45 CFR Parts 160 & 164 (CFR Annual Edition) Plan shall contain the fol- lowing: (a) Specification of the Lead Agency whose duties and responsibilities are delineated in § 98.10; (b) A description of processes the Lead Agency will use to monitor ad- ministrative and implementation re- sponsibilities undertaken by agencies other than the Lead Agency including descriptions of written agreements, monitoring and auditing procedures, and indicators or measures to assess performance pursuant to § 98.11(a)(3); (c) The assurances and certifications listed under § 98.15; (d)(1) A description of how the CCDF program will be administered and im- plemented, if the Lead Agency does not directly administer and implement the program; (2) Identification of the public or pri- vate entities designated to receive pri- vate donated funds and the purposes for which such funds will be expended, pursuant to § 98.55(f); (e) A description of the coordination and consultation processes involved in the development of the Plan and the provision of services, including a de- scription of public-private partnership activities that promote business in- volvement in meeting child care needs pursuant to § 98.14; (f) A description of the public hearing proces , including a de- scription of public-private partnership activities that promote business in- volvement in meeting child care needs pursuant to § 98.14; (f) A description of the public hearing process, pursuant to § 98.14(c); (g) Definitions of the following terms for purposes of determining eligibility, pursuant to §§ 98.20(a) and 98.46: (1) Special needs child; (2) Physical or mental incapacity (if applicable); (3) Attending (a job training or edu- cational program); (4) Job training and educational pro- gram; (5) Residing with; (6) Working; (7) Protective services (if applicable), including whether children in foster care are considered in protective serv- ices for purposes of child care eligi- bility; and whether respite care is pro- vided to custodial parents of children in protective services. (8) Very low income; and (9) In loco parentis; (h) A description and demonstration of eligibility determination and rede- termination processes to promote con- tinuity of care for children and sta- bility for families receiving CCDF serv- ices, including: (1) An eligibility redetermination pe- riod of no less than 12 months in ac- cordance with § 98.21(a); (2) A graduated phase-out for and sta- bility for families receiving CCDF serv- ices, including: (1) An eligibility redetermination pe- riod of no less than 12 months in ac- cordance with § 98.21(a); (2) A graduated phase-out for families whose income exceeds the Lead Agen- cy’s threshold to initially qualify for CCDF assistance, but does not exceed 85 percent of State median income, pursuant to § 98.21(b); (3) Processes that take into account irregular fluctuation in earnings, pur- suant to § 98.21(c); (4) Processes to incorporate addi- tional eligible children in the family size in accordance with § 98.21(d); (5) Procedures and policies for pre- sumptive eligibility in accordance with § 98.21(e), for tracking the number of presumptively eligible children; including procedures (6) Procedures and policies to ensure that parents are not required to unduly disrupt their education, training, or employment to complete initial eligi- bility determination or re-determina- tion, pursuant to § 98.21(f); (7) Processes for using eligibility for other programs to verify eligibility for CCDF in accordance with § 98.21(g); (8) Limiting any requirements to re- port changes in circumstances in ac- cordance with § 98.21(h); ( using eligibility for other programs to verify eligibility for CCDF in accordance with § 98.21(g); (8) Limiting any requirements to re- port changes in circumstances in ac- cordance with § 98.21(h); (9) Policies that take into account children’s development and learning 707 § 98.16 45 CFR Subtitle A (10–1–24 Edition) when authorizing child care services pursuant to § 98.21(i); and, (10) Other policies and practices such as timely eligibility determination and processing of applications; (i) For child care services pursuant to § 98.50: (1) A description of such services and activities; (2) Any limits established for the pro- vision of in-home care and the reasons to for § 98.30(e)(1)(iii); pursuant limits such (3) A list of political subdivisions in which such services and activities are offered, if such services and activities are not available throughout the entire service area; (4) A description of how the Lead Agency will meet the needs of certain families specified at § 98.50(e); (5) Any eligibility criteria, priority rules, and definitions established pur- suant to §§ 98.20 and 98.46; (j) A description of the activities to provide comprehensive consumer and provider education, 5) Any eligibility criteria, priority rules, and definitions established pur- suant to §§ 98.20 and 98.46; (j) A description of the activities to provide comprehensive consumer and provider education, including the post- ing of monitoring and inspection re- ports, pursuant to § 98.33, to increase parental choice, and to improve the quality of child care, pursuant to § 98.53; (k) A description of the sliding fee scale(s) (including any factors other than income and family size used in es- tablishing the fee scale(s)) that pro- vide(s) for cost-sharing by the families that receive child care services for which assistance is provided under the CCDF and how co-payments are afford- able for families, pursuant to § 98.45(l). This shall include a description of the criteria established by the Lead Agen- cy, if any, for waiving contributions for families; (l) A description of the health and safety requirements, applicable to all providers of child care services for which assistance is provided under the CCDF, in effect pursuant to § 98.41, and any exemptions to those requirements for relative providers made in accord- ance with § 98.42(c); (m) A description of child care stand- ards for ch under the CCDF, in effect pursuant to § 98.41, and any exemptions to those requirements for relative providers made in accord- ance with § 98.42(c); (m) A description of child care stand- ards for child care providers of services for which assistance is provided under the CCDF, in accordance with § 98.41(d), that includes group size limits, child- staff ratios, and required qualifications for caregivers, teachers, and directors; (n) A description of monitoring and other enforcement procedures in effect to ensure that child care providers comply with applicable health and safety requirements pursuant to § 98.42; (o) A description of criminal back- ground check requirements, policies, and procedures in accordance with § 98.43, including a description of the re- quirements, policies, and procedures in place to respond to other States’, Ter- ritories’, and Tribes’ requests for back- ground check results in order to ac- commodate the 45 day timeframe; (p) A description of training and pro- fessional development requirements for caregivers, teaching staff, and direc- tors of providers of services for which assistance is provided in accordance with § 98.44; (q) A description of the child fessional development requirements for caregivers, teaching staff, and direc- tors of providers of services for which assistance is provided in accordance with § 98.44; (q) A description of the child care certificate payment system(s), includ- ing the form or forms of the child care certificate, pursuant to § 98.30(c); (r) Payment rates and a summary of the facts, including a local market rate survey or alternative methodology re- lied upon to determine that the rates provided are sufficient to ensure equal access pursuant to § 98.45; (s) A detailed description of the State’s hotline for complaints, its proc- ess for substantiating and responding to complaints, whether or not the State uses monitoring as part of its process for responding to complaints for both CCDF and non-CCDF pro- viders, how the State maintains a record of substantiated parental com- plaints, and how it makes information regarding those complaints available to the public on request, pursuant to § 98.32; (t) A detailed description of the pro- cedures in effect for affording parents unlimited access to their children whenever their children are in the care of the provider, pursuant to § 98.31; (u) A detailed des iled description of the pro- cedures in effect for affording parents unlimited access to their children whenever their children are in the care of the provider, pursuant to § 98.31; (u) A detailed description of the li- censing requirements applicable to child care services provided, any ex- emption to licensing requirements that is applicable to child care providers of services for which assistance is pro- vided under the CCDF and a dem- onstration of why such exemption does 708 Dept. of Health and Human Services § 98.16 not endanger the health, safety, or de- velopment of children, and a descrip- tion of how such licensing require- ments are effectively enforced, pursu- ant to § 98.40; (v) Pursuant to § 98.33(f), the defini- tions or criteria used to implement the exception, provided in section 407(e)(2) of the Social Security Act (42 U.S.C. 607(e)(2)), to individual penalties in the TANF work requirement applicable to a single custodial parent caring for a child under age six; (w)(1) When any Matching funds under § 98.55(b) are claimed, a descrip- tion of the efforts to ensure that pre- Kindergarten programs meet the needs of working parents; (2) When State pre-Kindergarten ex- ) When any Matching funds under § 98.55(b) are claimed, a descrip- tion of the efforts to ensure that pre- Kindergarten programs meet the needs of working parents; (2) When State pre-Kindergarten ex- penditures are used to meet more than 10% of the amount required at § 98.55(c)(1), or for more than 10% of the funds available at § 98.55(b), or both, a description of how the State will co- ordinate its pre-Kindergarten and child care services to expand the availability of child care; (x) A description of the supply of child care available regardless of sub- sidy participation relative to the popu- lation of children requiring child care, including care for infants and toddlers, children with disabilities as defined by the Lead Agency, children who receive care during nontraditional hours, and children in underserved geographic areas, including the data sources used to identify shortages in the supply of child care providers; (y) A description of the Lead Agen- cy’s strategies and the actions it will take to address the supply shortages identified in paragraph (x) of this sec- tion and improve parent choice specifi- cally for families eligible to participate in CCDF, including: (1) Fo ions it will take to address the supply shortages identified in paragraph (x) of this sec- tion and improve parent choice specifi- cally for families eligible to participate in CCDF, including: (1) For families needing care during nontraditional hours, which may in- clude strategies such as higher pay- ment rates, engaging with home-based child care networks, partnering with employers that have employees work- ing nontraditional hours, and grants or contracts for direct services; (2) For families needing infant and toddler care, which must include grants or contracts for direct services pursuant to § 98.30(b) and described fur- ther in paragraph (z) of this section and may include additional strategies such as enhanced payment rates, train- ing and professional development op- portunities for the child care work- force, and engaging with staffed family child care networks and/or child care provider membership organizations; (3) For families needing care for chil- dren with disabilities, which must in- clude grants or contracts for direct services pursuant to § 98.30(b) and de- scribed further in paragraph (z) of this section and may include additional strategies such as enhanced pa , which must in- clude grants or contracts for direct services pursuant to § 98.30(b) and de- scribed further in paragraph (z) of this section and may include additional strategies such as enhanced payment rates, training and professional devel- opment opportunities for the child care workforce, and engaging with staffed family child care networks and/or child care provider membership organiza- tions; (4) For families in underserved geo- graphic areas, which must include grants or contracts for direct services pursuant to § 98.30(b) and described fur- ther in paragraph (z) of this section and may include additional strategies such as enhanced payment rates, train- ing and professional development op- portunities for the child care work- force, and engaging with staffed family child care networks and/or child care provider membership organizations; and, (5) A method of tracking progress to- ward goals to increase supply and sup- port equal access and parental choice; (z) A description of how the Lead Agency will use grants or contracts for direct services to achieve supply build- ing goals for children in underserved geographic areas, infants and toddlers, children with disabilities f how the Lead Agency will use grants or contracts for direct services to achieve supply build- ing goals for children in underserved geographic areas, infants and toddlers, children with disabilities as defined by the Lead Agency, and, at Lead Agency option, children who receive care dur- ing nontraditional hours. This must in- clude a description of the proportion of the shortages for these groups would be filled by contracted or grant funded slots. Lead Agencies must continue to provide CCDF families the option to choose a certificate for the purposes of acquiring care; (aa) A description of how the Lead Agency will improve the quality of child care services for children in un- derserved geographic areas, infants and toddlers, children with disabilities as 709 § 98.16 45 CFR Subtitle A (10–1–24 Edition) defined by the Lead Agency, and chil- dren who receive care during nontradi- tional hours; (bb) A description of how the Lead Agency prioritizes increasing access to high-quality child care and develop- ment services for children of families in areas that have significant con- centrations of poverty and unemploy- ment and that do not have sufficient numbers of such programs, purs ld care and develop- ment services for children of families in areas that have significant con- centrations of poverty and unemploy- ment and that do not have sufficient numbers of such programs, pursuant to § 98.46; (cc) A description of how the Lead Agency develops and implements strat- egies to strengthen the business prac- tices of child care providers to expand the supply, and improve the quality of, child care services; (dd) A demonstration of how the State, Territory or Tribe will address the needs of children, including the need for safe child care, before, during and after a state of emergency declared by the Governor or a major disaster or emergency (as defined by section 102 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5122) through a Statewide Dis- aster Plan (or Disaster Plan for a Tribe’s service area) that: (1) For a State, is developed in col- laboration with the State human serv- ices agency, the State emergency man- agement agency, the State licensing agency, the State health department or public health department, local and State child care resource and referral agencies, and the State Advisory Coun- cil on Early Childhood Edu the State licensing agency, the State health department or public health department, local and State child care resource and referral agencies, and the State Advisory Coun- cil on Early Childhood Education and Care (designated or established pursu- ant to section 642B(b)(I)(A)(i) of the Head U.S.C. Act 9837b(b)(1)(A)(i))) or similar coordi- nating body; and Start (42 (2) Includes the following compo- nents: (i) Guidelines for continuation of child care subsidies and child care serv- ices, which may include the provision of emergency and temporary child care services during a disaster, and tem- porary operating standards for child care after a disaster; (ii) Coordination of post-disaster re- covery of child care services; and (iii) Requirements that child care providers of services for which assist- ance is provided under the CCDF, as well as other child care providers as de- termined appropriate by the State, Territory or Tribe, have in place: shelter-in-place, (A) Procedures for evacuation, relo- cation, lock-down, communication and reunification with families, continuity of operations, ac- commodations of infants and toddlers, children with disabilities, and children with chroni uation, relo- cation, lock-down, communication and reunification with families, continuity of operations, ac- commodations of infants and toddlers, children with disabilities, and children with chronic medical conditions; and (B) Procedures for staff and volunteer emergency preparedness training and practice drills, including training re- quirements for child care providers of services for which assistance is pro- vided under CCDF at § 98.41(a)(1)(vii); (ee) A description of generally-ac- cepted payment practices applicable to providers of child care services for which assistance is provided under this part, pursuant to § 98.45(m), including practices to ensure timely payment for services, to delink provider payments from children’s occasional absences to the extent practicable, cover manda- tory fees, and pay based on a full or part-time basis; (ff) A description of internal controls to ensure integrity and accountability, processes in place to investigate and recover fraudulent payments and to impose sanctions on clients or pro- viders in response to fraud, and proce- dures in place to document and verify eligibility, pursuant to § 98.68; (gg) A description of how the Lead Agency nts and to impose sanctions on clients or pro- viders in response to fraud, and proce- dures in place to document and verify eligibility, pursuant to § 98.68; (gg) A description of how the Lead Agency will provide outreach and serv- ices to eligible families with limited English proficiency and persons with disabilities and facilitate participation of child care providers with limited English proficiency and disabilities in the subsidy system; (hh) A description of policies to pre- vent suspension, expulsion, and denial of services due to behavior of children birth to age five in child care and other early childhood programs receiving as- sistance under this part, which must be disseminated as part of consumer and provider education efforts in accord- ance with § 98.33(b)(1)(v); (ii) Designation of a State, terri- torial, or tribal entity to which child care providers must submit reports of any serious injuries or deaths of chil- dren occurring in child care, in accord- ance with § 98.42(b)(4); 710 Dept. of Health and Human Services § 98.19 (jj) A description of how the Lead Agency will support child care pro- viders in the successful engagement of families in children’s learning a 42(b)(4); 710 Dept. of Health and Human Services § 98.19 (jj) A description of how the Lead Agency will support child care pro- viders in the successful engagement of families in children’s learning and de- velopment; the CCDBG Act of (kk) A description of how the Lead Agency will respond to complaints sub- mitted through the national hotline and website, required in section 658L(b) of (42 U.S.C.9858j(b)), including the designee responsible for receiving and respond- ing to such complaints regarding both licensed and license-exempt child care providers; and 2014 (ll) Such other information as speci- fied by the Secretary. [81 FR 67576, Sept. 30, 2016, as amended at 89 FR 15412, Mar. 1, 2024; 89 FR 52396, June 24, 2024] § 98.17 Period covered by Plan. (a) For States, Territories, and In- dian Tribes the Plan shall cover a pe- riod of three years. (b) The Lead Agency shall submit a new Plan prior to the expiration of the time period specified in paragraph (a) of this section, at such time as re- quired by the Secretary in written in- structions. [63 FR 39981, July 24, 1998, as amended at 81 FR 67578, Sept. 30, 2016] § 98.18 Approval and disapproval of Plans and Plan amendments. (a) P e as re- quired by the Secretary in written in- structions. [63 FR 39981, July 24, 1998, as amended at 81 FR 67578, Sept. 30, 2016] § 98.18 Approval and disapproval of Plans and Plan amendments. (a) Plan approval. The Assistant Sec- retary will approve a Plan that satis- fies the requirements of the Act and this part. Plans will be approved not later than the 90th day following the date on which the Plan submittal is re- ceived, unless a written agreement to extend that period has been secured. (b) Plan amendments. (1) Approved Plans shall be amended whenever a substantial change in the program oc- curs. A Plan amendment shall be sub- mitted within 60 days of the effective date of the change. Plan amendments will be approved or denied not later than the 90th day following the date on which the amendment is received, un- less a written agreement to extend that period has been secured. (2) Lead Agencies must ensure ad- vanced written notice is provided to af- fected parties (i.e., parents and child care providers) of substantial changes in the program that adversely affect eligibility, payment rates, and/or slid- ing fee scales. (c) Appeal of disapproval of a Plan or Plan amendment. s and child care providers) of substantial changes in the program that adversely affect eligibility, payment rates, and/or slid- ing fee scales. (c) Appeal of disapproval of a Plan or Plan amendment. (1) An applicant or Lead Agency dissatisfied with a deter- mination of the Assistant Secretary pursuant to paragraphs (a) or (b) of this section with respect to any Plan or amendment may, within 60 days after the date of receipt of notification of such determination, file a petition with the Assistant Secretary asking for reconsideration of the issue of whether such Plan or amendment con- forms to the requirements for approval under the Act and pertinent Federal regulations. (2) Within 30 days after receipt of such petition, the Assistant Secretary shall notify the applicant or Lead Agency of the time and place at which the hearing for the purpose of reconsid- ering such issue will be held. (3) Such hearing shall be held not less than 30 days, nor more than 90 days, after the notification is furnished to the applicant or Lead Agency, unless the Assistant Secretary and the appli- cant or Lead Agency agree in writing on another time. (4) Action pursuant to an initial de- termination by t is furnished to the applicant or Lead Agency, unless the Assistant Secretary and the appli- cant or Lead Agency agree in writing on another time. (4) Action pursuant to an initial de- termination by the Assistant Secretary described in paragraphs (a) and (b) of this section that a Plan or amendment is not approvable shall not be stayed pending the reconsideration, but in the event that the Assistant Secretary sub- sequently determines that the original decision was incorrect, the Assistant Secretary shall certify restitution forthwith in a lump sum of any funds incorrectly withheld or otherwise de- nied. The hearing procedures are de- scribed in part 99 of this chapter. [63 FR 39981, July 24, 1998, as amended at 81 FR 67578, Sept. 30, 2016] § 98.19 Requests for temporary waiv- ers. (a) Requests for relief. The Secretary may temporarily waive one or more of the requirements contained in the Act or this part, with the exception of State Match and Maintenance of Effort requirements for a State, consistent with the conditions described in sec- tion 658I(c)(1) of the Act (42 U.S.C. 711 § 98.19 45 CFR Subtitle A (10–1–24 Edition) 9858g(c)(1)), provided that the waiver request: (1) Descri State, consistent with the conditions described in sec- tion 658I(c)(1) of the Act (42 U.S.C. 711 § 98.19 45 CFR Subtitle A (10–1–24 Edition) 9858g(c)(1)), provided that the waiver request: (1) Describes circumstances that pre- vent the State, Territory, or Tribe from complying with any statutory or regulatory requirements of this part; (2) By itself, contributes to or en- hances the State’s, Territory’s, or Tribe’s ability to carry out the pur- poses of the Act and this part; (3) Will not contribute to inconsist- ency with the purposes of the Act or this part, and; (4) Meets the requirements set forth in paragraphs (b) through (g) of this section. (b) Types. Types of waivers include: (1) Transitional and legislative waivers. Lead Agencies may apply for tem- porary waivers meeting the require- ments described in paragraph (a) of this section that would provide transi- tional relief from conflicting or dupli- cative requirements preventing imple- mentation, or an extended period of time in order for a State, territorial or tribal legislature to enact legislation to implement the provisions of this subchapter. Such waivers are: (i) Limited to a two-year period; (ii) May not be extend in order for a State, territorial or tribal legislature to enact legislation to implement the provisions of this subchapter. Such waivers are: (i) Limited to a two-year period; (ii) May not be extended, notwith- standing paragraph (f) of this section; (iii) Are designed to provide States, Territories and Tribes at most one full legislative session to enact legislation to implement the provisions of the Act or this part, and; (iv) Are conditional, dependent on progress towards implementation, and may be terminated by the Secretary at any time in accordance with paragraph (e) of this section. (2) Waivers for extraordinary cir- cumstances. States, Territories and Tribes may apply for waivers meeting the requirements described in para- graph (a) of this section, in cases of ex- traordinary circumstances, which are defined as temporary circumstances or situations, such as a natural disaster or financial crisis. Such waivers are: (i) Limited to an initial period of no more than 2 years from the date of ap- proval; (ii) May be extended, in accordance with paragraph (f) of this section, for at most one additional year from the date of approval of the extension, and; (iii) May be terminate the date of ap- proval; (ii) May be extended, in accordance with paragraph (f) of this section, for at most one additional year from the date of approval of the extension, and; (iii) May be terminated by the Sec- retary at any time in accordance with paragraph (e) of this section. (c) Contents. Waiver requests must be submitted to the Secretary in writing and: (1) Indicate which type of waiver, as detailed in paragraph (b) of this sec- tion, the State, Territory or Tribe is requesting; (2) Detail each sanction or provision of the Act or regulations that the State, Territory or Tribe seeks relief from; (3) Describe how a waiver from that sanction or provision will, by itself, improve delivery of child care services for children; and (4) Certify and describe how the health, safety, and well-being of chil- dren served through assistance re- ceived under this part will not be com- promised as a result of the waiver. (d) Notification. Within 90 days after receipt of the waiver request or, if ad- ditional follow up information has been requested, the receipt of such informa- tion, the Secretary will notify the Lead Agency of the approval or disapproval of the request. (e) Termination. T if ad- ditional follow up information has been requested, the receipt of such informa- tion, the Secretary will notify the Lead Agency of the approval or disapproval of the request. (e) Termination. The Secretary shall terminate approval of a request for a waiver authorized under the Act or this section if the Secretary determines, after notice and opportunity for a hear- ing based on the rules of procedure in part 99 of this chapter, that the per- formance of a State, Territory or Tribe granted relief under this section has been inadequate, or if such relief is no longer necessary to achieve its original purposes. (f) Renewal. Where permitted, the Secretary may approve or disapprove a request from a State, Territory or Tribe for renewal of an existing waiver under the Act or this section for a pe- riod no longer than one year. A State, Territory or Tribe seeking to renew their waiver approval must inform the Secretary of this intent no later than 30 days prior to the expiration date of the waiver. The State, Territory or Tribe shall re-certify in its extension request the provisions in paragraph (a) of this section, and shall also explain the need for additional time of relief fro f the waiver. The State, Territory or Tribe shall re-certify in its extension request the provisions in paragraph (a) of this section, and shall also explain the need for additional time of relief from such sanction(s) or provisions. 712 Dept. of Health and Human Services § 98.21 (g) Restrictions. The Secretary may not: (1) Permit Lead Agencies to alter the federal eligibility requirements for eli- gible children, including work require- ments, job training, or educational pro- gram participation, that apply to the parents of eligible children under this part; (2) Waive anything related to the Secretary’s authority under this part; or (3) Require or impose any new or ad- ditional requirements in exchange for receipt of a waiver if such require- ments are not specified in the Act. [81 FR 67578, Sept. 30, 2016, as amended at 89 FR 15413, Mar. 1, 2024] Subpart C—Eligibility for Services § 98.20 A child’s eligibility for child care services. (a) To be eligible for services under § 98.50, a child shall, at the time of eli- gibility determination or redetermina- tion: (1)(i) Be under 13 years of age; or, (ii) At the option of the Lead Agency, be under age 19 and physically or men- tally child shall, at the time of eli- gibility determination or redetermina- tion: (1)(i) Be under 13 years of age; or, (ii) At the option of the Lead Agency, be under age 19 and physically or men- tally incapable of caring for himself or herself, or under court supervision; (2)(i) Reside with a family whose in- come does not exceed 85 percent of the State’s median income (SMI), which must be based on the most recent SMI data that is published by the Bureau of the Census, for a family of the same size; and (ii) Whose family assets do not ex- ceed $1,000,000 (as certified by such family member); and (3)(i) Reside with a parent or parents who are working or attending a job training or educational program; or (ii) Receive, or need to receive, pro- tective services, which may include specific populations of vulnerable chil- dren as identified by the Lead Agency, and reside with a parent or parents other than the parent(s) described in paragraph (a)(3)(i) of this section. (A) At grantee option, the require- ments in paragraph (a)(2) of this sec- tion may be waived for families eligible for child care pursuant to this para- graph, if determined to be necessary on a case-by-case basis. (B) At the require- ments in paragraph (a)(2) of this sec- tion may be waived for families eligible for child care pursuant to this para- graph, if determined to be necessary on a case-by-case basis. (B) At grantee option, the waiver provisions in paragraph (a)(3)(ii)(A) of this section apply to children in foster care when defined in the Plan, pursu- ant to § 98.16(g)(7). (b) A grantee or other administering agency may establish eligibility condi- tions or priority rules in addition to those specified in this section and § 98.46, which shall be described in the Plan pursuant to § 98.16(i)(5), so long as they do not: (1) Discriminate against children on the basis of race, national origin, eth- nic background, sex, religious affili- ation, or disability; (2) Limit parental rights provided under subpart D of this part; (3) Violate the provisions of this sec- tion, § 98.46, or the Plan. In particular, such conditions or priority rules may not be based on a parent’s preference for a category of care or type of pro- vider. In addition, such additional con- ditions or rules may not be based on a parent’s choice of a child care certifi- cate; or (4) Impact eligibility other than at the time of care or type of pro- vider. In addition, such additional con- ditions or rules may not be based on a parent’s choice of a child care certifi- cate; or (4) Impact eligibility other than at the time of eligibility determination or redetermination. (c) For purposes of implementing the citizenship eligibility verification re- quirements mandated by title IV of the Personal Responsibility and Work Op- portunity Reconciliation Act, 8 U.S.C. 1601 et seq., only the citizenship and im- migration status of the child, who is the primary beneficiary of the CCDF benefit, is relevant. Therefore, a Lead Agency or other administering agency may not condition a child’s eligibility for services under § 98.50 based upon the citizenship or immigration status of their parent or the provision of any in- formation about the citizenship or im- migration status of their parent. [63 FR 39981, July 24, 1998, as amended at 81 FR 67579, Sept. 30, 2016] § 98.21 Eligibility determination proc- esses. (a) A Lead Agency shall re-determine a child’s eligibility for child care serv- ices no sooner than 12 months fol- lowing the initial determination or most recent redetermination, subject to the following: (1) Durin cy shall re-determine a child’s eligibility for child care serv- ices no sooner than 12 months fol- lowing the initial determination or most recent redetermination, subject to the following: (1) During the period of time between determinations or redeterminations, if 713 § 98.21 45 CFR Subtitle A (10–1–24 Edition) the child met all of the requirements in § 98.20(a) on the date of the most recent eligibility determination or redeter- mination, the child shall be considered eligible and will receive services at least at the same level, regardless of: (i) A change in family income, if that family income does not exceed 85 per- cent of SMI for a family of the same size; or (ii) A temporary change in the ongo- ing status of the child’s parent as working or attending a job training or educational program. A temporary change shall include, at a minimum: (A) Any time-limited absence from work for an employed parent due to reasons such as need to care for a fam- ily member or an illness;; (B) Any interruption in work for a seasonal worker who is not working be- tween regular industry work seasons; (C) Any student holiday or break for a parent participating in training or education; (D) Any ny interruption in work for a seasonal worker who is not working be- tween regular industry work seasons; (C) Any student holiday or break for a parent participating in training or education; (D) Any reduction in work, training or education hours, as long as the par- ent is still working or attending train- ing or education; (E) Any other cessation of work or attendance at a training or education program that does not exceed three months or a longer period of time es- tablished by the Lead Agency; (F) Any change in age, including turning 13 years old during the eligi- bility period; and (G) Any change in residency within the State, Territory, or Tribal service area. (2)(i) Lead Agencies have the option, but are not required, to discontinue as- sistance due to a parent’s loss of work or cessation of attendance at a job training or educational program that does not constitute a temporary change in accordance with paragraph (a)(1)(ii) of this section. However, if the Lead Agency exercises this option, it must continue assistance at least at the same level for a period of not less than three months after each such loss or cessation in order for the parent to engage in job search and re this option, it must continue assistance at least at the same level for a period of not less than three months after each such loss or cessation in order for the parent to engage in job search and resume work, or resume attendance at a job training or educational activity. (ii) At the end of the minimum three- month period of continued assistance, if the parent is engaged in a qualifying work, education, or training activity with income below 85% of SMI, assist- ance cannot be terminated and the child must continue receiving assist- ance until the next scheduled re-deter- mination, or at Lead Agency option, for an additional minimum 12—month eligibility period. (iii) If a Lead Agency chooses to ini- tially qualify a family for CCDF assist- ance based on a parent’s status of seek- ing employment or engaging in job search, the Lead Agency has the option to end assistance after a minimum of three months if the parent has still not found employment, although assist- ance must continue if the parent be- comes employed during the job search period. (3) Lead Agencies cannot increase family co-payment amounts, estab- lished in accordance with § 98.45(k), within the minimum 12-month eligi- the parent be- comes employed during the job search period. (3) Lead Agencies cannot increase family co-payment amounts, estab- lished in accordance with § 98.45(k), within the minimum 12-month eligi- bility period except as described in paragraph (b)(3) of this section. (4) Because a child meeting eligi- bility requirements at the most recent eligibility determination or redeter- mination is considered eligible between redeterminations as described in para- graph (a)(1) of this section, any pay- ment for such a child shall not be con- sidered an error or improper payment under subpart K of this part due to a change in the family’s circumstances. (5) Notwithstanding paragraph (a)(1), the Lead Agency may discontinue as- sistance prior to the next re-deter- mination limited circumstances where there have been: in (i) Excessive unexplained absences despite multiple attempts by the Lead Agency or designated entity to contact the family and provider, including prior notification of possible dis- continuation of assistance; (A) If the Lead Agency chooses this option, it shall define the number of unexplained absences that shall be con- sidered excessive; (B) [Reserved] (ii) A change in r dis- continuation of assistance; (A) If the Lead Agency chooses this option, it shall define the number of unexplained absences that shall be con- sidered excessive; (B) [Reserved] (ii) A change in residency outside of the State, Territory, or Tribal service area; or (iii) Substantiated fraud or inten- tional program violations that invali- date prior determinations of eligi- bility. 714 Dept. of Health and Human Services § 98.21 (b)(1) Lead Agencies that establish family income eligibility at a level less than 85 percent of SMI for a family of the same size (in order for a child to initially qualify for assistance) must provide a graduated phase-out by im- eligibility two-tiered plementing thresholds, with the second tier of eli- gibility (used at the time of eligibility re-determination) set at: (i) 85 percent of SMI for a family of the same size; or (ii) An amount lower than 85 percent of SMI for a family of the same size, but above the Lead Agency’s initial eli- gibility threshold, that: (A) Takes into account the typical household budget of a low income fam- ily; and (B) Provides justification that the second eligibility threshold is: (1) Sufficient to accommodate in- creases , that: (A) Takes into account the typical household budget of a low income fam- ily; and (B) Provides justification that the second eligibility threshold is: (1) Sufficient to accommodate in- creases in family income over time that are typical for low-income work- ers and that promote and support fam- ily economic stability; and (2) Reasonably allows a family to continue accessing child care services without unnecessary disruption. (2) At re-determination, a child shall be considered eligible (pursuant to paragraph (a) of this section) if their parents, at the time of redetermina- tion, are working or attending a job training or educational program even if their income exceeds the Lead Agen- cy’s income limit to initially quality for assistance, as long as their income does not exceed the second tier of the eligibility described in (b)(1); (3) A family meeting the conditions described in paragraph (b)(2) of this section shall be eligible for services pursuant to the conditions described in § 98.20 and all other paragraphs of this section, with the exception of the co- payment restrictions at paragraph (a)(3) of this section. To help families transition off of child care assistance ed in § 98.20 and all other paragraphs of this section, with the exception of the co- payment restrictions at paragraph (a)(3) of this section. To help families transition off of child care assistance, Lead Agencies may gradually adjust co-pay amounts for families whose children are determined eligible under the graduated phase-out conditions de- scribed in paragraph (b)(2) and may re- quire additional reporting on changes in family income as described in para- graph (h)(3) of this section, provided such requirements do not constitute an undue burden, pursuant to conditions described in paragraphs (h)(2)(ii) and (iii) of this section. (c) The Lead Agency shall establish processes for initial determination and redetermination of eligibility that take into account irregular fluctuation in earnings, including policies that en- sure temporary increases in income, in- cluding temporary increases that re- sult in monthly income exceeding 85 percent of SMI (calculated on a month- ly basis), do not affect eligibility or family co-payments. (d) The Lead Agency shall establish policies and processes to incorporate additional eligible children in the fam- ily size (e.g., siblings or foster si o not affect eligibility or family co-payments. (d) The Lead Agency shall establish policies and processes to incorporate additional eligible children in the fam- ily size (e.g., siblings or foster siblings), including ensuring a minimum of 12 months of eligibility between eligi- bility determination and redetermina- tion as described in paragraph (a) of this section for children previously de- termined eligible and for new children who are determined eligible, without placing undue reporting burden on fam- ilies. (e) At a Lead Agency’s option, a child may be considered presumptively eligi- ble for up to three months and begin to receive child care subsidy prior to full documentation and eligibility deter- mination: (1) The Lead Agency may issue pre- sumptive eligibility prior to full docu- mentation of a child’s eligibility if the Lead Agency first obtains a less bur- densome minimum verification re- quirement from the family. (2) If, after full documentation is pro- vided, a child is determined to be ineli- gible, the Lead Agency shall ensure that a child care provider is paid and shall not recover funds paid or owed to a child care provider for services pro- vided as a result of determined to be ineli- gible, the Lead Agency shall ensure that a child care provider is paid and shall not recover funds paid or owed to a child care provider for services pro- vided as a result of the presumptive eli- gibility determination except in cases of fraud or intentional program viola- tion by the provider. (3) Any CCDF payment made on be- half of a presumptively eligible child prior to the final eligibility determina- tion shall not be considered an error or improper payment under subpart K of this part and will not be subject to dis- allowance so long as the payment was not for a service period longer than the period of presumptive eligibility. 715 § 98.21 45 CFR Subtitle A (10–1–24 Edition) (4) If a child is determined to be eligi- ble, the period of presumptive eligi- bility will apply to the minimum of 12 months of eligibility prior to re-deter- mination described in paragraph (a) of this section. (5) The Secretary may deny the use of federal funds for direct services under presumptive eligibility for Lead Agencies under a corrective action plan for error rate reporting pursuant to § 98.102(c). (f) The Lead Agency shall establish procedures and policies to ensure under presumptive eligibility for Lead Agencies under a corrective action plan for error rate reporting pursuant to § 98.102(c). (f) The Lead Agency shall establish procedures and policies to ensure par- ents, especially parents receiving as- sistance through the Temporary As- sistance for Needy Families (TANF) program are not required to unduly disrupt their education, training, or employment in order to complete the eligibility determination or re-deter- mination process, including the use of online applications and other meas- ures, to the extent practicable. (g) At the Lead Agency’s option, en- rollment in other benefit programs or documents or verification used for other benefit programs may be used to verify eligibility as appropriate accord- ing to § 98.68(c) for CCDF, such as: (1) Benefit programs with income eli- gibility requirements aligned with the income eligibility at § 98.20(a)(2)(i) may be used to verify a family’s income eli- gibility; and (2) Benefit programs with other eligi- aligned with bility requirements § 98.20(a)(3) may verify: (i) A family’s work or attendance at a job training or educational program; (ii) A family’s status as receiving, or need to receiv her eligi- aligned with bility requirements § 98.20(a)(3) may verify: (i) A family’s work or attendance at a job training or educational program; (ii) A family’s status as receiving, or need to receive, protective services; or (iii) Other information needed for eli- gibility. (h) The Lead Agency shall establish procedures and policies to ensure par- ents, especially parents receiving as- sistance through the Temporary As- sistance for Needy Families (TANF) program, are not required to unduly disrupt their education, training, or employment in order to complete the eligibility redetermination process. (i) The Lead Agency shall specify in the Plan any requirements for parents to notify the Lead Agency of changes in circumstances during the minimum 12-month eligibility period, and de- scribe efforts to ensure such require- ments do not place an undue burden on eligible families that could impact con- tinued eligibility between redetermina- tions. (1) The Lead Agency must require families to report a change at any point during the minimum 12-month period, limited to: (i) If the family’s income exceeds 85% of SMI, taking into account irregular income fluctuations; or (ii) At the option to report a change at any point during the minimum 12-month period, limited to: (i) If the family’s income exceeds 85% of SMI, taking into account irregular income fluctuations; or (ii) At the option of the Lead Agency, the family has experienced a non-tem- porary cessation of work, training, or education. (2) Any additional requirements the Lead Agency chooses, at its option, to impose on parents to provide notifica- tion of changes in circumstances to the Lead Agency or entities designated to perform eligibility functions shall not constitute an undue burden on fami- lies. Any such requirements shall: (i) Limit notification requirements to items that impact a family’s eligi- bility (e.g., only if income exceeds 85 percent of SMI, or there is a non-tem- porary change in the status of the child’s parent as working or attending a job training or educational program) or those that enable the Lead Agency to contact the family or pay providers; (ii) Not require an office visit in order to fulfill notification require- ments; and (iii) Offer a range of notification op- tions (e.g., phone, email, online forms, extended submission hours) to accom- modate the needs of parents; (3) During a fulfill notification require- ments; and (iii) Offer a range of notification op- tions (e.g., phone, email, online forms, extended submission hours) to accom- modate the needs of parents; (3) During a period of graduated phase-out, the Lead Agency may re- quire additional reporting on changes in family income in order to gradually adjust family co-payments, if desired, as described in paragraph (b)(3) of this section. (4) Lead Agencies must allow fami- lies the option to voluntarily report changes on an ongoing basis. (i) Lead Agencies are required to act on this information provided by the family if it would reduce the family’s co-payment or increase the family’s subsidy. (ii) Lead Agencies are prohibited from acting on information that would reduce the family’s subsidy unless the information provided indicates the family’s income exceeds 85 percent of 716 Dept. of Health and Human Services § 98.30 SMI for a family of the same size, tak- ing into account irregular income fluc- tuations, or, at the option of the Lead Agency, the family has experienced a non-temporary change in the work, training, or educational status. (j) Lead Agencies must take into con- sideration children’s dev s, or, at the option of the Lead Agency, the family has experienced a non-temporary change in the work, training, or educational status. (j) Lead Agencies must take into con- sideration children’s development and learning and promote continuity of care when authorizing child care serv- ices. (k) Lead Agencies are not required to limit authorized child care services strictly based on the work, training, or educational schedule of the parent(s) or the number of hours the parent(s) spend in work, training, or educational activities. [81 FR 67579, Sept. 30, 2016, as amended at 89 FR 15413, Mar. 1, 2024; 89 FR 52397, June 24, 2024] Subpart D—Program Operations (Child Care Services)—Paren- tal Rights and Responsibilities § 98.30 Parental choice. (a) The parent or parents of an eligi- ble child who receives or is offered child care services shall be offered a choice: (1) To enroll the child with an eligi- ble child care provider that has a grant or contract for the provision of such services, if such services are available; or (2) To receive a child care certificate as defined in § 98.2. Such choice shall be offered any time that child care serv- ices are made available to a parent. (b)(1 if such services are available; or (2) To receive a child care certificate as defined in § 98.2. Such choice shall be offered any time that child care serv- ices are made available to a parent. (b)(1) Lead Agencies shall increase parent choice by providing some por- tion of the delivery of direct services via grants or contracts, including at a minimum for children in underserved geographic areas, infants and toddlers, and children with disabilities. (2) When a parent elects to enroll the child with a provider that has a grant or contract for the provision of child care services, the child will be enrolled with the provider selected by the par- ent to the maximum extent prac- ticable. (c) In cases in which a parent elects to use a child care certificate, such cer- tificate: (1) Will be issued directly to the par- ent; (2) Shall be of a value commensurate with the subsidy value of the child care services provided under paragraph (a)(1) of this section; (3) May be used as a deposit for child care services if such a deposit is re- quired of other children being cared for by the provider; (4) May be used for child care services provided by a sectarian organization or agency, including child care services if such a deposit is re- quired of other children being cared for by the provider; (4) May be used for child care services provided by a sectarian organization or agency, including those that engage in religious activities, if those services are chosen by the parent; (5) May be expended by providers for any sectarian purpose or activity that is part of the child care services, in- cluding sectarian worship or instruc- tion; (6) Shall not be considered a grant or contract to a provider but shall be con- sidered assistance to the parent. (d) Child care certificates shall be made available to any parents offered child care services. (e)(1) For child care services, certifi- cates under paragraph (a)(2) of this sec- tion shall permit parents to choose from a variety of child care categories, including: (i) Center-based child care; (ii) Family child care; and (iii) In-home child care, with limita- tions, if any, imposed by the Lead Agency and described in its Plan at § 98.16(i)(2). Under each of the above categories, care by a sectarian provider may not be limited or excluded. (2) Lead Agencies shall provide infor- mation regarding the range of provider options under .16(i)(2). Under each of the above categories, care by a sectarian provider may not be limited or excluded. (2) Lead Agencies shall provide infor- mation regarding the range of provider options under paragraph (e)(1) of this section, including care by sectarian providers and relatives, to families of- fered child care services. (f) With respect to State and local regulatory requirements under § 98.40, health and safety requirements under § 98.41, and payment rates under § 98.45, CCDF funds will not be available to a Lead Agency if State or local rules, procedures or other requirements pro- mulgated for purposes of the CCDF sig- nificantly restrict parental choice by: (1) Expressly or effectively excluding: (i) Any category of care or type of provider, as defined in § 98.2; or (ii) Any type of provider within a cat- egory of care; or 717 § 98.31 45 CFR Subtitle A (10–1–24 Edition) (2) Having the effect of limiting pa- rental access to or choice from among such categories of care or types of pro- viders, as defined in § 98.2, with the ex- ception of in-home care; or (3) Excluding a significant number of providers in any category of care or of any type as defined in § 98.2. (g) As lon s of pro- viders, as defined in § 98.2, with the ex- ception of in-home care; or (3) Excluding a significant number of providers in any category of care or of any type as defined in § 98.2. (g) As long as provisions at para- graph (f) of this section are met, paren- tal choice provisions shall not be con- strued as prohibiting a Lead Agency from establishing policies that require providers of child care services for which assistance is provided under this part to meet higher standards of qual- ity, such as those identified in a qual- ity rating and improvement system or other transparent system of quality in- dicators. (h) Parental choice provisions shall not be construed as prohibiting a Lead Agency from providing parents with in- formation and incentives that encour- age the selection of high-quality child care. [63 FR 39981, July 24, 1998, as amended at 81 FR 67580, Sept. 30, 2016; 89 FR 15413, Mar. 1, 2024] § 98.31 Parental access. The Lead Agency shall have in effect procedures to ensure that providers of child care services for which assistance is provided afford parents unlimited ac- cess to their children, and to the pro- viders caring for their children, during normal hour ensure that providers of child care services for which assistance is provided afford parents unlimited ac- cess to their children, and to the pro- viders caring for their children, during normal hours of provider operation and whenever the children are in the care of the provider. The Lead Agency shall provide a detailed description in the Plan of such procedures. [81 FR 67581, Sept. 30, 2016] § 98.32 Parental complaints. The State shall: (a) Establish or designate a hotline or similar reporting process for parents to submit complaints about child care providers; (b) Maintain a record of substan- tiated parent complains; (c) Make information regarding such parental complaints available to the public on request; and (d) The Lead Agency shall provide a detailed description in the Plan of how: (1) Complaints are substantiated and responded to, including whether or not the State uses monitoring as part of its process for responding to complaints for both CCDF and non-CCDF pro- viders; and, (2) A record of substantiated com- plaints is maintained and is made available. [81 FR 67581, Sept. 30, 2016] § 98.33 Consumer and provider edu- cation. The Lead Agency shall: (a) Certify that it wi , (2) A record of substantiated com- plaints is maintained and is made available. [81 FR 67581, Sept. 30, 2016] § 98.33 Consumer and provider edu- cation. The Lead Agency shall: (a) Certify that it will collect and disseminate consumer education infor- mation to parents of eligible children, the general public, and providers through a consumer-friendly and easily accessible Web site that ensures the widest possible access to services for families who speak languages other than English and persons with disabil- ities, including: (1) Lead Agency processes, including: (i) The process for licensing child care providers pursuant to § 98.40; (ii) The process for conducting moni- toring and inspections of child care providers pursuant to § 98.42; (iii) Policies and procedures related to criminal background checks for child care providers pursuant to § 98.43; and (iv) The offenses that prevent indi- viduals from serving as child care pro- viders. (2) A localized list of all licensed child care providers, and, at the discre- tion of the Lead Agency, all eligible child care providers (other than an in- dividual who is related to all children for whom child care services are pro- vided), diff providers, and, at the discre- tion of the Lead Agency, all eligible child care providers (other than an in- dividual who is related to all children for whom child care services are pro- vided), differentiating between licensed and license-exempt providers, search- able by zip code; (3) The quality of a provider as deter- mined by the Lead Agency through a quality rating and improvement sys- tem or other transparent system of quality indicators, if such information is available for the provider; (4) Results of monitoring and inspec- tion reports for all eligible and licensed child care providers (other than an in- dividual who is related to all children for whom child care services are pro- vided), including those required at 718 Dept. of Health and Human Services § 98.33 § 98.42 and those due to major substan- tiated complaints about failure to com- ply with provisions at § 98.41 and Lead Agency child care policies. Lead Agen- cies shall post in a timely manner full monitoring and inspection reports, ei- ther in plain language or with a plain language summary, for parents and child care providers to understand, and shall establish a process for correcting inaccuracies in the repo spection reports, ei- ther in plain language or with a plain language summary, for parents and child care providers to understand, and shall establish a process for correcting inaccuracies in the reports. Such re- sults shall include: (i) Information on the date of such inspection; (ii) Areas of compliance and non- compliance; (iii) Information on corrective action taken by the State and child care pro- vider, where applicable; (iv) Any health and safety violations, including any fatalities and serious in- juries occurring at the provider, promi- nently displayed on the report or sum- mary; and (v) A minimum of 3 years of results where available. (5) Aggregate data for each year for eligible providers including: (i) Number of deaths (for each pro- vider category and licensing status); (ii) Number of serious injuries (for each provider category and licensing status); (iii) Instances of substantiated child abuse that occurred in child care set- tings; and, (iv) Total number of children in care (for each provider category and licens- ing status). (6) Referrals to local child care re- source and referral organizations. (7) Directions on how parents can contact the Lead Agency or its de n care (for each provider category and licens- ing status). (6) Referrals to local child care re- source and referral organizations. (7) Directions on how parents can contact the Lead Agency or its des- ignee and other programs to help them understand information included on the Web site. (8) The sliding fee scale for parent co- payments pursuant to § 98.45(l), includ- ing the co-payment amount a family may expect to pay and policies for waiving co-payments. (b) Certify that it will collect and disseminate, through resource and re- ferral organizations or other means as determined by the State, including, but not limited to, through the Web site described in paragraph (a) of this sec- tion, to parents of eligible children and the general public, and where applica- ble providers, information about: (1) The availability of the full diver- sity of child care services to promote informed parental choice, including in- formation about: (i) The availability of child care serv- ices under this part and other pro- grams for which families may be eligi- ble, as well as the availability of finan- cial assistance to obtain child care services; (ii) Other programs for which fami- lies that rec s part and other pro- grams for which families may be eligi- ble, as well as the availability of finan- cial assistance to obtain child care services; (ii) Other programs for which fami- lies that receive assistance under this part may be eligible, including: (A) Temporary Assistance for Needy Families (TANF) (42 U.S.C. 601 et seq.); (B) Head Start and Early Head Start (42 U.S.C. 9831 et seq.); (C) Low-Income Home Energy Assist- ance Program (LIHEAP) (42 U.S.C. 8621 et seq.); (D) Supplemental Nutrition Assist- ance Program (SNAP) (7 U.S.C. 2011 et seq.); (E) Special supplemental nutrition program for women, infants, and chil- dren (42 U.S.C. 1786); (F) Child and Adult Care Food Pro- gram (CACFP) (42 U.S.C. 1766); (G) Medicaid and the State children’s health insurance programs (42 U.S.C. 1396 et seq., 1397aa et seq.); (iii) Programs carried out under sec- tion 619 and part C of the Individuals with Disabilities Education Act (IDEA) (20 U.S.C. 1419, 1431 et seq.); (iv) Research and best practices con- cerning children’s development, mean- ingful parent and family engagement, and physical health and development, particularly healthy eating and phys- ical activity; and (v) State polici practices con- cerning children’s development, mean- ingful parent and family engagement, and physical health and development, particularly healthy eating and phys- ical activity; and (v) State policies regarding social emotional behavioral health of chil- dren which may include positive behav- ioral health intervention and support models for birth to school-age or age- appropriate, and policies to prevent suspension and expulsion of children birth to age five in child care and other early childhood programs, as described in the Plan pursuant to § 98.16(ee), re- ceiving assistance under this part. (c) Provide information on develop- mental screenings to parents as part of the intake process for families receiv- ing assistance under this part, and to 719 § 98.34 45 CFR Subtitle A (10–1–24 Edition) providers through training and edu- cation, including: (1) Information on existing resources and services the State can make avail- able in conducting developmental screenings and providing referrals to services when appropriate for children who receive assistance under this part, including the coordinated use of the Early and Periodic Screening, Diag- nosis, and Treatment program (42 U.S. ferrals to services when appropriate for children who receive assistance under this part, including the coordinated use of the Early and Periodic Screening, Diag- nosis, and Treatment program (42 U.S.C. 1396 et seq.) and developmental screening services available under sec- tion 619 and part C of the Individuals with Disabilities Education Act (20 U.S.C. 1419, 1431 et seq.); and (2) A description of how a family or eligible child care provider may utilize the resources and services described in paragraph (c)(1) of this section to ob- tain developmental screenings for chil- dren who receive assistance under this part who may be at risk for cognitive or other developmental delays, which may include social, emotional, phys- ical, or linguistic delays. (d) For families that receive assist- ance under this part, provide specific information about the child care pro- vider selected by the parent, including health and safety requirements met by the provider pursuant to § 98.41, any li- censing or regulatory requirements met by the provider, date the provider was last inspected, any history of vio- lations of these requirements, and any voluntary quality standards met by the provider. Info g or regulatory requirements met by the provider, date the provider was last inspected, any history of vio- lations of these requirements, and any voluntary quality standards met by the provider. Information must also de- scribe how CCDF subsidies are designed to promote equal access in accordance with § 98.45, how to submit a complaint through the hotline at § 98.32(a), and how to contact local resource and re- ferral agencies or other community- based supports that assist parents in finding and enrolling in quality child care. (e) Provide linkages to databases re- lated to paragraph (a) to HHS for im- plementing a national Web site and other uses as determined by the Sec- retary. (f) Inform parents who receive TANF benefits about the requirement at sec- tion 407(e)(2) of the Social Security Act (42 U.S.C. 607(e)(2)) that the TANF agency make an exception to the indi- vidual penalties associated with the work requirement for any single custo- dial parent who has a demonstrated in- ability to obtain needed child care for a child under six years of age. The in- formation may be provided directly by the Lead Agency, or, pursuant to § 98.11, other entities, and shall include: (1) The lity to obtain needed child care for a child under six years of age. The in- formation may be provided directly by the Lead Agency, or, pursuant to § 98.11, other entities, and shall include: (1) The procedures the TANF agency uses to determine if the parent has a demonstrated inability to obtain need- ed child care; (2) The criteria or definitions applied by the TANF agency to determine whether the parent has a demonstrated inability to obtain needed child care, including: (i) ‘‘Appropriate child care’’; (ii) ‘‘Reasonable distance’’; (iii) ‘‘Unsuitability of informal child care’’; (iv) ‘‘Affordable child care arrange- ments’’; (3) The clarification that assistance received during the time an eligible parent receives the exception referred to in paragraph (f) of this section will count toward the time limit on Federal benefits required at section 408(a)(7) of the Social Security Act (42 U.S.C. 608(a)(7)). (g) Include in the triennial Plan the definitions or criteria the TANF agen- cy uses in implementing the exception to the work requirement specified in paragraph (f) of this section. [81 FR 67581, Sept. 30, 2016, as amended at 89 FR 15414, Mar. 1, 2024] § 98.34 Parental rights and ses in implementing the exception to the work requirement specified in paragraph (f) of this section. [81 FR 67581, Sept. 30, 2016, as amended at 89 FR 15414, Mar. 1, 2024] § 98.34 Parental rights and responsibil- ities. Nothing under this part shall be con- strued or applied in any manner to in- fringe on or usurp the moral and legal rights and responsibilities of parents or legal guardians. Subpart E—Program Operations (Child Care Services)—Lead Agency and Provider Re- quirements § 98.40 Compliance with applicable State and local regulatory require- ments. (a) Lead Agencies shall: (1) Certify that they have in effect li- censing requirements applicable to child care services provided within the area served by the Lead Agency; 720 Dept. of Health and Human Services § 98.41 (2) Describe in the Plan exemption(s) to licensing requirements, if any, for child care services for which assistance is provided, and a demonstration for how such exemption(s) do not endanger the health, safety, or development of children who receive services from such providers. Lead Agencies must provide the required description and demonstration for any exemptions based on: (i) Provider category, type, or se development of children who receive services from such providers. Lead Agencies must provide the required description and demonstration for any exemptions based on: (i) Provider category, type, or set- ting; (ii) Length of day; (iii) Providers not subject to licens- ing because the number of children served falls below a State-defined threshold; and (iv) Any other exemption to licensing requirements; and (3) Provide a detailed description in the Plan of the requirements under paragraph (a)(1) of this section and of how they are effectively enforced. from (b)(1) This section does not prohibit a Lead Agency imposing more stringent standards and licensing or regulatory requirements on child care providers of services for which assist- ance is provided under the CCDF than the standards or requirements imposed on other child care providers. (2) Any such additional requirements shall be consistent with the safeguards for parental choice in § 98.30(f). [63 FR 39981, July 24, 1998, as amended at 81 FR 67582, Sept. 30, 2016] § 98.41 Health and ments. safety require- (a) Each Lead Agency shall certify that there are in effect, within the State (or other area served by the Lead Agency), unde at 81 FR 67582, Sept. 30, 2016] § 98.41 Health and ments. safety require- (a) Each Lead Agency shall certify that there are in effect, within the State (or other area served by the Lead Agency), under State, local or tribal law, requirements (appropriate to pro- vider setting and age of children served) that are designed, imple- mented, and enforced to protect the health and safety of children. Such re- quirements must be applicable to child care providers of services for which as- sistance is provided under this part. Such requirements, which are subject to monitoring pursuant to § 98.42, shall: (1) Include health and safety topics consisting of, at a minimum: (i) The prevention and control of in- fectious diseases (including immuniza- tions); with respect to immunizations, the following provisions apply: (A) As part of their health and safety provisions in this area, Lead Agencies shall assure that children receiving services under the CCDF are age-appro- priately immunized. Those health and safety provisions shall incorporate (by reference or otherwise) the latest rec- ommendation for childhood immuniza- tions of the respective State, terri- torial, or tribal public health agen ealth and safety provisions shall incorporate (by reference or otherwise) the latest rec- ommendation for childhood immuniza- tions of the respective State, terri- torial, or tribal public health agency. (B) Notwithstanding this paragraph (a)(1)(i), Lead Agencies may exempt: (1) Children who are cared for by rel- atives (defined as grandparents, great grandparents, siblings (if living in a separate residence), aunts, and uncles), provided there are no other unrelated children who are cared for in the same setting. (2) Children who receive care in their own homes, provided there are no other unrelated children who are cared for in the home. (3) Children whose parents object to immunization on religious grounds. (4) Children whose medical condition contraindicates immunization. (C) Lead Agencies shall establish a grace period that allows children expe- riencing homelessness and children in foster care to receive services under this part while providing their families (including foster families) a reasonable time to take any necessary action to comply with immunization and other health and safety requirements. (1) The length of such grace period shall be established in consultation wi milies) a reasonable time to take any necessary action to comply with immunization and other health and safety requirements. (1) The length of such grace period shall be established in consultation with the State, Territorial or Tribal health agency. (2) Any payment for such child dur- ing the grace period shall not be con- sidered an error or improper payment under subpart K of this part. (3) The Lead Agency may also, at its option, establish grace periods for other children who are not experi- encing homelessness or in foster care. (4) Lead Agencies must coordinate with licensing agencies and other rel- evant State, Territorial, Tribal, and local agencies to provide referrals and support to help families of children re- ceiving services during a grace period comply with immunization and other health and safety requirements; 721 § 98.42 45 CFR Subtitle A (10–1–24 Edition) (ii) Prevention of sudden infant death syndrome and use of safe sleeping prac- tices; (iii) Administration of medication, consistent with standards for parental consent; (iv) Prevention and response to emer- gencies due to food and allergic reac- tions; (v) Building and physical premises safety, including identif cation, consistent with standards for parental consent; (iv) Prevention and response to emer- gencies due to food and allergic reac- tions; (v) Building and physical premises safety, including identification of and protection from hazards, bodies of water, and vehicular traffic; (vi) Prevention of shaken baby syn- drome, abusive head trauma, and child maltreatment; (vii) Emergency preparedness and re- sponse planning for emergencies result- ing from a natural disaster, or a man- caused event (such as violence at a child care facility), within the meaning of those terms under section 602(a)(1) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5195a(a)(1)) that shall include procedures for evacuation, relocation, shelter-in-place and lock down, staff and volunteer emergency preparedness training and practice drills, commu- nication and reunification with fami- lies, continuity of operations, and ac- commodation of infants and toddlers, children with disabilities, and children with chronic medical conditions; (viii) Handling and storage of haz- ardous materials and the appropriate disposal of biocontaminants; (ix) Appropriate precautions in trans- porti lities, and children with chronic medical conditions; (viii) Handling and storage of haz- ardous materials and the appropriate disposal of biocontaminants; (ix) Appropriate precautions in trans- porting children, if applicable; (x) aid cardiopulmonary resuscitation; Pediatric first and (xi) Recognition and reporting of child abuse and neglect, in accordance with the requirement in paragraph (e) of this section; and (xii) May include requirements relat- ing to: (A) Nutrition (including age-appro- priate feeding); (B) Access to physical activity; (C) Caring for children with special needs; or (D) Any other subject area deter- mined by the Lead Agency to be nec- essary to promote child development or to protect children’s health and safety. (2) Include minimum health and safe- ty training on the topics above, as de- scribed in § 98.44. (b) Lead Agencies may not set health and safety standards and requirements other than those required in paragraph (a) of this section that are inconsistent with the parental choice safeguards in § 98.30(f). (c) The requirements in paragraph (a) of this section shall apply to all pro- viders of child care services for which assistance is provided under t with the parental choice safeguards in § 98.30(f). (c) The requirements in paragraph (a) of this section shall apply to all pro- viders of child care services for which assistance is provided under this part, within the area served by the Lead Agency, except the relatives specified at § 98.42(c). this part, appropriate (d) Lead Agencies shall describe in the Plan standards for child care serv- ices for which assistance is provided under to strengthening the adult and child rela- tionship in the type of child care set- ting involved, to provide for the safety and developmental needs of the chil- dren served, that address: (1) Group size limits for specific age populations; (2) The appropriate ratio between the number of children and the number of caregivers, in terms of age of children in child care; and (3) Required qualifications for care- givers in child care settings as de- scribed at § 98.44(a)(4). (e) Lead Agencies shall certify that caregivers, teachers, and directors of child care providers within the State or service area will comply with the State’s, Territory’s, or Tribe’s child abuse reporting requirements as re- quired by section 106(b)(2)(B)(i) of the Child Abuse and are providers within the State or service area will comply with the State’s, Territory’s, or Tribe’s child abuse reporting requirements as re- quired by section 106(b)(2)(B)(i) of the Child Abuse and Prevention and Treat- ment Act (42 U.S.C. 5106a(b)(2)(B)(i)) or other child abuse reporting procedures and laws in the service area. [81 FR 67582, Sept. 30, 2016] § 98.42 Enforcement of licensing and health and safety requirements. (a) Each Lead Agency shall certify in the Plan that procedures are in effect to ensure that child care providers of services for which assistance is made available in accordance with this part, within the area served by the Lead Agency, comply with all applicable State, local, or tribal health and safety requirements, those de- scribed in § 98.41. including (b) Each Lead Agency shall certify in the Plan it has monitoring policies and practices applicable to all child care 722 Dept. of Health and Human Services § 98.43 providers and facilities eligible to de- liver services for which assistance is provided under this part. The Lead Agency shall: (1) Ensure individuals who are hired as licensing inspectors are qualified to inspect those child care providers an er services for which assistance is provided under this part. The Lead Agency shall: (1) Ensure individuals who are hired as licensing inspectors are qualified to inspect those child care providers and facilities and have received training in related health and safety requirements appropriate to provider setting and age of children served. Training shall in- clude, but is not limited to, those re- quirements described in § 98.41, and all aspects of the State, Territory, or Tribe’s licensure requirements; (2) Require inspections of child care providers and facilities, performed by licensing inspectors (or qualified in- spectors designated by the Lead Agen- cy), as specified below: (i) For licensed child care providers and facilities, (A) Not less than one pre-licensure inspection for compliance with health, safety, and fire standards, and inspection (B) Not less than annually, an unan- nounced for compliance with all child care licensing standards, which shall include an inspection for compliance with health and safety, (in- cluding, but not limited to, those re- quirements described in § 98.41) and fire standards (inspectors may inspect for compliance with all three standards at th compliance with health and safety, (in- cluding, but not limited to, those re- quirements described in § 98.41) and fire standards (inspectors may inspect for compliance with all three standards at the same time); and (ii) For license-exempt child care providers and facilities that are eligi- ble to provide services for which assist- ance is made available in accordance with this part, an annual inspection for compliance with health and safety (in- cluding, but not limited to, those re- quirements described in § 98.41), and fire standards; (iii) Coordinate, to the extent prac- ticable, monitoring efforts with other Federal, State, and local agencies that conduct similar inspections. (iv) The Lead Agency may, at its op- tion: (A) Use differential monitoring or a risk-based approach to design annual inspections, provided that the contents covered during each monitoring visit is representative of the full complement of health and safety requirements; (B) Develop alternate monitoring re- quirements for care provided in the child’s home that are appropriate to the setting; and (3) Ensure the ratio of licensing in- spectors to such child care providers and facilities is maintained at a l uirements for care provided in the child’s home that are appropriate to the setting; and (3) Ensure the ratio of licensing in- spectors to such child care providers and facilities is maintained at a level sufficient to enable the State, Terri- tory, or Tribe to conduct effective in- spections on a timely basis in accord- ance with the applicable Federal, State, Territory, Tribal, and local law; (4) Require child care providers to re- port to a designated State, Territorial, or Tribal entity any serious injuries or deaths of children occurring in child care. (c) For the purposes of this section and § 98.41, Lead Agencies may exclude grandparents, great grandparents, sib- lings (if such providers live in a sepa- rate residence), aunts, or uncles, from the term ‘‘child care providers.’’ If the Lead Agency chooses to exclude these providers, the Lead Agency shall pro- vide a description and justification in the CCDF Plan, pursuant to § 98.16(l), of requirements, if any, that apply to these providers. [81 FR 67583, Sept. 30, 2016] § 98.43 Criminal background checks. (a)(1) States, Territories, and Tribes, through coordination of the Lead agen- cy with other State, territorial, and triba providers. [81 FR 67583, Sept. 30, 2016] § 98.43 Criminal background checks. (a)(1) States, Territories, and Tribes, through coordination of the Lead agen- cy with other State, territorial, and tribal agencies, shall have in effect: (i) Requirements, policies, and proce- dures to require and conduct back- ground checks, and make a determina- tion of eligibility for child care staff members (including prospective child care staff members) of all licensed, reg- ulated, or registered child care pro- viders and all child care providers eli- gible to deliver services for which as- sistance is provided under this part as described in paragraph (a)(2) of this section; (ii) Licensing, regulation, and reg- istration requirements, as applicable, that prohibit the employment of child care staff members as described in paragraph (c) of this section; and (iii) Requirements, policies, and pro- cedures in place to respond as expedi- tiously as possible to other States’, Territories’, and Tribes’ requests for background check results in order to accommodate the 45 day timeframe re- quired in paragraph (e)(1) of this sec- tion. 723 § 98.43 45 CFR Subtitle A (10–1–24 Edition) (2) In this section: ( uests for background check results in order to accommodate the 45 day timeframe re- quired in paragraph (e)(1) of this sec- tion. 723 § 98.43 45 CFR Subtitle A (10–1–24 Edition) (2) In this section: (i) Child care provider means a center based child care provider, a family child care provider, or another provider of child care services for compensation and on a regular basis that: (A) Is not an individual who is re- lated to all children for whom child care services are provided; and (B) Is licensed, regulated, or reg- istered under State law or eligible to receive assistance provided under this subchapter; and (ii) Child care staff member means an individual (other than an individual who is related to all children for whom child care services are provided): (A) Who is employed by a child care provider for compensation, including contract employees or self-employed individuals; (B) Whose activities involve the care or supervision of children for a child care provider or unsupervised access to children who are cared for or super- vised by a child care provider; or (C) Any individual residing in a fam- ily child care home who is age 18 and older. (b) A criminal background check for a cess to children who are cared for or super- vised by a child care provider; or (C) Any individual residing in a fam- ily child care home who is age 18 and older. (b) A criminal background check for a child care staff member under para- graph (a) of this section shall include: (1) A Federal Bureau of Investigation fingerprint check using Next Genera- tion Identification; (2) A search of the National Crime In- formation Center’s National Sex Of- fender Registry; and (3) A search of the following reg- istries, repositories, or databases in the State where the child care staff mem- ber resides and each State where such staff member resided during the pre- ceding five years: (i) State criminal registry or reposi- tory, with the use of fingerprints being: (A) Required in the State where the staff member resides; (B) Optional in other States; (ii) State sex offender registry or re- pository; and (iii) State-based child abuse and ne- glect registry and database. (c)(1) The State, Territory, or Tribe in coordination with the Lead Agency shall find a child care staff member in- eligible for employment for services for which assistance is made available in accordance with this part, if such r Tribe in coordination with the Lead Agency shall find a child care staff member in- eligible for employment for services for which assistance is made available in accordance with this part, if such indi- vidual: (i) Refuses to consent to the criminal background check described in para- graph (b) of this section; (ii) Knowingly makes a materially false statement in connection with such criminal background check; (iii) Is registered, or is required to be registered, on a State sex offender reg- istry or repository or the National Sex Offender Registry; or (iv) Has been convicted of a felony consisting of: (A) Murder, as described in section 1111 of title 18, United States Code; (B) Child abuse or neglect; (C) A crime against children, includ- ing child pornography; (D) Spousal abuse; (E) A crime involving rape or sexual assault; (F) Kidnapping; (G) Arson; (H) Physical assault or battery; or (I) Subject to paragraph (e)(4) of this section, a drug-related offense com- mitted during the preceding 5 years; or (v) Has been convicted of a violent misdemeanor committed as an adult against a child, including the following crimes: child endangerment, and sexual assault, or of any misdemeano receding 5 years; or (v) Has been convicted of a violent misdemeanor committed as an adult against a child, including the following crimes: child endangerment, and sexual assault, or of any misdemeanor involving child pornography. abuse, child (2) A child care provider described in paragraph (a)(2)(i) of this section shall be ineligible for assistance provided in accordance with this subchapter if the provider employs a staff member who is ineligible for employment under paragraph (c)(1) of this section. (d)(1) A child care provider covered by paragraph (a)(2)(i) of this section shall submit a request, to the appro- priate State, Territorial, or Tribal agency, defined clearly on the State or Territory Web site described in para- graph (g) of this section, for a criminal background check described in para- graph (b) of this section, for each child care staff member (including prospec- tive child care staff members) of the provider. (2) Subject to paragraph (d)(3) of this section, the provider shall submit such a request: 724 Dept. of Health and Human Services § 98.43 (i) Prior to the date an individual be- comes a child care staff member of the provider; and (ii) Not less than once ovider shall submit such a request: 724 Dept. of Health and Human Services § 98.43 (i) Prior to the date an individual be- comes a child care staff member of the provider; and (ii) Not less than once during each 5- year period for any existing staff mem- ber. (3) A child care provider shall not be required to submit a request under paragraph (d)(2) of this section for a child care staff member if: (i) The staff member received quali- fying results from a background check described in paragraph (b) of this sec- tion; (A) Within 5 years before the latest date on which such a submission may be made; and (B) While employed by or seeking employment by another child care pro- vider within the State; (ii) The State provided to the first provider a qualifying background check result, consistent with this sub- chapter, for the staff member; and (iii) The staff member is employed by a child care provider within the State, or has been separated from employ- ment from a child care provider within the State for a period of not more than 180 consecutive days. (4) A prospective staff member may begin work for a child care provider de- scribed in paragraph (a)(2)(i) of this section after receiving the State for a period of not more than 180 consecutive days. (4) A prospective staff member may begin work for a child care provider de- scribed in paragraph (a)(2)(i) of this section after receiving qualifying re- sults for either the check described at paragraph (b)(1) or (b)(3)(i) of this sec- tion in the State where the prospective staff member resides. Pending comple- tion of all background check compo- nents in paragraph (b) of this section, the staff member must be supervised at all times by an individual who received a qualifying result on a background check described in paragraph (b) of this section within the past five years. (e) Background check results. (1) The State, Territory, or Tribe shall carry out the request of a child care provider for a criminal background check as ex- peditiously as possible, but not to ex- ceed 45 days after the date on which the provider submitted the request, and shall provide the results of the criminal background check to such provider and to the current or prospec- tive staff member. (2) States, Territories, and Tribes shall ensure the privacy of background check results by: (i) Providing the results of the crimi- nal background check t o the current or prospec- tive staff member. (2) States, Territories, and Tribes shall ensure the privacy of background check results by: (i) Providing the results of the crimi- nal background check to the provider in a statement that indicates whether a child care staff member (including a prospective child care staff member) is eligible or ineligible for employment described in paragraph (c)(1) of this section, without revealing any dis- qualifying crime or other related infor- mation regarding the individual. (ii) If the child care staff member is ineligible for such employment due to the background check, the State, Ter- ritory, or Tribe will, when providing the results of the background check, include information related to each disqualifying crime, in a report to the staff member or prospective staff mem- ber, along with information on the op- portunity to appeal, described in para- graph (e)(3) of this section. (iii) No State, Territory, or Tribe shall publicly release or share the re- sults of individual background checks, except States and Tribes may release aggregated data by crime as listed under paragraph (c)(1)(iv) of this sec- tion from background check results, as lo the re- sults of individual background checks, except States and Tribes may release aggregated data by crime as listed under paragraph (c)(1)(iv) of this sec- tion from background check results, as long as such data is not personally identifiable information. (3) States, Territories, and Tribes shall provide for a process by which a child care staff member (including a prospective child care staff member) may appeal the results of a criminal background check conducted under this section to challenge the accuracy or completeness of the information contained in such member’s criminal background report. The State, Terri- tory, and Tribe shall ensure that: (i) Each child care staff member is given notice of the opportunity to ap- peal; (ii) A child care staff member will re- ceive clear instructions about how to complete the appeals process if the child care staff member wishes to chal- lenge the accuracy or completeness of the information contained in such member’s criminal background report; (iii) If the staff member files an ap- peal, the State, Territory, or Tribe will attempt to verify the accuracy of the information challenged by the child care staff member, including making an e ort; (iii) If the staff member files an ap- peal, the State, Territory, or Tribe will attempt to verify the accuracy of the information challenged by the child care staff member, including making an effort to locate any missing disposi- tion information related to the dis- qualifying crime; 725 § 98.44 45 CFR Subtitle A (10–1–24 Edition) (iv) The appeals process is completed in a timely manner for each child care staff member; and (v) Each child care staff member shall receive written notice of the deci- sion. In the case of a negative deter- mination, the decision should indicate the State’s efforts to verify the accu- racy of information challenged by the child care staff member, as well as any additional appeals rights available to the child care staff member. (4) States, Territories, and Tribes may allow for a review process through which the State, Territory, or Tribe may determine that a child care staff member (including a prospective child care staff member) disqualified for a crime paragraph (c)(1)(iv)(I) of this section is eligible for employment described in paragraph (c)(1) of this section, notwithstanding paragraph (c)(2) of this section. The re- view process shall be crime paragraph (c)(1)(iv)(I) of this section is eligible for employment described in paragraph (c)(1) of this section, notwithstanding paragraph (c)(2) of this section. The re- view process shall be consistent with title VII of the Civil Rights Act of 1964 (42 U.S.C. 2000e et seq.); specified in (5) Nothing in this section shall be construed to create a private right of action if a provider has acted in ac- cordance with this section. (f) Fees for background checks. Fees that a State, Territory, or Tribe may charge for the costs of processing appli- cations and administering a criminal background check as required by this section shall not exceed the actual costs for the processing and adminis- tration. (g) Transparency. The State or Terri- tory must ensure that its policies and procedures under this section, includ- ing the process by which a child care provider or other State or Territory may submit a background check re- quest, are published in the Web site of the State or Territory as described in § 98.33(a) and the Web site of local lead agencies. (h) Disqualification for other crimes. (1) Nothing in this section shall be con- strued to prevent a State, Territory, or Tribe fr y as described in § 98.33(a) and the Web site of local lead agencies. (h) Disqualification for other crimes. (1) Nothing in this section shall be con- strued to prevent a State, Territory, or Tribe from disqualifying individuals as child care staff members based on their conviction for crimes not specifically listed in paragraph (c)(1) of this section that bear upon the fitness of an indi- vidual to provide care for and have re- sponsibility for the safety and well- being of children. (2) Nothing in this section shall be construed to alter or otherwise affect the rights and remedies provided for child care staff members or prospective staff members residing in a State that disqualifies individuals as child care staff members for crimes not specifi- cally provided for under this section. [81 FR 67584, Sept. 30, 2016, as amended at 89 FR 15414, Mar. 1, 2024] § 98.44 Training and professional de- velopment. (a) The Lead Agency must describe in the Plan the State or Territory frame- work for training, professional develop- ment, and postsecondary education for caregivers, teachers, and directors, in- cluding those working in school-age care, that: (1) Is developed in consultation with or training, professional develop- ment, and postsecondary education for caregivers, teachers, and directors, in- cluding those working in school-age care, that: (1) Is developed in consultation with the State Advisory Council on Early Childhood Education and Care (des- ignated or established pursuant to sec- tion 642B(b)(1)(A)(i) of the Head Start Act (42 U.S.C. 9837b(b)(1)(A)(i))) or simi- lar coordinating body; (2) May engage training and profes- sional development providers, includ- ing higher education in aligning train- ing and education opportunities with the State’s framework; (3) Addresses professional standards and competencies, career pathways, ad- visory structure, articulation, and workforce information and financing; (4) Establishes qualifications in ac- cordance with § 98.41(d)(3) designed to enable child care and school-age care providers that provide services for which assistance is provided in accord- ance with this part to promote the so- cial, emotional, physical, and cognitive development of children and improve the knowledge and skills of caregivers, teachers and directors in working with children and their families; (5) Includes professional development condu nd cognitive development of children and improve the knowledge and skills of caregivers, teachers and directors in working with children and their families; (5) Includes professional development conducted on an ongoing basis, pro- viding a progression of professional de- velopment (which may include encour- aging the pursuit of postsecondary edu- cation); (6) Reflects current research and best practices relating to the skills nec- essary for caregivers, teachers, and di- rectors to meet the developmental needs of participating children and en- gage families, including culturally and 726 Dept. of Health and Human Services § 98.45 linguistically appropriate practices; and (7) Improves the quality, diversity, stability, and retention (including fi- nancial incentives and compensation improvements) of caregivers, teachers, and directors. (b) The Lead Agency must describe in the Plan its established requirements for pre-service or orientation (to be completed within three months) and ongoing professional development for caregivers, teachers, and directors of child care providers of services for which assistance is provided under the CCDF that, to the extent practicable, align with the S g professional development for caregivers, teachers, and directors of child care providers of services for which assistance is provided under the CCDF that, to the extent practicable, align with the State framework: (1) Accessible pre-service or orienta- tion training in health and safety standards appropriate to the setting and age of children served that address- es: (i) Each of the requirements relating to matters described in § 98.41(a)(1)(i) through (xi) and specifying critical health and safety training that must be completed before caregivers, teach- ers, and directors are allowed to care for children unsupervised; (ii) At the Lead Agency option, mat- ters described in § 98.41(a)(1)(xii); and (iii) Child development, including the major domains (cognitive, social, emo- tional, physical development and ap- proaches to learning); (2) Ongoing, accessible professional development, aligned to a progression of professional development, including the minimum annual requirement for hours of training and professional de- velopment for eligible caregivers, teachers and directors, appropriate to the setting and age of children served, that: (i) Maintains and updates health and safety t s of training and professional de- velopment for eligible caregivers, teachers and directors, appropriate to the setting and age of children served, that: (i) Maintains and updates health and safety training standards described in § 98.41(a)(1)(i) through (xi), and at the Lead Agency option, in § 98.41(a)(1)(xii); (ii) Incorporates knowledge and ap- plication of the State’s early learning and developmental guidelines for chil- dren birth to kindergarten (where ap- plicable); (iii) Incorporates social-emotional behavior intervention models for chil- dren birth through school-age, which may include positive behavior inter- vention and support models including preventing and reducing expulsions and suspensions of preschool-aged and school-aged children; (iv) To the extent practicable, are ap- propriate for a population of children that includes: (A) Different age groups; (B) English learners; (C) Children with developmental delays and disabilities; and (D) Native Americans, including Indi- ans, as the term is defined in section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b) (including Alaska Natives within the meaning of that term), and Native Hawaiia - ans, as the term is defined in section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b) (including Alaska Natives within the meaning of that term), and Native Hawaiians (as defined in section 6207 of the Elementary and Secondary Edu- cation Act of 1965); (v) To the extent practicable, awards continuing education units or is credit- bearing; and (vi) Shall be accessible to caregivers, teachers, and directors supported through Indian tribes or tribal organi- zations that receive assistance under this subchapter. [81 FR 67585, Sept. 30, 2016] § 98.45 Equal access. (a) The Lead Agency shall certify that the payment rates for the provi- sion of child care services under this part are sufficient to ensure equal ac- cess, for eligible families in the area served by the Lead Agency, to child care services comparable to those pro- vided to families not eligible to receive CCDF assistance or child care assist- ance under any other Federal, State, or tribal programs. (b) The Lead Agency shall provide in the Plan a summary of the data and facts relied on to determine that its payment rates ensure equal access. At a minimum, the summary shall include facts show ams. (b) The Lead Agency shall provide in the Plan a summary of the data and facts relied on to determine that its payment rates ensure equal access. At a minimum, the summary shall include facts showing: (1) How a choice of the full range of providers is made available, and the ex- tent to which child care providers par- ticipate in the CCDF subsidy system and any barriers to participation in- cluding barriers related to payment rates and practices, based on informa- tion obtained in accordance with para- graph (d)(2) of this section; (2) How payment rates are adequate and have been established based on the most recent market rate survey or al- ternative methodology conducted in 727 § 98.45 45 CFR Subtitle A (10–1–24 Edition) accordance with paragraph (c) of this section; (3) How base payment rates enable providers to meet health, safety, qual- ity, and staffing requirements in ac- cordance with paragraphs (f)(1)(ii)(A) and (f)(2)(ii) of this section; (4) How the Lead Agency took the cost of higher quality into account in accordance with paragraph (f)(2)(iii) of this section, including how payment rates for higher-quality care, as defined by the Lead Agency using a quality rating cost of higher quality into account in accordance with paragraph (f)(2)(iii) of this section, including how payment rates for higher-quality care, as defined by the Lead Agency using a quality rating and improvement system or other system of quality indicators, re- late to the estimated cost of care at each level of quality; (5) How co-payments based on a slid- ing fee scale are affordable and do not exceed 7 percent of income for all fami- lies, as stipulated at paragraph (l) of this section; if applicable, a rationale for the Lead Agency’s policy on wheth- er child care providers may charge ad- ditional amounts to families above the required family co-payment, including a demonstration that the policy pro- motes affordability and access; anal- ysis of the interaction between any such additional amounts with the re- quired family co-payments, and of the ability of subsidy payment rates to provide access to care without addi- tional fees; and data on the extent to which CCDF providers charge such ad- ditional amounts (based on informa- tion obtained in accordance with para- graph (d)(2) of this section); (6) How the Lead Agency’s payment practices support equal access to a range of charge such ad- ditional amounts (based on informa- tion obtained in accordance with para- graph (d)(2) of this section); (6) How the Lead Agency’s payment practices support equal access to a range of providers by providing sta- bility of funding and encouraging more child care providers to serve children receiving CCDF subsidies, in accord- ance with paragraph (m) of this sec- tion; (7) How and on what factors the Lead Agency differentiates payment rates; and (8) Any additional facts the Lead Agency considered in determining that its payment rates ensure equal access. (c) The Lead Agency shall dem- onstrate in the Plan that it has devel- oped and conducted, not earlier than two years before the date of the sub- mission of the Plan, either: (1) A statistically valid and reliable survey of the market rates for child care services; or (2) An alternative methodology, such as a cost estimation model, that has been: (i) Proposed by the Lead Agency; and (ii) Approved in advance by ACF. (d) The Lead Agency must: (1) Ensure that the market rate sur- vey or alternative methodology re- flects variations by geographic loca- tion, category of provider, and age of child; (2) Track through the m he Lead Agency must: (1) Ensure that the market rate sur- vey or alternative methodology re- flects variations by geographic loca- tion, category of provider, and age of child; (2) Track through the market rate survey or alternative methodology, or through a separate source, information on the extent to which: (i) Child care providers are partici- pating in the CCDF subsidy program and any barriers to participation, in- cluding barriers related to payment rates and practices; and (ii) CCDF child care providers charge amounts to families more than the re- quired family co-payment (under para- graph (l) of this section) in instances where the provider’s price exceeds the subsidy payment, including data on the size and frequency of any such amounts. (e) Prior to conducting the market rate survey or alternative method- ology, the Lead Agency must consult with: (1) The State Advisory Council on Early Childhood Education and Care (designated or established pursuant to section 642B(b)(1)(A)(i) of the Head Start Act (42 U.S.C. 9837b(b)(1)(A)(i)) or similar coordinating body, local child care program administrators, local child care resource and referral agen- cies, and other appropriate en ) of the Head Start Act (42 U.S.C. 9837b(b)(1)(A)(i)) or similar coordinating body, local child care program administrators, local child care resource and referral agen- cies, and other appropriate entities; and (2) Organizations representing child care caregivers, teachers, and direc- tors. (f) After conducting the market rate survey or alternative methodology, the Lead Agency must: (1) Prepare a detailed report con- taining the results, and make the re- port widely available, including by posting it on the Internet, not later than 30 days after the completion of the report. The report must include: (i) The results of the market rate survey or alternative methodology; 728 Dept. of Health and Human Services § 98.45 (ii) The estimated cost of care nec- essary (including any relevant vari- ation by geographic location, category of provider, or age of child) to support: (A) Child care providers’ implementa- tion of the health, safety, quality, and §§ 98.41 staffing through 98.44; and requirements at (B) Higher-quality care, as defined by the Lead Agency using a quality rating and improvement system or other sys- tem of quality indicators, at each level; (iii) The Lead Agency’s respons irements at (B) Higher-quality care, as defined by the Lead Agency using a quality rating and improvement system or other sys- tem of quality indicators, at each level; (iii) The Lead Agency’s response to stakeholder views and comments; and, (iv) The data and summary required at paragraph (d)(2)(ii) of this section. (2) Set payment rates for CCDF as- sistance: (i) In accordance with the results of the most recent market rate survey or alternative methodology conducted pursuant to paragraph (c) of this sec- tion; (ii) With base payment rates estab- lished at least at a level sufficient for child care providers to meet health, safety quality, and staffing require- ments in accordance with paragraph (f)(1)(ii)(A) of this section; (iii) Taking into consideration the cost of providing higher-quality child care services, including consideration of the information at each level of higher quality required by paragraph (f)(1)(ii)(B) of this section; (iv) Taking into consideration the views and comments of the public ob- tained in accordance with paragraph (e) and through other processes deter- mined by the Lead Agency; and (v) Without, to the extent prac- ticable, reducing the number of fam comments of the public ob- tained in accordance with paragraph (e) and through other processes deter- mined by the Lead Agency; and (v) Without, to the extent prac- ticable, reducing the number of fami- lies receiving CCDF assistance. (g) To facilitate parent choice, in- crease program quality, build supply, and better reflect the cost of providing care, it is permissible for a Lead Agen- cy to pay an eligible child care pro- vider the Lead Agency’s established payment rate at paragraph (a) of this section, which may be more than the price charged to children not receiving CCDF subsidies. (h) A Lead Agency may not establish different payment rates based on a family’s eligibility status, such as TANF status. (i) Payment rates under paragraph (a) of this section shall be consistent with the parental requirements in § 98.30 (j) Nothing in this section shall be construed to create a private right of action if the Lead Agency acts in ac- cordance with the Act and this part. (k) Nothing in this part shall be con- strued to prevent a Lead Agency from differentiating payment rates on the basis of such factors as: (1) Geographic location of child care providers (such as location in an urban his part shall be con- strued to prevent a Lead Agency from differentiating payment rates on the basis of such factors as: (1) Geographic location of child care providers (such as location in an urban or rural area); (2) Age or particular needs of chil- dren (such as the needs of children with disabilities, children served by child protective services, and children expe- riencing homelessness); (3) Whether child care providers pro- vide services during the weekend or other non-traditional hours; or (4) The Lead Agency’s determination that such differential payment rates may enable a parent to choose high- quality child care that best fits the parents’ needs. (l) Lead Agencies shall establish, and periodically revise, by rule, a sliding fee scale(s) for families that receive CCDF child care services that: (1) Helps families afford child care and enables choice of a range of child care options; (2) Is based on income and the size of the family and may be based on other factors as appropriate, but may not be based on the cost of care or amount of subsidy payment; (3) Provides for affordable family co- payments that are not a barrier to families receiving assistance under this part, no iate, but may not be based on the cost of care or amount of subsidy payment; (3) Provides for affordable family co- payments that are not a barrier to families receiving assistance under this part, not to exceed 7 percent of income for all families, regardless of the num- ber of children in care who may be re- ceiving CCDF assistance; and (4) At Lead Agency discretion, allows for co-payments to be waived for fami- lies whose incomes are at or below 150 percent of the poverty level for a fam- ily of the same size, that have children who are in foster or kinship care or otherwise receive or need to receive protective services, that are experi- encing homelessness, that have chil- dren who have a disability as defined at § 98.2, that are enrolled in Head Start or Early Head Start (42 U.S.C. 9831 et 729 § 98.46 45 CFR Subtitle A (10–1–24 Edition) seq.), or that meet other criteria estab- lished by the Lead Agency. the Lead Agency becomes aware that such a change will occur; (m) The Lead Agency shall dem- onstrate in the Plan that it has estab- lished payment practices applicable to all CCDF child care providers that re- flect generally accepted payment prac- tices of child care provide ency shall dem- onstrate in the Plan that it has estab- lished payment practices applicable to all CCDF child care providers that re- flect generally accepted payment prac- tices of child care providers that serve children who do not receive CCDF sub- sidies, which must include (unless the Lead Agency can demonstrate that such practices are not generally-ac- cepted for a type of child care setting): (1) Ensure timeliness of payment to child care providers by paying in ad- vance of or at the beginning of the de- livery of child care services to children receiving assistance under this part; (2) Support the fixed costs of pro- viding child care services by delinking provider payments from a child’s occa- sional absences by: (i) Basing payment on a child’s au- thorized enrollment; or, (ii) An alternative approach for which the Lead Agency provides a jus- tification in its Plan that the require- ments at paragraph (m)(2)(i) of this section are not practicable, including evidence that the alternative approach will not undermine the stability of child care programs. (3) Pay providers on a part-time or full-time basis (rather than paying for hours of service or smaller increments of time) lternative approach will not undermine the stability of child care programs. (3) Pay providers on a part-time or full-time basis (rather than paying for hours of service or smaller increments of time); and (4) Pay for reasonable mandatory registration fees that the provider charges to private-paying parents. (n) The Lead Agency shall dem- onstrate in the Plan that it has estab- lished payment practices applicable to all CCDF providers that: (1) Ensure child care providers re- ceive payment for any services in ac- cordance with a written payment agreement or authorization for services that includes, at a minimum, informa- tion regarding payment policies, in- fees cluding rates, schedules, any charged to providers, and the dispute resolution process required by para- graph (n)(3); (2) Ensure child care providers re- ceive prompt notice of changes to a family’s eligibility status that may im- pact payment, and that such notice is sent to providers no later than the day (3) Include timely appeal and resolu- tion processes for any payment inac- curacies and disputes; (4) May include taking precautionary measures when a provider is suspected of fiscal mismanagement; and (5) Ensure the to appeal and resolu- tion processes for any payment inac- curacies and disputes; (4) May include taking precautionary measures when a provider is suspected of fiscal mismanagement; and (5) Ensure the total payment received by CCDF child care providers is not re- duced by the determination of afford- able family co-payment as described in the sliding fee scale at § 98.45(l). [81 FR 67586, Sept. 30, 2016, as amended at 89 FR 15414, Mar. 1, 2024] § 98.46 Priority for child care services. (a) Lead Agencies shall give priority for services provided under § 98.50(a) to: (1) Children of families with very low family (considering income family size); (2) Children with special needs, which may include any vulnerable popu- lations as defined by the Lead Agency; and (3) Children experiencing homeless- ness. (b) Lead Agencies shall prioritize in- creasing access to high-quality child care and development services for chil- dren of families in areas that have sig- nificant concentrations of poverty and unemployment and that do not have a sufficient number of such programs. [81 FR 67587, Sept. 30, 2016] § 98.47 List of providers. If a Lead Agency does not have a reg- istration process for child ca nd unemployment and that do not have a sufficient number of such programs. [81 FR 67587, Sept. 30, 2016] § 98.47 List of providers. If a Lead Agency does not have a reg- istration process for child care pro- viders who are unlicensed or unregu- lated under State, local, or tribal law, it is required to maintain a list of the names and addresses of unlicensed or unregulated providers of child care services for which assistance is pro- vided under this part. [63 FR 39981, July 24, 1998. Redesignated at 81 FR 67584, Sept. 30, 2016] § 98.48 Nondiscrimination in admis- sions on the basis of religion. (a) Child care providers (other than family child care providers, as defined in receive assistance through grants and contracts under the § 98.2) that 730 Dept. of Health and Human Services § 98.50 CCDF shall not discriminate in admis- sions against any child on the basis of religion. (b) Paragraph (a) of this section does not prohibit a child care provider from selecting children for child care slots that are not funded directly (i.e., through grants or contracts to pro- viders) with assistance provided under the CCDF because such children or their family members participate on a regular b e slots that are not funded directly (i.e., through grants or contracts to pro- viders) with assistance provided under the CCDF because such children or their family members participate on a regular basis in other activities of the organization that owns or operates such provider. (c) Notwithstanding paragraph (b) of this section, if 80 percent or more of the operating budget of a child care provider comes from Federal or State funds, including direct or indirect as- sistance under the CCDF, the Lead Agency shall assure that before any further CCDF assistance is given to the provider, (1) The grant or contract relating to the assistance, or (2) The admission policies of the pro- vider specifically provide that no per- son with responsibilities in the oper- ation of the child care program, project, or activity will discriminate, on the basis of religion, in the admis- sion of any child. [63 FR 39981, July 24, 1998. Redesignated at 81 FR 67584, Sept. 30, 2016] § 98.49 Nondiscrimination in employ- ment on the basis of religion. (a) In general, except as provided in paragraph (b) of this section, nothing in this part modifies or affects the pro- vision of any other applicable Federal l n employ- ment on the basis of religion. (a) In general, except as provided in paragraph (b) of this section, nothing in this part modifies or affects the pro- vision of any other applicable Federal law and regulation relating to dis- crimination in employment on the basis of religion. (1) Child care providers that receive assistance through grants or contracts under the CCDF shall not discriminate, on the basis of religion, in the employ- ment of caregivers as defined in § 98.2. (2) If two or more prospective em- ployees are qualified for any position with a child care provider, this section shall not prohibit the provider from employing a prospective employee who is already participating on a regular basis in other activities of the organi- zation that owns or operates the pro- vider. (3) Paragraphs (a)(1) and (2) of this section shall not apply to employees of child care providers if such employees were employed with the provider on November 5, 1990. (b) Notwithstanding paragraph (a) of this section, a sectarian organization may require that employees adhere to the religious tenets and teachings of such organization and to rules forbid- ding the use of drugs or alcohol. (c) Notw ) of this section, a sectarian organization may require that employees adhere to the religious tenets and teachings of such organization and to rules forbid- ding the use of drugs or alcohol. (c) Notwithstanding paragraph (b) of this section, if 80 percent or more of the operating budget of a child care provider comes from Federal and State funds, including direct and indirect as- sistance under the CCDF, the Lead Agency shall assure that, before any further CCDF assistance is given to the provider, (1) The grant or contract relating to the assistance, or (2) The employment policies of the provider specifically provide that no person with responsibilities in the op- eration of the child care program will discriminate, on the basis of religion, in the employment of any individual as a caregiver, as defined in § 98.2. [63 FR 39981, July 24, 1998. Redesignated at 81 FR 67584, Sept. 30, 2016] Subpart F—Use of Child Care and Development Funds § 98.50 Child care services. (a) Direct child care services shall be provided: (1) To eligible children, as described in § 98.20; (2) Using a sliding fee scale, as de- scribed in § 98.45(l); (3) Using funding methods provided for in § 98.30 includi re services shall be provided: (1) To eligible children, as described in § 98.20; (2) Using a sliding fee scale, as de- scribed in § 98.45(l); (3) Using funding methods provided for in § 98.30 including grants or con- tracts for slots for children in under- served geographic areas, for infants and toddlers, and children with disabil- ities. Grants solely to improve the quality of child care services like those in (b) of this section would not satisfy the requirements at § 98.30(b); and (4) Based on the priorities in § 98.46. (b) Of the aggregate amount of funds expended by a State or Territory (i.e., Discretionary, Mandatory, and Federal and State share of Matching funds): (1) No less than nine percent shall be used for activities designed to improve the quality of child care services and 731 § 98.51 45 CFR Subtitle A (10–1–24 Edition) increase parental options for, and ac- cess to, high-quality child care as de- scribed at § 98.53; and (2) No less than three percent shall be used to carry out activities at § 98.53(a)(4) as such activities relate to the quality of care for infants and tod- dlers. (3) Nothing in this section shall pre- clude the State or Territory from re- serving a arry out activities at § 98.53(a)(4) as such activities relate to the quality of care for infants and tod- dlers. (3) Nothing in this section shall pre- clude the State or Territory from re- serving a larger percentage of funds to carry out activities described in para- graphs (b)(1) and (2) of this section. (4) Amounts reserved pursuant to this subsection may not be used to sat- isfy requirements at § 98.30(b). (c) Funds expended from each fiscal year’s allotment on quality activities pursuant to paragraph (b) of this sec- tion: (1) Must be in alignment with an as- sessment of the Lead Agency’s need to carry out such services and care as re- quired at § 98.53(a); (2) Must include measurable indica- tors of progress in accordance with § 98.53(g); and (3) May be provided directly by the Lead Agency or through grants or con- tracts with local child care resource and referral organizations or other ap- propriate entities. (d) Of the aggregate amount of funds expended (i.e., Discretionary, Manda- tory, and Federal and State share of Matching Funds), no more than five percent may be used for administrative activities as described at § 98.54. (e) Not less than 70 percent of the State and Manda- tory, and Federal and State share of Matching Funds), no more than five percent may be used for administrative activities as described at § 98.54. (e) Not less than 70 percent of the State and Territory Mandatory and Federal and State share of State Matching Funds shall be used to meet the child care needs of families who: (1) Are receiving assistance under a State program under Part A of title IV of the Social Security Act; (2) Are attempting through work ac- tivities to transition off such assist- ance program; and (3) Are at risk of becoming dependent on such assistance program. (f) From Discretionary amounts pro- vided for a fiscal year, the Lead Agency shall: (1) Reserve the minimum amount re- quired under paragraph (b) of this sec- tion for quality activities, and the for administrative costs de- funds scribed at paragraph (d) of this section; and (2) From the remainder, use not less than 70 percent to fund direct services (provided by the Lead Agency). (g) Of the funds remaining after ap- plying the provisions of paragraphs (a) through (f) of this section, the Lead Agency shall spend a substantial por- tion of funds to provide direct child care services to low-income emaining after ap- plying the provisions of paragraphs (a) through (f) of this section, the Lead Agency shall spend a substantial por- tion of funds to provide direct child care services to low-income families who are working or attending training or education. (h) Pursuant to § 98.16(i)(4), the Plan shall specify how the State will meet the child care needs of families de- scribed in paragraph (e) of this section. [81 FR 67587, Sept. 30, 2016, as amended at 89 FR 15415, Mar. 1, 2024; 89 FR 52397, June 24, 2024] § 98.51 Services for children experi- encing homelessness. Lead Agencies shall expend funds on activities that improve access to qual- ity child care services for children ex- periencing homelessness, including: (a) The use of procedures to permit enrollment (after an initial eligibility determination) of children experi- encing homelessness while required documentation is obtained; (1) If, after full documentation is pro- vided, a family experiencing homeless- ness is found ineligible, (i) The Lead Agency shall pay any amount owed to a child care provider for services provided as a result of the initial eligibility determination; and (ii) Any CCDF payment made prior to the eligible, (i) The Lead Agency shall pay any amount owed to a child care provider for services provided as a result of the initial eligibility determination; and (ii) Any CCDF payment made prior to the final eligibility determination shall not be considered an error or im- proper payment under subpart K of this part; (2) [Reserved] (b) Training and technical assistance for providers and appropriate Lead Agency (or designated entity) staff on identifying and serving children experi- encing homelessness and their families; and (c) Specific outreach to families ex- periencing homelessness. [81 FR 67588, Sept. 30, 2016] § 98.52 Child care resource and refer- ral system. (a) A Lead Agency may expend funds to establish or support a system of 732 Dept. of Health and Human Services § 98.53 local or regional child care resource and referral organizations that is co- ordinated, to the extent determined ap- propriate by the Lead Agency, by a statewide public or private nonprofit, community-based or regionally based, lead child care resource and referral or- ganization. (b) If a Lead Agency uses funds as de- scribed in paragraph (a) of this section, the local or regional child care re- source a r regionally based, lead child care resource and referral or- ganization. (b) If a Lead Agency uses funds as de- scribed in paragraph (a) of this section, the local or regional child care re- source and referral organizations sup- ported shall, at the direction of the Lead Agency: (1) Provide parents in the State with consumer education information re- ferred to in § 98.33 (except as otherwise in that paragraph), con- provided cerning the full range of child care op- tions (including faith-based and com- munity-based child care providers), analyzed by provider, including child care provided during nontraditional hours and through emergency child care centers, in their political subdivi- sions or regions; (2) To the extent practicable, work directly with families who receive as- sistance under this subchapter to offer the families support and assistance, using information described in para- graph (b)(1) of this section, to make an informed decision about which child care providers they will use, in an ef- fort to ensure that the families are en- rolling their children in the most ap- propriate child care setting to suit their needs and one that is of high quality (as determined by t will use, in an ef- fort to ensure that the families are en- rolling their children in the most ap- propriate child care setting to suit their needs and one that is of high quality (as determined by the Lead Agency); (3) Collect data and provide informa- tion on the coordination of services and supports, including services under section 619 and part C of the Individ- uals with Disabilities Education Act (20 U.S.C. 1431, et seq.), for children with disabilities (as defined in section 602 of such Act (20 U.S.C. 1401)); (4) Collect data and provide informa- tion on the supply of and demand for child care services in political subdivi- sions or regions within the State and submit such information to the State; (5) Work to establish partnerships with public agencies and private enti- ties, including faith-based and commu- nity-based child care providers, to in- crease the supply and quality of child care services in the State; and (6) As appropriate, coordinate their activities with the activities of the State Lead Agency and local agencies that administer funds made available in accordance with this part. [81 FR 67588, Sept. 30, 2016] § 98.53 Activities to improve the qual- ity of chil ivities of the State Lead Agency and local agencies that administer funds made available in accordance with this part. [81 FR 67588, Sept. 30, 2016] § 98.53 Activities to improve the qual- ity of child care. (a) The Lead Agency must expend funds from each fiscal year’s allotment on quality activities pursuant to §§ 98.50(b) and 98.83(g) in accordance with an assessment of need by the Lead Agency. Such funds must be used to carry out at least one of the following quality activities to improve the qual- ity of child care services for all chil- dren, regardless of CCDF receipt, in ac- cordance with paragraph (e) of this sec- tion: (1) Supporting the training, profes- sional development, and postsecondary education of the child care workforce as part of a progression of professional development through activities such as those included at § 98.44, in addition to: (i) Offering training, professional de- velopment, and postsecondary edu- cation opportunities for child care caregivers, teachers and directors that: (A) Relate to the use of scientifically developmentally-appropriate, based, culturally-appropriate, and age-appro- priate strategies to promote the social, emotional, physical, rs and directors that: (A) Relate to the use of scientifically developmentally-appropriate, based, culturally-appropriate, and age-appro- priate strategies to promote the social, emotional, physical, and cognitive de- velopment of children, including those related to nutrition and physical activ- ity; and (B) Offer specialized training, profes- sional development, and postsecondary education for caregivers, teachers and directors caring for those populations prioritized at § 98.44(b)(2)(iv), and chil- dren with disabilities; (ii) Incorporating the effective use of data to guide program improvement and improve opportunities for care- givers, teachers and directors to ad- vance on their progression of training, professional development, and postsec- ondary education; (iii) Including effective, age-appro- priate behavior management strategies and training, including positive behav- ior interventions and support models for birth to school-age, that promote 733 § 98.53 45 CFR Subtitle A (10–1–24 Edition) positive social and emotional develop- ment and reduce challenging behav- iors, including reducing suspensions and expulsions of children under age five for such behaviors; (iv) Providi –1–24 Edition) positive social and emotional develop- ment and reduce challenging behav- iors, including reducing suspensions and expulsions of children under age five for such behaviors; (iv) Providing training and outreach on engaging parents and families in culturally and linguistically appro- priate ways to expand their knowledge, skills, and capacity to become mean- ingful partners in supporting their children’s positive development; (v) Providing training corresponding to the nutritional and physical activity needs of children to promote healthy development; (vi) Providing training or profes- for caregivers, sional development teachers and directors regarding the early neurological development of chil- dren; and (vii) Connecting child care care- givers, teachers, and directors with available Federal and State financial aid that would assist these individuals in pursuing relevant postsecondary education, or delivering financial re- sources directly through programs that provide scholarships and compensation improvements for education attain- ment and retention. (2) Improving upon the development or implementation of the early learn- ing and development guidelines at § 98.15(a) holarships and compensation improvements for education attain- ment and retention. (2) Improving upon the development or implementation of the early learn- ing and development guidelines at § 98.15(a)(9) by providing technical as- sistance to eligible child care providers in order to enhance the cognitive, physical, social, and emotional devel- opment and overall well-being of par- ticipating children. (3) Developing, implementing, or en- hancing a tiered quality rating and im- provement system for child care pro- viders and services to meet consumer education § 98.33, which may: requirements at (i) Support and assess the quality of child care providers in the State, Terri- tory, or Tribe; (ii) Build on licensing standards and other regulatory standards for such providers; (iii) Be designed to improve the qual- ity of different types of child care pro- viders and services; (iv) Describe the safety of child care facilities; promote parents’ and families’ under- standing of the early childhood system and the rating of the program in which the child is enrolled; (vi) Provide, to the maximum extent practicable, financial incentives and other supports designed to expand the full diversi ldhood system and the rating of the program in which the child is enrolled; (vi) Provide, to the maximum extent practicable, financial incentives and other supports designed to expand the full diversity of child care options and help child care providers improve the quality of services; and (vii) Accommodate a variety of dis- tinctive approaches to early childhood education and care, including but not limited to, those practiced in faith- based settings, community-based set- tings, child centered settings, or simi- lar settings that offer a distinctive ap- proach to early childhood development. (4) Improving the supply and quality of child care programs and services for infants and toddlers through activities, which may include: (i) Establishing or expanding high- quality community or neighborhood based family and child development centers, which may serve as resources to child care providers in order to im- prove the quality of early childhood services provided to infants and tod- dlers from low-income families and to help eligible child care providers im- prove their capacity to offer high-qual- ity, age-appropriate care to infants and toddlers from low-income families; (ii) Esta rs from low-income families and to help eligible child care providers im- prove their capacity to offer high-qual- ity, age-appropriate care to infants and toddlers from low-income families; (ii) Establishing or expanding the op- eration of community or neighborhood- based family child care networks; (iii) Promoting and expanding child care providers’ ability to provide devel- opmentally appropriate services for in- fants and toddlers through, but not limited to: (A) Training and professional devel- opment for caregivers, teachers and di- rectors, including coaching and tech- nical assistance on this age group’s unique needs from statewide networks of qualified infant-toddler specialists; and (B) Improved coordination with early intervention specialists who provide services for infants and toddlers with disabilities under part C of the Individ- uals with Disabilities Education Act (20 U.S.C. 1431. et seq.); (v) Build the capacity of early child- hood programs and communities to (iv) If applicable, developing infant and toddler components within the 734 Dept. of Health and Human Services § 98.53 Lead Agency’s quality rating and im- provement system described in para- graph (a)(3) of applicable, developing infant and toddler components within the 734 Dept. of Health and Human Services § 98.53 Lead Agency’s quality rating and im- provement system described in para- graph (a)(3) of this section for child care providers for infants and toddlers, or the development of infant and tod- dler components in the child care li- censing regulations or early learning and development guidelines; (v) Improving the ability of parents to access transparent and easy to un- derstand consumer information about high-quality infant and toddler care as described at § 98.33; and (vi) Carrying out other activities de- termined by the Lead Agency to im- prove the quality of infant and toddler care provided, and for which there is evidence that the activities will lead to improved infant and toddler health and safety, infant and toddler cognitive and physical development, or infant and toddler well-being, including providing health and safety training (including training in safe sleep practices, first aid, and cardiopulmonary resuscitation for providers and caregivers. (5) Establishing or expanding a state- wide system of child care resource and referral services. (6) Facilitating compl ices, first aid, and cardiopulmonary resuscitation for providers and caregivers. (5) Establishing or expanding a state- wide system of child care resource and referral services. (6) Facilitating compliance with Lead Agency requirements for inspec- tion, monitoring, training, and health and safety, and with licensing stand- ards. (7) Evaluating and assessing the qual- ity and effectiveness of child care pro- grams and services offered, including evaluating how such programs posi- tively impact children. (8) Supporting child care providers in the voluntary pursuit of accreditation by a national accrediting body with demonstrated, valid, and reliable pro- gram standards of high-quality. (9) Supporting Lead Agency or local efforts to develop or adopt high-quality program standards relating to health, mental health, nutrition, physical ac- tivity, and physical development. (10) Carrying out other activities, in- cluding implementing consumer edu- cation provisions at § 98.33, determined by the Lead Agency to improve the quality of child care services provided, and for which measurement of out- comes relating to improvement of pro- vider preparedness, child safety, child well-being, or e the Lead Agency to improve the quality of child care services provided, and for which measurement of out- comes relating to improvement of pro- vider preparedness, child safety, child well-being, or entry to kindergarten is possible. (b) Lead Agencies are strongly en- couraged to engage families and pro- viders with direct experience in the child care subsidy system to improve the quality of child care and child care subsidy policy. Lead Agencies may ex- pend quality funds to support such en- gagement including: (1) Planning and implementing an en- gagement strategy to solicit and im- plement feedback from families, child care providers, and staff who have di- rect experience with the child care sub- sidy program and/or quality improve- ment activities; (2) Compensating participating par- ents, child care providers, and child care staff for their time and for ex- penses incurred as a result of their par- ticipation (i.e. transportation, child care); and (3) Hiring parents, child care pro- viders, or child care staff to serve as subject matter experts in the develop- ment or refinement of subsidy policy and quality initiatives. (c) Pursuant to § 98.16(j), the Lead Agency shall descr ro- viders, or child care staff to serve as subject matter experts in the develop- ment or refinement of subsidy policy and quality initiatives. (c) Pursuant to § 98.16(j), the Lead Agency shall describe in its Plan the activities it will fund under this sec- tion. (d) Non-Federal expenditures re- quired by § 98.55(c) (i.e., the mainte- nance-of effort amount) are not subject to the requirement at paragraph (a) of this section. (e) Activities to improve the quality of child care services are not restricted to activities affecting children meeting eligibility requirements under § 98.20 or to child care providers of services for which assistance is provided under this part. (f) Unless expressly authorized by law, targeted funds for quality im- provement and other set asides that may be included in appropriations law may not be used towards meeting the quality expenditure minimum require- ment at § 98.50(b). (g) States shall annually prepare and submit reports, including a quality progress report and expenditure report, to the Secretary, which must be made publicly available and shall include: (1) An assurance that the State was in compliance with requirements at § 98.50(b) in the pre s report and expenditure report, to the Secretary, which must be made publicly available and shall include: (1) An assurance that the State was in compliance with requirements at § 98.50(b) in the preceding fiscal year and information about the amount of funds reserved for that purpose; 735 § 98.54 45 CFR Subtitle A (10–1–24 Edition) (2) A description of the activities car- ried out under this section to comply with § 98.50(b); (3) The measures the State will use to evaluate its progress in improving the quality of child care programs and services in the State, and data on the extent to which the State had met these measures; (4) A report describing any changes to State regulations, enforcement mechanisms, or other State policies addressing health and safety based on an annual review and assessment of se- rious child injuries and any deaths oc- curring in child care programs serving children receiving assistance under this part, and in other regulated and unregulated child care centers and family child care homes, to the extent possible; and (5) A description of how the Lead Agency responded to complaints sub- mitted through the national hotline and Web site, required in section 65 and family child care homes, to the extent possible; and (5) A description of how the Lead Agency responded to complaints sub- mitted through the national hotline and Web site, required in section 658L(b) of the CCDBG Act (42 U.S.C. 9858j(b)). [81 FR 67588, Sept. 30, 2016, as amended at 89 FR 15415, Mar. 1, 2024; 89 FR 52397, June 24, 2024] § 98.54 Administrative costs. (a) Not more than five percent of the aggregate funds expended by the Lead Agency from each fiscal year’s allot- ment, including the amounts expended in the State pursuant to § 98.55(b), shall be expended for administrative activi- ties. These activities may include but are not limited to: (1) Salaries and related costs of the staff of the Lead Agency or other agen- cies engaged in the administration and implementation of the program pursu- ant to § 98.11. Program administration and implementation include the fol- lowing types of activities: (i) Planning, developing, and design- ing the Child Care and Development Fund program; (ii) Providing local officials and the public with information about the pro- gram, including the conduct of public hearings; (iii) Preparing the application and Plan; (iv) Developing agreeme program; (ii) Providing local officials and the public with information about the pro- gram, including the conduct of public hearings; (iii) Preparing the application and Plan; (iv) Developing agreements with ad- ministering agencies in order to carry out program activities; (v) Monitoring program activities for compliance with program require- ments; (vi) Preparing reports and other doc- uments related to the program for sub- mission to the Secretary; (vii) Maintaining substantiated com- plaint files in accordance with the re- quirements of § 98.32; (viii) Coordinating the provision of Child Care and Development Fund serv- ices with other Federal, State, and local child care, early childhood devel- opment programs, and before-and after- school care programs; (ix) Coordinating the resolution of audit and monitoring findings; (x) Evaluating program results; and (xi) Managing or supervising persons with responsibilities described in para- graphs (a)(1)(i) through (x) of this sec- tion; (2) Travel costs incurred for official business in carrying out the program; (3) Administrative services, including such services as accounting services, performed by grantees or subgrantees or under a 2) Travel costs incurred for official business in carrying out the program; (3) Administrative services, including such services as accounting services, performed by grantees or subgrantees or under agreements with third parties; (4) Audit services as required at § 98.65; (5) Other costs for goods and services required for the administration of the program, including rental or purchase of equipment, utilities, and office sup- plies; and (6) Indirect costs as determined by an indirect cost agreement or cost alloca- tion plan pursuant to § 98.57. (b) The following activities do not count towards the five percent limita- tion on administrative expenditures in paragraph (a) of this section: (1) Establishment and maintenance of computerized child care information systems; (2) Establishing and operating a cer- tificate program; (3) Eligibility determination and re- determination; (4) Preparation/participation in judi- cial hearings; (5) Child care placement; (6) Recruitment, licensing, inspection of child care providers; (7) Training for Lead Agency or sub recipient staff on billing and claims processes associated with the subsidy program; 736 Dept. of Health and Human Services § 98.55 ( ction of child care providers; (7) Training for Lead Agency or sub recipient staff on billing and claims processes associated with the subsidy program; 736 Dept. of Health and Human Services § 98.55 (8) Reviews and supervision of child care placements; (9) Activities associated with pay- ment rate setting; (10) Resource and referral services; and (11) Training for child care staff. (c) The five percent limitation at paragraph (a) of this section applies only to the States and Territories. The amount of the limitation at paragraph (a) of this section does not apply to Tribes or tribal organizations. (d) Non-Federal expenditures re- quired by § 98.55(c) (i.e., the mainte- nance-of-effort amount) are not subject to the five percent limitation at para- graph (a) of this section. (e) If a Lead Agency enters into agreements with sub-recipients for op- eration of the CCDF program, the amount of the contract or grant attrib- utable to administrative activities as described in this section shall be count- ed towards the five percent limit. [63 FR 39981, July 24, 1998. Redesignated and amended at 81 FR 67588, 67590, Sept. 30, 2016] § 98.55 Matching fund requirements. (a) Federal matching fun l be count- ed towards the five percent limit. [63 FR 39981, July 24, 1998. Redesignated and amended at 81 FR 67588, 67590, Sept. 30, 2016] § 98.55 Matching fund requirements. (a) Federal matching funds are avail- able for expenditures in a State based upon the formula specified at § 98.63(a). (b) Expenditures in a State under paragraph (a) of this section will be matched at the Federal medical assist- ance rate for the applicable fiscal year for allowable activities, as described in the approved State Plan, that meet the goals and purposes of the Act. (c) In order to receive Federal match- ing funds for a fiscal year under para- graph (a) of this section: (1) States shall also expend an amount of non-Federal funds for child care activities in the State that is at least equal to the State’s share of ex- penditures for fiscal year 1994 or 1995 (whichever is greater) under sections 402(g) and (i) of the Social Security Act as these sections were in effect before October 1, 1995; and (2) The expenditures shall be for al- lowable services or activities, as de- scribed in the approved State Plan if appropriate, that meet the goals and purposes of the Act. (3) All Mandatory Funds are obl The expenditures shall be for al- lowable services or activities, as de- scribed in the approved State Plan if appropriate, that meet the goals and purposes of the Act. (3) All Mandatory Funds are obli- gated in accordance with § 98.60(d)(2)(i). (d) The same expenditure may not be used to meet the requirements under both paragraphs (b) and (c) of this sec- tion in a fiscal year. (e) An expenditure in the State for purposes of this subpart may be: (1) Public funds when the funds are: (i) Appropriated directly to the Lead Agency specified at § 98.10, or trans- ferred from another public agency to that Lead Agency and under its admin- istrative control, or certified by the contributing public agency as rep- resenting expenditures eligible for Fed- eral match; (ii) Not used to match other Federal funds; and (iii) Not Federal funds, or are Federal funds authorized by Federal law to be used to match other Federal funds; or (2) Donated from private sources when the donated funds: (i) Are donated without any restric- tion that would require their use for a specific individual, organization, facil- ity or institution; (ii) Do not revert to the donor’s facil- ity or use; (iii) Are not used t ted without any restric- tion that would require their use for a specific individual, organization, facil- ity or institution; (ii) Do not revert to the donor’s facil- ity or use; (iii) Are not used to match other Fed- eral funds; (iv) Shall be certified both by the Lead Agency and by the donor (if funds are donated directly to the Lead Agen- cy) or the Lead Agency and the entity designated by the State to receive do- nated funds pursuant to paragraph (f) of this section (if funds are donated di- rectly to the designated entity) as available and representing funds eligi- ble for Federal match; and (v) Shall be subject to the audit re- quirements in § 98.65 of these regula- tions. (f) Donated funds need not be trans- ferred to or under the administrative control of the Lead Agency in order to qualify as an expenditure eligible to re- ceive Federal match under this section. They may be given to the public or pri- vate entities designated by the State to implement the child care program in accordance with § 98.11 provided that such entities are identified and des- ignated in the State Plan to receive do- nated in accordance with § 98.16(d)(2). funds (g) The following are not counted a n accordance with § 98.11 provided that such entities are identified and des- ignated in the State Plan to receive do- nated in accordance with § 98.16(d)(2). funds (g) The following are not counted as an eligible State expenditure under this part: 737 § 98.56 45 CFR Subtitle A (10–1–24 Edition) (1) In-kind contributions; and (2) Family contributions to the cost 404(d) of the Social Security Act shall be treated as Discretionary Funds; of care as required by § 98.45(l). (h) Public pre-kindergarten (pre-K) expenditures: (1) May be used to meet the mainte- nance-of-effort requirement only if the State has not reduced its expenditures for full-day/full-year child care serv- ices; and (2) May be eligible for Federal match if the State includes in its Plan, as pro- vided in § 98.16(w), a description of the efforts it will undertake to ensure that pre-K programs meet the needs of working parents. (3) In any fiscal year, a State may use public pre-K funds for up to 20% of the funds serving as maintenance-of-ef- fort under this subsection. In addition, in any fiscal year, a State may use other public pre-K funds as expendi- tures serving as State matching funds under this subsection; such maintenance-of-ef- fort under this subsection. In addition, in any fiscal year, a State may use other public pre-K funds as expendi- tures serving as State matching funds under this subsection; such public pre- K funds used as State expenditures may not exceed 30% of the amount of a State’s expenditures required to draw down the State’s full allotment of Fed- eral matching funds available under this subsection. (4) If applicable, the CCDF Plan shall reflect the State’s intent to use public pre-K funds in excess of 10%, but not for more than 20% of its maintenance- of-effort or 30% of its State matching funds in a fiscal year. Also, the Plan shall describe how the State will co- ordinate its pre-K and child care serv- ices to expand the availability of child care. (i) Matching funds are subject to the liquidation require- obligation and ments at § 98.60(d)(4). [63 FR 39981, July 24, 1998, as amended at 72 FR 27979, May 18, 2007. Redesignated and amended at 81 FR 67588, 67590, Sept. 30, 2016; 89 FR 52397, June 24, 2024] § 98.56 Restrictions on the use of funds. (a) General. (1) Funds authorized under section 418 of the Social Security Act and section 658B of the Child Care and Devel 2016; 89 FR 52397, June 24, 2024] § 98.56 Restrictions on the use of funds. (a) General. (1) Funds authorized under section 418 of the Social Security Act and section 658B of the Child Care and Development Block Grant Act, and all funds transferred to the Lead Agen- cy pursuant to section 404(d) of the So- cial Security Act, shall be expended consistent with these regulations. Funds transferred pursuant to section (2) Funds shall be expended in accord- ance with applicable State and local laws, except as superseded by § 98.3. (b) Construction. (1) For State and local agencies and nonsectarian agen- cies or organizations, no funds shall be expended for the purchase or improve- ment of land, or for the purchase, con- struction, or permanent improvement of any building or facility. However, funds may be expended for minor re- modeling, and for upgrading child care facilities to assure that providers meet State and local child care standards, including applicable health and safety requirements. Improvements or up- grades to a facility which are not speci- fied under the definitions of construc- tion or major renovation at § 98.2 may be considered minor remodeling and are, therefore, n ments. Improvements or up- grades to a facility which are not speci- fied under the definitions of construc- tion or major renovation at § 98.2 may be considered minor remodeling and are, therefore, not prohibited. (2) For sectarian agencies or organi- zations, the prohibitions in paragraph (b)(1) of this section apply; however, funds may be expended for minor re- modeling only if necessary to bring the into compliance with the facility health and safety requirements estab- lished pursuant to § 8.41. (3) Tribes and tribal organizations are subject to the requirements at § 98.84 regarding construction and ren- ovation. (c) Tuition. Funds may not be ex- pended for students enrolled in grades 1 through 12 for: (1) Any service provided to such stu- dents during the regular school day; (2) Any service for which such stu- dents receive academic credit toward graduation; or (3) Any instructional services that supplant or duplicate the academic program of any public or private school. (d) Sectarian purposes and activities. Funds provided under grants or con- tracts to providers may not be ex- pended for any sectarian purpose or ac- tivity, including sectarian worship or instruction. Assist arian purposes and activities. Funds provided under grants or con- tracts to providers may not be ex- pended for any sectarian purpose or ac- tivity, including sectarian worship or instruction. Assistance provided to parents through certificates is not a grant or contract. Funds provided through child care certificates may be expended for sectarian purposes or ac- tivities, including sectarian worship or 738 Dept. of Health and Human Services § 98.60 instruction when provided as part of the child care services. demonstration, and for a national toll free hotline and Web site; (e) Non-Federal share for other Federal programs. The CCDF may not be used as the non-Federal share for other Federal grant programs, unless explicitly au- thorized by statute. [63 FR 39981, July 24, 1998. Redesignated and amended at 81 FR 67588, 67590, Sept. 30, 2016] § 98.57 Cost allocation. (a) The Lead Agency and subgrantees shall keep on file cost allocation plans or indirect cost agreements, as appro- priate, that have been amended to in- clude costs allocated to the CCDF. (b) Subgrantees that do not already have a negotiated indirect rate with the Federal government should prepare and keep on file cost , that have been amended to in- clude costs allocated to the CCDF. (b) Subgrantees that do not already have a negotiated indirect rate with the Federal government should prepare and keep on file cost allocation plans or indirect cost agreements, as appro- priate. (c) Approval of the cost allocation plans or indirect cost agreements is not specifically required by these regu- lations, but these plans and agree- ments are subject to review. [63 FR 39981, July 24, 1998. Redesignated at 81 FR 67588, Sept. 30, 2016] Subpart G—Financial Management § 98.60 Availability of funds. (a) The CCDF is available, subject to the availability of appropriations, in accordance with the apportionment of funds from the Office of Management and Budget as follows: (1) Discretionary Funds are available to States, Territories, and Tribes; (2) State Mandatory and Matching Funds are available to States; (3) Territory Mandatory Funds are available to Territories; and (4) Tribal Mandatory Funds are avail- able to Tribes. (b) Subject to the availability of ap- propriations, in accordance with rel- evant statutory provisions and the ap- portionment of funds from the Office of Management and Budget, the Sec- reta Tribes. (b) Subject to the availability of ap- propriations, in accordance with rel- evant statutory provisions and the ap- portionment of funds from the Office of Management and Budget, the Sec- retary: (1) May withhold a portion of the CCDF funds made available for a fiscal year for the provision of technical as- sistance, for research, evaluation, and (2) Will award the remaining CCDF funds to grantees that have an ap- proved application and Plan. (c) The Secretary may make pay- ments in installments, and in advance or by way of reimbursement, with nec- essary adjustments due to overpay- ments or underpayments. (d) The following obligation and liq- uidation provisions apply to States and Territories: (1) Discretionary Fund allotments shall be obligated in the fiscal year in which funds are awarded or in the suc- ceeding fiscal year. Unliquidated obli- gations as of the end of the succeeding fiscal year shall be liquidated within one year. (2)(i) Mandatory Funds for States re- questing Matching Funds per § 98.55 shall be obligated in the fiscal year in which the funds are granted and are available until expended. (ii) Mandatory Funds for States that do not request Matching Funds ng Matching Funds per § 98.55 shall be obligated in the fiscal year in which the funds are granted and are available until expended. (ii) Mandatory Funds for States that do not request Matching Funds are available until expended. (3) Mandatory Funds for Territories shall be obligated in the fiscal year in which funds are granted and liquidated no later than the end of the succeeding fiscal year. (4) Both the Federal and non-Federal share of the Matching Fund shall be obligated in the fiscal year in which the funds are granted and liquidated no later than the end of the succeeding fiscal year. (5) Except for paragraph (d)(6) of this section, determination of whether funds have been obligated and liq- uidated will be based on: (i) State or local law; or, (ii) If there is no applicable State or local law, the regulation at 45 CFR 75.2, Expenditures and Obligations. (6) Obligations may include sub- grants or contracts that require the payment of funds to a third party (e.g., subgrantee or contractor). However, the following are not considered third party subgrantees or contractors: (i) A local office of the Lead Agency; (ii) Another entity at the same level of government as the Lead Ag contractor). However, the following are not considered third party subgrantees or contractors: (i) A local office of the Lead Agency; (ii) Another entity at the same level of government as the Lead Agency; or (iii) A local office of another entity at the same level of government as the Lead Agency. 739 § 98.61 45 CFR Subtitle A (10–1–24 Edition) (7) In instances where the Lead Agen- cy issues child care certificates, funds for child care services provided through a child care certificate will be consid- ered obligated when a child care cer- tificate is issued to a family in writing that indicates: (i) The amount of funds that will be paid to a child care provider or family, and (ii) The specific length of time cov- ered by the certificate, which is lim- ited to the date established for redeter- mination of the family’s eligibility, but shall be no later than the end of the liquidation period. (8) In instances where third party agencies issue child care certificates, the obligation of funds occurs upon en- tering into agreement through a subgrant or contract with such agency, rather than when the third party issues certificates to a family. (9) Any funds not obligated during the obl unds occurs upon en- tering into agreement through a subgrant or contract with such agency, rather than when the third party issues certificates to a family. (9) Any funds not obligated during the obligation period specified in para- graph (d) of this section will revert to the Federal government. Any funds not liquidated by the end of the applicable liquidation period specified in para- graph (d) of this section will also revert to the Federal government. (e) The following obligation and liq- uidation provisions apply to Tribal Dis- cretionary and Tribal Mandatory Funds: (1) Tribal grantees shall obligate all funds by the end of the fiscal year fol- lowing the fiscal year for which the grant is awarded. Any funds not obli- gated during this period will revert to the Federal government. (2) Obligations that remain unliqui- dated at the end of the succeeding fis- cal year shall be liquidated within the next fiscal year. Any tribal funds that remain unliquidated by the end of this period will also revert to the Federal government. (f) Cash advances shall be limited to the minimum amounts needed and shall be timed to be in accord with the actual, immediate cash requirements of the Sta will also revert to the Federal government. (f) Cash advances shall be limited to the minimum amounts needed and shall be timed to be in accord with the actual, immediate cash requirements of the State Lead Agency, its sub- grantee or contractor in carrying out the purpose of the program in accord- ance with 31 CFR part 205. (g) Funds that are returned (e.g., loan repayments, funds deobligated by cancellation of a child care certificate, unused subgrantee funds) as well as program income (e.g., contributions made by families directly to the Lead Agency or subgrantee for the cost of care where the Lead Agency or sub- grantee has made a full payment to the child care provider) shall, (1) if received by the Lead Agency during the applicable obligation period, described in paragraphs (d) and (e) of this section, be used for activities spec- ified in the Lead Agency’s approved plan and must be obligated by the end of the obligation period; or (2) if received after the end of the ap- plicable obligation period described at paragraphs (d) and (e) of this section, be returned to the Federal government. (h) Repayment of loans made to child care providers as part of a quality im- provement le obligation period described at paragraphs (d) and (e) of this section, be returned to the Federal government. (h) Repayment of loans made to child care providers as part of a quality im- provement activity pursuant to § 98.53, may be made in cash or in services pro- vided in-kind. Payment provided in- kind shall be based on fair market value. All loans shall be fully repaid. (i) Lead Agencies shall recover child care payments that are the result of fraud. These payments shall be recov- ered from the party responsible for committing the fraud. [63 FR 39981, July 24, 1998, as amended at 81 FR 3020, Jan. 20, 2016; 81 FR 67591, Sept. 30, 2016; 89 FR 15415, Mar. 1, 2024; 89 FR 52397, June 24, 2024] § 98.61 Allotments from the Discre- tionary Fund. (a) To the 50 States, the District of Columbia, and the Commonwealth of Puerto Rico an amount equal to the funds appropriated for the Child Care and Development Block Grant, less amounts reserved for technical assist- ance, research, and the national hot- line and Web site, pursuant to § 98.60(b), and amounts reserved for the Terri- tories and Tribes, pursuant to § 98.60(b) and paragraphs (b) and (c) of this sec- tion, shall be allotted bas tional hot- line and Web site, pursuant to § 98.60(b), and amounts reserved for the Terri- tories and Tribes, pursuant to § 98.60(b) and paragraphs (b) and (c) of this sec- tion, shall be allotted based upon the formula specified in section 658O(b) of the Act (42 U.S.C. 9858m(b)). (b) For the U.S. Territories of Guam, American Samoa, the Virgin Islands of the United States, and the Common- wealth of the Northern Mariana Islands an amount up to one-half of one per- cent of the amount appropriated for the Child Care and Development Block Grant shall be reserved. 740 Dept. of Health and Human Services § 98.61 (1) Funds shall be allotted to these Territories based upon the following factors: (i) A Young Child factor—the ratio of the number of children in the Territory under five years of age to the number of such children in all Territories; and (ii) An Allotment Proportion factor— determined by dividing the per capita income of all individuals in all the Ter- ritories by the per capita income of all individuals in the Territory. (A) Per capita income shall be: (1) Equal to the average of the annual per capita incomes for the most recent period of three consecutive years for which sati come of all individuals in the Territory. (A) Per capita income shall be: (1) Equal to the average of the annual per capita incomes for the most recent period of three consecutive years for which satisfactory data are available at the time such determination is made; and (2) Determined every two years. (B) Per capita income determined, pursuant to paragraph (b)(1)(ii)(A) of this section, will be applied in estab- lishing the allotment for the fiscal year for which it is determined and for the following fiscal year. (C) If the Allotment Proportion fac- tor determined at paragraph (b)(1)(ii) of this section: (1) Exceeds 1.2, then the Allotment Proportion factor of the Territory shall be considered to be 1.2; or (2) Is less than 0.8, then the Allot- ment Proportion factor of the Terri- tory shall be considered to be 0.8. (2)(i) The formula used in calculating a Territory’s allotment is as follows: t × YCF APF t ( × YCF APF t t ∑ ) × amount reserved for Territories at paragraph (a) of this section. (ii) For purposes of the formula speci- fied at paragraph (b)(2)(i) of this sec- tion, the term ‘‘YCFt’’ means the Terri- tory’s Young Child factor as defined at paragraph (b)(1)(i) of this section. (ii) For purposes of the formula speci- fied at paragraph (b)(2)(i) of this sec- tion, the term ‘‘YCFt’’ means the Terri- tory’s Young Child factor as defined at paragraph (b)(1)(i) of this section. (iii) For purposes of the formula specified at paragraph (b)(2)(i) of this section, the term ‘‘APFt’’ means the Territory’s Allotment Proportion fac- tor as defined at paragraph (b)(1)(ii) of this section. (c) For Indian Tribes and tribal orga- nizations, including any Alaskan Na- tive Village or regional or village cor- poration as defined in or established pursuant to the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.) not less than two percent of the amount appropriated for the Child Care and Development Block Grant shall be reserved. (1) Except as specified in paragraph (c)(2) of this section, grants to indi- vidual tribal grantees will be equal to the sum of: (i) A base amount as set by the Sec- retary; and (ii) An additional amount per Indian child under age 13 (or such similar age as determined by the Secretary from the best available data), which is deter- mined by dividing the amount of funds available, less amounts set aside for el- igible Tribes, pursua (or such similar age as determined by the Secretary from the best available data), which is deter- mined by dividing the amount of funds available, less amounts set aside for el- igible Tribes, pursuant to paragraph (c)(1)(i) of this section, by the number of all Indian children living on or near tribal reservations or other appropriate area served by the tribal grantee, pur- suant to § 98.80(e). (2) Grants to Tribes with fewer than 50 Indian children that apply as part of a consortium, pursuant to § 98.80(b)(1), are equal to the sum of: (i) A portion of the base amount, pur- suant to paragraph (c)(1)(i) of this sec- tion, that bears the same ratio as the number of Indian children in the Tribe living on or near the reservation, or other appropriate area served by the tribal grantee, pursuant to § 98.80(e), does to 50; and (ii) An additional amount per Indian child, pursuant to paragraph (c)(1)(ii) of this section. (3) Tribal consortia will receive grants that are equal to the sum of the individual grants of their members. (d) All funds reserved for Territories at paragraph (b) of this section will be allotted to Territories, and all funds reserved for Tribes at paragraph (c) of thi e individual grants of their members. (d) All funds reserved for Territories at paragraph (b) of this section will be allotted to Territories, and all funds reserved for Tribes at paragraph (c) of this section will be allotted to tribal grantees. Any funds that are returned by the Territories after they have been allotted will revert to the Federal gov- ernment. (e) For other organizations, up to $2,000,000 may be reserved from the tribal funds reserved at paragraph (c) of this section. From this amount the Secretary may award a grant to a Na- tive Hawaiian Organization, as defined in section 4009(4) of the Augustus F. Hawkins-Robert T. Stafford Elemen- tary and Secondary School Improve- ment Amendments of 1988 (20 U.S.C. 741 § 98.62 45 CFR Subtitle A (10–1–24 Edition) 4909(4)) and to a private non-profit or- ganization established for the purpose of serving youth who are Indians or Na- tive Hawaiians. The Secretary will es- tablish selection criteria and proce- dures for the award of grants under this subsection by notice in the FED- ERAL REGISTER. (f) Lead Agencies shall expend any funds that may be set-aside for tar- geted activities pursuant to annual ap- propriations law as di grants under this subsection by notice in the FED- ERAL REGISTER. (f) Lead Agencies shall expend any funds that may be set-aside for tar- geted activities pursuant to annual ap- propriations law as directed by the Secretary. [63 FR 39981, July 24, 1998, as amended at 81 FR 67591, Sept. 30, 2016] § 98.62 Allotments from the Mandatory Fund. (a) Each of the 50 States and the Dis- trict of Columbia will be allocated from the funds appropriated under sec- tion 418(a)(3)(A) of the Social Security Act, less the amounts reserved for technical to § 98.60(b)(1) an amount of funds equal to the greater of: assistance pursuant (1) the Federal share of its child care expenditures under subsections (g) and (i) of section 402 of the Social Security Act (as in effect before October 1, 1995) for fiscal year 1994 or 1995 (whichever is greater); or (2) the average of the Federal share of its child care expenditures under the subsections referred to in subparagraph (a)(1) of this section for fiscal years 1992 through 1994. (b) For Indian Tribes and tribal orga- nizations will be allocated from the section funds appropriated under 418(a)(3)(B) of the Social Security Act shall be allocated according to t 992 through 1994. (b) For Indian Tribes and tribal orga- nizations will be allocated from the section funds appropriated under 418(a)(3)(B) of the Social Security Act shall be allocated according to the for- mula at paragraph (c) of this section. In Alaska, only the following 13 enti- ties shall receive allocations under this subpart, in accordance with the for- mula at paragraph (c) of this section: (1) The Metlakatla Indian Commu- nity of the Annette Islands Reserve: (2) Arctic Slope Native Association; (3) Kawerak, Inc.; (4) Maniilaq Association; (5) Association of Village Council Presidents; (6) Tanana Chiefs Conference; (7) Cook Inlet Tribal Council; (8) Bristol Bay Native Association; (9) Aleutian and Pribilof Islands As- sociation; (10) Chugachmuit; (11) Tlingit and Haida Central Coun- cil; (12) Kodiak Area Native Association; and (13) Copper River Native Association. (c)(1) Grants to individual Tribes with 50 or more Indian children, and to Tribes with fewer than 50 Indian chil- dren that apply as part of a consortium pursuant to § 98.80(b)(1), will be equal to an amount per Indian child under age 13 (or such similar age as determined by the Secretary from the best avail- a - dren that apply as part of a consortium pursuant to § 98.80(b)(1), will be equal to an amount per Indian child under age 13 (or such similar age as determined by the Secretary from the best avail- able data), which is determined by di- viding the amount of funds available, by the number of Indian children in each Tribe’s service area pursuant to § 98.80(e). (2) Tribal consortia will receive grants that are equal to the sum of the individual grants of their members. (d) The Territories will be allocated from the funds appropriated under sec- tion 418(a)(3)(C) of the Social Security Act based upon the following factors: (1) A Young Child factor—the ratio of the number of children in the Territory under five years of age to the number of such children in all Territories; and (2) An Allotment Proportion factor— determined by dividing the per capita income of all individuals in all the Ter- ritories by the per capita income of all individuals in the Territory. (i) Per capita income shall be: (A) Equal to the average of the an- nual per capita incomes for the most recent period of three consecutive years for which satisfactory data are available at the time such determina- tion is made be: (A) Equal to the average of the an- nual per capita incomes for the most recent period of three consecutive years for which satisfactory data are available at the time such determina- tion is made; and (B) Determined every two years. (ii) [Reserved] [63 FR 39981, July 24, 1998, as amended at 89 FR 15415, Mar. 1, 2024 § 98.63 Allotments from the Matching Fund. (a) To each of the 50 States and the District of Columbia there is allocated an amount equal to its share of the total available under section 418(a)(3) of the Social Security Act. That amount is based on the same ratio as the number of children under age 13 re- siding in the State bears to the na- tional total of children under age 13. 742 Dept. of Health and Human Services § 98.64 The number of children under 13 is de- rived from the best data available to the Secretary for the second preceding fiscal year. (b) For purposes of this section, the amounts section available under 418(a)(3) of the Social Security Act (42 U.S.C. 618(a)(3)) excludes the amounts reserved under § 98.60(b)(1) for technical assistance, re- search and evaluation, and the na- tional toll-free hotline and Web site and under § 98.62(a) and (b) for the 18(a)(3)) excludes the amounts reserved under § 98.60(b)(1) for technical assistance, re- search and evaluation, and the na- tional toll-free hotline and Web site and under § 98.62(a) and (b) for the Man- datory Fund. allocated and (c) Amounts under this section are available pursuant to the requirements at § 98.55(c). [63 FR 39981, July 24, 1998, as amended at 81 FR 67591, Sept. 30, 2016] § 98.64 Reallotment and redistribution of funds. (a) According to the provisions of this section State and Tribal Discre- tionary Funds are subject to reallot- ment, and State Matching Funds and Territory Mandatory Funds are subject to redistribution. State funds are real- lotted or redistributed only to States as defined for the original allocation. Tribal funds are reallotted only to Tribes. Mandatory Funds granted to Territories are redistributed only to Territories. Discretionary Funds grant- ed to the Territories are not subject to reallotment. Any Discretionary funds granted to the Territories that are re- turned after they have been allotted will revert to the Federal Government. (b) Any portion of a State’s Discre- tionary Fund allotment that is not re- quired to carry out its Plan, in th that are re- turned after they have been allotted will revert to the Federal Government. (b) Any portion of a State’s Discre- tionary Fund allotment that is not re- quired to carry out its Plan, in the pe- riod for which the allotment is made available, shall be reallotted to other States in proportion to the original al- lotments. For purposes of this para- graph the term ‘‘State’’ means the 50 States, the District of Columbia, and the Commonwealth of Puerto Rico. The other Territories and the Tribes may not receive reallotted State Discre- tionary Funds. (1) Each year, the State shall report to the Secretary either the dollar amount from the previous year’s grant that it will be unable to obligate by the end of the obligation period or that all funds will be obligated during such time. Such report shall be postmarked by April 1st. (2) Based upon the reallotment re- ports submitted by States, the Sec- retary will reallot funds. (i) If the total amount available for reallotment is $25,000 or more, funds will be reallotted to States in propor- tion to each State’s allotment for the applicable fiscal year’s funds, pursuant to § 98.61(a). (ii) If the amount available for real- lotment 000 or more, funds will be reallotted to States in propor- tion to each State’s allotment for the applicable fiscal year’s funds, pursuant to § 98.61(a). (ii) If the amount available for real- lotment is less than $25,000, the Sec- retary will not reallot any funds, and such funds will revert to the Federal government. (iii) If an individual reallotment amount to a State is less than $500, the Secretary will not issue the award, and such funds will revert to the Federal government. (3) If a State does not submit a real- lotment report by the deadline for re- port submittal, either: (i) The Secretary will determine that the State does not have any funds available for reallotment; or (ii) In the case of a report post- marked after April 1st, any funds re- ported to be available for reallotment shall revert to the Federal government. (4) States receiving reallotted funds shall obligate and expend these funds in accordance with § 98.60. The reallot- ment of funds does not extend the obli- gation period or the program period for expenditure of such funds. (c)(1) Any portion of the Matching Fund granted to a State that is not ob- ligated in the period for which the grant is made shall be gation period or the program period for expenditure of such funds. (c)(1) Any portion of the Matching Fund granted to a State that is not ob- ligated in the period for which the grant is made shall be redistributed. Funds, if any, will be redistributed on the request of, and only to, those other States that have met the requirements of § 98.55(c) in the period for which the grant was first made. For purposes of this paragraph (c)(1), the term ‘‘State’’ means the 50 States and the District of Columbia. Territorial and tribal grant- ees may not receive redistributed Matching Funds. (2) Matching Funds allotted to a State under § 98.63(a), but not granted, shall also be redistributed in the man- ner described in paragraph (1) of this section. (3) The amount of Matching Funds granted to a State that will be made available for redistribution will be 743 § 98.65 45 CFR Subtitle A (10–1–24 Edition) based on the State’s financial report to ACF for the Child Care and Develop- ment Fund (ACF–696) and is subject to the monetary limits at paragraph (b)(2) of this section. (4) A State eligible to receive redis- tributed Matching Funds shall also use the ACF–696 to request its share of the redist and is subject to the monetary limits at paragraph (b)(2) of this section. (4) A State eligible to receive redis- tributed Matching Funds shall also use the ACF–696 to request its share of the redistributed funds, if any. (5) A State’s share of redistributed Matching Funds is based on the same ratio as the number of children under 13 residing in the State to the number of children residing in all States eligi- ble to receive and that request the re- distributed Matching Funds. (6) Redistributed funds are considered part of the grant for the fiscal year in which the redistribution occurs. (d) Any portion of a Tribe’s allot- ment of Discretionary Funds that is not required to carry out its Plan, in the period for which the allotment is made available, shall be reallotted to other tribal grantees in proportion to their original allotments. States and Territories may not receive reallotted tribal funds. (1) Each year, the Tribe shall report to the Secretary either the dollar amount from the previous year’s grant that it will be unable to obligate by the end of the obligation period or that all funds will be obligated during such time. Such report shall be postmarked by a deadline esta he previous year’s grant that it will be unable to obligate by the end of the obligation period or that all funds will be obligated during such time. Such report shall be postmarked by a deadline established by the Sec- retary. (2) Based upon the reallotment re- ports submitted by Tribes, the Sec- retary will reallot Tribal Discretionary Funds among the other Tribes. (i) If the total amount available for reallotment is $25,000 or more, funds will be reallotted to other tribal grant- ees in proportion to each Tribe’s origi- nal allotment for the applicable fiscal year pursuant to § 98.62(c). (ii) If the total amount available for reallotment is less than $25,000, the Secretary will not reallot any funds, and such funds will revert to the Fed- eral government. (iii) If an individual reallotment amount to an applicant Tribe is less than $500, the Secretary will not issue the award, and such funds will revert to the Federal government. (3) If a Tribe does not submit a real- lotment report by the deadline for re- port submittal, either: (i) The Secretary will determine that Tribe does not have any funds available for reallotment; or (ii) In the case of a report received after the deadli by the deadline for re- port submittal, either: (i) The Secretary will determine that Tribe does not have any funds available for reallotment; or (ii) In the case of a report received after the deadline established by the Secretary, any funds reported to be available for reallotment shall revert to the Federal government. (4) Tribes receiving reallotted funds shall obligate and expend these funds in accordance with § 98.60. The reallot- ment of funds does not extend the obli- gation period or the program period for expenditure of such funds. (e)(1) Any portion of the Mandatory Funds that are not obligated in the pe- riod for which the grant is made shall be redistributed. Territory Mandatory Funds, if any, will be redistributed on the request of, and only to, those other Territories that have obligated their entire Territory Mandatory Fund allo- cation in full for the period for which the grant was first made. (2) The amount of Mandatory Funds granted to a Territory that will be made available for redistribution will be based on the Territory’s financial report to ACF for the Child Care and Development Fund (ACF–696) and is subject to the monetary limits at para- graph (b)(2) of th vailable for redistribution will be based on the Territory’s financial report to ACF for the Child Care and Development Fund (ACF–696) and is subject to the monetary limits at para- graph (b)(2) of this section. (3) A Territory eligible to receive re- distributed Mandatory Funds shall also use the ACF–696 to request its share of the redistributed funds, if any. (4) A Territory’s share of redistrib- uted Mandatory Funds is based on the same ratio as § 98.62(d). (5) Redistributed funds are considered part of the grant for the fiscal year in which the redistribution occurs. [63 FR 39981, July 24, 1998, as amended at 81 FR 67591, Sept. 30, 2016; 89 FR 15416, Mar. 1, 2024] § 98.65 Audits and financial reporting. (a) Each Lead Agency shall have an audit conducted after the close of each program period in accordance with 45 CFR part 75, subpart F, and the Single Audit Act Amendments of 1996. (b) Lead Agencies are responsible for ensuring that subgrantees are audited in accordance with appropriate audit requirements. 744 Dept. of Health and Human Services § 98.66 (c) Not later than 30 days after the completion of the audit, Lead Agencies shall submit a copy of their audit re- port to the l iate audit requirements. 744 Dept. of Health and Human Services § 98.66 (c) Not later than 30 days after the completion of the audit, Lead Agencies shall submit a copy of their audit re- port to the legislature of the State or, if applicable, to the Tribal Council(s). Lead Agencies shall also submit a copy of their audit report to the HHS In- spector General for Audit Services, as well as to their cognizant agency, if ap- plicable. (d) Any amounts determined through an audit not to have been expended in accordance with these statutory or reg- ulatory provisions, or with the Plan, and that are subsequently disallowed by the Department shall be repaid to the Federal government, or the Sec- retary will offset such amounts against any other CCDF funds to which the Lead Agency is or may be entitled. (e) Lead Agencies shall provide ac- cess to appropriate books, documents, papers and records to allow the Sec- retary to verify that CCDF funds have been expended in accordance with the statutory and regulatory requirements of the program, and with the Plan. (f) The audit required in paragraph (a) of this section shall be conducted by an agency that is independent of the State, Territory or y and regulatory requirements of the program, and with the Plan. (f) The audit required in paragraph (a) of this section shall be conducted by an agency that is independent of the State, Territory or Tribe as defined by generally accepted government audit- ing standards issued by the Comp- troller General, or a public accountant who meets such independent standards. (g) Lead Agencies shall submit finan- cial reports, in a manner specified by ACF, quarterly for each fiscal year until funds are expended. (h) At a minimum, a State or terri- torial Lead Agency’s quarterly report shall include the following information on expenditures under CCDF grant funds, including Discretionary (which includes realloted funding and any funds transferred from the TANF block grant), Mandatory, and Matching Funds (which includes redistributed funding); and State Matching and Maintenance-of-Effort (MOE) Funds: (1) Child care administration; (2) Quality activities, including any sub-categories of quality activities as required by ACF; (3) Direct services for both grant or contracted slots and certificates; (4) Non-direct services, including: (i) Establishment and maintenance of computerized child care in ivities as required by ACF; (3) Direct services for both grant or contracted slots and certificates; (4) Non-direct services, including: (i) Establishment and maintenance of computerized child care information systems; (ii) Certificate program cost/eligi- bility determination; (iii) All other non-direct services; and (5) Such other information as speci- fied by the Secretary. (i) Tribal Lead Agencies shall submit financial reports annually in a manner specified by ACF. [63 FR 39981, July 24, 1998, as amended at 81 FR 67591, Sept. 30, 2016; 89 FR 15416, Mar. 1, 2024] § 98.66 Disallowance procedures. (a) Any expenditures not made in ac- cordance with the Act, the imple- menting regulations, or the approved Plan, will be subject to disallowance. (b) If the Department, as the result of an audit or a review, finds that expend- itures should be disallowed, the De- partment will notify the Lead Agency of this decision in writing. (c)(1) If the Lead Agency agrees with the finding that amounts were not ex- pended in accordance with the Act, these regulations, or the Plan, the Lead Agency shall fulfill the provisions of the disallowance notice and repay any amounts improperly expended; or (2 were not ex- pended in accordance with the Act, these regulations, or the Plan, the Lead Agency shall fulfill the provisions of the disallowance notice and repay any amounts improperly expended; or (2) The Lead Agency may appeal the finding: (i) By requesting reconsideration from the Assistant Secretary, pursuant to paragraph (f) of this section; or (ii) By following the procedure in paragraph (d) of this section. (d) A Lead Agency may appeal the disallowance decision to the Depart- mental Appeals Board in accordance with 45 CFR part 16. (e) The Lead Agency may appeal a disallowance of costs that the Depart- ment has determined to be unallowable under an award. A grantee may not ap- peal the determination of award amounts or disposition of unobligated balances. (f) The Lead Agency’s request for re- consideration in (c)(2)(i) of this section shall be postmarked no later than 30 days after the receipt of the disallow- ance notice. A Lead Agency may re- quest an extension within the 30-day 745 § 98.67 45 CFR Subtitle A (10–1–24 Edition) time frame. The request for reconsider- ation, pursuant to (c)(2)(i) of this sec- tion, need not follow any prescribed form, but it shall contain: (1) y 745 § 98.67 45 CFR Subtitle A (10–1–24 Edition) time frame. The request for reconsider- ation, pursuant to (c)(2)(i) of this sec- tion, need not follow any prescribed form, but it shall contain: (1) The amount of the disallowance; (2) The Lead Agency’s reasons for be- lieving that the disallowance was im- proper; and (3) A copy of the disallowance deci- sion issued pursuant to paragraph (b) of this section. (g)(1) Upon receipt of a request for re- consideration, pursuant to (c)(2)(i) of this section, the Assistant Secretary or the Assistant Secretary’s designee will inform the Lead Agency that the re- quest is under review. (2) The Assistant Secretary or the designee will review any material sub- mitted by the Lead Agency and any other necessary materials. (3) If the reconsideration decision is adverse to the Lead Agency’s position, the response will include a notification of the Lead Agency’s right to appeal to the Departmental Appeals Board, pur- suant to paragraph (d) of this section. (h) If a Lead Agency refuses to repay amounts after a final decision has been made, the amounts will be offset against future payments to the Lead Agency. (i) The appeals process in this section ion. (h) If a Lead Agency refuses to repay amounts after a final decision has been made, the amounts will be offset against future payments to the Lead Agency. (i) The appeals process in this section is not applicable if the disallowance is part of a compliance review, pursuant to § 98.90, the findings of which have been appealed by the Lead Agency. (j) Disallowances under the CCDF program are subject to interest regula- tions at 45 CFR part 30. Interest will begin to accrue from the date of notifi- cation. § 98.67 Fiscal requirements. (a) Lead Agencies shall expend and account for CCDF funds in accordance with their own laws and procedures for expending and accounting for their own funds. (b) Unless otherwise specified in this part, contracts that entail the expendi- ture of CCDF funds shall comply with the laws and procedures generally ap- plicable to expenditures by the con- tracting agency of its own funds. (c) Fiscal control and accounting pro- cedures shall be sufficient to permit: (1) Preparation of reports required by the Secretary under this subpart and under subpart H; and (2) The tracing of funds to a level of expenditure adequate to establish that such funds have not be t: (1) Preparation of reports required by the Secretary under this subpart and under subpart H; and (2) The tracing of funds to a level of expenditure adequate to establish that such funds have not been used in viola- tion of the provisions of this part. § 98.68 Program integrity. (a) Lead Agencies are required to de- scribe in their Plan effective internal controls that are in place to ensure in- tegrity and accountability, while main- taining continuity of services, in the CCDF program. These shall include: (1) Processes to ensure sound fiscal management; (2) Processes to identify areas of risk; (3) Processes to train child care pro- viders and staff of the Lead Agency and other agencies engaged in the adminis- tration of CCDF about program re- quirements and integrity; and (4) Regular evaluation of internal control activities. (b) Lead Agencies are required to de- scribe in their Plan the processes that are in place to: (1) Identify fraud or other program violations, which may include, but are not limited to the following: (i) Record matching and database linkages; (ii) Review of attendance and billing records; (iii) Quality control or quality assur- ance reviews; and (iv) Staff de, but are not limited to the following: (i) Record matching and database linkages; (ii) Review of attendance and billing records; (iii) Quality control or quality assur- ance reviews; and (iv) Staff training on monitoring and audit processes. (2) Investigate and recover fraudulent payments and to impose sanctions on clients or providers in response to fraud. (c) Lead Agencies must describe in their Plan the procedures that are in place for documenting and verifying that children receiving assistance under this part meet eligibility criteria at the time of eligibility determination and redetermination. Because a child meeting eligibility requirements at the most recent eligibility determination or redetermination is considered eligi- ble during the period between redeter- minations as described in § 98.21(a)(1): (1) The Lead Agency shall pay any amount owed to a child care provider for services provided for such a child during this period under a payment 746 Dept. of Health and Human Services § 98.71 agreement or authorization for serv- ices; and (2) Any CCDF payment made for such a child during this period shall not be considered an error or improper pay- ment under subpart K of Services § 98.71 agreement or authorization for serv- ices; and (2) Any CCDF payment made for such a child during this period shall not be considered an error or improper pay- ment under subpart K of this part due to a change in the family’s cir- cumstances, as set forth at § 98.21(a). [81 FR 67591, Sept. 30, 2016] Subpart H—Program Reporting Requirements § 98.70 Reporting requirements. (a) Quarterly Case-level Report— (1) State and territorial Lead Agen- cies that receive assistance under the CCDF shall prepare and submit to the Department, in a manner specified by the Secretary, a quarterly case-level report of monthly family case-level data. Data shall be collected monthly and submitted quarterly. States may submit the data monthly if they choose to do so. (2) The information shall be reported for the three-month federal fiscal pe- riod preceding the required report. The first report shall be submitted no later than August 31, 1998, and quarterly thereafter. The first report shall in- clude data from the third quarter of FFY 1998 (April 1998 through June 1998). States and Territorial Lead Agencies which choose to submit case- level data monthly must submit their report for April n- clude data from the third quarter of FFY 1998 (April 1998 through June 1998). States and Territorial Lead Agencies which choose to submit case- level data monthly must submit their report for April 1998 no later than July 30, 1998. Following reports must be sub- mitted every thirty days thereafter. (3) State and territorial Lead Agen- cies choosing to submit data based on a sample shall submit a sampling plan to ACF for approval 60 days prior to the submission of the first quarterly re- port. States are not prohibited from submitting case-level data for the en- tire population receiving CCDF serv- ices. (4) Quarterly family case-level re- ports to the Secretary shall include the information listed in § 98.71(a). (b) Annual Report— (1) State and territorial Lead Agen- cies that receive assistance under CCDF shall prepare and submit to the Secretary an annual report. The report shall be submitted, in a manner speci- fied by the Secretary, by December 31 of each year and shall cover the most recent federal fiscal year (October through September). (2) The first annual aggregate report shall be submitted no later than De- cember 31, 1997, and every twelve months thereafter. (3) Bienn e most recent federal fiscal year (October through September). (2) The first annual aggregate report shall be submitted no later than De- cember 31, 1997, and every twelve months thereafter. (3) Biennial reports to Congress by the Secretary shall include the infor- mation listed in § 98.71(b). (c) Tribal Annual Report— (1) Tribal Lead Agencies that receive assistance under CCDF shall prepare and submit to the Secretary an annual aggregate report. (2) The report shall be submitted in the manner specified by the Secretary by December 31 of each year and shall cover services for children and families served with CCDF funds during the pre- ceding Federal Fiscal Year. (3) Biennial reports to Congress by the Secretary shall include the infor- mation listed in § 98.71(c). (d) State and territorial Lead Agen- cies shall make the following reports publicly available on a Web site in a timely manner: (1) Annual administrative data re- ports under paragraph (b) of this sec- tion; (2) Quarterly financial reports under § 98.65(g); and (3) Annual quality progress reports under § 98.53(g). [63 FR 39981, July 24, 1998, as amended at 81 FR 67592, Sept. 30, 2016; 89 FR 52397, June 24, 2024] § 98.71