Department of Health and Human Services 
OFFICE OF

INSPECTOR  GENERAL

States  Child  Care  Certificate  Systems:  An

Early  Assessment  of  Vulnerabilities  and

Barriers

JUNE GIBBS BROWN 
Inspector  General 
FEBRUARY 1998  OFFICE OF INSPECIOR GENERAL 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 
452, is to protect the integrity of the Department of Health and Human Services 
programs as well as the health and welfare of beneficiaries served by them. This 
statutory mission is carried out through a nationwide program of audits, investigations, 
inspections, sanctions, and fraud alerts.  The Inspector General informs the Secretary 
of program and management problems and recommends legislative, regulatory, and 
operational approaches to correct them. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) is one of several components of the 
Office of Inspector General. It conducts short-term management and program 
evaluations (called inspections) that focus on issues of concern to the Department, the 
Congress, and the public. The inspection reports provide findings and 
recommendations on the efficiency, vulnerability, and effectiveness of departmental 
programs. 
 Chicago Regional Office prepared this report under the direction of William C. 
Moran, Regional Inspector General, and Natalie Coen, Deputy Regional Inspector 
General. Principal OEI staff included: 
CHICAGO REGION 
Emily   Project Leader  Ann OConnor 
 Leibowitz  Linda Hall 
Elizabeth Mages 
To obtain a copy of this report, call the Chicago Regional Office at (312) 353-4124. 
Reports are also available on the World Wide Web at our home page address,  E X E C U T I V E   S U M M A RY

PURPOSE 
To identify vulnerabilities and barriers to effective implementation of States child care 
certificate systems under the Child Care and Development Fund which is administered 
under the Child Care and Development Block Grant Act. 
BACKGROUND 
Child Care a Priority 
Difficulty in obtaining affordable and safe child care is widely recognized as a major 
barrier that prevents families from leaving welfare and entering and remaining in the 
workforce. The Administration has made ensuring safe, accessible and affordable child 
care for low-income families a top priority. The Congress has also given attention to this 
area. 
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 repealed 
the existing Title IV-A child care programs   Child Care, Transitional Child 
Care, and At-Risk Care) and created two new child care funds (matching and 
mandatory). The funding for these programs is now folded into the Child Care and 
Development Fund (CCDF). Program goals include the following: promoting parental 
choice; encouraging States to provide consumer education to parents; and helping States 
implement health, safety, licensing, and registration standards. The program is currently 
funded for a total of $20.9 billion for Fiscal Years 1996-2002. 
Use of Certificates 
The Child Care and Development Fund (CCDF) requires States to give eligible families 
the option of enrolling their children with an eligible provider that has a grant or contract 
or receiving a child care certificate (also called a voucher) with which they can purchase 
child care. During the last few years, certificate use has become the primary method of 
financing care.  Approximately half of parents using certificates obtain care from informal 
providers -- neighbors or relatives.  Most of these informal providers are license-exempt -
- they operate legally outside of the States regulatory framework. 
Parental choice, the primary goal of the certificate system, presents additional challenges 
to meeting the other goals of the CCDF, such as consumer education and health and 
safety. States need to place additional emphasis on the provision of consumer education 
and the enforcement of health and safety standards in a system where many parents 
choose  license-exempt  providers. 
1  Methodology and Scope 
Our study is not meant to be a definitive evaluation of States certificate systems.

Rather, it is intended to provide a baseline of information upon which to build

knowledge of this complex system.  In that vein, in order to gain knowledge and

understanding of any barriers to the use of certificates in implementing the CCDF, we

interviewed State Child Care administrators in all 50 States and the District of Columbia

and collected data regarding their child care subsidy systems. In addition, in six States

(California, Georgia, Illinois, New Jersey, Oregon, and Texas) we performed a more

intensive review. We interviewed State lead agency staff, certificate/voucher management

agency staff (either from private or public State contracted agencies), child care resource

and referral agency staff, and parents and providers in structured discussion groups.

FINDINGS 
 In the child care certificate system, parental choice may be restricted by low 
provider payment rates and high co-payment rates. 
Without equal access to appropriate care, low-income families will not have the range of 
care that is adequate to support their work schedules and needs of their children. If 
providers are not reimbursed at rates that enable them to serve subsidized children, 
parents access will be restricted and their ability to choose limited. 
Twenty-nine out of 51 States do not make payments to child care providers that 
are based on the 75th percentile of the market rate. (Title IV-A Child Care 
regulations in effect before October 1996 required that States make payments to 
providers caring for children using subsidies based on the 75th percentile cost of 
such types of care in the local areas.  The preamble to the current proposed rule 
sets forth this same benchmark, not a requirement.) 
If family co-payments are too high, families will not be able to access more expensive 
regulated care.  These families will have no choice but to find less expensive care, which 
is often from a license-exempt provider. 
In at least 22 out of 51 States, many families eligible to receive child care subsidies 
are subject to co-payments that exceed 10 percent of their income. (The 
Administration for Children and Families sets forth the 10 percent benchmark in 
the preamble of the proposed rule.  In addition, most experts believe 10 percent 
to be the limit of affordability. We use this as the standard for our analysis.) 
CONSUMER EDUCATION Child care consumer education appears limited. 
States face multiple constraints providing adequate consumer education. These 
include: large caseloads; long waiting lists; multiple functions of Child Care 
Resource and Referral agencies; and reliance on printed materials. 
ii  Families using child care subsidies face multiple constraints accessing consumer 
education. For those families not linked to the welfare system, access to consumer 
education is particularly limited. Individual practical constraints, such as time and 
transportation also restrict access.  Lastly, families that have a provider prior to 
entry receive minimal consumer education. 
 AND SAFETY:  State efforts may not be sufficient to ensure that health and 
safety standards are met, particularly for license-exempt providers. 
Minimal on-going and professional monitoring of providers may not ensure that 
basic health and safety standards are being met. Forty-three States rely on 
certification of license-exempt providers. 
Only 12 States report screening all providers.  Screening of providers for criminal 
background and child abuse and neglect history is lacking in some States, 
particularly  for  license-exempt  providers. 
RECOMMENDATIONS 
With regard to access, our analysis highlights the funding constraints within the child care 
certificate  system.  We recognize that hard choices need to be made about child care 
spending versus other important social needs.  The responsibility for adequately funding 
the child care certificate system involves Federal, State, local and private resources. 
Funding allocation decisions are legitimate issues that cannot be addressed in our study. 
However, we make several recommendations regarding the other issues highlighted in 
our report. 
The Administration for Children and Families should: 
Set forth the goal that States monitor all providers (including relatives) through 
professional inspections of all child care settings (i.e. in-home, family homes and 
centers) and know the backgrounds of all providers through criminal background 
and child abuse history registry checks. 
Help States establish intrastate and interstate comprehensive child abuse and 
neglect and criminal background check registries, and toll free numbers to report 
problems and concerns. 
Disseminate information about effective ways to enhance consumer education. 
Help States devise outcome measures of quality consumer education. 
We acknowledge the difficulty of implementing these recommendations and suggest that 
States look to the Department of Defense model of monitoring and oversight of child 
care and to States that have already incorporated these provisions into their systems. 
111  We make these recommendations recognizing the Administration for Children and 
Families Child Care Bureaus past efforts addressing many of these areas. We urge 
them to continue efforts to provide technical assistance and guidance to the States. 
AGENCY 
We received comments from the Administration for Children and Families. The ACF 
concurs with our recommendations and describes actions they will take in response to our 
recommendations. The   actions include increased technical assistance and 
dissemination of information to States on model practices regarding the monitoring of 
child care providers.  In addition, ACF will consult with child welfare to craft solutions to 
the constraints involved in using child abuse and neglect central registries such as 
confidentiality, scope of information maintained and allowable uses of that information. 
The ACF will also continue to disseminate information about effective ways to enhance 
consumer  education.  Finally, ACF will develop optional data elements to report the 
manner in which consumer education is provided to parents. The full text of the 
Administration for Children and Families comments is in Appendix B. 
We acknowledge their efforts and urge ACF to continue to provide support and 
assistance to States. 
iv  TABLE  OF  CONTENTS

PAGE 
EXECUTIVESUMMARY

 . . . . . . . .  1

FINDINGS . . . . . . . . . . . . .  . . . . . . . . . . . . .  7

Access  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..  , 
 
.  Consumer Education  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..  11 
Health and Safety Standards  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..  14 
 
RECOMMENDATIONS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..  17 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..  A-l 
APPENDIX B: AGENCY COMMENTS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..  B-l  I N T R O D U C T I ON

PURPOSE 
To identify vulnerabilities and barriers to effective implementation of States child care 
certificate systems under the Child Care and Development Fund which is administered 
under the Child Care and Development Block Grant Act. 
BACKGROUND 
 as Policy 
Difficulty in obtaining affordable and safe child care is widely recognized as a major 
barrier that prevents families from leaving welfare and entering and remaining in the 
workforce. Experts agree that parents are more likely to work and remain in the 
workforce if child care is affordable, stable, conveniently located, and of good 
Child care helps parents establish and maintain economic self-sufficiency. Child care 
assistance is crucial to successfully move families from welfare to work and to enable 
income working families to remain in the workforce. 
A focus of the Administration and a Secretarial initiative, child care is viewed as critical 
to the success of States welfare-to-work efforts. The Administration has made ensuring 
safe, accessible and affordable child care for low-income families a top priority under 
welfare reform. Additional Administration investment in child care includes initiatives 
such as Healthy Child Care America, increased funding for Head Start, and the 
sponsoring of a White House Conference on Child Care in October 1997. 
 Care 
Since 1962, child care payments have been available for recipients of Aid to Families 
with Dependent Children (AFDC) who were receiving job training, although this benefit 
was infrequently used because mothers of preschool children were exempted from job 
training requirements.  As the emphasis of welfare reform efforts has increasingly focused 
on transitioning recipients from welfare to work, child care assistance became an 
essential  component. 
The Family Support Act (FSA) of 1988 guaranteed child care (called 
Opportunities and Basic Skills Training Program (JOBS) child care) for families 
participating in work, educational, or training activities. In addition, FSA guaranteed 
families that left welfare for work, 1 year of Transitional Child Care (TCC). In 1990, 
Congress passed two additional pieces of legislation that recognized the need for child 
care support among all low-income families, not just those on AFDC. The Child Care 
and Development Block Grant (CCDBG) and the At-Risk Child Care program provided 
low-income working families with child care subsidies. The CCDBG targeted child care 
services for low-income families as well as activities to improve the overall quality and 
1  supply of child care for families in general. The CCDBG was 100 percent federally 
funded and did not require a State match. At-Risk Child Care, which required a State 
match, targeted funding to low-income non-AFDC families that needed care in order to 
work and at-risk of becoming eligible for AFDC. Unlike JOBS and Transitional Child 
Care, CCDBG and At-Risk Child Care were not entitlement programs. 
 and   Care 
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 
(PRWORA) authorized a major overhaul of the welfare system and replaced AFDC with 
block grants to the States, offering the States maximum flexibility to design their own 
welfare programs.  The PRWORA mandates strict work requirements and lifetime 
eligibility limits.  More recipients are required to participate in work activities for longer 
hours. In addition, the Act lowers the age of the child for which a work exemption is 
granted and forbids States from sanctioning a single parent with a child under age six for 
refusing to participate in required activities due to lack of child care. 
The PRWORA repealed the existing IV-A programs   Child Care, 
Transitional Child Care, and At-Risk Child Care) and created two new child care funds 
(mandatory and matching). The funding for these programs is now folded into the Child 
Care and Development Fund (CCDF) administered by the State lead agency responsible 
for administering the previous CCDBG. The CCDF also includes discretionary funds. 
PRWORA establishes five goals for the expanded CCDF: 
allowing States maximum flexibility in developing their programs; 
promoting parental choice; 
encouraging States to provide consumer education to parents; 
helping States provide child care to parents trying to become independent 
of public assistance; and 
helping States implement health, safety, licensing, and registration standards 
established in State regulations. 
Significantly, PRWORA eliminated the guarantee of child care to welfare families who 
are working or in approved education and training, and the guarantee of Transitional 
Child Care assistance. While child care assistance is no longer an entitlement, States 
must use at least 70 percent of CCDF mandatory and matching funds to provide child 
care services to three categories of families: those receiving public assistance under the 
new Temporary Assistance to Needy Families (TANF) program; families that are trying 
to become independent of public assistance through work activities; and families that are 
at-risk of becoming dependent on public assistance.  States must ensure that a substantial 
portion of the remaining 30 percent of these funds, in addition to the discretionary funds 
are used for child care services to eligible families other than those described above. 
The definition of eligible child was revised to increase the maximum family income to 
85 percent of the State median income for a family of the same size, instead of 75 
2  percent, as contained in prior law.  States set their own eligibility limits no higher than 85 
percent of the State median income. 
States are also responsible for setting parent sliding fee scales and maximum provider 
reimbursement rates. States may exempt families at or below   percent of Federal 
poverty and protective services families from contributing to the cost of care. All other 
families are required by the legislation to contribute to the cost of their child care.  In 
addition, under former IV-A requirements, States were required to make payments to 
providers based on the 75th percentile cost of such types of care in local areas, this 
provision is no longer a required piece of the legislation. 
The Child Care and Development Block Grant Amendments of 1996 authorized and 
appropriated $13.9 billion in mandatory and matching (capped entitlement) funding for 
fiscal years   and authorized $7 billion in discretionary funding for 
 The $20.9 billion in Federal funding over 7 years represents a $4 billion 
increase in funds over the old law. 
The capped entitlement portion of the fund has two parts -- the mandatory funds (the 
base funding amount) and matching funds (those above the base that require a State 
match). Mandatory funding allocations to States are based on previous State spending 
on the three former title IV-A programs --  Transitional Child Care, and 
At-Risk child care. The mandatory funds are automatically available to States each year. 
To qualify for the matching funds portion, States must obligate their mandatory funds 
awarded in a fiscal year, maintain their past effort in child care and provide the State 
match. States can match Federal funds at their Medicaid matching rate. The matching 
funds will be allocated according to the proportion of children under age 13 in each State 
to the national number of children under age 13. 
Congress must appropriate the discretionary portion of the CCDF funds annually. These 
funds will be allocated based on the previous CCDBG funding formula and do not 
require a State match. 
Certificates and Contracts 
The CCDF requires States to give eligible families the option of (1) enrolling their 
children with an eligible provider that has a grant or contract or (2) receiving a child care 
certificate with which they can purchase child care. The CCDF goal of promoting 
parental choice is the fundamental principle of the certificate system. During the last few 
years, certificate use has become the primary method of financing care. Certificates may 
be issued directly to the parent or to the provider.  Certificate system payments may be 
in the form of checks or other disbursements, such as cash, at the discretion of the State. 
In most States, payments are sent directly from the State to the provider. 
3
 Unlike contracts, which tie funding to a specific site, certificates allow parents to choose 
from a broad range of providers.  A certificate is an agreement by the State to subsidize 
child care for a specific child. In contrast, a contract is an agreement between the State 
and a provider for a guaranteed slot or number of slots, but not for a specific child to fill 
that slot. 
From center-based care to a neighbors or relatives home, parents with a certificate can 
choose the child care setting that best meets their needs. Certificates can be used with 
any legally operating provider as defined by the State. In most States, informal care 
provided by a neighbor or relative who cares for a small number of children in their own 
home or the parents home does not need to be licensed. Fifty-five percent of poor 
parents use informal care arrangements.3 
Parental choice, the primary goal of the certificate system, presents additional challenges 
to meeting the other goals of the law such as consumer education and health and safety. 
States need to place additional emphasis on the provision of consumer education and the 
enforcement of health and safety standards in a system where many parents choose 
license-exempt providers who operate legally outside of the regulatory framework. 
 and Quality of Care 
The important role of child care in relation to States welfare reform efforts and new 
studies demonstrating the importance of early childhood brain development has focused 
attention on the availability, accessibility, safety, and quality of child care in America. 
Child care must take place in a setting that is consistently safe, supportive, and 
developmentally appropriate.  This is particularly important for low-income children who 
need a strong start to overcome the disadvantages of 
In order to ensure a childs safety in their care setting, it is considered essential that 
providers meet basic health and safety standards and that States regulate and monitor 
the quality of these programs.  Well-trained, educated, and well-compensated providers 
and programs with higher staff-child ratios are most likely to provide quality care 
 These standards are often found in higher cost programs and those with 
State or national 
Child care experts also assert that quality is best measured by observing the interaction 
between child and provider and the day-to-day experiences of children in these programs. 
Frequent professional monitoring by the State is difficult, time-consuming, and expensive, 
but is considered by experts to be essential. In addition, parents who are 
knowledgeable about child care can play an integral part in on-going monitoring. 
Other OIG 
In 1994, the Office of Inspector General (OIG) work in the area of child care found that 
States were weak in ensuring health and safety requirements were being met and that 
children were in environments that could be hazardous to their health and safety 
4  (Nationwide Review of Health and Safety Standards at Child Care Facilities, CIN: 
04-94-00071). This study also raised questions regarding how States can enforce 
standards and provide assurances regarding the health and safety of children cared for in 
facilities exempt from licensing. The study also recommended using public education to 
train parents on the applicable standards that a child care provider should be evaluated 
against. 
Previous OIG work from 1990 in the area of child care found that parent participation is 
vital in assisting the States in the enforcement of child care regulations and assurance of 
quality care (Enforcing Child Care Regulations,  OEI-03-89-00700, Effective Practices in 
Enforcing Child Care Regulations, OEI-03-89-00701). However, these studies found that 
most parents may not know what to look for in assessing their own childs care facility. 
The report states that several respondents suggested that if parents knew what to look 
for and what questions to ask, providers would be forced to comply with and take 
regulations more seriously. 
While it is crucial to recognize that State child care systems face many different 
constraints than the military, there are lessons to be learned from the Department of 
Defenses child care experience, especially concerning its efforts to enhance monitoring, 
safety, and quality. 
In the late   facing a crisis brought on by loosely organized systems, and little or no 
oversight, the military took comprehensive steps to address child care problems including 
availability, health and safety standards and provider training. Focusing on oversight, 
accreditation, consistent care, and quality across provider types; the military is a useful 
example of a system that maximizes accountability that children are being cared for in 
safe, quality settings. According to a spokesperson from the Department of Defense, the 
linchpin of their system is four unannounced inspections per year and a system-wide toll 
free number to report safety concerns. 
Methodology and Scope 
Our study is not meant to be a definitive evaluation of States certificate systems. 
Rather, it is intended to provide a baseline of information upon which knowledge of this 
complex system can be built. To gain knowledge and understanding of any barriers to 
the use of vouchers in implementing the new Act, we interviewed State Child Care 
administrators in all 50 States and the District of Columbia (hereafter referred to as 51 
States) and collected data regarding their child care subsidy systems. We also reviewed 
components of FY 1997 and 1998 State plans.  To provide more detailed information on 
how some of these State programs are operating, in six States (California, Georgia, 
Illinois, New Jersey, Oregon, Texas) we interviewed in person State lead agency staff, 
certificate/voucher management agency staff (either from private or public State 
contracted agencies), and child care resource and referral agency staff. Parents and 
providers were also interviewed in separate structured group discussions. 
5  The issues addressed in this report include parental choice, consumer education, and 
State monitoring of State health and safety standards. We reviewed State certificate 
systems accountability, but did not evaluate individual child care programs for fraud and 
abuse. In addition, we did not inspect individual child care programs or evaluate State 
monitoring  records. 
We conducted our review in accordance with the Quality Standards for Inspections 
issued by the Presidents Council on Integrity and Efficiency. 
6
 F I N D I N GS

ACCESS: In the child care certificate system, parental choice may be restricted by low 
provider payment rates and high   rates. 
In all 51 States, State child care administrators, voucher management administrators, and 
their respective staff reported that parents are given the option of certificates or a similar 
mechanism to choose a provider of their choice.  In fact, the majority of subsidized care 
in the United States is provided through certificate 
Parental choice is the basic principle on which most State certificate systems are 
designed. In all States, various categories and types of providers (i.e. relative, family 
home, or center-based care) are eligible to receive subsidies. In all 51 States, State and 
voucher management agency (VMA) administrators emphasized the importance of 
freedom of choice for parents with regard to their desired type of child care. In our 
structured discussions, parents also reported receiving the option to choose their 
preferred type of child care. 
Recognizing the importance of parental choice, however, does not necessarily translate 
into implementing choice.  Certificate use and parental choice do not guarantee that 
parents will either be able to access their preferred type of care or receive the best care 
available. As one State administrator stated, and information reported from other States 
supports, closing the gap between the implementation and reality of parental choice is a 
complex task. 
 out of 51 States do not   to   care   based on the 
75th   of the I996 
Title IV-A Child Care regulations in effect before October 1996 required that States 
make payments to providers caring for children using subsidies based on the 75th 
percentile cost of such types of care in the local areas. While the requirement to 
make payments based on the market rate is no longer required, the Administration for 
Children and Families and many experts recommend that States maintain rates at the 
75th percentile of the market in order for parents to have equal   Without 
equal access to appropriate care, low-income families will not have the range of care that 
is adequate to support their work schedules and needs of their children. If providers are 
not reimbursed at rates that enable them to serve subsidized children, parents access will 
be restricted and their ability to choose limited. 
In most States, conflict exists between paying providers based on the market rate and 
serving all eligible families.  Some States reported that they will not continue to make 
payments based on the market price for care.  Due to budget constraints, these States 
cannot both make payments at the market rate and provide subsidies for all families with 
incomes below 85 percent of the State median income. 
7  A few States reported that they will pay specific types of providers such as relatives or 
license-exempt providers below the market rate. A small number of States said they will 
pay a higher rate to providers with accreditation and additional training. Case study 
respondents from the States, voucher management agencies and Child Care Resource 
and Referral agencies reported that most child care providers are not adequately paid to 
ensure low staff turnover, high staff/child ratios, and participation in the subsidy system. 
Rather than pay providers lower rates, or restrict parent eligibility, respondents would 
like their States, needless to say, to increase overall funding allocations. 
Various respondents reported that payment rates were not adequate for parents to 
access many of the centers in their State. Some parents interviewed in the six case study 
States reported that they sought to have care provided in some centers that would not 
accept the maximum State reimbursement rate.  These parents were forced to choose a 
less expensive provider. Some respondents stated that a parents inability to access 
higher cost centers, which are often those with national or State accreditation, may inhibit 
clients from accessing quality care.  Experts reported that reasonable payment rates for 
subsidized care are critical in ensuring access to decent child 
Providers interviewed in the six case study States reported that below market payment 
rates are a significant impediment to serving subsidized children. Many providers 
expressed concern that the increasing gap between the subsidized payment rate and the 
market rate, in addition to other subsidized system components such as retrospective 
payments and large paperwork burdens, will restrict their ability to serve subsidized 
children. 
For example, only three States reported that they pay providers prospectively which is 
how the non-subsidized child care market operates.  Forty-five States reported that they 
pay providers on a retrospective payment schedule ranging from 5 to 60 days after care is 
provided. In addition, while a few case study States send one attendance sheet to a 
provider with all children listed, other case study States send as many as three pieces of 
paper per child for monthly completion.  Some providers from centers who serve large 
numbers of children reported that they have had to hire additional staff in order to 
complete required paperwork. 
In at least 22 out   States, many families   to receive child care subsidies are 
subject to   that exceed 
Affordable parent co-payments are one of the key elements in determining that a child 
care program provides equal access to child care services for eligible families. Nationally, 
in 1993, all families paid an average of   percent of their income for child care. Yet, 
families earning less than $14,400 a year paid 25 percent of their incomes for child 
care.  The Administration for Children and Families, in addition to many child care 
experts, believe that child care may not be affordable if parents have to pay more than 
10 percent of their income for child care, regardless of how many children are in 
We use this percent of income as the benchmark of affordable care for our analysis. 
8
 The CCDF sets forth that States require that parents contribute to the cost of their 
subsidized child care. States set parent sliding fee scales and they may exempt families at 
or below 100 percent of Federal poverty and protective services families from 
contributing to the cost of care.  All other families are required by law to contribute to 
the cost of their child care. States also set their own eligibility requirements for parents 
earning up to 85 percent of State median income. 
In 10 States, families with incomes at or below 100 percent of the Federal poverty level 
are not required to contribute to the cost of care.  In 18 States, TANF recipients with 
earned income are not required to contribute to the cost of care. 
The co-payment amount parents are required to pay varies widely across States. Some 
States require only a nominal fee, while others require parents to pay a sizable 
percentage of their family income.  For example, in New Hampshire, parents pay either 
one or two dollars a month depending on income; in Texas parents pay a flat fee of 
either 9 or 11 percent of their income depending on if they have one child or more than 
one child in care, respectively. Further, in Vermont parents at 125 percent of poverty for 
a family of three pay 5 percent of the cost of care, while their counterparts in New 
Mexico pay 17.4 percent of their family income.  Lastly, for parents earning up to 150 
percent of Federal poverty, States required co-payment amounts range from 0 percent to 
30 percent of a familys income. 
Finally, a parents co-payment may not represent the full amount of a parents share of 
the cost of child care. In most States, providers may charge a fee above the maximum 
State reimbursement rate and require parents who use subsidies to make up the 
difference. 
The following table on page 10 shows the co-payment amount required by States for 
families at 100, 125, and 150 percent of the Federal poverty level. The co-payment 
amount for these families varies within some States by factors including variation in the 
cost of care, type of provider, age of the child, and the number of children in care. 
9
 Percent of  # of Children in Care  # of States Requiring   of Co-pay 
Federal  Povertv  Level*  Co-uav   10%   States 
100  1  3 
2  11 
INELIGIBLE  0 
125  1  10  0%-16.4% 
2  17  0%-27.7 % 
INELIGIBLE  1 
150  1  14  - 30% 
2  19  - 30% 
INELIGIBLE  7 
*family of three assumed.  Source: FY 1998 Child Care Plans 
Overall, in 22 out of 51 States co-payment amounts exceed 10 percent of family income 
for at least one of the income groups evaluated. Twenty-two States are represented in 
the table above because in three States, families at 125 percent of Federal poverty would 
be required to pay in excess of 10 percent, but families at 150 percent of Federal poverty 
in that State would be ineligible for subsidies. 
Cliff Effect Another concern expressed by many State and voucher management agency 
respondents is the so-called cliff effect: the point at which a parents co-payment rises 
so sharply that they can no longer afford their care.  For some parents, the cliff effect 
causes them to turn down a raise at work or choose a less expensive type of care that 
may not be of comparable quality. Most parents reported that they believe parents 
should be required to contribute to the cost of care.  A number of parents, however, had 
difficulty  meeting  co-payment  requirements.  One parent stated the more I make the 
more I have to pay. Its hard to get ahead.  In one State, sliding fee scale changes 
under their new child care plan will require that many parents pay significantly more than 
previously required. For example, a family of three at the poverty level with two children 
in care who previously paid one dollar a month will now have to pay 70 times that much. 
Center providers in this State expressed concern that many families would not be able to 
continue participating in the subsidy system and would be forced to seek less expensive 
informal  care. 
10
 CONSUMER  EDUCATION:  Child  care  consumer  education  appears  limited. 
To help parents make informed choices about child care, States provide consumer 
education information through State offices or voucher management agencies, or through 
contracts with Child Care Resource and Referral agencies   Good consumer 
information is critical to making the child care market function properly. If parents are 
not able to make informed choices, their access to the market is limited. Further, if 
parents demand safe and quality care, providers are more likely to supply it. To 
emphasize the importance of consumer education, Congress changed the legislative 
wording from the former requirement in the legislation that consumer education be 
made available to the current requirement that States collect and disseminate 
consumer education that will promote informed child care choices. 
While respondents in all case study States emphasized the importance of consumer 
education, most reported that they were not able to provide sufficient consumer 
education. Multiple constraints exist to voucher management agencies providing 
adequate consumer education including: large caseloads, long waiting lists; multiple 
functions of Child Care Resource and Referral agencies; and reliance on printed 
materials. In addition, parents face multiple constraints accessing consumer education 
including services targeted to welfare recipients to the exclusion of low-income working 
families and individual practical constraints. 
 Face   Providing Adequate Consumer Education 
Large Caseloads, Long Waiting Lists In three of six case study States, large caseloads 
and an insufficient amount of funding to serve all eligible clients dictate agency practice. 
Typical caseloads of 350 to 500 families impede voucher management agencies ability to 
regularly provide services beyond eligibility determination and payment. In many States, 
under welfare reform, child care caseload growth is likely to happen at the same time 
many States are cutting back on casework staff. One State administrator reported that 
her State is cutting the number of workers at the same time the child care caseload is 
expected to grow three to four fold. In addition, long waiting lists add to some voucher 
management agencies sense of urgency in allocating subsidies because many eligible 
families remain on the waiting list for months or years before new slots become available. 
Voucher management agency staff recognize the importance of providing consumer 
education, yet they reported that they usually do not have enough time to give parents all 
of the necessary information about the program and how to choose a good provider. 
Further, although respondents in our six case study States indicated the importance of 
following up with parents when care arrangements break down or problems arise, they 
reported that they did not have the capacity to provide follow-up consumer education as 
a regular service.  Systemic tension exists between providing information to parents 
about accessing quality, stable child care and getting parents into a child care 
arrangement as quickly as possible. New welfare work participation requirements and 
time limits will most likely exacerbate this problem. 
11
  Functions of Child Care Resource and Referral Agencies Forty-one States 
reported that they contract with Child Care Resource and Referral agencies to provide 
some or all of the consumer education in that State for parents using subsidized child 
care. In addition, a number of States contract with CCRRs to be the voucher 
management agency. However, in the case study States few parents are referred to and 
receive education from a CCRR or a trained educator. 
Even Child Care Resource and Referral agencies that are   are organized into 
separate subsidy and education components with few parents accessing services from the 
education component.  CCRR and State administrators reported that CCRRs are 
insufficiently funded to provide consumer education to most families in need. In addition 
to providing consumer education for subsidized families, most CCRRs are contracted to 
make referrals, maintain data bases, train providers, build child care provider supply, and 
provide services to the community at large. One administrator from a CCRR voucher 
management agency reported that many CCRRs nationwide are only able to provide 
referrals and cut checks and not provide sufficient consumer education due to insufficient 
State funding. 
Reliance on Printed Materials In the six case study States, printed materials are the 
primary way that consumer education is made available. State and VMA administrators 
reported that they use a pamphlet consisting of a checklist indicating what parents should 
look for when choosing safe, quality care.  Due to constraints mentioned above, little or 
no time is spent explaining safety standards and variation in training requirements 
between different types of care.  Printed materials may not be a sufficient information 
source, particularly if parents have low literacy rates. 
Various respondents indicated that because the provision of consumer education is 
minimal, it may not aid parents in choosing the type of care or provider that best meets 
their needs. As one VMA agency administrator stated,  Consumer education needs to 
help parents see they have more choices.  Parents who use subsidized care believe they 
have no choices and may leave children in places they would rather not. Despite urging 
parents to visit all child care providers referred to them by the VMA or CCRR, case 
study States reported that provider selection most often occurs by phone on the same 
day a referral is received. Accordingly, VMA staff in all six case study States reported 
that parents may not choose a provider based on where the parent feels her child will be 
best cared for and safest. 
 Face   Consumer Education 
Implications of   Services to Welfare Recipients In the case study States, the 
families that systematically received consumer education beyond printed materials are 
those connected to the welfare system, particularly participants in required welfare to 
work activities.   reported that low-income working families not connected to the 
welfare system do not regularly access consumer education services. 
12
 Child Care Resource and Referral agencies provide enhanced consumer education 
services to welfare recipients because States give targeted funding to educate welfare 
recipients as part of their required training. TANF work requirements, participation 
rates, and time limits place additional pressure on States to target services to TANF 
participants. Welfare work program participants usually receive a 1 hour education 
module from CCRRs, and in some locations may also receive referrals to providers 
where CCRR staff have verified openings. 
Further, voucher management agency administrators reported that the majority of 
parents have already selected a provider prior to receiving a subsidy. These parents 
almost never receive consumer education beyond the basic pamphlet. While in one 
State, VMA staff said that the typical parent has an informal provider with whom they 
are unhappy, most VMA staff reported that they operate under the assumption that most 
parents want to keep the care they have.  While different provider types may be 
presented, parents receive little encouragement to think about specific provider 
alternatives. In general, VMA staff give parents referrals to CCRRs only if parents state 
that they need a new provider. 
Restricting parents who already have a provider and low-income working parents access 
to consumer education services is a problem if the care these parents have chosen is not 
adequate or becomes inadequate over time.  In the child care certificate system, these 
parents, in particular, may not know that they have child care options. In some States, 
parents cannot easily change their chosen type of providers if problems arise. In one 
case study State, for example, parents are locked into the provider payment rate for a 
year once the provider is chosen.  If a parent chooses an informal care provider, their 
subsidy amount will not be sufficient for them to switch to a regulated family home or 
center-based care later on. In other States, parents are strongly discouraged from 
switching providers and help from the CCRR may not be easily accessible if new 
referrals are needed. 
Practical Constraints on Parents Personal time constraints and transportation difficulties 
often restrict parents ability to visit child care providers before a choice is made, 
especially if they must begin a new job or training program immediately.  In addition, 
many parents reported that they did not know they could contact the VMA or the CCRR 
when they needed help finding a new child care provider. Lastly, some parents do not 
initiate contact with caseworkers after finding a job due to the stigma of public assistance 
or because they do not know about the services and resources available to them. 
Minimal consumer education is compounded by the problem that referrals from VMA 
staff or   are often misinterpreted as recommendations. Further, many parents 
and VMA staff reported that child care referrals are construed not only as 
recommendations, but as State or VMA certification of a providers safety and quality. 
All States emphasized that child care referrals made by them or contracted CCRRs are 
neither recommendations nor quality certifications. 
Misinformation undermines a States reliance on parents to carefully monitor their childs 
13  provider. While referrals are usually made to regulated or licensed providers who have 
been monitored at least once by a professional, many States rely on parents to be 
ongoing monitors of their childs provider.  Minimal consumer education may jeopardize 
States ability to ensure the health and safety of subsidized child care. 
HEALTH AND   State efforts may not be sufficient to ensure that health and 
safety standards are met, particularly for license-exempt providers. 
Under CCDF, States are required to establish procedures to ensure that child care 
providers will be subject to State and local requirements designed to ensure basic health 
and safety. Further, States must assure that procedures are in effect to ensure that 
providers comply with all applicable State or local health and safety requirements. 
Specifically, States health and safety requirements must include the prevention and 
control of infectious diseases including immunizations, building and physical premises 
safety and minimum health and safety training appropriate to the provider setting. Only 
relative providers may be excluded from meeting these requirements at State 
While States are responsible for regulating child care, they vary widely in how they 
exercise that  All providers of care to children receiving CCDF 
subsidies must meet basic health and safety standards as determined by the State, yet 
States vary in their use of mechanisms to ensure compliance with health and safety 
standards. Some respondents expressed concern about the mechanisms in place to 
ensure health and safety. A few State respondents stated that health and safety is a 
parents responsibility and that they can do little, if anything, to monitor unregulated 
informal providers, hereafter referred to as license-exempt 
We concentrated our analysis on the health and safety standards of license-exempt 
providers and on the background checks on both licensed and license-exempt providers. 
 of   may not ensure that basic 
and safety   are   met. 
An inherent benefit in a certificate payment system where payments are sent directly to 
providers, is the built-in connection between the State and the provider. However, while 
most States directly pay providers, they do not monitor a large proportion of the provider 
population -- license-exempt providers.  Forty-three States (84 percent) rely on 
certification of health and safety standards for the license-exempt provider population. 
In these States, a providers signature on this form stating that they meet the States 
health and safety standards is the only information States have that these providers do so. 
There is no on-site monitoring. This is significant, because nationally, overall, 55 percent 
of poor parents use informal care arrangements: a relative or neighbor. 
In some States, VMA computer systems are interfaced with licensing so that certificates 
and/or payments do not go to providers who are required to be licensed but are without 
licenses or to those providers whose licenses have been revoked. A few States reported 
14  that they check unregulated providers against licensing records to ensure that these 
providers have not been denied licensure. 
To a large extent, maintaining the quality and safety of child care in a system that 
combines public subsidies and private provision is the parents responsibility. Parents 
need to evaluate and monitor the safety and quality of care their children receive. Most 
States rely on parents to use their consumer knowledge to choose safe providers. As one 
State administrator responded, our system is based on the premise that parents know 
how to choose child care and that families need to be monitors. 
In 18 of the 43 States that use a health and safety self-certification form, parents are 
required to co-sign the form -- formally relying on parents to monitor the health and 
safety conditions of their child care provider. Research indicates however, that parents 
consistently overestimate the quality of care their children   Parent inability to 
recognize health and safety hazards undermines the States abilities to provide safe care. 
State and   administrators emphasize the importance of consumer education in 
ensuring that parents know how to choose safe child care and make quality choices. 
While consumer education helps ensure safety in all child care arrangements because 
even licensed centers may not be monitored frequently, it is particularly important in 
license-exempt arrangements where parents are usually the only monitors of the care. If 
consumer education is inadequate, parents may not recognize the basic health and safety 
regulations that all providers must meet. Accordingly, States reliance on self-certification 
in combination with minimal consumer education and lack of professional monitoring, 
increases the risk that children are cared for in settings that do not conform to basic 
State health and safety requirements. 
Only I2   reported screening all 
In order to ensure a baseline of accountability within their systems, most States mandate 
that providers pass various background checks in order to be eligible to receive payment. 
The table below shows the number of States who require criminal background checks 
and child abuse and neglect history checks for licensed and license-exempt providers. 
STATE BACKGROUND CHECKS ON CHILD CARE PROVIDERS 
 of Provider  Criminal  Background  Child Abuse   Neglect 
Licensed  Providers  43 States  40 States  34 States 
Licenseexempt Providers 20 States  20 States  16 States 
 Providers  18 States  19 States  12 States 
of 
Source:   survey  State Child Care Administrators, September 1997 
15
 Most States exclude providers who are relatives from these safety checks and from health 
and safety regulation in general.  One State which has a separate TANF and low-income 
working family child care system only screens providers caring for low-income working 
families and not those caring for children on TANF. 
It may take quite a long time for States to get the results back from a background check. 
On average, it takes 5 weeks for States to get the results back from a criminal 
background check, but may take from 1 day to 9 months. On average, it takes   weeks 
for a child abuse and neglect check to come back, but may take from the same day to 2 
months. Further, in most States a background check is performed for crimes committed 
only within that State. In county administered States, a background check may only 
include crimes committed within that county. 
In 30 out of the 43 States where at least one form of background check is required, some 
types of providers can provide care while the results of their tests are pending. States 
appear to face a conflict between restricting supply, facilitating parents ability to work, 
and risking the safety of children during this period. 
While one State reported that its background checks have rendered 10 percent of the 
license-exempt population ineligible to provide services, most States find that only a very 
small percentage of providers are found ineligible to provide services based on their 
background. However, many State administrators reported that they believe that many 
individuals with criminal or child abuse backgrounds are deterred from applying because 
of these checks. 
Another mechanism used by States to ensure accountability is connecting their subsidy 
system to the States child care licensing system.  Nineteen out of 42 States reported that 
their systems are connected by computer to State licensing systems so that licenses can 
be easily verified. The remaining States that provided this information either do not 
verify license information or verify information by phone or from hard copies of the 
licensing data base. 
16
 R E C O M M E N D A T I O NS

This report discussed issues relating to States child care certificate systems which were 
created to provide parental choice.  While our recommendations pertain to the certificate 
system, States may want to consider these in a broader context. 
We found that parental choice may be restricted by low provider payment rates and high 
co-payment rates, child care consumer education appears limited and State efforts may 
not be sufficient to ensure that health and safety standards are met, particularly for 
license-exempt  providers. 
We found that the Department of Defense as well as some States have dealt with many 
of these issues. Some of our recommendations coincide with Department of Defense 
models and lessons learned over the years.  In addition, some States have used their 
resources to create certificate systems with models offering enhanced accountability. 
With regard to access, our analysis highlights the funding constraints within the child care 
certificate  system.  We recognize that hard choices need to be made about child care 
spending versus other important social needs. The responsibility for adequately funding 
the child care certificate system involves Federal, State, local, and private resources. 
Funding allocation decisions are legitimate issues that cannot be addressed in our study. 
However, we make several recommendations regarding the other issues highlighted in 
our report. 
We recommend that the Administration for Children and Families: 
Set forth the goal that States monitor all providers (including relatives) through 
professional inspections of all child care settings (i.e. in-home, family homes and centers) 
and know the backgrounds of all providers through criminal background check/child 
abuse  history  registries. 
Examples: 
The military model of four unannounced inspections per year has resulted in an 
increased level of accountability within the system that ensures that providers are 
consistently meeting safety and quality standards. Each inspection has a firm fix, 
waive, or close policy to ensure 
Georgia requires that new license-exempt providers appear in person before they 
are approved to provide care.  They must have a criminal background check. In 
addition, all providers are monitored to ensure that they meet health and safety 
standards. 
17
 Help States establish intrastate and interstate comprehensive child abuse and neglect and 
 background check registries and a toll free number to report problems and 
concerns. 
Examples: 
The California   requires a check on all license-exempt providers 
including criminal background and child abuse history. Individuals whose 
applications clear the background examination have their names placed onto the 
 Registry, with the understanding that their names will be monitored for 
future criminal conviction(s) and/or reports of child abuse. 
The military has established a toll free number where suspicion or concerns about 
safety can be reported. 
Disseminate information about effective ways to enhance consumer education. 
Example: 
Continue to provide regional and national forums and publications on 
resources, strategies, and innovations. 
Help States devise outcome measures of quality consumer education. This will assist 
States in meeting Child Care and Development   legislative intentions and 
PRWORA requirements that States collect and report consumer education information 
based on outcome measures. 
Examples of outcome measurements include: 
the number of parents who had information on how to select and 
maintain their child care arrangement. 
what information was provided to the parents who had prior 
arrangements to help them maintain their current choice or choose 
more appropriate care. 
We make these recommendations recognizing the Administration for Children and 
Families Child Care Bureaus past efforts addressing many of these areas. We urge 
them to continue efforts to provide technical assistance and guidance to the States. 
18
 AGENCY  COMMENTS 
We received comments from the Administration for Children and Families. The ACF 
concurs with our recommendations and describes actions they will take in response to our 
recommendations. The   actions include increased technical assistance and 
dissemination of information to States on model practices regarding the monitoring of 
child care providers.  In addition, ACF will consult with child welfare to craft solutions to 
the constraints involved in using child abuse and neglect central registries such as 
confidentiality, scope of information maintained and allowable uses of that information. 
The ACF will also continue to disseminate information about effective ways to enhance 
consumer  education.  Finally, ACF will develop optional data elements to report the 
manner in which consumer education is provided to parents. The full text of the 
Administration for Children and Families comments is in Appendix B. 
We acknowledge their efforts and urge the Administration for Children and Families to 
continue to provide support and assistance to States. 
19
 A P P E N D I X   A

1.  The Personal Responsibility and Work Opportunity Reconciliation Act of

1996 (P.L. 104-193) refers to this title as the Child Care and Development

Block Grant Amendments of 1996. Because this law amends both the

former Child Care and Development Block grant and Title IV-A child care

provisions and to distinguish the Act from the previous Child Care and

Development Block Grant Act, the Administration on Children and

Families refers to this section of the law as the Child Care and

Development Fund. For the purpose of this report we refer to the current

program as Child Care and Development Fund.

2.  Child Care Subsidies Increase Likelihood That Low-Income Mothers Will Work.

U.S. General Accounting Office. Washington DC. 1994.

White House Conference on Child Care, October   Deborah A.

editor. Child Care for Low-Income Families. National Academy Press.

Washington DC 1995.

Blank, Helen. Helping Parents Work and Children Succeed: A Guide to Child

Care and the 1996 Welfare Act. Childrens Defense Fund. 1997

Gomby, Deanna et al.  Financing Child Care: Analysis and Recommendations. in

The Future of Children: Financing Child Care, Center for the Future of Children,

Vol. 6   1996.

3.  Casper, Lynne M. Whos Minding Our Preschoolers? US Census Bureau 1996.

4.  Adams, Gina and Nicole   Poersch.   Facts About Child Care and

Early Education: A Briefing Book, Childrens Defense Fund, 1997.

5.  Helburn, Suzanne and   Howes. Child Care Cost and Quality in The

Future of Children, Financing Child Care Center for the Future of Children, Vol.

6, No.2 1996.

The White House Conference on Child Care, October 1997.

6.  Hofferth, Sandra. Child Care in the United States Today in The Future of

Children, Financing Child Care, Center for the Future of Children, Vol. 6 No.2 ,

1996.

Adams, Gina and Nicole   Poersch. Kev Facts About Child Care and

 Education: A Briefing Book, CDF 1997.

A -l  7.  Hofferth, Sandra. Child Care in the United States Today in The Future of

Children, Financing Child Care, Center for the Future of Children, Vol. 6 No.2 ,

1996.

8.  States were selected based on factors including: size; geographic location; whether

the State or a contracted voucher management agency administered subsidies; and

if the States welfare system was State or county administered.

9.  Overview of Entitlement Programs (1996 Green Book). Committee on Ways and

Means, US House of Representatives.

10.  State child care administrators were asked what year current payment rates were

based on. If payments were not based on 1996 market rates, State administrators

were asked what percentile of the current market their rate represents.

11.  Title IV-A regulations required that States establish local market rates and make

payments based on the 75th percentile of such types of care in the local areas.

Previous CCDBG regulations required that States operating a child care program

which includes child care funded under Title IV-A must operate with the same

payment rates.

12.  Blank, Helen. Helping Parents Work and Children Succeed: A Guide to Child

Care and the 1996 Welfare Act. Childrens Defense Fund, January 1997.

1997 Proposed Amended Rule, Child Care and Development Fund.

13.  Adams, Gina and Nicole   Poersch. Kev Facts About Child Care and

Earlv Education: A   Book, CDF 1997.

14.  In this report, where variation in the sliding fee scale occurs within a State, the co 

payment amount used represents what a family of three with 2 children and a

child under age 2 would be required to pay in the area of the State with the

highest subsidy participation or highest provider payment rate.

15.  Casper, Lynne M. What Does it Cost to Mind Our Preschoolers? US Census

Bureau 1996.

16.  Blank, Helen. Helping Parents Work and Children Succeed: A Guide to Child

Care and the 1996 Welfare Act. CDF, January 1997.

Proposed Rule 1996 Child Care and Development Block Grant Amendment.

17.  Child Care and Development Block Grant Act amendments of The Personal

Responsibility and Work Opportunity Reconciliation Act of 1996.

18.  As established in the CCDBG Act, States must certify that there are in effect,

under State or local law, requirements designed to protect the health and safety of

children that are applicable to providers that provide services for which assistance

is made available. These requirements must include the three specific provisions

detailed in the text of the report. In addition, States must certify that there are

A -2  procedures in effect to ensure that providers comply with all applicable health and 
safety  requirements. 
19.	 Section 98.41 Health and Safety Requirements of the Child Care and 
Development Block Grant, Final Regulations 1992. 
20.	 Hofferth, Sandra. Child Care in the United States Today in The Future of 
Children, Financing Child Care, Vol. 6 No.2 , 1996. 
21.	 Providers included. under license-exempt or informal vary from State to State. 
Licensed-exempt care used in this evaluation refers to care settings which operate 
legally outside of any regulatory framework. 
22.  Casper, Lynne M. Whos Minding Our Preschoolers? US Census Bureau 1996. 
23.	 Helburn, Suzanne and   Howes. Child Care Cost and Quality The 
Future of Children, Financing Child Care, Center for the Future of Children, Vol. 
6   1996. 
24.	  Making a Difference in Child Care: Lessons learned while building the 
military child development system. Department of Defense, 1997. 
A -3
 A P P E N D I X   B

AGENCY 
B -l  DEPARTMENT OF HEALTH   HUMAN SERVICES 
ADMINISTRATION  FOR  CHILDREN  AND  FAMILIES 
Offlce of the Assistant Secretary, Suite 600 
370   Promenade, S.W. 
Washington, D.C. 
DATE:  February 18, 1998

TO:	 June Gibbs Brown

Inspector General

FROM:  Olivia A. Golden

Assistant Secretary

for Children and-Families

SUBJECT:	 Comments on OIG Draft Report --  Child Care

Certificate  Systems:  An Assessment of Vulnerabilities

and  Barriers," OEI-05-97-00320

Attached, please find comments on the above-captioned report.

The Administration for Children and Families has coordinated

these comments with the Office of the General Counsel.  The draft

inspection report presents its analysis in the form of findings

and recommendations on the efficiency, vulnerability, and

effectiveness of departmental programs.  We respond to the

recommendations and provide technical comments.

We appreciate the opportunity to comment on the draft report. If

you have questions or need further information, please contact

Barbara Binker of my staff at 401-5145.

Attachment

B -2
 COMMENTS OF THE ADMINISTRATION FOR CHILDREN AND FAMILIES ON THE 
OFFICE OF INSPECTOR GENERAL'S DRAFT REPORT, "STATES' CHILD CARE 
CERTIFICATE  SYSTEMS:  AN ASSESSMENT OF   AND 
BARRIERS," OEI-05-97-00320 
The Administration for Children and Families appreciates the

opportunity to comment on the draft report,   Child Care

Certificate  Systems:  An Assessment of Vulnerabilities and

Barriers."

The findings in this study reflect some of the child care issues

that we hear across the country.  While the OIG did not include a

specific recommendation regarding the finding that parental

choice may be restricted by States'  provider payment rates and

limited co-payment rates; we agree that these elements, coupled

with State choices on eligibility levels and priorities for

subsidy programs,  adversely impact parental choice of child care

arrangements,  and sometimes force families into care situations

that do not even meet the basic needs for stability and safety.

OIG  Recommendation:

We recommend that ACF set forth the goal that States monitor all 
providers (including relatives) through professional inspections 
of all child care settings (i.e. in-home, family homes, and 
centers)  and  know  the  backgrounds  of  all  providers  through 
criminal  background  check/child  abuse  history  registries. 
ACF 
ACF agrees with the goal of monitoring of all providers.  The

Child Care and Development Block Grant   quality funds may

be used to fund child care monitoring activities.  The CCDBG

quality and administrative funds may be used for creating a child

care background check system or to assist with the costs of

performing individual background checks. ACF is committed to

encouraging monitoring and background checks, through

dissemination of information on model practices and other

Technical Assistance activities.  Under the President's

initiative announced on January 7,  1998, to provide substantial

new child care funds,  there are proposed funds specifically

dedicated to helping States increase their ability to enforce

child care standards building on the military's model.

OIG Recommendation:

We recommend that the ACF help States establish intrastate and 
interstate comprehensive child abuse and neglect and criminal 
background check registries and a toll free number to report 
problems and concerns. 
B-3
 Page 2

ACF  :

As we noted in the response above, CCDBG quality and

administrative funds may be used for creating a child care

background, check system or to assist with the costs of performing

individual background checks.  Similarly,  toll free numbers would

be an allowable cost under the CCDBG.  California's Trustline

system, for example,  receives some support from CCDBG funds.

Again,  however,  there are concerns about the availability of

funds for these endeavors.

ACF is committed to taking appropriate measures to encourage

background checks,  through dissemination of information on model

practices and other Technical Assistance activities.

Furthermore,  other measures have been undertaken that will

facilitate  States'  efforts to make nationwide background checks.

On October 23,  1997, the President transmitted the National Crime

Prevention and Privacy Compact to Congress.  The compact will

facilitate effective background checks on providers by

eliminating State law barriers to the sharing of criminal history

information for purposes other than ongoing criminal

investigations.  Under the compact,  each ratifying State would

agree to release its own criminal history information to other

ratifying States for the purpose authorized by the receiving

State's law.  The FBI would give the requesting agency a list of

States in which the individual has a criminal record, so that the

agency can access those States' record directly.

Screening for a history of child abuse and neglect is certainly

one important component of a background check, although other

methods,  such as personal interviews and reference checks, are

also recognized as being essential to checking the credentials of

caregivers.  Of course,  many incidents of child abuse and neglect

do not result in criminal prosecutions of convictions.

Information on these cases is maintained in the automated systems

used by State child protective service agencies.  In the past,

many of these information systems or databases have been referred

to as "central registries."

The scope of information maintained on central registries, and

the allowable uses of that information, vary considerably from

State to State.  It is important to note that the main purpose of

central registries is to maintain information about children who

are the subjects of reports of abuse and neglect, rather than on

the adults who are identified as perpetrators of maltreatment.

The information contained in central registries is confidential

and may only be released to certain individuals or agencies for

specific  purposes,  as detailed in State statute.  Typically,

information on the registry is accessible by child protective

services,  police officers, courts and, in some cases, physicians

or others involved in the treatment of child abuse and neglect,

B -4
 Page 3

if the information is necessary to help them carry out their

respective functions in protecting children.  Particularly, when

the data are used for purposes of background and employment

checks,  issues arise around the extent to which data on

unsubstantiated cases may be maintained and on the due process

rights of 'adults identified on the registry as perpetrators

associated with child abuse and neglect.

Most States are currently in a period  transition with respect 
of 
to their automated systems for child abuse and neglect.  To the 
extent that these functions are incorporated, inherent tensions 
may develop on the quantity and nature of information maintained, 
and the procedures set in place regarding access to the 
information. 
Given this period of flux in the development of automated systems

for child abuse and child welfare in the States, it is important

that we study carefully the issue of conducting child abuse and

neglect background checks.  The ACF will consult with State child

care and child welfare officials to understand better how

information on perpetrators of child abuse and neglect may be

maintained in the new automated environment, and how either

automated systems or systems of communication between agencies

could be strengthened to develop better procedures for screening

child care workers for histories of child abuse.

OIG  Recommendation:

We recommend that the ACF disseminate information about effective

ways to enhance consumer education.

ACF 
ACF concurs that information dissemination is essential and an

ongoing need.  CCDBG funds are available for States to utilize

for Consumer Education and for Child Care Resource and Referral

Services   .  Through the Child Care Bureau's Technical

Assistance  Projects,  many events that are relevant to how States

implement consumer education activities are conducted.

The Child Care Bureau sponsored a leadership forum in 1996 on

Consumer Education and disseminated materials to all State Child

Care Administrators and others in attendance.  Promoting  Quality

Child Care:  Innovations in Consumer Education" is a guide for

the use of State and Tribal child care administrators and the

early child care community.  This document was distributed in

DRAFT form at the leadership forum.  Final printing will be made

available for wide distribution in the Spring of 1998.

OIG  Recommendation:

We recommend that ACF help States devise outcome measures of 
quality  consumer  education.  This will assist States in meeting  Page 4

Child Care and Development Block Grant  legislative  intentions  and 
PRWORA requirements that States collect and report  consumer 
education information based on outcome measures. 
ACF  : 
The statute currently requires States to report the manner in

which consumer education is provided and the number of parents to

whom such information was provided.  This information will be

collected annually on the ACF-800 form.

The Bureau agrees that reporting on consumer education outcome

measures would be useful.  As part of the Bureau's plan for the

development of performance measures, our information system

contractor has been tasked with assisting the Bureau's efforts to

develop optional data elements.  We have already identified the

development of consumer education measures as a part of this

effort and have received input from the National Association of

Child Care Resource and Referral Agencies concerning this effort.

All measures will be developed in collaboration with States.

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