License-Exempt Child Care Providers in the Child Care and Development Fund Program

WHY WE DID THIS STUDY

ACF administers the Child Care and Development Fund (CCDF), which provides financial assistance with child care for approximately 1.7 million children each month. States are required to have health and safety requirements and monitoring requirements in place for all providers receiving CCDF money. During data collection for the study Child Care and Development Fund: Monitoring of Licensed Child Care Providers (OEI-07-10-00230), we found that a number of States did not report having certain requirements for license-exempt providers. These States are not fully compliant with Federal regulations. Other States reported allowing providers to self-certify compliance with health and safety requirements, and reported limited monitoring, limited use of background checks, and provider nonreporting of serious injuries. We believe that these gaps in health and safety requirements and gaps in monitoring represent vulnerabilities that could potentially lead to harm for children in care, including care financed by the Federal government.

HOW WE DID THIS STUDY

For Federal fiscal years 2010 through 2011, we reviewed each State's health and safety requirements for license exempt providers. According to CCDF State plans, 30 States allow license-exempt center based providers to care for children receiving CCDF subsidies, and 33 States allow license exempt family home providers to care for such children.

WHAT WE FOUND

States exempt from regulation many CCDF subsidy-receiving providers that provide care for children. Not all States required license-exempt child care providers to meet Federal health and safety requirements. States with health and safety requirements for license-exempt providers commonly allowed providers to self-report compliance. States did not always monitor license exempt providers for compliance with health and safety requirements.

WHAT WE CONCLUDE

States may and do exempt many types of providers from licensing. These providers, however, are still required to adhere to Federal health and safety requirements in order to be eligible for CCDF payments. ACF needs to be reasonably assured that States have in place Federal health and safety requirements for license-exempt providers and that States ensure compliance with these requirements before they authorize CCDF vouchers.

On May 20, 2013, ACF issued a Notice of Proposed Rulemaking that included regulations to strengthen health and safety requirements for and oversight of CCDF providers. Although OIG acknowledges ACF's efforts to make its regulations more comprehensive, some States do not comply with the current Federal regulations for license exempt providers. Therefore, we are providing this early alert memorandum so that ACF can use this information to bring those States into compliance with existing Federal regulations.