+-------------------+--------------------+-----------------------------+
| **ACF**           | **U.S. DEPARTMENT  |                             |
|                   | OF HEALTH AND      |                             |
|                   | HUMAN SERVICES**   |                             |
|                   |                    |                             |
|                   | **Administration   |                             |
|                   | on Children, Youth |                             |
|                   | and Families**     |                             |
+-------------------+--------------------+-----------------------------+
| *                 | **1. Log No.**     | **2. Issuance Date: April   |
| *Administration** |                    | 8, 2005**                   |
|                   | **                 |                             |
|                   | ACYF-PI-CC-05-02** |                             |
+-------------------+--------------------+-----------------------------+
| **for Children**  | **3. Originating   |                             |
|                   | Office: Child Care |                             |
|                   | Bureau**           |                             |
+-------------------+--------------------+-----------------------------+
| **and Families**  | **4. Key Words:    |                             |
|                   | Child Care and     |                             |
|                   | Development Fund** |                             |
+-------------------+--------------------+-----------------------------+
|                   | **Regulations      |                             |
|                   | Regarding Use of   |                             |
|                   | CCDF Funds for     |                             |
|                   | Research and       |                             |
|                   | Evaluation**       |                             |
+-------------------+--------------------+-----------------------------+

+-------------+--------------------------------------------------------+
| #           | State, Territorial and Tribal Lead Agencies            |
|             | administering child care programs under the Child Care |
| # **TO:**   | and Development Block Grant Act of 1990 (the CCDBG     |
|             | Act), as amended, and other interested parties.        |
+-------------+--------------------------------------------------------+
| #           | To provide guidance on the use of Child Care and       |
|             | Development Fund (CCDF) funds for the purposes of      |
| # *         | research and evaluation.                               |
| *SUBJECT:** |                                                        |
+-------------+--------------------------------------------------------+
| #           | The CCDBG Act; section 418 of the Social Security Act; |
|             | 45 CFR Parts 98 and 99.                                |
| # **RE      |                                                        |
| FERENCES:** |                                                        |
+-------------+--------------------------------------------------------+
| *           | This Program Instruction (PI):                         |
| *PURPOSE:** |                                                        |
|             | -   Provides clarification about the use of CCDF funds |
|             |     for research and evaluation; and                   |
|             |                                                        |
|             | -   Encourages States, Territories and Tribes to       |
|             |     evaluate subsidy policies and quality initiatives  |
|             |     as a means to improve program performance, inform  |
|             |     policy decisions, and effectively target available |
|             |     child care funds.                                  |
+-------------+--------------------------------------------------------+
| # **EFFECT  | April 8, 2005                                          |
| IVE DATE:** |                                                        |
+-------------+--------------------------------------------------------+
| #           | The CCDF allows States maximum flexibility in          |
|             | developing child care programs and policies that best  |
| # **BA      | suit the changing needs of children and families. At   |
| CKGROUND:** | the same time, States must use their child care        |
|             | dollars as effectively as possible and demonstrate     |
|             | that their investments are making a difference in      |
|             | outcomes for families and children. Research and       |
|             | evaluation can help States make policy and program     |
|             | decisions that support these goals.                    |
|             |                                                        |
|             | The Child Care Bureau (CCB) is committed to supporting |
|             | State access to policy-relevant research and           |
|             | evaluation. Since FY 2000, CCB has invested close to   |
|             | \$50 million in research and evaluation to create a    |
|             | research infrastructure that includes:                 |
|             |                                                        |
|             | -   Policy Research Partnerships which provide State   |
|             |     and cross-State information on child care needs,   |
|             |     utilization patterns and outcomes for low-income   |
|             |     families;                                          |
|             |                                                        |
|             | -   Field-Initiated Research Grants which support      |
|             |     researchers in investigating child care issues     |
|             |     that are consistent with the CCB's research        |
|             |     agenda;                                            |
|             |                                                        |
|             | -   Research Scholar Grants which increase the number  |
|             |     of graduate students conducting dissertation       |
|             |     research on child care issues;                     |
|             |                                                        |
|             | -   Data and Research Capacity Grants which provide    |
|             |     grants to States to develop their child care data  |
|             |     and research capacity either internally or through |
|             |     contract;                                          |
|             |                                                        |
|             | -   Evaluation studies, *the Evaluation of Child Care  |
|             |     Subsidy Strategies* and *the Evaluation of         |
|             |     Promising Models and Approaches to Child Care      |
|             |     Provider Training (QUINCE)*, each of which         |
|             |     addresses key issues of concern to researchers and |
|             |     policymakers;                                      |
|             |                                                        |
|             | -   The Child Care Policy and Research Consortium, a   |
|             |     national alliance of research projects sponsored   |
|             |     by the CCB; and,                                   |
|             |                                                        |
|             | -   The Child Care and Early Education *Research       |
|             |     Connections,* a web-based resource for researchers |
|             |     and policymakers.                                  |
|             |                                                        |
|             | These investments have yielded findings on subsidy     |
|             | utilization, parent choice of care, quality of care,   |
|             | and the child care workforce -- all relevant to State  |
|             | and national child care policy. In addition, CCB       |
|             | research activities underscore the importance of       |
|             | States and researchers working together to identify    |
|             | and conduct policy-relevant research that addresses    |
|             | important short- and long-term issues.                 |
|             |                                                        |
|             | The importance of these activities is discussed in a   |
|             | September 2002 GAO report that looks at evaluations of |
|             | State quality initiatives.[^1] This report notes that  |
|             | the descriptive information collected from             |
|             | State-sponsored studies can provide reliable           |
|             | information required to address program design issues  |
|             | including provider reimbursement rates, as well as to  |
|             | assess program implementation, such as examining the   |
|             | number of caregivers who have earned child development |
|             | credits, which can then be useful in planning more     |
|             | rigorous evaluations of program impacts.               |
|             |                                                        |
|             | Recognizing that CCB's funds are limited and that      |
|             | States often find their own research most responsive   |
|             | to the specific issues faced by the State, questions   |
|             | have arisen about the circumstances under which States |
|             | may use CCDF funds for research and evaluation.        |
|             |                                                        |
|             | This Program Instruction is intended to provide        |
|             | guidance on the use of CCDF funds to assess program    |
|             | performance and to support evidence-based research     |
|             | that can be used to guide the development of child     |
|             | care services and systems. Examples of ways States     |
|             | have used research to make decisions about subsidy     |
|             | policies and quality initiatives also are included.    |
+-------------+--------------------------------------------------------+
| # **        | The Child Care and Development Fund (CCDF) primarily   |
| GUIDANCE:** | helps States, Territories, and Tribes make child care  |
|             | services available to low-income working families. At  |
| **          | least four percent of CCDF dollars as well as          |
| EXAMPLES:** | specially-earmarked funds must be used to improve      |
|             | child care quality. While no more than five percent of |
| **FOR       | CCDF may be used for administrative purposes, certain  |
| ADDITIONAL  | costs incurred in providing services directly to       |
| INF         | families, including eligibility determination and      |
| ORMATION:** | re-determination are considered non-administrative     |
|             | costs. (These are referred to as "non-direct services" |
|             | for purposes of the ACF 696 Financial Report.)         |
|             | **Special Note About Tribes:** Specific provisions in  |
|             | this section related to quality expenditures and       |
|             | administrative costs vary for Tribes (See 45 CFR       |
|             | 98.83).                                                |
|             |                                                        |
|             | States, Territories and Tribes may use CCDF funds for  |
|             | research and evaluation purposes. Costs associated     |
|             | with research and evaluation may be considered         |
|             | administrative, non-direct (non-administrative), or    |
|             | quality expenditures depending on the nature of the    |
|             | study and, to some extent, grantee preference.         |
|             |                                                        |
|             | More specifically\--                                   |
|             |                                                        |
|             | *Use of CCDF Administrative Funds for Research and     |
|             | Evaluation*                                            |
|             |                                                        |
|             | As described in the CCDF regulations (45 CFR 98.52),   |
|             | administrative costs include expenses associated with  |
|             | CCDF administration and implementation. This includes  |
|             | activities such as plan development, public hearings,  |
|             | monitoring, resolution of audit and monitoring         |
|             | findings, coordinating the provision of CCDF services  |
|             | with other programs, and evaluation of program         |
|             | results. Administrative costs also include travel      |
|             | expenses to carry out the program, accounting and      |
|             | audit services, goods and services required for        |
|             | program administration, and indirect costs. Since      |
|             | evaluation of program results is defined as an         |
|             | administrative cost, studies dealing with issues such  |
|             | as how well the State CCDF program meets the needs of  |
|             | low-income families; economic development studies;     |
|             | cost-benefit analyses of financing options; and, the   |
|             | adequacy and accuracy of payments made to providers    |
|             | would be considered CCDF administrative activities. As |
|             | discussed below, an evaluation of a quality            |
|             | initiative, intended to enhance the effectiveness of a |
|             | State's efforts to improve child care quality, could   |
|             | be considered either an administrative or quality      |
|             | activity.                                              |
|             |                                                        |
|             | *Use of Non-Direct (Non-Administrative) Funds for      |
|             | Research and Evaluation*                               |
|             |                                                        |
|             | The Preamble to the July 24, 1998 CCDF Final Rule (63  |
|             | FR at 39962) lists the following activities that       |
|             | should not be considered administrative costs under    |
|             | CCDF: eligibility determination and redetermination;   |
|             | preparation and participation in judicial hearings;    |
|             | child care placement; recruitment, licensing,          |
|             | inspection, reviews and supervision of child care      |
|             | placements; rate setting; child care resource and      |
|             | referral (CCR&R) services; child care staff training;  |
|             | and the establishment and maintenance of computerized  |
|             | child care information systems. Research and           |
|             | evaluation costs associated with carrying-out these    |
|             | activities are considered non-direct expenditures not  |
|             | subject to the five percent administrative limit. For  |
|             | instance, CCDF regulations require States to           |
|             | demonstrate in their biennial CCDF State Plans how     |
|             | payment rates are adequate based on a local market     |
|             | rate survey conducted no earlier than two years prior  |
|             | to the effective data of their current Plan (45 CFR    |
|             | 98.43). Because rate setting is not considered an      |
|             | administrative cost, CCDF funds spent on a market rate |
|             | survey would not be subject to the administrative      |
|             | limit under CCDF.                                      |
|             |                                                        |
|             | *Use of Quality Funds for Research and Evaluation*     |
|             |                                                        |
|             | States are required to spend not less than four        |
|             | percent of their CCDF funds (not including             |
|             | maintenance-of-effort) on quality activities (45 CFR   |
|             | 98.51). Allowable activities to improve the quality of |
|             | child care include, but are not limited to:            |
|             |                                                        |
|             | -   Activities designed to provide comprehensive       |
|             |     consumer education;                                |
|             |                                                        |
|             | -   Activities that increase parental choice;          |
|             |                                                        |
|             | -   Activities to improve the quality and availability |
|             |     of child care, such as:                            |
|             |                                                        |
|             |     -   CCR&R programs;                                |
|             |                                                        |
|             |     -   Grants or loans to child care providers to     |
|             |         meet applicable health and safety              |
|             |         requirements;                                  |
|             |                                                        |
|             |     -   Monitoring of compliance with, and enforcement |
|             |         of, licensing and health and safety            |
|             |         requirements;                                  |
|             |                                                        |
|             |     -   Training and technical assistance related to   |
|             |         the provision of child care services;          |
|             |                                                        |
|             |     -   Improving the salaries and compensation of     |
|             |         staff who provide CCDF child care services.    |
|             |                                                        |
|             | In recent years, and under current FY 2005             |
|             | appropriations, States have been subject to three      |
|             | earmarks targeted as follows: child care resource and  |
|             | referral and school-age child care activities;         |
|             | improving the quality of infant-toddler care; and,     |
|             | additional quality expansion activities.               |
|             |                                                        |
|             | While a study designed to evaluate outcomes related to |
|             | a State CCDF quality initiative may be considered a    |
|             | CCDF administrative activity, it may alternatively be  |
|             | categorized as a quality activity if the findings are  |
|             | intended to help the State improve the effectiveness   |
|             | of its quality investments. This would be true whether |
|             | or not the evaluation is funded separately or as part  |
|             | of the implementation of the quality initiative.       |
|             |                                                        |
|             | The following are examples of research and evaluation  |
|             | activities that are allowable uses of CCDF dollars.    |
|             |                                                        |
|             | **Market Rate Surveys**                                |
|             |                                                        |
|             | The Act and regulations governing CCDF require Lead    |
|             | Agencies to provide assurances that payment rates for  |
|             | CCDF-funded direct service subsidies are sufficient to |
|             | provide equal access for eligible children to          |
|             | comparable child care services that are provided to    |
|             | children whose parents are not eligible to receive     |
|             | CCDF-funded subsidies (45 CFR 98.43). States must      |
|             | conduct at least biennial local market rate surveys    |
|             | and demonstrate how their payment rates are adequate   |
|             | based on the survey results.                           |
|             |                                                        |
|             | > Some States use CCDF funds to pay for their market   |
|             | > rates surveys including Connecticut, District of     |
|             | > Columbia, Illinois, Massachusetts, Minnesota,        |
|             | > Oregon, and Washington. Many of these States also    |
|             | > use their market rate survey to gather broader       |
|             | > information about the child care workforce in their  |
|             | > State.                                               |
|             |                                                        |
|             | **Research on Local Child Care Markets**               |
|             |                                                        |
|             | CCDF urges States to consider the capacity of local    |
|             | child care markets in meeting the child care needs of  |
|             | families (63 FR at 39950).                             |
|             |                                                        |
|             | > ***Oregon***                                         |
|             | >                                                      |
|             | > Using CCDF funds, Oregon pays for the purchase of    |
|             | > child care questions in the biennial Oregon          |
|             | > Population Survey. These questions relate to child   |
|             | > care supply and help the State better understand     |
|             | > changes in the child care market over time.          |
|             | > Inclusion of child care questions in the larger      |
|             | > survey has also allowed Oregon to describe the       |
|             | > supply of child care from families' perspectives     |
|             | > based on parent reports of their care arrangements.  |
|             | >                                                      |
|             | > ***Illinois, Minnesota , Mississippi, South          |
|             | > Carolina***                                          |
|             | >                                                      |
|             | > Using CCDF funds in combination with other           |
|             | > public/private funds, these States have conducted    |
|             | > household demand surveys to explore the child care   |
|             | > use patterns, cost, and parent satisfaction with     |
|             | > child care. These studies increase States'           |
|             | > understanding of the child care needs of families.   |
|             | > In addition, some States are creating public use     |
|             | > data files for ongoing analysis of household demand  |
|             | > surveys.                                             |
|             | >                                                      |
|             | > ***Illinois***                                       |
|             | >                                                      |
|             | > Illinois used CCDF quality funds to produce a 2003   |
|             | > State Child Care Needs Assessment report with supply |
|             | > and demand data specific to ages 0 -- 5 for every    |
|             | > county and urban area with populations over 30,000.  |
|             | >                                                      |
|             | > ***Wisconsin***                                      |
|             | >                                                      |
|             | > Wisconsin requires its CCR&R agencies to conduct     |
|             | > annual stakeholder surveys in their service delivery |
|             | > areas. These surveys provide data to evaluate child  |
|             | > care needs at a community level and are supported in |
|             | > part with CCDF funds.                                |
|             |                                                        |
|             | **Evaluation of Activities to Improve Quality**        |
|             |                                                        |
|             | Lead Agencies are encouraged to evaluate the success   |
|             | of their efforts to improve quality (63 FR at 39962).  |
|             | Examples include evaluation of compensation            |
|             | initiatives, evaluation of training programs and       |
|             | evaluation of grants programs.                         |
|             |                                                        |
|             | > ***Connecticut***                                    |
|             | >                                                      |
|             | > CCDF funds together with State funds were used in    |
|             | > Connecticut to evaluate the content and format of    |
|             | > infant and toddler training (offered through         |
|             | > Connecticut Charts-a-Course to provide information   |
|             | > useful to curriculum developers and program          |
|             | > planners).                                           |
|             | >                                                      |
|             | > ***Florida***                                        |
|             | >                                                      |
|             | > Using CCDF funds, Florida studied the effects of     |
|             | > their ratio and education requirements on children's |
|             | > cognitive and socio-emotional development. They      |
|             | > found that lower child to staff ratios significantly |
|             | > contributed to gains in children's cognitive and     |
|             | > language development.                                |
|             | >                                                      |
|             | > ***Illinois***                                       |
|             | >                                                      |
|             | > CCDF funds were used in Illinois to evaluate the     |
|             | > success of its Great START (Strategy to Attract and  |
|             | > Retain Teachers) program. Great START aims to        |
|             | > increase retention of child care providers and       |
|             | > increase provider education levels by paying         |
|             | > stipends to providers based on their level of        |
|             | > education every six months that they stay in their   |
|             | > same position. The evaluation assessed retention and |
|             | > education outcomes of participants in the program.   |
|             | > Participants in the program, especially those who    |
|             | > had not already earned a college degree, were more   |
|             | > likely to remain in their current positions and to   |
|             | > pursue additional education.                         |
|             | >                                                      |
|             | > ***Minnesota***                                      |
|             | >                                                      |
|             | > CCDF funds were used to conduct a process evaluation |
|             | > of Minnesota's grants program to support             |
|             | > organizations providing culturally responsive care,  |
|             | > and to support a variety of quality initiatives.     |
|             | >                                                      |
|             | > ***North Dakota***                                   |
|             | >                                                      |
|             | > Using a combination of CCDF funds (as they relate to |
|             | > the infant and toddler earmark), funds from the      |
|             | > Maternal and Child Health Bureau's Healthy Child     |
|             | > Care America, and private funds, North Dakota is     |
|             | > working with its CCR&R agencies to develop a network |
|             | > of consultants and trainers to support caregivers    |
|             | > who work with infants and toddlers. This initiative  |
|             | > uses the WestEd *Program for Infant/Toddler          |
|             | > Caregivers (PITC)* curriculum as well as a lending   |
|             | > library of books, resources, and equipment. The      |
|             | > State is currently conducting long-term planning and |
|             | > evaluation (using the *Infant/Toddler Environment    |
|             | > Rating Scale*).                                      |
|             | >                                                      |
|             | > ***Washington***                                     |
|             | >                                                      |
|             | > CCDF and Temporary Assistance for Needy Families     |
|             | > (TANF) reinvestment funds were used to assess the    |
|             | > effects of Washington's Child Care Career and Wage   |
|             | > Ladder Pilot Project, which aims to establish        |
|             | > specific job titles and related wages based on       |
|             | > teacher education and experience. The study examined |
|             | > the program's impact on the retention of             |
|             | > participants in relationship to a comparison group.  |
|             | > Results indicated strong inter-relationships among   |
|             | > the variables studied -- retention, education        |
|             | > pursuits, wages, and sense of professionalism.       |
|             | >                                                      |
|             | > ***North Carolina, Pennsylvania and Wisconsin***     |
|             | >                                                      |
|             | > Of the 17 states with T.E.A.C.H. (Teacher Education  |
|             | > and Compensation Helps) Early Childhood Projects,    |
|             | > three states have initiated evaluations of their     |
|             | > programs -- North Carolina, Pennsylvania, and        |
|             | > Wisconsin. The                                       |
|             | >                                                      |
|             | > Pennsylvania evaluation is ongoing. Results from     |
|             | > North Carolina, funded with CCDF quality funds,      |
|             | > indicated a drop in turnover rates among             |
|             | > participants in the program. Similarly, through its  |
|             | > Child Care Research Partnership, Wisconsin used CCDF |
|             | > quality funds to evaluate the success of its         |
|             | > T.E.A.C.H. program. Operating since 1999, an         |
|             | > evaluation in 2003 was conducted by the Partnership  |
|             | > that assessed the scholarships granted and the       |
|             | > credit hours or degrees earned. Findings indicated   |
|             | > that recipients completed a substantial number of    |
|             | > college courses, turnover rates were reduced, and    |
|             | > the wages of T.E.A.C.H. recipients rose.             |
|             |                                                        |
|             | **Evaluation of Program Results**                      |
|             |                                                        |
|             | > ***District of Columbia***                           |
|             | >                                                      |
|             | > Using CCDF administrative funds, the District of     |
|             | > Columbia conducted a study of its child care subsidy |
|             | > waiting list in 2003. Findings indicate that         |
|             | > families were on the waiting list an average of      |
|             | > three months; the majority of families were single   |
|             | > parents seeking full-time care for infants and       |
|             | > toddlers while they worked; and families used        |
|             | > multiple providers over the course of a typical week |
|             | > and across the duration of their time on the waiting |
|             | > list. Providers were also affected by the waiting    |
|             | > list as their enrollments and revenues decreased,    |
|             | > resulting in staff reductions and increased class    |
|             | > sizes.                                               |
|             | >                                                      |
|             | > ***Minnesota***                                      |
|             | >                                                      |
|             | > Since 1998, Minnesota has invested CCDF              |
|             | > administrative funds in research and evaluation. In  |
|             | > 2000, Minnesota conducted a process and outcome      |
|             | > evaluation of its CCR&R system 10 years after its    |
|             | > inception. This study is the only evaluation of      |
|             | > CCR&R systems to date. Findings indicate that the    |
|             | > vision to implement the CCR&R services in every      |
|             | > county maximized stakeholders' investment in the     |
|             | > system, and resulted in service delivery that is     |
|             | > highly tied to local needs and interests of          |
|             | > communities. Challenges indicated that while funding |
|             | > has remained relatively constant over the 10-year    |
|             | > period, the number of contractual demands and duties |
|             | > for CCR&R staff has risen.                           |
|             | >                                                      |
|             | > ***Wisconsin***                                      |
|             | >                                                      |
|             | > With CCDF administrative funds, ongoing evaluation   |
|             | > is conducted in Wisconsin using subsidy data from    |
|             | > ACF-800 and ACF-801 data reports. This evaluation    |
|             | > allows for trend analysis of child care use and age  |
|             | > of children in care.                                 |
|             |                                                        |
|             | For more information on conducting research and        |
|             | evaluation, please see:                                |
|             |                                                        |
|             | -   Porter, T., Mabon, S., Kearns, S., Robertson, A. & |
|             |     Kreader, J. L. (2003), *A Toolkit for Evaluation   |
|             |     Initiatives to Improve Child Care Quality,* New    |
|             |     York, NY: Institute for a Child Care Continuum.    |
|             |                                                        |
|             | http://www.bankstreet.edu/gems/ICCC/QualityStudy03.pdf |
|             |                                                        |
|             | -   Child Care and Early Education *Research           |
|             |     Connections*                                       |
|             |                                                        |
|             | > http://childcareresearch.org/discover/index.jsp      |
+-------------+--------------------------------------------------------+
| # **        | Questions should be directed to your ACF Regional      |
| QUESTIONS** | Office.                                                |
+-------------+--------------------------------------------------------+
|             | Joan Ohl                                               |
|             |                                                        |
|             | Commissioner                                           |
|             |                                                        |
|             | Administration on Children, Youth                      |
|             |                                                        |
|             | And Families                                           |
+-------------+--------------------------------------------------------+

[^1]: *States Have Undertaken a Variety of Quality Initiatives, but More
    Evaluations of Effectiveness Are Needed* (GAO-02-897). September
    2002. General Accounting Office.