, C., and E. Tekin, 2011. “Do Child Care Subsidies Influence Single Mothers' Decision to Invest in Human Capital? ” Economics of Education Review 30, no. 5: 901-12. <E T="03">https://doi.org/10.1016/j.econedurev.2011.03.006.</E> </FTNT> <FTNT> <SU>8</SU>  Landivar, L.C., Graf, N.L., and Altamirano Rayo, G. (2023). Childcare Prices in Local Areas: Initial Findings from the National Database of Childcare Prices. Women's Bureau Issue Brief. U.S. Department of Labor. <E T="03">https://www.dol.gov/sites/dolgov/files/WB/NDCP/508_WB_IssueBrief-NDCP-20230213.pdf.</E> </FTNT> <FTNT> <SU>9</SU>  Thomson, D., Ryberg, R., Harper, K., Fuller, J., Paschall, K., Franklin, J., & Guzman, L. (2022). Lessons From a Historic De ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 395k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━