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 INSPECI’OR 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 O’Connor 

 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, 
EXECUTIVE SUMMAR Y

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The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 repealed 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 Bureau’s 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 
INTRODUCTIO N

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 neighbor’s or relative’s 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 parent’s 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 child’s 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 child’s 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 

Defense’s 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 President’s Council on Integrity and Efficiency. 

6
FINDING S

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, parent’s 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 parent’s 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 family’s income. 

Finally, a parent’s co-payment may not represent the full amount of a parent’s 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 

Federal Povertv Level* Co-uav 10% 

100 1 3 

2 11 

INELIGIBLE 0 

125 1 10 

2 17 

INELIGIBLE 1 

150 1 14 

2 19 

INELIGIBLE 7 

 of Co-pay 

 States 

0%-16.4% 

0%-27.7 % 

- 30% 

- 30% 

*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 parent’s 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. It’s 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 provider’s 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 State’s reliance on parents to carefully monitor their child’s 

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 child’s 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 

parent’s 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 provider’s signature on this form stating that they meet the State’s 

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 

Source: survey of 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 parent’s 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
RECOMMENDATION S

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 Bureau’s 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
APPENDIX A

1. 

2. 

3. 

4. 

5. 

6. 

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.

“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. Children’s 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.

Casper, Lynne M. “Who’s Minding Our Preschoolers?” US Census Bureau 1996.

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

Early Education: A Briefing Book, Children’s Defense Fund, 1997.

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.

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.

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7. 

8. 

9. 

10. 

11. 

12. 

13. 

14. 

15. 

16. 

17. 

18. 

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.

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

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

if the State’s welfare system was State or county administered.

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

Means, US House of Representatives.

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.

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.

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

Care and the 1996 Welfare Act.” Children’s Defense Fund, January 1997.

1997 Proposed Amended Rule, Child Care and Development Fund.

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

Earlv Education: A Book, CDF 1997.

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

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

Bureau 1996.

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.

Child Care and Development Block Grant Act amendments of The Personal

Responsibility and Work Opportunity Reconciliation Act of 1996.

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. “Who’s 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
APPENDIX 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

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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. 

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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 of transition with respect 

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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