PAGENO="0001" ADMINISTRATION'S PROPOSED FEDERAL CHILD CARE REGULATIONS `~I ~ r'~ ..~ ~ ~ L~ J I ~ ~ HEARING BEFORE THE SUBCOMMITTEE ON IfUMAN RESOURCES OF THE COMMITTEE ON WAYS AND MEANS HOUSE OF REPRESENTATIVES ONE HUNDRED SECOND CONGRESS FIRST SESSION SEPTEMBER 26, 1991 Serial 102-64 Printed for the use of the Committee on Ways and Means U.S. GOVERNMENT PRINTING OFFICE 51-713t WASHINGTON 1992 For sale by the U.S. Government Printing Office Superintendent of Documents, Congressional Sales Office, Washington, DC 20402 ( I ISBN 0-16-037701-3 `~. W3c~7 /O~~ ~ PAGENO="0002" COMMITTEE ON WAYS AND MEANS DAN ROSTENKOWSKI, Illinois, Chairman SAM M. GIBBONS, Florida J.J. PICKLE, Texas CHARLES B. RANGEL, New York FORTNEY PETE STARK, California ANDY JACOBS, JR., Indiana HAROLD E. FORD, Tennessee ED JENKINS, Georgia THOMAS J. DOWNEY, New York FRANK J. GUARINI, New Jersey MARTY RUSSO, Illinois DON J. PEASE, Ohio ROBERT T. MATSUI, California BERYL ANTHONY, JR., Arkansas BYRON L. DORGAN, North Dakota BARBARA B. KENNELLY, Connecticut BRIAN J. DONNELLY, Massachusetts WILLIAM J. COYNE, Pennsylvania MICHAEL A. ANDREWS, Texas SANDER M. LEVIN, Michigan JIM MOODY, Wisconsin BENJAMIN L. CARDIN, Maryland JIM McDERMOTT, Washington BILL ARCHER, Texas GUY VANDER JAGT, Michigan PHILIP M. CRANE, Illinois DICK SCHULZE, Pennsylvania BILL GRADISON, Ohio BILL THOMAS, California RAYMOND J. McGRATH, New York ROD CHANDLER, Washington E. CLAY SHAW, JR., Florida DON SUNDQUIST, Tennessee NANCY L. JOHNSON, Connecticut JIM BUNNING, Kentucky FRED GRANDY, Iowa Ii ROBERT J. LEONARD, Chief Counsel and Staff Director PHILLIP D. MOSELEY, Minority Chief of Staff SUBCOMMIrFEE ON HUMAN RESOURCES HAROLD E. FORD, Tennessee, Chairman THOMAS J. DOWNEY, New York, E. CLAY SHAW, JR., Florida Acting Chairman NANCY L. JOHNSON, Connecticut BARBARA B. KENNELLY, Connecticut FRED GRANDY, Iowa MICHAEL A. ANDREWS, Texas ROD CHANDLER, Washington JIM McDERMOTT, WASHINGTON SANDER M. LEVIN, Michigan JIM MOODY, Wisconsin (II) PAGENO="0003" CONTENTS Page Press release of Tuesday, August 20, 1991, announcing the hearing 2 WITNESSES U.S. Department of Health and Hum~an Services, Hon. J0 Anne Barnhart, Assistant Secretary, Administration for Children and Families 59 American Public Welfare Association, Claudia Langguth 131 Associated Day Care Services of Metropolitan Boston, Douglas Baird 159 Baird, Douglas, Child Welfare League of America, and Associated Day Care Services of Metropolitan Boston 159 Blank, Helen, Children's Defense Fund 110 Brackin, Susan, Eagle Forum 218 Brandwein, Ruth A., National Association of Counties, and Department of Social Services, Suffolk County, N.Y 141 Cain, Hon. Bernest, National Conference of State Legislatures, and Senator, Oklahoma State Senate 35 Campbell, Nancy Duff, National Women's Law Center 169 Child Care Action Campaign, Barbara Reisman 200 Children's Defense Fund, Helen Blank on behalf of Marian Wright Edelman... 110 Child Welfare League of America, Douglas Baird 159 Eagle Forum, Susan Brackin 218 Edelman, Marian Wright. (See Children's Defense Fund.) Family Research Council, William R. Mattox, Jr 173 Gibbs, Alan J., New Jersey Department of Human Services 100 Heritage Foundation, Robert Rector 183 Jackson, Beverly Robeson, National Black Child Development Institute 207 Kingsbury, Daniel F., National Child Care Association 227 Langguth, Claudia, American Public Welfare Association, and Client Self- Support Services Division, Texas Department of Human Services 131 La Petite Academy, Inc., Robert A. Rodriguez 223 Mattox, William R., Jr., Family Research Council 173 McEwen, Hon. Bob, a Representative in Congress from the State of Ohio 30 Miller, Hon. George, a Representative in Congress from the State of Califor- nia 149 National Association of Counties, Ruth A. Brandwein 141 National Black Child Development Institute, Beverly Robeson Jackson 207 National Child Care Association, Daniel F. Kingsbury 227 National Conference of State Legislatures, Hon. Bernest Cain 35 National Women's Law Center, Nancy Duff Campbell 169 New Jersey Department of Human Services, Alan J. Gibbs 100 Rector, Robert, Heritage Foundation 183 Reisman, Barbara, Child Care Action Campaign 200 Rodriguez, Robert A., La Petite Academy, Inc 223 Stenholm, Hon. Charles W., a Representative in Congress from the State of Texas 16 Suffolk County, N.Y., Department of Social Services, Ruth A. Brandwein 141 Texas Department of Human Services, Client Self-Support Services Division, Claudia Langguth 131 (III) PAGENO="0004" Iv SUBMISSIONS FOR THE RECORD Page Alvarez, Daniel, Sr., Chicago (Ill.) Department of Human Services, statement.. 295 American Federation of State, County & Municipal Employees, AFL-CIO, Gerald W. McEntee, statement 254 American Jewish Committee, New York, N.Y., Richard T. Foltin, statement.... 257 Association of Christian Schools International, Whittier, Calif., John C. Holmes, statement 262 Association of Junior Leagues International, Nancy H. Evans, statement 263 Big Bend Child Care Council, Tallahassee, Fla., Pamela B. Davis, letter 266 Boisture, Robert, YMCA of the USA, statement 394 Bronk, Joan, National Council of Jewish Women, Washington, D.C., state- ment 331 Broward County (Fla.) Commissioners, John P. Hart, letter 269 Broward County (Fla.) School Board, Toni J. Siskin, letter 270 Brown, Diane, Pilgrim Child Development Center, St. Petersburg, Fla., letter and attachments 345 Bulgrin, Susan, National Association of Pediatric Nurse Associates & Practi- tioners, Portage, Wis., statement 315 California Association for the Education of Young Children, Ree Williams, statement 276 California Department of Social Services, Lonnie M. Carlson, statement 278 California, State of, Hon. Pete Wilson, Governor, statement 272 California State Department of Education, Child Development Division, Robert A. Cervantes, letter and attachments 277 Carlson, Barbara Coccodrilli, Child Care Law Center, San Francisco, Calif., statement 301 Carison, Lonnie M., California Department of Social Services, statement 278 Cervantes, Robert A., California State Department of Education, Child Devel- opment Division, letter and attachments 277 Chicago (Ill.) Department of Human Services, Daniel Alvarez, Sr., statement... 295 Child Care Association of America, Newport News, Va., William J. Tobin, letter 297 Child Care Employee Project, Oakland, Calif., Marcy Whitebook, letter 299 Child Care Law Center, San Francisco, Calif., Barbara Coccodrilli Carison, statement 301 Citrus Community College Child Development Center, Glendora, Calif., Diane Hinds, letter 303 Clinton, Hon. Bill, Governor, State of Arkansas, and National Governors' Association, joint letter and attachments 333 Coordinated Child Care of Pinellas, Inc., Guy M. Cooley, St. Petersburg, Fla., statement 304 Cross, Joyce, Coral Springs, Fla., letter 306 Davis, Pamela B., Big Bend Child Care Council, Tallahassee, Fla., letter 266 Day Care Action Council of Illinois, Shelley Peck, statement 307 DeWeaver, Norman C., Indian and Native American Employment and Train- ing Coalition, joint statement 340 Episcopal Child Care & Development Centers, Jacksonville, Fla., Susan S. Wilkinson, letter 310 Evans, Nancy H., Association of Junior Leagues International, statement 263 Foltin, Richard T., American Jewish Committee, New York, N.Y., statement ... 257 Funk, Karen J., National Indian Education Association, joint statement 340 Gage, Michael J., Coral Springs, Fla., letter 312 Hart, John P., Broward County (Fla.) Commissioners, letter 269 Hinds, Diane, Citrus Community College Child Development Center, Glendo- ra, Calif., letter 303 Holmes, John C., Association of Christian Schools International, Whittier, Calif., statement 262 Indian and Native American Employment and Training Coalition, and Na- tional Indian Education Association, Norman C. DeWeaver and Karen J. Funk, joint statement 340 Jones, Jannienne A., Dayton, Ohio, letter 313 Kramer, Linda L., YWCA of Dayton, Ohio, letter 399 Mahan, Marty P., Fort Lauderdale, Fla., letter 314 McEntee, Gerald W., American Federation of State, County & Municipal Employees, AFL-CIO, statement 254 McKernan, Hon. John R., Jr., Governor, State of Maine, and National Gover- nors' Association, joint letter and attachments 333 PAGENO="0005" V Mills, Jim, Pinellas Interagency Collaborative Council for Infants & Toddlers, Page Largo, Fla., joint letter 355 National Association of Pediatric Nurse Associates & Practitioners, Portage, Wis., Susan Bulgrin, statement 315 National Center for Clinical Infant Programs, Arlington, Va., Eleanor S. Szanton, statement and attachment 318 National Council of Jewish Women, Washington, D.C., Joan Bronk, statement 331 National Governors' Association, Hon. John R. McKernan, Jr., Governor, State of Maine, and Hon. Bill Clinton, Governor, State of Arkansas, joint letter and attachments 333 National Indian Education Association, and Indian and Native American Employment and Training Coalition, Karen J. Funk and Norman C. DeWeaver, joint statement 340 Olsen, Shari, Pinellas Interagency Collaborative Council for Infants and Tod- dlers, Largo, Fla., joint letter 355 Peck, Shelley, Day Care Action Council of Illinois, statement 307 Pilgrim Child Development Center, St. Petersburg, Fla., Diane Brown, letter and attachments 345 Pinellas Interagency Collaborative Council for Infants & Toddlers, Largo, Fla., Jim Mills and Shari Olsen, joint letter 355 Reardon, Steve, United Way of Alachua County, Gainesville, Fla., letter 378 Sanger, Sally, Southern California Association for the Education of Young Children, Whittier, Calif., letter and attachments 360 Sawyers, Linda, Virginia Council on Child Day Care & Early Childhood Programs, letter and attachment 380 Shear, Hon. Sue, a State Representative in the Missouri House of Representa- tives, letter 359 Siskin, Toni J., Broward County (Fla.) School Board, letter 270 Southern California Association for the Education of Young Children, Whit- tier, Calif., Sally Sanger, letter and attachments 360 Steinmetz, Hon. Kaye H., a State Representative in the Missouri House of Representatives, letter 375 Surr, John V., Bethesda, Md., letter 376 Szanton, Eleanor S., National Center for Clinical Infant Programs, Arlington, Va., statement and attachment 318 Tobin, William J., Child Care Association of America, Newport News, Va., letter 297 United Way of Alachua County, Fla., Steve Reardon, letter 378 Virginia Council on Child Day Care & Early Childhood Programs, Linda Sawyers, letter and attachment 380 Weber, Hon. Vin, a Representative in Congress from the State of Minnesota, statement 14 Whitburn, Gerald, Wisconsin Department of Health and Social Services, letter and attachments 388 Whitebook, Marcy, Child Care Employee Project, Oakland, Calif., letter 299 Wilkinson, Susan S., Episcopal Child Care & Development Centers, Jackson- ville, Fla., letter 310 Williams, Ree, California Association for the Education of Young Children, statement 276 Wilson, Hon. Pete, Governor, State of California, statement 272 Wisconsin Department of Health and Social Services, Gerald Whitburn, letter and attachments 388 Woodbury, Ruthann, Fort Lauderdale, Fla., letter 393 YMCA of the USA, Robert Boisture, statement 394 YWCA of Dayton, Ohio, Linda L. Kramer, letter 399 PAGENO="0006" PAGENO="0007" ADMINISTRATION'S PROPOSED FEDERAL CHILD CARE REGULATIONS THURSDAY, SEPTEMBER 26, 1991 HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, SUBCOMMITTEE ON HUMAN RESOURCES, Washington, D.C. The subcommittee met, pursuant to notice, at 10:02 a.m., in room 2358, Rayburn House Office Building, Hon. Thomas J. Downey (acting chairman of the subcommittee) presiding. [The press releases announcing the hearing follow:] (1) PAGENO="0008" 2 FOR IMMEDIATE RELEASE PRESS RELEASE #12 TUESDAY, AUGUST 20, 1991 8UBCOMMITTEE ON HUMAN RESOURCES COMMITTEE ON WAYS AND MEANS U.S. HOUSE OF REPRESENTATIVES 1102 LONGWORTH HOUSE OFFICE BLDG. WASHINGTON, D.C. 20515 TELEPHONE: (202) 225-1721 THE HONORABLE THOMAS J. DOWNEY (D., N.Y.), ACTING CHAIRMAN, SUBCOMMITTEE ON HUMAN RESOURCES, COMMITTEE ON WAYS AND MEANS, U.S. HOUSE OF REPRESENTATIVES, ANNOUNCES AN OVERSIGHT HEARING ON THE ADMINISTRATION'S PROPOSED FEDERAL CHILD CARE REGULATIONS The Honorable Thomas a. Downey (D., N.Y.), Acting Chairman, Subcommittee on Human Resources, committee on Ways and Means, U.S. House of Representatives, today announced that the Subcommittee will hold an oversight hearing on the Department of Health and Human Services' proposed regulations for implementing the State grants for child care that were enacted pursuant to the Omnibus Budget Reconciliation Act of 1990. The hearing will be held on Tuesday, September 17, 1991, beginning at 10:00 a.m., in room H-l37 of the capitol. In announcing the hearing, Acting Chairman Downey said: "A major success of the 101st congress was the enactment of a child care bill that would provide income and work support to thousands of low- and moderate-income families each year. At this hearing, we will review the Administration's proposed rules for implementing the two State grants for child care that were. included in the legislation. Implemented properly, these ~rants will ensure greater access to safe child care for many American families struggling to remain in the labor force.' The Omnibus Budget Reconciliation Act of 1990 was signed into law on November 5, 1990. The child care provisions of the Act include a new entitlement grant to the States for child care authorized under title IV-A of the Social Security Act, and a discretionary grant program for child care services, called the child care and Development Block Grant. Under the title IV-A grant program, States are collectively entitled to up to $300 million per year to provide child care to families who need the care in order to work and would otherwise be at risk of becoming eligible for Aid to Families with Dependent Children (cash welfare benefits). Each State's allotment is based on its child population in relation to the overall U.S. child population. The program targets a low-income population, but specific eligibility criteria are left for the States to devise. States may provide care directly, or choose a range of delivery options. All care must meet standards of State and local law. Except for providers who provide care solely to family members, providers who participate in the program must be licensed, regulated or registered by the State. care must be provided on a sliding-fee-scale basis, with contributions based on the family's ability to pay. A State match equal to the matching rate for the Medicaid program is required. The Child care and Development Block Grant authorizes $750 million for fiscal year 1991, and increases to $925 million for fiscal year 1993. Seventy-five percent of a State's allocation must be used to provide child care services and for activities to improve the availability and quality of child care. The remaining 25 percent must be used for quality improvements and to increase the availability of early childhood development and before- and after-school services. Under the program, States may provide care to certain children who are under age 13, and who come from a family whose income is less than 75 percent of the median income of the State for a family of the same size. (MORE) PAGENO="0009" 3 States must establish a sliding-fee scale, with contributions based on the family's income and size. Beginning with fiscal year 1993, States must give program beneficiaries the option of enrolling their children with a provider that has a grant or contract, or receiving a child care certificate. States must certify that certain health and safety requirements are established for child care providers, and must demonstrate that compliance procedures are in effect. Eligible providers must be licensed, regulated or registered, and must comply with applicable State and local licensing and regulatory requirements. Half of any funds appropriated for the program will be allocated on the basis of the number of children ages 4 or younger in the State, and half on the number of children receiving free and reduced-price school lunches. Both factors are adjusted based on per-capita personal income in the State. There is no State match required for this program. At this hearing, testimony will be heard from Administration officials and public witnesses. Testimony should focus on the Administration's regulations as they relate to both programs and the extent to which specific regulations conform to the law, promote streamlined and efficient program operations, promote State flexibility, and respect the needs of individual recipients. DETAILS FOR SUBMISSION OF REQUESTS TO BE HEARD: The Subcommittee will hear testimony from public witnesses. Individuals and organizations interested in presenting oral testimony before the Subcommittee must submit their requests to be heard by telephone to Harriett Lawler, Diane Kirkland or Laura Cook [(202) 225-1721) no later than noon, Thursday, September 5, 1991. The telephone request must be followed by a formal written request to Robert J. Leonard, Chief Counsel, Committee on Ways and Means, U.S. House of Representatives, 1102 Longworth House Office Building, Washington, D.C. 20515. The Subcommittee staff will notify by telephone those scheduled to appear as soon as possible after the filing deadline. Any questions concerning a scheduled appearance should be directed to the Subcommittee [(202) 225-1025]. It is urged that persons and organizations having a common position make every effort to designate one spokesperson to represent them in order for the Subcommittee to hear as many points of view as possible. Time for oral presentations will be strictly limited with the understanding that a more detailed statement may be included in the printed record of the hearing. (Sea formatting requirements below.) This process will afford more time for Members to question witnesses. In addition, witnesses may be grouped as panelists with strict time limitations for each panelist. In order to assure the most productive use of the limited amount of time available to question witnesses, all witnesses scheduled to appear are required to submit 200 copies of their prepared statements to the Subcommittee office, B-3l7 Rayburn House Office Building, by Friday, September 13, 1991. Failure to comply with this requirement may result in the witness being denied the opportunity to testify in person. WRITTEN STATEMENTS IN LIEU OF PERSONAL APPEARANCE: Persons wishing to submit written statements for the printed record of the hearing should submit at least six (6) copies of their statements by close of business, Tuesday, October 15, 1991, to Robert J. Leonard, Chief Counsel, Committee on Ways and Means, U.S. House of Representatives, 1102 Longworth House Office Building, Washington, D.C. 20515. If those filing written statements wish to have their statements distributed to the press and interested public, they may deliver 100 additional copies for this purpose to the Subcommittee office, room B-317 Rayburn House Office Building, on or before the day of the hearing. (MORE) PAGENO="0010" 4 FORMATTING REQUIREMENTS: Each statement presented for printing to the Committee by a witness any written statement or exhibit submitted for the printed record or any written comments in response to a request for written comments must conform to the guidelines listed below. Any statement or exhibit not in compliance with these guidelines will not be printed, but will be maintained in the Committee files for review and use by the Committee. 1. All statements and any accompanying exhibits for printing must be typed in single space on legal-size paper and may not exceed a total of 10 pages. 2. Copies of whole documents submitted as exhibit material will not be accepted for printing. Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material not meeting these specifications will be maintained in the Committee files for review and use by the Committee. 3. Statements must contain the name and capacity in which the witness wilt appear or, for written comments, the name and capacity of the person submitting the statement as well as any clients or persons, or any organizationfor whom the witness appears or for whom the statement is submitted. 4. A supplemental sheet must accompany each statement listing the name, full address, a telephone number where the witness or the designated representative may be reached and a topical outline or summary of the comments and recommendations in the full statement. Thin supplemental sheet will not be included in the printed record. The above restrictions and limitations apply only to material being submitted for printing. Statements and exhibits or supplementary material submitted solely for distribution to the Members, the press and the public during the course of a public hearing may be submitted in other forms. PAGENO="0011" 5 * * * NOTICE -- CHANGE IN SCHEDULE * * * FOR IMMEDIATE RELEASE PRESS RELEASE #12-REVISED FRIDAY, SEPTEMBER 13, 1991 SUBCOMMITTEE ON HUMAN RESOURCES COMMITTEE ON WAYS AND MEANS U.S. HOUSE OF REPRESENTATIVES 1101 LONGWORTH HOUSE OFFICE BLDG. WASHINGTON, D.C. 20515 TELEPHONE: (202) 225-1025 THE HONORABLE THOMAS J. DOWNEY (D., NEW YORK), ACTING CHAIRMAN, SUBCOMMITTEE ON HUMAN RESOURCES, COMMITTEE ON WAYS AND MEANS, U.S. HOUSE OF REPRESENTATIVES, ANNOUNCES POSTPONEMENT OF THE OVERSIGHT HEARING ON THE ADMINISTRATION'S PROPOSED FEDERAL CHILD CARE REGULATIONS The Honorable Thomas J. Downey, (D., New York), Acting Chairman, Subcommittee on Human Resources, Committee on Ways and Means, U.S. House of Representatives, announced today that the oversight hearing on the Administration's proposed Federal child care regulations, originally scheduled for Tuesday, September 17, 1991, has been postponed. The hearing has been rescheduled for Thursday, September 26, 1991, beginning at 10:00 a.m. in room H-l37 of the Capitol. All other details for the hearing remain the same. (See Subcommittee press release #12, dated August 20, 1991.) ***** PAGENO="0012" 6 Acting Chairman DOWNEY. The subcommittee will come to order. As you can see we are in less familiar surroundings than we are used to. This is an appropriations subcommittee hearing room and not our normal venue, and I ask your indulgence. I know it is very crowded. It's likely to be a long day and we're going to try to move expeditiously. We have Members of Congress who are supposed to be with us. If they are not here on time we're going to try to move through other witnesses, so that we can try and get you out on some orderly basis and make sure you have an opportunity to speak. We are also up against a very exciting hearing that the Over- sight Subcommittee is doing on Salomon Bros., and much of the media and much of our members attention is turned toward the fi- nancing of debt, as opposed to the concern about children, but that is lamentably understandable. Last year when child care legislation became law, this Nation took a giant step forward in the effort to provide affordable and quality care for America's children. We are here today because the Department of Health and Human Services (HHS) is proposing that we now take two steps backward. As one of the principal architects of this proposal, I can personal- ly attest to the fact that this was not an easy accomplishment. One of the most difficult issues we confronted was ensuring the quality of federally subsidized child care. At the time we fully appreciated the importance of this issue. We fully understood how important it was for parents to have peace of mind when they left their children with a child care provider. We recognized that parents, alone, could not and should not have to shoulder the burden of determining whether the child care they were using provided adequate health and safety standards. And the result of the final compromise was a decision by the Congress that the establishment of child care standards was best left to the States. We thought at that time that we had resolved this issue and that we could now move forward. But apparently the Department of Health and Human Services has decided otherwise. They have pro- posed rules for the administration of this program that ignore the details and the outcome of last year's debate. They have ignored the clear intent of Congress which was expressed throughout its de- liberations over child care. They have written regulations that re- place legislative intent with misguided ideology. Let me make my position very clear: the proposed HHS regula- tions are wrong, and they should not and will not be implemented. Ms. Barnhart, whom we will hear from today, stated in a recent article that in researching congressional intent, it is important to look at what ultimately passes, rather than, I quote "the also rans." With all due modesty, I would not characterize myself as an also ran in the child care debate since, unlike the bureaucrats at HHS, I participated in this debate at all stages of the legislative process. Nor would I place the chairman of the House Education and Labor Committee, Mr. Ford, or the chairman of the Senate Human Re- sources Committee, Senator Kennedy, in that category. Yet, we PAGENO="0013" 7 have all strongly expressed the view that the proposed regulations are counter to what was intended. Let me also call attention to an opinion from the legal scholars at the Congressional Research Service which I am releasing today. They have concluded that these proposed rules may exceed the Sec- retary's statutory authority. [The opinion referred to follows:] PAGENO="0014" 8 CRS Congressional Research Service * The Library of Congress. Washington, D.C. 20541) September 20, 1991 TO : Rouse Committee on Ways and Means FROM : American Law Division SUBJECT : Legal Analysis of Certain Proposed Regulations Under the Title N-A At Risk-Child Care Program On June 25, 1991 the Secretary of the Department of Health and Human Services (Secretary) issued a proposed regulation implementing section 5081 of the Omnibus Budget Reconciliation Act of 1990 (OBRA 90), Pub. L 101-508.' That section adds section 402(i) of the Social Security Act to create a child care program for low-income, working families who are not receivingAid to Families with Dependent Children (AFDC). The purpose of this optional program is to permit states to provide child care to low-income families who are not receiving AFDC, but who need child care in order to work, and who would otherwise be at risk of becoming eligible for AFDC. Under Section 402(i)(5)(B) of the Social Security Act federal financial participation Is only available for child care that meets applicable standards of State and local law'. The Secretary defines `applicable standards' as follows:2 Applicable standards are licensing or regulatory requirements which apply to care of a particular type in the State, local area, or Indian reservation, regardless of the source of payment for the care. In effect, the Secretary has defined `applicable' standards to be only those standards which applygenemlly to a particular kind of child care, such as center care, or family day care. Thus, if a state has standards which apply only to publicly-funded care of a particular type, then those standards could not be applied to child care receiving funds under this program, even though such funds are public funds. In addition, states would not be permitted to establish standards applicable only to care funded under this program. This memorandum addresses the question, raised by your committee, whether this regulation appears to exceed the statutory authority of the Secretary of DHHS to issue regulations implementing the Title N-A At Risk- Child Care program. The standard of review which a court would use in `56 Fed Reg 29054 - 29069 (June 25, 1991). 2 Proposed regulation at 45 C.F.R. * 257.41(a)(2). PAGENO="0015" 9 CRS-2 as8essing the legality of the Secretary's proposed rule Is set forth In the Administrative Procedure Act (APA). The APA requires the reviewing court to `hold unlawftil and set aside agency actions, findings and conclusions found to be (1) arbitrary, capricious, or which constitute an abuse of discretion, or otherwise not in accordance with law. . .~ This standard of review is a somewhat restrictive one, confining the court's review to whether the agency's interpretation was within the permissible scope of administrative judgment. The United States Supreme Court has set forth specific guidance on application of this standard of review. In order to determine whether an agency has violated the arbitrary and capricious test the court `must consider whether the decision was based on consideration of the relevant factors and whether there has been a clear error of judgment.. . Although its inquiry into the facts is to be searching and careflil, the ultimate standard of review is a narrow one. The court is not empowered to substitute its judgment for that of the agency'.4 The circumstances in which a court should defer to an agency interpretation of a statutory provision were recently defined by the Supreme Court via a two-prong analysis in Chevron U.S.A. v. No.turol Resource8 Defense Council (`Chevron'). Under the first prong of the test, if the statutory language is clear or if Congress expresses a clear intent on the `precise question at issue,' then the court `must give effect to the unambiguously expressed intent of Congress'.' However, under the second prong of the test, if congressional intent is not clear, then the court should defer to a reasonable agency construction of the statutory provision. Said the Court:7 If, however, the court determines that Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute. Applying the first prong of the Chevron test to the issue at hand involves an examination of the statutory language in Section 402(i)(5)(B) and pertinent legislative history if the language is ambiguous. A good argument maybe made that this statutory provision is plain on its face, not subject to ambiguities ~ 5 U.S.C. ~706(2)(B). Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 216 (1971) (citations omitted); see also, Stereo Broadcasters v. FCC, 652 F.2d 1026 (D.C. Cir. 1981). 467 U.S. 837 (1984). Id. at 842-43. Id. at 843 (footnotes omitted). PAGENO="0016" 10 CRS3 which would require clarification orpernait interpretation by the agency charged with implementing the provision.1 Section 402(i)(5XB) simply states that the child care involved in this program must meet those standards of state and local law which are applicable to such care. No other provision of this statute gives the Secretary express authority to define applicable state and local standards so as to preclude any group of currently applicable standards. The Secretary's regulation interprets this provision in such a way that certain state standards (standards applicable to child care receiving public funds) could not be applied to child care funded under this program, even though such standards are clearly applicable. In the absence of any ambiguity in the statutory terms, and in the absence of any express delegation of discretionary authority to interpret such language, it would appear that the Secretary's rule, in so far as it excludes state and local standards which would be applicable to child care funded under this program, may exceed the Secretary's authority. Kathleen S. Swendiman Legislative Attorney $ Where the plain language of a statute is deemed to be clear on its face the court need not examine the relevant legislative history. Ifs court should decide to examine the conference report accompanying this program, it is noted that there is little mention of this issue. The conference report simply restates that `[ala in the Senate amendment, all child care paid for with these funds must meet applicable standards of State and local law.' RB. CONF. REP. NO. 964, 101st Cong., 2d Seas. 922 (1990). PAGENO="0017" 11 Acting Chairman DOWNEY. Beyond the fact that HHS has bla- tantly ignored the intent of the elected Members of Congress, I am equally disturbed by the Department's cavalier regard for the safety of children. They would require States to be no more strin- gent in setting standards for subsidized child care, than they are for nonsubsidized care. The result would be that States would adopt the lowest common denominator. We would actually move below the minimum health and safety standards that provide a floor of protection for children. States would find themselves in the position, if HHS regulations are im- plemented, of funding child care which they have determined is unsafe. Taxpayers have a right to expect that the child care that they are funding is safe. They have a right to expect that they are not subsidizing future tragedies. Finally, the Department of HHS has cloaked its regulations under the banner of parental choice. The purpose of passing child care legislation was to encourage parental choice. Our goal was to expand the number of quality child care providers, and to provide more Americans with access to child care. But we did not say that we were giving child care providers a blank check. We recognize that Government must play some role in ensuring the safety of children, like it does in ensuring the safety of nursing homes or in certifying the quality of beef that you buy in the su- permarket. And we decided that the States were best equipped to determine the appropriate standards. Let me conclude by saying that America's children should not be the innocent victims of some ideological war that the Department of HHS has decided to wage. We set out 2 years ago to expand safe and affordable child care. We achieved that goal and we are not going to let anyone turn back the clock. Mr. Shaw. Mr. SHAW. Thank you, Mr. Chairman. I, as you, have been looking forward to the hearing and the testi- mony that we are going to receive today. The major focus of this testimony and my questions will be day care quality. No doubt, all the witnesses who appear today want to ensure that children whose parents work are in a setting that, at minimum does no harm to that particular child. I welcome the opportunity to investigate the best way to achieve this mutually agreed to goal. As you well recognize, Mr. Chairman, this is an issue that our committee and the Congress has been pur- suing for many years. Back in the late 1960s, there was a movement led by advocates- a few Republicans and more Democrats-to strengthen the Federal regulations of day care quality. For more than a decade, during both Republican and Democratic administrations, HHS attempted to develop standards that would apply to all day care supported by Federal funds. Congress, howev- er, refused to enact the standards that emerged from this long process and the effort died in 1980. Major efforts to create Federal day care standards were also mounted during both the welfare reform debate and the day care debate of the late 1980s. PAGENO="0018" 12 Many of the people in this room wanted Congress to adopt strin- gent Federal standards on staff/child ratios, class size, teacher training, teacher qualifications and so forth, and then force the States to meet these standards or lose Federal funds. Early drafts of bills emerging from the Education and Labor Committee even threatened to cancel Federal funds for any State that did not ensure that all day care, not just care receiving Federal funds, met Federal standards. These attempts to establish Federal standards all failed. At the moment, as nearly as I can tell, the most that the Federal statutes or regulations require is that day care supported by Federal dollars meet the following conditions: The care must meet applicable standards of State and local law; the care must meet health and safety standards; parent access to the care facilities must be as- sured; providers must be at least registered with the State; parents have the right to choose the care that best meets their needs; and relatives are exempt from State licensing and standards. Not every Federal program has all of these requirements, but these show the limits to which the Federal Government has been willing to go in regulating day care. Today we are meeting, both because of the routine desire of the subcommittee to gauge public reaction to the new care regulations published by HRS; and because there is a lOt of talk that HHS erred on the side of parents and against State legislatures and bu- reaucrats. More specifically, HHS limited the States' authority to regulate care in favor of ensuring that parents' right to choose cannot be abridged. For example, regulations for the at-risk grant program say that States cannot adopt one set of standards for care receiving Federal funds and a different set of standards for other care. HHS' fear was that stronger standards for low-income parents would give them less choice than those enjoyed by other parents who could afford to pay for their own care. I look forward to the debate on this issue and this hearing. As we will see during the hearing, differing views on this issue are caused by a fundamental difference in the way we think the health and safety of the children in day care can best be protected. Some of us put our trust in Government standards and State bureaucrats; some of us put our trust in the parents. I hope we all agree that both Government regulations and parental choice have a role to play in protecting our children, but when these roles clash, who will prevail? That is a major question before us today. I think we can find some answers. Mr. Chairman, in the midst of a conference of unemployment in- surance, I hardly need to remind the Members of this subcommit- tee that we sometimes use serious issues, such as day care regula- tions, to score partisan points. I sincerely hope that we will not do that today. HHS has made a good faith effort to write good regula- tions that reflect the will of the Congress. Many of the advocates of State regulation here think that HHS went too far in the direction of parental choice. I plan to listen carefully to the arguments, to ask reasonable questions, and then to write a letter to Dr. Sullivan outlining the areas in which I think the administration should compromise. PAGENO="0019" 13 Finally I request unanimous consent to submit a statement by Mr. Weber, who is unable to be here this morning to present his own testimony to this committee. Acting Chairman DOWNEY. Without objection, Mr. Weber's state- ment will be included in its entirety in the record, at this point. [The prepared statement of Mr. Weber follows:] PAGENO="0020" 14 Statement of the Honorable yin Weber Before the Committee on Ways and Means Subcommittee on Human Resources September 26, 1991 Mr. Chairman: It's a good thing you're having hearings on the new child care regulations. Congress spent the better part of three years arguing about day care; I trust that none of us believe our work is over upon mere passage of a law. I came here to raise only one issue. In 1954, Congress enacted legislation that eventually led to the Dependent Care Tac Credit. I hardly need to remind members of this Subcommittee that the Dependent Care Credit now provides about $3 billion to families to help defray the cost of child care. This credit is by far the biggest federal subsidy of child care, exceeding even Head Start by around a billion dollars. In the last decade, we have spent at least $26 billion on the credit and in moat years have helped between 7 and 9 million families pay for care. Despite the fact that the Dependent Care Credit is the biggest federal subsidy for child care, I cannot find evidence that advocates, researchers, reporters, parent groups, Congress, or even this Subcommittee has been concerned with the quality of care being supported with these federal dollars. The explanation of the program in the Ways and Means Green Book goes on for seven pages and contains four tables, yet there is not a single syllable about the quality of care or the federal responsibility for insuring that tax credit dollars are spent on decent care. The Ways and Means Committee has never held a hearing-- about the quality of care used by parents with federal support from the tax credit. I asked my staff to search newspapers and the academic literature for evidence of concern about the quality of care supported by the tax credit; they came up with nothing. Despite the fact that the Congressional Research Service has often investigated state day care standards, when we called and asked if a Member of Congress had ever asked CRS to investigate the quality of care supported by the tax credit, the answer was no. Even the widely respected Children's Defense Fund, the same organization that submitted some 40 pages of comments on the day care regulations being considered by your Subcommittee today, much of it directly or indirectly about the quality of care, has not undertaken a study of the quality of care supported by the credit and has not asked tor congressional hearings on the tax credit. I conclude that the federal government can spend $26 billion on child care through the tax credit and subsidize the care of up to 10 million children per year, and virtually no one will utter a word about standards. And yet, let us enact one grant program for low-income families and, as our presence in this room today attests, we hear immediate claims that standards must be created and met. This is certainly not the first occasion, and this Subcommittee is not the first organization, concerned about standards for day care supported by federal grant dollars. Members of the Subcommittee may have heard about the years of turmoil that surrounded the Federal Interagency Day Care Standards, the so-called FIDCR, back in the l970s. In 1967, Congress mandated that HHS write comprehensive regulations that would be followed by all federal agencies using tax dollars to support child care. There ensued a 13-year struggle to write comprehensive federal regulations. Due to a host of factors too complex to discuss here, in 1980 Congress suspended use of the FIDCR guidelines. More recently, the welfare reform debates conducted by Congress from roughly 1986 until 1988 featured a prominent sub-debate on day care standards. A major focus of the welfare debate was helping mothers escape welfare by preparing for and PAGENO="0021" 15 accepting jobs. If mothers are to work, day care is a necessity. Members of the Education and Labor Committee, and to a lesser degree Members of this Subcommittee, seized upon the need for day care in welfare-to-work programs as an opportunity to once again raise the issue of day care standards. I understand that early versions of proposals from the Education and Labor Committee contained strong federal standards and even rules that made sweeping demands on states such as the requirement that all care in the state -- not just care receiving federal funds -- had to meet federal standards. Similarly, the various versions of the ABC bill all contained federal standards. In all these cases, despite the call for strong standards from many Members of Congress, in the end Congress refused to impose federal standards. Having participated in a number of these legislative debates, I found that a major reason we were able to defeat federal standards is that most Members of Congress, including both Republicans and Democrats, believe that parents should be responsible for preschool children. Parents are more capable than Members of Congress or state bureaucrats of making decisions about whether a particular type of care or specific provider is good for their children. The key issue of parental choice and responsibility brings me back to my theme: when spending tax credit money, Congress and the many fine individuals and organizations who have come today to testify apparently have no problem letting parent choice prevail. But now that we are discussing grant money for low-income families -- never mind that the total dollars are less than 1/3rd of the amount we will spend next year through the tax credit and that less than 1/10th the number of families will benefit -- lots of individuals and organizations want to impose strong regulations to insure the quality of care. Few reasonable people disagree that the effect of these regulations will be to restrict parental choice. There is, then, no question about the problem faced by HHS when they wrote this regulation. It is the same problem this Subcommittee faces today. To some degree, parental choice and strong regulations are incompatible. The more states get to decide, the less parents get to decide. And vice versa. As usual, many advocates and Members of Congress want it both ways. In the case of tax credits, they side with parents. If I were inclined to be provocative, I might say they side with middle-class parents. By contrast, in the case of grants, many advocates and Members of Congress side with government control and against parent choice. Surprisingly enough, the Congress itself appears to be somewhat consistent on this issue. In the case of tax credits, Congress has never attempted to impose regulations on care selected by parents. In the case of grants, Congress has in large part left regulation up to states, in some cases with the proviso that except for care by relatives all facilities providing care supported by federal funds must at least be registered. In effect, the course taken by HHS in drawing the regulations you are considering today is to say to states: yes you can regulate, but the Congress also directed us to insure parental choice. I think they are right. If your Subcommittee decides that they were not right, and that the regulations must allow states to unreasonably interfere in parental choice, perhaps you will explain why you have never decided to impose the same requirements on the millions of parents using the Dependent Care Tax Credit. PAGENO="0022" 16 Acting Chairman DOWNEY. Mr. Andrews. Mr. ANDREWS. I have no statement. Acting Chairman DOWNEY. Mrs. Johnson. Mrs. JOHNSON. Thank you, Mr. Chairman. And thank you for calling this hearing to look at the implemen- tation of one of the most important pieces of family legislation that Congress has adopted in over a decade. My hope is that through our discussions today we can clarify the intent of these regulations and evaluate their ability to meet the child care needs of low- income working Americans. The child care debate was fundamentally a battle over how best to help American families. One side fought principally to provide parents with resources to enable them to choose the kind of care that would be best for their children. The other side worked pri- marily to increase Federal control over child care. I remember a letter I wrote to the conference committee last year regarding the decision to fund new child care moneys through title TV-A of the Social Security Act, the Aid to Families with De- pendent Children program. By sending funding through the AFDC program, Congress can send no clearer message that our first prior- ity in distributing assistance should be to ensure that poor women become self-sufficient. The product of our debate-the at-risk child care and child care development block grant programs-incorporated the best ideas from both sides. However, that left the administration with the task of balancing sometimes truly conflicting language in these two statutes. After careful review of the regulations recently promul- gated by the administration, I believe that they have done an admi- rable job of balancing parental choice and State authority. The reg- ulations ensure that many more low-income parents throughout the country will have access to child care assistance and have the choice as to how to use that assistance, without the paternal direc- tion of the Federal Government restraining the authority of the State government. I appreciate the good attendance at this hearing and the chair- man focusing on what is a very important matter. Thank you. Acting Chairman DOWNEY. Thank you, Mrs. Johnson. Mr. Grandy, do you have a statement? Mr. GRANDY. No, Mr. Chairman. Acting Chairman DOWNEY. We are next privileged to hear from our colleague, Mr. Stenholm, the gentleman from Texas, who played an important role in this debate during the deliberations. He was the author of a substitute, and is a good friend to all of us. Charlie. STATEMENT OF HON. CHARLES W. STENHOLM, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS Mr. STENHOLM. Thank you, Mr. Chairman. I appreciate your holding these hearings today and I appreciate the opportunity to take a few minutes to share with you some of our views, not only on the legislation, but also on the regulations. PAGENO="0023" 17 As you mentioned, I, too, would say it's been a pleasure to work with you and other members of this committee on this very vital issue. And, Mr. Chairman, I certainly have gained additional re- spect for your commitment to helping American families and chil- dren as a result of our efforts in what formally is not an area that I spend a lot of time in. I am usually on the Agriculture Commit- tee. I have a statement. I ask that it be included in the record in its entirety and I would like to summarize a few of what I consider to be the major points. My efforts in the area of child care were guided by five princi- ples. One, that parents, States, and localities are better decision- makers than the Federal Government on how to care for children. Two, legislation should not discriminate against child care deliv- ered by a church or a synagogue. Three, that legislation should not discriminate against a family which chooses to have one parent remain at home. Four, complicated new bureaucracies for adminis- tering child care funds should not be established; and five, any new Federal program must balance fiscal responsibility with social re- sponsibility. I was pleased that the child care legislation included in the Om- nibus Budget Reconciliation Act and the regulations implementing this program reflected these principles. I would like to address several aspects of child care that the leg- islation was designed to address. First, the issue of parental choice. The regulations accurately, I believe, reflect the will of Congress as expressed in the conference report and in the debate in both Cham- bers on child care by promoting the ability of parents to be the pri- mary determiners of care for their children. From the conference report I quote, "the managers believe that parents should have the greatest possible choice in selecting child care for their children." Thus, parents would have complete discretion to choose from a wide range of child care arrangements. In announcing the agreement reached with the White House on child care legislation Senator Dodd stated, and I quote "what made this agreement possible is our mutual commitment to provide par- ents with the greatest range of choices possible for the care of their children." Senator Dodd continued to explain that the grant pro- gram would enable the State to quote, "improve the quality, avail- ability, and affordability of child care and to maximize parental choice." The members of this body have expressed their belief that par- ents are better decisionmakers than the Federal Government as to how their children should be cared for. During the floor debate on child care legislation, we defeated two amendments that would have limited parental choice. The Price amendment which would have removed provisions requiring voucher programs in every State was defeated 182 to 43. The Edwards amendment which would have restricted the use of vouchers in sectarian centers was defeated 297 to 125. Parental choice is meaningful only if parents have the option of choosing from the greatest range of choices possible. Standards which restrict the range of providers available do violence to the concept of parental choice. An example of this is an elderly lady in PAGENO="0024" 18 a rest home in the 17th district who had worked for 5 years at min- imum wage as a babysitter until she was required to drive 56 miles a day for 6 days for 12 hours of supervision and training. Now, that was one of the horror stories that was quoted time and time again of what happens when we begin to allow more Federal determina- tion of what's good, and rely less on common sense. Families that receive Government assistance should have the same freedom to select a child care provider as families who have financial resources to pay for child care. That's another general principle. If providers are subjected to additional requirements when they care for children receiving Government assistance, many providers will be discouraged from caring for low-income children. The proposed rule would prevent this by ensuring that providers are not penalized with additional regulations for caring for chil- dren receiving governmental assistance. I am pleased to note, Mr. Chairman, that the Texas Department of Health and Human Services has taken quick steps to develop a State plan that promotes parental choice. Now, a couple of observations in the availability/affordability side. I think the Government must be careful to avoid limiting the availability of care by inadvertently legislating particular forms of care out of existence. The affordability of child care is best ensured by promoting the widest range of providers possible. The regula- tions should ensure that there is not a bias in favor of or against any one type of care. Specifically the regulations should explicitly state that proprietary and religious providers be eligible for assist- ance from so-called section 658H services, programs for early child- hood development, and/or before/after school services. The regulations accurately reflect, I believe, the congressional intent expressed in the conference report that the preponderance of funds should be used to directly assist low-income families in paying for child care, and the least possible amount on administra- tive function. A couple of points on quality of care. I remain concerned about the health and safety of children receiving day care services as you do, Mr. Chairman, and as the members of this committee do. I hope that States will take a flexible approach so that health and safety, as well as parental choice can be maintained. Many of the worst child care horror stories today come from the most regulated States today. Equating lots of regulations, Federal regulations, with a guarantee of quality is absurd. The best guaran- tor of quality child care is the competition in the open market for the business of informed parents-and I underline informed par- ents-who are empowered to choose the care giver for their child. It is important to avoid running informal care-friends, neighbors, and relatives-out of business with unnecessary regulations. The most effective quality assurance in informal care arrange- ments is the personal relationship between the parents and the care giver. Finally, Mr. Chairman, in regard to State flexibility, the concept that the Federal Government knows the one, right way to do things which the States must then pursue has been thoroughly de- bunked in the area of child care, education, health care, you name PAGENO="0025" 19 it. If there is one message that I have received over and over and over again from the people back home, they are tired of us creating regulations that cost money without paying for it. And this is one of the areas in which I believe that we found the proper balance in the legislation that we passed, by providing that the principle of State flexibility should be second only to parental choice in the area of child care. States should be given the maxi- mum flexibility in how they spend the funds provided for by a block grant, and in setting standards for care so long as the princi- ple of parental choice is not violated. I would encourage the Department to limit the complexity of the regulations for the States and to ensure that the regulations are consistent so that States may provide a seamless delivery system for child care assistance. I thank you, Mr. Chairman. [The prepared statement follows:] PAGENO="0026" 20 Statement of Rep. Charles Stenoim House Ways and Means Subcommitte on Human Resources Concerning the Administration's Proposed Federal Child Care Regulations September24, 1991 I would like to thank Chariman Downey for holding this hearing. Although I have at times disagreed with Chairman Downey on the precise shape that child care legislation should take, I have always had tremendous respect for his committment to helping America's families and children. I appreciate having this opportunity to make a few comments regarding the proposed rule implementing section 5081 of the Omnibus Reconciliation Act of 1991, creating two child care block grants to states for the purpose of assisting low-income, working families meet their child care needs. Having spent a great deal of time and effort on child care legislation, I have a keen interest in the regulations being discussed here today. The success in developing a package that was enacted into law was the result of the tireless efforts of many individuals and organizations, many of which are represented here today. My efforts in the area of child care were guided by five principles: l)Parents, states and localities are better decision-makeçs than the federal government on how to care for children; 2)Legislation should not discriminate against child care delivered by a church or synagogue; 3)Legislation should not discriminate against the family which chooses to have one parent remain at home; 4)Complicated new bureaucracies for administering child care funds should not be established; and 5)Any new federal program must balance fiscal responsibility with social responsibility. I was pleased that the child care legislation included in the Omnibus Budget Reconciliation Act embodied these principles. The Department of Health and Human Services is to be commended for promulgating a proposed rule that accuretely reflects the intent of Congress. While I expect that folks on both sides of the spectrum will criticize the rule for going too far or not far enough in specific areas, I believe that the Department has done a good job of striking a balance between the two extreme positions. I will direct my comments to five issues that the child care legislation passed last fall was intended to address: parental choice; affordability; availability; quality; and state flexibility Parental Choice Anyone who followed the course of child care legislation through this institution knows that parental choice was an issue of great concern to many members. The compromise that made it possible for child care legislation to be enacted into law was supported by a wide spectrum of members because it promoted the ability of parents to be the primary determinors of care for their children. Parental choice of providers is the first requirement mentioned in the section of the statute for the Child Care and Development Block Grant listing the requirements of the state plans. Although the statute for the At-Risk Child Care program does not explicitly mention parental choice, the legislative history and clearly expressed intent of Congress was that any child care programs should provide low-income families with maximum flexibility in meeting their child care needs. It would be correct to assume that Congress intended that families receiving assistance under the At-Risk Child Care program should not be denied this flexibility. I believe that the regulations accurately reflect the will of Congress as expressed in the conference report and in the debate in both chambers on child care in this area. On page 923 of the the conference report the managers wrote that: "The managers believe that parents should have the greatest possible choice in selecting child care for their children. Thus, parents.. .would have complete discretion to choose from a wide range of child care arrangements." One of the principal architects of the agreement between the administrationa nd the Senate that led to the enactment of child care legislation, Senator Chris Dodd of Connecticutt stated on the Senate floor that PAGENO="0027" 21 "What made this agreement possible is our mutual committment to provide parents with the greatest range of choices possible for the care of their children." Dodd continued to explain that the grant program would enable the state to "improve the quality, availability and affordability of child care and to maximize parental choice." Senate Minority Leader Robert Dole, who also played a key role in reaching a compromise on this issue remarked that "The end result of our efforts is to put money and decisions in the hands of parents." Senator Clairborne Pell concurred in this judgement. In his remarks following the compromise, he praised the agreement for "(providing) for significant parental choice in child care services... (to) help ensure that families can make the child care choices that best address their particular needs." The members of this body have clearly expressed their belief that parents are better decision-makers than the federal government as to how their children should be cared for. During the floor debate on child care legislation the House defeated two amendments that would have limited parental choice. The Price amendment, which would have removed provisions requiring voucher programs in every state,was defeated 182-243. The Edwards amendment, which would have restricted the use of vouchers in sectarian centers, was defeated 125-297. Both of these amendments were defeated primarily becase of the concerns of members that they would restrict parental choice. Parental choice is meaningful only if parents have the option of choosing from the greatest range of choices possible. Standards which restrict the range of providers available do violence to the concept of parental choice. A couple of years back I was confronted in a rest home in my district by a little old lady who had worked for five years at minimum wage as a baby sitter in that rest home until the Federal guidelines imposed on nursing homes said she was required to drive 56 miles a day for six days for twelve hours of supervision and training. She told me , "I cannot do that, Congressman. I cannot." Families that receive government assistance should have the same freedom to select a child care provider as families who have the financial resources to pay for child care. If providers are subjected to additional requirments if they care for children receiving government assistance, many providers will be dicouraged from caring for low-income children. A young mother operating a family day care center would think twice about accepting children receiving assistance under the block grant if that would mean an increase in the amount of paperwork and regulations that she would have to comply with. The proposed rule would prevent this by ensuring that providers are not penalized with additional regulations for caring for children receiving government assistance. Availability / Affordability The conference report stated on page 922 that "The purpose of this block grant is to give parents a variety of option in addressing family child care needs." The government must be careful to avoid limiting the availability of care by inadvertently legislating particular forms of care out of existence. The affordability of child care is best ensured by promoting the widest range of providers possible. As I discussed earlier, the proposed rule is to be commended for attempting protects the number and diversity of providers from being limited by overly burdensome regulations. The regulations should ensure that there is not a bias in favor of or against any one type of care. Specifically, the regulations should explicitly state that proprietary and religious providers be eligible for assistance from so-called Section 658H services, programs for early childhood development and/or before- and after-school services. The regulations accurately reflect the Congressional intent expressed in the conference report on page 923 that the preponderance of the funds should be used to directly assist low-income families in paying for child care and the least possible amount on administrative functions. With the limited resources of this government, it is important that the Federal dollars that we are able to devote to child care be directed to those who need assistance. It would be unfair of us at the Federal level to pass legislation that promises to give assistance to low-income families with children if the money is to be diverted away from these families. PAGENO="0028" 22 Quality I remain concerned about the health and safety of children receiving day care services. It seems to me that states should be able to find ways in which state requirments can be dealt with in a flexible way so that health and safety as well as parental choice can be maintained. Many of the worst child care horror stories come from the most regulated states today. Equating lots of regulations with a guarantee of quality is absurd. The government can never replace the judgement of parents in ensuring the quality of child care. Extensive research into early childhood development has demonstrated that it is extremely important for the parent to be active participants in their children's care. The government can promote this involvement by protecting the right of parental access to child care providers and by providing parents with information that will allow them to make informed decisions about the most appropriate care for their children. Government standards can assure that basic safety and health concerns are addressed. However, government regulations are not an effective substitute for the informed judgement of parents. The best guarantor of quality child care is the competition in the open market for the business of informed parents who are empowered to choose the caregiver for their child. It is important to avoid running informal care -- friends, neighbors and relatives-- out of business with unnecessary regulations. The most effective quality assurance in informal care arrangements is the personal relationship between the parents and the caregiver. It is not as important that the federal government intervene to protect health and safety of children. State flexibility The concept that the Federal government knows the one right way to do things which the states must then pursue has been thoroughly debunked in the area of child care, congress clearly intended that the states have flexibility to explore creative approaches to child care and develop the programs that best suit their state. The debate here in the House on child care demonstrated that the majority of the membersr believe that the principle of state flexibility should be second only to parental choice in the area of child care. States should be given the maximum flexibility in how they spend the funds provided for by the block grant and in setting standards for care, so long as the principle of parental choice is not violated. Officials from the Texas Department of Human Services have contacted me to express their concern that the proposed regulations would present the state agencies wishing to implement this grant with a complex and at times inconsistent set of rules. I understand that they have expressed these concerns to theDepartment of Health and Human Services and to this subcommittee, as have other state agencies across the country. I would strongly urge the Department to try to accomodate these concerns so that states may continue to provide a seamless delivery system for child care services. In conclusion, I would like to state that the concepts of parental choice, state flexibility, and health and safety of children need not be, nor should they be, mutually exclusive goals. Any federal child care program must include a balance between all three of these fundamental principals. I believe that the proposed rule which the Department has issued provides the opportunity for balancing these various goals. PAGENO="0029" 23 Acting Chairman DOWNEY. Thank you, Charlie. We are also next privileged to hear from our friend and col- league from Ohio, Representative McEwen. Bob, you may proceed. Mr. MCEWEN. Thank you, Mr. Chairman. Indeed it is a privilege to appear before the committee, especially with the man who made it possible for us to have this legislation, Mr. Stenholm of Texas, and the great work that he did on this. I am here to testify on the freedom of choice. I don't want to run you off there, Charlie. Mr. STENHOLM. Do you want to ask me some questions, or can I go? We have a markup in the Agriculture Committee going, but go ahead. Mr. MCEWEN. Go ahead and ask the questions, I will wait. Acting Chairman DOWNEY. Charlie, I had just two quick ones. Let me quote from your statement last March. You said, "I do not argue against standards. There's nothing in my bill that says there are not going to be standards. What we argue against is having them federally mandated." What made you change your mind? Mr. STENHOLM. I beg your pardon? Acting Chairman DOWNEY. What has made you change your mind? The child care regulations that are in this bill specifically say to the State of Texas, when it comes to the at-risk program, that Texas can't have two sets of standards. You wanted to leave it to the States? I didn't want to, you are correct. I wanted the Feder- al Government to have standards. I compromised and I said, "All right, we'll leave it to the States." Now, these regulations say we're not going to leave it to the States. We are going to tell the States what sort of regulations they can and cannot have. What has made you change your mind from when you wanted to turn it over to the States? Mr. STENHOLM. As I mentioned in my testimony this morning, regarding State flexibility and the importance of making certain that those mandates, and regulations that we create, have accept- ance and workability at the State level. My statement that you quote from last year was what I believed to be an effort on the part of some that we create the regulations. We make all of the deter- minations and there is no flexibility at the State level to decide which standards, which regulations, in fact, they should set. That was the concern I was explaining in that particular state- ment, very accurate when I said it then, I believe just as accurate today. Acting Chairman DOWNEY. Well, let me ask you this question. Do you think that it's a fair idea to allow the State of Texas to make a decision, for instance, for some subsidized care to have a higher level of standards and for nonsubsidized care not to have standards? That was something that we understood at the time going into this debate that we would leave to the States. Now, the Depart- ment is saying-I think it's completely illegal-I mean I think they have dramatically overstepped their bounds here. Say the State of Texas wants to, for instance, have no regulation for church-based care that doesn't receive any subsidized money. But the minute PAGENO="0030" 24 that church-based care receives subsidized dollars, the State of Texas is interested in protecting the interests of the taxpayer and wants to have, maybe, fire and safety regulations. Or, it may not want, for instance, to have a lot of infants in the care of just one person. Now, what the Department is saying in their regulations is that the State of Texas is not going to be in the position to have differ- ent standards for subsidized and nonsubsidized care. So that in the State of Texas, Lester Roloff, if he were alive today-Charlie, does that name ring a bell? Mr. STENHOLM. Yes. Acting Chairman DOWNEY. Lester Roloff would get Federal dol- lars so that he could enact his kind of unique form of corporal pun- ishment on children. That's not what you want is it? Mr. STENHOLM. No, and there's nothing-let me see how to phrase this-if there are Federal dollars involved, there are going to be Federal strings attached; that's a personal philosophy. Now, what I am trying to emphasize is parental choice. If par- ents are making various decisions regarding the safety of their children, I think that parental choice carries greater weight than anything that you, and this committee, and we, together, might do in the creation of regulations as to what's safe and what's not safe in any shape, form, or fashion of child care and the regulations thereon. That's a personal belief. Acting Chairman DOWNEY. Well, I appreciate your personal belief. What I find confusing in this is that there was an express cOmpromise when we did the bill last year that we were going to leave to the States the ability to make regulations. The Depart- ment of Health and Human Services is now superseding that au- thority and you are prepared to live with that? The superseding by Federal agencies of State prerogatives, that's OK with you? Mr. STENHOLM. I don't believe that is the results of the regula- tions as I have read them, Mr. Chairman. I am going to have to go back and read them again, because you are drawing an entirely dif- ferent conclusion from what I have drawn, and what I admit is a very brief review of the regulations in question. But, it is not my belief, at this moment, that the interpretation of the regulations that you are asking me-that I don't understand the regulations to be as you say they are. Acting Chairman DOWNEY. OK. Mr. STENHOLM. If they are, then I will take another look at them and perhaps we can have some additional conversation and want to be a part working with this committee to see that that does not happen. Acting Chairman DOwNEY. Why don't I just do this? I will send you some of the statements that you may not have seen that the administration has written, and I will also make sure you receive some of the other testimony that we're going to receive later today from State people. I have spoken to a lot of them, and they view these regulations as usurpation of their authority by the Federal Government and they state it very clearly and 1 will make that available to you. PAGENO="0031" 25 Mr. STENHOLM. Mr. Chairman, I admit it, I did not come pre- pared to line-by-line itemize the regulations and what the adminis- tration wants. I came and what I believe to be one of the purposes of this hearing was again to reiterate my personal feelings regard- ing how these regulations should be written-after this committee has exercised your very real oversight responsibilities-and how, in fact, the programs work thereafter. I want to be a player with you, as we were last year. Acting Chairman DOWNEY. And we want your input. Mr. Andrews. Mr. ANDREWS. Just very briefly, Charlie. I know you are in a hurry but I want to flush out, just a little bit what you said in your prepared statement. Using the Lester Roloff situation, you said two things, very general things. One, parents are in the best position to make those decisions and frankly I agree with you. But, you also said something about church-related centers. And the need for the Federal Government to try and stay out of trying to regulate those centers. How do we deal with the Lester Roloff situation? Those decisions were made by parents. They consciously put their children in a center in which they should have known, if they didn't, that Lester Roloff was going to have them take cold showers and scrub them- selves down with wire brushes and that he was going to physically beat the children to encourage discipline in his kind of religion. Clearly, none of us are going to endorse that kind of center, that kind of discipline. I just want to hear your thoughts about that? Where does the Federal Government have a role to step in if a State either does not have requirements that would deal with the problem, or just for some reason does not enforce those require- ments-either because of political circumstances in a particular State or they don't put the resources into investigators to go out and find those kinds of situations? Where is the Federal Govern- ment's role in that kind of situation? Mr. STENHOLM. First off, Mike, I would have to make a general observation is that we do not live in a perfect world, God did not create a perfect world, and our chances of legislating that which was not created are very minimal. So we are going to have exam- ples of the Lester Roloffs. We are going to have-as I mentioned, some of the worst horror stories in my opinion, having read and done a lot of research last year on this-from those States who had the greatest amount of regulation. Now, that's not a reason to suggest that we do nothing. My simple answer to you would be powers of cease and desist. Once you find a Lester Roloff they should be out of business. You should be able to stop it and that is a very proper role for the Federal Government. If we are providing money in the subsidization of these then we ought to have in place the necessary regulatory over- sight so that when we find them and they are as guilty as we know him to have been even with parental consent, that we stop the sub- sidization by the Federal Government; and in our State, immedi- ately the State follows along. Now, the question is, can we, in our superwisdom, create the reg- ulations to stop a Lester Roloff? And I believe, no, we cannot. I really believe we can't, even though we want to, in the bottom of PAGENO="0032" 26 our hearts we want to try to do that. That's always been a natural thought process in the U.S. Congress in what we try to do, whether we are talking child care-yesterday it was banking. I could give you another example, last week it was in agriculture in which we try to guarantee against every known ill before man and you can't do it. Mr. ANDREWS. OK. Well, I also want to just reiterate what the chairman said. No one has worked harder on this issue than you and it might be appropriate in the coming days if we sit and~ visit about these regulations and the testimony. You haven't seen the specifics of some of the regulations that the administration is prof- fering before the committee today and maybe we could all sit and visit again. No one has made a larger contribution than you have, Charlie, and I really appreciate you coming to testify. Mr. STENHOLM. That's something I want very much to do, be- cause, Mr. Chairman, you may be-and I assume that you are-100 percent correct in what you have said. And if that's the case it cer- tainly is worthy of another input from this committee and I know you all will do just that. Acting Chairman DOWNEY. Charlie, you are an honest and good man here and we will talk about this again, because to me the compromise was very clear. I had to give up something that I wanted which was probably more intrusive than what you wanted in terms of Federal regulation. Mr. STENHOLM. Very correct. Acting Chairman DOWNEY. I was prepared to live with State reg- ulation and now the Federal Government has come back and found a way to undermine even-not the Federal Government, but the Department of Health and Human Services-has come back and undermined that compromise that was made. They have decided that the Federal Government will tell the States what is and what is not inappropriate. They will not allow the States to have varying sets of standards for care that is subsidized, and care that is not subsidized. That just doesn't appear anywhere in the legislation, that just doesn't exist. Mr. STENHOLM. I will be happy to look at that. Mr. SHAW. I find it very interesting that you are sitting here, as the staunch defender of States rights. I think that shows a political maturing. [Laughter.] But I want to bring this debate back to its clearest point. What we are talking about is not, in any way, prohibiting, and the regu- lations do not and certainly the statute does not prohibit the States of Texas, Connecticut, Iowa, New York, or Florida from coming up with its own standards. It just says, don't keep two sets of books. Apply what you are going to against subsidized as well as to unsub- sidized care and apply them equally. I see absolutely nothing wrong with that. I see nothing inconsist- ent with that. I see nothing barring any of our States from adopt- ing such regulations as they feel are best for the children. I know that Tom didn't mean this in the way he said it, and it might appear to be somewhat out of character for me to be saying this, but, the question is not the protection, as number one goal of the tax dollars; the number one goal is the protection of the child, and the question of who is best equipped to do it. PAGENO="0033" 27 And I certainly feel, as you do, Charlie, that we should not ride rough over the rights of the parents or the rights of the States to regulate. But, I think that we are simply demanding consistency and I see absolutely nothing wrong with that. If the regulations are good to children who are in a nonsubsidized program, they are cer- tainly good for the children who are in the subsidized program and I think both sets of children deserve the best type of regulations that the State sees fit to impose. I quite agree with everything that you have said in your statement, and I do believe quite frankly that it is not up to the Federal Government to try and draft these regulations. And I even agree with the chairman that it is up to the States. But I don't see any inconsistency in what the regulations have said in this regard, and I see nothing that would impair the States rights in the regulations or the statute passed by the Congress. Mr. STENHOLM. Mr. Shaw, if I might make one observation-if, in fact, the chairman is demonstrating maturity in his change of views, then I must have demonstrated immaturity in the views of which I have been perceived to be arguing with the chairman on something that I thought we had agreed on and that we have cor- rected in the legislation, but have not done so. Then I accept that as constructive criticism and will promise to try and do better. [Laughter.] Mr. SHAW. Charlie, I think that you and I have a mission here in Congress to continue and chide the chairman with regard to States rights. We have come a long way, Charlie, and here is a perfect example of the accomplishments that we have had here in the Congress. [Laughter.] Mr. STENHOLM. Well, I have a distinct sense that I have slipped some since last year- [Laughter.] Mr. STENHOLM. And I am going to try to do better, Mr. Chair- man. Acting Chairman DOWNEY. Thank you. Mrs. Johnson. Mrs. JOHNSON. Thank you and I am sorry to keep you from your Agriculture Committee markup but I think that this is really the heart of the matter. You say in your testimony something that I think we talked a lot about during the development of this legisla- tion and talked a lot about on the floor. It's in Senator Dodd's quotes, it's in everybody's quotes, but you bring it to a head in your testimony on page 2 where you say, "families that receive Govern- ment assistance should have the same freedom to select a child care provider as families who have the financial resources to pay." Now, that was a very big issue in the child care debate. We did not want to discriminate against poor women who had Federal vouchers, particularly in rural communities, but anywhere. And in principle, we felt that they ought to have the same spec- trum of choice. Now, the issue here is what is that spectrum of choice? That spectrum of choice we knew when we wrote the law and conducted our debate was going to be defined by State regulation, not Federal regulation. We were going to let federally funded day care dollars 51-713 0 - 92 - 2 PAGENO="0034" 28 flow to anyone that the State said was OK and that way everyone had the same spectrum of choice. Now, what has caused this problem in my estimation is, and I think you are absolutely right, Charlie, that the regulations reflect precisely the law, because some States don't regulate certain cate- gories of care. Some States have made the decision that if you care for three unrelated children, or less, then you don't have to meet any State standards. Now, the one new requirement that the Federal law does impose is that the State has to have your name. You have to be registered. So they have to know who you are and we talked about that exten- sively. We want to know who they are because we want to be able to market to them the fact that there are provider associations that could be helpful to them and that would be good for everybody so that we could lure them into the licensed structure. But if we say that a family making $70,000 can put their child with this provider and get a dependent care tax credit-or $50,000 or $40,000-that is unregulated by the State because the citizens of that State have chosen not to regulate. What we were trying to say is that the person making $6,000 should have the same choice. And it is the only way that you can allow States to allow people to choose their neighbor. Now, what happens in that abusive situation in Texas? We have child abuse laws. If you are beating children, we can go in and stop it, whether it is parents or a day care center. There are plenty of ways that we can intervene and there isn't a single State that doesn't regulate centers. So that is not a reasonable example. But I think what we're getting into here, and I think when we talk about whether State regulations do or do not overreach, it goes to this very difficult issue that some States have chosen not to regulate certain categories of care. Now, in Connecticut there is no category of care that is not regulated. In other States there are a number of categories that aren't regulated. But we have said the States will have that power to choose and we will not discriminate. That low-income families can have the same choices that everyone else has. And, therefore, I think that it is very important if we stand by the States rights to regulate, and we stand by nondiscrimination against poor women, then we must let Federal dollars flow to every provider that State dollars can flow to or that private dollars can flow to. And that's what these regulations do. There were some areas in which the law literally contradicts itself and those need to receive some further attention, but it is not easy to stick the administration with legislation that has internal contradictions and expect them to come out with regulations that aren't controversial. But on the whole, I think that what is at issue here, before the committee, and behind the chairman and my colleague's from Texas statements to you, is this concern about Federal dollars that flow to unregulated State providers when States have decided not to regulate those providers? If nondiscrimination and parental choice matter to you, then we must honor the States rights. If the States find enough problems with neighbor care, they will regulate it because we don't stop PAGENO="0035" 29 them from reregulating. They can impose all kinds of new regula- tions under these regulations. They just have to impose them on everybody. They can't just impose them on poor folks. I mean it is really stunning the degree to which we have decreased the availability of day care in urban areas by allowing higher standards for publicly funded day care centers. Consequently we don't have many now. So your testimony was absolutely right on, and having read the regulations in detail I think I would say to my friend from Texas, stick to your guns. [Laughter.] Acting Chairman DOWNEY. Mr. Grandy. Mr. GRANDY. Thank you, Mr. Chairman. Charlie, I am not going to keep you very long. I just wanted you to tell us, what is the relationship between formal care and infor- mal care in Texas? What defines informal care in Texas, do you know? Mr. STENH0LM. No. Mr. GRANDY. But there obviously is informal care, isn't there? I mean- Mr. STENH0LM. I don't know what defines it. I think I know what it is. The child care that we used, Cindy and I, was informal. There was no regulations. Mr. GRANDY. Is there anything that you have heard from State officials that indicates that the new regulations will somehow get in and skew the balance between formal and informal care in Texas? Mr. STENHOLM. All that I have heard thus far is that the regula- tions that the spirit of the act last year is being implemented in Texas without any great problems. I have told you more than I know about that at this stage of the game, but that is what I men- tioned in my testimony, that's what we've heard. Mr. GRANDY. Well, the only reason I bring this up is because I read these regulations and it seems to me the sticking point in ev- erything that every Member prior to me has talked about concerns informal care and the relationship between informal care and formal care. And as I look at these regulations-and, of course, there are probably as many interpretations as there are members of this panel-but it seems to me that there is still the choice that States have of either not regulating informal care, or regulating all infor- mal care, and that is basically kept intact by these regulations. So States still have choices and those choices do not interfere necessarily with parental choice. Thank you for coming to the panel and leading off these hearings because I think it's important that we set some of these arguments out clearly, and noncombati- vely at the outset. Thank you, Mr. Chairman. Mr. STENHOLM. One observation on that. You know, if we put stricter regulations on providers who care for children who receive assistance, providers will be discouraged from caring for low- income children. And if a parent who needs assistance from the Government, it's not fair to make it more difficult to find a child care provider. That's the spirit in which I thought that we were trying to work out the legislation as well as the regulations. PAGENO="0036" 30 Acting Chairman DOWNEY. Well, Charlie, sitting behind you is Claudia Langguth who is the deputy commissioner for client self- support services from the division of the Texas Department of Human Services. And it has been my privilege to be in Austin and meet with Claudia and observe the excellent work that the State of Texas is doing. She is testifying here on behalf of the APWA, sug- gesting to us that the points that I was making to you are the same issues that the State of Texas is dealing with. So I recommend you talk with Claudia, who is sitting right behind you, when you get the chance, and get some first-class infor- mation about one of the States that is deeply concerned about this problem. Mr. STENHOLM. Will do. Acting Chairman DOWNEY. Thank you, Mr. Stenholm. Mr. STENHOLM. Thank you. Acting Chairman DOWNEY. Mr. McEwen. STATEMENT OF HON. BOB McEWEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO Mr. MCEWEN. Thank you, Mr. Chairman. It is not as good as going to the Agriculture Committee, but I have just been notified that I need to leave to introduce a very good friend of mine who is being considered by the Senate Judici- ary Committee for an appellate position. She is now on the district court, and I shall exempt myself shortly with the understanding that the three of you that have dedicated so much of your time and effort to this cause are so much more knowledgeable. However, I do have an area that is of particular concern to me. That is to make sure that we give full support to the freedom of choice for parents in allowing that child care grants be used for the use religious day care. Senator Rockefeller's bipartisan report on the National Commis- sion on Children said, among other things, that a new American agenda for children and families must recognize that through par- ticipation in religious community worship, religious education, and social action programs, children learn and assimilate the values of their faith. And for most children, religion is the major force in their moral development. For some it is the chief determinant of moral behavior. Research on the effects of religion on children's day-to-day con- duct suggests that teenagers who are religious are more likely to avoid high-risk behaviors. This is all from the Senate report. Sur- veys of parents and children conducted by the Commission on Chil- dren found that children whose parents who described themselves as very religious were more likely to report that they could talk with their mothers about personal problems or concerns and their parents respected their ideas and opinions. "These children," quot- ing the report again, "were more likely to report frequent discus- sions with their parents about religion and values." Studies show that those that have a religious influence in their lives are 47 percent less likely to drop out of school; 54 percent less likely to use drugs; half as likely to engage in criminal activities. PAGENO="0037" 31 So there is considerable evidence to show that religious centers provide some of the best day care for children in this country, espe- cially to inner-city children. A third of all of the organized day care in the country is handled through religious providers. The Federal Government should do nothing to discourage this. That is my state- ment this morning. I am pleased that the child care bill the President signed into law provided that anywhere there was an opportunity for a parent be given the freedom of choice as to the type of care that was best for their children, that religious care would be considered an option. Now, this is a significant step for religious freedom in this coun- try. The program is in complete accord with the Supreme Court de- cisions Mueller v. Allen, as well as Witters v. Washington State that say that if the Federal funds are given to the individuals and the parents and they choose to use the money for religious educa- tion, this does not violate any clause of the first amendment, par- ticularly the establishment clause. Following are a couple of quick suggestions that I might have to best provide for public religious day care in the Federal child care regulations. First, the best way to spend grant money for child care is through vouchers that are available for parental use with all lawfully operating day care providers including sectarian providers who engage in religious activities, and/or instructions. Parents should be informed of this freedom of choice and this right to choose. It should be clear that religious providers who accept these certificates should be given the freedom to hire those employees who adhere to their values both on and off the job, if they so choose, if, as the regulations state, they do not accept more than 80 percent of their funding from public sources. This is very important because religious providers would certain- ly shy away from taking certificates if accepting them would force them to hire those who are dedicated to the destruction of the values they wish to hold. Second, the State should not impose any additional regulations on religious providers that would limit parental choice by making it so burdensome that religious providers cannot accept them. This is particularly true in regulating the circumstances under which the facilities are provided. We recognize that these public buildings that are used for other public purposes should not have such addi- tional stringent demands made upon them that it would be impos- sible for them to comply-in short, a way of circumventing, of de- nying this right of choice to parents. Religious day care should not discriminate in reimbursement to providers. They should be reimbursed at the same rate as any other type of provider in the same category. There is absolutely no evidence to indicate that strongly regulated day care is in any way superior to those States that provide less regulation. The best approach is for a voucher to retain the same value, irre- spective of the type of care giver the parent selects. This would be fairer, simpler, easier to administer, and would make the voucher much more useful. In the Baltics, the government is now allowing parents to send their children to Hebrew schools if the parents so PAGENO="0038" 32 choose. We look forward to the day that American families are given such similar liberties. I thank you, Mr. Chairman. [The prepared statement follows:] PAGENO="0039" 33 TESTIW)NY OF THE HONORABLE BOB ECEWEN (R-OH) BENORE TUE SUBCXNU~EE OW HW(BN RESOURCES, CONNI'fI'EE OW WAYS AND WEANS, U.S. BOUSE OF REPRESENTATIVES, ON THE ADNINISTRATION'S P~POSND FESERAL CEILD CARE RE(~LATIONS SEI'I~ENBEN 26, 1991 Mr. Chairman, Members of the Committee: Today I testify giving my full support of allowing the Child Care grants to use voucher money to be used for religious day care. Senator Jay Rockefeller's bi-partisan final report of the National Commission on Children, "Beyond Rhetoric, A New American Agenda for Children and Families" acknowledges the importance of religion in the life of children. It says, "Through participation in a religious community--in communal worship, religious education, and social action programs--children learn and assimilate the values of their faith. For many children, religion is a major force in the moral development; for some , it is the chief determinant of moral behavior. Research on the effects of religion on children's day-to-day conduct also suggest that teenagers who are religious are more likely to avoid high-risk behaviors. Surveys of parents and children conducted by the National Commission on Children found that children whose parents described themselves as `very religious' were more likely to report that they could talk to their mothers about personal problems or concerns and that tI~eir mothers respected their ideas and opinions. These children were also more likely to report frequent discussions with their parents about religion or values." Studies show that youths with religious influence in the inner city are 47 percent less likely to drop out of school, 54 percent less likely to use drugs, and 50 percent less likely to engage in criminal activities. There is considerable evidence to show that religious centers provide some of the best daycare to children in this country especially to inner city children. One-third of the organized day care in this country is handled through religious providers. The Federal Government should do nothing to discourage this. I am very delighted that the Child Care bill that President Bush signed into law provided that anywhere there was the opportunity for parents to chose the type of care that was best for their children, that religious care had to be an option. This is a significant step for religious freedom in this country. This program is in complete accord with the Supreme Court decisions Mueller vs. Allen and Witters vs. Washington State that says that if Federal funds are given to individuals and those individuals choose to use the money for religious education, that this does not violate the Establishment Clause of the First Amendment. Vouchers used for religious day care could for the first time, establish that parents would not be discriminated against if they wanted to use public funds for religious instruction or worship. The following are my suggestions on how to best accommodate public religious day care in the Federal childcare regulations: PAGENO="0040" 34 -The best way to spend grant money for childcare is through vouchers that are available for parental use with ALL lawfully operating day care providers including sectarian providers who engage in religious activities and on instruction. -Parents should be informed of their right to use a voucher for religious daycare--even if the facility engages in religious activities. This right should apply even to states that have laws prohibiting state funds from supporting religious organizations. Because of this, some of the states will have to segregate federal and state funds as to allow the vouchers to be used in religious institutions. -It should be clear that religious providers who accept certificates are exempt from nondiscrimination prohibitions in employment and may require employees to adhere to their religious teaching and tenants both on and of f the job (as long as the provider does not take more than 80% of their funding from public sources). This provision in the Child Care and Development Block Grant (CCDBG) regulations is very important because religious providers would certainly shy away from taking certificates if accepting them would force them to have to hire someone whose values are inimical to their own. -The state should not impose any additional regulation on religious providers that will limit parental choice by being so burdensome that religious provider will not accept them. -State should not be allowed to apply any standard for day care funded under the program which are seperate from and more stringent than those that apply to lawful daycare. -With regard to the required health and safety standard dictated by the CCDBG regulations, policies governing the safe operation of the church should be sufficient to me the necessary requirement of the daycare program. -Religious care should not be unfairly reimbursed, but should be reimbursed at the same rate as any other type of provider in the same category set by the United State Department of Health and Human Services regulations. Some child advocacy groups are pushing to have the center based highly regulated care reimbursed at a higher rate that non-licensed care in the CCDBG. Because there is absolutely no evidence to indicate the licensed care is in any way superior to non-licensed care, this is unacceptable. -The best approach is for a voucher to retain the same value irrespective of the type of care-giver the parent selects. This would be fairer, simpler to administer, and make the voucher more like cash. In the Baltics, the government is now allowing parents to send their children to Hebrew schools, if the parents so choose. Maybe some day in American families will have the same option. PAGENO="0041" 35 Acting Chairman DOWNEY. Bob, since you have urgent business elsewhere, if we have some questions for you, I will grab you on the floor. Mr. MCEWEN. Thank you, very much. Acting Chairman DOWNEY. The committee will next hear from Senator Bernest Cain of the State of Oklahoma on behalf of the National Conference of State Legislatures. Senator Cain, it's good to see you. STATEMENT OF HON. BERNEST CAIN, SENATOR, OKLAHOMA STATE SENATE, ON BEHALF OF THE NATIONAL CONFERENCE OF STATE LEGISLATURES Mr. CAIN. Thank you, Mr. Chairman. Mr. Chairman and members of the Subcommittee on Human Re- sources, I am Bernest Cain and I am from Oklahoma, where I serve as chairman of the Human Services Committee in that State. I am also the subcommittee chairman on appropriations for health and human services issues, so I work with this issue all the time, and I am the chair-designate of the Human Resources Com- mittee of NCSL. I cannot tell this committee how important it was to all of the States when we saw the bill that came down from Congress. We went out, we worked, we prepared our statutes, we worked to try to put together a plan that would be acceptable, that would meet what we felt like was one of the finest acts that had been passed by this Congress in many years. And it was an act that gave a lot of credence to the ability of States to deal with some of these key problems. We had a national meeting up here and we had that as our number one issue. We were going to deal with the regulations. The regulations were 2 months late, so we had our meeting but we didn't have any regula- tions. Most of us had our sessions. We had to deal with statutes. We had to deal with budgets. But we didn't get any regulations until most of us were out of session. So when the regulations came down, I will tell you that there's never been, and I don't care if it's Democrats, Republicans, I cannot believe what I've heard here today, that this is allowing States freedom under this particular regulation. We went to the National Conference of State Legislatures, down in Florida, and we had the man who was with the regulations down there, and they asked how many of the State legislatures ap- prove of these regulations? There was one person and 150 people spoke out against it. They held their hand up, we spoke out strong- ly because these regulations rape the bill that was passed. I can't believe what I've heard here, that this is not an intrusion on State responsibility. We worked on that compromise. We supported the bill. We are for the bill. We know of the problems. I have to deal with those problems every day. And for the bill to come out and say that 75 percent is going to go to the States to deal with their programs and then we come out with the regulation and it says 90 percent of that 75 percent has to be used in making up new slots. We can't deal PAGENO="0042" 36 with quality. To me it is the top level of bureaucratic totalitarian- ism. I cannot believe that a legislative body would pass a law like this and let regulations come out to foul up the bill. Now, you haven't read it, and you haven't dealt with them at the State level. Go talk with your State people. This man, Congressman who was from Texas go and talk to your people from Texas, see how they are doing. Go talk to Oklahoma, go talk to all your different groups. Now, you may get your letters, and you may get your ideology coming down, but how is it going to work in the States? And, folks, the way these regulations are they are onerous, they are going to hurt child care, they are going to ruin quality. We could have used that 75 percent money to increase payments. Let me tell you in our State we pay more for zookeepers and dog- catchers than we do for child care workers and this legislation says that we can't use money for improving the quality on this; it has got to be used for new slots. Now, that's absurd. You want us to improve child care? We can help you, we can work with you. But if you want to put down regulations like these ideological people over here want to do, and they want to fight about some battle up here in Washington, and you want to have your philosophical talk, fine. But down where people are being hurt, where children are not being taken care of, where child care is not being taken care of we need the help and we need the resources. And you gave it to us last year, Mr. Chairman, and members of this committee, but then you took it back. You raped the bill with the regulations. You can say it isn't, but go talk with the people that have to deal with it. You can talk about your high morals and we are going to give everybody all of these rights, and all of these freedoms to make choices. I will tell you about how that works in Oklahoma. We had a lady who had abused two of her children so bad that we had the children taken out of her care. Taken out of her care. Shortly after that she becomes a babysitter. Now, one of those babies got killed. They couldn't convict her because it just hap- pened to be an accident. But folks, within the next year, another child that she was taking care of got killed again. Now, you want to talk to those parents about choice? You want to talk to those parents about all of this freedom stuff? They are interested in qual- ity. We all are interested in quality. I know I need to keep my cool, but I am standing up saying what the legislatures are saying across this country. And it is not Democrats and Republicans. We all came together on this deal, the Democrats and the Republicans both care for child care services, but you are going to just tighten down the hands on the people who are trying to work with these programs to where we can't deal with it. I hope that you can get HHS to look at these proposed regula- tions and to consider changing them. I am not wanting to be in any ideological fight with anybody. The National Conference of State Legislatures doesn't take a position on the choice deal. In Oklaho- ma that's not a big issue. But I will tell you what, a lot of States you are putting them in real tough situations. Let us have some flexibility. If we mess it up, you come back and put these regulations on us. Tell us we have to open up all of these PAGENO="0043" 37 slots. If we are not dealing with quality, come back and deal with us. I am open to it. I know you are the Congress of the United States. You passed a major bill and it has been raped by the bu- reaucrats in this situation. I firmly believe that. I stayed up last night and I am as irritated as I can be. It was a good bill. We were proud of it, and it has been raped by these regulations. If you want me to go through them, I have got my testimony and I can go through all of that, but I didn't come 1,300 miles not to tell you how I feel and how many other of the legislatures feel about this issue. It's just not right. If we did this in our State, if we had an agency that pulled this kind of stuff, we would have some heads on the table. Now, I know it's different, I know it's different at the Federal level, but we would be- [Laughter.] Mr. CAIN. But we would be cutting out jobs in major agencies. We are not going to pass a law and then have some totalitarian bureaucracy come in here and change the clear intent of the law. It says 75 percent is discretion with the States for quality and for increasing slots. Then the bureaucracy comes in here and puts on regulations that are unwieldy. I have probably gone over my time, and I apologize, but I came a long way and we are irritated about it. We want to work with you and we want to try and work this thing out, but this stuff, and some of you, I know, you mean right, but you just don't know how it works with the folks. You have not been down there to see them. If you think that these regulations are acceptable to the State people who are trying to implement them, if you think that they don't care about care for children, if they don't care about improved quality, you know, I don't know what to tell you. Give us a chance, that's all I'm saying, give us a chance, and let us work with this bill. It's a good bill and we can make it work for all of you. Thank you. [The prepared statement follows:] PAGENO="0044" 38 TESTIMONY OF SENATOR BERNEST CAIN, STATE OF OKLAHOMA ON BEHALF OF THE NATIONAL CONFERENCE OF STATE LEGISLATURES Mr. Chairman and Members of the Subcommittee on Human Resources, I am Bernest Cain, State Senator from Oklahoma City, Oklahoma where I chair the Senate Committee on Health and Human Services. I also am Chairman of the Health and Human Services Subcommittee of the Oklahoma Senate Committee on Appropriations and Chair-designee of the National Conference of State Legislature's (NCSL) Human Services Committee. I appear on behalf of the NCSL to comment on the child care regulations that appeared in the Federal Register on June 5 and June 26, 1991 implementing both the Child Care and Development Block Grant and the At-Risk Child Care Entitlement and to express our organization's general concems about these regulations. As you know, NCSL represents the legislatures of the nation's 50 states, its commonwealths, and its territories. Enactment of comprehensive child care legislation was NCSL's top federal priority for the 101st Congress and we are committed to working closely with this subcommittee and other federal policy makers to fashion federal regulations that will protect Congressional intent, comprehensively care for our nation's children-at-risk, and will simultaneously being cost-effective and workable at the state and local level. Mr. Chairman, I want to begin by commending you and the Subcommittee for enacting a comprehensive federal child care bill that included both programmatic and tax credit initiatives. Your efforts created excitement and action at the state and local level to further our efforts to enhance child care quality and affordability. State legislators actively supported the child care package enacted in 1990, with the belief that together, with assured state flexibility, we could provide child care to our nation's children. At our NCSL meetings in December 1990 and May 1990, we had presentations from both NCSL and HHS staff about the opportunities available for states to expand and develop our child care services, In my seven years as Chairman of the Senate Human Resources Committee here in Oklahoma, I had never seen such enthusiasm expressed in so many states about a federal law. Many of us delayed state policymaking to await the requirements of the new federal child care. Most state legislatures enacted new legislation in our sessions this past spring, using the federal bill as a springboard for innovation of our existing systems. By the same token, I have never seen the states express such frustration as I have when these same people had the opportunity to review these regulations, and find them to be vastly different from our understanding of Congressional intent and information shared during our HHS briefing. Mr. Chairman, child care is not a panisan issue. Both Republican and Democratic legislative leaders have expressed dismay about the constraints on state authority in the federal regulations. They violate principles of federalism and, quite frankly, will serve to undermine our existing child care systems. For example, in Oklahoma, our standard since 1963 has been five children to a day care home. I have already been approached by individuals who view these federal regulations as a means to weaken our standards by asking the federal govemment to withhold our share of block grant funds. The federal regulations threaten to invalidate state regulation of child care. States regulate dog kennels without fear of kennel owners running to the federal govemment for regulatory relief. It was clearly not your intent to restrict state child care regulations. In our application for funds, we are required to assure that the state maintains a drug-free workplace. In effect, we are required to assure HHS that we maintain a drug-free workplace for state bureaucrats who administer the program. Under the regulations, we may not be able to regulate whether children are being cared for in a drug free workplace. A year ago in Oklahoma, we shut down a child care provider three blocks away from our state capitol for having 18 children in her day care home and for moving cocaine in and out of the house using the children's lunch boxes!! I took advantage of the federal law to enact legislation in Oklahoma this year. Oklahoma has had child care regulations and licensing since 1963. When we created our legislation (prior to the regulations), the Oklahoma legislature weighed the merits of these programs within the resources that we anticipated, and made difficult decisions about distribution of those funds. These decisions, as Congress agreed, belonged at the state level to accommodate local needs. The regulations proposed by HHS have exactly the opposite effect. The regulations contain provisions that raise serious questions about the Administration's view of federalism and the partnership between the federal and state govemment. NCSL strongly believes in the capabilities of state governments to solve public problems. Lest year's bipartisan child care agreement in the Omnibus Budget Reconciliation Act of 1990 was hailed by NCSL because it provided states the flexibility to respond to the specific child care needs of their citizens without unfunded mandates or federal standards. The regulations undermine rather than interpret the spirit of that agreement. They circumvent state authority, drastically limit program flexibility, and add unfunded mandates and administrative burdens on the states. As I see it, Mr. Chairman, you and the subcommittee have two choices. Either we rest our hopes on HHS substantially changing these regulations to conform with Congressional intent and principles of federalism. Or, in order to ensure that Congressional mIens is followed, a moratorium on the interim final rule for the block grant and final rule for the al-risk program must be imposed. By enacting legislation that allowed states regulatory authority, you trusted us. We trust you to negotiate with HI-IS or enact technical changes to clarify your intent. PAGENO="0045" 39 Child Care and Development Block Grant of 1990.42 U.S.C. 9801 In particular, NCSL objects to the use of an interim final rule for major policy initiatives. This undermines state policymaking and does not allow time for comment prior to implementation of the Act. The regulations were published after the close of the majority of state legislative sessions. State lawmakers will not have had the opportunity to enact measures to comply with the interim final rule. NCSL is in agreement with MRS concern for quality child care and the need for new child care slots. We believe that these policies are best decided at the state level. There are certain provisions of the regulations in which we believe MRS does achieve its purpose of providing "broad flexibilities to grantees in designing and administering programs under the Block Grant within the constraints of the Act." It is clear that I{HS does recognize state flexibility in certain aspects of the regulation: "We do not specify that programs be statewide, nor do we provide definitions of all terms. We allow flexibility in setting sliding fee scales, in setting payment rates, and in establishing eligibility conditions. The States will serve as laboratories for testing unique solutions to the needs of families targeted by this program." NCSL strongly supports the flexibility given to states to define the activities within the 25% quality funds. We appreciate that the market rate for reimbursement will be state determined and that state definitions of state median income, family structure and "very low income" are maintained. However, we believe that for the most part, these regulations appear to legislate, rather than interpret the enacted statute. We agree with the regulations that "By its very nature, a block grant provides great flexibility in program design." Unfortunately, we believe that these functions are constrained. 45 CFR Part 96 indicates that state determinations are sufficient in a block grant if they do noi violate federal statutes. We are greatly concerned by the Rule's preamble suggestion that there is little legislative history for the Block Grant. Surely, the negotiations between the Administration and the Congress to form the bipartisan compromise could not have occurred unless earlier versions of child care legislation had been contemplated, evaluated and put up for a vote. Speeches and communications were sent by the President and Administration officials to set out the Administration's child care principles. This included flexibility for states and no federally mandated standards for child care. The Senate decision to drop this provision from S.5, The Act for Better Child Care, signified a turning point in the success of the legislation. The regulations, however, do not correlate to the absence of federal standards and mandates in the statute and attempt to preempt state authority. It was the Administration in February 1991 that came forward with a budget proposal calling for expanded block grant activity. The proposed regulations are contraiy to this proposal, stripping states of their flexibility and their authority to determine who and which institutions should be regulated and to what exient. They determine for the states for what purposes funds must be used, contradicting both `egislative intent and basic block grant principles. Contrary to the regulations, we believe that state flexibility is the key to any "block grant" program. Nothing in the statute suggests that the Child Care and Development Block Grant is no less a block grant than the Social Services Block Grant (Title XX of the Social Security Act). The statute describes a block grant with minimum requirements, most on the distribution of the 25% quality funds. We believe that the absence of mandates within 75% of the Block Grant more than suggests the intent that the distribution of these funds was to be at the state's authority. Clearly, as the regulations note, administrative funds are not mentioned in the statute and were essential to implement the program. NCSL urges you to restore the nature of this grant.and return the apportionment of the 75% funds to the states. Federalism The regulations address two politically delicate issues that concern us, not for their substance or goals, but rather for their preemption of state laws and authority. Although NCSL does not have a position on the Administration's educational choice initiative, we are concerned that the provision in the regulations encouraging parental choice in child care would preempt state authority to establish or enforce standards for health and safety. And, in redefining the definition of public funds so they can be used for sectarian purposes, the regulations may preempt state constitutional and statutory provisions that restrict this use of public funds. Executive Order 12612 on Federalism Section 2(e) of Executive Order 12612, reaffirmed by President Bush, states: "In most areas of governmental concern, the States uniquely possess the constitutional authority, resources, and the competence to discern the sentiments of the people and to govern accordingly." The regulations do not give sufficient credence to the states. This is particularly true with child care, where states have deliberately established standards for the delivery of child care services. Most of these standards are designed to protect the health and safety of children -. and are of paramount importance. The regulations go beyond the core concerns of the statute to create a superseding authority of "parental choice". This concept is not addressed in the Act as the controlling factor in ensuring initial and continued block grant funding for states, nor as superseding the critical component of state health and safety laws. The flaw in the regulation is that it limits states' ability to decide the level of importance of health and safety regulations and parental choice. Section 3(c) of Executive Order 12612 urges that "the States (be granted) the maximum administrative discretion possible. Intrusive federal oversight of state administration is neither PAGENO="0046" 40 necessary or desirable." The statute fulfilled the goal of administrative discretion and oversight; the regulations provide the opposite. The Act did not distinguish between contract and certificate child care services in asserting that state laws on health and safety (and even those more stringent) were to be primary. This was a deliberate change from the proposed federally-mandated child care standards in the original Act for Better Child Care Services that initiated the Congressional child care debate. NCSL supported child care legislation only when state authority was maintained. Clearly, parental choice plays a role in state decisions. The Act acknowledged this; the regulatioiis undercut state authority and flexibility. The potential for claims of liability against the states and the federal government for not protecting children exists. We are disturbed by the damage that also could be done by withholding statewide funds to coerce states to change their statute to accommodate parental choice. In particular, this provision would penalize states for excluding a type or category of care by its standards. Interrupted funding would disrupt and jeopardize child care services in the states. This would undercut the general purpose of the statute and is a coercive mechanism to undermine state authority. It places states in a position of self-denial of their inherent authority to protect vulnerable children from risky, threatening, or basically unhealthy conditions and situations. And it may lead to equating parental choice with risk, negligence, and personal peril. Section 2(f) of Executive Order 12612 states that individual states and communities are free to experiment with a variety of approaches to public issues. One would expect this Administration to reinforce this basic principle with its child care regulations - but the opposite is true. The regulations close off options for applying broad use of discretionary funds by applying a 90% lock in of "discretionary" funds for "mandatory" direct services. The regulations cut off state discretion to use block grant funds for improved quality and existing slot subsidies. The regulations deny state flexibility to switch funding priorities with its supplantation mandate. All of these suggest denial of freedom to experiment with what are supposed to be flexible dollars. All of these go beyond the requirements of the statute. Section 3(d) of Executive Order 12612 states: "Refrain to the maximum extent possible from establishing uniform national standards for programs, and, when possible, defer to the states to establish standards." This Administration argued vociferously against national standards for child care in many Department of Labor and President Bush statements, but now contends it needs these regulations to superimpose policy preferences to supersede, and even control, state authority. As recently as June 18, 1991, the Supreme Court reaffirmed the federal government's limited power to preempt state law under the 10th Amendment and Guarantee Clause of the Constitution. In Gregory v. Ashcroft, Justice O'Connor in the majority opinion states the importance of federalism. Accountability, responsiveness and innovation are hurt by federal preemption, according to the majority decision. Further, the broad scope of the Supremacy Clause gives great advantage to the federal government. A plain statement of the intention to preempt should be a prerequisite of preemption. The statute does not provide the plain statement requiring preemption. In fact, the statute studiously avoids preemption that the Administration now seeks to impose. Limits Use of Flexible Block Grant Funds In his 1991 State of the Union address, President Bush lauded the "innovative power of states as laboratories". He proposed to turn programs over to the states in a block grant "to allow states to manage more flexibly and efficiently, and to move power and decision-making closer to the people." The proposed child care regulations thwart these objectives, eliminating state ability to manage more flexibly and efficiently by mandating percentages of a discretionary grant for specific purposes. The child care legislation specifically set-aside 25% of the block grant for early childhood education, before and after school services, and for quality. The remaining 75% of the block grant funds was intended to be used at the state's discretion to fund child care services and activities to improve the availability and quality of child care. The regulations, however, would require that 90% of the 75% discretionary block grant funds be spent on direct child care services for new slots, thus preventing states from funding improved quality initiatives and increasing subsidies for existing child care slots. The remaining 10% of the 75% is to be used for availability, and quality, and administrative costs. This cap should be eliminated. The regulations need to clarify how the term "preponderance" came to mean 90% of the funds for child care services. No provision in the statute suggests a 90% delineation of funds for services. Further, the statute does not indicate that the service funds are only for new slots. States should be allowed to decide how to distribute the funds and to reimburse existing slots at a higher rate to retain providers. The legislation recommends five types of activities to improve the quality of child care, which states will be unable to fund under this restriction: resource and referral, training, salary improvements, assistance in meeting standards, and monitoring of compliance and enforeement with licensing and regulatory requirements. Earmarking a block grant violates the very design of flexible money for states. NCSL repeatedly communicated to the Congress and the White House its ardent opposition to earmarking the social services block grant to provide child care funding. We refused to support any legislation that earmarked a block grant as an encroachment on state authority. 45 CFR Pan 96 indicates that state determinations are sufficient in a block grant if they PAGENO="0047" 41 do not violate federal statutes. Considering the multitude of administrative and reporting requirements in the regulations and the expense in implementing a certificate program, states are left no room to support quality improvements. In addition, the regulations prohibit states from using block grant funds to subsidize rates for child care under IV-A (AFDC). The AFDC rate is limited to the 75th percentile of the local market rate and has resulted in shortages in the supply of child care. We suggest that states be allowed to subsidize higher rates at their discretion to ensure seamless service for all clients. That is, states should be allowed to determined the best market rate so that there will not be a two-tiered child care system. This restriction is only mentioned in the Preamble, not in the regulatory language. State Use of Public Funds NCSL objects to broadening the scope of the preemptive provision of the Act relating to the use of federal funds by sectarian institutions. Under the statute, states may not prohibit the use of federal funds in sectarian institutions. The regulations once again go beyond the law, by not only forbidding that states prohibit such expenditures, but also by preventing the states from imposing any regulation that might limit the expenditure of funds for sectarian purposes. Permitting states to retain the right to regulate the use of funds is in accordance with federalism principles. (See Mechthild, Fritz, `Religion in a Federal System: Diversity Versus Uniformity" 38 Kansas Law Review 39, 70-77 (1989)). Under the First Amendment of the United States Constitution and comparable state constitutional provisions, the distinction between "sectarian use" and `sectarian institutions" is significant. (See Mechthild, pp. 44-49.) The regulations flagrantly disregard this important distinction. While state and federal laws uniformly forbid the use of public funds for sectarian purposes, to varying degrees some do permit expenditures at sectarian institutions for non-sectarian purposes. The regulations, citing a distinction between certi(icate and contract-based child care services that does not exist in the statute, cross the wall separating states from sectarian practices and commands that states allow expenditures for sectarian purposes. The method by which this is accomplished again goes beyond the statute. Federal funds that are explicitly not individual assistance grants in the statute are defined, when a certificate is used, as individual assistance grants. The language of this regulation was clearly intended by its authors to stretch the meaning of the statute beyond recognition. This provision requires states to segregate state and federal funds, if necessary, to ensure that a state constitution or law does sot prevent federal block grant funds from being expended for the purposes provided in the Act, without limitation. This surely will not help implement HHS's goal of "seamless" child care service, as funds and, ultimately, services are segregated. Furthermore, HIHS regulations cap administrative costs and states may have to spend more than allotted for start-up, implementation and continued block grant operation. States may not be able to spend state money if the above preemption of state constitutional requirements apply. State Authority and Parental Choice NCSL has no explicit policy on educational or parental choice. However, as we have stated earlier, we are concerned that the provision in the regulations encouraging parental choice in child care would preempt state authority to establish or enforce standards for health and safety. And, in redefining the definition of public funds so they can be used for sectarian purposes, the regulations may preempt state constitutional and statutory provisions that restrict this use of public funds. The legislation states that all providers must comply with all licensing or regulatory requirements applicable under state and local law; providers not required to be licensed or regulated under state and local law must be registered with the state. The regulations state that although grantees (states) have flexibility to establish state or local rules in licensing standards, registration, health and safety requirements and payment rates, such requirements must not significantly restrict parental choice. State and local rules, requirements, policies, and procedures cannot either explicitly or operationally result in significant restrictions in the range of child care options. This language implies that a state cannot necessarily compel licensure, regulatory oversight, registration, or health and safety requirements of caregivers. Block grant money wilt be withheld if parental choice is restricted. As we stated earlier, we are disturbed by the damage that could be done by withholding statewide funds to coerce states to change their statute to accommodate parental choice. In particular, this provision would penalize states for excluding a type or category of care by its standards. Interrupted funding would disrupt and jeopardize child care services provision in the states. This wostd undercut the general purpose of the statute and is a coercive mechanism to undermine state authority. Many states currently require that public funds may only be expended for child care that is properly licensed or certified. The potential for claims of liability against the states and the federal government for not protecting children exists. Ohio, for example, requires certification for relative provider care, to insure that public dollars are not spent on substandard care, while encouraging parental choice. Florida also requires licensing of all day care homes that receive government funding. California, with a history of providing for parental choice through their voucher program, including providers exempt from licensure, requires that exempt providers be fingerprinted for a criminal records clearance, and provide a health PAGENO="0048" 42 examination or evidence of a clear tuberculosis test. States should be allowed to refuse to pay for care either through contracts or certificates if the care is to be provided by persons who have criminal records or whose health imperils a child in care. We are concerned that the proposed regulations have the potential of putting children at risk and preventing parents from making safe choices. Standards The legislation states that all child care providers receiving assistance under this block grant must meet all applicable state and local licensing, regulatory or registration requirements. Providers not required to be licensed or regulated must be registered prior to payment being made. And further, "A State is not prohibited from imposing more stringent standards and licensing or regulatory requirements on child care providers receiving assistance under this grant than those imposed on other child care providers in the state." The legislation also requires states to provide assurances that certaln health and safety requirements are in effect within the state: prevention and control of infectious diseases, including immunization; building and physical premises safety; and minimum health and safety training appropriate to the provider setting. The regulations acknowledge legislative intent, but undermine it by adding a provision that limits the ability of states to set standards, licensing or registration requirements if it "significantly restricts parental choice". This use of "parental choice" as a means to limit health and safety protections seems clearly contrary to Congressional intent. Congress expressly sald states could apply higher standards to block grant care. The regulations, however, could have the effect of involving the federal govemment in reviewing and disapproving all manner of state child care regulations as contrary to parental choice. Current state safety requirements such as fire extinguishers, smoke detectors, criminal background checks, tuberculosis tests, and safety inspections may all be jeopardized. This condition of "family choice", in conjunction with the proposed regulatory cap of 10% on quality improvements and administration, severely hinder states' ability to support quality improvements and parents' ~gf~ choice. The statute does not require either of these provisions. By imposing an arbitrary limit on funding for administration and quality improvement, the regulations restrict the ability of states to address quality in ways that would not impair parental choice. To use an example cited in the regulations: "State or local regulations or policies in areas such as credentialing, schooling or training, space, and staffing ratios cannot significantly limit a parent's choice from among categories of care or types of providers." The limits imposed here, with the prohibition on differential payment rates for licensed and unlicensed care, remove regulatory requirements and fiscal incentives for providers to improve the quality of their child care and the capacity for parents to choose safe child care. The proposed regulations open the door to litigation opposing state and local regulations, while subjecting states to potential liability if a child is injured in a publicly-funded child care setting. It is curious that HHS is developing performance standards for Head Stan at the same time that these regulations prevent states from setting standards for the block grant. We are concemed that this provision is too general. Does any requirement that significantly reduces parental choice apply? We believe this should be at the states' discretion. Vouchers The proposed regulations would create severe fiscal and constitutional problems for states. The regulations forbid states to restrict the number of child care certificates. As long as block grant funds remain available for child care services, parents who choose certificates must receive them rather than being placed on a waiting list. This requirement compromises state fiscal planning authority. States will not know when federal funds will be exhausted, how many certificates to plan for, or the effects on contract programs. Many legislators have commented that the regulations wili threaten the stability of existing child care centers that depend on guaranteed, contracted child care slots. While the legislation permits public funds to be used in sectarian institutions, funds must not be used for sectarian purposes or activities. The regulations seem to compound this preemption of state constitutions by redefining certificates as assistance to parents, thus circumventing state prohibitions on the use of public funds for sectarian purposes. Please refer to the sections on Federalism and State Use of Public Funds. Finally, the tone of the regulations suggest a preference for certificate assistance over contract assistance. This was also reiterated during the HHS-sponsored child care forum in Washington, D.C. and San Francisco when HHS panelists suggested that while states must have a certificate system, they need not run a contract system at all. The statute does not make any distinction between systems to satisfy parental choice. Supplementation of Funds The legislation requires block grant funds to supplement, not supplant, the amount of federal, state and local funds spent on child care. The regulations narrow the definition of supplantation, using the states' previous funding year as the PAGENO="0049" 43 base (for example, September 1990 forFY 1991, September 1991 for FY 1992, etc.), thus making a state's decision to increase state child care funding a permanent appropriation. Reductions in federal expenditures resulting from actions outside the discretion of the grantee will be considered in determining whether a grantee has met this requirement. The regulations are unclear whether state budgetary problems and across the board cuts affect the supplantation requirement Economic conditions are beyond the control of the state, as well as fiscal constraints brought on by other federal mandates, such as Medicaid. In addition, Department reorganizing could lead to funds dropping below the base level. A state that reorganizes its child care programs to be more efficient could be penalized. Head Stan funds should not be included in a state's base, even if a state funds early childhood development. While linking Head Stan and child care is a goal of the states, we believe that supplementation should be limited to child care. Payment Rates The regulations require states, in establishing payment rates, to consider vanations in the costs of providing child care between different categories of care (center-based, group home, family and in- home). However, payment rates may not be based on the type of provider, i.e., sectanan, relative, for-profit, or nonprofit providers. The regulations appear to prohibit states from paying higher rates for higher quality programs. States would then be prohibited from paying higher rates for licensed or regulated care or nationally accredited seuings. This restriction on states' use of higher payment rates removes the incentive for child care providers to improve quality and thus promote parents' access to quality services. Many states currently practice this differential payment system, either in lieu of mandatory requirements or to support state requirements. This has served as an incentive for providers to improve quality. The statute does not mention this circumstance, which is prohibited in the regulations. Once again, states should decide whether this practice inhibits parental choice or restricts child care provilers. Furthermore, states will continue to use this practice for their other child care programs, both federal and state, and once again, the HHS goal of seamless service will not be attained. The regulations interfere with state rights to establish separate funding standards for child care financed by public funds despite language in the legislation (NCCIP: A State is not prohibited from imposing more stringent standards and licensing or regulatory requirements on child care providers receiving assistance under this grant than those imposed on other child care providers in the state. see p. 26229 In Rhode Island, the state has found that centers have been forced to limit the number of "state" slots (subsidized slots) that they can afford to have. Raising the reimbursement rate is a method of increasing staff salaries, and contributing to quality child care. At current market rates, child care workers salaries and benefits are grossly inadequate, leading to high turnover and low levels of staff training. Inadequate rates of reimbursement are limiting the accessibility of child care to those eligible for the sliding scale program. States should be allowed to use block grant funds to increase reimbursement rates to provide high quality child care for the greatest number of children and provide children in the subsidized state system fair access to quality care. In addition, the regulations prohibit states from using block grant funds to subsidize rates for child care under IV-A (AFDC). The AFDC rate is limited to the 75th percentile of the local market rate and has resulted in shortages in the supply of child care. We suggest that states be allowed to subsidize higher rates at their discretion to ensure seamless service for all clients. That is, states should be allowed to determined the best market rate so that there will not be a two-tiered child care system. This restriction is only mentioned is the Preamble, not in the regulatory language. The regulations should expressly provide that states may use block grant funds to supplement payment rates in other local, state, and federally funded child care funding streams. The regulations require that payment rates be sufficient to provide access "comparable" to those receiving unsubsidized care, for center based, group home, family and in-home child care. Mr. Chairman, states need clarification of the definition of comparable access. Aid to Families with Dependent Children At-Risk Child Carefrogram~ 45 CFRfarts 25Sisnd HR. Rep. No. 101-964 at 922 stated that states should have "maximum flexsbilsiy" in determining use of At-Risk funds. The regulations undermine rather than interpret the spirit of that agreement. They circumvent state authority, drastically limit program flexibility, and add unfunded mandates and administrative burdens on the states. NCSL is in agreement with HHS' concem for quality child care and the need for new child care slots. We believe that these policies are best decided at the state level. There are certain provisions of the regulations in which we believe HI-IS does achieve its purpose of providing broad flexibilities to the states designing and implementing the at-risk program. We appreciate the HHS decision to allow states to use all current state child care dollars (not matched to any other federal programs) towards the state match for the at-risk program. This policy clearly acknowledges both state fiscal distress and the states' leadership in creating child care programs using their own funds. As you well know, we have been concerned about whether states would be able to raise new funds for child PAGENO="0050" 44 care given their current fiscal conditions. NCSL strongly supports the provision that allows donated funds to be used as part of a state's match to obtain federal funds. State legislators supported the at- risk program because of its reliance on state discretion in definitions. With one notable exception discussed below, the regulations retain state authority to define the parameters of the new program, including individual eligibility. State Authority and Parental Choice NCSL has no explicit policy on educational or parental choice. However, we are concerned that the provision in the regulations encouraging parental choice in child care would preempt state authority to establish or enforce standards for health and safety or registration requirements. This preemption implies that a state cannot necessarily compel licensure, regulatory oversight, registration, or health and safety requirements of caregivers. NCSL urges you to place your trust in the states to determine how best to provide choice in child care for parents. Standards The regulations attempt to circumvent state authority on standards by defining applicable standards as those generally applicable to care of a particular type regardless of the source of paymenrfor the care. Child care for which there are no applicable standards, i.e., no licensing or regulatory requirements, is considered to be legal care for the purposes of the At Risk program. This provision would mandate states so pay for child care even if the provider did not meet or intend to meet state standards. By redefining applicable standards to eliminate existing state distinctions between publicly.funded and privately purchased child care, the proposed regulations would inhibit the states' ability to ensure some degree of accountability for the expenditure of public funds. Many states currently require providers receiving public funds to meet certain health, safety and training requirements to promote quality child care choices for low income families. The regulations propose to make this same amendment (`regardless of the source of payment") for AFDC child care services during participation in employment, education and training and transitional child care. NCSL urges you to avoid preemption of state authority in this area and eliminate this non-statutory clause. The statute requires that child care must meet all applicable standards of state and local law, and the provider must be licensed, regulated or registered by the state or locality. The regulations acknowledge legislative intent, but undermine it by adding a provision that limits the ability of states to set standards, licensing or registration requirements through the addition of parental choice as a "paramount consideration". This use of "parental choice" as a means to limit health and safety protections is clearly contrary to Congressional intent. The regulations could have the effect of involving the federal govemment in reviewing and disapproving all manner of state child care regulations as contrary to parental choice. This would violate Executive Order 12612 on Federalism and shows blatant disregard for the legislative branch. Current state safety requirements such as fire extinguishers, smoke detectors, criminal background checks, tuberculosis tests, and safety inspections may all be jeopardized. Elevation of the "family choice" standard above state authority and law, unsupported by the statute, severely hinders states' ability to support quality improvements and parents' safe choice. The proposed regulations open the door to litigation opposing state and local regulations, while subjecting state to potential liability if a child is injured in a publicly-funded child care setting. It is curious that HHS is developing performance standards for Head Start at the same time that these regulations prevent states from setting standards for At Risk. We are concerned that this provision is too general. Does any requirement that significantiy reduces parental choice apply? We believe this should be at the states' discretion. As stated earlier, report language clearly intended states to have maximum flexibility in implementing this program. The At Risk regulations are also at variance with the child care block grant regulations on standards. In order to achieve seamless service in the provision of child care, states would have to forgo higher health and safety standards for the block grant (expressly permitted in statute), to meet the contrary regulation under IV-A that standards must apply to all providers in a category regardless of public or private funding. States should not be forced to adopt inappropriate policies simply to attain conformity between federal child care funding streams. As a nonentitlement program, At Risk is more analogous to the Title XX program which allows states the freedom to impose higher standards on publicly funded care. Registration States are precluded from using their registration procedures to impose additional requirements on providers funded by the At Risk program. The process, as outlined in the regulation, must collect only information needed to facilitate payment of providers or to provide information to providers. This prohibition constrains state flexibility and preempts state authority. The statute's registration provision clearly excludes providers who care solely for the family of the individual. In the absence of a specific statutory provision, we recommend that this area be left to state discretion. In accordance with the report language giving "maximum flexibility" to states to operate this program, states should determine registration requirements. Freedom of choice for parents will not be in danger if states were allowed discretion in this area. PAGENO="0051" 45 Limiting states to setting standards only through the formal process of licensing is to eliminate a less formal and less expensive choice for states that can provide safety to children in reimbursed care. When tax dollars are used to pay for child care, states must reserve the right to refuse to pay caregivers who they determine are inappropriate, such as caregivers who have been convicted of violent and child-related crime and those with infectious diseases like tuberculous. Many states currently require that public funds may only be expended for child care that is properly licensed or certified. The provision that registration requirements not exclude a type or category of care does not acknowledge the states' potential interest in ensuring that its child care is safe. The potential for claims of liability against the states and the federal government for not protecting children exists. We are also concerned about inconsistencies about the primacy of state law between the variety of federal and state funded child care services. The registration provision in the At Risk program will differ from that of Block Grant and, potentially, state-funded care This provision will severely constrain states from reaching our shared goal of "seamless service"; states should be able to fashion, at their discretion, a set of procedures consistent with those in both Block Grant and state- funded child care. Definition of Eligibility The regulations appear to ignore Congress's intent to allow stases to define a family's need for child care "in order to work". The proposed rule mandates that child care be provided osly for employment or to remain employed, and would prevent states from providing child care services to families who needed education or training in order to obtain work. P.L. 100-508 gave states discretion in determining family eligibility for child care services: any low-income family the state determines is not receiving AFDC, needs child care in order to work, and would be at risk of becoming dependent on AFDC may receive child care services. These definitions would be "as the state determines." In violation of the legislation, the regulations define "in order to work", and would restrict at-risk child care to families who need child care to accept employment or remain employed, not those who are unemployed, in training or in education programs. Payment Rate The legislation required that payment for child care shall be the lesser of the actual cost of such care and the applicable local market rate. The regulations propose that the current federal regulations on local market rate apply to At-Risk: the 75th percentile of the local market rate. According to l-IHS, this "reduces the administrative burden" on states. HHS re-explains its policy on the 75th percentile as an attempt to include most providers but preventing the inefficient use of public funds by restricting payment to providers charging more expensive or excessive amounts. The Act, however, did not specify the 75th percentile. NCSL continues to strongly believe that state authority to determine payment rates should not be preempted. Experience with JOBS child care reimbursement has shown that, in some states, this low payment rate has discouraged providers from serving subsidized families. We also believe that this program is substantially different than JOBS and JOBS Transitional Child Care (TCC). The At-Risk program serves families that compete in the child care market with those who pay 100% of the cost of child care. This program is more akin to the Child Care and Development Block Grant, enacted in the same section of OBRA 1990. This potentially will create a two-tiered reimbursement system with state-only and block grant funded child care reimbursed at a different (usually higher) state-determined rate and JOBS, JOBS- Transition and At-Risk Child Care at a federally-determined rate. We urge you to restore flexibility to the program and allow states to determine child care reimbursement rates. This will allow states to subsidize higher rates at their discretion to ensure seamless service for all clients. The regulations should expressly provide that states may use other federal funds including the Child Care and Development Block grant, to supplement payment rates in other local, state, and federally funded child care funding streams. The requirement that self-arranged child care be one option within the state's system is not in the statute. The Act gives states flexibility to "adopt such arrangements as it deems appropriate." This proposed mandate should be eliminated; methods of child care payment (especially those ensuring parental choice) can and must be decided at the state level. The statute clearly provides the flexibility and state authority that is both appropriate and desirable. Administrative Costs The Act set no restriction on administrative costs, however, the proposed rule suggests that HHS will monitor States' performance on reasonable and necessary administrative expenditures. This monitoring process is not found anywhere in the statute. If this section is not eliminated, NCSL strongly believes that this monitoring process must not impose an undue burden on states, particularly in data collection. Training and Resource Development No funds were made available for recruitment and training of child care providers, resource development and licensing, because funding is available under the child care improvement grants and the block grant. However, the block grant funds have been severely limited for this purpose. NCSL is very concerned about the Administration's request for $13 million for FY1992, far less than the authorized $50 million, for the Child Care Licensing and Improvement Grant Program. States cannot meet the expectations for child care quality improvement that were set when these funds were authorized. NCSL will be monitoring the progress of thts program. PAGENO="0052" 46 Supplementation of Funds and Reporting Requirements The regulations state that states cannot replace current federal or state funding with at-risk funds. The base year is set at the year prior to the beginning of the states' at-risk program: a state with an interim plan beginning October 1990 must include the month of September 1989 in its base period. The regulation's non-supplantation clause goes beyond the statutory provision to ensure that states do not replace state child care spending with new federal dollars. Inclusion of federal funds along with state funds in the base year could unfairly penalize states in cases of federal budget cuts. A "hold harmless" provision should be added to section 267.64 to waive the non-supplantation provision when the federal government either reduces or rescinds federal child care funding below the authorized base level. The regulations are unclear whether state budgetary problems and across the board cuts affect the supplantation requirement. They should not. Economic conditions are beyond the control of the state, as well an fiscal constraints brought on by other federal mandates, such as Medicaid. In addition, departmental reorganizing could lead to funds dropping below the base level. A state that reorganizes its child care programs to be more efficient could be penalized. Head Start funds should not be included in a state's base, even if a state funds early childhood development. While linking Head Start and child care is a goal of the states, we believe that supplementation should be limited to child care services. NCSL believes that reporting requirements should be aligned with the child care and development block grant and not with Title IV-A child care, since most states currently separate their public assistance and low-income family child care. The At Risk child care program, while a section in Title IV, is not an entitlement like the JOBS or TCC program child care. At Risk will be administered differently and should be treated like other non public assistance child care. Carryover The regulation seems to prevent carryover of at.risk funds after the first year of the program. Clarification of this section is needed. In the statute, any funds not spent in a fiscal year can be spent in a subsequent fiscal year. In addition, there is no statutory guidance on the order in which funds may be spent. Spending the subsequent year's funds first, as the regulations imply, would eliminate the carryover provision after the first year of the program. Children with Disabilities NCSL appreciates your decision to provide At Risk child care services for children with disabilities up to the age of 18. This will allow states more flexibility to provide family support for working poor families with members who are disabled. However, we are concerned about the provision that requires that children age 13 or over with incapacities be verified by the state based on the determination of a physician or licensed or certified psychologist. This verification, while consistent with IV-A regulations, is not mentioned in the statute and inconsistent with the Block Grant regulations. Like other aspects of eligibility, the method of verification should be determined by each state. This regulatory mandate should be eliminated. Federalism As I stated earlier, in the Federalism section under Block Grant, the regulations go beyond the core concems of the statute to create a superseding authority of "parental choice". This concept is not addressed in the Act related to the At Risk program as superseding the critical component of state health and safety laws. The flaw in the regulation is that itlimits states' ability to decide the level of importance of health and safety regulations and parental choice. Comprehensive federal child care has been an NCSL priority for the last two sessions of Congress. States have enacted and implemented numerous child care programs, including those to enhance child care quality. We believe that states, when given sufficient flexibility, can create innovative programs to meet the department of Health and Human Services' child care goals. Accountability, responsiveness and innovation are hurt by federal preemption. As Justice O'Connor stated in the majority opinion of Gregory v. Ashcroft, "[un the tension between federal and state power lies the promise of liberty.") Thank you for your consideration of NCSL comments. We would be happy to meet with you to discuss this critical matter. PAGENO="0053" 47 Acting Chairman DOWNEY. Thank you, Senator Cain. I think you have made your point. [Laughter.] I am specifically interested in the regulations of the Federal Gov- ernment about the two layers of care. Whenever you say that these regulations reduce the standards that a State like Oklahoma could apply, the answer is that the State of Oklahoma can just have the same level of regulation for subsidized and nonsubsidized care. The answer is that the Federal Government is not really doing any- thing to the States. What happens in the State of Oklahoma where you have two tiers of regulations? Do you not have two tiers-one for subsidized and one for nonsubsidized day care? Mr. CAIN. Basically that's the situation but what our-we regu- late every day care center that has over five people in it. Acting Chairman DOWNEY. OK. Mr. CAIN. And we have a tight facility, and I think it has been very effective. We are concerned that with these kinds of regula- tions you are going to build in lawsuits that are going to come in saying, you are not giving us enough parental choice, so that we have got to move it to 10 children before it's freedom under the regulations. Acting Chairman DOWNEY. Senator, I just want to ask you specif- ically about this and if you are not familiar with it we will talk about something else. Mr. CAIN. OK. Acting Chairman DOWNEY. You say everybody with over five children is regulated, and so if I have five people and I have five children or more what is the procedure in the State of Oklahoma if I am not receiving any money from the State or Federal Govern- ment, if I have just got five people in the neighborhood that I am taking care of? Mr. CAIN. You have to go through an administrative hearing with the five people you have, health and safety regulations that are placed upon you. And if, at that point, you are having more than five children, and of course, there are always groups wanting to raise that limit, but if it is like that, then we have administra- tive hearings and administrative ways to deal with it, and then we go to legal methods. They shut them down. Acting Chairman DOWNEY. If I am a church, for instance, and I have day care, and I don't get any money from the State or the Federal Government, what are the regulations in Oklahoma that would apply? Mr. CAIN. Well, we have straight across-the-board regulations for all of them. Acting Chairman DOWNEY. OK. Mr. CAIN. And I think that's a good system. And I believe in the openness. We have an open group. If you qualify we fight at the State level to get money to have your subsidized care. A lot of States don't have that flexibility though. Acting Chairman DOWNEY. So you are saying that at least for the case of Oklahoma that there is no difference between care re- ceiving subsidy and care not receiving subsidy? Mr. CAIN. No. In our State we have licensure- Acting Chairman DOWNEY. You regulate everyone? PAGENO="0054" 48 Mr. CAIN [continuing]. Across the board. Acting Chairman DOWNEY. And your concern about these regula- tions is that with respect to the 75 percent rule you cannot be as involved in quality, and you are just going to have to create slots, is that correct? Mr. CAIN. Well, look at what it says. It just basically says that for the first year it says that 85 percent has to go for new, I mean services, and then you get 15 percent for administration or quality. Many States have never had a voucher type system. They are not going to be able, I can guarantee-I've talked with them-they are not going to be able to do it with 15 percent to turn around the system, even if they choose to do so. I don't think 15 percent is legitimate. We are tied in-that in our State plan that we put in, we said that one of the first things that we wanted to do instead of paying our child care workers the lowest in our whole State, almost for any job, that we were going to raise the subsidy on the child care workers, I mean on the amount that we would pay each day. We were going to raise that up and we weren't able to do that because they sent back our plan that says, you can't raise the amount that you're paying; you have got to deal with opening up more slots. Now, we have an open slot system right now; one of the few States. I mean you come into Oklahoma, you qualify financially, you get to go to subsidized day care. And you don't wait on any 500 people in a line. And I understand that's a problem in some States, and I understand that's what they are trying to deal with. But every State is different in this area. Some of the States are just beyond themselves. They want to come along with this, but you go 2 and 3 years and can't even raise the subsidy that you pay presently? I mean we are paying some of these $10 a day to keep these chil- dren. This is the second time they have sent back our report from Oklahoma. I mean they are messing us around all the way down the line. Acting Chairman DOWNEY. Do you think that you overregulate child care in Oklahoma, Mr. Cain? Mr. CAIN. No, I don't. I mean let me tell you what. If there is anything that our children-and parents tell me all the time, that I appreciate that we have the full regulation going on here in Okla- homa. I mean all the child care workers, all of the teachers, all of the people that are interested in quality care-now, I'm not talking about the ideologues who want to go around making fancy speeches and all of this kind of stuff-but I am talking about the people who are there, year after year for taking care of children, the people who get the rewards, who get the respect for taking care of chil- dren, they want standards there and those standards help protect our children. I am afraid in some of these States-you got a State like Missou- ri, it has got 1,000 church day care centers that are unregulated right now. I mean how are you going to deal with that deal? There have got to be some compromises working out there. I mean I don't know of a legislator-we have got comments over here, and the Na- tional Conference of State Legislatures went over and looked at their letters and comments and they have got a whole bunch of PAGENO="0055" 49 them from a group with a letter-writing campaign representing them. But you are not going to find very many legislators, and agency heads, and people who deal with these programs day-in and day-out, you don't find any pluses on this thing. I mean, I'm telling you, you go over and look at them yourself. They can tell you all the figures they want, but you will see all of those little form letters that are sent in. We all know about form letters. We have all had them. You guys, and women are just like I am, and we know that that is a campaign working. But go and look at what the legislators say, the people who run these child care services in the States they know that the people don't like those. They know they are unworkable. I don't even believe I could get up in front of a committee, a Democratic committee, if I passed out these regulations, a totalitarian type regulations. If we believe in democracy and then you can go in and tear up a bill by the regula- tions that come back, I don't know how you would stand in front of people. And this is not a Democrat and Republican issue. We had Republicans up here working for this bill; we had Demo- crats. We were all happy about this bill. This was a good bill, but you have restricted it down so hard that it is just going to be chaos out there. If you don't believe it, go and check with your own State agency. Acting Chairman DOWNEY. Mr. Shaw. Mr. SHAW. Thank you, Mr. Chairman. Senator, as you know, the chairman and I are very concerned about States rights. [Laughter.] Mr. CAIN. Yes. Mr. SHAW. As I understand your testimony, you have focused not on the question as to the imposition of just one set of regulations by the State; you are focusing on that portion of the regulations that speaks to the percentage that can be allocated to administra- tive overhead. Mr. CAIN. That's part of it. I've got, if you look at my full statement, I have got a full state- ment on a whole lot of problems that we have got with it. I had 5 minutes to tell you what is on my heart, and I am telling you that right there is a totalitarian bill. Mr. SHAW. That's something that I think we should look at, but I think in fairness to the administration, the report language, itself, addressed that issue on the bill and talks about the amount in broader terms, not in percentages or mathematical terms. And that's something I think we should look at and I have no problems with doing that. I guess you would agree with me, though, that it is a proper function of regulations to put some type of cap on this. Having come from local government, myself, I know the meaning of Con- gress can be somewhat blurred by the allocation of the moneys. And I think if the regulations with regard to that which could be spent as administrative overhead is unreasonable, then I think that cap should not be removed, but should be raised to give the States more flexibility in order to take care of it. I think that's rea- sonable and that's a reasonable criticism that I think we need to look at. PAGENO="0056" 50 Do you wish to submit what percentage you think would be rea- sonable, or if you don't, perhaps you can get some of your adminis- tration back in Oklahoma to submit that figure for the record so that we would have it, as a part of your testimony? Mr. CAIN. Well, Congressman, I respect the Congress and I will do whatever you will ask me to do. I will try and get you my re- sponse. But I will tell you this. Mr. SHAW. You don't have to respect the Congress. Probably most of your constituents don't. [Laughter.] Mr. CAIN. I mean in this kind of deal it doesn't help, I really promise you, it doesn't help the parents. But I don't know that it's percentage. The bill was pretty clear. It said, 75 percent goes to the States, and it doesn't make any percentages in the bill. I read the conference committee report. It said, look at additional services, and that ought to be a major part. I agree with your statement. I don't have any problem with that. We need additional services. But to wait 3 years before we can even deal with raising some of the amounts for some of these child care workers and I can tell you these States don't have any extra money on this. This was a life- saver. We were down to the bottom on many of the States. Oklaho- ma is not in as bad a shape on that. But we ought to leave some flexibility. If we mess it up, you have got the power to come back in here and change it next year. Mr. SHAW. I agree, but what I think the committee is interested in and I think what HHS is interested in and perhaps they have overreacted in the regulations, is that we are not, by this bill, bail- ing the States out of or taking care of some other problems that they have. We want to be sure that we are putting the major part of the money toward the children, the recipients, the poor people, and the parents to take care of this need. Mr. CAIN. That's why I liked the bill. Mr. SHAW. OK, I understand that and I appreciate that, and I think we should probably hear from other States on that to see what is reasonable. Mr. CAIN. OK, thank you. Mr. SHAW. Thank you, Mr. Chairman. Acting Chairman DOWNEY. Mr. Andrews. Mr. ANDREWS. I would like to ask Ms.-where is Ms. Barnhart? We are going to hear from you in a little while, I know, and I don't mean to go out of order. But I am just curious, while Senator Cain is here, did you visit and talk with State legislators, and workers in the States as you developed these regulations? Ms. BARNHART. We met with a number of people. In fact, it would be impossible for me to count exactly the number of people we met with. I would be happy to submit our list to the committee. [See list at pp. 72-73.] Mr. ANDREWS. I would like that very much. How many of them were State legislators and people that administer the programs, lit- erally, practically administer the programs in the State, did you talk to? Ms. BARNHART. I couldn't tell you the exact number, but I can tell you one of the first things I did on getting the responsibility for the CCDBG was to reach out to the advocate provider and State committee to develop the kind of relationship that would allow us PAGENO="0057" 51 to be aware of the concerns that those groups had, because we were interested. Mr. ANDREWS. We will have a chance to visit later when it comes time for your testimony. But I would like, if you would present the committee with a list of the State representatives that you did talk to, not groups that came to see you or petitioned you by letter-writ- ing campaigns, but specific State legislators that you visited with, and State administrators that you visited with, and State adminis- trators that deal with these programs on a day-to-day basis. Ms. BARNHART. I would be happy to do that, Congressman. Mr. CAIN. Can I respond to that? She just came into our office, when she came to the National Conference of State Legislatures meeting here in Washington, and we appreciated that. And Mark Regan has been willing to appear before our body. I think Mark will have to say I am saying what was said in Orlando, and I said what was said, here in Washington, there is such frustration. I can't tell you. There was such a disappointment. When something like this passes and we work on the bill and we work all our people together to try and prepare for when the regulations come out- because we don't think that you messed up this bill, this bill is a good solid bill and then the regulations come out-and it rapes what we tried to do, what we felt like we could do for our children. I just, you know, we would never let that happen at the State level and I know it is a different deal up here, but you read those regulations. And you read the comparison. Just take the time. I know how busy you all are, and children are minor on some of the big agenda items around here, but if you will take the time to look at that-are you a lawyer? Mr. ANDREWS. I am afraid I am, sir. [Laughter.] Mr. CAIN. You will see, I mean I can't imagine a lawyer saying that they followed the law on this on regulations. Whoever their lawyer is has got to be a weak lawyer. [Laughter.] Mr. ANDREWS. Well, Senator, I really appreciate your coming to testify. We are going to hear from the State of Texas in a few mo- ments and hear about what their thoughts are about these regula- tions. I suspect that they won't be much different from the Oklaho- ma problems. I do want to say that this bill was a finely crafted piece of legislation. Charlie Stenholm, his comments are heartfelt. He worked hard on this bill to make it work for a State like Texas, for instance, that is dealing with an enormous problem. Texas and Oklahoma today, one out of four babies are born into poverty. It is a hugely difficult issue that State legislators, and State governments are trying to deal with on a State basis, on a local basis and make some decisions that will make sense for young children. And it was a carefully crafted compromise. The needs of New York are far different from the needs of the States of Oklaho- ma and Texas. We felt like we had an understanding that would work. I think we did. I think it was a bill that people were pleased with and I really do appreciate your coming here to testify today and give us the benefit of your thoughts. Mr. CAIN. Thank you, very much. Acting Chairman DOWNEY. Mrs. Johnson. Mrs. JOHNSON. Thank you, Mr. Chairman. PAGENO="0058" 52 Welcome, Senator Cain. As a former State senator myself, and one who was very involved in legislation, particularly around child care licensing and the delivery of child care services, I am very pleased, first of all, that on the whole State legislators see this bill as positive and see the flexibility that it grants as the direction that we need to go. I feel that very strongly. Mr. CAIN. That's the bill and the regulations- Mrs. JOHNSON. Yes, we will get to that. Certainly reasonable people will be able to agree on solutions if there are real problems. I think there are also some misunderstandings. First of all, one of the difficulties of legislating from the Federal level is the problem that sometimes when we give States money they stop spending their own money and spend ours. So we have very serious debates about how we prevent what we call displace- ment. Mr. CAIN. Right. Mrs. JoHNsoN. And part of the reason that these percentages of money that can be spent on administration are set is to prevent you from using our money instead of yours, since service expansion was the goal of this bill. We wanted to provide more day care out there for the real world people who depend on Government. So to require that 90 percent of 75 percent go for services does not, in fact, seem extraordinary to me. In fact, as a Federal legisla- tor, I would have to look at the 10 percent that that allows, plus the other 25 percent. Now, I know that in the other 25 percent some of it must go to before and after school care, which we felt very strongly about. But 15 percent of that 25 percent is very flexi- ble in terms of its application to quality improvement and adminis- tration. So, in the bill there is the 10 percent of the 25 percent and the 10 percent of the 90 percent that can go to administration. I don't know to what extent you are aware of the welfare reform bill that we passed in 1988, but that has quite a bit of money that is dedicat- ed to improving child care and that is very flexible. So our intent was that States would have a number of pots of money to deal with the issue of flexibility. Now, my own State raises this issue, as well, and they would like us to limit 60 percent of the 90 percent to services-I mean of the 75 percent. It is hard for me to go home and say to my folks that basically 50 percent of this bill is for services, and 50 percent is everything else. If we set aside 25 percent for before and after school care and ad- ministration and quality and then we take 30 percent of the re- mainder for services, then basically what I have just done is cut the service dollars to roughly 50 percent. So I think my State will have to justify to me why they need that much money for administration and for quality. And I need that justification from you. Mr. CAIN. OK. Mrs. JOHNSoN. Because my goal here has been service expansion. My assumption is that you already have licensure in place, so, sure, you will have to license some more people, yes. But we give you 10 percent administrative costs. My assumption is that you will have to train more people, true. But State@ are not uBing-and I think I can say this pretty categor- PAGENO="0059" 53 ically-are not using their community colleges to do in training what they could and should because we have not been able to get the power within the State bureaucracy to force the educational system to meet the needs of the social service community. Mr. CAIN. True. Mrs. JOHNSON. Now, we particularly did not want to displace those training dollars when there are other resources out there that can and must be used for training. So I will read your testimony in greater detail. I am glad that you commend the legislation in many areas, and I have not been able to find the specific concerns, but I hear from your earlier statement that you think setting up a voucher program is a good idea. Why don't you tell me why you think there is not enough money for administration in here, when the goal and the desire by everybody is to have more day care slots? Is your concern-come to think of it, you did mention one thing-raising salaries? Do you want to use some of our money to raise your salaries? Mr. CAIN. That's right. Mrs. JOHNSON. But you see if we had been out there telling the world we are going to expand availability, then you set salaries higher and have fewer slots. Mr. CAIN. Find anybody in Oklahoma that can't be in a slot. Our slots are filled. If you want to have child care and you meet the requirements in Oklahoma you get that subsidy right away. Now, other States can't do that. Now, our system is different than other States. That's what we are trying to tell you. There are some States that have got a waiting list of 1,000 people to just get into subsidized child care. I know that's a problem. I know that we need to deal with that. Mrs. JOHNSON. Are you saying then, are you saying that if you don't have a waiting list, and therefore, you don't need the slots, you would want the right to use the money on other things? Mr. CAIN. For quality. For quality to upgrade- Mrs. JOHNSON. So you are assuming that there is not the demand there, that we assumed? You are saying in your State there's not that demand? Mr. CAIN. There's not that demand. Mrs. JOHNSON. OK, so you are saying that in the instance where there are no applications, you would like the flexibility over that money? Mr. CAIN. I think the flexibility, I think, you know, you have said a lot of things and I haven't responded, but I think you ought to give some flexibility to the States and let the work it out and see. If we mess up the system, if we push down quality, if, you know, we don't care to get involved in your little ideological game up here one way or the other on this whole thing. Mrs. JOHNSON. Please, Senator, this is not an ideological game. Mr. CAIN. It is an ideological game. Mrs. JOHNSON. It is not an ideological game. The Congress has a responsibility when they say they are going to pass legislation to expand the availability of day care in the Nation to assure some expansion. And we are certainly not trying to tie your hands. Mr. CAIN. You are. PAGENO="0060" 54 Mrs. JOHNSON. But we are trying to expand the availability. Now, if there is not a demand, then there are ways that we can deal with that, and say if there is not a demand, then you have certain rights to use the money in other ways. But I hope you would appreciate that we must justify not only to our constituents, but also to ourselves 50 percent administrative costs, or 50 percent training costs or whatever. So in this issue of flexibility there is, I think, at least the right and privilege on our part to say we give priority to get services out there. That was the goal of this money-get services out there. Mr. CAIN. Put it in the bill. Don't let a totalitarian bureaucracy come in and say what it's going to be with regulations. If you want to say 50 percent goes for new slots, and you want 50 percent goes for quality, do what we do, do what any democracy does-go out there and fight it on the floor and pass it that way. But to come in the back way-you read the statutes. I am asking you, you have, obviously, but you read the statutes and you read the regulations. Now, I am telling you there is not a fair person- Mrs. JoHNSoN. Just give me an example. Take from your testi- mony one specific example of what it does to you, in Oklahoma, be- cause you haven't been specific enough to justify the charge of to- talitarianism. Mr. CAIN. Well, first of all, it's a block grant. And the adminis- tration, NCSL over the objections of a lot of our congressmen sup- ported if the money was going to come down it comes down in a way that we can have some flexibility at the State. And you can look at the other block grants, they don't go in there and say that 75 percent of the money has to be for new slots, and you only have 10 or 15 percent for quality. I am sorry the way you make the breakdown is not the way the States are looking at it. Maybe we are just not smart enough to see the regulations and the laws, but we see it as a very, very restrictive bunch of regula- tions. Mrs. JOHNSON. Do you see it as 90 percent of 100 percent has to go to new slots? Mr. CAIN. 90 percent of 75 percent is what this, and it is 85 the first year. Mrs. JOHNSON. Right. Mr. CAIN. I know this bill and I know the regulations. I have to deal with it every day. I was so proud when you passed it. I am telling you we have all got objections across the board. We can go into specifics. I will try to deal with any specific. That is the pri- mary one. We have got other things. We have got some States, and it's not Oklahoma, we got some States that are not on kind of a voucher system. We are kind of on a voucher system already. If you want to go anywhere you want as long as it is a licensed day care center, you can go. And we will pay for it. And that's a fair deal. We think we would like to see other States come that way also. We don't think that they can do it real quick. We don't think they can do it by October 1. I mean there are legislators that are just up in arms. Ohio passed a bunch of new statutes dealing with your bill that passed. Now, the statutes, the PAGENO="0061" 55 regulations come in direct conflict of what was one of the model bills by the States on regulation of child care. Mrs. JOHNSON. All right, we will try and get a clearer view of what those conflicts are this morning. Thank you. Acting Chairman DOWNEY. Mr. McDermott. Mr. MCDERMOTT. Thank you, Mr. Chairman. Having spent 15 years in the State legislature, I have some feel- ing for what you feel like. I used to say that there was a whole- Mr. CAIN. Well, I want to be more respectful than I am sounding. Because I do respect- Mr. MCDERMOTT. Don't apologize, you don't have to, you came far enough. The rule is that he who has the gold, rules; and unfortunately, when we send the gold out, sometimes the rules that go with it are really impossible to deal with. I would like to ask you one specific question, because as I looked at this, and in reading the conference report it says each State shall use 75 percent of block grant funds for direct assistance to parents for child care services, and to in- crease the supply and to improve the quality. It looks like they are equal to me. One of the things that I understand in the regulations is that they have said that you cannot use this money in a day care above the 75th percentile. Mr. CAIN. Yes, that's- Mr. MCDERMOTT. Would you tell me the impact of that? I mean that sounds like if we are giving you the money, you got to go to the lower kind of day care, you can't get the best in the State, you can only go up to the 75th. Mr. CAIN. That's a prime example of someone not being out there working where the people are. Because you get out there right now and the people who are on subsidized care, there is day care centers that are all welfare day care centers, all over the Nation. And their parents can't afford any more than the subsidy. Most of the day care operators, and there will be some speaking here later, they don't think they can make a good day care center on just the amounts that most of those subsidies are. So what you have is you have all of these welfare day care cen- ters, and then you have all the day care centers that the upper income and the middle income people can deal with and they make sacrifices to do it. People all in this room have their children in day care centers. Most of-I look at some of the younger ones back here-but they have their children in the best day care that they can afford and their children are not going to be in those 75 per- centile day care centers, I can assure you. Now, there maybe a few of them but there's not very many of them. And they want to talk about how they are given choice to low-income people? That's not giving choice. They ought to, let us have some flexibility there. We can work with that. And we can try to make-we need to work at it, it is a bad situation. I mean if you pay at the 75 percentile, not 75 percent, but 75 per- centile then you are going to get less quality care and we need to severely change that. The best thing you can do for day care in this country is to have more of it and to start paying those women- PAGENO="0062" 56 women, that's what it is-a lot of women are working in there and they are working for slave labor. Now, you go and look at them, go look at them, they are working for minimum wage. And they are trying to keep off of welfare with minimum wage. Most, a lot of them are right off of welfare that are the child care givers. And that's where the money is needed. If you want to hire better day care centers, some of these children that come out of college with early childhood development degrees they can't afford to go in to a day care center. I mean they can't live on $9,000 a year and the majority of the day care centers in the Nation their average salaries are well under $7,000 a year. So that I don't even know how these people live. I have worked with them over the years. They were excited about this. They felt like it was an opportunity to give some of their people some incen- tive and try to get some new people concerned about this issue and it has been real disappointing that 75 percentile deal. Mr. MCDERMOTT. I would only say as a comment that having been a child psychiatrist in my other life, when you look at what goes on in day care it is quite clear that the quality of people who work in day care has a lot to do with what you pay people. This country operates on a free enterprise system. To send somebody to a community college, to expect them to study to be a child care worker and then send them out there for a minimum wage job- they can't pay the loans back that they took out to get through the community college in the first place. Mr. CAIN. That's true. Mr. MCDERMOTT. So I personally support your view that the rais- ing of salaries, the raising of the level has a lot to do with what the ability to give quality care. So I appreciate your coming here and I am glad you gave us your heart instead of your testimony. Mr. CAIN. Well, I thought my testimony was kind of bland. Mr. MCDERMOTT. Thank you, Mr. Chairman. Acting Chairman DOWNEY. Mr. Grandy. Mr. GRANDY. Thank you, Mr. Chairman. Senator, as I listened to what you said and as I rehash what the argument was when we had this fight for 3 years in Congress before passing legislation that we wrote last year, I have to say as I look at what I think the law says that the enemy may not be behind you-and I assume when you do this you are pointing to Ms. Barnhart et al.-it may be in front of you. In other words, it might be the Congress. And let me tell you why. Mr. CAIN. OK. Mr. GRANDY. Because last year, when we attempted to ally two child care programs; namely, the at-risk program and the block grant, in statute, not in regulations, but in statute, we had two sets of requirements that were not necessarily consistent with one an- other. Along with that, there are at least four other major child care programs all of which have different statutory requirements. So, to some extent, when the package arrived at the regulators' desk there was probably, conference language notwithstanding, a certain amount of confusion that even the regulators had to deal with. PAGENO="0063" 57 Now, I think that has to do with the arguments, legitimate as they were, between the proponents of, if you will-and I am gener- alizing here-parental choice, and provider quality which is an ar- gument that we settled but probably did not resolve, certainly not in your view, all right? For that matter these hearings are valuable, because we are now having the residue of that grudge match which was probably never quite concluded. But I have to say that as I look at our supposedly seamless web of Federal child care programs, the problem may be that there are too many spiders spinning these webs. It is difficult to draft consistent regulations when you look at the various statu- tory requirements. Just to take an example, under the child care block grant you have of the 10 statutory requirements outlined in the bill, you have a requirement in every single category except that nonrelative providers must, at least, be regulated. Under the at-risk provisions- Mr. CAIN. No, they must be registered. Mr. GRANDY. Nonrelative providers must be at least registered under the at-risk program. That, I think, is going to compound the problems that you are now seeing. So I am not exactly sure what the outcome is going to be, Senator, but I got a feeling that we may have to rejoin the battle on the floor of this Congress, and it may be a battle to the death. I mean I am not exactly sure that we are capable of solving this problem to your satisfaction, but let me go back to the 75th percentile question that you raised. Let me ask you how you deal with this in Oklahoma? This is a question that Iowa health and human services administrators have confronted. Is it not true-and maybe this won't work in your in- stance-but under the regulations as they are now promulgated in their interim form that you are worried about a child moving from a program that pays for care that costs above the 75th percentile down to a program that would pay only up to the 75th percentile- because obviously these are not static models. Incomes change over time and unfortunately that may affect how you move from one day care facility to another; a legitimate problem, I think, within a State. So you are forcing somebody to change providers with these models. Can a State prevent this by adopting the 75th percentile as the payment rate for the child care development block grant? Will that work or will it not work? Mr. CAIN. I don't know. I just have to look at it in depth a little bit more. But the 75th percentile, I think, is an arbitrary amount. I don't see that it helps any of these situations and I don't think that it keeps people from moving back and forth. I think what it does, as much as anything, is it does what is available in a lot of States right now. You have your welfare child care centers, and you could come to Oklahoma and I would show them to you. I know where they are. They are right around where the poorest people live. They don't have the options ever to, you know, I guess they have the options if they are willing to pay more money and meet the subsidy. But we even have child care that we have a sliding scale on so as people make more money they pay less. We worked hard on it, and I think we were excited when you passed your bill. I don't know a PAGENO="0064" 58 bill that I have had more excitement about and any bill that I have been more disappointed, and most all legislators, maybe we don't understand it or they just haven't explained this to us properly. But what I understand about it, what my people understand about it is that it is an onerous bunch of regulations and it's not going to help anything. It's not going to help us do a better job. In fact, it ought to be changed. It ought to have a moratorium on them, and I hope that you and the Democrats and the Republicans can work together to work this problem out. I don't know how to work it out. You guys are up here and women up here. So I guess I am not answering your question. Mr. GRANDY. I am not sure I am expecting you to provide a de- finitive answer. And this is a terrible concession for any lawmaker to make but it is apparent that regulators are people, too. Mr. CAIN. They are and I don't believe in beating up on bureauc- racy. I know that most politicians get up and talk about the bu- reaucrats all the time, and I am not a person that does that. I be- lieve it is red-baiting and all that kind of stuff. But in this situa- tion, honestly in my heart, I have looked at regulations over the years, I have never seen regulations abused more than I have with this particular bill. And that's a common viewpoint. Maybe I am just so slow that I can't understand it. Maybe the State legislators are just so slow that we can't catch it. But that's our feeling. Mr. GRANDY. I don't think there's a learning curve that plum- mets once you get to the State level, Senator. All I am saying is that-and I must tell you this is deja vue-I spent the summer wrestling with wetlands regulations, which I helped write, all right? I helped write the swamp-buster law. I thought I understood it. I don't have any idea what that law means. I thought I under- stood this. I think Mr. Downey thought he understood it, too, but I think we came to radically different understandings, stitched them together in a bill, and felt that somehow this would be resolved through regulations. I don't think that has happened to anybody's satisfaction. Mr. CAIN. Congressman, you look at the bill, you look at the reg- ulations. Try to step back and don't play partisan on it one way or the other, just look at it, and I don't think you can come back and say that the regulations are anywhere close to what the bill came out with. I don't know one person at our level that has agreed with that. Now, you may have a letter from one or two legislators, but I am telling you 150 stood up in that meeting-if I am lying he can stand up and say differently-but they held up their hands and said they opposed the way this was done; we don't appreciate it; and again, I have ended up taking more time than I ever should have and I am sorry on that, but you need to help us work it out. We can't work it out. We're in a bind and we're frustrated. Mr. GRANDY. Well, that's clearly why the chairman is holding these hearings. Mr. CAIN. OK. Mr. GRANDY. But I think we would be less than honest with you that the solution in terms of creating a successful compromise or understanding on administrative funding may be one that we may not come to cloture on. PAGENO="0065" 59 I mean I thought we had solved that problem, too, but clearly that is one of your biggest heartburns on this piece of legislation. Mr. CAIN. I am going to tell you this, all across this country- and I don't believe in this concept-but all across this country people are going to continue to say what I'm saying right here, be- cause they don't like the regulations, they feel they are onerous. If you want to just keep the fires burning, if you want to just-if you want to maybe educate us, we are willing to try to listen. But this is a burning flame out there and you need to work it out. You need to get some people's heads together. There are good, bright people here, we need to work it out. We don't need these kinds of regulations; they are onerous. They are totalitarian, and they go against everything democracy is about. Mr. GRANDY. I'm done. Thank you, Senator. Acting Chairman DOWNEY. Thank you, Senator Cain. You have certainly made your point clear and we appreciate your testimony. The committee is next privileged to hear from Jo Anne Barnhart who has been patient. She's the Assistant Secretary for the Admin- istration for Children and Families of the U.S. Department of Health and Human Services. Thank you, Ms. Barnhart, and thank you for being so patient and waiting while all these good and bad things have been said about the regulations that have emanated from your Department. STATEMENT OF HON. JO ANNE BARNHART, ASSISTANT SECRE- TARY, ADMINISTRATION FOR CHILDREN AND FAMILIES, U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES Ms. BARNHART. Mr. Chairman, that's part of my job and it's the purpose of the comment period, both public comment and congres- sional comment, during the consideration of proposed and interim final regulations. Mr. Chairman, and members of the committee, I want to thank you for the invitation to appear before you this morning. I am pleased to have this opportunity to report on the progress that we are making in implementing the child care and development block grant and the at-risk child care programs authorized by the Omni- bus Budget Reconciliation Act of 1990 or OBRA 1990. In fact, I am eager to respond to your concerns and to clarify any misunderstandings that may exist about our recently published child care regulations. Child care is a matter of great concern to the Congress, the administration, the States, and most importantly to American families. And for good reason. Children are our most precious natural resource. My comments today concern how we have proposed to assist low-income families with young children to obtain child care. As the Assistant Secretary for Children and Families, and as the working parent of a 3-year-old, I consider it my responsibility to ad- minister these Federal child care programs in such a way as to strengthen families and promote their self-sufficiency. The regula- tions we publish reflect this view. Implementing these two new programs has provided us a consid- erable challenge. It required that we address a variety of important 51-713 0 - 92 - 3 PAGENO="0066" 60 concerns. Of course, our foremost concern was the statutory lan- guage and congressional intent, as reflected in the statement of the managers. Here, our task was complicated by the absence of an un- ambiguous declaration of congressional intent with respect to some portions of the statute, and by the fact that the conference agree- ment covering the TV-A programs did not address many key issues. However, once we had satisfied the statutory provisions, we focused on how best to ensure that States could meet the goals of the pro- gram, support parental responsibility, and get funds to the grant- ees in a timely manner. I believe that our efforts have been successful. Within a few weeks of OBRA's enactment, we provided States instructions on how to begin drawing down their at-risk dollars. As a result, 38 States are currently approved to operate at-risk programs. We then began work formulating the regulations for both programs. And, as a part of this process, we met with many groups, as I indicated to Mr. Andrews earlier, including advocacy groups and State and local administering agencies representing the full breadth of the political spectrum to hear their concerns. In June we published regulations on both the child care and de- velopment block grant program and the at-risk program. Immedi- ately following publication, we conducted two child care forums to inform States and other potential grantees about the program re- quirements and to solicit feedback on our regulations. Over the course of the summer, we've been reviewing over 200 State, territorial, and tribal block grant applications. To assist the applicants, we have provided plan preprints and forms for program descriptions, service, and expenditure plans. We have also been providing ongoing assistance to applicants in the submission of ap- provable plans. Now, I would like to discuss the underlying themes, as well as the specific provisions of the regulations. At the heart of it we have attempted to develop programs not for the sake of bureaucrats, ad- vocates, or administrators, but for families. Our goal is to encour- age programs that maximize the amount of direct assistance to families and ensure their access to all types of care. There is no consensus among parents as to what constitutes the best care for ~their children. As a consequence, we have ensured that each par- ent's choice is honored to the maximum extent possible. The central purpose of these programs is to ensure the availabil- ity and affordability of child care for low-income families in order to support their efforts to be self-sufficient. Under our regulations, families would have access to all forms of care, including child care centers; family day care providers; and relative care. This administration believes that low-income families need to have the same child care choices as other families in our society. Further, we believe that parents are in the best position to deter- mine which child care is most appropriate for their own children. As I mentioned earlier, the statute and the conference agree- ment for the TV-A child care programs are not as specific as those for the block grant. Where the statute and legislative history did not lend themselves to a single interpretation, we looked to the goals of the program seeking to make the requirements of all of the title IV programs compatible with the self-sufficiency gQ~ls Qf the PAGENO="0067" 61 Family Support Act and the at-risk program. This is why our regu- lations for TV-A child care all reference the concept of parental choice. Most central to this discussion is the statutory requirement that care provided under the programs must meet applicable standards of State and local law. This language is subject to at least two pos- sible interpretations. Under the first, care would have to be legal. That is, providers would be subject to any general law governing the legal provision of child care services. Under the second inter- pretation providers also would have to meet any additional stand- ards set by the State or local government as a condition for receiv- ing funding under that program, including any standards that are applicable to publicly subsidized care. Since the conference report shed no light on how Congress intended this phrase to be interpret- ed, we turned to the question of how best to achieve the goals of the program. We determined that the first interpretation, the one that most furthered the goal of parental choice, would be the best approach. Where the statute and the conference agreement were silent, we worked for consistency among the three TV-A programs, and for consistency with the self-sufficiency goals of the Family Support Act. Under the JOBS program, for example, parents may be required to participate in work-related activities. When a State agency re- quires that a parent leave her child in a child care arrangement, it is incumbent on the State to give the parent a range of child care choices with which she can be comfortable. Tf she has a close rela- tive, a trusted neighbor, or a friend who can provide care, she should be able to select one of them as a provider. Perhaps no regu- lated providers are reasonably accessible because she is dependent upon a circuitous public bus system to get to work, as well as to transport her children. Perhaps there are no accessible licensed providers who will take her infant, or she is concerned that the available centers cannot give enough close, personal attention to an infant. In such cases, she should be free to consider alternative ar- rangements, rather than being relegated to a long waiting list. We need to support her efforts and the efforts of other parents seeking to become self-sufficient by making a broad range of child care re- sources available. Transitional child care and the child care for JOBS participants and employed AFDC recipients are entitlement programs which guarantee child care to eligible families. Restricting the range of allowable care givers would undermine that guarantee by reducing the chance that a family's provider of choice will qualify for pay- ment. In fact, experience suggests that State policies on eligible provid- ers can affect access to care and impede self-sufficiency efforts. For example, in Ohio, a State that has traditionally limited child care subsidies to regulated providers, many county welfare departments have long child care waiting lists, and there has been little overall increase in services. Conversely, in California, where welfare par- ents are free to choose their child's care, child care is cited as the primary barrier to participation by only 5 percent of those who are not participating in the JOBS program. PAGENO="0068" 62 The purpose of the at-risk program, like the other TV-A child care programs, is to support the self-sufficiency efforts of families. If it is to be effective, families need to be given the same range of choice in providers. We don't want to create a situation where a family's choice of child care is permissible under AFDC child care, but not under at-risk. Such a situation could undermine the at-risk program by compelling individuals to choose welfare over self-suffi- ciency. We believe that these programs should allow parents to access providers with whom they will be most comfortable. Their comfort level will reflect a number of factors including familiarity with the provider-that is, with neighbors and relatives-convenience in lo- cation-for example, in the neighborhood-and cost. Any program designed with families in mind must acknowledge these factors. Another important concern in developing these child care regula- tions was State flexibility, consistent with the goals of the pro- grams. For example under the block grant, we permit States to de- termine how best to administer their programs and how to develop their voucher or certificate process. In the at-risk program, while the statute provides for a range of payment mechanisms, we would require one that ensures parental choice. We would leave it up to States to define at-risk. We also would permit States the flexibility to set a statewide payment limit in order to allow compatibility with other TV-A programs. It is important to mention that the TV-A program regulations are proposed regulations. Tssued as a notice of proposed rulemak- ing, or NPRM, we fully expected and have appreciated the com- ments that we have received. Due to the lack of specific guidance in the statute or legislative history for many key areas of the at- risk program, in particular, we anticipated differing interpreta- tions. We are open to suggestions for changes, and we will consider all comments received as we draft the final rule. In developing regulations to implement the block grant program, we were able to rely on the greater detail provided in the statute and the conference report. Section 5082 of the conference agree- ment, which refers to the child care and development block grant states more specifically, "The purpose of this block grant program is to give parents a variety of options in addressing family child care needs." The conference report goes on to say, "The managers believe that parents should have the greatest choice possible in se- lecting child care for their children. Thus, parents assisted * * * would have complete discretion to choose from a wide range of child care arrangements, including care by relatives, churches, syn- agogues, family providers, centers, schools, and employers." Based on our reading of the conference report, parental choice would seem to frame all aspects of the block grant program. Based on the letters that we have received and the editorials that T have read recently, there is clearly some misunderstanding of our regulations. Our regulations do not eliminate standards for child care, nor do they inhibit the ability of the State to develop and enforce general child care standards. Nor do they say that each child care setting must be subject to the same standards. Fi- nally, these regulations do not favor one particular category of care PAGENO="0069" 63 over another. Rather our regulations ensure that a broad range of providers will be able to participate in the programs. We have moved quickly to issue these regulations and to other- wise implement these new programs but much remains to be done. We are now in the process of obligating all fiscal year 1991 funds under the block grant to States, tribes, and Territories. We will continue to assist grantees in completion of applications and plans for the block grant. For example, we intend to hold a number of technical assistance forums for tribal applicants, many of whom are new to the process of applying for grants. We also continue to approve plans for the at-risk program. We are working on plans to develop a general systems design for com- puter systems to help manage the TV-A child care programs, as well. We are analyzing the more than 2,000 comments we received on our two regulations and will soon begin to draft final regula- tions for both OBRA programs. The regulations represent a small, but extremely important part of our overall efforts to implement these new child care programs and to promote self-sufficiency. While we have already accom- plished much, we recognize the amount of work that remains ahead. I want to assure you that we recognize the importance of these efforts and will continue to focus the attention and energy to make them successful. Mr. Chairman, at this time, I would be happy to try and answer any questions that you, or other members of the subcommittee, have for me. Acting Chairman DOWNEY. Thank you, Ms. Barnhart. Let me be very plain about this. I consider the regulations that you have written beyond the authority of the Secretary on one level-and I will comment upon that in a moment-and on the other, as a matter of policy, both fraught with danger and mistak- en. Let me draw your attention to an analysis done, at my request, by the legal staff of the American Law Division of the Congression- al Research Service. I understand that you have a copy. This analy- sis covers the statutory language in the at-risk program dealing with the standards, and I am quoting. A good argument may be made that this statutory language is plain on its face, not subject to ambiguities, which would require clarification or permit interpreta- tion by the agency charged with implementing the provision. No other provision of this statute gives the Secretary express authority to define applicable standards, State and local standards, so as to preclude any group of currently applicable stand- ards. In the absence of any ambiguity in the statutory terms, and in the absence of any expressed delegation of discretionary authority to interpret such statute it would appear that the Secretary's rule, in so far as it excludes State and local standards that would be applicable to child care funded under this program, may exceed the Secretary's authority. Ms. Barnhart, I have invited you here today to tell you that these regulations, in my opinion, do exceed the Secretary's author- ity and that one way or another, either by your changing them or by this committee relegislating them, they are going to change. My first question about the policy is that, as you know, child care funded under title XX has to meet applicable standards of State and local law, just as the law requires child care funded PAGENO="0070" 64 under the at-risk program. Why is the flexibility that has histori- cally been granted to States under title XX not allowed, in your opinion, under the at-risk rules? Ms. BARNHART. Well, as I mentioned in my testimony, Mr. Chair- man, in looking to determine exactly what congressional intent was and what the appropriate interpretation of applicable stand- ards should be, we looked to the intent of the program, itself, the at-risk program. And specifically the at-risk program says that the services that are made available, the payments made available under at-risk could be made to any low-income family that is not receiving AFDC currently, is in need of child care in order to work, and meets the test of being at-risk of going on the welfare rolls. So it seems clear to us that the congressional intent was to promote self- sufficiency, not only the attaining but also the maintaining of self- sufficiency on the part of the person participating in the at-risk program. I would point out, too, that this also addresses the other TV-A provisions related to child care provided under the JOBS program, as well as the transitional child care program. Those clearly are programs that are focused on helping welfare recipients, as you well know, Mr. Chairman, obtain self-sufficiency and maintain self- sufficiency. So in looking at how best to make sure that the funds provided under this act do, in fact, provide a welfare mother with the ability to sustain self-sufficiency, it was important that several factors be addressed. First of all, from the standpoint of the JOBS program, where we can require a mother to participate in JOBS and leave her children-if they are under school age obviously-we felt it was important for the comfort level of that mother, who we are re- quiring to participate in the JOBS program, that she be able to choose the care. And I will use the word, "she," throughout, because, as you know, the vast majority of the households we are talking about are female-headed, but there are cases where it could be a father as well. I just wanted to acknowledge that. Acting Chairman DOWNEY. Sure. Ms. BARNHART. So for the mothers who are required to partici- pate in JOBS we require that they leave their children, and we say that child care is guaranteed. We thought it would undercut the guarantee in the statute if the mother is not allowed to select the child care provider of her choice. Second, we want low-income people-people whether they are still on welfare, or they have just recently left the rolls or are working to stay off the rolls-to have a situation that is equitable with other people in this country. Acting Chairman DOWNEY. Ms. Barnhart, let me just interrupt you at this point. Don't many of the child care subsidies under title XX go to low-income people? Doesn't the title XX child care subsi- dy also go to at-risk children? Ms. BARNHART. It does, Mr. Chairman, and- Acting Chairman DOWNEY. Well, confine your comments then to the question, if you would, please? What is the difference in your PAGENO="0071" 65 mind between title XX funds that go to at-risk children, and title TV-A money that goes to at-risk children? Ms. BARNHART. The main difference is what I was trying to ex- plain, Mr. Chairman. As I see it and as we saw it, was the purpose of the two programs. And clearly the expressed intent of the Con- gress in the statute of the at-risk law is that it is to go to any low- income parent who is at risk of going on welfare, you know, the criteria I mentioned a moment ago, I won't belabor that point. So going back to the criteria we looked to in terms of promoting that kind of self-sufficiency and working toward self-sufficiency, I mentioned, first of all, the mother's comfort level since we require participation in JOBS; I mentioned, second, having equity for the low-income parent, just as we have it for middle- and upper-income parents, the ability to choose who is the provider for their children; and finally, to make sure that we don't set up artificial barriers to prevent people from obtaining and maintaining self-sufficiency. And let me just give you an example there if I might, Mr. Chair- man? Acting Chairman DOWNEY. Sure, go ahead. Ms. BARNHART. I am sure you are well acquainted with the sta- tistic that only 4 percent of people who receive AFDC have automo- biles. So odds are, when we have someone participating in the JOBS program, they are probably taking a bus unless they just happen to live close to the site where they are receiving the work training or education service that we are providing. So if we don't allow a mother to pick the provider of her choice- who may well be the neighbor or someone close by in her neighbor- hood who does not necessarily meet additional standards that are established just for subsidized care-if we subject her care to tough- er standards, we could have a situation where that mother has to get up in the morning and take a bus to take her child to child care; take another bus to go to work; to be at work and hope that her child doesn't get sick, or need to leave during the day for any reason-because more than likely she is working at an entry-wage level job, whether minimum wage or just above minimum wage, and does not afford the kind of leave policies that probably smile upon parents having to take off from the job-and at the end of the day she has to take a bus to pick u~5 the child and take a bus to go home. That kind of a situation can create a very real barrier to some- one who is trying to maintain self-sufficiency, and it was our pur- pose to ensure that we didn't set up those kinds of artificial bar- riers, because we thought that Congress, in providing this funding for at-risk, wanted low-income parents to have the ability to contin- ue to remain off welfare. And we don't want to set up barriers that will force them to choose welfare over work. Acting Chairman DOWNEY. We wouldn't want to do that, as well. But we also, of course, talked about safety a lot and I am quite as- tonished that the word "safety" does not appear in your statement. But let me go on to another concern that I have. In formulating the at-risk program rules, were you concerned about the State? And, as I understand it, you were concerned that States would overregulate subsidized care and limit parental choice. Was that your concern with these rules? PAGENO="0072" 66 Ms. BARNHART. We were concerned about additional standards being applied to subsidized care. Let me make a point in terms of safety, if I may, Mr. Chairman? Acting Chairman DOWNEY. Sure. Ms. BARNHART. Having listened to the other witnesses here today, and the comments of the members of the subcommittee, and when we speak to the issue of safety and having concerns about protecting children from harm or one kind of a safety or health jeopardized situation or another, I think it is important, at least from our point of view, that, if a State is concerned about protect- ing the safety of a low-income child then it should be just as con- cerned about all its children. In other words, if it is something that warrants a State's attention to establish a standard for subsidized care, it should have it for all care. Acting Chairman DOWNEY. I have never heard this. This is an interesting comment that you are making, that States somehow are more interested in low-income children than they are in upper- income children? Ms. BARNHART. No, sir, what I am suggesting is that we didn't want to set up a situation where- Acting Chairman DOWNEY. So, let me just see if I can get it more precisely. Let's take the religious-based care if we could for a moment. States have historically set up two sets of standards. In some instances religious-based care has no standards whatsoever if is doesn't receive subsidies. And in those same States, if religious- based centers receive subsidies from the State, they have stand- ards. They may have standards about the number of children that can be in the care; they may have requirements that the people who take care of the children be immunized; they may require background checks. A gentleman who runs a State program said to me that he is afraid now that under your regulation he will be forced to choose. He will either have to raise the State's standards completely, just for religious-based center care, or he will have to lower them. Is that your interpretation of what will happen, that he will have the choice of regulating all religious-based care the same way with no standards, or raise it all to the level of subsidized care? Ms. BARNHART. Let me clarify a fine point here, Mr. Chairman, if I may? Acting Chairman DOWNEY. Yes, please. Ms. BARNHART. And I have a number of things I would like to respond to in what you just said. Acting Chairman DOWNEY. Surely. Ms. BARNHART. First of all in terms of regulations, our regula- tions do not prohibit States from setting any kind of regulations that they want to set. Acting Chairman DOWNEY. I understand that. Ms. BARNHART. States may regulate to any degree that they want to and they may have additional standards for subsidized care. It is simply for purposes of reimbursement under the TV-A program that we do not allow those additional standards to restrict the choice. Acting Chairman DOWNEY. So that if a State wants to get money for the TV-A program but they don't think they have the money to PAGENO="0073" 67 regulate all religious providers, they are not going to be able to use the more restrictive requirements of subsidized care. Is that right? Ms. BARNHART. What is correct is that- Acting Chairman DOWNEY. Is that correct? Is that correct? Ms. BARNHART. Would you mind repeating it? As you know, and as we have, I think, witnessed this morning, it is a complicated issue. Acting Chairman DOWNEY. Let's use the State of Missouri. The State of Missouri has many religious-based providers. The State has one set of regulations if you are receiving a subsidy, and none whatsoever if you don't receive a subsidy. Under your regulations, the State of. Missouri, if it chooses not to regulate all religious- based providers, will then be forced under the TV-A program to have no requirements on religious providers that get TV-A money? Ms. BARNHART. T believe that is correct. Acting Chairman DOWNEY. Continuing the example, is it your in- tention for the taxpayers of that State to pay tax money to reli- gious providers that may have 18 or 20 infants in the care of one individual, or who may think that corporal punishment is the ap- propriate way to care for crying infants, or who might not want to provide a background check? Ts that the intention of these regula- tions? Ms. BARNHART. Mr. Chairman, let me say there is nothing that would prevent the State from doing background checks and from making that kind of information available to the parent. There is nothing that would prevent- Acting Chairman DOWNEY. But you have just finished saying, Ms. Barnhart, that a State, if it chooses to opt for the lower level of standards is not going to be able to apply any of the regulations. Don't come up here and tell me that the State has the ability when, in fact, you have just finished telling me that the State does not have the ability. Ms. BARNHART. What T said, Mr. Chairman, or at least what T thought T said in terms of answering your question, was that, yes, for purposes of reimbursement under the TV-A program, the exist- ence of those standards could not prevent a parent from putting a child in that kind of care. Acting Chairman DOWNEY. Do you think the people in the State of Missouri should have the right to say that they don't want to see 20 infants in the care of one individual? Ms. BARNHART. As T said, Mr. Chairman, the State has the right to- Acting Chairman DOWNEY. Not if they want to get TV-A reim- bursement. Ms. BARNHART [continuing]. To do any kind of background check that they would like to do- Acting Chairman DOWNEY. But, not if they want to get TV-A re- imbursement. Ms. BARNHART. Tf T might finish the point? Acting Chairman DOWNEY. Yes. Ms. BARNHART. They have the right to do any kind of back- ground check they want to do, to have any kind of standards they want to have, and to inform. Let me give you an example. We have a mother who thinks she wants to put her child in that care. And PAGENO="0074" 68 the State can tell that mother through consumer education, "That care does not meet our standards." OK, we do not have regulations. That care does not meet the regulations. You want to put your child in unregulated care, and we are concerned about the infant! child ratio, we are going to do a background check. They can let the mother know about the background check. What I find difficult to believe, Mr. Chairman, is that we want to create a situation that establishes the presumption that Govern- ment can make better decisions than the parents. Acting Chairman DOWNEY. Well, let's talk about that, Ms. Barn- hart, just for a moment. Do you think it is right for the Govern- ment to say that in the process of giving States highway money that they believe that infants and toddlers should be in car seats? Do you think the Government has the right to say that? Ms. BARNHART. Well, the Government has said that to parents, State governments have said that. Acting Chairman DOWNEY. And do you agree with it? Ms. BARNHART. Do I agree with it? Acting Chairman DOWNEY. Yes. Do you agree that that is a good idea for the Government to tell parents that their infants should be in car seats? Ms. BARNHART. I think that the main difference there is that they don't say only low-income infants must be in car seats, Mr. Chairman, they say all infants must be in car seats. Acting Chairman DOWNEY. That is not my question. My question is, is it a good idea for the Government to tell rich and poor par- ents to put their children in car seats? Ms. BARNHART. My answer is, I think it is fine for the Govern- ment to do that, if they think it is important. Acting Chairman DOWNEY. Let me ask you another question, do you think it is right for the Government to impose standards, for instance, on nursing homes? Ms. BARNHART. As long as they impose them for all nursing homes. My understanding is that we don't just impose standards for nursing homes where poor people are patients, but we also impose standards- Acting Chairman DOWNEY. We impose them for everyone. Ms. BARNHART. Yes. Acting Chairman DOWNEY. So you think that parents are the best people in determining what is safe and what isn't safe in child care settings. Now, if I am a parent in the State of Arizona, and I want to know the criminal background and the potential child abuse back- ground of an informal care giver, where do I go to find that infor- mation? And while you are answering the question about Arizona, can you tell me or supply for the record the number of States where a conscientious parent can have access to what, as far as I can tell, is fairly confidential information about care givers? Ms. BARNHART. I would be happy to supply it for the record. I can't tell you offhand, Mr. Chairman. [The following was subsequently received:] We have received responses from a majority of States regarding their practices for releasing "fairly confidential information" (for example, criminal history/child abuse) about providers to parents. As we expected, States vary widely both in the PAGENO="0075" 69 type of information that they make available and in the accessibility of such infor- mation. We also found that accessibility may even vary within States, depending upon particular circumstances. For example, some States give parents access to both criminal history and child abuse complaint information, while others provide access to only one type of infor- mation. In some States the specific information is relatively accessible, while in others it may be released only in response to Freedom of Information Act requests. Some States may not make specific information available, but would inform parents that the provider does not meet State standards. Similarly there are States that, while not making such information available, provide protection by screening all providers and precluding persons with criminal/child abuse histories from providing child care. The responses thus confirm both that information and other protections are widely available to parents and that differences are the result of State, not Federal, decisions. Acting Chairman DOWNEY. Well, let me ask you, why can't you tell me? Has the Department, in promulgating the regulation, been concerned that the parent in choosing should know what States do and do not provide information about care givers? Is this an analy- sis that the Department did? Ms. BARNHART. Of course, we are concerned about that and as I indicated a moment ago, there is nothing that prevents the State from doing that kind of background check and then sharing that information with the parent, in fact, providing that information to the parent. Acting Chairman DOWNEY. Well, let me ask you a question, Ms. Barnhart. If the State of Missouri currently has no regulations, whatsoever, for the purpose of putting people in religious-based care that is not subsidized, under your regulation if the State of Missouri chooses not to regulate "up" religious-based care, but forces it "down," then TV-A dollars will flow and parents will not be able to know whether the care giver is a child abuser, a fledg- ling Lester Roloff, Jeffrey Dahmer, or David Berkowitz. They will not know that because the money, my money and your money will go to the State of Missouri then it will go to parents, and we will have nothing to say about that. Ms. BARNHART. Again, Mr. Chairman, I would say that it would seem to me that in that kind of situation the State would be con- cerned about all children being in a child care setting of that sort and receiving care from a person such as the individual that you mentioned, not just low-income children. Acting Chairman DOWNEY. That's why the State of Missouri has decided within the limits of its resources to regulate subsidized care. Comfort me, if we will, because we have had a plethora of State legislators come in personally to see me and say that they are fearful that what you are proposing will not give them the abil- ity to safely regulate child care, whether it's for low-income chil- dren or not. Why shouldn't the State be specifically concerned about low- income children? Ms. BARNHART. We do not believe that there is anything in our regulation that prevents States from regulating any care that they want to. The fact of the matter is, I go back to the original point, Mr. Chairman, and that is, for purposes of the TV-A program, they cannot deny the parent the ability to place their child in that care. T go back to a more basic principle which is the fact that T believe PAGENO="0076" 70 that parents care about their children, whether they are low- income, whether they are middle-income, or whether they are high- income. I would also make the point that if we are concerned about standards for subsidized care, then I would point out that with the dependent care tax credit this country subsidizes child care to the tune of almost $4 billion a year without requiring any standards whatsoever. Acting Chairman DOWNEY. Yes, of course, I am informed by staff that the care must meet any State and local standards that apply to the care when they get the credit. Let me make one point before Mr. Andrews inquires. In the last 20 years there has been a quadrupling of the number of child neglect and abuse cases in this country. Ms. BARNHART. Yes, sir; I'm aware of that. Acting Chairman DOWNEY. In the last few years the number of children that have had measles has increased. The State of Alaska has informed this committee that they think that your regulations will prohibit them from doing TB screens for people because of the duality of the regulations. They are not alone. The State of Arizona is afraid that they are not going to be able to do the background checks. What you tell me-that the States can do anything they want and that you haven't interfered with them-doesn't wash with the States' reali- ty. I want you to examine that and I want you to also hear one other thing. I do not believe that in all instances-and God knows I love my children and I think most people love their children-parents always make the smartest decisions for children. And I think that low-income parents oftentimes would like the peace of mind to know that when their children go into subsidized care, that subsi- dized care is going to include a background check or some overall set of standards. I think that the deregulation of child care when compared with the deregulation of the S&Ls and the railroad in- dustry, and the trucking industry is the most dangerous, the most shortsighted policy, and probably flies in the face of every experi- ence that every Western European country has had. Only in this country could you get away with saying that the State doesn't have a vigorous interest in the safety and the welfare of all its children, poor or not. The regulations that you have promulgated with regard to standards are beyond the legislative intent, and in my view, even if through this dance of imagination, you have come up with this set of standards-from a public policy point of view it is simply a catastrophe. Ms. BARNHART. Well, Mr. Chairman, I would say briefly to re- spond to the comments that you have just made that I agree with you that we have an interest in the health and safety of all chil- dren and that is precisely the premise that these regulations are based upon. Again, not to belabor the point, but simply to clarify in summary response to your comments on the part of the poor parent and the low-income person, they would like to know and have the comfort of knowing that the care that their child is in is regulated care and meets certain standards-they have every ability tO find that out PAGENO="0077" 71 now. We match administrative costs under the TV-A program; it is an open-ended matching program at 50 percent. If States choose to do that kind of consumer education my hope would be that they would so we could have informed consumers making choices and that parents would make the choice that is best for their children and that that choice will be a better choice than a Government agency can make. Acting Chairman DOWNEY. I hope that those parents make those right choices, but in the event that they don't, I want to make sure that the Government helps them in the process. Mr. Andrews. Mr. ANDREWS. Thank you, Mr. Chairman. Let's go back for just a second. I asked you a question before you took the witness stand and what I would like you to do is to supply the committee with a list of the State legislators and State admin- istrators that you, personally, have talked to. Ms. BARNHART. Let me say, Mr. Andrews I have talked to many people, myself. However, given the fact that I administer 65 pro- grams that total $27 billion, this program has consumed a good bit of my time and attention, but certainly not 100 percent of it. So, in many cases, the individuals that we met with from the advocacy groups, from the State legislatures, from the State programs and so forth were met by my Deputy Assistant Secretary for Policy, Bob Wilson, and Mark Ragan, the Director of the Child Care Task Force. So the list I would submit to you would include the meetings that were held with those individuals as well as those who had direct contact with me. Mr. ANDREWS. Why don't you just let me know then who you, personally, talked to, that's my question, who you, personally, talked to and then you might let me know who your associates talked to as well. Ms. BARNHART. I will. Mr. ANDREWS. Here is what I am really interested in: how many folks like Senator Cain did you have the opportunity to personally visit with about what the practical effects of these regulations might be, as you tried to formulate some conclusions? And if you just spell out the ones you, personally, talked to and then also spell out the ones that your aids talked to. Ms. BARNHART. I will, because I think it is important to point out that, as I mentioned, I have responsibility for a number of pro- grams and my assistants meet with the people, due to limitations on my schedule. That does not mean that those views are not shared with me, personally, as well, so I will include both for you. Mr. ANDREWS. Right. And you might just say and ask your staff to let us know, the committee know, I think this would be useful if there are some folks that really disagree with Senator Cain. I would like to know who they are so that the committee can talk to them. Ms. BARNHART. There absolutely are. I can let you know. We maintained notes from the meetings that we have held that would aid us in drafting the regulations. We tried to meet with people representing the broad spectrum of views that exist in relationship to passage of these pieces of legislation. [The following was subsequently received:] PAGENO="0078" 72 ORGANIZATIONS AND INDIVIDUALS ACF MET WITH TO DISCUSS THE CHILD CARE AND DEVELOPMENT BLOCK GRANT January - May, 1991 Renresentatives of State and Local Government American Public Welfare Association--Rick Ferreira National Governors Association--Linda McCart *National Association of Counties--Michael Stewart, Michael Benjamin Indian and Native American Employment and Training Coalition-- Norm DeWeaver *National Conference of State Legislatures--Human Services Committee, Candace Romig and Sherri Steisel U.S. Conference of Mayors--Mark Israel Montgomery County (MD) Department of Human Resources, Child Care Division--Jacquelyn Townes State of Pennsylvania--4 officials Fairfax County (VA) Office for Children--Karen Goode *State of North Carolina Other Contacts *Children's Defense Fund--Helen Blank *U.5. Catholic Conference National Association of Neighborhoods--Xarla Anderson *Heritage Foundation--Robert Rector *Child Welfare League--Julie Brite National Black Child Development Institute--Carla Curtis, B. Jackson National Women's Law Center--Duffy Campbell National Association for the Education of Young Children--Barbara Willer *Eagle Forum--Phyllis Schlafly, Susan Bracken National Child Care Association--Bill Tobias Bapttst Joint Committee on Public Affairs--Allan Sanders American Child Care Foundation *Family Research Council--Chuck Donovan, Bill Mattox National Association of child Care Resource and Referral Agencies--Nancy Kolben *National Center for Children in Poverty--Judith Jones, Bob Fulton PAGENO="0079" 73 Junior League--Karen Kendricks Lutheran East Missouri Synod U.S. Department of Housing and Urban Development--Paul Fletcher U.S. General Services Administration--Brooks Manessa National Association of Evangelicals--Richard Cizik Association of Christian Schools International--John C. Holmes House Appropriations Committee--staff House Education and Labor Committee--staff Council for Early Childhood--Carol Phillips Children's Resource Center Maryland Committee for Children--Janet Singerman and Sandra Skolnik Downtown Baltimore Child Care University Center--Anita Cox Cecelia Cheeseboro (family day care provider, Baltimore, MD) Baltimore City Child Care Resources Center--Duane Dennis Children's Learning Experience (Baltimore, MD)--Susan Bartz Washington (City) Child Development Council and School for Friends--Bobbi Blok Catholic Charities Model City Center, Washington, D.C. * organizations with whom Assistant Secretary Barnhart personally talked. PAGENO="0080" 74 Mr. ANDREWS. I want to go back and just ask you a couple of questions that probably Mr. Downey has already covered, but help me out here a little bit. What provision in the law gives the De- partment the authority to preclude the States from issuing sepa- rate regulations for subsidized care? Ms. BARNHART. It is the interpretation of applicable standards, Mr. Andrews. And let me point out here, too- Mr. ANDREWS. It's the what? I am sorry but I want to be sure I understand what you say. Ms. BARNHART. It is the interpretation of applicable standards. I would like to explain that interpretation to you. I can go back and review what I said in my testimony. But first, I would like to re- spond to something that the chairman said that I did neglected to respond to earlier, that is, the comments that were made relating the fact that the determination of the interpretation of applicable standards stood on its face, and therefore, did not require further interpretation. In fact, one of the motivating reasons for us to interpret applica- ble standards is because many State people asked us that question when we held our forums on the TV-A programs earlier. They actu- ally asked us, how are you going to interpret applicable standards? What does that mean? I just wanted to make that point for the record. Back to how we made the interpretation, as I indicated in my testimony, there were at least two possible ways to interpret appli- cable standards. One was any care that is legal child care under the laws of the State; and the second is care that is legal, but goes beyond that in terms of meeting standards, specifically applicable to subsidized care or care that is provided under that program. And we opted to accept the first interpretation for the reasons that I described to the chairman related to what appeared to be the intent of the at-risk program and the TV-A, JOBS and the transi- tional child care programs, in terms of the tie-in to promoting the attainment and sustainment of self-sufficiency. Mr. ANDREWS. My staff tells me there are no other programs that have been interpreted this way, is that, am I being told some- thing wrong? Ms. BARNHART. Mr. Andrews, I would not go so far as to say there are no other programs. First of all I don't know all the pro- grams- Mr. ANDREWS. Name one. Ms. BARNHART. Well, sir, let me say first of all, I don't know all the programs where the term, applicable standards has been used, so I couldn't begin to make an assessment like that. I would be happy- Mr. ANDREWS. Could you name one? Ms. BARNHART. I can't name one, but I would say that in terms of making interpretations- Mr. ANDREWS. Just one second. I wonder if your staff might be able to help you out, if they could name one program? Ms. BARNHART. I don't know if they could, but I would prefer to comment first, if I might? Mr. ANDREWS. While you are having an opportunity to elaborate, maybe your staff could write out, just for the purposes of the PAGENO="0081" 75 record, one other program where this same kind of standard is being applied to? Ms. BARNHART. I was going to say that I think it is important to point out that drafting regulations is not something that we do lightly in the Department, and certainly not in the Administration for Children and Families. I have great respect for the legislative process. I worked on the staff of the U.S. Senate in the Finance Committee for 4 years and the Government Affairs Committee for 4 years, and I have a keen interest, as we all do, in the executive branch. In meeting the intent of Congress and in looking at the factors that come into play in interpreting laws as they are passed, the first thing that we look to is the statute itself, and the legislative history surrounding that particular program and that particular statutory language. Mr. ANDREWS. Now, let me see, help me out again here. Let me ask you another question and this is sort of a long-winded question. I apologize even for reading part of it, but I want to be sure that I am right. The regulations state that if parental choice is limited by local and State health and safety standards then HHS will sanction the State for issuing restrictive regulations. Is that basically correct? Ms. BARNHART. Well, no, the regulations don't really say that. What the regulations do is apply an effects test. That is one of the things I would like to point out in terms of the flexibility that we afforded States. I trust you are now talking about the child care and development block grant program. And in CCDBG we really fo- cused more on outcomes than we did on process. So we allowed States a lot of flexibility in setting up the process for exactly how they were going to pay providers and how they were going to make eligibility determinations and so forth. So getting back to your point, in terms of the parental choice, the balance between parental choice and federalism that we at- tempted to attain and to achieve, and we think we did in the regu- lations. Essentially when you look at it what we have is an effects test. The parental choice test is an effects test that looks at stand- ards that are set, at additional standards for purposes of the block grant-not existing standards that the State has-that looks at those in the context of whether or not they significantly reduce or limit parental choice. So it is an effects test. In enforcing that provision, first of all, we do not intend to set any upfront limitations on exactly what kind of standards are ac- ceptable, but rather to allow States to use their judgment in setting additional regulations and standards for the care. And then on the back end-I think it is important that I explain the entire process, Mr. Andrews-on the back end what we do is, if we have a com- plaint through the parental complaint process that is established in the law, or if in the process of doing monitoring reviews, because we are required to do technical assistance and monitoring reviews in the statute, we determine that there was a problem in terms of the parental choice being restricted, that is, a particular type of provider, let's say all family care providers for some reason, were no longer being reimbursed, we would investigate it, first of all, to see if there really was any truth to it. We would talk to the State PAGENO="0082" 76 and we would negotiate with the State if we felt we found a prob- lem and allow the State the opportunity to correct the problem. Compliance is prospective, as we envision it, and that statute is prospective. We would not go back and retrospectively penalize States' interest. Mr. ANDREWS. Let me ask you an example, and maybe you can sort of apply your thoughts to it. Under the TV-A funding stream, HHS may prevent the States from issuing regulations that go beyond what State law is. Ms. BARNHART. We do not prevent the States from issuing any regulations. That's a point that I would like to make absolutely clear. We do not prevent States from issuing regulations. We have done nothing to interfere with the right of States to regulate any care they choose. What we have done-.- Mr. ANDREWS. They don't get the money. Ms. BARNHART. Well, what we have done is- [Laughter.] Ms. BARNHART [continuing]. Say, for reimbursement purposes. But we have not limited the right to regulate. We have said that- Mr. ANDREWS. I mean this is-look, let's be candid here. They, sure, the States can issue a regulation they just don't get your money, isn't that right? Ms. BARNHART. What is correct- Mr. ANDREWS. Can you say, yes, or no, and then you can explain your answer. Ms. BARNHART. Well, every time I do that the question ends up being a little different because it is a complicated area. I think we all appreciate that. Mr. ANDREWS. It's hard for me, if you just try to answer my questions, yes, or no, and then you can explain your answer. Ms. BARNHART. I am attempting to do that, but sometimes the questions don't lend themselves to being answered yes or no, and in the interest of not giving you an incorrect answer, Mr. Andrews, that's the reason I try to clarify. Mr. ANDREWS. All right. Well, let me ask it again, under TV-A funding streams HHS may prevent the States from issuing regulations that go beyond State law; is that correct? Ms. BARNHART. No, it is not. Mr. ANDREWS. Will States get money, get funding if they go beyond- Ms. BARNHART. For the purpose of TV-A reimbursement, and the JOBS program, transitional child care, and at-risk care they will not. Mr. ANDREWS. OK. Mrs. JOHNSON. Under the block grant they will. Mr. ANDREWS. OK, I guess I understand then. Ms. BARNHART. Under the block grant they will. Mrs. JOHNSON. I mean is that clear that under the block grant they will? Acting Chairman DOWNEY. Mr. Andrews is recognized. Mr. ANDREWS. I will be through in just one second. PAGENO="0083" 77 For example, Texas law currently exempts from regulations any child care providers with three or fewer children. Under the cur- rent regulations, Texas could be sanctioned then by HHS for decid- ing that all child care providers, regardless of the number of chil- dren had to be registered; is that right? Ms. BARNHART. No, as long as it applies to all child care provid- ers, they would not be prohibited from doing that. Mr. ANDREWS. OK. Ms. BARNHART. No. Mr. ANDREWS. I appreciate your clearing that up for me. We are just out of time. I am sorry we are so pressed but we are in the middle of a vote and we only have about 15 minutes to get over there. Acting Chairman DOWNEY. We are going to recess for the vote, and when we come back we are going to go to room B-318, which is the regular subcommittee room. The subcommittee is in recess. May I get your attention? We will reconvene at 1:15 p.m., in room B-318. [Recess.] Acting Chairman DOWNEY. The subcommittee will come back to order. Mrs. Johnson. Mrs. JOHNSON. Thank you, Mr. Chairman. Let me start with an easy and interesting question while I sort of get back to my papers here. But I was struck by how you have used many avenues to make sure that this program gets started and up and running while you are working on the regulations. And it is my understanding that lots of States have already submitted plans. In working with these States on these plans, if these regulations are as bad as the State Senator from Missouri indicates, I don't see how States could have written plans. So I am kind of confused be- tween the progress States have obviously made in going after this money and the complexities of the regulations. Would you just comment on that? Ms. BARNHART. I would be happy to comment on that, and let me say we are extremely pleased with the progress we have made to date. As of yesterday afternoon, we had approved 23 State plans, and those 23 States are representative of 60 percent of the funds that are available under the block grant. We had applications from over 100 tribes, and we estimate that the applications we received are representative of over 90 percent of all eligible Indian children in the country. So we are extremely pleased with where we stand today. We anticipate that we will have a number of additional States' plans approved by the end of this month. We do have nine States that have not yet submitted plans. But all States have sub- mitted applications. Mrs. JOHNSON. So the regulations are not so confusing and com- plicated that the States haven't been able to make at least that first plan proposal under them? Ms. BARNHART. No, definitely not. They are complicated, as we have all acknowledged here today, but by and large, for the majori- ty of States they have been successful in being able to submit plans. And where there have been issues that have come up, we PAGENO="0084" 78 have worked through a negotiating process in terms of talking to the States. But if I might take this opportunity, Mrs. Johnson-and I apolo- gize for cutting into your time-I would like to acknowledge the fact that you did a better job of understanding Mr. Andrews' ques- tion at the end of the morning session than I did. And to correct an answer that I gave for the record, as I indicated in the morning session, one of the difficulties in trying to answer yes or no to ques- tions that are posed, in listening to them orally and not having the benefit of looking at them in writing, is that sometimes you give answers that are not correct. In response to his question in which he talked about us withholding funds from States who had stand- ards- Mrs. JOHNSON. The second set of standards. Ms. BARNHART. Yes, the second set of standards. My answer was incorrect. I misinterpreted the question that I was asked. In fact, we do not withhold funds; rather, the purpose of our regulations, and what our regulations seek to accomplish, is the fact that the State would have to reimburse the individual for TV-A purposes, regardless of whether or not the care they chose met standards or not, in order to allow a parent to have full access to the range of choices. Mrs. JOHNSON. Now, you just said regardless of whether the care met standards. I think what you intended to say was that as long as the care met State standards. But regardless of whether the care met the second set of standards. Ms. BARNHART. Yes, the second set. Thank you. I did mean to say that. Mrs. JOHNSON. I think this is a very, very important issue, and this we discussed at great length amongst ourselves, in the confer- ence committees, at every level with both bills. And it is a dramat- ic difference between the at-risk legislation and the block grant leg- islation. They are written differently. The at-risk regulation re- quires that the care meet State standards. It does not require that the care meet health and safety standards. It only requires that the care meet State standards, and I hope that those of you-I know you have been diligent about picking up the testimony that has been provided for us today. I hope you will read the Senator from Missouri's testimony because in one of the passages where he is most vehement, he is saying we supported the form of the bill that allowed us to set standards, and the health and safety section com- plicates setting standards in those areas where we don't regulate; that is, church care-in his case because I gather from the conver- sation that Missouri does not regulate church care. So under the block grant, because of the health and safety lan- guage, block grant money cannot go to church care, because there are no State standards that govern health and safety. But under the at-risk program, subsidized vouchers could go to provide that same church care. So the bills are literally different. The at-risk bill allows States total authority to set standards. And our money flows wherever private or State money flows. Our money flows-I want to be sure. I am saying this, and I am going to ask you to respond yes or no. Under the at-risk bill, Federal money flows wherever anyone's PAGENO="0085" 79 money could flow. In other words, if I am a middle-class parent in Missouri I can choose my neighbor. If I am a low-income parent, I can get a voucher, if my income is low enough, and I would have the same choice as the middle-class parents to choose my neighbor. Ms. BARNHART. Yes, that is correct. Mrs. JOHNSON. So under at-risk grants as long as the care meets State standards and if the State doesn't regulate that care, then it is legal care and people have access to it, and people at-risk have access to it. Ms. BARNHART. Yes, that is correct. Mrs. JOHNSON. Under the at-risk program, State standards hold sway completely. And these folks that are testifying saying, You let us down, we wanted a bill that gave us total State flexibi1it~, sup- port the at-risk program. The block grant program doesn t give States total latitude. In compromising with the issue of Federal standards, we accepted a Federal standard, which is health and safety. So if a State doesn't regulate church care and assure health and safety, then money cannot flow through the block grant to that provider, is my understanding. Ms. BARNHART. It is correct that care providers under CCDBG, under the block grant, would have to meet minimum health and safety standards as established by the State. We give the States tremendous flexibility in terms of establishing those standards. So you are absolutely right. Mrs. JOHNSON. Right. You give them great flexibility. Excuse me, Senator Cain. I understand you are from Oklahoma, and I had for- gotten that. I said Missouri. I am sorry. But, I think that is a significant difference in the two bills. It re- flects a very significant philosophical difference, and it is that phil- osophical difference that is really at issue in this hearing. Frankly, I don't see any way of resolving it. One side says that you can only have money go where there are standards regulating the care, and the other side, including myself, says that if Joe Blow can select that care and therefore that care is legal, Madam Jane Doe who is at risk of going on welfare has the same right to that care. And I think this issue of equity, this issue of equal access, equal rights to access, this issue of assuming that poor women aren't capable of choosing in the same way that middle-class women are capable-you are shaking your head. But, you see, if we limit access to regulated facilities but the State allows as legal facilities unregulated categories, but we say to the poor woman, You can't use unregulated categories, only the wealthier person who doesn't need a subsidy can use unregulated categories because they are legal. But the poor person who needs a subsidy can't, even though they are legal. I mean, it is as bad as non-Medicaid funding for abortions. It is the same issue. Equity, equality, access. And I am very disturbed by the implication that somehow the administration has worked in bad faith because the laws are different and they were products of different debates, and different factions won in each debate. And there is some legitimacy to each side, so it is not surprising nor wrong in a democracy that we really basically have two different programs. But moving from the goal, in a sense, of universal access to child care as we tried to provide it in the at-risk bill and the PAGENO="0086" 80 block grant, my sense is that we were trying to provide in the block grant higher standards from reducing access to care. And I think you need to talk a little bit more about what is the evidence of-what are those higher standards and why do you think there is an access issue embodied in them. Ms. BARNHART. In terms of the block grant? Mrs. JOHNSON. Yes. Ms. BARNHART. Well, the fact of the matter is that the statute does say in the block grant legislation, unlike the at-risk legisla- tion, that States may set more stringent standards for care that they pay for. And under the block grant, they are allowed to set additional standards. In fact, as you point out so correctly, they are required to set additional standards from the standpoint of health and safety-unless they have existing health and safety standards. I want to make that clear. We are not forcing States into addition- al regulation because it is conceivable that a State that currently regulates could meet the minimum standards by current regula- tion. And so we have a situation where the concern-and the reason for the parental choice effects test that I mentioned earlier was to make sure that we achieved a balance between the strong parental choice language that is included, not only in the statute-there is a section 658(q) that specifically speaks to the moral and legal rights of parents in making decisions for their children, but also in the conference report. It is mentioned at least three times very strong- ly, and some of the witnesses earlier today, I believe, quoted, or members of the committee quoted, from that conference report. It was precisely to achieve a balance between that desire to promote and encourage and foster parental choice and allow strong parental choice in the area of determining what is best for their children as opposed to the Government making that decision, that we put in the effects test to make sure that the additional standards that are set under the block grant do not decrease access for parents. Mrs. JOHNSON. In my State, which is a high standards State, the State had to establish a separate voucher program with lower standards so that there would be access for Hispanic children be- cause Hispanic parents wanted their children to go to Hispanic homes. The Hispanic homes could not meet the standards in the State's licensure law. And so we had to set separate lower stand- ards for a voucher program so that we could provide urban access to home care. If a State had a special standards program where the standards were actually lower than the general standards rather than higher, how would you view those? Ms. BARNHART. If the State decided to redefine or to define the minimum health and safety requirements as having been met, even by that lower care standard, for purposes of the block grant that would be permissible. Mrs. JOHNSON. OK. They certainly were met. One other question. Can you give us a general sense of the com- ments you are receiving? Because you are receiving thousands of comments, and on the other hand States seem to be moving right along. What is the nature of the comments you are receiving? PAGENO="0087" 81 Ms. BARNHART. We have received over 1,500 comments on the block grant, and of those comments roughly 75 percent are in sup- port of the position that we took in the regulation related to the balance of parental choice versus federalism. I would be happy to provide the committee with a more thorough breakdown of the positions that have been articulated in the com- ments we have received on the block grant, as well as the at-risk group where we have received roughly 700 comments. And my un- derstanding from the initial cataloging of comments that has taken place-and I want to emphasize we have not had an opportunity to review all these comments in depth yet because the same staff that is working on those is also doing plan review, and so obviously our major push at this point is to get the plans approved and get the funding out to the States-but in the at-risk program, it is about a 50-50 split. Mrs. JOHNSON. I want to bring up one other aspect of the com- ments that my State has made. They have made a number of com- ments, and I am not going to go State by State into the detailed comments. But this raises a question that hasn't been raised today that I see as a difficult question, and that is the issue of certifi- cates, contracts, and grants. You use in your regulations the cate- gories of licensure and registration, and you require that everybody must give their name if they are going to get a subsidy so we at least have a record of who they are-and I think that is very wise. States do vary in what they call different categories. Are your regulations going to cause States problems if they don't use, in a sense, the categories of regulation, the structure of regulation that you imply in your regulations? Ms. BARNHART. If my response is nonresponsive to your question, please tell me, but I believe, as I understand what you are asking me, it is a common misunderstanding since the regulations were promulgated. The fact is that many States and individuals who have read the regulations have ~interpreted them to mean that if you establish standards, when we say across a category of care, that it means the standards must be the same for all care. In other words, the standards must be the same for family care as they are for center-based care, and so forth. That is not the intent at all. It is, rather, within those individual categories that the standards must be the same. Mrs. JOHNSON. I am glad you brought out that point, but that is not my point. Ms. BARNHART. I am sorry. Mrs. JOHNSON. But I will have to proceed with this in more detail at some other time. There is one other issue that is of gener- al enough interest, I think, for the committee to consider. There has been concern that because your regulations require that vouch- ers must be available sort of at all times, that somehow money would have to be reserved, even if the demand was 100 percent. So at the beginning of the year, even though you had demand for all of the voucher money, you couldn't let it all out because at all times during the year you would be legally obliged to have vouch- ers available. Is that or is that not the case? Ms. BARNHART. That is the case. I believe in the conference report it says that a parent must have the option of receiving a cer- PAGENO="0088" 82 tificate. And so the way that we apply that in the regulation is to say that certificates must be available at any time that block grant funds remain available. Obviously, if a State expends all of its block grant funds halfway through the year, we would not require that the certificate program be in effect the remainder of the year because there are no funds to back that up. Mrs. JOHNSON. I think that may be the critical point that is being missed. I had one other question, but it has gone out of my mind. So I will move on, Mr. Chairman. Thank you very much, Jo Anne. Acting Chairman DOWNEY. Thank you, Ms. Johnson. Dr. McDermott. Mr. MCDERMOTT. Thank you, Mr. Chairman. I spent 20 years doing this at the State level, and so I know a little bit about how State bureaucrats feel about this issue. And I want to just for a second put you in mind of a State bureaucrat. If you had to make the choice between enforcing fire standards, rais- ing fire standards in all unregulated three and four places, and if you couldn't do that you wouldn't get any Federal money, which would you take; as a State regulator? Would you decide no fire standards, I want the Federal money? Ms. BARNHART. I am not sure that I understand the question. Mr. MCDERMOTT. Well, if you have fire standards on a child care unit and you don't have them over here on this unregulated bunch, and you are now going to have a-you either have to have the same standard on everybody, you either have to bring them down or bring them up-and you can bring them up under the law. You don't prevent that. So you could bring them up in the State of whatever. But if you bring them down and say we are not going to enforce fire standards anymore so we can get the Federal money. Now, if. you were a State regulator, what would you do? Which would you choose? These are your choices. Ms. BARNHART. Let me say first of all that as you just explained it related to this program and to these regulations, we do not re- quire States to lower standards in order to receive Federal money. We are not telling them they have to deregulate to receive Federal money. Mr. MCDERMOTT. In your mind, are these at-risk children in one kind of place and all the other child care is in some other place? Is it two different places? Ms. BARNHART. No, no. And, in fact- Mr. MCDERMOTT. They are all mixed together? Ms. BARNHART. That is entirely the purpose of the regulation: to ensure that they can be mixed together and have access. Mr. MCDERMOTT. And so the standards that apply on the regular day care children apply on everybody else in that place, right? Ms. BARNHART. The standards apply to the place of care, correct. Mr. MCDERMOTT. Well, you try and slice the baloney too thin for me because you either have to have fire standards that apply on the whole place or you have no fire standards. Ms. BARNHART. Maybe I could give you an example of the point that I am trying to make. Mr. MCDERMOTT. OK. Do that. PAGENO="0089" 83 Ms. BARNHART. I am obviously not doing a good job of making my point. That is, if we take a mother who is determined to be eli- gible for at-risk child care and she wants to send her child to a neighbor, and the State says that for other subsidized programs that we run, we have standards that say that anyone who provides child care to receive fund under that program has to meet certain standards, let's say a sprinkler system in the home. This is for hy- pothetical purposes only, discussion purposes only. And the mother says, well, I still want to send my child to my neighbor. What we are saying is that regardless of whether or not that care meets the standards the State has, if the mother chooses to put her child in that care, then the State has to reimburse it under the TV-A pro- gram. That is what we are saying. We are not saying the State has to lower standards for every- body. That is not what we are saying. It is based on the issues that I mentioned earlier this morning in terms of helping mothers attain and maintain self-sufficiency-not setting up artificial bar- riers to care, and also on the firm belief that the parent is going to make the best choice for their child. Mr. ANDREWS. Would you yield for just one second? Mr. MCDERMOTT. Sure. Mr. ANDREWS. So then are you saying that Dr. McDermott's question, then, the premise of his question is incorrect? Ms. BARNHART. Yes, sir. I believe it is incorrect. Mr. ANDREWS. And you are saying, that-your answer, since you didn't answer his question, but your answer should be that a State administrator or a State senator would not have to make that choice. Is that what your answer is? Ms. BARNHART. That is exactly what my answer is, yes. Mr. MCDERMOTT. So if I can distill that all the way down, what you are saying is that these regulations were written with the basic principle that what a parent decides for children is preeminent above everything. If the parent makes the wrong choice, too bad, the child got burned. Remember that little child that fell in that hole, in that abandoned well in Texas? We all held our breath for a couple days while they tried to get that child up out of there. Mr. ANDREWS. That was Baby Jessica. Mr. MCDERMOTT. Baby Jessica. You remember that one? Ms. BARNHART. I do remember. Mr. MCDERMOTT. Was that a regulated care center? Ms. BARNHART. I don't believe it- Mr. MCDERMOTT. Everybody knows the answer. In the audience the heads are wagging no. I know it wasn't. Ms. BARNHART. I don't believe it was. Mr. MCDERMOTT. But as far as you are concerned, it is all right. You would be willing to give money to that mother to put her child in a place, and they couldn't even look around and see if there was an abandoned well in the back yard? Ms. BARNHART. I think- Mr. MCDERMOTT. Is that your position? Ms. BARNHART. Our position- Mr. SHAW. Would the gentleman yield for just a second? I think that it is being very unfair to the witness by saying that everyone is wagging their head in the audience. If someone knows it, per- PAGENO="0090" 84 haps they could be recognized and put their name on the record and put their answer on the record rather than facial motions or head motions. Acting Chairman DOWNEY. The fact is that we have not yet regu- lated facial motions in this subcommittee. People can wince and- [Laughter.] Mr. SHAW. I understand that. Mr. MCDERMOTT. I didn't mean to be unfair to the witness. Mr. SHAW. But I just say that it would appear on the record that this was regulated. It may have been. I don't know. Mr. MCDERMOTT. No, it was not. Mr. SHAW. But we ought to put a name on that. If the member wants to say that it was unregulated- Mr. MCDERMOTT. I will supply the documentation for the record. It was not a regulated day care. Mrs. JOHNSON. Would the gentleman yield? Acting Chairman DOWNEY. The gentleman from Washington, Dr. McDermott, has been recognized. It is his time. Mr. MCDERMOTT. I really would like to hear what your answer to that is. Your position as a Department, as representing the admin- istration, is that parental choice is preeminent above any responsi- bility by the State on behalf of children? Ms. BARNHART. Our position is that parents can make the best choice and better choices than Government can make. It is impor- tant for me to clarify that at the same time we recognize the value of informed consumers, and I have attempted to make that point clear throughout my testimony today. There is nothing that would prevent the State from informing a parent who says I would like to have care-and let's take the Jessica McClure case-in that par- ticular home, to say that home does not meet our standards be- cause, in fact, it is not regulated and it is not licensed by our agency. But if the parent decides that that is the best place for their child to receive the care that they want their child to receive, we believe we should not create a situation where low-income par- ents do not have the same choice that middle- and upper-income parents have. And I go back to the point I made earlier related to the depend- ent care credits. The fact of the matter is we have a Government subsidy program there in the form of a tax credit that allows all income people- - Mr. MCDERMOTT. I think you are filibustering me. This egalitar- ianism that you are offering, everybody is going to be treated the same, means we are going to go down to the lowest bidder. Now, it is all right to make things that shoot up to the Moon on the basis of low cost, but when you are dealing with human beings, with children that have to be protected, you cannot stake-I can't be- lieve you would sit here and take the position that we as the State, the Government, is going to say that children are property to be disposed of by their parents in whatever way they choose, that they can put them any place and leave them for 8 hours a day and it is all right. We have a whole child abuse system- Ms. BARNHART. Absolutely. PAGENO="0091" 85 Mr. MCDERMOTT [continuing].That picks up the pieces for that, and you are saying, well, the State, just take the money and put them any place you want. If it doesn't work, we will pick up the child abuse problems. Ms. BARNHART. I think the fact that we have a child abuse system is the point; that for parents who are not doing a good job and who are not providing for their children's welfare, we do have a system that provides for Government intervention. But, I find it difficult to believe that we would want to set up a presumption in this country that anyone can make a better choice for their chil- dren than the parents of that child, that the Government, in fact, can make better choices. Mr. MCDERMOTT. You will force us, in the process of this, to set minimum standards at the Federal level because you leave us no- you don't leave the States with any flexibility. You say here is the money, but you got to do it at the lowest possible way. And States are strapped. I mean, I was in the State legislature that went through the early 1980s. We were all the time scraping for money and trying to figure out how to get Federal dollars. And you got States in big trouble in this country who are going to want those Federal dollars for their child care thing, and faced with saying we can't regulate because if we regulate for one we have got to regu- late for all, or we don't get any Federal money. Ms. BARNHART. If I may respond to one of the points that you made. Mr. MCDERMOTT. Yes. Ms. BARNHART. I would say that in terms of making the assump- tion that we are forcing things to the lowest common denominator or to the lowest level, that is making the assumption that parents are going to choose care that is, in fact, inadequate and that they are going to choose low quality care for their children-I am not sure that that is the case. In fact, I don't believe that at all. I don't believe that as a parent, and I don't believe that as an administra- tor of Federal programs. And I certainly don't believe that low- income parents are going to make any worse choices simply be- cause they are low income, that they are either on welfare trying to get off or have succeeded in getting off welfare and are strug- gling to stay off, simply because they are receiving a subsidy for their child care, and middle- and higher-income people are not. Mr. MCDERMOTT. Those people need that Federal money. They are at-risk people of going on welfare. They haven't the choices. I mean, I have a friend in Seattle who went out the door one day with one child under each arm, and he said to me, you know, I am spending as much on this as I did on my tuition at Princeton. Now, he can do that. But the average person we are talking about in this situation has got to have that Federal money, and you are putting the State regulators in a position where they cannot enforce standards for these people, because if they want that Fed- eral money, they have some way got to dive under it. Ms. BARNHART. I would say, again, a point I made earlier-if the State wants to regulate in the area, if they are concerned that a particular situation is going to jeopardize a child's health or safety, there is nothing that prevents them from regulating across the board for all children, not just for low-income children; that if they PAGENO="0092" 86 are concerned about the health and safety of low-income children, they would be concerned about the health and safety of all chil- dren. Mr. MCDERMOTT. In medicine, this business about informed choice-one of the interesting things about having patients make choices, how do you get to be an informed patient? How do you get enough knowledge? I will bet you that Mrs. McClure, when she took her baby Jessica to that house, had no idea. Now, who would think to ask, Do you have an old well in the back yard? How would you-how could you possibly have the knowledge to ask that kind of question? Ms. BARNHART. Well, I guess carrying that point just a little fur- ther, if I may respond, then I am not sure that it necessarily fol- lows that, if it is regulated care, they are necessarily going to ask that question either. I think one of the things we must be cautious of is viewing highly regulated care as an absolute panacea in terms of preventing all health and safety problems for children. I think that clearly we all recognize that children can be injured and harmed in regulated care as well as unregulated care, and that that is an important point to make. Mr. MCDERMOTT. I don't deny that. My problem is, if you don't try to regulate, you are never going to catch all the problems. I mean, look-well, I won't get into the child abuse, the felons ques- tion. That is another issue. I don't know how any parent could ever know who their child care worker is. Ms. BARNHART. Getting back to that-and I don't believe that you were here when I addressed that question earlier in terms of doing background checks and so forth, so if I may just mention this again. There is nothing that would prevent a State from having a system to do background checks. There is nothing that would pre- vent a State from informing a parent of the fact that a particular kind of care they say they want to choose does not meet State standards. So the kind of informed parental judgment that you are advocating is certainly a possibility. In fact, it would be a probabili- ty, something that we would encourage, and that we would reim- burse through administrative dollars to pay for those kinds of things. Mr. MCDERMOTT. Mr. Chairman, I know I have used my time, but I just would say that if these regulations go in place, you are pushing back child welfare standards at least 85 years in this coun- try-at least 85 years-in terms of the State accepting the respon- sibility for trying to set minimum standards. And these regula- tions, what you are saying is you take our money, you have got to lower the standards, because you know State legislatures can't go around and say to people who take three children in their house, you have got to have all those high standards that we have over here at the ABC day care unit. You are never going to get that kind of legislation through, and you know it. Anybody who has been in this business knows you can't. That is why we have all the fights in the State legislature. Ms. BARNHART. Let me emphasize that is not what we are saying, and that is one of the common misunderstandings of the regulations. We are not suggesting that the standards for family- based care have to be the same as standards for center-based care. PAGENO="0093" 87 That is not the point. That is not at all what we are suggesting or requiring in this regulation. We allow for variation of regulation among categories of care. You are absolutely right. It would be ab- solutely ridiculous for us to suggest that a mother who is caring for three or five children in her own home would have to meet the same standards as a center that has perhaps 50 children or more in several locations throughout a city. We are not saying that at all. What we are saying is that in the case of family based care and in the case of center-based care, or whatever the child care setting is, if the State decides to regulate in a particular category of care, then the additional regulations for subsidized care in that category do not prevent parents from choosing that care under the TV-A program. Mr. MCDERMOTT. I thank you for laying out your position very clearly. It's nice to have somebody say it. Thank you. Acting Chairman DOWNEY. Yes. I intend to allow the subcommit- tee members to have one more brief round of questions. Ms. Barnhart, in my case of the State of Missouri- Mr. SHAW. Mr. Chairman, if I might, I haven't had my first round. Acting Chairman DOWNEY. I apologize, Mr. Shaw. You are recog- nized. Mr. SHAW. I'd like to go back. This Jessica McClure case keeps running around, and obviously there are people that know more about it than I do. But it is my understanding-I will address my question to the gentleman from Washington-that this was a rela- tive- Ms. BARNHART. A relative care center. Mr. SHAW. A relative care center, and it wasn't something that would be regulated anyway. Is that true, or am I getting some bad information? Mr. MCDERMOTT. I don't know the answer to that specific ques- tion. The question we are arguing about now is whether that mother could have the money to pay her relative without knowing anything about it, I mean- Mr. SHAW. Well, OK. Then I think that-the statute that you voted on and that I voted on specifically- Mr. MCDERMOTT. I voted no. Mr. SHAW. Oh, you voted no, excuse me. [Laughter.] The statute and not the regulations specifically exempts rela- tives, and if this was a relative, I don't think that any of us want to regulate grandmas and sisters and brothers as relatives who are taking care of the children. That is exactly what this is. This was somewhat debated but I think generally agreed to. Whereas the gentleman from Washington may have disagreed with regard to final passage of the bill for various reasons, I doubt if one of those reasons is that the gentleman wants to regulate parents and grandparents and all kinds of relatives in a small day care sit- uation. So I think the record ought to be very clear that if this was a case of a relative, that the regulations have nothing to do with it, that the facility in which Jessica McClure got her child care was specifically exempted in the statute, and that was an act of Con- PAGENO="0094" 88 gress, not an act of HHS. I cannot represent that as the case, but it is my understanding that it probably is. I will be glad to yield. Acting Chairman DOWNEY. Jessica McClure was being cared for by her aunt, who operated an illegal day care center in the State of Texas. Mr. SHAW. Well, then it was illegal under State law- Acting Chairman DOWNEY. Yes. Mr. SHAW. Then it was regulated or should have been regulated, and it is a question of the emphasizing of State law. Acting Chairman DOWNEY. Of course, we can take this to the re- ductum ad absurdum. Because it happened in regulated care, why regulate anyone? The reality is that regulated care offers a mini- mal level of protection that the State may, on occasion, come around to check to see that the fire exits are not nailed shut and that someone is not caring for 18 infants. Mr. SHAW. Better the States than the Federal Government, and as the gentleman has said earlier in his defense of State rights, that it is the States that should be free to regulate these care facili- ties, and Texas does have a form of regulation which, if it is not stringent enough, then so be it, but that is Texas' problem, and the Texas legislature should fix that by a change in their laws or that should be done by a change in their regulations for their Governor to enforce. I am not sure we disagree on where we want to end up. I think we are really here arguing over minute differences, and I don't see that we are stepping on State regulations. We are just simply saying, treat the poor children like you do the rich children. Treat the ones who are subsidized the way you do the ones who are un- subsidized, and I can't think of anything that is fairer. Quite frank- ly, it is almost like a role reversal here that you are defending States rights and I am defending the rights of the poor. [Laughter.] Perhaps what goes around comes around, and perhaps that is a wonderful, wonderful thing to happen. The Republicans are defend- ing the poor, and you are defending the States. Maybe we should both cave- [Laughter.] Mr. SHAW. I yield back. Acting Chairman DOWNEY. Does the State of Missouri have to change its law with respect to religious-based care in order to re- ceive TV-A funding? Ms. BARNHART. No, they would not have to change their law with respect to any regulation they have, Mr. Chairman. Acting Chairman DOWNEY. To receive TV-A funding, the State of Missouri can have one set of regulations for subsidized care and an- other for nonsubsidized care? Ms. BARNHART. You may have different sets of standards for sub- sidized care. However, for purposes of the TV-A program, you may not deny a mother who is participating in that program the ability to choose a provider that does nof meet those standards. Acting Chairman DOWNEY. All right. So then Federal dollars can go to Jeffrey Dahmer's brother Ted and David Berkowitz's brother Bill in their excellent tiger cage adventure for children? [Laugh- ter.] PAGENO="0095" 89 Ms. BARNHART. I have already attempted to make the point, Mr. Chairman, on at least a couple of occasions that there is nothing that would prevent States from doing the kind of background checks that I think that you are alluding to in making that kind of comment. Acting Chairman DOWNEY. Let us go through it again slowly. In the State of Missouri, I require background checks for subsidized care. I do not require them for nonsubsidized care. How is the Mis- souri taxpayer or the Federal taxpayer ensured that these people receiving IV-A money have background checks on child care pro- viders? Ms. BARNHART. Well, again, Mr. Chairman, I would say that our position there is that if the State wants to conduct background checks for child care providers to ensure the safety and health of children receiving care, it would seem they would want to do it for all children, not just children- Acting Chairman DOWNEY. No- Ms. BARNHART [continuing]. Who are poor or low income. Acting Chairman DOWNEY. I think Mr. McDermott has stated it well-and we will listen to other Members of the Congress on this question-this is a tragic step backward. As I said at the outset, we are not going to let it happen. Let me ask you another question on another matter. What is the minimum length of time that it would take before any emergency assistance policy would change? Ms. BARNHART. At this point in time, Mr. Chairman, it would probably take at least 1 year to take final action that would have the effect of changing the current emergency assistance policy. Acting Chairman DOWNEY. Thank you, Ms. Barnhart. Mrs. Johnson. Mrs. JOHNSON. Mr. Chairman, Madam Assistant Secretary, it has been said now by both the chairman and another committee member that these regulations would allow child care to go back- ward 35 years- Acting Chairman DOWNEY. Eighty-five. Mrs. JOHNSON [continuing]. Backward 85, 150, whatever, but a long way. Now, it is my understanding that your regulations do not require a State to change any regulation that they have on the board, no matter how high or restrictive their licensure standards might be. Correct or incorrect? Ms. BARNHART. That is correct, except in the case of the child care and development block grant, depending on- Mrs. JOHNSON. I was going to turn to that. Ms. BARNHART. I am sorry. Mrs. JOHNSON. So it doesn't require States to change their regu- lations. Does it prevent States from raising regulations in any cate- gory, if they choose? Ms. BARNHART. No, it does not. Mrs. JOHNSON. It is my understanding that parents, under your regulation, have only the choice of a facility that meets State standards under both bills, at-risk and block grants, that all provid- ers must meet the State standards. Ms. BARNHART. They must be in legal care, and they must meet State standards- PAGENO="0096" 90 Mrs. JOHNSON. That is right. Ms. BARNHART. Yes. Mrs. JOHNSON. So in no case are we in any way providing money to people to use providers who don't meet State standards, and I think that has got to be very clear in the record. We don't reduce the States' ability to write standards. We don't prevent them from raising standards, and we don't let money flow to people who don't meet State standards. The only issue-and it is a narrow issue and it has been parlayed into representing the whole system-is this. Where States have two sets of standards, we require that if you are going to get the money, you have to let the money go to the providers who meet the general standards. Since I am attempting to help clarify what I think is the core thing at issue here, I don't care to proceed until the committee is- until we are all in this together. Acting Chairman DOWNEY. The gentlelady has an absolute right to ask any questions she wants of the witness and the chairman has the right to speak to any- Mrs. JOHNSON. Beyond my right to ask any question, I was asking for the courtesy of the attention of my colleagues, because I think- Acting Chairman DOWNEY. The gentlelady is correct. I have something important to discuss with Mr. Andrews. Mrs. JOHNSON. Thank you. I want to proceed with this, because I think that it is really important that we try to get at what the problem is and, therefore, what the solution might be. As I understand these regulations, and this is only pertaining to the block grant program, not to the at-risk program, the only limit that your regulations put on States in terms of standards is that they cannot say that poor people who get subsidies have to send their children to the higher standard facility. They must allow that poorer person to choose the general standard facility. Ms. BARNHART. That is correct, in terms of the at-risk program and the TV-A program, yes. Mrs. JOHNSON. Therefore, they are not lowering standards. Ms. BARNHART. No, we do not require-.--- Mrs. JOHNSON. It is just an alternate set of standards that the State has deemed sufficiently protective of health and safety of children to govern the majority of children. Ms. BARNHART. That is correct. Mrs. JOHNSON. Thank you, Mr. Chairman. Acting Chairman DOWNEY. Mr. Andrews. Mr. ANDREWS. I am still trying to understand exactly these regu- lations, and let us go back to Missouri again. There were schools in Texas owned by Lester Roloff where children were asked to take showers with wire brushes and were beaten. Let us assume in Missouri a similar problem might exist, in which there are subsidized institutions for poor children. Let me see if I understand what you are saying. If the Missouri legislature were to determine that it would be appropriate to have investiga- tors without notice go into those poorer subsidized facilities to ex- amine their standards, to see what kind of health and safety stand- ards they had? to see how the children were being treated, without PAGENO="0097" 91 notice to examine them physically to see if they had been abused, but if the State also decided we only have limited resources, and it might not be necessary, to send these investigators across the board into every kind of facility, only these subsidized ones, now, what would be the result? First, you are saying, and you have said many times-I think this is correct-that a State has every right to do that. Missouri would have every right to make that decision. Ms. BARNHART. That is correct. They do. Mr. ANDREWS. Would they get any Federal money if they made that decision? Ms. BARNHART. It would depend under which program you were talking about. Under the CCDBG program- Mr. ANDREWS. Say that again? Ms. BARNHART. Under the CCDBG program-did you say it was a religious facility? Mr. ANDREWS. Yes. Ms. BARNHART. Yes. Mr. ANDREWS. This is only a hypothetical, and please help me out. That is why I am asking the question. Under what situation would they not get Federal funds? Ms. BARNHART. Well, the CCDBG program does allow Federal re- imbursement for care that is provided in sectarian organizations, so they would be able to receive it there, if they met the standards that the State had, as Mrs. Johnson points out. Mr. ANDREWS. But the real issue is, with our tired case here of Missouri, is that the State can have its set of standards for subsi- dized and nonsubsidized care, but the State can't prohibit IV-A money from going to those people who don't fall under-well, who may fall under the regulations. Those regulations just cannot be enforced, is that right? Ms. BARNHART. It is correct that the States cannot prohibit the parent from making the choice for their child. Mr. ANDREWS. The State cannot enforce it- Acting Chairman DOWNEY. And get the money. Mr. ANDREWS [continuing]. And get the money; is that right? Mrs. Johnson, I have the time, and I will be glad to yield to you in just a moment, and you will have an opportunity to carry on. Acting Chairman DOWNEY. But you have just heard, the point is, the State cannot enforce the standard- Mr. ANDREWS. Is that right? Ms. BARNHART. It is- Acting Chairman DOWNEY [continuing]. In this instance. Mr. ANDREWS. Why would you take that position? Ms. BARNHART. That is not correct to say they would not get the money. That was the point that I attempted to clear up when I first came back. Acting Chairman DOWNEY. They would get the money- Ms. BARNHART. The fact- Acting Chairman DOWNEY. They would get the money, and the State would not be able to enforce the standards. They would get the money. 51-7130-92-4 PAGENO="0098" 92 Ms. BARNHART. That is correct. What would happen is they would get the money. What we are saying is the parent, under the TV-A program, would get the money. Mr. ANDREWS. But the State, to follow his question-that is what I am trying to understand. I am honestly not trying to trick you up here- Ms. BARNHART. No, I understand. I am trying to- Mr. ANDREWS [continuing]. To follow his question- Ms. BARNHART. I am trying to~ listen, believe me. I am trying to follow so I can give you my best answer. I really am trying to do that. Mr. ANDREWS. Are you telling us, then, if the State were to impose those kinds of inconsistent standards-they would impose them on some institutions, but not on others-that they would not receive funding under some programs? Ms. BARNHART. No, I am not telling you that. Mr. ANDREWS. You are not saying that? Ms. BARNHART. I am not telling you that. I am not doing a good job of telling you, so let me try again. Mr. ANDREW5. I am wondering-I can't wait to see some of this input you all have gotten on some of these regulations. Maybe we are just the only people that are confused up here. Ms. BARNHART. What- Mr. ANDREWS. Do you think everyone that wrote you understood these regulations clearly? Ms. BARNHART. No, I do not. I do not think that, and I mentioned a few moments ago, and I think earlier today, there have been some real misunderstandings of the regulation and that is one of the purposes of the comment period. Let me say that it is particu- larly helpful, because commentators point out those areas where we need to be clearer- Mr. ANDREWS. Fine. Ms. BARNHART [continuing]. And that is extremely helpful. Mr. ANDREWS. All right. Ms. BARNHART. I was going to suggest, if I may take the liberty to do so, that given the complexity of the issue and the keen inter- est on the part of the chairman and you, Mr. Andrews, and the other members of the committee, what might be an appropriate way to attempt to be more responsive to your concerns would be for you to have your staff provide us with these situations that you would like for us to respond to about what would be allowable and not allowable under certain circumstances so that you will know exactly what the situation would be in your States. It is extremely difficult to sit and just listen to the questions- Mr. ANDREWS. Well, if a State then- Ms. BARNHART [continuing]. And be assured that I am giving you an absolutely correct answer. Mr. ANDREWS. Let me rephrase it this way. If a State were to reach a conclusion that they only had limited resources, but they had a Lester Roloff problem in poor institutions, they had children they knew were being abused, but maybe they couldn't make the case. They knew it was happening, and they decided to put x number of resources into a special program, have more emphasis, have more awareness, put more people out in the field. They PAGENO="0099" 93 couldn't do it for everybody, just these institutions that tended to be poor and subsidized. Now, would the State suffer any consequences financially if they did that- Ms. BARNHART. No- Mr. ANDREWS [continuing]. Under your regulations? Ms. BARNHART. The State would be allowed to do that. Really- Mr. ANDREWS. And when I say consequences-you keep saying they will be allowed to do that. Would they lose any Federal sup- port- Ms. BARNHART. No, they wouldn't- Mr. ANDREWS [continuing]. By doing that? Ms. BARNHART. They would not lose Federal funds by doing that. No, they would not. Mr. SHAW. I think, if the gentleman would yield, we are getting into the question of enforcement rather than regulation. Mr. ANDREWS. Well, maybe we are, Clay. I just- Mr. SHAW. I think the point that you are making- Mr. ANDREWS. I just want to hear her explain to me how these regulations are going to work in real-life situations. Baby Jessica and Lester Roloff are extremes, but frankly, I think Dr. McDermott and myself are really just trying to use them to try to appreciate what the significance of these regulations are going to be. Acting Chairman DOWNEY. Dr. McDermott, do you have any other questions? Mr. MCDERMOTT. Yes, Mr. Chairman. I just want to ask unani- mous consent to enter an article by Robert Peer of the New York Times, July 22, 1991, into the record, and then I want to ask a question. Acting Chairman DOWNEY. Without objection, it will be entered into the record at this point. [The article follows:] PAGENO="0100" z CD otu ~-,-4 Z ~tu ~ PAGENO="0101" 95 Mr. MCDERMOTT. The article says that Kay Hendon, the day care coordinator for the Wisconsin Department of Health and Social Services, said, "Other State officials and I have actually been told by Federal officials that we cannot run a criminal records check on a publicly subsidized child-care provider to see if that person is a known child abuser because we do not run such checks on all pro- viders." Now, you are saying-if I understand you correctly-that some- body has misrepresented the Federal regulations to State officials? Ms. BARNHART. I don't think anyone knowingly misrepresented or intended to misrepresent- Mr. MCDERMOTT. Well, you are supposed to know. You wrote the regulations. So when you tell a State official- Ms. BARNHART. I can tell you that what we have been saying to State officials is our correct interpretation and our understanding of the regulations as we wrote them. Unfortunately, as I think ev- eryone in this room would acknowledge, there has been an awful lot of media attention. An awful lot of articles have appeared on this issue. That is not unfortunate, that articles appear. I think that is healthy and it is a good part of the public debate and the whole issue of evaluating regulations when they are promulgated as an NPRM. I think what is unfortunate is that in those articles, for example in that article, there has been information that has been presented and purported to be true and to be an accurate representation of the regulations, and in fact, it is not. We do not deny States the ability to do that. Mr. MCDERMOTT. Next question. Ms. BARNHART. Yes sir. Mr. MCDERMOTT. My distinguished colleague has said that these regulations are designed to protect the poor people, and I assume you would agree to that, right? Give them the same break every- body else gets? Ms. BARNHART. I think they are absolutely designed to give people the same break that everybody else gets. That is- Mr. MCDERMOTT. Everybody in the United States is the same, right? Ms. BARNHART. Our intent is to. Mr. MCDERMOTT. OK. That is laudable, and I am sorry that he doesn't think we support that. But I would like to go on. Do you agree that there is an epidemic of children having babies in this country? Ms. BARNHART. I agree that there is a substantial growth in out- of-wedlock births among teenagers, yes. Mr. MCDERMOTT. And it is your contention that these regulations protect those 14-year-old children who are out getting day care for their children because they are at risk of going on welfare, by God, I believe that. So they certainly fit in this category. They have all the knowledge necessary to pick out the proper place to drop off their child while they go up to the local high school and try and get their diploma-is that your contention? Ms. BARNHART. My contention is that it is the extreme case that a 14-year-old is not living under the supervision of a parent or a guardian of some sort. Very few young teenagers like that who PAGENO="0102" 96 have children establish their own separate households and do not have the influence of some senior and more mature individual and influence in their life. I would say also that it is my contention that the State has the ability to provide adequate information to that teenager and to the mother-in this case the grandparent of the baby-the aunt, or whoever the person is living with that could help that child, that teenager, make a choice for that child. Mr. MCDERMOTT. Well, we would argue about that because I think if you are applying the gathering of information, criminal checks, whatever and you are not doing it universally you are not going to get Federal money, so the State is not going to be doing that. All these States are going to back out of this. Or if they are really responsible, I think they will refuse the Federal money. That is my belief. If I were sitting out in the State legislature today, that is what I would be arguing with my colleagues-refuse the Federal money, because we are not going to have the Federal Government drive our standards down just because of bucks. That is simply not a good choice to put out there. You really don't want them to spend the money, that is my belief. Ms. BARNHART. Oh, absolutely, that is not the case at all, and I must respond to something that you said, and it is a point that we have discussed at some length today. The fact of the matter is, we are not saying that they may not do background checks for certain parts of the population in terms of certain child care centers, cer- tain types of care. That is not what we are saying. We are not saying we will take funds away if the State only does background checks for subsidized care. That is not what these regu- lations do. That is not what they attempt to do and is not in fact what they do. Mr. MCDERMOTT. Well, I would just suggest that your under- standing of what is going on in the inner cities of this country-as one of the cochairs of the Urban Caucus, we have sat and listened in hearings to what is going on in cities, and if you think that Ozzie and Harriet-Ed goes to work, mom stays home and takes care of the two children-is what is going on ~n this country or anything close to it, you do not understand how much we need to help these young women who have these children. If you don't want to even be humane and just want to talk about the fiscal consequences of the failure to deal with this issue, with adequate day care in those early years of life, we are incurring enormous responsibility because of the children in our system who do not arrive in school ready to go to learn. My mother taught me to read when I was 3 years old because she was home and could do that. That doesn't happen very much today. And what you are talking about-the day care center is a surrogate for that kind of experience, because young women are out in the work force struggling to make it, and if you think that at the same time they are going to have the ability to choose and to go around and figure out what is the right place to put their child, when you say they have to ride the bus to the day care and then the bus to work and then go and get them at night and all this kind of stuff, it is just simply not the real world that you are PAGENO="0103" 97 saying that she can make an informed choice, even though she wants to. I believe those young women care about their children, but there is no way they can possibly have the time or the energy to make an informed choice. They have to rely on somebody to say, this is a place where it is safe to put my child. Ms. BARNHART. And if I may say, we are not saying that they cannot rely on the State to do that. The State can provide all that information to the parent, and it is up to the parent to decide what to do with that information and where to place their child in care. Mr. MCDERMOTT. But what you are doing by this set of regula- tions is pitting that young woman against church-faced care and all these other unregulated situations that in every State they have struggled with. When I was in the State legislature we struggled with it, and they struggle with it in every legislature. So you are saying, either apply the regulations to everybody or bring them down, because you are not telling them to bring them up. If you would say in your regulation, you must bring your regu- lations up to the level of the State for all places where this money goes, I would be cheering for you. But you don't. You let the States make the choice, and you know politically they can't bring them up or they would have done it a long time ago. If you read that State senator, he wasn't frothing at the mouth because he didn't care. He was angry because he was trying to raise the standards. Ms. BARNHART. Well, in fact, in Oklahoma they do have across- the-board standards for care- Mr. MCDERMOTT. Some places have made it. Ms. BARNHART [continuing]. Regardless of whether it is subsi- dized or unsubsidized. Mr. MCDERMOTT. Some places have made it, but it is not a uni- form condition in this country. Thank you, Mr. Chairman. Mr. SHAW. Mr. Chairman, that State senator is still here, and he is not drooling any longer. [Laughter.] Mr. MCDERMOTT. He is like me. He has been in the battle- Mr. SHAW. And I don't- Mr. MCDERMOTT. He has been on the battlefield and he knows what it feels like down there. Mr. SHAW. And as I recall his testimony, he was irate over the fact that they were not allowed to spend more of the funds as they saw fit and as they felt necessary in administration, which includ- ed the enforcement procedure, and I think that that is something we can look at, and I think that is something that HHS and the Congress should agree to work on. Ms. BARNHART. If I might comment on that, Mr. Shaw- Mr. SHAW. Could you please? Ms. BARNHART. Yes, I would appreciate an opportunity to com- ment, because again, that is another area where there has been a misunderstanding of our regulation. For purposes of the 75 percent services dollars in the child care development block grant, there is absolutely nothing that would preclude a State from making a determination-a State like Okla- homa, where they enjoy the situation where they, according to Sen- ator Cain's testimony, do not have waiting lists for child care. PAGENO="0104" 98 There is nothing that would prevent that State from using the CCDBG funds to raise the payment rate for child care that meets the criteria under the block grant and therefore have the follow-on effect of raising salaries for child care providers. So States have a choice. They may either expand care, or they may increase payment. In fact, we are seeing some States where availability of child care is not an issue. We have received State plans where States have chosen to raise payment rates. Mr. SHAW. Well, Senator Cain is still here. Perhaps you could spend a few minutes with him in the hail before you leave here- Ms. BARNHART. We would be happy to do that. My staff informs me, Senator, that they have spoken with him on several occasions. We would be happy to extend the opportunity to meet with him or any members of his staff again in an attempt to clarify issues that are related to the regulations. Mr. SHAW. I would also, and I assume I do have the floor-you didn't recognize me, but I assume it is my turn-I would like to comment with regard to what the gentleman from Washington said. We did not draft this legislation-and I am sure the regula- tions were not drawn thinking all parents had the mentality of a 14-year-old. That is simply not the case. We don't pass laws like that, and I think all of us on this committee, including the gentleman from Washington, certainly didn't mean to say that, but that is the way it comes out. I mean, we cannot draft it and say that because there are irresponsible teenage mothers that may not know right from wrong and certainly are not mature enough to make some deci- sions for their children, we don't have to treat 21-, 22-, and 25-year- old parents like we would 14-year-olds and make the decisions for them. That is just not our function, and I would hope that we would never start drawing laws like that so that we treat parents with that amount of disrespect. I yield back the balance of my time. I would like to thank Ms. Barnhart. She is a wonderful witness. I think she has cleared up a lot of misunderstanding today, and hopefully with the input from the Congress as well as the input that she has given to the Con- gress, perhaps we have put a lot of these problems behind us. Thank you. Acting Chairman DOWNEY. Thank you, Mr. Shaw. Ms. Barnhart, you have been a very patient witness. You have attempted to answer us thoroughly and reasonably. I was one of the few people who, at least in my party, was still on speaking terms with Mr. Sununu when this decision was made, and it was my express understanding and his that we would leave this to the States. I consider this not leaving it to the States. I con- sider this an attempt by you and by the other people at HHS to do something that was not ever implied by the clear language of the legislation, and only through the greatest flight of imagination from the legislative intent. When you said you will work with us, understand one thing. We want these regulations changed to reflect clearly the words of the statute and its legislative intent. If you don't change them, then on PAGENO="0105" 99 the very first legislative vehicle we are going to change them for you. Thank you. Ms. BARNHART. Mr. Chairman, if I may respond in summary- Acting Chairman DOWNEY. You certainly may. Ms. BARNHART. Thank you. I want to say that I appreciate the opportunity to appear here today. I appreciate the concerns that have been expressed to me, and I assure the committee that we will be reviewing all comments we have received on both regula- tions as we work to develop the final regulations. In relation to the issue of congressional intent, there has been an awful lot of focus on that lately in the media as well as in this hearing earlier today. I think that that is clearly an issue where, based on the range of opinions we experienced this morning with the other witnesses and the varied opinions of the committee mem- bers as well as some of the letters that were printed in your com- mittee print that was prepared and published and distributed prior to this hearing, that there appears to be no absolute consensus among the Members of the Congress what congressional intent was. What we attempted to do in drafting the regulation was to look at the statutory language, to look at the conference language that accompanied both statutes, and to make the best judgment that we could on those matters. Again, I just want to emphasize that the purpose of the regula- tion, that the point that we are trying to emphasize in the at-risk program is the fact that we do not want to establish the presump- tion the Government can make better choices for children than the parents of those children can make. We do not believe that welfare parents or low-income parents are any less caring and concerned about their children than others. In no way did I attempt to give the impression today that the people in our Department view families in America as totally the Ozzie and Harriet situation that was depicted by Mr. McDermott. Certainly, as the person with responsibility for administering the Aid to Families with Dependent Children program with a case load of over 11 million people and 90 percent of those being single- parent families headed by women, I am well aware on a daily basis that Ozzie and Harriet is not the predominant situation. But I still believe, and we believe, that the legislation and the conference report provided for us to afford those women, regardless of whether or not they are in an Ozzie and Harriet situation, the same equity, the same options, the same range of choice as any other American parent. Thank you very much. Acting Chairman DOWNEY. Your job, Ms. Barnhart, if I may have the last word, is to faithfully execute the laws as we write and intend them. It is not to serve in some crusade about poor women or about what you believe to be the intent of the Congress. The clear unadulterated language of the legislation, if followed scrupulously, would not by any stretch of any imagination have al- lowed you to write the regulations that you have. Thank you for appearing. Ms. BARNHART. Thank you, Mr. Chairman. Acting Chairman DOWNEY. The committee will next hear from the New Jersey Department of Human Services, Alan J. Gibbs, PAGENO="0106" 100 commissioner, who has patiently waited. We will take him out of turn because he has a prior commitment. Mr. Gibbs. STATEMENT OF ALAN J. GIBBS, COMMISSIONER, NEW JERSEY DEPARTMENT OF HUMAN SERVICES Mr. GIBBS. Mr. Chairman and members of the committee, thank you for the opportunity to testify on the administration's proposed child care regulations. I am Alan Gibbs, commissioner of the Department of Human Services in the State of New Jersey. Among the responsibilities of the department is the administration of most child care programs in the State, including the newly created at-risk child care program and the child care development block grant. With these programs, we intend to expand quality child care and to design a more unified and seamless system of child care which is user-friendly for parents and providers. We, therefore, are extremely concerned about some of the admin- istration's proposed regulations which, as they stand, would create major roadblocks to the achievement of this goal. We are most concerned about those requirements which would result in our State having to reduce or eliminate minimum health and safety child care standards, abandon its practice of differentiat- ing payment rates to certain child care providers based on the quality of care provided, and which discourage a balanced system of child care. Many of the regulations have been justified by the administra- tion as necessary to promote parental choice, but we strongly be- lieve that they could result in fewer, not more, choices for parents because true choice offers parents all options, including various de- grees of regulated care regardless of income. Unless the proposed regulations are changed, I am sorry to say that the real promise of the new child care legislation will not be realized. We have tried to maximize resources by making available a vari- ety of child care settings from which parents can choose. In the past, we emphasized center-based care, but more recently, we have greatly increased placements in family day care and other less formal arrangements with friends and relatives. We did this be- cause the demand for center-based care has exceeded the supply and because some parents prefer to place their children in home- based settings. We have made the child care system more flexible. At the same time, we have continued to meet our responsibility to protect the welfare of the State's children by providing standards which pro- mote safe child care arrangements. Our policy is that any type of publicly funded child care must meet basic health and safety stand- ards. We believe strongly that we should continue this policy under the new child care programs. This policy, however, would have to be changed under the at-risk child care program's proposed regula- tions. PAGENO="0107" 101 The new regulation requires that standards cannot apply to child care placements funded with title TV-A funds unless such stand- ards also apply to all placements regardless of funding source. This proposed regulation would inappropriately usurp State authority in an area of critical importance to children. This not only impacts our at-risk child care program, but also has a major impact on the existing Job Opportunity and Basic Skills training program. In this program, we have successfully placed children in both registered family day care homes and a cat- egory we call approved homes. Registered homes are operated by providers who agree to be screened, trained, and inspected according to our regulations. But we also recognize that parents may prefer care by relatives, friends, or neighbors who are not registered. For these approved homes, we have applied a simple inspection for minimum health and safety standards. The proposed regulation would result in the State having to eliminate all of these standards in these settings. As of the week ending April 26 of this year, child care was pro- vided by 1,893 registered family day care providers and approved homes. Last year, 12,000 child care placements were made in these settings. We are happy to report the consumer satisfaction surveys have indicated that both parents and providers are overwhelmingly sat- isfied with this form of care. Also, the life safety inspections we conduct are viewed not as an obstacle by parents or providers, but as an affirmation of our concern for the well-being of our children. These standards are not difficult to meet, and are very basic to the health and safety of the child. They require hot and cold water, heat, adequate ventilation, working toilets, and smoke detectors, which any parent would want for their child. It has been our experience in the JOBS program that these basic standards do not discourage provider participation, and that most parents want the assurance that their child will be in a setting which is, above all, safe. We do not believe it was the intent of the Congress that States eliminate minimum health and safety requirements, especially when such standards are required in the child care development block grant, which was enacted at the same time as the at-risk child care program. Establishing different standards for different programs is not only confusing and insufficient, it implies that at-risk families de- serve an inferior level of care. We believe that all children deserve a safe and healthy environment regardless of the funding source. I would now like to discuss the child care development block grant regulations which require that we pay the same rates to ap- proved homes as to family day care providers, and do not adequate- ly support center-based care. We have planned in New Jersey to extend the child care under CCDBG our system of registered family day care and approved homes which exists in our JOBS program. In JOBS, we have paid a higher rate to registered family day care providers based on the more stringent standards that they must meet and the role that they play in our network of child care. PAGENO="0108" 102 The registered family day care provider is a small business that can take up to five children, and is a continuing resource for offer- ing child care. The approved home is usually providing care for a family member or a neighbor, and rarely becomes a part of our network. The two systems have existed side-by-side with roughly 36 percent of the parents in JOBS choosing approved homes and 17 percent choosing registered family day care homes. Certainly, this represents parents exercising their choice. If, however, we must raise the rates paid to approved homes under CCDBG, the net result can only be fewer families receiving child care, as the dollars we have to spend are limited. For this added expenditure, there will be no improvement in the quality of care. Indeed, there may be some diminution in quality if some reg- istered family day care homes decide that they need not meet the higher standards required of them since the rate paid for approved homes and registered care are the same. The Department of Health and Human Services has told us that they will not approve our CCDBG plan until we equalize the rates in those settings. We have been told by the Department of Health and Human Services that they are simply complying with the Fed- eral law, but we believe that their interpretation of the statute is too narrow. Surely it was not the intent of the Congress to increase rates for providers at the expense of serving children and to jeop- ardize the quality of family day care in the State. We are also concerned about these regulations which discourage a balanced system of child care. The CCDBG legislation requires that the State make available both certificates and direct contracts with providers. We were very surprised that the administration in- terpreted this to mean that certificates must be available at all times, and contracts are only a last resort. As in the at-risk child care program, we plan to use most of our CCDBG funds for vouchers. We will allow contracts with centers on a limited basis where that option gives the services that best meet the needs of the family. However, this regulation discourages States from contracting with any center-based providers, since the States must have to ter- minate the contracts if they run out of certificates. Unless we pro- vide equitable support for center-based child care, parents will not have the opportunity to choose this type of care even if they wanted. I realize, Mr. Chairman, that the administration has defended both the at-risk and the CCDBG regulations as essential for paren- tal choice. We disagree. We strongly support parental choice. New Jersey was one of the first States to pilot a voucher program. If we have to eliminate minimum health and safety standards for family day care, we run the risk of putting children in unsafe, un- healthy arrangements. I don't think that was the intent of the Con- gress. Our experience has been that requiring minimum health and safety standards in these settings has not resulted in decreased use of this option. New Jersey has shown the choice need not mean States abandon minimum health and safety standards. We must and can balance parental choice with protecting the welfare of the PAGENO="0109" 103 child. National child care policy must address the needs of the entire family, and this includes the children as well as parents. We, therefore, urge that Congress make known to the Depart- ment of Health and Human Services that it was not the intent of this legislation to turn the clock back and cause a State to reduce minimal health and safety standards for any child or to reimburse many providers at the same rate, regardless of the quality of care provided. If it appears that the administration will not change these pro- posed regulations, we strongly recommend that a 1-year moratori- um on the regulations be enacted this year to enable further dis- cussion of these critical issues. Thank you, Mr. Chairman. I would be happy to answer your questions. [The prepared statement follows:] PAGENO="0110" 104 STATEMENT OF ALAN J. GIBBS, COMMISSIONER, NEW JERSEY DEPARTMENT OF HUMAN SERVICES Mr. Chairman, members of the Committee, thank you for the opportunity to testify on the Administration's proposed child care regulations. I am Alan Gibbs, Commissioner of the New J.ersey Department of Human Services. Among the responsibilities of the Department is the administration of most child care programs in the state, including the newly created At-Risk Child Care program and the Child Care and Development Block Grant (CCDBG). When Governor Jim Florio was a Congressman, he was one of the original sponsors of the "Act for Better Child Care." The Governor has made the expansion and improvement of child care one of his top priorities. It is our intention not only to expand quality child care but to design a more unified and "seamless" system of child care, which is "user friendly" for parents and providers. As the Governor has said, "New Jersey works when child care works." We, therefore, are extremely concerned about some of the Administration's proposed regulations which, as they stand, would create major roadblocks to the achievement of this goal. We are most concerned about those requirements which would result in our state having to reduce or eliminate minimum health and safety child care standards, abandon its practice of differentiating payment rates to certain child care providers based on the quality of care provided, and which discourage a balanced system of child care. Many of the regulations have been justified by the Administration as necessary to promote parental choice. But, we strongly believe that they could result in fewer, not more, choices for parents because true choice offers parents all options including various degrees of regulated care regardless of income. We also have concerns regarding several other aspects of the regulations. We think the 15 percent cap on both quality improvements and administration in CCDBG, is too low. There are inconsistencies between the proposed regulations for the two new child care programs that will make it very difficult to develop the seamless program we all want. However, in the interest of brevity, I will defer to the other witnesses who will be discussing these specific subjects. I will focus on our three major concerns. The issues raised by the Administration's proposals will have implications for the direction we take in child care as a nation. Unless the proposed regulations are changed, I am sorry to say that the real promise of the new child care legislation will not be realized. There are about a million children under 14 years of age in New Jersey who live in families with either single or married parents. Although we plan to increase state and federal funding for child care to about $90 million next year, we know that this will not nearly meet the full need for this assistance. We have tried to maximize resources by makin~ ovoilable of child care settings from which parents can choose. In the past, we emphasized center-based care; more recently, we have greatly increased placements in family day care and other less formal arrangements with friends and relatives. We did this because the demand for center-based care has exceeded the supply; and because some parents prefer to place their children in home- based settings. We have made the child care system more flexible. At the same time, we have continued to meet our responsibility to protect the welfare of the state's children, by providing standards for parents and the public which promote safe child care arrangements. Our policy is that any type of publicly-~unded PAGENO="0111" 105 child care must meet basic health and safety standards. We believe strongly that we should continue this policy under the new child care programs. ¶~his policy, however, would have to be changed under the At-Risk Child Care program's proposed regulations. The new regulation requires that standards cannot apply to child care placements funded with Title IV-A funds unless such standards also apply to all placements regardless of funding source. This proposed regulation would inappropriately usurp state authority in an area of critical importance to children. This not only impacts our At-Risk Child Care plan, but also has a major impact on the existing Job Opportunity And Basic Skills Training (JOBS) program. In this program, we have successfully placed children in both registered family day care homes and a category we call approved homes. Registered homes are operated by providers who agree to be screened, trained and inspected according to our regulations. But, we also recognize that parents may prefer care by relatives, friends, or neighbors who are not registered. For these approved homes, we have applied a simple inspection for minimum health and safety standards. The proposed regulation would result in the state having to eliminate all of these standards in these settings. As of the week ending April 26, 1991, child care was provided by 1,893 registered family day care providers and approved homes. Throughout the entire year of 1990, 12,000 child care placements were made in these settings. We are happy to report that consumer satisfaction surveys funded through the Child Care Improvement Grant have indicated that both parents and providers are overwhelmingly satisfied with this form of care. Also, the life safety inspections we conduct are viewed not as an obstacle by parents or providers, but as an affirmation of our concern for the well-being of our children. Mr. Chairman, these standards are not difficult to meet and are very basic to the health and safety of the child. They are hot and cold water, heat, adequate ventilation, and working toilets, which any parent would want for their child. It has been our experience in JOBS that these basic standards do not discourage provider participationi and that most parents want the assurance that their child will be in a setting which is, above all, safe. We do not believe that it was the intent of Congress that states eliminate minimum health and safety requirements~ especially when such standards are required in the CCDBG, which was enacted at the same time as the At-Risk Child Care program. Establishing different standards for different programs is not only confusing and insufficient--it implies that at-risk families deserve an inferior level of care. We believe that all children deserve a safe and healthy environment, regardless of the funding source. I would now like to discuss those CCDBG regulations which require that we pay the same rates to approved homes as to family day care providers and do not adequately support center-based care. We have planned in New Jersey to extend to child care under CCDBG our system of registered family day care and approved homes which exists in our JOBS program. In JOBS, we have paid a higher rate to registered family day care providers based on the more stringent standards they must meet and the role they play in our network of child care. The registered family day care provider is a small business that can take up to five children, and is a continuing resource for offering child care. The approved home is usually providing care for a family member or neighbor and rarely becomes a part of our network. PAGENO="0112" 106 The two systems have existed side-by-side, with roughly 36 percent the parents in JOBS choosing approved homes and 17 percent choosing registered family day care homes. Certainly, this represents parents exercising their choice. If, however, we must raise the rates paid to approved homes under CCDBG, the net result can only be fewer families receiving child care, as the dollars we have to spend are limited. And for this added expenditure, there will be no improvement in the quality of care. Indeed, there may be some diminution in qua~4~y if some registered family day care homes di~ide that they need not meet the higher standards required of them since the rates paid for approved homes and registered care are the same. Mr. Chairman, I do not think that parental choice is served by a system that forces us to pay identical rates for all child care offered in the home regardless of the quality of care provided. I have been told that half the states that submitted plans face disapproval because of this identical rate requirement. i am sure it will be raised by others giving testimony. We have been told by the Department of Health and Human Services that they are simply complying with federal law, but we believe their interpretation of the statute is too narrow. Surely, it was not the intent of Congress to increase rates for providers at the expense of serving children and to jeopardize the quality of family day care in a state. We are also concerned about those regulations which discourage support for a balanced system of child care. The CCDBG legislation requires that the state make available both certificates and direct contracts with providers. We were very surprised that the Administration interpreted this to mean that certificates must be available at all times and contracts are only a last resort. As in the At-Risk Child Care program, we plan to use most of our CCDBG funds for vouchers. W will allow contracts with centers on a limited basis where that option gives the services that best meet the needs of the family. However, this regulation discourages states from contracting with ~ center-based providers since the states may have to terminate the contracts if they run out of certificates. As you know, several studies have shown the important benefits to children resulting from their experiences in center-based child care. Unless we provide equitable support for center-based child care, parents will not have the opportunity to choose this type of care, even if they want it. Another CCDBG requirement also would have a negative effect on center-based care. This regulation requires that if any portion of the funds expended by a provider are from the CCDBG, the client must be given the opportunity to leave the program and choose another provider. While on its face this provision seems to foster choice, in reality it will not. Under this regulation, if the parent chooses to leave, the center's total reimbursement will be lowered if that slot is not filled by another CCDBG participant. Providers need assurance that funds will continue for a reasonable period of time to bridge the gap until another child can fill the vacancy. Without this short-term extension, there may not be a program available by the time the next child enrolls. Staff cannot be fired and rehired every few weeks whenever families change their plans. States should be allowed to offer a stable rate of reimbursement to maintain openings in child care programs. I realize, Mr. Chairman, that the Administration has defended both these At-Risk and CCDBG regulations as essential for parental choice. PAGENO="0113" 107 We disagree. We strongly support parental choice. New Jersey was one of the ~irst states to pilot a voucher project. We use vouchers exclusively in JOBS and plan to use only vouchers in the At-Risk Child Care program. We also plan to use mostly vouchers in CCDBG. However, we also recognize that prograss serving children with greater needs often need additional supports to assure continued operations. Without these supports, parents will not be able to make meaningful choices. If we have to eliminate minimum health and safety standards for family day care, we run the risk of putting children in unsafe, unhealthy arrangements. Clearly, this was not the intent of Congress, nor is it the intent of parental choice. Our experience has been that requiring minimum health and safety standards in these settings has not resulted in decreased use of this option. It has actually resulted in an increase, because these arrangements are now legitimatized in the eyes of the families. New Jersey has shown that choice need not mean states abandon minimum health and safety standards. We must, and can, balance parental choice with protecting the welfare of the child. National child care policy must address the needs of the entire family and this includes the children as well as parents. We, therefore, urge that Congress make known to the Department of Health and Human Services that it was not the intent of this legislation to turn the clock back and cause a state to reduce minimal health and safety standards for any child, or to reimburse many providers at the same rate regardless of the quality of care provided. If it appears that the Administration will not change these proposed regulations, we strongly recommend that a one year moratorium on the regulations be enacted this year, to enable further discussion on these critical issues. If Congress waits until after these regulations are finalized, it will be too late. States already will have made major systemic changes required by some of these regulations. States must be granted the flexibility to maintain beneficial child care practices and the opportunity to build on those successes. Children and parents with low incomes need this assistance to maintain their self-sufficiency, and deserve no less. Thank you for your attention to this matter. I would be happy to answer any questions. PAGENO="0114" 108 Acting Chairman DOWNEY. Thank you, Mr. Gibbs. I am sorry to keep you all waiting, and I extend the same apology to the other witnesses who have been waiting here all day. We will try to move quickly. Mr. Gibbs, you were in the audience during Ms. Barnhart's testi- mony. If the State of New Jersey has different levels of regulation for subsidized versus nonsubsidized care, what is New Jersey going to do? Mr. GIBBS. Well, the choice I am going to have as commissioner is a very difficult choice. What we have in the State is we have mandatory licensed day care centers, regardless of whether it is re- ligious or not religious, profit or not-for-profit. All day care centers in the State are licensed and therefore heavily regulated. We do not have a mandatory system in New Jersey of licensed or registered family care. We have a system that is voluntary, where family care providers caring for up to five children voluntarily reg- ister. In doing so, they accept certain State standards applied to that. But it is not a mandatory system. So, we have family care providers who are registered and meet certain standards, and we have other family care providers who are not registered and who do not meet those standards. We have a special category that we use only in the TV-A pro- gram of approved homes, recognizing that many women on welfare who are entering job training or job search or the employment market prefer to have not center-based care, but wanted to have a relative or friend take care of the child. Our only requirement was that we would like to approve the arrangement, approve the home, make sure that it had minimum health and safety standards. And that has been acceptable to the welfare recipients who have gone through that, and we have approved many homes and have many children under that arrangement. Acting Chairman DOWNEY. How would you respond to Ms. Barn- hart's point that you can do that? Mr. GIBBS. I haven't finished. What we are also saying, when you look at the two regulations in combination, what they are saying- we pay a different rate to an approved home, which usually has about two children in it, than we do for a registered family care, which has up to five children. There is a rate differential. We pay more for the family care provider. One of the things the family care provider agrees to do besides meeting minimum health standards is to undergo some training in child care. There is an initial training requirement and a continu- ing education requirement. We pay a higher rate for that. We are told by the Department of Health and Human Services we cannot have a differential rate. So, if I want to maximize the Federal funds, I am either going to have to raise the approved home rates or I am going to have to lower the family care rates, but I can't have a differential rate. It makes no sense whatsoever, and is obviously going to result in less day care being provided. Acting Chairman DOWNEY. I yield for questions. Mr. SHAW. The problem raised by Mr. Gibbs is different than the issue that has been addressed by other witnesses and that we have spent quite a bit of time on today. I think the issue of differential PAGENO="0115" 109 rates is a real problem because there have to be differential rates to recognize differential qualification of the providers. I would want to cooperate with the Chair and with HHS in look- ing into this issue. I don't know the exact language in the statute that is being interpreted that way, but I think we ought to take a look at it. Acting Chairman DOWNEY. The statute doesn't provide for that. Mr. SHAW. That is right. Acting Chairman DOWNEY. The regulation provides for that. Mr. SHAW. Well, somebody picked something up and interpreted it or misinterpreted it- Acting Chairman DOWNEY. Yes. Mr. SHAW [continuing]. To be the meaning of Congress- Acting Chairman DOWNEY. Among other things. Mr. SHAW [continuing]. And I think we ought to look at that, be- cause I don't recall that being even discussed during our delibera- tions. Acting Chairman DOWNEY. Dr. McDermott. Mr. MCDERMOTT. Are you saying that you won't have to change any of your other standards, just the rate? Mr. GIBBS. No, I think- Mr. MCDERMOTT. To follow these regulations, in other words. Mr. GIBBS. You know, this morning's discussion has been thor- oughly confusing. In order for us to obtain TV-A funds, we have to allow for a recipient to choose unregulated care. That is what we have to do. I don't think that we are necessarily going to be precluded from continuing to have regulated care, but there is not going to be- especially when you combine with this rate problem-there is no longer going to be any incentive for people to volunteer for regis- tered family care, and I think that is a shame. Acting Chairman DOWNEY. Thank you. In fairness to others, we must move on but I hope you'll keep a channel of communication with us open. Mr. GIBBS. Thank you, Mr. Chairman. Acting Chairman DOWNEY. We would appreciate it. Mr. MCDERMOTT. Mr. Chairman, may I just say that Mr. Gibbs had a long and distinguished career in the State of Washington. He was working for a Republican Governor when I was the Democrat- ic chairman of the Ways and Means Committee, and we worked to- gether on a number of issues. He has now moved to a Democratic Governor in the State of New Jersey. Good chase. [Laughter.] Mr. GIBBS. Thank you. It is good to be out of the frying pan into the fire that is in New Jersey. Mr. SHAW. It is nice to see a Democrat that sees both sides of the issue. [Laughter.] Acting Chairman DOWNEY. The subcommittee will next hear from the Children's Defense Fund. Helen Blank is the witness. Helen, it is a pleasure to have you back before the committee. Ms. BLANK. Thank you. Acting Chairman DOWNEY. Helen, we have your very fine state- ment here. I would ask you to summarize the major points for us. I am going to request that the other witnesses that come before us PAGENO="0116" 110 give a 5-minute presentation. We have many other witnesses on the schedule. Helen. STATEMENT OF HELEN BLANK, DIRECTOR OF CHILD CARE, ON BEHALF OF MARIAN WRIGHT EDELMAN, PRESIDENT, CHIL- DREN'S DEFENSE FUND Ms. BLANK. Actually, I am going to take the opportunity today to tell you a story. It is a story that I heard as I went around the country, visiting almost every State to help them work on the im- plementation of these new child care bills. It is not a story I ever heard when I worked on the child care bills as they were debated in Congress. Let me say before I tell you the story that all of us at Children's Defense Fund (CDF) deeply appreciate the leadership and the at- tention that you, Chairman Downey, and this committee have shown to the issues of poor children, especially child care. Marian very much wanted to be here today, but she was in New York and she came back. She is back on another plane to New York. But we also appreciate the time that you are taking today, be- cause these are such serious issues, and we think they do need this kind of attention to the details. Once upon a time, there was a kingdom where children were not treated very well. In this kingdom, parents made some very tough choices that they needed to work to pay their rent and keep food on the table. They struggled to find child care, and many were not happy with the choices they had to make. Citizens of this kingdom were horrified many times when they heard or watched stories about bad child care. The entire kingdom held its breath, watching and waiting for a 2-year-old girl to be pulled out of a well. Yes, she had been in an unregulated family day care home with nine other children which ignored the prov- ince's rule that open wells be covered. The kingdom shed tears when Eric Michael Brooks, who was 13 months old, died after being shaken by his family care giver. Parents nationwide in this kingdom were very unhappy about the quality of child care, but of greatest concern was the care for poor children. A study by a national research council concluded, of greatest concern is the large number of children who presently are cared for in settings that don't protect their health and safety and don't provide appropriate developmental stimulation. Poor quality care, more than any single type of program or arrangement, threatens children's development, especially children from poor and minority families. Indeed, poor children in this got the shortest end of the stick. The king and other leaders in this kingdom believe that mothers receiving welfare should go to work. They created a program that made it mandatory for many poor mothers to participate in worker training programs. The leaders did agree that Government should help pay for these mothers' child care costs. However, for these very poor children who needed the best child care in order to overcome the obstacles associated with poverty, the kingdom only agreed to pay a very PAGENO="0117" 111 small amount for child care, an amount significantly below the market rate. As a result, very few providers were willing to care for these vul- nerable children. Worse yet was the quality of this care. The king interpreted maximum parental choice as allowing par- ents to use public dollars to pay for unsafe child care. This inter- pretation was the result of a philosophy in the kingdom that over- hung the child care debate. Somehow, the concept of parental choice was seen in conflict with the concept of the welfare children. Parental choice was not seen as offering parents enough to pay for child care so they could have access to more child care pro- grams or helping parents find the best child care or ensuring that programs like Head Start could serve children whose mothers worked full-day, full-year, or building the supply of child care for children in low-income neighborhoods. Standards were seen as an obstacle to parents and not as a help. Some trolls visited the king in the middle of the night in this kingdom. They advised him to issue the strangest decree. The king said that before provinces could pay for child care for the poorest children, they couldn't check that care givers had put bleach or other poisonous substances out of reach of children, that electrical sockets were protected from inquisitive toddlers, that homes had smoke detectors so that children could escape tragedy, that exits were blocked so the children could not get out in an emergency, or that providers did not have a criminal record. They only could do it if they did it for all children. The parliament was confused when it read the decree, because they had spent many years debating how the kingdom should help families with their child care needs. When they finally passed two child care ordinances providing help for families, they believed they had done what their king wanted. They had in both ordinances-not only in one-given the prov- inces the ability to make many of the decisions about how to spend the new money, because they heard the king when he said he was opposed to national standards for child care. Yet the king, after listening to the trolls, was now issuing a decree that was the opposite of what the king and the parliament had agreed to. He was telling the provinces exactly what to do in many areas that the parliament did not believe were mandated by the ordinance. Most shocking was that the king's national standards required that the provinces had to allow parents to choose unsafe child care. The king argued that any protections for children set by the prov- inces would deter neighbors for caring for children. He did not like child care centers, and didn't want children to be forced into them. Yet the king, when he took the trolls' advice, paid not attention to the fact that some of the provinces with the highest standards for neighborhood family day care homes had the most regulated family day care homes. In fact, one of them with the highest stand- ards in the country had the most regulated homes per capita and half of their public money was used for neighbors and relatives. Provinces had always been concerned about the health and safety of children in child care. They were very, very upset when the king told them that they could not ensure that poor children PAGENO="0118" 112 were safe, that they couldn't require a criminal background check, even if they knew that the provider had a record, or that they couldn't visit providers, even though visits had found concealed weapons and the drugs of would-be care givers. Most sad were the 13 provinces that didn't require all children in family day care to be immunized. These provinces could not have special requirements for poor children. This occurred at the same time that the kingdom saw a huge increase in measles, once nearly eradicated, largely due to a failure to immunize preschool children. Half of children under the age of 2 who were living in innercity families were not immunized-the very children who could have been targeted by these new child care ordinances. The king also told provinces they could use very little of the money they received from the kingdom from another new child care program to improve the quality of child care. He talked about educating parents. Let them just know about good child care and they would choose it, but he told the provinces they could only spend 6 percent of the funds to do things like consumer education, hire more licensers to inspect child care programs, help neighbor- hood homes buy fire extinguishers or smoke detectors. The king ignored a report done by his own consul that said that the number of inspectors in child care programs far exceeded rec- ommended levels. He told provinces they couldn't pay more to pro- grams that met higher standards. In an effort to improve quality and give poor children a better chance, several provinces were paying more to child care programs which offered comprehensive services similar to Head Start. Many more were contemplating doing that when the new ordinance was passed. They were very upset about this pronouncement, because they felt the prospect of higher rates to these programs was useful to encourage better care to the poorest children. This kingdom stood alone in the western world with respect to its ideas, not only about child care, but about other supports for children and families. There were other lands where children were recognized as a national resource and child care was recognized as an investment in the future well-being of the kingdom. One leader was fond of saying, this land will be strong in its fam- ilies and will blossom in its children. This kingdom's king was short-sided. He didn't recognize that his kingdom had an aging pop- ulation and a shrinking population of young workers. It would need every one of its young people to grow up strong and self-suffi- cient and be able to hold down jobs. Many more of its young people were minority or growing up poor. They needed the best possible child care to start school ready to learn. The king strongly supported the goal of having all chil- dren enter school ready to learn. It was a readiness goal. However, he failed to understand that good child care would help his king- dom to meet his goal. This story does not have an ending. The end will be written by the king, perhaps the parliament. Maybe the king will return home from his many trips to other lands and realize that the trolls were wrong and he really didn't need to take away the provinces' authority to protect our poorest children. Maybe the parliament will insist that the original agreement between their body and the PAGENO="0119" 113 king prevail. Maybe the tribunal of wise men appointed by the king will have the final say. I have to say that I hope the ending will not be one to create the national standard for the kingdom that denies poor parents the choice of safe child care for their children. [The prepared statement follows:] PAGENO="0120" 114 STATEMENT OF MARIAN WRIGHT EDELMAN, PRESIDENT, CHILDREN'S DEFENSE FUND The Children's Defense Fund is a privately funded public charity dedicated to providing a strong and effective voice for children, especially poor and minority children and their families. All of us at CDF greatly appreciate the leadership and attention that Chairman Downey and the Subcommittee have provided to the problems of poor children and their families including child care. CDF has worked extensively with state officials and advocates as they plan the implementation of the "At-Risk" Child Care Program ("At-Risk") and the Child Care and Development Block Grant. We have also worked extensively on the implementation of the Family Support Act ("FSA"). States welcomed the new child care funds. They felt that both bills in combination with the FSA could provide the opportunity for them to create a set of child care services that responded to families changing needs and that offered low income children minimally safe child care. However, many of the proposed regulations have thwarted states' plans to build a coordinated child care system and worse yet seriously set back their efforts to encourage quality child care. These regulations are not only contrary to the statute, but threaten the quality, safety, and affordability of care that will be provided to the very low income children served by these programs. Such provisions will put poor children at risk. The regulations proposed for the At-Risk Child Care Program and FSA seriously limit states' ability to apply minimal standards to providers serving subsidized children. They conflict with the Child Care and Development Block Grant regulations which follow the statute and require caregivers receiving Block Grant funds to meet minimal health and safety requirements. Both sets of regulations also severely limit states' ability to create a registration process for providers to again ensure that child care is minimally safe. Block Grant regulations also significantly limit states' ability to invest in improving the quality of child care and to encourage providers to meet higher standards. Concerns With Regulations for the "At-Risk" Child Care Program While we are concerned about a number of issues addressed in the At-Risk regulations, there are two provisions that go far beyond the intent of the law and limit the flexibility of states to insure that public funds are spent for child care that meets the most minimal health and safety standards. The first prohibits states from applying standards that apply to other subsidized care but not to unsubsidized care. The second limits states ability to establish a meaningful registration process. Standards for Subsidizod Care The proposed regulations provide, both for FSA and At-Risk child care, that states can only apply standards to subsidized care that they apply to all child care in the state, regardless of the source of funding. These regulations are unauthorized by statute, usurp determinations left by statute to the states, and use federal funds to put children at risk. The rationale for the proposed regulation is that allowing states to impose additional protections on subsidized care will restrict parent choice and fail to support a family in its guest for self-sufficiency. CDF has consistently stood for maximizing parental choice in child care. However, parent choice does not require a state to offer a choice of child care that fails to provide what the state determines is the minimum necessary protection for a child. Parental choice can and should be expanded in many ways: through adequate rates that give parents access to a greater PAGENO="0121" 115 range of care; through improved child care counseling initiatives; through efforts to create full-day, full-year options so that working parents can choose to place their children in Head Start and have their child care needs met; and through greater emphasis on building the supply of child care for special needs populations and for low-income areas where supply is limited. The concept of parental choice, however, does not mean that states must pay for care they determine is unsafe, inappropriate, or places a child at risk. Proposed Section 255.4 (c~ (2]~ exceeds the Secretary!s authority ~n~er this Zsni1~ ~I~PPQ~t &~t. There is nothing in the Family Support Act that bars states from applying protections to care paid for through IV-A if those protections apply to subsidized care but not to unsubsidized care. The FSA explicitly recognizes that in some instances states will re9ulate care paid for with IV-A funds even if the same regulations do not apply to unsubsidized care: under the Act, states must have health and safety protections, including fire safety protections, that apply to all center-based care paid for under the Act (even if some of that center-based care is otherwise exempt from generally applicable s~ate regulation); and states must ensure parent access to the caregiver, even if the state does not include a parent access requirement in its generally applicable state standards. The Act also requires states to endeavor to develop health and safety protections, including fire safety protections, for family day care funded through the Act even if the state otherwise does not have health and safety protections. Thus, the statute clearly recognizes that there are instances in which it is appropriate to regulate publicly subsidized care even if the state does not apply the same regulations to unsubsidized care. The FSA leaves up to states the decision about what the contents of child care standards should be (including the health and safety requirements described above): child care paid for with IV-A funds must meet "applicable state and local standards" that are not prescribed by federal law. Legislative history specifically indicates that it "is not the intent of Congress to stipulate specific day care standards for states or localities." In light of this history, and of the structure of the rest of the child care provisions in the Act, we believe that the requirement that child care must meet "applicable" state and local standards reserves to states the discretion to determine which laws are "applicable." The determination of what constitutes an "applicable" state or local standard is uniquely a question of state law.±J It should be left up to the state unless there is an explicit instruction that federal interpretation of state law should be substituted. There is no such instruction in this case. Where Congress intended to allow HHS to intervene in the states' determination of what is "applicable" in a state, we believe Congress was explicit in authorizing HHS to direct decisions that might otherwise have been solely a matter of state discretion. Thus, for example, the FSA contains explicit language concerning HHS intervention in what might otherwise be a state determination of an "applicable" local market rate for child care. The Act was explicit that it expected guidance from the Secretary about what "applicable" meant. Section 304's market rate provision states that the "State agency may not reimburse the cost of child care provided with respect to a ±1 In determining what is "applicable" law, states are not restricted to law that is already on the books. Congress recognized that state regulation was not static, and encouraged state efforts to "improve their child care licensing and registration requirements and procedures. . ." by authorizing $13 (and subsequently $50) million to support such efforts. PAGENO="0122" 116 family in an amount that is greater than the ~pp1icab1e jqg~J~ market ~: ins determjj~ by the ~ jn sccor~~g~ vit~h regulations issued ~y ~ Secretaryj." There was no similar delegation of authority to the Secretary to interpret what is an "applicable" state or local child care standard. Thus, our reading of the Act is that states, not the Secretary, have discretion to determine what standards should apply to child care paid for under the Family Support Act. While states are not required to regulate informal care provided through the Family Support Act, they have the option to do so if they choose. Proposed Section 257.41 Exceeds tbs Secret~ry~ Authority IZn~er tbs At-Risk St~tu~. Just as there is nothing in the FSA that authorizes the Secretary to prohibit states from determining what constitutes an applicable standard, nothing in the At-Risk statute authorizes the proposed regulation limiting state discretion to determine what standards apply. The statutory requirement is that "the care involved meets applicable standards of State and local law...". Here, as in the FSA, the determination of what standards are "applicable" is clearly left to the states. When the "At-Risk" statute intended to let HHS limit state discretion about what local conditions applied, Congress was explicit about authorizing HHS to do so. Thus, in the section on local market rates, the statute explicitly states that HHS can establish a methodology limiting state discretion to determine the "applicable" local rate: The State agency shall make payment for the cost of child care provided under paragraph (1) with respect to a family in an amount that is the lesser of - (ii) the applicable local market rate (as determined by the State in accordance with regulations issued by the Secretary). No such reservation of discretion is made to the Secretary to determine what constitutes an ~applicab1e" state or local standard. Where the determination so clearly involves questions of state and local law that would ordinarily be resolved by states, no such reservation can be implied. Moreover, it is clear by the structure of the At-Risk statute that the At-Risk requirements go beyond those applied to all child care. For example, federal At-Risk funds are available only for child care that is licensed, regulated, or registered (except in the case of an individual that provides care solely to members of the individual's family). The requirement that all such care be licensed, regulated, or registered goes well beyond requirements in most states for unsubsidized care. Similarly, the requirement that all At-Risk providers allow parental access, although a CDF survey prior to enactment of the At-Risk provision found that only 21 states had parent access rules that applied to unsubsidized care as well as to subsidized care. Thus, some of the very protections imposed as a condition of federal funding for subsidized care go significantly beyond those required for unsubsidized care. Tbe proposed ~ fly in th~ ~L state~ historical regulation ~ subsidized ç~. States have historically applied greater protection to subsidized care than to care that is not subsidized. State governors, administrators and legislators have frequently told us that they believe strongly that if government dollars are used to purchase child care for low income and at risk children, they have a responsibility to try to ensure that children are not placed with caregivers who will endanger their health or safety. For fiscal reasons, states may not offer such protections to all children in family day care. Many states take seriously the need PAGENO="0123" 117 to craft a "seamless system" of child care services, and to ensure continuity of care for children who move from one subsidy program to another. Their efforts to provide seamless protections for all children in subsidized care will be frustrated by the roadblocks set up by the proposed regulations since child care funded by the Child Care and Development Block Grant must meet health and safety protections. States' longstanding concern with protecting children in subsidized care is reflected in the results of a just-completed CDF survey of the major subsidized child care programs in each state. This survey found a widespread practice of greater protection through regulations and standards that apply to subsidized programs than through those that apply to all child care: o Only five states allow state funds to go to unregulated family day care without requiring such care to meet any requirements at all. Many states require such otherwise unregulated care to become licensed or regulated. Additionally, twenty-two states will use state funds for unlicensed family day care programs only if they are self-certified or if they comply with requirements that typically involve health, safety, or quality protections for children. These registration requirements vary widely, from simply an age requirement in two states (NH, OR), to substantially more in many others (e.g., criminal and child abuse background checks, first aid training, a physical exam, and a home visit). o Of the 14 states that fully or partially exempt religious-based programs from generally applicable licensing standards, eleven require these programs to meet ~ licensing requirements in order to receive public funds. o More than half of the states that pay for relatives through their major subsidized care program require those relatives to meet health, safety, or quality requirements of some sort. These protections are typically modest and geared to child health and safety. For example, Rhode Island requires that relatives be over 18, sign an ethical statement, and satisfy a protective services and criminal background check; and Washington state requires that relatives (not immediate family) be 18, have a TB test, be mentally and physically healthy, and pledge not to use corporal punishment or emotional abuse. o Some states require licensed programs to meet requirements different from general licensing standards as a condition to receiving public funds. In FY 1990, 11 states required licensed programs to meet additional quality requirements (such as staff-to-child ratios, ability to make appropriate social services referrals, and teacher training). Seven other states had additional requirements that were not related to quality (such as having to sign nondiscrimination or code of ethics statements). Thus, the longstanding and overwhelming state practice has been to use a different set of "applicable" state and local standards for publicly subsidized care than for child care in general. Regulations that prohibit states from continuing this practice for At-Risk and FSA child care ignore the history of what standards have been determined to be "applicable" in the public subsidy context. Failure to ~]J~Q~ States ~ ~ppl,y ~gj~ Protections ~ ~ Children ~ Unconscionable Riu1c~ The effect of the proposed regulations will be to deny low- income children protection that states want to give them: o Alaska administrators report that they have been told that they cannot require unlicensed providers to take a TB test as a condition of At-Risk funding, even though they report an unusually high incidence of TB in Alaska; PAGENO="0124" 118 o Wisconsin administrators report that they have been informed that they cannot require a criminal background check even if they have strong reason to believe that a proposed provider has a record of child abuse; o Ohio would be unable to continue its certification process for publicly funded caregivers, despite the fact that home visits under this program have found concealed weapons and drugs in the homes of would-be caregivers; and o The 13 states that do not require all children to be immunized before they enter family day care could not require providers serving subsidized children to ensure that children in their care are immunized. Barring states from crafting such protections is particularly harmful because avoidable childhood diseases, including measles, once nearly eradicated, are again on the rise -- largely due to failure to immunize pre-school children. Federal Centers for Disease Control data show that only about half of two year olds in inner cities are immunized, and that most measles outbreaks are concentrated among children in poor, inner-city families -- the very children targeted by these child care programs. The regulations would deny states the opportunity to provide even the most modest protections for publicly funded care, much less any kind of quality assurance. We know from Head Start that quality assurances have immediate and long-term benefits for low- income children. States would be barred by the proposed regulation from providing similar benefits to At-Risk and FSA children based on the source of their public subsidy. Even more disturbing, states would be precluded from providing even the most basic health and safety protections. As we have discussed, these protections generally have not been elaborate, but rather have focused on the most basic safety issues. They have typically involved low-cost, non-intrusive provisions highly correlated with child safety. Based on experience, they are also highly appropriate safeguards to impose on publicly funded care. For example, as part of New Jersey's REACH program, local child care agencies voluntarily inspect homes of informal caregivers. In Elizabeth, New Jersey, inspections of 38 homes found a high incidence of potentially serious conditions: 32 homes did not have electrical outlets covered; 26 failed to keep toxic substances out of reach; 22 failed to maintain electrical cords in good repair; 18 failed to have a smoke detector on each floor; 24 did not have accessible First Aid supplies; and 8 had obstructed stairs, halls or exits. Community Coordinated Child Care, 1988 Reach Report at 12. Such threats to child safety are readily identifiable and correctable without significant cost or risk of deterring providers. States should not be denied the tools they need to check that caregivers put up bleach or corrosive plumbing supplies rather than leaving them at a young child's level; that electrical sockets are protected from inquisitive toddlers; that homes have smoke detectors so that children escape tragedy; or that exits are not blocked so that children can get out in an emergency. There is no permissible purpose served by denying states the flexibility to apply such protections for children. Regulations Need Not Deter Family Day Care Providers From Operating Legally and Serving Low Income Children. Concern has been expressed that regulation will force children into center-based care because providers will not be able to meet the regulations. Reasonable regulations coupled with support to providers to help them comply need not deter family day care providers from operating legally. They can support providers and help them to improve their caregiving as well as provide more child care options for parents and children. PAGENO="0125" 119 For example, Minnesota, a state with fairly rigorous standards for family day care has 13,000 licensed family day care providers -- the largest number of regulated homes per capita in the country. Over half (52 percent) of that state's subsidized child care is provided in family day care homes or by regulated informal caregivers. Wisconsin's experience also provides a useful illustration. The state requires informal care givers to be certified in order to receive state and federal funds through its subsidized care program. These certification requirements are fairly strong and include requirements that providers meet health and safety standards, be subject to an inspection, and receive training in a number of areas. Yet even this approach has not precluded widespread use of informal care arrangements: certified care givers make up more than one-third of the child care receiving public funds through the state's subsidized care program. Restrictive Registration Provisions Further Deny Children Protections The regulations further undercut quality protections through their extraordinarily narrow definition of what can be included in the registration process for otherwise unregulated providers. The At-Risk statute provides that except in the case of a family member providing care only to other family members, providers paid with At-Risk funds must be either licensed, regulated, or registered. However, the proposed regulations provide that during the registration process states can only collect information necessary to pay providers or to furnish information to them. Registration cannot be used as a way of ensuring that informal caregivers meet even the most minimal health and safety standards, even if that is how states have previously used registration. This extremely narrow definition of registration is not supported by the statute. It is clear that the registration process was intended to involve some regulation and review, rather than simply collection of the provider's name and address for payment purposes. The reporting requirements in the legislation include registration in the description of child care licensing and regulation: (B) Each report prepared and transmitted by a State shall set forth (iii) the child care licensing and regulatory (including registration) requirements in effect in the State with respect to each type of service Similarly, the reporting provisions require states to report "the enforcement policies and practices in effect in the State which apply to licensed and regulated child care providers (including providers required to register)." If the registration process was to be a purely ministerial act for payment purposes, there would have been no point in requiring states to report enforcement policies and practices applied to registered providers. Rather, it seems clear that the registration process would include some form of state regulation, review and enforcement. The registration process is also far more limited than registration procedures that have been employed successfully by many states, and that were in use by them at the time of the At- Risk statute's passage. A just-completed CDF survey of the major subsidized child care programs in each state found that only five states allow funds to go to unregulated family day care without requiring it to meet any requirements at all. The overwhelming number of states that pay for "informal" caregivers they do not require to be licensed use registration or self-certification procedures significantly broader than those authorized by the proposed regulation. Such registration requirements are PAGENO="0126" 120 typically modest, and targeted at protecting a child's health and safety. For example, o Kansas reported that all family day care homes must be registered, a process that includes filling out a form testifying that the home meets a number of basic health and safety requirements, that the provider has had first aid training, that children will be immunized before entering care, and that the provider has a substitute in case of emergency; o Wisconsin requires certification, a process that includes meeting certain health and safety requirements, having a physical exam, an inspection of the home, and 10 hours of training; o West Virginia requires background checks, including checks of child abuse and neglect registries; annual on-site inspections; health and safety requirements; parental involvement; no corporal punishment; and minimal curriculum involvement; o Arizona requires exempt family day care homes to be certified, a process that includes quarterly in-home inspections; o Vermont requires that self-certified providers have three references, have their heating systems checked, be willing to comply with random in-home visits, and read the provider manual; o Nebraska requires that otherwise exempt family day care homes meet age requirements, and satisfy criminal background, child abuse and neglect, and adult abuse and neglect background checks. Nothing in the statute indicates that there was an intent to prohibit states from following similar registration procedures in the At-Risk context. Nothing in the requlatory record suggests that such procedures have unduly limited access to care or are inappropriate exercises of states' authority to protect the children they serve. Low-Income Parents Do Not Necessarily Prefer Infor~a1 Child Care In attacking state efforts to protect the health and safety of children and to ensure accountability in the use of public funds, critics typically rely upon popular misconceptions that all or most low-income parents prefer informal child care arrangements for their children. Research demonstrates that low-income parents want the same kinds of things for their children as do their more affluent counterparts--a quality, safe, reliable, convenient, and loving environment for their children where they trust the provider. While low-income working parents are more likely than higher- income parents to rely upon informal care arrangements, they also are far less likely to be able to afford the higher costs of formal child care programs. When income rises, research suggests that substantially more low-income parents choose these options. Similar to more affluent parents, many low-income parents with infants and young toddlers prefer to place their children in the care of relatives. When relatives are available to provide such help, studies have shown that relative care in the home can be very reliable. Yet in the absence of relatives who can serve as child care providers, a heavy reliance on informal care simply may force man~' parents to accept ad hoc arrangements that are fraught with difficulties. The instability of informal care by nonrelatives poses major problems for AFDC families in education, training, or employment programs. A recent Urban Institute evaluation of welfare-to- employment programs in Massachusetts and Washington State found that informal care by nonrelatives was the least stable form of PAGENO="0127" 121 child care used by families receiving AFDC, lasting roughly half as long as center-based care arrangements. Another evaluation of the Massachusetts program revealed that job retention among AFDC parents with children under age 6 was at least 50 percent higher when they relied on child care centers as opposed to family child care homes or informal care arrangements. Parents -- particularly those with preschool-age children -- also frequently are dissatisfied with the lack of emphasis in informal care on early childhood development. For example, in a study of child care use in three cities by Mathematica Policy Research, roughly three in four parents who were dissatisfied with their child care arrangements wanted to move their children into child care centers and preschool programs. The most common reason behind this desire to change arrangements was to help their children learn more during the time spent in child care. certainly, if parents choose to place their children in informal care, they should have the option to do so. Similarly, however, states should have the discretion to create protections for children in informal care -- just as they create protections for children in other child care settings. The concerns of low income parents with the quality of informal care indicate that such protections are consistent with the desire of low income families as well as legally appropriate. Concerns with Proposed Regulations for the Child Care and Development Block Grant We also have serious concerns about a number of the proposed regulations for the child care and Development Block Grant. In significant instances, they violate the letter or spirit of the Block Grant, and in others undermine the Department of Health and Human Service's own intent to create a "seamless service" system. Several provisions not only limit state flexibility but undermine current state practices to encourage quality child care for low-income children. The regulations undercut state flexibility to construct quality protections in several ways. The regulations use "parent choice" to impermissibly restrict state discretion to create additional protections for Block Grant child Care. The Statute allows states to impose more stringent standards and licensing or regulatory requirements for child care providers of Block Grant services. However, the regulations dictate that such provisions cannot "significantly restrict" parental choice by expressly or effectively excluding any category of care, type of provider, or type of provider within a category of care; by limiting parental access to or choice from among such categories of care or types of providers; or by excluding a significant number of providers in any category of care or of any type. This extremely vague measure for whether additional state protections limit parent choice may discourage states that want to protect children in Block Grant child care from doing so. Using such a vague measure, state protections that are both limited and reasonable (such as requiring a home visit, a fire extinguisher, a smoke detector, a minimal number of hours of first aid training, a criminal records check) could be viewed as limiting parent choice if a number of or a segment of providers do not want to comply with them. States should not be chilled from adopting such protections if they choose to do so. The regulations provide conflicting direction about registration and health and safety protections. The Block Grant requires that providers of services paid for under the Block Grant who are not licensed or regulated must be registered. Registered providers except for grandparents, aunts, and uncles must also meet the minimum health and safety requirements set out in the law. The regulations establish a very stripped-down registration process that must be simple and timely. The preamble indicates that such a process may involve simply giving the state agency the provider's name and address. However, the preamble also notes that states have flexibility in establishing a registration process, and observes that some states have PAGENO="0128" 122 procedures in effect under which providers must meet certain requirements (such as a health department certification) before payment is made. This clarification that states can build additional protections into the registration process is a useful one. However, as is the case with health and safety protections, the registration regulations require that registration provisions cannot limit parent choice, potentially chilling states from creating a meaningful registration process. The regulations severely limit states' ability to use funds for quality improvements. The Block Grant statute authorizes 75 percent of funds to be used for child care services and for activities designed to improve the quality and availability of care. The accompanying conference report indicates that a "preponderance" of the 75 percent funds be "spent on child care services and a minimum amount on other authorized services." The regulations interpret this legislative history by providing that in the first two years, states can only spend a total of 15 percent of the 75 percent portion on both administration and on activities to increase availability. After that, only 10 percent of the 75 percent portion can be spent on these activities. Because the statute requires states to operate a certificate program which is costly to administer many states will have to spend 10 - 15 percent of these funds on administrative costs. Therefore, the practical effect of this regulatory provision is to deny states the option of spending any portion of the 75 percent pot of money on activities to improve the quality or the availability of child care. The regulations improperly require states to pay the same rates to informal providers who are not providing services of equal quality as those provided by formal providers. Many states now set different rates for providers who provide child care that meets a lesser standard. Several as we discussed previously offer higher rates to programs which meet certain higher standards. Others were planning to do so with new Block Grant funds to encourage higher quality child care. The Block Grant provides that states must set "payment rates that take into account the variations in the costs of providing child care in different settings ..." The regulations prevent states from complying with this statutory mandate by requiring states to pay formal and informal caregivers identically even if they are subject to different regulations and are therefore providing child care in different settings. While the regulations on their face do not require states to violate the statutory mandate, the preamble does, by prohibiting states from differentiating rates based on the type of provider: [P]ayment rates should not be based on the type of provider. For example, care provided by a sectarian child care provider or by a relative would not be considered a catec~ory for the purpose of determining rates, and those providers must be reimbursed at the same rate as other providers in the same category. Thus, a relative taking care of a child in the relative's own home would receive the family child care rate; a relative taking care of a child in the child's own home would receive the in-home rate. Preamble, 56 Fed. Reg. at 26207 This preamble discussion requires a result contrary to the statutory mandate, since it assumes that different "types of providers" within the same very broad category of care (e.g., family day care, center-based care) wIll be providing care in the same setting and at similar cost. This assumption is simply incorrect. For example, a caregiver providing care in her home may not be subject to family day care regulation because she has fewer children in care than the number that triggers state family day care regulation. This "informal" caregiver will be subject PAGENO="0129" 123 to minimum health and safety requirements, but these requirements may not be the same as those that apply to family day care. If the family day care requirements are more stringent, the cost of providing care in a regulated family day care home may be greater than the cost of providing care for an informal provider. Similarly, a regulated family day care provider may be subject to additional training requirements that enhance the quality of care provided and make it care of a different type altogether than that provided by an informal caregiver (for example, training in child development, appropriate child discipline, First Aid, or CPR). Yet the preamble requires states to pay the same rates for these two types of caregivers because they both provide care in a family-like setting. Finally, certain relatives are not subject to minimum health and safety requirements under the Block Grant. Other relatives may be subject to these health and safety requirements but nevertheless may be exempt from other family day care requirements if they are only caring for related children. Indeed, a single relative exempt from family day care requirements may be caring for a much larger number of children, at a much less costly "staff-to-child" ratio, than a nonrelative subject to family day care regulations and staffing ratios. These distinctions all make a difference in the cost of care and indeed may result in a different "type" of care altogether. The. preamble improperly prohibits states from taking these differences into account in their ratesetting. The fact that a regulated provider and an unregulated one may both be providing care in their home does not necessarily mean that they are providing care in the same setting or are the same type of provider. Differences in regulation may result in real differences in the quality or cost of care provided. In such cases, states should be able to adjust their rates accordingly. State Flexibility to Ensure Safe Child Care is Essential. The debate that the proposed regulations engenders is an unusual and extraordinarily disturbing one. The Administration seeks to reopen a debate through the back door that we believe was resolved during deliberations on child care legislation when Congress reserved to the states rather than the federal government the responsibility for the content of child care standards based on particular conditions in their regions. The Administration which adamantly opposed federal standards is now attempting to set a federal standard for states--one which denies them the flexibility to set the barest minimum protections for children and denies parents the choice of safe child care. These regulations send a dismal signal from Washington about how we as a society value our children. 51-713 0 - 92 - 5 PAGENO="0130" 124 Acting Chairman DOWNEY. Thank you, Helen. Let me ask you about your hypothetical kingdom. [Laughter.] As you read these regulations, you come to the same conclusion that Dr. McDermott and others have come to. That the States, in order to receive this money, will be forced to reduce their require- ments and pay less or pay more for care that is not sufficient. Ms. BLANK. Absolutely. Many States have separate standards. Their applicable State and local standards are different for subsi- dized child care, and they will not be able to use those standards when they take the at-risk money. Currently 13 States exempt churches from licensing, but 11 of them require churches to be licensed to receive public funds. That's a compromise they made. At least they were going to cover chil- dren who were at risk. They will not be allowed to have health and safety protections for the children in these- Acting Chairman DOWNEY. So the practical consequences, as Ms. Barnhart pointed out, is not that TV-A money would be denied the State. The parent would be able to decide the care that he or she chooses, and the State will not be able to enforce its regulation. Ms. BLANK. That is true. Unless the State of New Jersey decides that they are not going to take this money if they can't have those minimal protections on the children in family day care, if they say we insist on these protections, then technically I would guess they would be denied the money, because they can't use the money the way the regulations are written in subsidized care if it meets a dif- ferent standard. Acting Chairman DOWNEY. Well, let me go over Mr. Gibbs' point to us as well. Was he saying that you may no longer pay more for regulated care than for nonregulated care? Ms. BLANK. Right. That is another serious issue that I talked about. I talked about it related to enriched standards, but there are many States-Connecticut is one, and I think Mrs. Johnson re- ferred to it. They pay less money to care that is exempt from standards. It costs less to provide this care. This care may not have to meet staff-child ratios, they may not have to meet as many health and safety protections, and States have typically paid less. Connecticut told me that they will have to serve half as many children as they planned because they are going to have to double their rates to what they call exempt providers. We have seen a trend across the country for States saying, you know, in order to make care better, we are going to offer programs that either provide enriched services like Head Start or meet a na- tional organization's accreditation standards or whose workers have a little more training. We will give them higher rates. And the administration has told them they can't do that. They have to give the exact same rate to all day care centers and to ev- eryone they put in the category of family day care homes. Acting Chairman DOWNEY. That is under the block grant? Ms. BLANK. It is under the block grant. Acting Chairman DOWNEY. Mr. Shaw. Mr. SHAW. Thank you. I will be very brief. Do you believe that unregulated care is inferior care or that regulated care protects the child more than unregulated care? PAGENO="0131" 125 Ms. BLANK. There are some studies that show that regulated care- Mr. SHAW. What studies are those? Ms. BLANK. We can get them to do. I think what- Mr. SHAW. Would you please do so, because I am not aware of any such studies, and I think- Ms. BLANK. There are some studies that also show- Mr. SHAW. I think it would be very helpful to have that as a part of this record. [The information follows:] PAGENO="0132" 126 10/11/91 Children's Defense Fund Thg Relationship Between Child Q~g Regulation ~ Child ~ Quality The following is in response to the question raised at the hearing concerning whether there is any evidence that regulated child care is of better quality than unregulated care. It shows that there is strong evidence to support the importance of regulations to protect the health, safety, and development of children in child care. 1) There is widespread agreement that regulations support good quality, and are essential to protect children's health, safety, and development. Several major national studies, reflecting the cumulative knowledge of wide range of experts, have supported the strengthening of child care regulation as an essential step to improve the quality of care. Three of these studies were released in recent years. See, for example, the recent report of the bipartisan National Commission on Children, Beyond Rbetoric: A ~iss~z American ~genda LQX Children ~nd Families, which concludes that "regulations ... are one important means of fostering high- quality child care.. ."(p 268); the National Research Council's (NRC) recent landmark study Who Cares LQx America's Children? Child ~ Policy for ~hs l99Gs, which includes national child care regulations as one of its primary recommendations to improve child care quality (p xv and 310-311); and the National Child Care Staff ing Study, ~hn Cares? Child Q~re Teachers and tils Quality g~ ~ in America, which proposes improving federal and state child care standards as a key component to improve quality. The federal government also has repeatedly recognized the importance of standards and regulation to protect children's health, safety, and development. Head Start programs, for example, are required to meet a variety of performance standards to ensure that children receive good quality care. Child care programs and family day care homes receiving funds from the Child Care Food Program are required to meet applicable state and local standards. The Department of Defense also has regulations and requirements for child care programs (both centers and family day care homes) serving military personnel. As a spokesperson for the Department of the Army testified before the Senate Labor and Human Resources Committee on January 24, 1989, "Army standards have been developed to minimize the possibility of injury, abuse or neglect, and to decrease the number of situations where children might be at risk." She goes on to comment on the importance that the Army gave in its development of standards to those "issues and areas most critical to safe, quality early childhood programs" and emphasizes the importance of such regulations in ensuring "consumer protection for the parents and the taxpayers." PAGENO="0133" 127 Similarly, numerous national professional organizations have proposed model standards, or suggested standards to ensure the quality of care. See for example, the National Research Council's discussion in ~ Cares ~ America's Children of the various quality standards suggested by the National Association for the Education of Young Children, the National Black Child Development Institute, the Child Welfare League of America, and others (see page 99). The importance of good standards and regulations for setting a baseline of care is also shown by the decision of the American Public Health Association and the American Academy of Pediatrics to engage in a multi-year project to develop a set of model standards for states to use to improve the quality of care. 2) There are a number of studies that support the importance of regulation, and show that, on average, regulated care is of better quality than unregulated care. Centers: There are several studies that show that regulation and standards are related to better quality programs in child care centers. For example, a just-released study funded by the U.S. Department of Education and conducted by Mathematica Policy Research, mc, examined the supply of child care and early childhood education programs. This study, ~ Profile ~ Child ~ Settings: Early Education nn~ ~ ft 191Q, examined the quality of child care programs by asking the directors of pro9rams to self-report on issues such as group size, etc. While it is likely that these results are somewhat biased by this approach, nonetheless, this study found that regulations made a difference in the quality of the program. In particular, the study examined the total number of children cared for in a group, as group size has been repeatedly shown to be related to quality and to children's development.l/ They looked at reported group sizes in programs that were not subject to state regulation, and found that "centers" that conformed with state group size regulations (eg were in states with group size requirements) had significantly smaller group sizes than did "centers" that were not subject to such regulations.2/ For example, conforming centers reported average group sizes of 7 infants, while those that were not subject to 1/ Group size is one of the few factors where regulated programs can be easily compared to unregulated programs, as many states do not regulate group size at all and therefore the sample of programs that are not subject to this regulation is large. 2/ This study is unusual, in that it included programs not usually thought of as "centers" in this category -- in particular, public-school preschool programs, Head Start programs, and part-day programs. PAGENO="0134" 128 such regulations reported average group sizes of 9.6 infants per group. [The Federal Interagency Day Care Requirements recommend no more than 6 infants in a group for quality care, and the National Association for the Education of Young Children recommend up to 8 infants if the staff is well trained.] The National Child Care Staff ing Study found, based on intensive observations of child care centers, that the centers that provided better quality services were those that met higher standards. They also found a clear association between children's development and whether their program met higher quality standards. Family Day Care: The National Research Council concluded from their extensive review of the literature that the research suggests that the regulatory status of family day care and the quality of care is linked -- concluding that "on average, caregiver behavior appears to be more stimulating in regulated or sponsored family day care, and children's development differs accordingly." (p 96) Studies that support,this conclusion include the National Day Care Home Study, a study funded by the federal Department of Health Education and Welfare (now HHS), which found in the late l970s that regulatory status was related to quality. Specif i- cally, it found that unregulated caregivers had the lowest levels of caregiver interactions and spent significantly more time uninvolved with the children. Homes where the caregiver was regulated and involved with a family day care network had more teaching activities, more facilitation of language, and more structured activities. A study in Victoria, Canada found in a survey of regulated and unregulated family day care homes that 13 of the 15 that were rated as high quality were licensed, while only 2 out of 11 of the low-quality programs were licensed (Goelman and Pence, 1987). They also found clear negative outcomes for children in the poor quality programs -- they scored lower on measures of language development, and engaged in fewer structured fine- and gross- motor activities and fewer art and music activities. 3) Research has repeatedly shown that good quality child care makes a difference in children's lives. High quality early childhood and child care programs can provide children -- especially those from low-income families -- with the foundation they need to do better in school and to lead more productive lives. o A review of the wide body of research on the effects of good quality preschool education for at-risk children, conducted for the U.S. Department of Education in 1988, found that such programs have an effect on six major areas: improved cognitive abilities, improved classroom learning behavior, PAGENO="0135" 129 gains in socio-emotional development, higher family satisfaction and stronger parent-child relationships, greater likelihood of long-term school success, and improved likelihood of long-term social and economic self- sufficiency. High quality programs were found to have a number of characteristics, include limited group sizes and limited numbers of children per staff member. (Balasubra- maniam and Turnbull, `Exemplary Preschool Programs for At- Risk Children: A Review of the Literature," U.S. Department of Education, November 1988.) o Comparison studies between groups of low-income three- and four-year-olds showed that by age 19, the group that had attended a quality early childhood development program was more likely to be literate, employed, and enrolled in post- secondary education and was less likely to be school dropouts, dependent on welfare, or arrested for criminal activity or delinquency than those who had not attended. (See Changed Lives: The Effects g~ ~Ji~ Perry Preschool Programs gj~ Youths Through ~ j~, High/Scope Press, Ypsilanti, Michigan and Evaluation Q~ ~ ~ Y~rJ~ t~ Experimental Prekindergarten Program. Final Report. New York State Education Department, Albany, New York.) o One dollar of federal monies invested in preschool education returns about $6.00 in savings because of lower special education and welfare costs and higher worker productivity (Opportunities fQ~ Success: ~ Effective Programs LQ~ Children, House Select Committee on Children, Youth and Families, update, 1988). On the other hand, poor quality child care can have devastating results: o Children attending lower quality centers and centers with higher rates of staff turnover have been found to be less competent in language and social development. (Child Care Employee Project, Who Cares? ~fld ~ Teachers ~ Quality ~ j11 America, Executive Summary of the National Child Care Staffing Study, Oakland, CA, 1989.) [For a comprehensive and expert review of large body of research showing the strong relationship between the quality of child care and children's development, see pages 65-77 of the National Research Council, ~ Cares f~Q~ America's Children.1 PAGENO="0136" 130 Ms. BLANK. There are studies that show that higher quality care, especially for poor children, can make a difference. That is why ev- erybody supports Head Start. Mr. SHAW. Do you know who has done these studies? Ms. BLANK. They have been done by several universities, several child development specialists. Mr. SHAW. Can you name any? Ms. BLANK. One was-I can't remember the names right now, but we can get them to you. Mr. SHAW. You don't know who- Ms. BLANK. I can't remember them- Mr. SHAW. You know studies have been done, but you don't know who has done them then? Ms. BLANK. I can't, but- Mr. SHAW. Have they concluded- Ms. BLANK. There have been a number of studies- Mr. SHAW [continuing]. That regulated care is better? Ms. BLANK [continuing]. That have shown in some cases-in North Carolina, they looked at- Mr. SHAW. I am talking about a general proposition. In some cases, I am sure that- Ms. BLANK. The National Research Council looks at this issue, and they have quite a few sites. In a massive study they did on the quality of child care, and I am trying to- Mr. SHAW. The National Research- Ms. BLANK. The National Research Council of the National Acad- emy of Sciences did a major study on child care and issued a book about 2 years ago, and in it they recommend national child care standards. Mr. SHAW. That study that you are referring to, I am told by staff, is just a review of other studies. Ms. BLANK. But in that study, they review other studies and they come to the conclusion. Mr. SHAW. What studies do they review? Ms. BLANK. Again, we will get you the studies. Mr. SHAW. OK. Ms. BLANK. I think what is important too is we are not talking about major complicated regulations. We are talking about smoke detectors and fire extinguishers. The Perry preschool study-I mean, if you want to look at care for poor children-found that high quality preschool made a huge difference in children's future and Head Start-like programs where children participated had children less likely to be juvenile delin- quents, less likely to be pregnant adolescents, more likely to be in jobs. Mr. SHAW. Well, if there are such studies, as I asked for them, I would appreciate your making them available to us. Ms. BLANK. OK. Acting Chairman DOWNEY. Thank you, Helen. Ms. BLANK. Thank you. Acting Chairman DOWNEY. The subcommittee will next hear from a panel comprised of a representative of the American Public Welfare Association, Claudia Langguth, deputy commissioner, State of Texas; and of the National Association of Counties, Ruth PAGENO="0137" 131 Brandwein, commissioner of the Department of Social Services in my county. Ladies, thank you for waiting so long. Your reward for having waited so long is to be required to summarize your statements within 5 minutes. Claudia, if you would begin. STATEMENT OF CLAUDIA LANGGUTH, DEPUTY COMMISSIONER, CLIENT SELF-SUPPORT SERVICES DIVISION, TEXAS DEPART- MENT OF HUMAN SERVICES, ON BEHALF OF THE AMERICAN PUBLIC WELFARE ASSOCIATION Ms. LANGGUTH. Good afternoon Chairman Downey, members of the subcommittee. I am Claudia Langguth, deputy commissioner for client self-support services for the Texas State Department of Human Services. I am also responsible, as part of my job duties, for the child care program in the State of Texas. We have recently put in place a comprehensive child care system that fully coordinates nine sources of State and Federal funding, including a preliminary allo- cation of $67.8 million in child care and development block grant funds. Over the past 2 years, our total budget for child care will have quadrupled, primarily as a result of the new Federal child care leg- islation. I am testifying today on behalf of the American Public Welfare Association's National Council of State Human Service Administra- tors. APWA is a nonprofit, bipartisan organization representing all the State human service departments, local public welfare agen- cies, and individuals concerned with social welfare policy and prac- tice. I welcome the opportunity to present the views of State and local human service and child care administrators on the interim final regulations for the child care and development block grant and the notice of proposed rulemaking for the at-risk and Family Support Act child care programs. Let me first say thank you, Mr. Chairman, for your leadership and commitment to child care legislation. With the passage of the Family Support Act of 1988 providing child care assistance to fami- lies participating in the JOBS program and those on AFDC who are employed or leaving AFDC for work, we now have the opportu- nity with the block grant and at-risk child care to create a truly comprehensive, integrated child care delivery system for our Na- tion's most vulnerable families. We have six major points, three relating to the block grant and three relating to the at-risk and FSA child care regulations. Some of those points have already been discussed previously, and I am not going to reiterate them again. We concur with Commissioner Gibbs' concerns regarding safe- guarding parental choice, and our remarks and APWA's remarks are in our written testimony. We are very concerned about the potentially serious conse- quences-the loss of block grant funding-for violating the provi- sions of parental choice. It is essential that States know in advance PAGENO="0138" 132 whether a policy or process for ensuring quality is in violation of the parental choice safeguards. This could be accomplished via the State plan process, since States must describe the minimum health and safety requirements in the plan. If HHS approves a State plan, State policies and proc- esses for ensuring quality should be considered as meeting the safe- guard requirements. An issue that hasn't been discussed in detail today is limitations on the use of the 75 percent funds. The States support congression- al intent, as reflected in the conference report on the block grant, that a preponderance of funds under the 75 percent set-aside be spent on child care services, but we strongly disagree that the pre- ponderance be defined as 85 percent of the funds in the first 2 years and 90 percent of the funds thereafter. This requirement severely limits State flexibility to allocate re- sources to activities that improve the availability and quality of child care and to support required administrative activities. These administrative activities include training. It also includes recruit- ment of providers. And in addition, it includes counseling parents as to their best choice of child care. As has already been expressed, we are deeply troubled with the proposed regulations for at-risk child care that require a State to accept a parent's choice of a child care provider, even when the provider does not meet licensing or regulatory standards for that particular type of care. We think this will have a major impact on States because it fails to recognize the long-standing State policy of applying greater pro- tection to child care subsidized with public funds. We have several other remarks regarding that in our testimony. Let me talk to a couple of issues on the at-risk regulations. One is support of the elimination of the ceiling of the 75th percentile, which I think has been mentioned earlier. This is a very important issue for us. The Department contends it was the intent of Con- gress that payment rates for at-risk to be the same as TV-A child care under the Family Support Act, and by adopting this require- ment it will reduce the administrative burdens on States. We strongly oppose this provision. It fails to recognize that States also have a stake in controlling excessive spending and a re- sponsibility for being accountable for the expenditure of public funds. Removing the 75th percentile ceiling on FFP will not result in excessive spending. It will ensure that children eligible for TV-A care can access care that truly meets their needs. I would like to talk very briefly about the effects of these issues on Texas. We have been able to successfully construct a system that puts together nine sources of funds and 22 client eligibility groups to create a truly seamless system. We are very concerned that the conflicts presented in these two sets of regulations regard- ing payment rates, basic protection of children, and parental choice will severely impede our ability to continue this successful system. As an example, we serve many families whose children are not all eligible for the same funding source. A parent participating in the JOBS program may have one child eligible for JOBS child care and another child not on the AFDC grant whose care must be paid for with another funding source. PAGENO="0139" 133 If we were not able to establish uniform requirements for pay- ment rates and protection of the children's basic health and safety, this family may have two children placed with two different child care providers who are paid under different rate structures. In ad- dition, one of the providers would be subject to basic health and safety standards designed to protect the child while the other is not. If modifications are not made in the final regulations, this family will face a confusing and disjointed system of care. Parental choice will not be ensured. It will be severely limited. In Texas, we have made a serious commitment to coordination of funding sources and provision of seamless service to families. We urge HHS to make the same commitment within its own organiza- tional structure and in the issuance of final regulations. The children of Texas and our Nation are our most precious re- source. Our future depends on them, and their future depends on us. The policies and guidelines which govern their care must be written and spoken with one voice. Thank you again for the opportunity to testify on behalf of APWA, the National Council of State Human Service Administra- tors. I will be happy to answer any questions. [The prepared statement follows:] PAGENO="0140" 134 TESTIMONY OF CLAUDIA LANGGUTH AMERICAN PUBLIC WELFARE ASSOCIATION Good morning Chairman Downey and members of the Subcommittee. am Claudia Langguth, deputy commissioner of the Texas Department of Human Services. I am testifying today on behalf of the American Public Welfare Association's National Council of State Human Service Administrators. APWA is a nonprofit bipartisan organization representing all the state human service departments, local public welfare agencies, and individuals concerned with social welfare policy and practice. In my role as Texas Department of Human Services deputy commissioner for Client Self-Support Services, I am responsible for the administration of our child care program. We have recently implemented a comprehensive child care system that fully coordinates nine sources of state and federal funding. Over the past two years our total budget for child care and quality improvement activities has quadrupled. This dramatic increase is primarily due to the new sources of federal child care funding. Our budget for 1992 includes a preliminary allocation of $67.8 million in Child Care and Development Block Grant funds (assuming Congress does not impose cuts in the program) in addition to Title IV-A At-Risk Child Care funds. I welcome the opportunity to present the views of state and local human service and child care administrators on the interim final regulations for the Child Care and Development Block Grant and the notice of proposed rulemaking for the At-Risk and Family Support Act child care programs. Let me first say thank you on behalf of the state and local human service administrators, Mr. Chairman, for your leadership on and commitment to child care legislation. With the Family Support Act of 1988 providing child care assistance to families participating in the JOBS program and those on AFDC who are employed or leaving AFDC for work, we now have the opportunity with the Block Grant and At-Risk Child Care to create a truly comprehensive, integrated child care delivery system for our nation's most vulnerable families. I also want to thank you for scheduling this hearing today. It is important to the success of these two programs that there be a public forum to discuss the issues and concerns of the states on the regulations implementing the Block Grant and At-Risk Child Care programs. APWA and the states are committed to implementing the Block Grant and At-Risk Child Care programs as envisioned by Congress. In doing so, we place high value on ensuring that parents are provided maximum choice when making their child care arrangements. At the same time we value child care that provides for the best interest of children, where protecting the health, safety, and well-being of the child is of primary importance. We also place high value on states having maximum flexibility to integrate both programs with other federal and state funded child care programs in a manner that provides for a coherent system of child care for low income families. It is within this context that we commented on the regulations and appear before you today. APWA made a special effort to ensure that every state had an opportunity to participate in developing comments and recommendations on the regulations. We held three meetings with state administrators--two in Washington and one in San Francisco--to review and discuss the regulations following their publication in the Federal Register. We are pleased that 35 states were represented at these meetings and note that our comments on the regulations and testimony today reflect a consensus of those in attendance. PAGENO="0141" 135 We appreciate the efforts of Assistant Secretary Barnhart and her staff to reach out to a wide range of individuals and organizations while developing the regulations. Their cozunitment to an open process is to be commended. We also appreciate the timeliness in which the regulations were promulgated given the complexity of the issues they addressed. In my testimony today I will discuss six major points--three relating to the Block Grant and three relating to the At-Risk and FSA child care regulations. I would like to, by way of example, discuss how these issues impact the delivery of child care in Texas. I hope today to underscore the point that what should be at the heart of the discussion on these regulations is whether the regulations strengthen or impede the implementation of a coherent system of child care--first and foremost for families served by such a system and, second, for the states charged with the responsibility of administering the programs. It is critically important that we resolve any provisions that impede family access and efficient administration of the programs. The Block Grant In large measure APWA and the states are pleased with the Block Grant regulations. We are especially pleased that state discretion is provided to increase the availability of child care services, including early childhood development and before- and after-school care under the 25 percent set-aside. Great flexibility is also provided in establishing sliding fee scales and priority for child care services, including meeting the needs of children with special needs. While there are a number of issues that prompt our concern about the Block Grant regulations, I will highlight three that are particularly troublesome to APWA and the states: (1) the requirements for safeguarding parental choice; (2) the prohibition against differentiated payment rates for regulated versus unregulated providers; and (3) the requirements relating to states spending a preponderance of the funds under the 75 percent set-aside on child care services. Safeguardino Parental Choice As stated earlier, Mr. Chairman, APWA and the states strongly support the statutory and regulatory requirements that maximum choice be provided to parents in the selection of child care arrangements. We are concerned, however, that the regulations pose potentially serious conflicts for states charged with the responsibility for assuring that health and safety protections are in place while, at the same time, assuring that such protections are not deemed to be inconsistent with safeguards for parental choice. The preamble to the regulation states that if evidence--via HHS monitoring of grantees and the annual child care report--suggests that parental choice of certain categories of care or types of providers is limited due to state or local licensing or health and safety requirements, HHS will take corrective action. Section 98.30 (g) of the regulations specify that Block Grant funds will not be available to grantees if this requirement is not met. Nevertheless neither the preamble nor the regulation itself specifies what would constitute a violation of this provision other than to say that policies or processes should not have the "effect' of limiting parental choice. An example of this "effects test" provided in the preamble is that applying health and safety standards to child care occurring in family care or in-home settings would be considered troublesome and unreasonable because it could have the effect of limiting the availability of child care in those settings. PAGENO="0142" 136 Again, Mr. Chairman, we do not argue with the importance of protecting the rights of parents. We do contend that since there are potentially serious consequences--that is, loss of Block Grant funds for violating the provisions of parental choice--we should know in advance whether a policy or process for ensuring quality is in violation of the parental choice safeguards. This could be accomplished via the state plan process since there is a requirement that states describe the minimum health and safety requirements and the registration process. If HHS approves a state's plan, state policies and processes for ensuring quality should be considered as meeting the safeguard requirements. Subsequent disputes or complaints about a state's policy would be resolved by the state and parents and providers would have the right to appeal the disposition of a grantee to the Assistant Secretary. If the appeal process results in a finding that there are systemic barriers to parental choice the state should be required to modify its policy and only after a failure to do so should the state face a fiscal penalty. Payment Rates Mr. Chairman, one of the provisions most detrimental to state flexibility is the requirement that states pay the same rates to unregulated and regulated caregivers. This requirement is included in the regulations in spite of the fact that the statute provides that in setting payment rates states must take into account the variations in the cost of providing child care in different settings. The regulations incorrectly presume that different types of providers within the same category of care-- f or example relative care under the category of family child care providers--will be providing care in the same setting and at a similar cost. This presumption is incorrect. Many states, including Texas, do not requia~e all providers within the Category of family child care to meet the same regulatory requirements. Payment rates reflect the increased cost of care associated with being regulated. We strongly believe that the regulations should provide states with the option of setting lower or higher rates of payment for subcategories of providers within the same category of care in order to reflect the decreased or increased cost of care. Limitations On the Use of the 75 Percent Funds States support Congressional intent--as reflected in the Conference Report on the Block Grant--that a "preponderance" of funds under the 75 percent set-aside be spent on child care services. But we strongly disagree that "preponderance" be defined as 85 percent of the funds in the first two years and 90 percent of the funds thereafter. This requirement severely limits state flexibility to operate the program based on state and local need. Specifically, it limits our ability to allocate resources to activities that improve the availability and quality of child care and to support required administrative activities under the program. Both efforts are essential if states are to assure parental choice and implement and maintain a comprehensive child care system. APWA and the states believe there should be a more even balance between investing in child care services and improving the availability and quality of care than is provided in the regulation. Greater recognition should also be given to the costs of administering the Block Grant due to the need to implement and maintain an effective and efficient certificate system. PAGENO="0143" 137 Mr. Chairman, in our comments to HHS we proposed that the regulation be modified to provide that no less than 75 percent of the 75 percent set-aside be spent on child care services, and that no more than 25 percent be spent on activities to improve availability and quality and to administer the program. We believe our proposal is a modest change that upholds the intent of Congress by ensuring that a preponderance of funds are spent on child care services, and at the same time provides state flexibility to invest resources to improve quality and administer the program. At-Risk child Care Regulations With regard to the At-Risk Child Care regulations, I would like to discuss three issues: (1) the proposed regulation on child care standards for AFDC, Transitional, and At-Risk Child Care-- Section 255.4(c) (2) and Section 257.41(a) (2); (2) requirements for defining "At-Risk"; and (3) limiting federal financial participation to the 75 percentile. GenerallY Applicable Standards As explained by others today, this provision prohibits states from rejecting a parent's choice of a child care provider under Title IV-A when the provider does not meet licensing or regulatory standards for that particular type of care. I would like to take issue with several comments in the preamble to the regulations regarding the impact of this proposed rule on states. Specifically, the preamble (56 Fed. Reg. 29066) asserts that this provision will have limited impact on states since a state could extend standards for publicly-funded care to all care, and there is no requirement to develop standards or require that standards be uniform across all types of care. The department further asserts that states have been paying for care that does not meet publicly-funded care requirements for years through the AFDC disregard. APWA disagrees with these contentions. First, the regulation will have a ~n~jQI impact on states. It fails to recognize the long-standing state policy of applying greater protection to child care subsidized with public funds. According to a recent survey conducted by the Children's Defense Fund, only five states allow state funds to go to unregulated family day care without requiring that such care meets at least some requirements. Of the 14 states that fully or partially exempt religious-based programs, 11 require these programs to meet all licensing requirements in order to receive public funds. More than half of the states that pay relatives through their subsidized child care program require relatives to meet health, safety, or quality requirements of some kind. We also question the logic of the preamble's assertion (56 Fed. Reg. 29066) that states have for years been paying for care that does not meet state standards for publicly-funded care under the AFDC disregard, and that, therefore, this proposal would not conflict with existing applicable standards. The AFDC disregard is a deduction of a recognized child care expense and not a "payment" or reimbursement of such an expense. While the department may be accurate in asserting that expenses were for care that did not meet standards for "publicly-funded care," the assertion fails to recognize that such care, in some cases, probably did not meet ~ "applicable standards of state and local law." This is because "public" funds were not used and therefore state and local law did not apply. Second, while the preamble is accurate that states could extend standards for publicly-funded care to all care, the cost of doing PAGENO="0144" 138 so would be prohibitive given the extensive expansion of staff that would be needed to license providers and monitor compliance with standards. The burden of this cost would be borne by the states since Section 255.4(f) (2) of the regulations specifies that administrative costs for licensing are not considered an allowable IV-A cost. Further, funding levels for grants to states to improve child care licensing and registration requirements under Section 402(g) (6) would be insufficient to cover the increased cost of licensing. There is no guarantee that Congress will appropriate funding for these grants, and even if funds are appropriated up to the increased levels provided under OBRA 1990, half of those funds must be spent to train providers. Finally, and most importantly, we believe that Congress did not intend that federal funds be used to pay for care that state law deems to be ineligible to receive public funding under AFDC, Transitional Child Care, and At-Risk Child Care programs. In fact, in the case of At-Risk Child Care Congress did intend to allow states to impose additional requirements on unregulated providers other than those providing care solely to the family of the individual as shown by the requirement that providers who are not licensed or regulated must be registered. We have strongly recommended to HHS that the proposed rule be modified to allow states to determine which state and local standards apply to IV-A child care and to allow such standards to be limitedto publicly subsidized child care. Definition of At-Risk Mr. Chairman, as you know, for purposes of determining who is eligible for child care, the At-Risk statute provides that states may provide child care to any low-income family that the state determines is not receiving AFDC, needs such care in order to work, and would be at risk of becoming eligible for AFDC if child care is not provided. The proposed regulations require that the state must make a further determination that the family meets these criteria by requiring the state to define "at risk" other than in terms of income. APWA and the states are opposed to the requirement for an additional condition of eligibility other than that of income. We disagree with the preamble that Congress intended to require states to establish this additional test. First, the statutory language explicitly refers to the "state" as having the authority to determine whether any low-income family would be at risk of becoming eligible for AFDC if child care were not provided. This was not intended as a requirement for states. Second, it is our understanding that it was the explicit intent of Congress that states were to be provided maximum flexibility in defining "low- income," "in order to work," and "at risk." This assurance was affirmed in Conference Report language clarifying that states should have maximum flexibility in determining the use of the funds for the program (H.R. Rep. No. 101-964 pg. 922). In our comments on the regulations we encouraged the department to delete the proposed requirement that the state define "at risk" beyond income eligibility. If not modified this regulation will be very burdensome for families applying for care and will greatly increase the administrative complexity and cost of determining eligibility at the expense of providing care with these limited funds. Limiting FFP to the 75th Percentile The proposed regulations restrict federal financial participation PAGENO="0145" 139 to payments within the 75th percentile of the local market rates charged by providers. The department contends that it was the intent of Congress that payment rates for At-Risk be the same as IV-A child care under the Family Support Act and by adopting this requirement it will reduce the administrative burden on states since it is already a requirement for AFDC child care. APWA and the states opposed this provision under the proposed and final regulations implementing the child care provisions of the Family Support Act on the basis that it: 1) restricted parental choice particularly for very low income families; and 2) contributed to provider reluctance to accept subsidized children because of lower payment rates. Providing this same limitation under the At-Risk program will only further exacerbate the problem. In addition, given that there is no similar requirement under the Block Grant, attempts to implement a coherent system of child care will be thwarted and continuity of child care arrangements will be unnecessarily disrupted for those families changing subsidy programs. The department's rationale for limiting FFP to the 75th percentile under Title IV-A is an attempt to control federal expenditures. But, it fails to recognize that states also have a stake in controlling excessive spending and being held accountable for the expenditure of public funds. Removing the 75th percentile ceiling on FFP will not result in excessive spending. Rather, it will allow states to ensure that equal quality of care is provided to eligible children regardless of the funding stream used to reimburse the cost of care. The Effects of These Issues on Families and States Mr. Chairman, I would like to illustrate the effect of these issues on families and states by briefly discussing them within the context of the Texas child care system. When we began redesigning our system two years ago, we had four primary goals in mind. First, we wanted to make the process of applying for and enrolling children in care as easy for families as possible. We believe that the burden of making sense out of a myriad of rules and eligibility requirements should not have to be carried by parents. Second, we wanted to increase the participation of child care providers in our system so that we could offer parents their choice from among the widest variety of child care arrangements. Third, we wanted to ensure that families would not have to reapply for care when their eligibility status changed from one funding source to another. Finally, we wanted to ensure that the quality of care offered to a child did not vary based on the source of funds used to pay for the care. We have successfully constructed a system that manages nine sources of state and federal funding and 22 client eligibility categories. Families are able to access all sources of funds through one application process and all providers who wish to participate are eligible to receive all sources of funds. We are concerned that the conflicts presented in these two sets of regulations regarding payment rates, basic protection of children, and parental choice will severely impede our ability to continue this successful system. We serve many families whose children are not all eligible for the same funding source. For example, a parent participating in the JOBS program may have one child eligible for JOBS child care and another child, not on the AFDC grant, whose care must be paid for with another funding source. If we are not able to establish uniform requirements for payment rates and protection of the children's basic health and safety, this family may have two children placed with two different child care providers who are paid under different rate PAGENO="0146" 140 structures. In addition, one of the providers would be subject to basic health and safety standards designed to protect the child, while the other is not. If modifications are not made in the final regulations, this cumbersome method of delivering child care services to this family will be the end result, regardless of what the parent's choice might be. The impact of the Title IV-A requirement that child care rates be based on market rates and limited to the 75th percentile of the local market rate has had a particularly negative effect on our ability to provide infant care. Setting rates on the basis of what providers are able to charge in their local markets does not recognize the actual cost of those services and allows no support for improved quality of care. Most disturbing, we believe that this policy clearly discriminates against the very poorest families (those receiving AFDC or at-risk of becoming eligible for AFDC). Also, in order to prevent establishing a disincentive for providers to serve these lowest income families, we have been forced into the decision to use the same rate structure for all funding sources. In some areas of Texas, this has resulted in providers receiving up to $3.50 less per day than they were under the old budget-based structure. Finally, the restriction on the amount of the 75 percent portion of the Block Grant can be used for quality improvement and administration will jeopardize our ability to maintain the integrity of our delivery system. We also believe this regulation will ultimately restrict parent choice by limiting our ability to improve the quality and availability of child care in Texas. We anticipate that the cost of improving child care quality and availability in our 254 counties will be high because of our large expanse of rural areas. We have many under-served areas in this state where concentrated efforts will be needed to develop new child care options. In addition, we are committed to assisting current providers (approximately 15,000 registered family homes and 7,000 licensed facilities) by offering caregiver training and other resources to improve quality. Conclusion In Texas we have made a serious commitment to coordination of funding sources and provision of seamless services to families. We urge HHS to make the same commitment within its own organizational structure and in the issuance of final regulations. The children of Texas and our nation are our most precious resource. Our future depends on them and their future depends on us. The policies and guidelines which govern their care must be written with one voice. Mr. Chairman andmembers of the subcommittee, thank you for the opportunity to testify today on behalf of APWA and the National Council of State Human Service Administrators. I would be happy to answer any questions. PAGENO="0147" 141 Acting Chairman DOWNEY. Thank you, Claudia. Ruth. STATEMENT OF RUTH A. BRANDWEIN, PH.D., COMMISSIONER, DE- PARTMENT OF SOCIAL SERVICES, SUFFOLK COUNTY, N.Y., ON BEHALF OF THE NATIONAL ASSOCIATION OF COUNTIES Ms. BRANDWEIN. Thank you, Mr. Chairman, distinguished mem- bers of the subcommittee. My name is Ruth Brandwein, and I am commissioner of the Department of Social Services in Suffolk County, N.Y. I am very pleased to be here. I think this is one of the most important pieces of legislation that I have seen, unfortunate- ly, in a long time. I think it is the next logical step to make welfare reform a reality, because you can't get people off welfare and then not have day care for them after they are working. I am especially pleased that you and the subcommittee are con- ducting this oversight hearing so promptly after the administration issued the proposed rules. I believe that you have my written testimony, and what I will do is highlight some of the concerns of NACo and myself, four regard- ing the block grant and three regarding the at-risk program. I am here representing the National Association of Counties (NACo), because counties across the United States are working hard to achieve within their communities a system of child care that both protects and encourages parental choice, but also ensures quality and safe child care for children receiving public subsidized services. Because many of the counties across the United States are re- sponsible for monitoring, developing, and providing child care serv- ices, we are testifying on some of these regulations which we be- lieve would have an adverse impact on safe and quality child care. In terms of the child care and development block grant, first we are very concerned that the strong emphasis on parental choice will limit the percentage of new funds being passed through from the State to local programs and prevent development of communi- ty-based child care services capacity. We believe that the interim rule incorrectly interprets the stat- ute's requirement that parents be offered the choice of a contrac- tor's certificate and to require that certificates be available throughout the year. In Suffolk County, for example, this has the potential devastat- ing impact of discontinuance of contractual agreements for subsi- dized youngsters. At the present time, 60 percent of the children subsidized by our department of social services are in centers which depend entirely or almost entirely on county funding. These are located in areas of poverty and they are the ray of hope for the future for an otherwise impoverished economic area. Without contracts, these centers would not survive to continue serving their communities. Decisions on contracts must be made lo- cally to meet local needs. Therefore, we recommend that targets be allowed in the State plan which would direct a certain percentage of funds to certificates and a percentage to contract providers based on local conditions. PAGENO="0148" 142 The contracting of slots is imperative in most low-income com- munities to ensure that these facilities remain open. In addition, they provide the needed services to specialized populations such as children needing protective services. Counties are also concerned with the potential for subsidization of inadequate or unsafe child care environments that may result from the limits placed on the creation and enforcement of mini- mum health and safety standards. State and local governments must have the right to establish such requirements in order to ensure the health and safety of children. We believe that parental choice must be balanced with some safeguards and safety measures built into the system to ensure quality care for parents and protection to youngsters. Third, counties support flexible reimbursement based on the local market rates determined by the States as opposed to the 75th percentile rate under title TV-A child care programs. We recom- mend that the CCDBG funds be available to supplement the 75th percentile reimbursement rate of other child care programs. We are also very concerned about what we see as an unreason- able limitation on administrative costs. We fear that funds allocat- ed to administrative costs will not be adequate for the monitoring and accountability responsibilities that go along with the adminis- tration of the program. We take these responsibilities very serious- ly, and we recommend that there should be an expansion of the proportion of funding for administrative costs and a requirement that States pass through to local governments adequate adminis- trative funds for local implementation. Now, I have a few remarks regarding the title TV-A at-risk pro- gram. Similar to our comments on the CCDBG, we believe it is im- portant to balance parental choice of provider with measures that allow State and local governments to ensure quality and safety. I have already mentioned the importance of developing mini- mum health and safety regulations. I just want to mention that if programs are reduced to the lowest common denominator of safety standards, there could be a real lessening of quality in Suffolk County. We go beyond the State's standards, and I am proud that we do that. We now have mandated State-central registry clearance for child abuse as well as fingerprint clearance for criminals. We also conduct frequent onsite visits to monitor compliance with local laws. Though having administrative costs attached, these assure that health and safety standards are maintained. There has been a lot of discussion about this, but besides the Fed- eral funding, in Suffolk County we will be paying 25 percent of local funds for this child care, and if we are not able to monitor, we are then betraying the public trust for the funds that we are paying for this kind of care. I would also like to add just a personal note, if I may. I was a young separated mother with two preschool children, and I would have welcomed the knowledge that there was some protection and some regulation when I went to make choices. At that time, I didn't have the time or luxury, I was under a lot of pressure. I had to work, and when you have to work, you will find a child care pro- vider. And if there aren't these regulations and there aren't those PAGENO="0149" 143 protections in place, you may hire someone that is not in the best interests of your child, not because you are irresponsible, but just because the information is not available and you didn't have the time. Another concern in the proposed rule is that States develop fur- ther eligibility requirements in addition to low income in order for clients to be eligible for subsidized care under the program. Such additional eligibility requirements would further segment the types of population child care funds would serve. This would not only make administration of the program cumbersome, but would create further barriers to services to families; in other words, adding to administrative burdens rather than decreasing them. So we think that the low-income eligibility is sufficient, and there shouldn't be all these additional criteria that are in the regu- lations. We therefore strongly recommend that low income be the crite- rion for program eligibility with maximum flexibility built in to ensure local discretion to target at-risk population. Finally, we are concerned that by setting local market rate at the 75th percentile limits parental choice. There has been a lot of discussion about parental choice today, and I think the real barrier to parental choice is to provide for low-income users only 75 per- cent of market rate instead of market rate. That is really limiting choice. This is an artificial ceiling that is already creating difficulties for local agencies providing child care under the AFDC child care pro- gram and the Family Support Act. Using the 75th percentile to cap the rate effectively caps parents' choice, thereby impacting ad- versely on quality for low-income families. Furthermore, NACo believes that the legislative language re- quires that payment for child care be at the lesser of the rate charged for such care, and at the applicable local market rate-not the 75th percentile. We strongly recommend that the restriction of reimbursement to the 75th percentile of market rate be deleted, and that the final regulations establish a definition of market rate similar to that es- tablished for the child care and developmental block grant. Furthermore, funding should be available for recruitment, train- ing, and developmental purposes. These are the counties' concerns, Mr. Chairman, and we would hope that the administration will not only hear them but would act in a manner that would be more consistent with the statutes passed by the Congress. Again, I want to thank you for the opportunity to testify. I look forward to working with you and the committee in building a com- prehensive children and family service system. [The prepared statement follows:] PAGENO="0150" 144 TESTIMONY OF RUTH A. BRANDWEIN, PH.D. NATIONAL ASSOCIATION OF COUNTIES MR. CHAIRMAN AND DISTINGUISHED MEMBERS OF THE SUBCOMMITTEE, MY NAME IS RUTH A. BRANDWEIN, COMMISSIONER, DEPARTMENT OF SOCIAL SERVICES, SUFFOLK COUNTY, NEW YORK. I AM PLEASED TO BE MERE TODAY TO PRESENT THE NATIONAL ASSOCIATION OF COUNTIES* VIEWS ON THE PROPOSED FEDERAL CHILD CARE REGULATIONS. I AM ESPECIALLY PLEASED THAT YOU AND THE SUBCOMMITTEE ARE CONDUCTING THIS OVERSIGHT HEARING, SO QUICKLY AFTER THE WRITING OF THE DRAFT CHILD CARE REGULATIONS BECAUSE OF YOUR PERSONAL CONCERN TO SEE THAT QUALITY AND SAFE CHILD CARE IS DELIVERED TO THOSE FAMILIES MOST IN NEED OF THESE SERVICES. THOSE OF US FROM YOUR DISTRICT, MR CHAIRMAN, KNOW AND APPRECIATE VERY WELL YOUR COMMITMENT NOT ONLY TO CHILDREN AND THEIR FAMILIES BUT ALSO TO ELDERLY PERSONS AS WELL. IN ADDRESSING THE ISSUE OF THE PROPOSED FEDERAL CHILD CARE REGULATIONS, I WILL DIVIDE MY REMARKS BETWEEN CONCERNS AND RECOMMENDATIONS REGARDING THE CHILD CARE AND DEVELOPMENT BLOCK GRANT AND THE TITLE IV, AT-RISK CHILD CARE PROGRAM. A. COMMENTS ON THE POSITIVE ASPECTS OF CHILD CARE AND DEVELOPMENT BLOCK GRANT INTERIM FINAL RULE NAC0 BELIEVES THAT THE PASSAGE OF THE CHILD CARE AND DEVELOPMENT BLOCK GRANT OFFERS THE COUNTRY AN IMPORTANT OPPORTUNITY TO EXPAND AND IMPROVE CHILD CARE FOR LOW- AND MODERATE-INCOME FAMILIES. THIS PROGRAM AFFORDS THE STATES AND COMMUNITIES THE OPPORTUNITY TO ANALYZE THE CURRENT CHILD CARE SYSTEM AND TO USE FUNDING TO FILL NEEDED SERVICE GAPS. NAC0 WAS VERY ENCOURAGED ABOUT THE ~ MARKET RATE AS OPPOSED TO A RIGIfl 75 PERCENT REIMBURSEMENT RATE AS UNDER TITLE IV-A CHILD CARE PROGRAMS. WE BELIEVE THE FULL MARKET RATE WILL INCREASE PARENTAL ACCESS TO QUALITY CARE. NAC0 IS ALSO ENCOURAGED THAT THE RULE PERMITS ELIGIBILITY FOR THOSE CHILDREN WITH SPECIAL ~ SERVICE ~ AND HANDICAPPING CONDITIONS. WE ARE AWARE THAT SOME STATES HAVE BEEN RELUCTANT TO PERMIT THE USE OF CHILD CARE DOLLARS FOR SPECIAL NEEDS OF CHILD PROTECTIVE CHILD CARE, FOR EXAMPLE, AS WELL AS THE INCLUSION OF CHILDREN OVER AGE 13 IF THEY HAVE A SPECIAL CONDITION. THESE GROUPS NEED TO FALL ON THE COUNTIES' SHOULDERS FOR SUPPORT SO WE ARE PLEASED THAT A PRIORITY IS PLACED ON THIS POPULATION. BECAUSE COUNTIES IN MANY STATES ARE RESPONSIBLE FOR MONITORING, DEVELOPING OR PROVIDING CHILD CARE SERVICES, WE FULLY APPRECIATE THE NEED FOR INTERAGENCY COORDINATION AND THE PROVISION IN THE DRAFT RULE FOR CONSULTATION WITH LOCAL GOVERNMENTS. WITHOUT SUCH CONSULTATION AND INVOLVEMENT OF LOCAL GOVERNMENT IN THE STATE PLANNING PROCESS, WE BELIEVE THAT PROGRAM EFFECTIVENESS WOULD BE AN EMPTY SHELL GAME. B. NAC0 `S CONCERNS ABOUT THE BLOCK GRANT RULE SAFE CHILD CARE ENVIRONMENT AN OVERRIDING CONCERN VOICED BY THE COUNTIES IS THE POTENTIAL FOR SUBSIDIZATION OF INADEQUATE OR UNSAFE CHILD CARE ENVIRONMENTS THAT MAY RESULT FROM THE LIMITS PLACED ON THE CREATION AND ENFORCEMENT OF MINIMUM HEALTH AND SAFETY STANDARDS. MR. CHAIRMAN, THE ISSUE OF STANDARDS FOR DAY CARE IS NOT A 1990 * The National Association of Counties is the only national organization representing county government in the United States. Through its membership, urban, suburban and rural counties join together to build effective, responsive county governnent. The goals of the organization are to: improve county goverri~ent; serve as the national spokesman for county goveriment; serve as a liaison between the nation's counties and other levels of government; achieve public understanding of the role of counties in the federal system. PAGENO="0151" 145 PHENOMENON. PRESIDENT JOHN F. KENNEDY URGED THE 87TH CONGRESS TO PASS A FEDERAL ASSISTANCE PROGRAM THAT WOULD HELP PRESERVE AND REHABILITATE THE AMERICAN FAMILY. THE PROGRAM BECAME KNOWN AS PUBLIC LAW 87-543 (1962) AND AMENDED THE SOCIAL SECURITY ACT. A PROVISION OF THE ACT REQUIRED LICENSING OR APPROVAL OF ALL DAY CARE FACILITIES THAT RECEIVED ANY FEDERAL FUNDS. SECTION 1O2C OF PUBLIC LAW 87-542 ADDRESSED DAY CARE AND INSTRUCTED STATES WHO WISHED TO PARTICIPATE IN THE FEDERAL ASSISTANCE PROGRAM AND RECEIVE FEDERAL MONIES TO DEVELOP THEIR OWN STATE PLAN FOR DAY CARE SERVICES. THE PLAN REQUIRED THAT DAY CARE FACILITIES, INCLUDING PRIVATE HOMES, BE LICENSED OR APPROVED BY THE STATE AGENCY RESPONSIBLE FOR LICENSING FACILITIES AND THAT THE STATE MUST HAVE STANDARDS. THE PUBLIC LAW DEFINED THE CRITERIA FOR DAY CARE AS `THE CARE AND PROTECTION OF CHILDREN WHOSE PARENTS ARE, FOR PART OF THE DAY, WORKING OR SEEKING WORK, OR OTHERWISE ABSENT FROM HOME OR UNABLE FOR OTHER REASONS TO PROVIDE PARENTAL SUPERVISION..." (PUBLIC LAW 87-543, 1962). BASED ON THIS HISTORY AND INPUT FROM COUNTIES, WE BELIEVE THAT MINIMAL STANDARDS WHICH REFLECT HEALTH AND SAFETY ISSUES MUST BE A REQUIREMENT OF ANY PROVIDER. STATES AND LOCAL GOVERNMENTS MUST HAVE THE RIGHT TO ESTABLISH SUCH REQUIREMENTS IN ORDER TO ENSURE THE HEALTH AND SAFETY OF CHILDREN. THE FAMILY SUPPORT ACT REQUIRES THAT CARE PROVIDERS HAVE MINIMAL LIFE AND SAFETY REQUIREMENTS WHICH IS DETERMINED THROUGH HOME INSPECTIONS. THIS PROCESS IN ESSEX COUNTY (NJ) HAS EXCLUDED LESS THAN ONE PERCENT OF PROVIDERS. HENNEPIN COUNTY (MN) ADDS THAT "PARENTAL CHOICE MUST BE BALANCED WITH SOME SAFEGUARDS AND SAFETY MEASURES BUILT INTO THE SYSTEM TO ENSURE QUALITY CARE FOR THE PARENTS." PARENTAL CHOICE WITH RESPECT TO PARENTAL CHOICE, MANY COUNTIES WERE ALSO CONCERNED THAT THE STRONG EMPHASIS ON PARENTAL CHOICE WILL LIMIT THE PERCENTAGE OF NEW FUNDS BEING PASSED THROUGH FROM THE STATE TO LOCAL PROGRAMS AND PREVENT DEVELOPMENT OF COMMUNITY BASED CHILD CARE SERVICE CAPACITY. WHILE COUNTIES GENERALLY SUPPORT THE CONCEPT OF PARENTAL CHOICE IN SELECTING THE MOST SUITABLE CHILD CARE SETTING, THERE IS ADDITIONAL CONCERN EXPRESSED BY NEW JERSEY COUNTIES THAT OVEREMPHASIS ON PARENTAL CHOICE WITHIN THE REGULATIONS MAY PROVE PROBLEMATIC. WE BELIEVE THE INTERIM RULE INCORRECTLY INTERPRETS THE STATUTE'S REQUIREMENT THAT PARENTS BE OFFERED THE CHOICE OF A CONTRACT OR CERTIFICATE AND TO REQUIRE THAT CERTIFICATES BE AVAILABLE THROUGHOUT THE YEAR. FIRST, IT GIVES THE IMPRESSION OF HAVING AN UNLIMITED AVAILABILITY OF FUNDS FOR DIRECT SERVICE. SECONDLY, IT MAKE IT VIRTUALLY IMPOSSIBLE TO RESERVE FUNDS FOR CONTRACTING WITH PROVIDERS FOR A CERTAIN NUMBER OF SLOTS ON AN ANNUAL BASIS. THE CONTRACTING OF SLOTS IS IMPERATIVE IN MOST LOW INCOME COMMUNITIES TO ENSURE THAT THESE FACILITIES REMAIN OPEN. IN ADDITION, THEY PROVIDE NEEDED SERVICES TO SPECIALIZED POPULATIONS SUCH AS CHILDREN NEEDING PROTECTIVE SERVICES. THE FAMILY RESOURCE AGENCY (BRADLEY COUNTY, TN) BELIEVES THAT THIS RULE DISCOURAGES, AND ALMOST PROHIBITS, CONTRACTING AS A METHOD OF PROVIDING CHILD CARE SERVICES. IT WOULD APPEAR THAT A STATE WOULD BE VERY RELUCTANT TO SET UP ANY KIND OF ONGOING CONTRACT WITH A DAY CARE SERVICE PROVIDER IF THE STATE HAS TO ALWAYS GUARANTEE THE AVAILABILITY OF A CERTIFICATE. THIS RAISES THE POSSIBILITY THAT A STATE MIGHT HAVE TO PULL FUNDS FROM A DAY CARE SERVICE CONTRACTOR TO PUT INTO ITS VOUCHER SYSTEM, THUS UNDERMINDING THE INTERGRITY OF A COMMUNITY BASED SYSTEM OF CARE. IT WOULD APPEAR THAT THE RULE PROMOTES A VOUCHER SYSTEM ALMOST TO THE POINT OF REALISTICALLY EXCLUDING OTHER METHODS OF PROVIDING SERVICES. IN FACT, ONE ADMINISTRATOR BELIEVES THAT A PREDOMINANTLY VOUCHER BASED SYSTEM MAY BE INCOMPATIBLE WITH THE GOAL OF PROVIDING A "SEAMLESS SERVICE SYSTEM." THEREFORE, WE RECOMMEND THAT TARGETS BE ALLOWED IN THE STATE PLAN WHICH WOULD DIRECT A CERTAIN PERCENTAGE OF FUNDS TO CERTIFICATES AND A PERCENTAGE TO CONTRACT PROVIDERS BASED ON LOCAL CONDITIONS. PAGENO="0152" 146 IN SUFFOLK COUNTY, THIS HAS THE POTENTIAL DEVASTATING IMPACT OF DISCONTINUANCE OF CONTRACTUAL AGREEMENTS FOR SUBSIDIZED YOUNGSTERS. AT PRESENT, 60 PERCENT OF THE CHILDREN SUBSIDIZED BY DSS IN CENTER CARE ARE IN CENTERS WHICH DEPEND ENTIRELY OR ALMOST ENTIRELY ON COUNTY FUNDING. THESE ARE LOCATED IN AREAS OF POVERTY AND ARE THE RAY OF HOPE FOR THE FUTURE FOR AN OTHERWISE IMPOVERISHED ECONOMIC AREA. WITHOUT CONTRACTS THESE CENTERS WOULD NOT SURVIVE TO CONTINUE SERVING THEIR COMMUNITIES. DECISIONS ON CONTRACTS MUST BE MADE LOCALLY TO MEET LOCAL HEEDS. ADMINISTRATIVE COSTS A NUMBER OF COUNTIES, INCLUDING BALTIMORE COUNTY (MD), ESSEX COUNTY (NJ), HENNEPIN AND RAMSEY COUNTIES (MN), LOS ANGELES COUNTY (CA), AND ERIE COUNTY (NY) EXPRESSED THEIR ONGOING CONCERN ABOUT THE UNREASONABLE LIMITATION ON ADMINISTRATIVE COSTS FEARING THAT FUNDS ALLOCATED TO ADMINISTRATIVE COSTS WILL NOT BE ENOUGH FOR THE MASSIVE MONITORING AND ACCOUNTABILITY RESPONSIBILITIES THAT GO ALONG WITH THE ADMINISTRATION OF THE PROGRAM. ONE OF THE TOP CONCERNS CITED IS THE BELIEF THAT THE PROPORTION OF FUNDING ALLOCATED TO ADMINISTRATIVE COSTS WILL BE INSUFFICIENT TO IMPLEMENT THE CCDBG PROGRAM. IN PARTICULAR, IT WILL MAKE IT DIFFICULT FOR COUNTIES TO COORDINATE THE DELIVERY OF SERVICES IN A MANNER THAT WILL MAXIMIZE THE BENEFITS OF THE PROGRAM (LOS ANGELES COUNTY). IN ADDITION TO THE ISSUE OF THE LIMITS ON THE ADMINISTRATIVE COSTS, THERE IS THE ISSUE OF WHAT PORTION IS SPENT AT THE STATE PLANNING/OVERSIGHT LEVEL AND WHAT PORTION IS SPENT AT THE LOCAL IMPLEMENTATION LEVEL. MARYLAND COUNTIES, FOR EXAMPLE, HAVE SEEN A SIGNIFICANT GROWTH IN STATE CHILD CARE ADMINISTRATION AND A GROWTH IN THE DAY CARE PROGRAM, WHILE THE COUNTIES HAVE LOST STAFF. MARYLAND'S APPLICATION FOR CCDBG FUNDS CONTINUED THIS PATTERN OF ALLOCATING A HIGH PERCENTAGE OF NEW RESOURCES TO THE STATE ADMINISTRATION AND LEAVING THE LOCAL SHARE INADEQUATE. SIMILARLY, CLARK COUNTY (NV) STATED THAT PROBLEMS MAY ARISE DUE TO THE FACT THAT ADMINISTRATIVE COSTS "SHARED" BY STATE AND LOCAL ENTITIES WILL BE DETERMINED BY THE STATES ALBEIT THE STATES ARE SUPPOSE TO CONSULT WITH LOCAL GOVERNMENTS IN THE FORMULATION OF THE STATE APPLICATION. CURRENTLY, IN NEW JERSEY, THE AVERAGE ADMINISTRATIVE COST FOR PILOT VOUCHER PROGRAMS HAS BEEN 25 PERCENT TO 28 PERCENT. THE PROPOSED ALLOCATION FOR ADMINISTRATIVE COSTS WOULD BE TOTALLY INADEQUATE TO MEET THE MONITORING AND ACCOUNTABILITY RESPONSIBILITIES FOR THIS PROGRAM. FOR LARGER SIZED COUNTIES, LOS ANGELES COUNTY MAKES A SUCCINCT CASE: "TO MAXIMIZE THE BENEFITS DERIVED FROM THE CCDBG, IT IS ESSENTIAL THAT LOCAL ENTITIES COORDINATE RESOURCES AND EFFORTS. THE OVERALL PROGRAM WILL BE ENHANCED TO THE EXTENT THE ALLOCATION FORMULA FOR ADMINISTRATIVE COSTS IMPROVE THE COUNTIES' ABILITY TO COORDINATE THE DELIVERY OF SERVICES. WE FAVOR THE ADDITION OF AN EXCEPTION CLAUSE THAT ALLOWS FOR COVERAGE OF JUSTIFIABLE EXCESS COSTS WHEN APPROPRIATE. A MORE LIBERAL ALLOWANCE FOR MEETING THE EXPENSES ASSOCIATED WITH COORDINATING AND ADMINISTRATIVE ACTIVITIES IN LARGE SIZED COUNTIES WOULD SUFFICE." AT THE SAME TIME, THE RULE MUST ENSURE THAT RURAL AND URBAN UNDERSERVED AREAS RECEIVE AN EQUITABLE SHARE OF THE CCDBG FUNDS. REIMBURSEMENT RATES COUNTIES SUPPORT THE FLEXIBLE REIMBURSEMENT BASED ON THE LOCAL MARKET RATES DETERMINED BY THE STATES AS OPPOSED TO A RIGID 75 PERCENT REIMBURSEMENT RATE UNDER TITLE IV-A CHILD CARE PROGRAMS. HOWEVER, DIFFERENCES IN REIMBURSEMENT RATES AND ELIGIBILITY REQUIREMENTS BETWEEN THE CCDBG AND THESE OTHER CHILD CARE PROGRAMS WERE CITED AS ADDITIONAL BURDENS, THEREBY PAGENO="0153" 147 INCREASING ADMINISTRATIVE COSTS. FURTHERMORE, COUNTIES ARE CONCERNED THAT THE REGULATIONS PREVENT STATES FROM USING BLOCK GRANT FUNDS TO SUBSIDIZE RATES FOR CHILD CARE IN THE TITLE IV-A PROGRAM. TEE TITLE IV-A RATE IS LIMITED TO 75 PERCENT OF THE LOCAL MARKET RATE AND HAS RESULTED IN SHORTAGES IN THE SUPPLY OF CHILD CARE. WE RECO!~(END THAT THE CCDBG FUNDS BE AVAILABLE TO USE TO SUPPLEMENT THE 75 PERCENT REIMBURSEMENT RATE OF OTHER CHILD CARE PROGRAMS. C. NAC0 `S CONCERNS WITH AT-RISK CHILD CARE PROGRAM LIKE THE CHILD CARE BLOCK GRANT PROGRAM, NAC0 BELIEVES THAT THE TITLE IV-A AT-RISK CHILD CARE PROGRAM IS A MUCH NEEDED FEDERAL ADDITION TO CURRENT COUNTY AND OTHER PUBLICALLY FUNDED LOW-INCOME CHILD CARE PROGRAMS. NEVERTHELESS, WE HAVE BASIC CONCERNS WHICH CENTER ON THE BASIC INATTENTION TO PROTECTING THE HEALTH AND SAFETY OF CHILDREN IN CHILD CARE, THE LACK OF LOCAL DISCRETION IN DETERMINING FAMILY ELIGIBILITY FOR CHILD CARE SERVICES, THE DIFFICULTY WITH THE PAYMENT RATES AND INABILITY TO EXPAND ON THE OVERALL QUALITY OF PROGRAMS. ~~TH ~!fl SAFEEXI ~M~PARD~ WE BELIEVE IT IS IMPORTANT TO BALANCE PARENTAL CHOICE OF PROVIDER (A KEY ELEMENT IN THIS LEGISLATION) WITH MEASURES THAT ALLOW STATE AND LOCAL GOVERNMENTS TO ENSURE QUALITY AND SAFETY. IN MOST STATES, THERE ARE STATE AND LOCAL CHILD CARE REGULATIONS FOR CHILD CARE CENTER AND FAMILY DAY CARE HOMES WHERE MINIMUM HEALTH AND SAFETY REQUIREMENTS PROTECT CHILDREN IN CHILD CARE. IN MANY CASES, IN-HOME CARE HAS NOT BEEN REGULATED. HOWEVER, IN MINNESOTA, FOR EXAMPLE, PARENTS CHOOSE FROM MANY TYPES OF PROVIDERS, INCLUDING LICENSED, IN-HOME AND LEGALLY UNLICENSED (THOSE HOMES SERVING FEW ENOUGH CHILDREN THAT STATE LAW DOES NOT REQUIRE A LICENSE); HOWEVER, THE STATES REQUIRE COUNTIES TO HAVE A CONTRACT WITH THAT PROVIDER. IF PUBLIC FUNDS ARE USED FOR CHILD CARE, THEN WE BELIEVE THAT THE PUBLIC (STATE AND LOCAL GOVERNMENTS) NEEDS TO TAKE RESPONSIBILITY FOR THE SAFETY OF ALL CHILDREN IN CARE. DEVELOPING MINIMUM HEALTH AND SAFETY REGULATIONS FOR SUBSIDIZED IN-HOME CARE IS ESSENTIAL TO THE PROTECTION OF CHILDREN RECEIVING PUBLIC FUNDING. THE POSSIBILITY THAT CHILDREN COULD BE PLACED IN SUBSIDIZED (BUT UNREGULATED) DANGEROUS OR UNHEALTHY ENVIRONMENTS IS UNACCEPTABLE. WITH SOME STATES HAVING MINIMAL CHILD CARE LICENSING STANDARDS FOR CENTER BASE CARE, WE DO NOT NEED ADDITIONAL INCENTIVES FOR POOR QUALITY CARE, ESPECIALLY FOR OUR MOST VULNERABLE CHILDREN. THE PROPOSED REGULATIONS PROHIBIT ANY KIND OF STANDARDS, HOWEVER MINIMAL, FOR INFORMAL CARE. BY REQUIRING A CONTRACT WITH THE COUNTY (AS OUR MINNESOTA EXAMPLE) THIS CONCERN COULD BE ADDRESSED BY PERMITTING STATE AND LOCAL GOVERNMENTS TO REQUIRE SUCH SAFEGUARDS AS HOME INSPECTIONS, BACKGROUND CHECKS OF PROVIDERS, INSURANCE, A FIRE INSPECTION OR OTHER MODEST ASSURANCES OF SAFETY AS PART OF THE REGISTRATION PROCESS, AS PROVIDED IN THE PROPOSED REGULATIONS. AT THE SAME TIME, ADEQUATE ADMINISTRATIVE FUNDS MUST BE MADE AVAILABLE TO STATE AND LOCAL GOVERNMENTS TO CONDUCT AND MONITOR SUCH ACTIVITIES. IF PROGRAMS ARE REDUCED TO THE LOWEST COMMON DENOMINATOR ON SAFETY STANDARDS, SURELY THERE WILL BE A LESSENING OF QUALITY IN SUFFOLK COUNTY WHERE THERE ARE NOW MANDATED STATE CENTRAL REGISTRY CLEARANCES AS WELL AS FINGERPRINT CLEARANCES. FREQUENT ON-SITE VISITS TO MONITOR COMPLIANCE WITH LOCAL LAWS, THOUGH HAVING ADMINISTRATIVE COSTS ATTACHED, ASSURE THAT HEALTH AND SAFETY STANDARDS ARE MAINTAINED. WITHOUT SUCH GOVERNMENTAL INVOLVEMENT ALL MIGHT APPEAR APPROPRIATE TO AN EDUCATED CONSUMER OF SERVICE. UNFORTUNATELY, SOME PARENTS DO NOT HAVE ACCESS TO A CONSUMER REPORTS RATING ON SPECIFIC PROVIDERS. THEY ARE UNABLE TO SECURE ENOUGH RELEVANT DATA TO MAKE AN INFORMED CHOICE WITHOUT BASIC GOVERNMENTAL ASSURANCES THAT BASIC STANDARDS ARE BEING MET. PAGENO="0154" 148 NAC0 STRONGLY RECO~~NDS THAT THE FINAL REGULATIONS CLEARLY SPECIFY THAT STATE AND LOCAL GOVERNMENTS MAY APPLY MINIMUM HEALTH AND SAFETY REQUIREMENTS INCLUDING flO~UNIZATIONS, FIRE INSPECTIONS, BACKGROUND CHECKS, AND OTHER ASSURANCES OF SAFETY THAT THE STATE DEEMS APPROPRIATE, AS PART OF THE REGISTRATION PROCESS, AND THAT ADEQUATE REIMBURSEMENT BE MADE AVAILABLE TO THOSE GOVERNMENTS FOR SUCH ADMINISTRATIVE COSTS. DEFINITION ~ ELIGIBILITY THE RULE PROPOSES THAT STATES DEVELOP FURTHER ELIGIBILITY REQUIREMENTS OTHER THAN LOW-INCOME IN ORDER FOR CLIENTS TO BE ELIGIBLE FOR SUBSIDIZED CARE UNDER THIS PROGRAM. WE BELIEVE THAT LOW-INCOME IS SUFFICIENT AS A CRITERION. BY REQUIRING FURTHER ELIGIBILITY REQUIREMENTS, THE RULE WOULD FURTHER SEGMENT THE TYPES OF POPULATION CHILD CARE FUNDS WOULD SERVE, THEREBY MAKING ADMINNISTRATION OF THE PROGRAM CUMBERSOME. THIS PROGRAM SHOULD ALLOW MAXIMUM FLEXIBILITY AS TO WHO CAN BE SERVED, SUCH AS PEOPLE OF COLOR AND PEOPLE FOR WHOM ENGLISH IS A SECOND LANGUAGE. UNLESS THE "FURTHER ELIGIBILITY REQUIREMENTS" ARE WRITTEN VERY FLEXIBLY (INCLUDING LANGUAGE THAT WOULD PERMIT PROVIDING CHILD CARE SERVICES TO FAMILIES WHO NEEDED EDUCATION OR TRAINING IN ORDER TO OBTAIN WORK), THE FINAL RULES MAY END UP EXCLUDING PEOPLE BECAUSE THEY STILL DON'T FIT EXACTLY WITHIN THE GUIDELINES OF "AT-RISK" AND EVENTUALLY MAY END UP IN OUR AFDC CASELOADS AFTER ALL, WHICH IS WHAT THESE FUNDS ARE SUPPOSED TO HELP PREVENT. NACo STRONGLY RECO~ENDS THAT LOW-INCOME BE THE CRITERION FOR PROGRAM ELIGIBILITY, WITH MAXIMUM FLEXIBILITY BUILT IN TO ENSURE LOCAL DISCRETION TO TARGET AT-RISK POPULATIONS QUALITY Q~ ~ ~fl PAYMENT ~ NACO IS CONCERNED THAT BY SETTING LOCAL MARKET RATES AT THE 75TH PERCENTILE LIMITS PARENTAL CHOICE. THE 75TH PERCENTILE IS AN ARTIFICIAL CEILING THAT IS ALREADY CREATING DIFFICULTIES FOR LOCAL AGENCIES PROVIDING CHILD CARE UNDER THE AFDC CHILD CARE PROGRAM IN THE FAMILY SUPPORT ACT. THE WHOLE CONCEPT OF THE 75TH PERCENTILE, WE BELIEVE, PRECLUDES LOW-INCOME PARENTS FROM UTILIZING MANY OF THE BEST QUALITY CENTERS AND HOMES. LOW-INCOME PARENTS MUST HAVE THE SAME RIGHT TO CHOOSE FREELY FROM THE SAME MARKET PLACE FROM WHICH ALL OTHERS CHOOSE. THIS WOULD CERTAINLY BE CONSISTANT WITH LANGUAGE IN THE CHILD CARE AND DEVELOPMENT BLOCK GRANT INTERIM FINAL RULE WHICH ALLOWS PAYMENT AT THE MARKET RATE. USING THE 75TH PERCENTILE TO CAP THE RATES EFFECTIVELY CAPS THE PARENT ` S CHOICE, THEREBY IMPACTING ADVERSELY ON THE QUALITY OF CHILD CARE FOR LOW-INCOME FAMILIES. FURTHERMORE, NAC0 BELIEVES THAT THE LEGISLATIVE LANGUAGE REQUIRES THAT PAYMENT FOR CHILD CARE BE T THE LESSER OF THE RATE CHARGED FOR SUCH CARE AND THE APPLICABLE LOCAL MARKET RATE, NOT 75TH PERCENTILE OF THE MARKET RATE. FINALLY, WE ARE VERY CONCERNED THAT CHILDREN COULD BE ENTRUSTED TO SUBSTANDARD CAREGIVERS WHO HAVE LIMITED KNOWLEDGE AND SKILLS TO ADDRESS ADEQUATELY THE NEEDS OF THE CHILDREN. SOMETIMES THIS MAY OCCUR WHEN PARENTS LACK THE SKILLS AND KNOWLEDGE TO CHOOSE QUALITY CARE OVER THAT WHICH IS THE MOST CONVENIENT FOR THEM TO ARRANGE. THUS, WE BELIEVE THAT FUNDS MUST BE MADE AVAILABLE FOR TRAINING AND RECRUITMENT OF CHILD CARE PROVIDERS AND RESOURCE DEVELOPMENT TO ASSIST IN IMPROVING THE QUALITY OF ALL CARE GIVERS. NAC0 STRONGLY RECOMMENDS THAT THE RESTRICTION OF REIMBURSEMENT TO THE 75TH PERCENTILE OF MARKET RATE BE DELETED AND THAT THE FINAL REGULATIONS ESTABLISH A DEFINITION OF MARKET RATE SIMILAR TO THAT ESTABLISHED FOR THE CHILD CARE AND DEVELOPMENT BLOCK GRANT. FURTHERMORE, FUNDING SHOULD BE AVAILABLE FOR RECRUITMENT, TRAINING AND DEVELOPMENTAL PURPOSES. AGAIN, I THANK YOU FOR THIS OPPORTUNITY TO TESTIFY AND LOOK FORWARD TO CONTINUE WORKING WITH YOU AND THE SUBCOMMITTEE IN BUILDING A COMPREHENSIVE CHILDREN AND FAMILY SERVICES SYSTEM. IF YOU HAVE ANY QUESTIONS, I WILL BE PLEASED TO ANSWER THEM. PAGENO="0155" 149 Acting Chairman DOWNEY. We have been joined by the former chairman of the Select Committee on Children, Youth, and Fami- lies, Mr. Miller, and also the current chairman of the Interior Com- mittee. George, did you want to ask a question? STATEMENT OF HON. GEORGE MILLER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA Mr. MILLER. Thank you, Mr. Chairman. I don't have a question to ask. You were nice enough to schedule me to testify earlier in the morning, and I was unable to make it. I had to take up a bill on the floor. I want to just commend you for holding these hearings in a very timely fashion, and all of the witnesses that have testified against these regulations, raising the very serious questions that these two witnesses have just raised. Clearly, the administration's position is absolutely contrary to the legislative intent. It is contrary to all of our discussions with the administration during the development of this legislation. I think that the committee print that you have put out putting the two positions, the law and their position, side by side, clearly makes that case, and I commend you and the staff for putting that together so that all can see what is going on here. Clearly the ad- ministration is engaged in one of the most perverse activities I have seen-to suggest that choice is to be equated with only the worst choices being available to you, that choice is to be equated with having to pick unhealthy, unsafe, low-quality care for your children. It defies what their own studies tell us. When people think of choice, low-income or high-income, they think about better quality, better care. Low-income people said they would choose better care if they could afford it. To then insist that affordability means that they must be driven into unregulated, unsafe care is to take their views, their wishes, and their desires for their children, and simply stand them on their head. We don't do this in other programs. We give people nutrition as- sistance based upon choice through the food stamp programs, through income programs. We don't insist that they eat day-old bread. We don't insist that they drink stale milk. We don't suggest that they eat low-quality foods in School Lunch programs. In fact, we heavily regulate those programs to make sure that the quality of those programs are maintained for the benefit of those children who are participating. In this one, we are going in exactly the wrong direction. I have extensive remarks and comments by other members of the Select Committee and the Women's Caucus on these regulations that we would like to have made part of this record. I would hope that we would be able to overturn the cruel, cruel intent of what the ad- ministration is doing here on behalf of our Nation's children and is really obstructing the rights of caring parents in this country. It simply cannot be allowed to stand. I want to thank you, the committee, the committee staff that has worked hard to prepare the documents, and to the witnesses. PAGENO="0156" 150 Thank you very much for your position. Acting Chairman DOWNEY. Thank you, Mr. Miller. Your entire statement will appear at this point in the record. [The prepared statement and attachment follow:] PAGENO="0157" 151 TESTIMONY OF CONGRESSMAN GEORGE MILLER before the Subcommittee on Human Resources Committee on Ways and Means September 26, 1991 Thank you for providing me with an opportunity to testify on the implementation of our child care legislation. This Subcommittee, and in particular, Chairman Downey, played a very important role in the creation of that legislation. We share dismay at the failure of the Administration to live up to its commitment to emphasize the safety and quality of child care. Together with Chairman Downey and others, I attended numerous meetings at which White House officials assured us that there would be no abandonment of the effort to upgrade child care quality. I was there when we were promised, on the floor of the House, that tough federal standards weren't needed in the law because the Administration would assure high quality care. And now we see that those assurances were worthless. The Administration has developed a convenient case of legislative amnesia, forgetting completely nearly a decade of Congressional discussion, expert investigation, and negotiation by declaring in the preamble to these Child Care and Development Block Grant regulations that "... there is relatively little legislative history that is instructive in drafting regulations that reflect the clear intent of the law." That assertion is flatly contradicted by years of hearings and committee reports, and by the debates in committee and on the floor on the child care bills. Over the past decade, the Select Committee on Children, Youth, and Families, which I formerly chaired, documented the inadequate supply of safe, affordable and reliable care. The "Child Care Staffing Study," among several authoritative studies not only corroborated the sorry state of America's child care, but also demonstrated the very developmental and cost effective benefits of improved training, salaries, and other basic standards on the development of children in the programs. Polls have demonstrated vigorous support among the American public for improving not only the supply, but also the quality of child care. Apparently, the Bush Administration doesn't care about those polls. The preamble to the Administration's regulations for the Child Care and Block Grant Regulations assumes erroneously that the law establishes two competing principles: State flexibility versus parental choice. PAGENO="0158" 152 To protect the Administration's ideal of parental choice, the ragulations would substantially limit the role of states in setting their own standards. According to these regulations, States that impose supposedly "excessive and ill-designed" requirements that could affect "parental choice" by increasing costs -- such as smoke detectors or criminal background checks -- will not be funded. I find it dismaying that the Bush Administration instinctively recoils from standards that could protect the health, safety and lives of millions of American children because they might raise costs. Perhaps the Administration also opposes workplace health and safety standards that might increase the price of chicken. Tell that to the mourning families in North Carolina. The Administration has no ideological hostility to federal health and safety regulations. As I pointed out during the floor debate, many of those who oppose minimum quality standards for child care enforce federal standards every day -- for cows and pigs. In fact, the Department of Agriculture has books of regulations about how to transport farm animals, when to feed them, how much water they need, even how frequently they need to take naps! It is a sad irony that an Administration that so feverently embraces choice for parents in child care vigorously opposes choice for women. It is a sad irony that an Administration that promotes health and safety standards in the barnyard cannot support quality standards in the play yard. I find it very perplexing that at the same time the Department of BUS tells us they are opposed to detailed federal regulations that might improve the quality of child care, the Internal Revenue Service is pushing regulations that would subject family day care homes to mountains of paperwork to detail the exact amounts of time children spend in each room of the house. Regulatory detail, it seems, is fine with the Administration when it involves creating hardships for child care providers, but not when it means helping them provide better care for children. Regulatory overload is fine when it serves to discourage the provision of child care, but not when, in some bureaucrats' minds, it is designed to stretch the arms of the federal government into upgrading training and program excellence. PAGENO="0159" 153 Instead of providing flexibility for improving child care, the Block Grant regulations deny states the authority to determine how much should be spent on quality. Without that flexibility, efforts to fund provider training, parent education, and the development of resource and referral networks -- all documented to be critical to improving the quality and availability of child care -- will be severely hampered. Assistant HHS Secretary Jo Anne Barnhart recently cited California as an example of a state where parents on AFDC can choose their child care arrangements while participating in training or education programs. And, Ms. Barnhart concluded, there have been no child care tragedies. Of course, Ms. Barnhart neglected to mention that California has more stringent family day care licensing requirements than most states, a larger pooi of guaranteed safe and quality child care options, and state child care subsidies that supplement federal funds for families in the GAIN program. California also has mandated resource and referral networks in every county that educate parents about choosing quality child care. We wish that every state had at least the depth of commitment to child care that California has developed. But to suggest that additional commitment to safety and quality is generally unnecessary because of the record of an atypically advanced state is deceptive at best. Under the guise of "parental choice," the Administration's would expressly forbid states from applying health and safety standards to publicly-funded child care under the "At-Risk" Child Care Program unless the same standards apply to unsubsidized care. Such action will force many states either to relax current minimal protections or refuse the federal money. The Administration is not even consistent in granting powers to the states instead of mandating them from Washington. Under both sets of these regulations, states are restricted from establishir~g their own registration procedures for child care programs even though the law clearly allows for state flexibility. There is simply no reason to prohibit a state from deciding that its children deserve a higher level of protection or quality that BBS determines is necessary. That is the principle we follow with labor and environmental law; it ought to be good enough for our children, too. The regulation for the "At-Risk Program" further undermined the concept of parental choice by permitting payment at an inadequate sub-market rate of 75 percent. This low rate not only discourages providers from accepting subsidized children, but subverts parental choice. The Administration is essentially consigning participants in this program to sub-quality care by allowing only sub-market rates of payment. The regulations make a mockery of efforts to upgrade the training and compensation of child care workers, variables that perhaps more than any other have been demonstrated to improve PAGENO="0160" 154 child care quality. Instead of the serious efforts to improve training, like those developed with federal assistance by the National Association for the Education of Young Children, the regulations for the Child Care and Development Block Grant would permit the mailing of information to family day care providers to constitute sufficient "training." That absurd criteria directly contradicts the repeated assurances of White House officials, during the discussions over the legislation, that they shared our firm commitment to improved training for child care workers. The fact is that there is nothing in these regulations that would assure that those who provide daily care to millions of children would have !P1 opportunity for additional training or instruction. This flies in the face of knowledge, experience and logic. We know that improved training is directly linked to reduced turn-over, to higher quality programs, to better compensation -- and that these factors produce better programs for children. I cannot accept the argument inherent in the Administration's policy that parents resent mandatory efforts to improve child care quality or that federal taxpayers should subsidize poor quality, and potentially dangerous, child care. In fact, a Harris Poll showed that 89% of the public felt that setting standards for child care would help ensure that all facilities offer reasonably adequate care and would give parents peace of mind. Yet, according to a National Academy of Sciences report, minimum protections do not exist in a significant number of states. The Administration says that is fine, and we should subsidize the substandard care. A few years ago, when a little girl fell down a well at an unlicensed child care center, or when some children were sexually abused at another program, no public official would have had the nerve to suggest that we ignore quality in the creation of a federal child care program. We were reminded of the many safety problems in many child care arrangements by a recent Prime Time Live segment, let alone concern for the quality of the programs. While the primary responsibility for assuring quality rests with the states, the federal government must not abandon its own responsibilities, particularly when we are expending hundreds of millions of taxpayer dollars to underwrite these child care programs. We should not wait for a flurry of child abuse reports or fires or other tragedies to force us to take action. These regulations are a betrayal of the representations made to Congress during the development of this legislation. But something far more important is at stake than the integrity of the Administration's word: what is really at stake is the health, safety and development of millions of American children who would be abandoned by the federal government if these regulations are permitted to go into effect. I would like to submit for the record the attached letter commenting on both the interim final rule for the Child Care and Development Block Grant and the proposed rule for the At-Risk Child Care Program which was signed by 21 of my colleagues on the Select Committee on Children, Youth, and Families and the Congressional Caucus for Women's Issues. PAGENO="0161" 155 -~ ~4~J7 ca-' ?&~Z~4- ~`1ie1J 7~ /`)cz~-k Con~ve~ ot the ~ntteb ~`tate~ ~ou~e at ~epvt~tntatibe~ ~as~ington, ~X. 205t5 August 2, 1991 Assistant Secretary for Children and Families Attention: Mary Ann Higgins, 0FA/JTF, Fifth Floor 370 L'Enf ant Promenade, SW Washington, DC 20447 Dear Ms. Higgins: As members of the Select Committee on Children, Youth, and Families and the Congressional Caucus on Women's Issues, we are concerned about the interim final and proposed child care rules that could seriously undermine the safety of children. The interim final rule for the Child Care and Development Block Grant (CCDBG) was published in the Federal Register on June 6, 1991 and the proposed rule for the At-Risk Child Care Program (ARCCP) was published on June 25, 1991. Since its inception in 1983, the Select Committee on Children, Youth, and Families has conducted an ongoing investigation of child care and documented the woefully inadequate supply of quality, affordable child care. The Congressional Caucus on Women's Issues also has played an active role in the development of a national child care policy. We welcome the opportunity to comment on the proposed regulations to govern the two new federal child care programs, and urge your serious consideration of the following issues: 1. The CCDBG regulations are overly restrictive in limiting the amount of funds that can be used to improve the availability and quality of child care. The CCDBG requires that 75% of the funds be used to pay for child care services and (emphasis added) to improve the availability and quality of child care. While the conference report (Report 101-964) does stipulate that a "preponderance" of these funds be spent on direct services, the regulations interpret this to mean that at least 90% of these funds be used for direct care. Congress expressly required that some portion of funds be used to improve child care quality. Since it is not unreasonable to expect that administering the block grant could consume 10% of the funds, especially given the state mandate to establish a voucher program, virtually no money would be available for quality improvements in direct defiance of Congressional intent. 51-713 0 - 92 - 6 PAGENO="0162" 156 Assistant Secretary for Children and Families Page 2. Attention: Mary Ann Higgins August 2, 1991 Activities, such as provider training, parent education, and the development of resource and referral networks, are critical to improving the quality and availability of child care. But these activities are also necessary to guarantee parental choice. We urge that the regulation be revised to allow greater state flexibility to improve the quality and availability of child care, while also providing incentives to do so, by requiring that no less than 51% of the 75% set-aside be used for direct services and capping administrative costs at 10%. 2. The regulations seriously impede the statee' ability to impose even minimal health and safety regulations for the CCDBG. The broad, vague standard in the CCDBG regulations, which repeatedly emphasizes that additional health and safety standards cannot significantly restrict parental choice, could in effect deter states from adopting reasonable safety standards. No one disagrees that parental choice is an important principle, but Congress intended to provide assistance to families for quality child care, not unsafe or unhealthy care. Furthermore, we do not believe that parental choice is in any way harmed by reasonable state efforts to regulate providers in order to protect the health and safety of their children. Second, in the preamble, it is implied that only the most minimal health and safety standards will be acceptable. For example, the regulations suggest that states could meet the law's training requirement by mailing providers information regarding health and safety codes, rather than by actually providing more direct effective training opportunities. This is a disgrace, given what we know about the importance of training to stable and nurturant child care. In the most comprehensive study of child care in the nation to date, the National Child Care Staff ing Study found that at a minimum, 15 hours of training are necessary to provide quality care. We urqe that the final regulations be revised so that states may require providers to meet health and safety standards that protect children and assure parents a wide range of safe and healthy child care from which to choose. 3. The proposed regulations for the IV-A At-Risk child Care Program expressly prohibit states from imposing health and safety protections for any child care funded under Title IV- A that do not apply to unsubsidized care. We strongly believe that government has the responsibility to ensure that public funds are spent in a responsible manner. To prohibit states from ensuring that children in publicly-funded child care are in a safe environment is an abrogation of the PAGENO="0163" 157 Attention: Mary Ann Higgins August 2, 1991 public trust and seriously undermines Congressional intent. We urge reversal of this restrictive interpretation. 4. The registration requirements in both sets of regulations are unnecessarily restrictive. The CCDBG regulations require that providers exempt from licensing or regulation by the states must be registered in order to receive payment. However, the language in the preamble severely and unnecessarily limits the information that the states nay collect for this purpose and in effect prohibits the states from gathering public health information that nay be vital to the well-being of children. Similarly, the ARCCP regulations severely limit registration procedures. There is no legislative history authorizing these restrictions on the states. The regulations should be rewritten so that States are allowed to gather pertinent background information about child care providers, including background and/or fingerprint checks, and health screening information so that parents can make informed choices regarding the care of their children. For the safety of the nation's children, we urge your immediate consideration of these comments, and publication of revisions and final regulations in a timely fashion. ~T~incerely, CA~~ Chairwoman Co-~jai/~ I Select Committee on Children, Con~e*i6nal Caucus on Youth, and Families Wdi4ex~'s Issues Co-Chair V ~ Congressional Caucus on Issues George Miller, M.C. Constance A. Morella, M.C. William Lehman, M.C. atthhew F. McHugh~k~C. PAGENO="0164" T d Weiss, M.C. 158 :C~_~_~I_1 ~ Joa* Kelly Horn, N.C. B~ov,Jr., D g as ete Peterson N C David E. Skaggs, ~~Lh444 Richard 3. Durbin, M.C rbara-Ro ns, N.C. an H. Levin, .C. PAGENO="0165" 159 Acting Chairman DOWNEY. I have exhausted, I think, my fund of questions on these matters. [Laughter.] Let me just tell you, Claudia and Ruth, that your testimony ad- dresses the issues that concerns me in the county. Claudia, I want to make sure that the fine work you all are doing in Texas contin- ues to be done, and I think that that can only happen if we change some of these absurd regulations which we intend to do. Thank you both very much. Acting Chairman DOWNEY. The subcommittee will next hear from the Child Welfare League of America, Douglas Baird, the chief executive officer, Associated Day Care Services of Metropoli- tan Boston; the National Women's Law Center, Nancy Duff Camp- bell, copresident; the Family Research Council, William R. Mattox, Jr., director of policy analysis; and Robert Rector, policy analyst, the Heritage Foundation. Please proceed in the order in which I have introduced you. Thank you all for coming and waiting so long. I realize what a long day it has been for you, and I apologize that this appears to be hur- ried. It isn't. First, Mr. Baird. STATEMENT OF DOUGLAS BAIRD, CHIEF EXECUTIVE OFFICER, ASSOCIATED DAY CARE SERVICES OF METROPOLITAN BOSTON, ON BEHALF OF THE CHILD WELFARE LEAGUE OF AMERICA Mr. BAIRD. Congressman Downey, thank you very much for the time. I have to start by saying that at the point that I heard that you were going to hold these hearings, I thought that there was an opportunity, perhaps. There is a moment here, perhaps, that we can stop some very destructive events from going forward. As those of us who have worked on the development of these child care funding programs at the Federal level for some years know, you have worked particularly hard to make sure that at the point that the programs get into place that they serve children and families and serve them well. I would like to just deal with some very limited matters that were talked about earlier this morning and try to bring them down, if I can, to the most local level and talk about one child care program that my agency, Associated Day Care Services, provides in Boston in Roxbury in Mission Hill. Acting Chairman DOWNEY. Without objection, all of your state- ments will appear in their entirety in the record prior to your making your statements. Please continue. Mr. BAIRD. The Ruggle Street Mission Hill Day Care Center is an old center. It was established in 1922. It was the first educational preschool in the United States, so it has had a chance to spend some time learning how to provide care to children. The parents who are served in that center are consistently, and have historical- ly been, poor parents. The community it serves is a poor communi- ty, but the parents have chosen that center. These are not parents who have been forced to go to that center. There are other child care centers, and there are other child care choices available in Boston, so this is a choice program for parents who make choices. PAGENO="0166" 160 We have been able, over the course of many years, to seam to- gether programming so that regardless of whether a parent is on welfare, working, or in training, just off welfare in what is now called the transitional child care stage, in what is now or about to be the at-risk stage, or is just a plain working low-income parent, to mix and seam together all of the dollars that are necessary to serve some 61 parents and their children in this program. What is happening in Massachusetts and what will happen across the country if these regulations are moved into place, is that we will not be able to do that. In order to assure that the at-risk population is not somehow prevented from the broadest set of choices that the Secretary says should be available, our program and all of the programs that serve our community in Roxbury will devolve. Their standards will lower in order to assure that the State can fund at a consistent level across the board. What Mr. Gibbs said about what is going on in New Jersey with his two sets of child care standards for family day care will occur State by State, community by community. And, instead of allowing us to continue a seamless child care program, we will vulcanize it. It will break into parts. The part of the program that serves children who are labeled protective services will continue to remain a strong program, and we are reasonably sure that we can keep that one together. But the program that serves children who are in the now at-risk label cate- gory will have to devolve. That is not in the interest of children. It is not in the interest of families. It is not in the interests of this country. Absolutely no one will be well served by that chain of events. I would urge you to look for the effects of the regulations to make every effort to try to push through the iterations of what these regulations will do State by State in the near term so that we can understand and prevent the regulations from going into place before they actually do what we know they are going to do. I could also tell you that the simple effect of limiting the States to the 75th percentile method of reimbursement will, if you iterate that one, two, or three terms over several years, will drive down the market cost of care because the State monopolizes child care in many parts of many communities and will, in net effect, lower the cost of care each time the 75th percentile becomes the 100th per- centile. Finally, one thing. I believe that the administration does intend to make foster parents or children who are in foster care categori- cally eligible. If they don't, they have made an awful, awful mis- take. There are so many children who are now in foster care, and we have historically treated that population across the country as eligible for child care programs. To not do it under these two pro- grams, both the at-risk program and the block grant, would be an absolute travesty. Thank you very much. [The prepared statement follows:] PAGENO="0167" 161 TESTIMONY OF TIlE CHILD WELFARE LEAGUE OF AMERICA BY DOUGLAS BAIRD, CHIEF EXECUTIVE OFFICER ASSOCIATED DAY CARE SERVICES OF Mm'ROPOLJTAN BOSTON My name is Douglas Baird, and I am Chief Executive Officer of Associated Day Care Services of Metropolitan Boston, New England's oldest and largest charitable day care agency, and Chair of the Child Welfare League of America's National Task Force on Child Day Care. The Child Welfare League (CWLA) appreciates the opportunity to present testimony on the proposed and interim final child care regulations promulgated by the Department of Health and Human Services for implementation of the Title IV-A At-Risk Child Care Program and the Child Care and Development Block Grant. CWLA is a membership organization of more than 650 child serving agencies, comprised of both public and private nonprofit providers, serving children, youth and families in need of adoption, child care, family support services, foster care, parenting skills, teen pregnancy services, residential and group homes, emergency shelter care and other basic supports. League agencies work with some of the most troubled and needy children and families in this country. Since its inception in 1920, the Child Welfare League has been setting standards of practice in order to protect children and improve services to children and their families. CWLA standards serve not only to define the kinds of programs which will protect families and children; they also point the way to high quality early education and child development practice and comprehensive family supportive community services. The Child Welfare League of America has just completed a 1991 revision of CWLA Standards for Child Day Care Services (the third revision since original standards were published in 1960). While revisions were made to reflect contemporary demographics and practice, each edition reaffirms the conviction that, "The care of children away from their own families involves certain hazards. The community should create and enforce appropriate safeguards to ensure the well-being of those children who are cared for over long periods of time outside of their own homes, in other families or in groups, under public or voluntary auspices, or in privately operated facilities." (CWLA Standards for Child Day Care Services 1991 Revised Edition, in press). My agency, Associated Day Care, has been serving children from low income families in the Boston area since 1878. This summer, Department of Health and Human Services Secretary Louis Sullivan visited one of our programs that dates from the 1880s. One hundred years ago the agency served populations of European immigrants during the settlement house era. Today the agency serves white, Hispanic, and African American as well as southeast Asian and Pan-American low income families. While the population has changed over the century, the mission remains the same: provision of essential services to allow families to become self-supporting. The agency received the first State contract to provide child care for AFDC recipients when that program was instituted in 1968. Today we serve 550 children, ages one month to six years, in two family day care network programs and seven day care centers in public housing sites and multi- lingual, multi-cultural neighborhoods. I am here today on behalf of the CWLA and Associated Day Care to recommend that the proposed and interim final child care regulations must be revised in several areas if the programs are to fulfill their primary responsibility to provide safe and appropriate care for children. Our recommendations will draw on the experience of the CWLA Task Force composed of executive directors of public and voluntary, citywide and statewide agencies providing child day care to thousands of children from low income families throughout the United States. Initially, I would like to commend the Chairman and the Subcommittee for holding this oversight hearing on very important issues affecting America's children and their families. These laws and regulations under review today will have profound and far-reaching impact on our children and families and will shape many other programs, policies and practices as well. It is especially important to understand the critical impact of the child care policies and regulations on the young children and families for whom these programs will constitute the early, and in many cases predominant, building blocks of their lives. These programs, together with existing Federal, State, and local initiatives, will frame family life for millions of this PAGENO="0168" 162 generation's young working parents and their children. For many young children these child care programs will provide or deny them the first tools they will need to participate fully in the global economy of the 21st century. For low income and disadvantaged children, these become the very tools that can enrich their lives and secure their education and their future. Similarly, these child care programs and their proposed regulations will have a direct impact on State efforts. Many States are using the Child Care and Development Block Grant planning process to review and amend or otherwise set forth new programs of child care encompassing Family Support Act programs, Title IV-A At-Risk programs and the Title XX Social Services Block Grant child care programs. In many States, review and redefinition of the relationship between child care programs, .Head Start programs, early childhood education and early intervention programs funded under Federal and State budgets is proceeding at unprecedented levels, driven by the urgent needs of changing American family life and by the two new programs established last year. At a community level, it is often a quirk of fate that some children and families enter their first child care experiences through the welfare door with a JOBS certificate, while their neighbor in the same circumstance may, having just located a menial job, become eligible for an At-Risk program, and the child next door may be in Head Start in the mornings and a separate wrap-around child care setting in the afternoons. To the extent that these regulations do not recognize and speak to that reality, they will guide States and local jurisdictions toward balkanized, uneven, and disjointed family supports, particularly among low income working families. Eligibility for these programs may change several times in a year. The parents' child care choices should not have to change with it. And, while we understand that the scope of this hearing is limited to the Block Grant and the amendments to Title IV-A which entitle States to reimbursement for child care programs for working families who would otherwise be at-risk of becoming eligible for AFDC, the direct impact of these proposed regulations will also fall on programs providing child care under the JOBS and Transitional Child Care components of the Family Support Act since the Administration proposes to amend certain parts of these programs through the At-Risk regulations. Despite the critical importance of these child care programs and the breadth of their impact, we believe that, overall, the proposed regulations place children at risk, restrict low income working parents to substandard child care, make "seamless" programming impossible, deny States flexibility and authority, and contradict statutory provisions and Congressional intent. We recommend that the regulations be substantially revised before they may be implemented. Our recommendations follow. STANDARDS 1. We recomm~nd that the authority for setting standards for child care services be returned to the jurisdiction of the States without the proposed Federal mandates that wouldreauire the same rerulations for publicly and privately funded child care~. ecommend that the definitions of registration likewise be left to the We believe that, contrary to statutory provisions and Congressional intent, the proposed regulations are specifically designed to deregulate the provision of child care by withholding Federal approval (and funding) of State Plans which do not scale back their provider requirements to the lowest possible common denominator. In reexamining the statute we find neither a mandate nor authority to deregulate publicly funded child care. The purpose of the new child care programs is to strengthen families by providing needed child care for working parents. With respect to determining the intent of Congress, we would point out that, Congress enacted and continues to fund the Child Care Licensing and Improvement Grant Program to assist States in strengthening, not abolishing, child care regulation. In the same P.L. 101- 508 Child Care provisions, Section 5081, Chapter 6 (c), the authorization for PAGENO="0169" 163 the licensing program is increased and enforcement language is added. This suggests the opposite of a mandate to deregulate. Deregulation may place millions of children at risk. We are all aware that many, many more infants and children are in some form of child care, and that many more will need child care in the future. In its 1990 report, Who Cares for America's Children? Child Care Policy for the 1990's, the National Academy of Sciences conservatively estimates that 16.5 million children under age six, including 6.6 million infants and toddlers, and another 18 million children, ages six to 13 years, have mothers in the work force. The Academy projects that, by the year 2000, 80 percent of school-age children and 70 percent of preschoolers will have mothers in the work force. What is not as evident is the role that publicly funded child care programs play in setting the standard for the child care industry. When Massachusetts upgraded its child care programs as an essential component of their ET CHOICES welfare reform program in the 1980's, standards for service in the private sector rose as well, and the quality of care for all children in the State improved. It is our hope that similar industry-wide quality improvements may be effected as the new Federal child care programs are implemented. Deregulation may also have a negative effect on the supply of child care, as the recent history of the insurance industry's withdrawal from insuring child care providers in the 1980's illustrates. Some insurance companies went out of the child care business entirely. Some went so far as to cancel homeowner policies for family day care providers, while others raised rates to exorbitant levels. The insurance industry was only persuaded to return to the child care field as national organizations demonstrated the existence of accreditation and standards requirements (CWLA Standards for Child Day Care Services; the Accreditation Criteria and Procedures of the National Academy of Early Childhood Programs, the American Public Health Association/American Academy of Pediatrics National Health and Safety Performance Standards for Out-of-Home Child Care Programs, etc.) in addition to State and local regulatory requirements. Should deregulation stimulate a recurrence of insurance industry withdrawal, there will surely be a concomitant withdrawal of child care providers, leaving parents with few child care options. Our primary concern with both regulations, however, is that the Administration has clothed its intention to deregulate in "parental choice." It is a cruel hoax. to utilize "parental choice" to frame the deregulation of publicly funded child care in a manner which denies low income parents the child care choices available to more affluent families. It defies common sense to juxtapose "parental choice" with governmental efforts to assure low income parents safe and decent child care choices. Certainly "parental choice" has not precluded the U.S. government from assuring its own employees in Langley, Virginia and military installations around the globe child care programs that meet standards of quality care. We do not believe that low income parents would choose to place their children in child care settings which do not even meet basic health and safety standards, nor do we believe that Congress intended to remove critical protections for children in care. But that is what is happening as States struggle to draft plans that conform to these proposed regulations. We hope the Subcommittee will pay particular attention to the Block Grant regulations Subpart D 98.30 (g) Parental choice, While the statute does emphasize parental choice, we can find no suggestion that parental choice is to outweigh the protection of the children in care, This provision of the regulations appears to lay the regulatory groundwork for sanctioning States and localities for maintaining basic health and safety requirements and suggests that Federal auditors could decide that State and local requirements "significantly restrict" the supply of child care. We would urge that this provision, which is antithetical to the law and holds the potential for coercing States to cease providing rudimentary protections for children, be revised or deleted. For example, while child care under California's GAIN welfare reform program is often cited as an example of the success of parental choice, our statewide Resource and Referral agency CWLA member reports that more than one factor entered into this outcome. Child care in California PAGENO="0170" 164 is well regulated, and there is very little exempt child care in that State. California pays the full market rate for care, making up the difference with State funds so that provider reimbursement is very close to the actual cost of care. And Resource and Referral agencies were very active in counseling parents on choices. One finding from this experience was that a major problem with parental choice was mothers sometimes experienced great pressure from friends and relatives to designate them as providers whether or not they were actually prepared to provide the care. In States where basic income supports under AFDC are burdensomely low, child care dollars may well be diverted to family supports other than child care. While this may be economically beneficial to impoverished families, it does not reflect the intent of Congress that these funds provide child care in order to facilitate parents entry into the workforce. There is every evidence in the statute and the conference report that Congress intended to give States the right to determine standards for services, and this appears to be an abrogation of States' rights as well as a negation of the declared intent to give States and localities as much flexibility as possible in designing programs to meet State and local needs. In the At-Risk regulations we urge elimination of the 257,41 (a) (2) Child Care Standards provision which states that `Applicable standards are licensing or regulatory requirements which apply to care of a particular type in the State, local area, or Indian reservation, regardless of the source of payment for the care." Nowhere in the statute is there authority to require States to reduce or abolish their existing standards "regardless of the source of payment for the care." The preceding provision, 257.41 (a) (1) of the Proposed Standards which states that "Child care provided with funds under this part must meet applicable standards of State and local law, and/or Tribal law" accurately reflects the language and intent of the statute, but is contradicted by the (a) (2) proposed provision, and (a) (2) is an unworkable and legislatively insupportable provision which should be removed. Likewise, we find no statutory authority for the Part 255 Child Care and Other Work Related Supportive Services During Employment, Education and Training which would impose the At-Risk deregulation provisions in the JOBS and Transitional Child Care programs. The FL. 101-508 Chapter 6, Child Care, Section 5081 (c) Amendments to the Grants to States to Improve Child Care Licensing and Registration Requirements and to Monitor Child Care Provided to Children Receiving AFDC state quite clearly that the purpose of the grants is "to enforce standards with respect to child care provided to children under this part..." We take this to be a definitive expression of the intent of Congress that child care provided under Title fl/-A is to be regulated and monitored. In addition to disparities between the Block Grant statute and regulations, we find significant contradictions between various provisions in the Block Grant regulations. For example, the Subpart E 98.40 (a) (1) and (b) (1) provisions on compliance with applicable State and local regulatory requirements seem inconsistent with other sections of the regulations such as Subpart D 98.30 (g) referenced above, with the ambiguous result that States are required to provide assurances that child care assistance comply with any licensing or regulatory requirements under State and local law, while at the same time assure that any such requirements not restrict parental choice by diminishing the supply. Likewise the statement in (b) (1) that "this section does not prohibit a State from imposing more stringent standards and licensing or regulatory requirements on child care providers under the Block Grant than the standards or requirements on other child care providers," does not comport with the "significantly restrict" provision and the following (b) (2) that such additional requirements be consistent with the safeguards for parental choice. With respect to Block Grant regulations at Subpart D Parental complaints , if no standards are to be imposed on the providers, it seems to us there is no standard against which to substantiate complaints. We do, of course, recommend that there be standards, and that records of substantiated complaints be recorded and made available, For example, a nonprofit statewide CWLA member agency in Illinois reports that both new and existing child care programs in that State are now "on hold" because a carefully drafted State Plan has had to be scrapped due to PAGENO="0171" 165 the stringent standards prohibitions in the Federal regulations which disallow Illinois' provider agreements that include basic health and safety requirements, authorization for criminal records checks, and mandated child abuse reporting. In both the P7-A and Block Grant regulations the provisions on registration of providers seem to recommend that registration require only the name of the provider and the address to which payment is to be made and health and safety training literature is to be mailed. On a very basic level, Social Security numbers would have to be provided to comply with the Internal Revenue code. Further, criminal record checks advocated strongly by Congress in 1986 during the height of public concern and press coverage about child sexual abuse in child care programs, are in place in most of the States. For those States with any categories of exempt care, the effect of these `no barriers" regulatory provisions would remove record checks for all programs. The regulations should not cause this result. We suggest that requiring only the name and address of the provider opens the door to the ex- penditure of government funds for unsafe and potentially fraudulent activities. Likewise, the implication that any health and safety training requirements could be met by mailing providers some printed materials, seems woefully short of child protection and is, in fact, dangerous for children and outrageous. SEAMLESS PROGRAMMING 3. In order to offer States the flexibility needed to create seamless grpgramming we recommend that eligibility be limited to low income without additional Federal criteria which may impede at-risk families' access to service. Despite the very admirable preamble description of intent to provide States with the flexibility to design "seamless" programs which would allow for the integration of child care funding streams and systems to maximize resources and provide continuity of care for the children, regardless of the eligibility status of the parents, these regulations have the effect of making integrated systems virtually impossible. As in the standards area, the only recourse for States wishing to adopt seamless programming is to downgrade all services to the lowest possible common denominator. As a result of what may be perceived as excessive Federal regulation, the two regulatory proposals create barriers between the Block Grant and the P7-A programs with disparate provisions on payment rates, sliding fee scales, and eligibility. For example, a CWLA member agency in the State of Washington tells of the agency's inability to serve a critically disturbed four-year-old child referred by protective services for therapeutic child care. This child, and her family, which was rapidly becoming dysfunctional, "fell out of all the funding streams," an~d the child and her family, including five children, have since "disappeared." We believe that one possible consequence will be to insulate the unregulated programs required by these regulations from those meeting standards which can apply under the Block Grant. As family status changes from Family Support Act and At-Risk program eligibility to Block Grant, Title XX or Head Start, children will have to be moved. In fact, in the most balkanized of situations, children will have to move from a JOBS child care program to a Transitional Child Care program to an At-Risk child care program to a Child Care and Development Block Grant program, despite all research indications that continuity of care is a critical element in child development. How can this be construed as desirable parent choice? Another possible consequenc~ of the barriers created by these regulations is that States will opt to move toward a more "seamless" approach, using vouchers or certificates and allowing community based programs to market their choices to parents, in which case it may be anticipated parents will end up with fewer options as providers accustomed to operating under grants and contracts will discontinue subsidized services. This will have a particularly unfortunate effect in inner cities and isolated PAGENO="0172" 166 rural areas where centers and family day care networks frequently offer the only quality care available. REIMBTJRSEMENT RATES 4. We recommend that the 75th percentile definition of market rate s be eliminated as well as the permission for States to set statewide rates. 5. We recommend that the interpretation of permissible differential rate setting be revised to take into account existing State rate incentives for improving quality of care. We would like to reference the At-Risk statute at Sec. 5081 (a) (B) which states that "The State agency shall make payment for the cost of child care provided with respect to a family in an amount that is the lesser of (i) the actual cost of care; and (ii) the applicable local market rate." The proposed regulations (257.63 Allowable Expenditures) appear to be substituting the 75th percentile for the applicable local market rate. It seems to us that the regulations should follow the statute. Additionally, we would point out that setting reimbursement at the 75th percentile infringes on parental choice by restricting options available to parents and denying access to quality care. We note that the regulations also propose to allow the States to set statewide limits, a proposal .which would result in even greater reductions in some areas. For example, higher cost programs operating in higher cost urban areas could be "redlined" because of the 75th percentile cutoff if States with as little as a 25 percent differential in cost of living adopt a statewide limit. In Massachusetts, parent choice for JOBS eligible parents has been further limited to a. $2.00 an hour fiat rate. Parents previously granted greater choices have had their choices severely limited. Since the proposed regulations would permit States to elect a flat fee for IV-A At.Risk programs, there is every likelihood that some will do so. Also, the regulations appear to prohibit States from paying higher rates for higher quality program by paying more for accredited, licensed, and regulated care. This effectively removes incentives for child care providers to improve quality, and, in so doing, restricts parents ability to choose quality care. We wOuld invite the Subcommittee to take a look at the issue of differential rates and the manner in which the proposed regulations have interpreted categories of care and care providers. SERVICE DELIVERY METHODS 6. We recommend that the certificates-are.best bias be removed from the Federal guidelines, allowing States the flexibility to use their own experience and the needs of their families to determine service delivery methods. It appears to us that the proposed regulations are attempting to revise legislative policy by invoking parental choice to urge States to adopt payment plans which "provide parents with cash or vouchers in advance or reimburse caretaker relatives for child care expenses incurred' (At.Risk, Sec. 5081 (a) (i)(2). Overall, the regulations fail to strike an appropriate balance between contract and certificate programs. We find no basis in the statute for the separate provisions in the Block Grant regulations (Subpart A 98.2 (g) ,(j),(k), which define assistance to the parent as totally different from payments to child care providers. Both certificates and grants and contracts are assistance to parents, and the distinction in the regulations Ci) that "a child care certificate is assistance to the parent, not assistance to the provider" reflect language recommended by the Administration prior to enactment and not the language of the statute enacted by the Congress. The introduction of a preference for certificates holds a potential for decreasing child care resources. Most States have found that a dual system of both contracts and certificates is necessary to maintain an adequate supply of child care, particularly in the areas most and least densely populated. For example, a Connecticut voluntary agency reports that their State Plan excludes day care programs currently supported by grants from the PAGENO="0173" 167 State thus denying them access to the new Federal funds. At best, significant reductions in voluntary agency services are projected, and this means that working parents with income over 50 percent of the State median income will not be served. It is estimated that many centers in low income areas will have to close. ELIGIBILITY FOR FOSTER PARENTS 7. We recommend that the regulations clarify the categorical eligibility~of foster parents and foster children for these The National Foster Parents Association, a CWLA member, submits the following statement: "In this day and age, many families require two incomes to keep going. When fo"fer parents take on the added burden of other people's children, they often need support services to keep their own families intact. The children being placed today require a more structured environment to their lives. Day care provides some of this structure and helps reinforce the foster parent's efforts to deal with problems appropriately. Day care also ensures a more stable placement by reducing the stress on the foster parent, thereby limiting movement of the child from home to home. Many foster children have been deprived of socialization benefits which are developed in day care. Day care provides an opportunity for physical, emotional and learning problems to be identified by skilled day care workers. It also affords an opportunity for foster children to be with adults and to learn to trust. It helps the foster child make the transition back to the birth family or other permanent placement, i.e. adoption." From a foster parent comes the following description of the importance of child care: "Amanda is about to turn six. In this short life span she has experienced physical and sexual abuse and witnessed the same. She has been shuttled back and forth between her father and mother as a main caretaker at least three times. And she has been hospitalized twice for depression and `suicidal ideation.' The impermanence in her life is profound. As two working parents, we never could have considered becoming foster parents without child care. Upon meeting Amanda, we knew that a quality child care program was an important element in her `therapeutic environment,' and luckily we were able to find an excellent child care situation for her. Recently our authorization for child care services expired, and we were unsure whether we would be eligible for another one. Fortunately, we are in the therapeutic foster care program that provides a larger stipend for the fostering and could choose to use that money to keep her in quality care. But we are the exception. What would our choices have been if we had been the typical foster parents?" It is our understanding of the intent of Congress that "Parent" includes foster parents. Given the critical need for child care as a component of recruitment of foster parents for abused, abandoned, and other special needs children, we recommend that the eligibility of foster parents for child care under these programs be explicitly stated. This could be clarified by amending the provision at Block Grant regulation Subpart A 98.2 (aa) to read: "Parent means a parent by blood, marriage or adoption and also, means a foster parent, legal guardian, or other person standing in loco parentis." It is our impression that children living with foster parents are to be eligible for these services on a categorical basis. We would suggest that the Block Grant regulations on a child's eligibility for child care services at Subpart C 98.20 (a) (2) clearly indicate that the foster parents not be means tested. The protective service provision in Subpart C 98.20 (a) (3) (ii) should PAGENO="0174" 168 attach, as an alternative, to income eligibility as well as the work/training/education provision in (3) (i) ADMINISTRATION ISSUES 8. We recommend that, to avoid potential conflict of interest outcomes. provisions which allow the State agency to contract with other public or private organizations for assistance in implementing the State programs clarify that such contracts as applied to the nrivate sector be limited to the not-for-profit private sector. 9. We recommend that the State Plan public hearing requirements extend to one hearing a year for the first three years in order to allow for full consideration of community comments. especially since this year's planning time lines were so abbreviated. To conform to the intent of Congress and avoid potential conflict of interest outcomes, we suggest changing At-Risk State W-A Agency Administration provision, 257.10 (c) to read: "Except for functions described in paragraph (b) of this section, the State W-A agency may carry out the At- Risk Child Care Program through arrangements or under contracts with other State or local administrative entities, or other public or private not-for- profit organizations. Similarly, in the Block Grant regulations, Subpart B 98.11 (a) Administration under contracts and agreements we suggest changing the second sentence in this provision to read: "In addition, the lead agency can share implementation of the program with other public or private not-for- profit local agencies." We believe that the intention was to require States to hold a public hearing in order to allow for public input in the development of the plan. Since the initial planning process has moved very quickly and many States have not had the opportunity to consider public comments in any depth due to the need to formulate and submit State Plans in a short time period, we suggest changing the Block Grant regulation provision, Subpart B 98.10 (d) to read, "Hold at least one public hearing a year during the first three years of operation in order to incorporate community recommendations into the evolving program." PAGENO="0175" 169 Acting Chairman DOWNEY. Thank you, Mr. Baird. Ms. Campbell. STATEMENT OF NANCY DUFF CAMPBELL, COPRESIDENT, NATIONAL WOMEN'S LAW CENTER Ms. CAMPBELL. Thank you, Mr. Chairman. We at the National Women's Law Center share many of the concerns that have al- ready been addressed today, and our statement sets these out in some detail. I really want to focus in the brief time that I have on what I think is the emphasis in our statement on the legal arguments that need to be considered here, and the subcommittee certainly has al- ready done that in the committee print that you and your staff have prepared. The focus in our testimony really is to try to dispel the argument that is being made by the administration that there is a conflict in the statute-in both statutes really-between parental consent and the desire for State flexibility. We do not believe there is that conflict in the statute, that essen- tially what you have as the primary concern of both statutes-and in fact, I might add that I myself am not altogether happy with this, but I think this is the way it turned out-what you have in both statutes is a paramount concern for State flexibility. Parental choice comes in, but it comes in in a much more limited manner than the administration has interpreted it. In the block grant statute, you have consideration of parental choice really only in one place in the statute, and that is in the discussion of certificates and in the mandate that families have the opportunity to choose between certificate and contracted care. Pa- rental choice is not mentioned anywhere else in the statute. So the notion which runs through all of the regulations and the problems that have been described, that parental choice can be ele- vated to overcome explicit places in the statute where other consid- erations-mostly considerations of State flexibility-are clearly stated just is not consistent with statutory intent and with how we read statutes or with what Congress clearly intended in the law. So, they sort of set up the straw person and then proceeded to im- plement it. In the at-risk statute, as you well know, Mr. Chairman, parental choice isn't mentioned at all. So the notion of parental choice-did I say parental consent all the way through my testimony? I am used to talking in parental consent terms as well in another forum. But the notion of parental choice, which is what I meant to be saying throughout, is not even stated in that statute. So to then take what is done in the block grant, pull it into the at-risk stat- ute-and by the way, they don't just pull it into the at-risk statute, they go back and pull it into the Family Support Act which was passed several years before and also doesn't have any mention of it, is a stretching of one particular phrase in the statute well beyond what it was ever intended to do in terms of the regulation. This isn't to say that parental choice isn't a concern and isn't an important concern and isn't something that we should all care about. But when you are looking to areas where the statute man- PAGENO="0176" 170 dated that particular things be done, such as that applicable State and local standards apply, the issue that we have been talking about so much this morning, it is important first to look very clear- ly at what Congress said and what it directed and not to pick some language from elsewhere in the statute, bring it in to support an interpretation that should then drive statutory interpretation. I won't take the time now to go into in any detail the various examples we give of this, but we run through not only the issues that we discussed this morning, but issues about the registration process, issues about the percentage of funding for administrative quality and availability, religious nondiscrimination provisions, which haven't been addressed here today but which pose some of the same kinds of problems, and issues around the payment rate, which also have been discussed. But in all of these areas, you have Congress being very clear about State flexibility and the administration pulling in parental choice as the underpinning for what they are doing in ways that go well beyond what the statute says and what the legislative history demonstrates. So I will close by being the only witness, I think, to stop before even the yellow light came on. [The prepared statement follows:] PAGENO="0177" 171 NATIONAL WOMEN'S LAW CENTER Summary of Testimony of Nancy Duff Campbell, Co-President National Women's Law Center 1616 P Street, NW, Suite 100 Washington, DC 20036 (202)328-5160 Before the Subcommittee on Human Resources Committee on Ways and Means U.S. House of Representatives on the Administration's Proposed Federal Child Care Regulations September 26, 1991 The National Women's Law Center is a national women's legal organization that has been working for nearly twenty years to protect and advance women's legal rights. As a leading advocate for child care, we worked extensively on the landmark legislation enacted last year and are pleased to have the opportunity to testify before the Subcommittee on regulations to implement that legislation. We are seriously concemed that the regulations play havoc with states' child care systems, forcing them to restructure existing programs or reduce standards for all publicly funded child care if states want to maintain a `seamless system" of care. As we understand Congress's intent in enacting the child care programs, issues regarding standards, quality, and other matters not specifically addressed by the legislation were left to state discretion. However, the regulations instead impose onerous federal requirements on slates, limit states' flexibility to determine spending priorities within the parameters of the statutes, and may, in fact, have the effect of reducing the quality of child care in states rather than improving it. Our testimony is based on comments we submitted to the Administration for Children and Families (ACF) this summer on proposed regulations for the At-Risk Child Care Program (At-Risk) and intenm final regulations for the Child Care and Development Block Grant (CCDBG). It addresses the following inadequacies in the regulations, and makes the following recommendations: c -x~'sz~ wiu Lt..UtiU regulations ~, ~iv ,, requirements to ensure a minimum lpygLpf~~pgffiy by a) prohibiting states from setting more rigorous standards for funded providers than for nonfunded providers, and b) in the CCDBG program, by preventing slates from establishing effective health and safety requirements, and inappropriately suggesting examples of activitian sufficient to meet these requirements that are so weak as to undercut the statutory mandate. To address these problems, we urged that ACF delete §~257.4l(a)(2) and §255.4(c)(2) of the At-Risk regulations, and §~98.40(b)(2), 98.30(g), and 98.41(b) of the CCDBG regulations, and that the parentheticals in §~98.41(a)(2) and (3) of the CCDBG regulations be deleted and more appropriate examples be included in the explanatory materials accompanying the final regulations. (2) ThcAERisk and CCDBG regulations inappropriately restrict states from usingjhg se~u.a5JdLLUH process to chock complian~çe of ui~~iceq~ed programs with minimum j~eatth artç~ ~af~tyrequirements. To address these problems, we urged ACF to modify the CCDBG regulations to state specifically that registered providers must meet minimum health and safety requirements, and that both the Block Grant and At-Risk regulations clearly state that the registration process may provide for the exchange of information sufficient to meet slate requirements as long as the process docs not significantly delay payment. Finally, we proposed that the parental choice limitations in both sets of regulations be deleted, as neither statute suggests that parental choice should be exalted at the expense of other requirements of the Acts. 1616 P Street, NW * Suite 100. Washington, DC 20036* (202) 328-5160 PAGENO="0178" 172 2 (3) TheCCDBG regulations deny states flexibility to use funds to increase the quality and~availabilitv of child care. To address this problem, we urged ACF to prohibit states from using for administrative expenses more than 10 percent of the seventy-five percent share of funds allocated by the statute for child care services and to increase the quality and availability of care, and to state simply that the preponderance of funds should be spent for services. This would leave states the flexibility intended by the statute to use block grant funds for activities designed to increase the quality and supply of child care. Alternatively, the regulations could include two limitations -- one for administrative costs, and a second for quality and availability activities. We recommended that each cap be set at 10 percent, which would leave 80 percent of the seventy-five percent share for child care services. (4) The CCDBG regulations provide insufficient protection against religious discrimination by a) allowing discrimination against children within child care programs so long as children are admitted to these programs in a nondiscriminatory manner, and b) by excluding providers of services funded through certificates from the religious nondiscrimination requirements. To address these problems, we urged ACF to modify the preamble and regulations to include the broad prohibition on religious nondiscrimination against any child on the basis of religion required by the statute and to ensure that all funded child care providers are prohibited from discriminating on the basis of religion. ~J) i~ciuci uc ~i.w~j nor the At-rosa reguiauons auequaseiy provide for payment rates to child care providers necessary to ensure that families have access to high quality care because a) the At-Risk regulations adopt the Family Support Act regulations' inappropriate limitation on the rate at which states may reimburse child care providers, and b) the CCDBG regulations inappropriately require states to provide equal payment rates for services provided by unlicensed and lower-quality child care providers and for services provided by licensed and high-quality providers. To address these problems, we urged ACF to permit, for both the FSA and At-Risk programs, payments in an amount equal to the actual costs of care up to the applicable local market rate or the disregard level, whichever is higher, and, for the CCDBG program, to clarify that states may vary payment rates for licensed and unlicensed care and to delete §98.43(c). PAGENO="0179" 173 Acting Chairman DOWNEY. Thank you, Ms. Campbell. Mr. Mattox. STATEMENT OF WILLIAM R. MATTOX, JR., DIRECTOR OF POLICY ANALYSIS, FAMILY RESEARCH COUNCIL Mr. MATTOX. Mr. Chairman, I want to thank you for the opportu- nity to testify before your committee today about regulations gov- erning the implementation of the new child care programs created as part of last year's omnibus budget package. As one who has long admired your effectiveness in championing various causes, I consider it an honor to address your subcommittee today. Several months ago, I watched ABC TV's Primetime Live exposé of licensed day care centers in Louisiana, and like millions of Americans was quite appalled by what I saw. One of the images that struck me was that of the overwhelmed day care worker who, just after cleaning a toddler's dirty diaper, rubbed some Ora-Gel on the gums of a teething infant without first washing her hands. Needless to say, incidents like this help to illustrate why a number of recent research studies have linked group day care at- tendance to several serious diseases, including bacterial meningitis, hepatitis A, cytomegalovirus, gastrointestinal disorders, and upper respiratory problems. Now I don't want to exaggerate the threat to children's health in day care centers. Obviously, most children in center-based care manage to avoid contracting serious illnesses. But I would submit, Mr. Chairman, that the chances of contracting such a disease are far greater than the chances of falling in a backyard well. It seems to me, then, that anyone interested in protecting child safety and health would agree that there is a need for action to curb the spread of disease in day care centers. Indeed, you will recall that in testimony before your subcommittee 2 years ago our president, Gary Bauer, called for the Government to require center-based programs to give written information to parents about the potential dangers of out-of-home group day care. We continue to believe some sort of requirement in this area is needed, and have sent a letter to the Secretary of Health and Human Services urging him, as part of the implementation proc- ess, to consider sending a brochure or some other written material to all parents eligible for public child care assistance informing them of these facts. Mr. Chairman, our support for such regulation, I think, demon- strates that we part ways with some conservatives who would like nothing better than a laissez-faire approach to center-based care, but it does not mean that we want State regulators to have ulti- mate decisionmaking authority over which child care arrange- ments receive indirect Government assistance. That authority, we believe, should rest with parents who should be guaranteed access to a child care voucher which they can then use at the arrangement of their choice, whether it be a formal in- stitutional center-based program or an informal home-based ar- rangement not licensed by the State. PAGENO="0180" 174 Mr. Chairman, if the regulations governing these programs were to permit States to attach separate regulations or secondary regula- tions to child care programs which receive vouchers, we believe the supply of relatives, trusted neighbors, and family friends willing to care for children could dry up. A phone call to me just this week from a foster care mother in Texas drove home this point. She reported that the welfare depart- ment recently completed an inspection of her home and told her that in order to continue as a foster care mother, she would have to get a new toilet seat because some of the paint on the underside of the seat had rubbed off. The fact that, her foster care children were both infants and would not have any contact with the seat made no difference to the regulators. She had to buy a new seat. Mr. Chairman, I wish I could say that regulatory absurdities like these were highly unusual in our foster care system, but a recent story in the Washington Post suggests otherwise. The Post report- ed, and I quote, In some cases, children are removed from the grandmother's care temporarily during the screening process, which includes child care training, background checks, and home inspections to ensure that, among other things, each child has his own bed. As one social worker told the Post, the system acts as if children are better off with strangers than they are with family members. Since the foster care system often provides obstacles rather than assistance to grandparents and others close to the child, many pro- spective foster care parents are discouraged from offering care. We are concerned that State intervention in informal home- based child care, however well intentioned, could have a similar effect on the supply of informal child care. Finally, Mr. Chairman, I want you to know that while I support the general thrust of the proposed rules laid out by the administra- tion, I do believe that they fall short of meeting certain goals of the at-risk program. Recently, I talked with a woman from Oklahoma who is a li- censed home day care provider that first started caring for other children in her home because she wanted to be home to care for her own children. After hearing about the day care bill passed last fall by the Congress, the Oklahoma woman went to the human services department in her State to get information about how to receive assistance. She was told that she could accept day care vouchers for caring for other people's children, but that no assistance would be avail- able to her family so long as she provided care for her own chil- dren. She was told that if she hired someone else to come into her home and care for her children in one part of the house while she cared for others in another part of the house, her family could re- ceive a voucher. So long as she cared for her own child, she was not eligible, even though caring for her own children obviously limited the number of children she could care for and the amount of income she could earn by caring for children. Because the regulations governing the at-risk program make no mention of children in parental care, we are concerned that many, PAGENO="0181" 175 most, or all States will, like Oklahoma, prevent vouchers from being used by wage earning families that care for their own chil- dren. This appears to be at odds with the goal of this program, which is to provide assistance to families with young children who are "at risk" of becoming welfare dependents via AFDC. Clearly, it is not always necessary for a wage-earning family to obtain nonparental child care in order to spend 40 or more hours each week in the paid labor force. Indeed, many families choose, for peace of mind or convenience, to arrange work-family schedules to maximize parental time with children by working split shifts or by having one or both parents work from home or in a job like a day care worker, which allows them to care for their own children while they earn income. Thus, the goals of maximizing parental choice, reducing family stress, and increasing economic self-sufficiency cannot be met with- out recognition of the parental care option. The key to eligibility should not be whether all able-bodied members of the household work for pay outside the home, but whether the eligible family's wage earners would be able to work for pay absent the services of the child care provider. On these grounds, there is no rational basis for distinguishing be- tween care provided by one parent, by both parents, by one or more relatives, or by commercial or nonprofit providers. Indeed, it seems rather absurd that a program designed to help families at risk of welfare dependency would extend no assistance to an intact family with a father who moves out of unemployment and into the paid labor force. Mr. Chairman, we believe the regulations governing the at-risk program should be modified to make explicit that families can use vouchers for parental care. A stipulation of this kind would bring the program into conformity with other antiwelfare programs like the earned-income tax credit, which reward family efforts to become economically self-sufficient without dictating how couples might choose to balance their income producing and child rearing responsibilities. Again, Mr. Chairman, I want to thank you for giving me the op- portunity to testify before your committee. I will be happy to answer any questions. [The prepared statement follows:] PAGENO="0182" 176 )1Research Council TESTIMONY OF WILLIAM R. MATTOX, JR. DIRECTOR OF POLICY ANALYSIS FAMILY RESEARCH COUNCIL BEFORE THE SUBCOMMITTEE ON HUMAN RESOURCES COMMITTEE ON WAYS AND MEANS U.S. HOUSE OF REPRESENTATIVES THURSDAY, SEPTEMBER 26, 1991 MR. CHAIRMAN, I want to thank you for the opportunity to testify before your committee today about the regulations governing the implementation of the new "at risk" child care program created as part of last year's omnibus budget package. As one who has long admired your effectiveness in championing various causes, I consider it an honor to address your subcommittee today. I hope that this hearing will help lead to the adoption of policies which both promote the health and safety of our nation's children and encourage greater parental involement' in children's lives. Informing Parents about Day Care Diseases MR. CHAIRMAN, as you know, the Family Research Council has long been concerned about the health and safety of children in day care centers. Indeed, when our president, Gary Bauer, testified at your subcommittee's hearing on child care in the spring of 1989, you will recall that he expressed grave reservations about the medical risks associated with participation in center-based day care programs. Since that time, the medical evidence about disease transmission in day care centers has continued to grow, making it increasingly clear that the climate for germ exchange is ripe in group Family Research Council A division of Focus on the Family 700 Thirteenth Street, NW, Suite 500 * Washington, DC 20005 ° (202) 393-2100 * FAX (202) 393-2134 PAGENO="0183" 177 care facilities where large numbers of unrelated children share the same play things, and the same eating, sleeping, and toilet facilities. For example, recent medical research shows that day care attendance is the most significant factor associated with increased incidence of bacterial meningitis, or Hemophilus influenza type b (HIB).l Infants in day care are 12.3 times more likely to contract HIB meningitis than are home-reared infants.2 In fact, a study in one community found no reported cases of HIB in smaller, unlicensed child care programs -- all of the children infected attended larger, licensed facilities.3 Of the children who contract HIB meningitis, 10 percent die and another 33 percent experience other effects, including blindness, deafness, speech deficiencies, lower school performance, and a general depression of the intelligence quotient. Among neonates, fully 75 percent of all infected die.4 Similarly, day care attendance has been linked to the transmission of cytomegalovirus (CMV), the leading cause of congenital infections in newborns. In a recent study, between five and 30 percent of all preschool children at home tested positive for the CMV virus, while nearly 100 percent of the children in day care tested positive. Characteristically, the CMV virus has no visible effects in most children and adults, but can be fatal for the fetus of a pregnant woman or can cause severe long-term complications, including deafness and varying degrees of perceptual, neurological, psychomotor, or behavioral complications.5 In addition, research by the Centers for Disease Control in Atlanta has found a link between day care centers and hepatitis A.6 In one city studied, at least 30 percent of the hepatitis A cases had their origins in day care centers. As with other studies on day care diseases, the CDC study found that the larger the center, the longer its operational hours, the greater the risk to children. It also found that risk was greatest in centers that catered to children under two years of age. Other studies have demonstrated that upper respiratory problems and gastrointestinal diseases, including diarrhea, are considerably more common among group day care participants than children cared for in a home setting.7 PAGENO="0184" 178 Unfortunately, most of the commonly-cited strategies to curb disease transmission in day care centers are not terribly effective. Increased handwashing by caregivers (particularly after diaper changing) certainly has some positive effect, but its impact is limited since germs are primarily spread through child-to-child touching and the sharing or toys and other objects. Realistically, it is impossible to disinfect an environment where so many carriers have so much prolonged contact with one another. Likewise, screening providers for infection has only limited benefit, since it is the children who are the primary germ carriers, and they cannot be protected from one another by immunizations. No vaccines exist for any of the most common day care diseases except HIB, and the RIB vaccine is totally ineffective for children less than 18 months old. MR. CHAIRMAN, in view of the significant medical risks associated with day care centers, you will recall that Mr. Bauer suggested in 1989 that all center-based providers be required to give written information to parents about the medical risks associated with out-of-home care. We continue to believe that some type of fact sheet or brochure is needed. Indeed, we have sent a letter to the Secretary of the Health and Human Services, urging him to consider sending a brochure or some other written material to all parents eligible for public child care assistance. Such a document could not only outline the medical risks of center-based care, but could also outline for parents all of the options available to them under the federal program. Whether viewed as informed consent or "consumer" information material, such a document would convey to parents crucial information about their child care decision that is not otherwise readily accessible to them. Giving Paramount Consideration to Parental Choice As our support for "informed consent" materials makes clear, we at the Family Research Council have no philosophical objection to new day care regulations. While we recognize that some conservatives would like nothing better than a laissez-faire approach to commercial day care centers, we find ourselves much more in accord with those who argue that there is a compelling state interest in insuring that center-based programs meet minimum health and safety requirements. Moreover, we hope that states, where it is appropriate, will adopt more stringent regulations governing center- based care. PAGENO="0185" 179 This does not mean, however, that we want state regulators to have ultimate decision-making authority over which child care arrangements receive (indirect) assistance through the "at risk" program. We believe parents are the first and best regulators of child care arrangements -- that parents have a far better understanding of their own child's unique needs than any outside regulator. Thus, we believe the "at risk" regulations need an explicit guarantee~ that qualified parents will be able to receive a voucher which they can use for the child care arrangement of their choice. Since such a voucher constitutes aid to the parent rather than to the provider, it is inappropriate for the government to stipulate that providers meet super-regulations (above and beyond the regulations governing that particular form of care in the state) as a condition of receiving vouchers. Indeed, we are concerned that attaching secondary regulations to these vouchers would have a chilling effect on informal home- based providers, who could be deterred in offering care by meddlesome state regulations. Reducing the supply of informal home-based care is worrisome since such care is generally safer for children and since parents generally prefer home-based arrangements to center-based care. Accordingly, we believe it is important for state regulators to continue to recognize that there are essentially two types of consumers in the child care market today: (1) those who arrange for their children to be cared for in a formal, center-based commercial day care establishment; and (2) those who arrange for their children to be cared for in a home setting by an immediate family member, other relative, trusted neighbor, family friend, or other informal provider. Clearly, it is appropriate for the state to require programs serving the first group to meet minimum health and safety standards, just as it is appropriate for state regulators to require McDonald's and other commercial food establishments to meet minimum health and safety requirements. However, since the second group usually is obtaining informal care from someone they know (and typically have known for some time), it is neither necessary nor desirable for the government to step in and provide assurances that caretakers have say, completed 15 hours of specialized training or obtained a master's degree in child development. Parents who have known a prospective caretaker for some time (and have observed her raise her own children) do not need the government's seal of approval to know that that caretaker is capable of providing loving care for their child. In fact, requiring PAGENO="0186" 180 an informal caretaker of this kind to undergo a training regimen could prove harmful if it had the effect of discouraging care by a relative, trusted neighbor, or family friend. MR. CHAIRMAN, I think it is important to note that informal, home-based child care arrangements are the most common form of substitute care used by parents today. According to Census Bureau data, 26 percent of all preschool children in American today are primarily cared for in a home setting by a grandparent, other relative, nanny, neighbor, friend, or "family" day care provider. Conversely, only 14 percent are primarily cared for in center-based care.8 Eliminating Biases Against Parental Care MR. CHAIRMAN, the numbers cited above not only challenge the common perception that most preschool children are primarily cared for in some type of center-based day care program, but they also beg this question: what about the other 60 percent? Who is caring for those preschool children not found in home- or center- based substitute care arrangements? As quaint or old-fashioned as it may seem, the remaining 60 percent are primarily cared for by one or both parents. According to the Census Bureau, 47 percent have non-employed mothers at home; eight percent have "tag-team" parents who work alternate shifts, and five percent have mothers who care for them while earning income.9 Moreover, recent research shows that parental care of children is voluntary (parents choose to care for children, they are not forced to do so due to the lack of adequate day care) and that parental care of children often involves significant economic sacrifices (which helps explain why the median income of two-earner couples is close to 50 percent greater than one-earner couples). MR. CHAIRMAN, because the regulations governing the "at- risk" program make no mention of children in parental care, we are concerned that many, most, or all states will (perhaps. unintentionally) prevent vouchers from being used by wage-earning families that care for their own children. This appears to be at odds with the goal of this program, which is to provide assistance to families with young children who are "at risk" of becoming welfare dependents via Aid to Families with Dependent Children (AFDC). PAGENO="0187" 181 Clearly, it is not always necessary for a wage-earning family to obtain non-parental child care in order to spend 40 or more hours each week in the paid labor force. Indeed, many families choose -- for peace of mind or convenience -- to arrange work-family schedules to maximize parental time with children by working split shifts or by having one or both parents work from home or in a job (like a day care worker) which allows them to care for their own children while they earn income. Moreover, some couples choose to have a sole breadwinner work say, a 55-hour week (while the spouse cares for children) rather than have spouses divide a 55-hour paid work week between them. Thus, the goals of maximizing parental choice, reducing family stress, and increasing economic self-sufficiency cannot be met without recognition of the parental care option. The key to eligibility should not be whether all able-bodied members of the household work for pay outside the home, but whether the eligible family's wage earner(s) would be able to work the same number of hours absent the services of the child care provider. On these grounds, there is no rational basis for distinguishing between care provided by one parent, by both parents, by one or more relatives, or by commercial or nonprofit providers. Indeed, it seems rather absurd that a program designed to help families "at risk" of welfare dependency would extend no assistance to a father who moves out of unemployment and into the paid labor force. MR. CHAIRMAN, we believe the regulations governing the "at- risk" program should be modified to make explicit that families can use vouchers for parental care. A stipulation of this kind would bring the "at risk" program into conformity with other anti-welfare programs (like the Earned Income Tax Credit) which reward family efforts to become economically self-sufficient without dictating how couples might choose to balance their income-producing and childrearing responsibilities. MR. CHAIRMAN, I want to thank you once again for giving me the opportunity to testify before your subcommittee this morning. sincerely hope that we can work together on these and other issues in the future. Indeed, your recognition that "LBJ is not going to come back and sign" some new round of Great Society-style welfare programs gives us hope that there can be genuine cooperation between liberals and conservatives interested in crafting policies which both promote the health and safety of our nation's children and encourage greater parental involvement in children's lives. PAGENO="0188" 182 NO1ES 1. Ron Haskins and Jonathan Kotch, "Day Care and Illness: Evidence, Costs, and Public Policy," Pediatrics, Supplement, Vol. 77, No. 2, Part 2, June, 1986, p. 958. 2. Stephen R. Redmond and Michael E. Pichichero, "Hemophilus influenza Type b Disease: An Epidemiological Study With Special Reference to Day Care Centers," Journal of the American Medical Association, Vol. 252, No. 18, November 9, 1984. 3. Ibid. 4. W.E. Feldman, C. M. Ginsburg, D. Allen, et. al., "Relation of Concentrations of Hemophilus influenza type b in Cerebrospinal Fluid to Late Sequelae of Patients With Meningitis," Lournal of Pediatrics, Vol. 100, 1982, pp. 209-219. 5. Sergio Stango, Robert F. Pass, Meyer E. Dworsky, Ronald E. Henderson, Ernest G. Moore, Philip D. Walton, and Charles A. Alford, "Congenital Cytomegalovirus Infection: Relative Importance of Primary and Recurrent Maternal Infection," The New England Journal of Medicine, Vol. 306, April, 1982, pp. 945-949. 6. Stephen C. Handler, Hannah M. Webster, John J. Erben, Judith E. Swanson, and James E. Maynard, "Hepititis in Day Care Centers: A Community-Wide Assessment," The New England Journal of Medicine, Vol. 302, No. 22, pp. 1222-1227. 7. For a review of the literature on these and other day care diseases, see Patricia A. Farnan, "Day Care Diseases," Family Policy, The Family Research Council, May/June, 1989. 8. U.S. Bureau of the Census, Current Population Reports, Series P-70, No. 20, Who's Minding the Kids? Child Care Arrangements, 1986-87, U.S. Government Printing Office, Washington, D.C., 1990. 9. Ibid. PAGENO="0189" 183 Acting Chairman DOWNEY. Thank you, Mr. Mattox. Mr. Rector. STATEMENT OF ROBERT RECTOR, POLICY ANALYST, THE HERITAGE FOUNDATION Mr. RECTOR. Thank you, Mr. Chairman. I must say, I admire your endurance here today. [Laughter.] Acting Chairman DOWNEY. Well, I admire your patience. Mr. RECTOR. I must say on the other hand that I must say regret- tably that I work very closely with the religious day care and reli- gious education institutions in the State of Missouri, and I think I am speaking for all the parents and operators in those institutions in saying that I am deeply offended by the contempt and the hostil- ity that has been evidenced toward religious day care by various members in this committee during this hearing. I would like to start my remarks by going back about a year ago. I was visited by two Soviet reform scholars from Moscow who were part of the anticommunist movement there. Aside from telling me that they were amazed at how their reform agenda coincided with the political agenda of the Heritage Foundation, they also told me a very interesting story. It was a story about Mayor Gavriil Popov, the reform mayor of Moscow, who at the same time that we were debating child care legislation here in Washington voucherized the Moscow day care system. Mr. Popov faced the same resistance in Moscow that those of us who seek parental rights here in Washington face. He faced complaints that the Government would then lose con- trol over parents' choices. He faced stiff resistance from the special bureaucratic interests that recognized that if vouchers were given to parents and parents used those vouchers for grandparent care, that those big bureaucratic day care centers would lose money. And he also faced resistance by people who claimed good heavens, if you allow people vouchers for day care, they may actually put the child in a day care program that provides prayers, Bible sto- ries, and religious instruction. Mayor Popov won. He won for parental rights. He won for the right of parents to choose, and I only hope that here in the United States, parents will get the same rights of choice that parents are enjoying in Moscow today. There has been a great deal of talk here today about concern for the health and well-being of children in day care. I have said from the beginning of these debates and going on for 3 years that if anyone were sincerely interested in the health of children in day care, they would have started this issue by putting together pro- grams that actively encouraged parents to put their children with grandparents and with neighbors, because the epidemiological liter- ature is absolutely uniform and unequivocal in showing over and over and over again, in dozens and dozens of studies, that care by grandparents, home care, and care by neighbors in a home setting is unequivocally healthier for children. Children placed into large day care centers have, for example, 100 percent greater risk of ear infections, a 700 percent greater risk of CMV infections, 100 to 1,000 percent greater risk of HIB PAGENO="0190" 184 meningitis infection-all coming from the fact of putting large numbers of toddling children together in one facility. Informal care is high quality care. Informal care is good care. It is good for children. It is what parents want. Care by grandparents is good care. It is what parents want. It is best for children. Now let us get down to the reality of this. The reality here is not health and safety, because if you were in favor of health and safety, you would be in favor of allowing parents untrammeled rights to use vouchers with informal care, such as grandparents. What we are talking about here is control over who gets these funds. It is the ultimate destiny of the funds. I have here an example of regulations in the State of Ohio. These are secondary standards, Mr. Congressman. In the State of Ohio, a mother caring for one child in her own home and receiving a voucher to care for that child is subject to these 86 pages of rules, 540 specific regulations. Now, if these regulations have any intent other than to prevent that mother from receiving funds and to make sure that the funds to into large organized institutions that have lobbying clout at the State capitol, then I don't know any- thing about politics. The key thing here is parental freedom and who gets these funds. By allowing parental freedom, by allowing parents to have the right to use these vouchers with informal care, we are in fact enhancing the quality of day care that will be provided. Allowing the special interests at the State level to restrict the vouchers so that the funds are directed and channeled toward large institutional day care centers does not provide quality care. It does not provide what parents want, and it is not in the best interests of children. Thank you. [The prepared statement follows:] PAGENO="0191" 185 Testimony before the Ways and Means Committee September 26, 1991 Robert Rector The Heritage Foundation (202-546-4400) I wish to thank the committee for the opportunity to testify here today. The views I will express are my own views as a political analyst and are not necessarily the views of the Heritage Foundation as an organization. Within the last two years Gavriil Popov, the reform mayor of Moscow, voucherized that city's bureaucratic daycare system. The policy fight in Moscow in many respects mirrored similar battles here in Washington. Mayor Popov was resisted by entrenched bureaucratic interests which were financially threatened by parental freedom. He was challenged by those who believed the state, not parents, should decide how children will be raised. Mayor Popov and the parents of Moscow won. In Washington the outcome is less clear. The same special interests who have unequivocally opposed choice in childcare continue to seek to undermine parents effective right of choice. One interesting aspect of the debate over the proposed daycare regulations is, to me, the new bumper crop of states rights proponents springing up in unlikely quarters. The Washington Post has undergone a conversion experience and is now a states' rights zealot. The ~ accuses the Bush administration of hypocrisy and "fair weather federalism." There is indeed a lot of hypocrisy on this issue, but it is not on the part of President Bush. Conservatives and President Bush have consistently promoted a philosophy of childcare based on the empowerment of parents. Moreover, there is no contradiction between empowerment and federalism. Conservatives support federalism not because state governments are sacramental entities, but because of a broader commitment to decentralization of authority and decision making. Federalism and empowerment are both manifestations of the same philosophy of decentralization. It is wiser to have fifty state governments making decisions about daycare than one government in Washington, but it is even more wise to have half a million parents make the key decisions about how children will be raised than to have fifty state bureaucracies control the decision. Conservatives clearly understand this, as does Mayor Popov. It is only recent converts to federalism such as the Washington Post who appear befuddled. Basic Principles I would recommend that the "at risk" program be governed by four basic principles: 1) Parents who are aided under the program should be given the right to receive vouchers and empowered to choose who will care for their children. PAGENO="0192" 186 2) Parents should have an absolute right to use funds provided under the program to pay for daycare that includes religious worship and instruction; state governments should not be able to construct regulations which would restrict a parent's ability to use funds from the at risk program to pay for child care in any lawfully operating religious daycare program within a state. 3) All parents assisted under the program should have a right to receive a voucher which can be used with a wide range of child care providers including relatives and neighbors. State bureaucracies should not be permitted to use regulations to surreptiously limit a parent's right of choice among lawfully operating daycare providers. 4) The federal government should not subsidize non-parental childrearing in lieu of parental childrearing. The "at risk" program should ensure that assistance is provided to low income traditional families in which one parent is employed while the other cares for the family's young children. Assistance should not be limited to families using non-parental daycare. Current Requlations Under the proposed regulations parents would be able to use vouchers with all lawfully operating daycare providers within a state; this includes grandparents, neighbors, and daycare programs which offer religious instruction. States could not impose standards on caregivers receiving vouchers that are more stringent than the normal regulations within a state applying to daycare which does not receive public funds. A state government may not attach extra regulatory requirements to the federal vouchers which would make it difficult for a parent to use the voucher with grandparents, neighbors, and daycare programs which include religious worship and instruction. This last provision is crucial to ensuring parental choice in the new federal daycare program. For example, in Ohio a mother who receives state funds to care for one neighbor's child in her own home must comply with 80 pages of state regulations with over 500 separate rules; the clear intent of such regulations is to make it nearly impossible for small informal providers to receive government funds. Under the new federal program state bureaucrats should not be permitted to undermine parental choice in this manner. Parental Choice and Religious Liberty Under the proposed federal regulations a parent would be able to use vouchers with all lawfully operating religious daycare centers within a state. The religious daycare center would be free to provide children with hymns, Bible stories, and other religious activities. No state could impose regulations which would prohibit a parent's use of vouchers for religious PAGENO="0193" 187 care. This is good news for parents and children. Research by Dr. Richard Freeman of Harvard shows that young black males in the inner city who have religious values are 47% less likely to drop out of school, 54% less likely to use drugs and 50% less likely to engage in criminal activities when compared to peers without religious values. The federal government has long permitted funds under the G.I. bill to be used for religious education. The Supreme Court has held in Mueller v. Allen and Witters v. Washington State that government funds, if given to an individual, may be used for religious purposes as long as the individual, not the government, determines where the funds will be spent. Parental Choice and Government Regulation There are three basic types of daycare providers: daycare centers which care for more than six children, regulated and family daycare providers generally caring for five to six children in a private residence; and unlicensed family daycare which is generally a mother caring for a child of her own as well as one or two other children in her own home. For years, advocates of institutional care have tried to argue that unlicensed neighborhood family daycare providers are less safe and less healthful than large, regulated daycare centers or regulated family daycare. All available scientific evidence flatly contradicts this claim. Indeed, much evidence suggests the opposite. The National Daycare Home Study, published in 1981 by the Department of Health and Human Services, found no indication that unregulated family daycare was harmful or dangerous. The typical unregulated family daycare provider is a mother taking care of one child of her own as well as one or two other children from the neighborhood. The study found that such unregulated providers were more likely to comply with state regulations concerning adult/child ratios for children of different ages than were licensed family daycare providers. Unregulated providers, according to the study, were governed by a "self-regulating mechanism" concerning the number of children in their care: the more of her own children a mother cared for, the fewer outside children she would take in. The average child/caregiver ratio in unlicensed family care is far lower than in the most strictly regulated daycare centers. Moreover, given that unregulated providers have fewer children under their care, the average child in an unregulated home spent more time in direct interaction with adults than the average child in a regulated family daycare home. Despite a lack of formal training in caregivers, the average non-resident child in an unregulated setting spent more time in constructive teaching/developmental activities with the caregiver than did the average child in regulated family care. 51-713 0 - 92 - 7 PAGENO="0194" 188 According to the HHS study, regulated family daycare providers are less likely to be caring for their own children; have more children under their care; and charge higher prices. These providers clearly regard childcare as an occupation. In contrast, unregulated providers are primarily engaged in caring for their own children; they care for one or more neighborhood children as a modest means of supplementing the family's income. Very often mothers in unlicensed homes begin offering daycare not at their own initiative, but because neighbors and relatives have asked them to do so. The HHS study concluded that family daycare is, "stable, warm, and stimulating... [it) caters successfully to the developmentally appropriate needs of the children in care; parents who use family daycare report it satisfactorily meets their child care needs... [the study's) observers were consistently impressed by the care they saw regardless of regulatory status." There are some one million women providing unregulated family care in the U.S. Parental Choice and Children's Health Some argue that the parental choice provisions in the proposed regulations will jeopardize children's health and safety. In fact, the opposite is true for two reasons. First, the proposed federal regulations clearly ensure that children receiving subsidized care would be protected by the same health and safety standards which apply to the vast majority of children in daycare within a state who do not receive government subsidies. Second, daycare provided by relatives or by neighbors caring for a few children in their own homes is in fact far healthier than daycare provided in large formal daycare centers. Therefore, extra red tape and regulatory requirements which would discourage parents from using vouchers with small informal providers will undermine rather promote the health and safety of children. Researchers at the Centers for Disease Control reported in 1984 that, "large, licensed daycare centers.. . are major transmission centers for hepatitis, severe diarrhea and other diseases." Infections picked up in large daycare centers are passed on to parents and siblings. Diseases rampant in these daycare centers range from hepatitis and meningitis to upper respiratory infections, diarrhea, and ear infections. A recent article in the Bulletin of the New York Academy of Medicine produced a conservative estimate that daycare related illnesses impose a cost of $1.8 billion per year on American families and society. The general principle regarding health and daycare is as follows: Smaller, generally unlicensed, neighborhood facilities pose a significantly lower threat of infectious disease than do large regulated facilities, because larger centers place more children in contact with each other, thereby raising each child's PAGENO="0195" 189 risk of contracting infectious diseases. "The larger the center or the longer the hours, the greater the chance [of infectious disease occurring]," states Dr. Hadler of the Centers for Disease Control. Regulations and red tape which would discourage or make it difficult for parents to use vouchers to pay for small informal daycare are counterproductive and would undermine rather than improve the health of American children. Dr. Hadler has estimated that 14 percent of all infectious hepatitis cases in the U.S. are acquired through daycare facilities. Hepatitis A, often asymptomatic in infected children, is passed on to their adult caregivers and parents, who then develop symptomatic cases of the disease. According to Dr. Hadler's 1979 study of daycare in Maricopa County, AZ, the size of a day care center is strongly correlated with the number of hepatitis outbreaks occurring there. Fifty three percent of centers in Maricopa County enrolling over 50 children experienced outbreaks after hepatitis was introduced into the center, versus only 3% of those enrolling 20 or fewer children. A 1988 study by Dr. A.V. Bartlett found rates of diarrhea to be significantly higher in 21 daycare centers than in daycare homes and households not using daycare. An earlier study by Dr. R.E. Black of the Bureau of Epidemiology, Centers for Disease Control in Atlanta, showed the aiarrhea causing parasite Giardia to be present in 29% to 54% daycare center attendees versus only 2% of comparatively aged children not in daycare centers. A 1987 study by D.W. Fleming found that 31% of upper respiratory infections in daycare children were contracted due to daycare attendance. Otitis Media Otitis media is infection of the middle ear. Research by Dr. D.W. Fleming in Atlanta found that 66% of ear infections among children in daycare were caused by daycare attendance. Similar research in Finland and the U.S. has found the rate of ear infection among children in daycare centers to be twice that of children in home care. Research by Dr. Helen Wald has shown that 22% of young children in formal daycare centers have by their second year of life experienced chronic ear infections requiring surgical emplacement of tubes in their ears. This may be compared to 3 percent of similar children in home care. Numerous studies have linked repeated otitis media during childhood with hearing loss, lowered IQ, poor school performance, learning disabilities, and even school dropout rates. The rate of respiratory and ear infections in Dr. Fleming's Atlanta study was found to be positively associated with the number of children in the center and the extent of their interaction. The largest day care centers had the highest rates of disease. Due to such increased risks of disease and evidence indicating that age at the onset of the first infectious event is related to a higher risk of repeated events, Dr. Collet and others of the Unite de Parmacologie Clinique (Lyon, France), PAGENO="0196" 190 consider that admission to a daycare center of children under twelve months of age should be questioned. Meningitis Haemophilus influenzae infection, which can cause meningitis, pneumonia, arthritis and blood and skin infections is commonly spread through daycare centers as well. Stephen Redmond and Michael Pichichero conducted an analysis of meningitis cases in Monroe County, New York, and found that children below twelve months of age were 12.2 times more likely to contract meningitis if they were cared for at a daycare center rather than at home. For children one to two years old, daycare attendance increased the relative risk by 7.2 times, and for three and four year olds, it was 3.8 times higher. While the overall incidence of meningitis among children in the general population is 40 to 60 cases per 100,000 per year, the Monroe County study found that nearly one percent (1000 per 100,000) of the children in daycare centers under the age of one suffered a meningitis attack each year. Based on rates of occurrence revealed in the Redmond and Pichichero study, it would be reasonable to conclude that use of daycare centers, at the time,, resulted in an additional 3,100 meningitis cases per annum nationwide. Meningitis is fatal for approximately one-tenth of its victims and another third suffer long-term neurological damage. The recent availability of HIB vaccines should reduce this threat, but the number of children injured by meningitis in daycare centers during the 1980's underscores the health risks posed by use of formal daycare by young children. Cytomegalovirus Cytonegalovirus in a herpes type virus for which there is no present cure or system of vaccination. While cytomegalovirus (CMV) rarely causes illness in adults or children who contract it, if the virus is contracted by a pregnant woman who transmits it to her fetus, it will frequently result in severe birth defects. Roughly 2 percent of all pregnant women in the U.S. acquire a CMV infection during pregnancy. In roughly half these cases the CMV infection is transmitted to the fetus in the womb. Thus around 1 percent of children, or 36,000 each year, are born carrying CMV. Of these new-born children carrying CMV, some 10 to 20 percent will suffer from neurological or developnental damage. Between 3500 and 7000 children born each year are handicapped as a result of CMV infection contracted by the mother. A principal means by which mothers contract CMV is through older children in daycare. Children in daycare centers particularly those under age three, contract CMV from other children in the center and then transmit the disease to their parents in the home. Children cared for in formal daycare centers are between 300 and 700 percent more likely to carry CMV than are children reared in the home or in a smaller more homelike setting. PAGENO="0197" 191 Once a child has acquired CMV in a daycare setting there is a very high probability that the CMV will be transferred to the child's mother. According to studies by Dr. Stuart P. Adler, a mother who has not previously been infected by CMV and who has a child enrolled in a large daycare center has a 10 to 15% probability of being infected by CMV each year. The rate of primary CMV infection appears to be significantly higher among parents with young children in daycare than among parents with children cared for in the home. For example, one study by Dr. Robert Pass found that some 20% of parents with children in daycare acquired a CMV infection over an 18 month period compared to zero percent of parents with children cared for at home. If the mother is pregnant at the time she acquires an initial CMV infection there is a four to ten percent probability that her unborn child will develop birth defects. Based on the apparent differential rates of CMV infection among parents with children in daycare compared to other parents, a family's use of formal daycare centers may increase the probability of CMV- related birth defects in subsequent children perhaps by some 400 percent. Data from various studies indicate that the rate of CMV induced birth defects for newborn children with older siblings in daycare may be as high as one in 200. Table 1 presents the risk factor related to CMV: Table 1 CMV Data Percent of Infection Free Mothers Acquiring 2% per year a CMV infection Percent of Infection Free Mothers with 10-15% per year Children in Daycare Acquiring an Initial CMV Infection Percent of Cases Where Infected Pregnant 40% Mothers Transmit CMV to Fetus Rate of Eventual Impairment Among 10-20% Unborn Children Infected with CMV The exact mechanism by which CMV is transmitted between children in daycare centers has not been proved. But the most probable means of contagion is toddlers putting toys in their mouths and then passing the toys to other children. Children PAGENO="0198" 192 with CMV infection frequently shed CMV in their saliva. Infants and toddlers put their hands in their months every one to two minutes throughout the day. One study has found that when a child carrying CMV nouthed a toy, the child left active CMV on the surface of the toy 25% of the time. CMV left on the surface of a toy in a roon at normal temperature will remain viable for 30 full minutes. The possibility that another toddler will pick the toy up and put it in his mouth during that period is high. This means that hygienic practices will have little effect on the CMV transmission rate. Even children in a daycare center with the strictest hygiene will have dramatically higher CMV infection rates than children in a home setting. A recent article in the Canadian Medical Association Journal asks the question of whether CMV contagion in daycare centers can be controlled and concludes: "Child to child spread probably cannot be prevented." The only clear mechanism by which the probability of a toddler acquiring CMV and transmitting the virus to his parents can be significantly reduced is to place the toddler in a setting where he or she has the lowest probability of daily contact with other children potentially carrying CMV. Hone care by parents or care of small numbers of children by neighbors or relatives in a home setting is significantly more healthful for the child and the mother. Health and Daycare Regulation With the health risks of large scale daycare centers so well documented, government policy should encourage not discourage the use of srnall,unregulated home-based child care. Even regulations nominally intended to protect children's health (such as requiring tuberculosis tests of informal care givers) tend to severely restrict parents access to informal care and thereby encourage the use of larger formal daycare centers. Such regulation is clearly not in the health interest of children. There are four general principles which should govern public policy relating to children's health and daycare regulation. 1) Use of formal daycare centers significantly increases the health risks to children and their family members; 2) The risk of infectious disease increases with the number of children in the daycare setting. While homecare is best for a child's health, informal care for small numbers of children by neighbors or relatives in a homelike setting is far healthier than use of formal daycare centers. 3) Although improved hygienic practices in daycare centers will reduce the rate of infectious disease to some extent, these practices will never be sufficient to make formal daycare centers as healthy as home care or small scale informal daycare in a home setting. 4) Government policies which discourage parental care of children in the home are injurious to children's health. PAGENO="0199" 193 Government red tape and regulation which make it difficult for parents to select informal care by neighbors and relatives and thereby encourage use of large formal daycare centers are injurious to children's health. Merging Safety and Parental Choice In many cases regulations which seen innocuous will have the effect of barring parents from using vouchers with friends and neighbors. For example, a criminal records check on informal caregivers sounds reasonable. But a criminal records check may take 8 to 12 weeks to complete. If a friend or neighbor cannot receive a voucher from a parent until a criminal records check has been completed, the parent is effectively barred from selecting informal care. Reasonable alternatives are available. For example, a state government could perform a records check after the parent has given the voucher to the neighbor. The state could require the neighbor or informal caregiver -- upon immediate receipt of the voucher -- to assert in writing that she has no criminal record. The state should warn the caregiver that a criminal records check will be conducted and that providing false information will result in criminal prosecution. This procedure should scare of f persons with criminal records while imposing no undue delay which would bar parents from using vouchers with most friends and neighbors. Such a system would enhance safety without unreasonably restricting choice. Opposing Parental Choice A crucial rule of policy analysis is captured in the title of Harold Laswell's political science classic -- Politics: Who Gets What When How. Since there are finite funds in government daycare programs, the more money goes to neighbors and grandparents, the less going to professional daycare. That is the key. The groups opposed to these regulations have a long, copious track record of opposing parental choice in child care. The ABC bill originally provided funds only to licensed, fully regulated facilities. In hearing after hearing, ABC backers opposed guaranteeing parents the right to a voucher and demanded that grandparents receiving vouchers undergo government training and regulation, etc. In one version of ABC, grandmothers had to file reports on what the grandchild ate at lunch. The ABC proponents never intended one penny to go to the informal sector. They now seek to pursue that goal by quietly undermining parental choice with regulations at the state level. There is also a hidden assumption in this debate that poor people are not intelligent enough to make good childcare decisions. I wonder what would happen if someone devised a rule stating that the middle class dependent care tax credit (DCTC) could only be used with caregivers who had criminal record checks or could only be used with half the daycare centers in the state PAGENO="0200" 194 which met special standards. By the logic of the opponents of these regulations, such restrictions on the DCTC would be justified. Such a rule would not get very far, I think. The real difference seems to be that low incone households are politically weaker than the middle class. Traditional Families The law establishing the "at risk't program asserts that families will be eligible for aid under the program if they are not receiving AFDC but are at risk of becoming dependent on AFDC. Under current federal law, two parent families in which neither parent is employed are eligible to receive welfare assistance from the Aid to Families with Dependent Children (AFDC) program. In many cases AFDC benefits combined with other welfare will provide a higher standard of living than a low wage father can obtain by working to support a wife and children. Therefore, low wage traditional families (where one parent is employed while the other cares for the family's young children in the home) are consistently "at risk" of becoming full time welfare dependents because the low wage father might reasonably choose to abandon employment and enroll in AFDC as an alternative means to support his family. Wage supplements such as the Earned Income Tax Credit (which is available to traditional families) are intended to raise a parent's economic gains and therefore to make employment more attractive relative to welfare programs such as AFDC. Similarly, the new "at risk" program should provide cash assistance to supplement the earned income of two parent traditional families where one parent is employed at a low wage job while the other cares for young children in the home. This would provide incentives for the working parent to continue employment and would discourage the family from abandoning the labor market entirely and enrolling in AFDC. It is important to remember that the most common way for mothers to leave AFDC enrollment in not by employment but by marriage. Since AFDC mothers will be more likely to leave the AFDC rolls if the prospective husband's earnings would support the mother and children as effectively as AFDC without the mother's employment -- wage supplements to low income working fathers through the at risk program would thereby increase the probability that mothers will marry and leave the AFDC system. Thus wage supplements to traditional families are in keeping with the intent of the at risk program in discouraging dependence. Indeed, the anti-dependency effects of the at risk program would be greatly diminished if the program's benefits were restricted only to non-parental child care. The federal regulations should be modified to require states to provide assistance not only to families using non-parental daycare but also to low income traditional families where one parent is employed full time while the other parent cares for the family's young children in the home. In closing, I would like to thank the committee once again for allowing me the opportunity to present this testimony. PAGENO="0201" 195 Sources Primary Sourge~ Bartlett, A.V., et~ai. "Diarrheal illness among infants and toddlers in Day Care Centers: Effects of active surveillance and staff training without subsequent monitoring." American Journal of Epidemiology, V. l27(4):808. 1988. Black, R. E., ~..ai. "Giadiasis in Day-Care Centers: Evidence of person-to-person transmission." Pediatrics, Vol. 60(4) :486. October 1977. Collet, J.P., M. D., et al. "Daycare attendance and risk of first infectious disease." European Journal of Pediatrics, Vol. 150(3): 214-6. January 1991. Feldman. "Relation of Concentrations of Haemophilus Influenzae Type b in Cerebrospinal Fluid to Late Sequelae of Patients with Meningitis." Journal of Pediatrics, Vol. 100. 1982. Fleming, David W., M. D. ~ "Childhood Upper Respiratory Tract Infections: To What Degree Is Incidence Affected by Day-Care Attencance?" Pediatrics 79. January 1987. Hadler, Stephen, M.D., et al. "Hepatitis in Day-Care Centers: A Community-Wide Assessment." The New England Journal of Medicine, Vol. 302, No. 22. Hadler, Stephen, M.D. and McFarland, Louise. "Hepatitis in Day Care Centers: Epidemiology and Prevention." Reviews of Infectious Diseases, Vol. 8, No. 4. July/August, 1986. Hadler, Stephen, M.D. et al. "Risk Factors for Hepatitis A in Day Care Centers." The Journal of Infectious Diseases, Vol. 145, No. 2. February 1982. Haskins, Ron, Ph.D., and Kotch, Jonathan, M.D. "Day Care and Illness: Evidence, Costs, and Public Policy." Pediatrics, Supplement, Vol. 77, Number 2, Part 2. June 1986. Hofferth & Phillips. "Childcare in the United States, 1970 to 1995." 49 Journal of Marriage and Family. 1987. Istre, Gregory R., M.D. ~ "Risk Factors for Primary Invasive Hemophilus Influenzae Disease: Increased Risk from Day Care Attendence and School-aged Household Members." Th~ Journal of Pediatrics, Vol. 106, No. 2. February 1985. Redmond, Stephen R., M.D. and Pichichero, M.D. "Haemophilus influenzae Type b Disease: An Epidemologic Study with Special Reference to Day Care Centers." Journal of the PAGENO="0202" 196 American Medical Association, Vol. 252, No. 18. November 9, 1984. Stango, Sergio, M.D., Pass, Robert, M.D., ~ "Congenital cytomegalovirus Infection: Relative Importance of Primary and Recurrent Maternal Infection." The New En~land Journal pLMedicine, 306. April 1982. U.S. Department of Health & Human Services, Family Day Care in the United States: Final Report of the National Day Care Home Study. 1981. ~~ndary Sources Farnan, Patricia A. "Day Care Diseases--Exploring the Risks of Center-Based Care." Fa)milv Pol~çy. (The Family Research Council) May/June 1989. Rector, Robert. "Fourteen Myths About Families and Child Care." j~yard Journal on Lec~islation, Vol. 26, No. 2. Summer 1989. Ricks. "Researchers Say Day-Care Centers Are Implicated in Spread of Disease." Wall Street Journal, September 5, 1984. P. 35, col. 3. Worrell-white, Cynthia, M.D. "Is Daycare Dangerous to Your Health?" ~troncrer Families or Bigc~er Government--t~ cj~1lenge of Child Care. (Eagle Forum Education & Legal Defense Fund: Washington, D.C.) 1990. pp. 55-70. PAGENO="0203" 197 Acting Chairman DOWNEY. Thank you, Mr. Rector. Mr. Grandy, do you have a question? Mr. GRANDY. Yes, Mr. Chairman. I apologize to the committee for having to be away for a while, but I appreciate the testimony that I did hear. I would like you to address, though, a concern that has been raised a couple of times in these hearings and was raised privately among Republican members of this panel. The issue is that it is alleged that under the regulations that are currently promulgated, States could not if they saw fit find a way to interdict parents from putting their children with child molest- ers. In other words, if there is not an applicable standard in place to prevent the identification of people who are felons or at least be- lieved to be suspect in this field, there is nothing that the regula- tions that were written, based on the statute that we put forth last year, could do to prevent that from happening. Do you read that that way? I am asking you, Mr. Rector. I will ask all the panelists. Mr. RECTOR. That is not my reading of the regulations. I have discussed this with people at HHS, and that is not their interpreta- tion of the regulation. I think the key issue in that is whether or not the intent of a State regulation is to restrict choice. I have com- mented about this in my written testimony. For example, if you put in a requirement that said that every provider who received a voucher had to have a criminal records check before they could receive the voucher, a criminal records check taking 12 weeks to complete, then in fact you have banned informal care. You have banned grandparents and so forth and so on. On the other hand, I think there are ways that you could accom- modate that concern by, in fact, allowing the voucher to go for- ward, warning the provider that you are going to do a criminal records check, telling him that he will be subject to criminal pros- ecution if he takes the voucher and he has a criminal record-all of that would allow parents in 99.9 percent of the cases where they want to use their best friend and there is not a criminal records problem, they could use the voucher with informal care in those cases, but you would also be protected by scaring away the people with criminal records and really preventing the vouchers from going into their hands. It is really a question of whether your intent is to prevent the vouchers from being used in informal care or whether your intent is simply to protect children. Mr. GRANDY. Do you have an opinion on that? Mr. BAIRD. With deference to Mr. Rector, I think that is a seren- dipitous interpretation of the regulations. As I understand, a State could not make any imposition at all. As long as there was an un- regulated part of a State's child care system, the State could not, with the use of TV-A funds, make any imposition at all for any part of the child care system or the child care programs that a parent eligible under TV-A selected, because any imposition what- soever would be construed as a barrier to parent choice. On this matter, I have talked with Secretary Barnhart, and I have talked with Mark Reagan on any number of occasions, and I PAGENO="0204" 198 think they have been quite clear about it. Anything that creates a barrier, as long as there is no uniform, broad, across-the-board State standard under TV-A, is prohibited. Ms. CAMPBELL. Basically-I mean, I agree with Mr. Baird. Basi- cally, the State is going to have to make the determination that it is going to subject all providers within that category to a criminal record check, and if that is what Mr. Rector is positing, if that is essentially what they are doing when they are sort of warning them, I really didn't sort of understand exactly what he was saying. But as I read the regulations, the State has to say that all pro- viders within that category will be subject to that kind of a check or it can't say it to any of them. Alternatively, it can have that standard for some providers, not have it for others, but it still has to give the money to the provider for whom it doesn't have it or, as Mr. Downey said, not enforce the fact that it has this general rule against some. I didn't hear all of the statements this morning, and since I have been here I don't recall people saying quite so strongly as you said it that you couldn't have such a check, but the effect is that you may not be able to have such a check because you have to have it for all providers within that category. So if the category is family day care, then all categories of family day care have to have that kind of a check or you can't get the money. Mr. GRANDY. Let me read to you a response that was made to the Iowa Department of Human Services from Ms. Barnhart's office re- garding the problem of knowingly paying for care provided by con- victed child molesters, the worst case scenario in this case. She responded this way. States could have regulations that prohibit convicted molesters, for example, from providing child care if such rules applied to all care of a particular type. That is what she said. But even if the State did not have a generally applicable regulation that prohibit- ed molesters from providing care, but only addressed such circumstances in the con- text of subsidized care, ACF believes that the State could inform the parent that the provider selected did not meet State standards and let the parent then decide whether to continue using that provider. Now, I think that is what you were getting at, Mr. Rector. And I think the intent of the regulation is not, perhaps as some members of this committee would like, to absolutely prohibit a potential mo- lester from getting into the system, but to at least inform the parent that in their best judgment, the State feels that that par- ticular individual, convicted, suspect, or not, may not be worthy of that parent's subsidy. And that, to me, is where the argument is. Whether we cross that line and actually prevent that person from getting into the system and conducting child care and becoming obviously a dis- credit to the system or whether we keep the ultimate responsibility with the parent-who of course if they were rich could go in and make the same mistake. I mean, it is conceivable that a bunch of women that belong to a card club at a country club could decide that 1 day a week they would leave their children with a friend who could be on crack, Un- PAGENO="0205" 199 beknownst to anybody, and flush one of these children down the toilet. But, the difference here is we are talking about subsidized care, and we are implying a separate standard, and it seems to me that in this particular area, which is the one that I think gave most of us on this side the most pause, is where do we reposit the choice? And it still seems to me that to inform the parent that no, we think there may be some problems with this particular person, they have not passed a check, it is up to you to decide, is about as far as we can and should go. Ms. CAMPBELL. Excuse me, Mr. Grandy. I don't believe that a State can do that currently. And I am not sure that I would read the quote that you read exactly the same way. It seemed to me that what she was saying is that you can say to the parent, we are going to give you money either way- Mr. GRANDY. Yes. Ms. CAMPBELL [continuing]. But you ought to know that we have some different standards for some people. We are going to have to give you money either way, and you may or may not be able to say that one of the standards that we have that doesn't apply to your type of provider is criminal record check. I do not think, however, that a State can say, we have checked your person out and they have passed. First of all, information re- lated to criminal record checks is highly confidential, and those checks can be done and States can make judgments based on them. But the extent to which they can inform the parent about what they have found out about the person is very limited under State laws. So as I read what she was saying, it is that the most that the State could say was that we have different requirements, and it is up to you, but we will fund you either way because under the regu- lations what it means to have an applicable State and local stand- ard is, in effect, we don't have different requirements. Mr. RECTOR. If I might- Mr. GRANDY. Go ahead, please. Mr. RECTOR. It is my understanding from my conversations with the people at HHS that they would be able to inform the parent of this threat and possibly even go farther in terms of-I would hope that the State would have its own laws to prohibit such care per se, not just in the case of public funding. But, I think there is a larger issue here, and the larger issue could be conceptualized by asking the question, what if we required criminal records check for every parent who uses the dependent care tax credit, OK? The logic is the same. If we should require criminal records check for every parent who has a voucher under this program, we should also require criminal records check for the millions and millions and millions of parents who use DCTC. Now, would that be a good thing? Would that improve the qual- ity-well first of all, could you guys pass that? Heck no, because you would be massively eroding parental choice and pushing par- ents to use formal care rather than informal care. Second, would it be a good thing? Would it improve the quality of care? No, I don't think it would, because the marginal gain that would come from the criminal record check would become more PAGENO="0206" 200 than outweighed by the parents' inability to use informal care with the DCTC. It is exactly the same question, and I think we ought to provide the same right of choice through these vouchers as we provide to upper-middle class parents with the DCTC. Ms. CAMPBELL. Can I just make a clarification on the dependent care tax credit? Providers who care for six or more children are subject to applicable State and local standards under the depend- ent care tax credit- Mr. RECTOR. Well, all providers- Ms. CAMPBELL [continuing]. So that- Mr. RECTOR [continuing]. Who care for six or more children in every State in the United States are already regulated- Ms. CAMPBELL. Fine, but- Mr. RECTOR [continuing]. So I mean- Ms. CAMPBELL [continuing]. It's not totally unregulated. Mr. GRANDY. Mr. Chairman, the red light has been on for some time. I am not going to belabor that. That six or more children standard for informal, nonregulated care has become, through State regulation, something of a uniform manageable total in day care administration. I think what most of us are concerned about here, particularly people who are using informal care are trying to give the same breadth of choice to people using informal care, and it is with really that in mind that I think we were talking about the back- ground check. Mr. Chairman, I have no more questions. Thank you. Acting Chairman DOWNEY. Mrs. Johnson. Mrs. JOHNSON. No questions. Acting Chairman DOWNEY. Thank you all for your testimony. The committee will next hear from the panel comprised of the Child Care Action Campaign, Barbara Reisman, executive director; the National Black Child Development Institute, Inc., Beverly Jackson, senior public policy analyst; and the Eagle Forum, Susan R. Brackin, executive director. Ms. Reisman, if you would proceed first. STATEMENT OF BARBARA REISMAN, EXECUTIVE DIRECTOR, CHILD CARE ACTION CAMPAIGN Ms. REISMAN. Good afternoon. In the interest of brevity, I will limit my acknowledgements of the leadership of this committee to a short thank you. Since you have my written testimony, I would like to just high- light a few of the key points that I don't- Acting Chairman DOWNEY. Before you do that, Ms. Reisman, let me just assure all members of the panel that we will include in the text your complete statements. Ms. REISMAN. Thank you. I would like to just highlight some of the points that I don't think have received enough attention today. First, in the context of our great concern over parental choice, the fact that the at-risk child care regulations limit payment to the 75th percentile of the market price for care, is the single biggest limitation on parental choice in these regulations. PAGENO="0207" 201 I think it is clear that the ability of parents to pay for care is the most serious limitation on the choices available to them, and since there is no basis in the statute for the 75th percentile, we recom- mend that it be removed. Second, we do believe that certain aspects of these proposed regu- lations will turn the clock back on quality protections because of the very real situation that States find themselves in. Given the limited budgets that they have, States have been fairly creative in developing a number of ways to provide consumer protections for child care, many of which would not be available under these pro- posed regulations. Third, we support very strong consumer protection for child care, and I think that is what we are talking about when we talk about regulations or standards. We seem to have posited this morning a complete dichotomy between the concept of parental choice on the one hand and some kind of consumer protection on the other. In practice that is not the way consumer protection works. Consumer protection does, in fact, limit choices to safe care. We have a history of doing that in many other areas of consumer pro- tection. We require the availability of seat belts in cars, for exam- ple, and in some States we require the use of those seat belts. That is because we have decided it is a matter of public policy and public safety that it is good for people to protect themselves in that way. I think that some of the child care regulations we are talking about are of a similar nature. Third, a lot of people have talked this morning about what par- ents want, and no one has really given any evidence beyond, I guess, our own personal opinions about what parents want. The Child Care Action Campaign did a survey in cooperation with 23 national magazines in 1989, well before this issue became quite as hot as it is today, so I think that those parents were not affected by what they read in the media on this particular issue. Of the parents who responded to the survey, 71 percent were paying less than $50 a week for child care supported Government standards to ensure that care was of a minimal quality. The point here is that parents themselves in many cases are asking for mini- mal protections, and I think we ought to afford them with those kind of protections at the State level, as the statute clearly intend- ed. Finally, we have talked a lot about this notion of discriminating against children who are at-risk or poor children by excluding them from certain programs. The very nature of this bill, of this act, creates a difference between those children who are at-risk and families who are of higher incomes. The money itself can only go to a particular category of children. What I think we are trying to do is discriminate in favor of chil- dren who are at-risk and who are in need of certain kinds of qual- ity child care, and that is what the States have tried to do who have set higher standards for funded care. I think we turn the notion of discrimination on its head when we talk about discriminating against at-risk children by precluding them from being in very risky child care situations. Finally, I find, and we point out in our testimony, that there are lot of contradictions within the regulations themselves over the PAGENO="0208" 202 question of parental choice, and I think that the administration's position on regulation is indeed contradictory. I would like to read for the record a paragraph from America 2000, which is the education strategy of the Bush administration: The Federal Government's role in this strategy is limited, as wisely its part in education always has been. But that role will be played vigorously. Washington can help by setting standards, highlighting examples, contributing some funds, provid- ing flexibility in exchange for accountability, and pushing and prodding, then push- ing and prodding some more. I would suggest that if we are willing to do that for education, which does not take place only in schools but also in family child care homes and in child care centers that we ought to ask Wash- ington to play the same role for child care as they are willing to do for education. Thank you very much for the opportunity to testify. [The prepared statement follows:] PAGENO="0209" 203 CC~AC CHILD CARE ACTION CAMPAIGN * 330 SEVENTH AVENUE, 18th FLOOR * NEW YORK, NY 10001 * (212) 239-0135 FAX (2121268-6515 Statemcnt of the Child Care Action Campaign Prcscntcd by Barbara Reisman, Executive Dircctor before the Committce on Ways and Means, Subcommittee on Human Resources September 26, 1991 Introduction Good afternoon, my name is Barbara Reisman. I am the executive director of the Child Care Action Campaign (CCAC). CCAC is a national coalition of leaders from the public and private sectors whose goal is to develop policies and programs that will increase the availability of quality, affordable child care. I appreciate the opportunity to present testimony on CCAC's behalf on the Administration's proposed regulations for the At-Risk Child Care Program and the Child Care and Development Block Grant (CCDBG). These tsvo initiatives are the result of landmark work by Congress and could greatly improve time ability of states to provide quality child care for low-income fansilies. We at CCAC believe, however, that the Administration's proposed regulations would actually reverse some of the work that Congress has done to make this child care available, and would limit states' ability to give families meaningful child care options. AT~RISK CHILD CARE PROGRAM Specifically, CCAC is concerned about the following provisions in the proposed rule for the At-Risk Progratn: o The proposed rule prohibits states frotn setting meaningful standards specj~ all forchild care programs that are supported with Title P1-A funds. This provision will endanger children in tax-supported care without giving parents an opportunity to make an informed choice about child care services. o Under the proposed rule, the Department of Health and Human Services (HHS~ would not let states use child care registration systems as an avenue for modest health and safety protections for children receiving care in otherwise unregojs~~ child care settipgs. This svould change the current practices of several states which lack the resources to license all child care and use registration systems to give parents some assurance that this child care is safe. o HHS limits parental choice by restricting child care payments to levels belo3s~ytyg market rate for child care. HHS applies an artificial definition of market rate by restricting reimbursement to the 75th percentile of the market price for care. CCAC recommends that these provisions of time proposed regulations for the At-Risk Child Care Program be amended to allow states to practice sound consumer protection and administrative policies. It is entirely appropriate and consistent with current practices to allow states to enforce standards and to pay adequately for child care. This policy is in keeping withs Congressional intent. The legislation provides that child care funded by tise At-Risk Program meet "applicable standards of state and local law." The Conferees for the At-Risk Program clarified that "standards" should be determined by the states: "It is the intent of the conferees that States will have maximum flexibility in determining how the new grant funds are used." (Conference Report on HR 5835, page 922) In addition to using licensing, states usc other forms of regulation. In these proposed rules, however, the Administration would in effect make uniform licensing the only type of consumer protection that states could use. Aspects of the proposed regulations will turn the clock hack on quality protections and will jeopardize children. Faced svith hard choices and limited state budgets, states use a variety of methods to provide consumer protections for child care. These include registration systems, which are often used by state government for unlicensed child care PAGENO="0210" 204 providers and stress self-inspection to help providers ensure that they have met certain fire and health standards. They also include funding standards for subsidized care. For instance, some states have chosen to license only child care that they fund. Other states, such as Iowa, Kentucky, Newjersey and West Virginia, have voluntary registration programs with standards and sanctions, and they may require homes to register as a condition of receiving funds. Eleven other states - - Connecticut, Georgia, Hawaii, Maryland, Michigan, Montana, North Carolina, Nebraska, Pennsylvania, Texas and Wyoming - - have family day care systems which include standards and sanctions. The proposed regulations would impede these and other states from using any consumer protection measures to augment their licensing systems to provide minimal protections for those families receiving Title IV-A subsidies. Parental Choice CCAC supports strong consumer protection for child care. Provisions included in both sets of regulations undercut states' ability to provide these crucial protections. The Administration justifies many of these provisions with the argument that the regulations result in providing parents with the maximum choice of child care options. This language - - "maximum parental choice" - - is used, CCAC believes, in a way that is inaccurate and opportunistic. CCAC is a firm believer in providing families with the support and information they need to choose quality child care from a range of child care settings - - child care that is safe, developmentally appropriate, and suited to a family's individual needs. Parents want choices, but they want assurances that the care they are choosing is safe and healthful. The language of "parental choice" in the proposed regulation is used inconsistentiy to justify what appears to be essentially a regulatory intrusion into state consumer protection efforts. The Administration's proposed rules would deny all consumer protection to parents in subsidized care unless the state has standards for all care of that nature. Parents do not want to be able to choose child abusers and sex offenders to care for their children. They do not want the right to have their child perish in a fire. Good regulations can enhance choice by giving parents some assurance that their child will be safe and healthy in the care they have chosen. The very nature of child care dictates that parents cannot oversee the service all of the time. They need assurance that the care the government is helping them pay for is of a certain minimum quality. This assurance is in keeping with the consumer protections our country has traditionally placed on goods and services. We regulate automobiles, food and drugs, and we regulate medical care. In these areas, our country recognizes that consumers run the risk of getting a product or service that is of poor quality and potentially harmful to the individual and to the public; regulations are set to minimize these risks. The proposed regulations for the At-Risk Program, however, do not allow states to set regulatory standards for child care that is subsidized by government funding unless those standards apply to all care, whether funded or not [Section 257.41(a)(2)J. In addition, the Administration gives an extraordinarily narrow definition of what can be included in the registration process for unregulated child care providers [Section 257.41(b) (2)}. The Administration uses the "maximum parental choice" argument inappropriately here. Any regulation of quality has the effect of limiting parental choice by helping to eliminate child care situations that are unsafe; that is the appropriate consequence of consumer protection measures. Our research confirms that parents want to rely on the government for some protections, particularly where vulnerable children are concerned. Eighty-four percent of the respondents to CCAC's national "Your Family Matters" survey indicated that they think that the ip.taiity of child care is a paramount concern. Seventy-one percent of parents who paid less than $50 a week for child care supported government standards to ensure that care was of a minimal quality. CCAC has been monitoring the implementation of Family Support Act child care in 10 states. We hear that the lack of access to stable, quality child care is a critical concern. Without it, these families are precariously close to falling back onto the AFDC rolls. CCAC receives an average of 200 calls a month from parents, from the media, from providers and from business and government leaders, the overwhelming majority of PAGENO="0211" 205 whom are concerned about the need for protections to ensure that child care is safe. It is a clear step backwards to allow states only the use of formal licensing, instead of a number of regulatory strategies that they traditionally employ. State Child Care Policy Making Policies proposed for At-Risk Child Care, anti those for the CCDBG as well, could create federal control over responsibilities that traditionally have been state responsibilities. The result is that states would not be able to protect children in subsidized care, would not be able to offer incentives for programs to improve quality, and would not be able to make efficient use of federal and state dollars in a coordinated way. In addition to providing families with the assurance of basic protections for their children when tax dollars are spent, there are two other reasons why the states need to develop their own policies for federally funded child care: (1) There must be state regulations to protect against fraud and the misuse of federal and state tax dollars. The S&L crisis and HUD scandals demonstrate clearly what happens when public funds are free of oversight. We ought not to run this risk with the limited resources we have allocated to child care. (2) States need to be able to develop their own policies in order to create a seamless child care system across funding sources. The regulations for the Block Grant and the At-Risk Program could potentially disrupt child care for families as they move from one subsidy to the other. CCAC recommends that Section 257.41 (a)(2) of the proposed regulations for the At-Risk Program be deleted. We ask that HHS allow states to continue to set health and safety protections specifically for children receiving Title lV-A child care subsidies. Nothing in the statute indicates that Congress intended that states should be barred from doing so. In addition, CCAC would like to see the regulations be amended to allow states to use the registration process for otherwise unregulated child care providers as a way to ensure that minimal health and safety standards are met. States should be allowed to maintain current practices, such as criminal record checks or rcquiremcnts that fire extinguishers or smoke detectors be present in family day care homes, Limits on Child Care Payment Rates Although the statute provides that the state must pay a ratc for child care funded by the At-Risk Child Care Program at the applicable market rate, HHS limits child care reimbursement to the 75th percentile of the market rate for each category of care and allows states to choose rates lower than the 75th percentile. This regulation presents a serious limitation to true "parental choice" and is a primary example of the Administration's inconsistent use of the "parental choice" concept. Consider the fact that parents - - and their children - - are the ultimate consumers of child care. The principal factor limiting a consumer's ability to "vote" in the market place, to choose a product or service, is money. If the Administration truly wanted to provide families with the maximum "parental choice," it would not have placed the 75th percentile cost limitation on At-Risk Child Care payments. The definition of market rate as the 75th percentile of the cost of care is an artificial creation of HHS; we know that in many areas this limit makes it difficult, if not impossible, to find quality child care. It is difficult to recruit providers to serve poor families when they can get higher rates for children of other families. In half of the states CCAC has surveyed, advocates and/or state administrators have stressed that the 75th percentile cost limitation hinders the ability of families to find any child care at all - - regardless of its quality. CCAC asks that HHS amend Section 257.63 to enable states to set adequate payment rates for At-Risk Child Care. Families svho are served by this program should have equal access to the same care as families who do not receive any subsidy. CHILD CARE AND DEVELOPMENT BLOCK GRANT CCAC also has concerns about the interim rule for the Child Care and Development Block Grant. Specifically, we believe that the rules should allow states to use funds beyond the set-aside for infrastructure and quality improvement. In addition, states should be allowed to set standards for child care funded seith CCDBG monies above PAGENO="0212" 206 those for unfunded care. The will give providers the incentive to improve programs in order to receive additional money. Our particular areas of concern are: o Restrictions on states aoility to improve child care quality and increase child care availability: The regulations provide that in the Grant's first two years, states can spend only a total of 15 percent of the 75 percent portion on activities to increase child care availability, improve child care quality BntI on administrative expenses. After that, only 10 percent of the 75 percent portion can be spent on these activities. Given the administrative burden that the Act puts on states, it seems likely that very little of this money will be available for quality improvements. This represents a step backwards from what could be an opportunity to improve the quality of child care, especially for children from low-income families. o Restrictions on states' ability to set standards: The legislation provides that states can strengthen health and safety requirements for child care providers receiving Block Grant funds. Section 98.30(g) of the proposed regulations, however, prohibits additional regulatory requirements on Block Grant funds if they limit parental choice. This provision could discourage states from using Block Grant funding as an incentive to encourage providers to improve the quality of child care and to protect the health and safety of children in care. Conclusion We greatly appreciate this opportunity to present testimony to the Ways and Means Subcommittee on Human Resources. The At.Risk Child Care Program and the Child Care and Development Block Grant could improve the lives of many families who receive the child care benefit. Congressional oversight is critical if we are to achieve this goal. The proposed regulations for the At-Risk Program would be greatiy improved if the following changes are made: 1) Section 257.41 (a) (2) is amended so that states are allowed to set consumer protection standards for child care that is funded by Titie W-A, even if universal child care standards for that particular category of care exist; 2) Section 257.41 (b)(2) of the regulations is amended so that states can continue to use child care registration as a method to ensure consumer protection; and, 3) Section 257.63 of the proposed rule be changed to enable states to reimburse child care at the market rate for care. CCAC also recommends that the Block Grant regulations be amended to delete Section 98.30(g) because it may discourage states from improving and expanding their consumer protection measures for child care. We also recommend that the interim rule for the Block Grant be changed so that states can spend additional funds for infrastructure and child care quality incentives. We urge you to use your influence to improve the regulations for these two programs. PAGENO="0213" 207 Acting Chairman DOWNEY. Thank you, Ms. Reisman. Ms. Jackson. STATEMENT OF BEVERLY ROBERSON JACKSON, ED.D., SENIOR PUBLIC POLICY ANALYST, NATIONAL BLACK CHILD DEVELOP- MENT INSTITUTE Ms. JACKSON. Thank you, Chairman Downey, members of the subcommittee. I think this is a very timely oversight hearing based on the critical nature of the regulations that have recently been promulgated. Although there are some positive aspects to the proposed rules submitted by the DHHS child care task force, the attempt to feder- ally sanction unsafe environments for poor children is indefensible. The result of the proposed rules would directly contradict what we believe to be the congressional intent in developing this legislation. Furthermore, the Federal Government should not be in the busi- ness of funding unsafe child care environments under any circum- stances. In developing viable regulations, the Department of Health and Human Services must acknowledge four critical points, and these are four points that I think have somehow gotten lost in the debate. One, child care services, regardless of quality, are in short supply relative to the need. Two, the Federal Government does have a responsibility for ad- vocating for the safest and most healthful work, care, and living environments for all of its citizenry. Three, parents should not be encouraged to remain in the paid labor force rather than to stay at home if they cannot secure a safe and healthful environment for their children. And finally, the Federal Government should not erect barriers or cause additional disruption for at-risk families as they attempt to become self-sufficient and to remain in the paid work force. The rationale behind the creation of the child care and develop- ment block grant, at least in the minds of child advocates, was to provide parents with affordable, accessible, and quality child care services. The intent of the law is to increase the diversity of care and enhance the quality of all types of care, not to promote diversi- ty at the expense of quality. The lack of available child care for parents who need such serv- ices has been documented clearly in national surveys by the Ameri- can Federation of State, County & Municipal Employees, the Na- tional League of Cities, and also in popular magazines, as Ms. Reis- man has mentioned. Child care is often out of the reach of poor families because it is too expensive. According to the Census Bureau's Survey of Income and Program participation, SIP 1990, poor families spend 25 per- cent of their family income on child care, while nonpoor families with working mothers spend only 6.3 percent of their income on child care. The 25 percent is a large proportion of a small amount of money, but it is spent because poor families are also concerned about having their children in a quality environment, or at least in a safe and healthful environment. PAGENO="0214" 208 Currently, parents are severely limited in their choices of afford- able, quality child care. The quantity of safe and healthful care for children should be expanded rather than reduced. NBCDI believes that parents should be able to make their choice from a pooi of safe, quality child care arrangements, not from a potpourri of unregulated care which includes low-quality, unsafe, and substandard programs. Because the Federal and State govern- ments would be subsidizing care under these programs, they have a responsibility for ensuring that such care meets basic standards at minimum. Federal child care programs that target low-income families and require States to lower their health and safety requirements for subsidized care are unconscionable. The regulations proposed by the Department of Health and Human Services sets a reprehensible precedent in children's serv- ices by actually lessening assurances of health and safety measures to protect children. In fact, the regulatory proposals for at-risk care recommend that children of the poorest of families would not be protected by even the most basic of health and safety requirements in States that allow some types of care to go unregulated. These are the same children who are most in need of high-quality programs to enter school on an equal footing with their more fortunate peers. I find it somehow very difficult to understand that we can have a national education goal that children will be able to enter school ready to learn and at the same time we issue proposed regulations that try to ensure the least possible quality in programs for chil- dren who are poor. The last point that I would like to make also reinforces the dis- cussion about the at-risk program allowable expenditures, looking at the 75th percentile. By thinking that we are dealing with compe- tition among a lot of care in various areas, we are forgetting the fact that many areas both in urban, rural, and semirural settings have very little child care from which to select, whether it is infor- mal settings or family day care settings. We are not dealing with competition among a whole range of dif- ferent types of care available. We are dealing with a scarce quanti- ty of child care in all areas. There are not a lot of grandparents. Many parents are older when they start to have their children. My youngest child was born on my parents' 50th anniversary. Needless to say, my parents are not able to provide grandparent care, in addition to being 3,000 miles away. We would like for you to consider those four points with which we initiated this discussion: one, consider the lack of child care that is available; two, consider-especially when thinking about Family Support Act, at-risk, and transitional child care-that par- ents should not be forced to remain in the paid labor force if they can't find a safe and healthful environment for children; three, the Federal Government should support quality care; and four, the Federal Government should not erect barriers to self-sufficiency. If these points are considered during the amendment of the pro- posed regulations, American children and families will benefit greatly. If they are not taken into consideration, the Federal Gov- PAGENO="0215" 209 ernment will be shirking its responsibility for protecting the lives of American children and promoting the viability of American fam- ilies. Thank you. [The prepared statement follows:] PAGENO="0216" 210 OVERSIGHT HEARING ON THE ADMINISTRATION'S PROPOSED FEDERAL CHILD CARE REGULATIONS September 26, 1991 TESTIMONY OF THE NATIONAL BLACK CHILD DEVELOPMENT INSTITUTE WASHINGTON, DC Thank you, Chairman Downey and members of the Subcommittee on Human Resources of the Comsittee on Ways and Means, for your invitation to testify today. I am Beverly Jackson, Senior Public Policy Analyst of the National Black Child Development Institute (NBCDI). Founded in 1970, NBCDI is a nonprofit, nentbership organization dedicated to improving the quality of life for Black children and families. NBCDI focuses primarily on issues and services that fall within four major areas: health, education, child care/early childhood education, and child welfare. NBCDI monitors public policy issues that affect Black children and educates the public through its publications, annual conference, and other public educatipn forums. NBCDI's network of forty affiliates in twenty- three States is comprised of volunteers from all walks of life who provide direct services and conduct public education activities on behalf of Black children and youth in their communities. NBCDI is the first national organization of its kind. My testimony today is based upon NBCDI's twenty-one years of active involvement in the effort to create a coordinated and comprehensive system of child care and early childhood education service delivery. For more than two decades, parents, child care professionals, early childhood education specialists, and others interested in the welfare of children have petitioned the United States Government to provide a uniform system to deliver affordable, accessible, quality child care services. Many advocates -- including NBCDI -- considered the passage of the Child Care and Development Block Grant and At-Risk Child care legislation to be a victory for this nation's children and families. That victory is now uncertain, however, because of the regulations proposed by the Department of Health and Human Services (DHHS) child Care Task Force in response to the legislation. The proposed regulations are incompatible with Congressional intent: to provide increased access for low-income families to quality child care and early childhood education programs. This testimony will outline NBCDI's careful analysis of the regulations, focusing on issues related to health and safety standards and the potential negative impact of the proposed fee regulations for both programs as well as the allowable expenditures and program eligibility regulations for the At-Risk Program. I. PARENTAL CHOICE VS. STANDARDS For decades, persons concerned about the health and well-being of children have urged the Federal Government to develop and mandate guidelines for quality child care. Although those requests have gone unheeded by the Federal Government, at least minimal health PAGENO="0217" 211 and safety requirements have been established by States and localities for many Federally sponsored programs. The regulations proposed by DHHS set a reprehensible precedent in children's services by actually lessening assurances of health and safety measures to protect children. Children of the poorest of families would not be protected by even the most basic of health and safety requiresents in States that allow some types of child care to go unregulated. These are the same children who are most in need of high quality programs to enter school on an equal footing with their more fortunate peers. In both the Interim Final Rule for implementation of the Child Care and Development Block Grant and the Proposed Rule for implementation of the At-Risk Child Care Program, the concept of qgg~peting statutory principles -- a competition between parental choice versus quality -- is unnecessarily introduced. To maximize "parental choice," the Child Care Task Force mandates that only the most minimal State and local requirements and standards be applied to care under these programs: 1. Child Care and Development Block Grant Section 98.30(g) of the Interim Final Rule makes a Grantee ineligible for Block Grant funds if State or local rules in the areas of regulatory requirements, health and safety requirements, and other requirements, "significantly restrict parental choice." This provision raises serious questions about the intent of the regulations to increase quality child care options for children and parents. The Child Care Task Force correctly recognizes the importance of parental choice as expressed in Public Law 101-508. However, the intent of the law is to increase the diversity of care and enhance the quality of all types of care, not to promote diversity at the expense of quality. NBCDI recommends that Section 98.30(g) of the Interim FinaLRR~ be deleted or substantially rewritten such that ~fl Grantees receiving reimbursement under the Child Care and Development Block Grant are required to meet a basic level of health, safety, and nutritional requirements. States should be required to establish a basic floor of health and safety for all programs registered for funding under this slock Grant, including providers which may be exempt from State and local health and safety requirements. No site should be exempt from these essential standards. 2. At-Risk Program Again, the Child Care Task Force minimizes health, safety, and other standards because "parental choice' must be a paramount consideration." Though Section 257.41(a) (1) states that "Child care provided with funds under this part must meet applicable standards ...," Section 257.41(a) (2) renders this language regressive by defining "applicable standards" as "licensing or regulatory requirements which apply to care of a particular type ... regardless of the source of payment for~care." (Emphasis added.) Thus, according to the Preamble, "If a State has standards which affect only publicly-funded care, and a caregiver of that type of care does not meet them, for title IV-A purposes ... that care is still `legal,' and the State must pay for that care." PAGENO="0218" 212 In addition to recommending the. lowering of State standards for At-Risk Child Care [Title IV-A Section 402(i)), the Task Force recommends the same language as an amendment for Family Support Act Child Care and Transitional Child Care (TCC) [CFR 255.4(c)(2)). While NBCDI is certain that the intent of the Task Force is to reconcile any differences between these two sections of Title IV-A of the Social Security Act, the impact on poor children would be grave. NBCDI recommends that Section 257.41(a) (1) be amended to require all newly secured care to meet State and local standards. Section 257.4l(a)(2), which defines "applicable standards," should be deleted. Section 255.4(c) (2) of the Family Support Act Regulations should not be changed as proposed by DHHS. Thus, States would be required to apply applicable State and local standards to all newly secured care funded under this program, and States would determine which standards are applicable. However, in situations where parents wish to retain care that does not meet State licensing standards but has been determined not to be detrimental to the child's health and safety, extreme latitude should be provided, in recognition of the temporary nature of at-risk care. In addition, because of an increased use of vouchers for parental choice, NBCDI recommends amending the regulations to encourage States to coordinate quality controls and to utilize similar health and safety requirements across all Federally funded child care programs (Title XX, Child Care and Development Block Grant, and other child care services) to minimize family disruption when programmatic eligibility changes. The National Association for the Education of Young Children's accreditation criteria are recommended as a model. It is NBCDI's view that parental choice is an important consideration, but the health, safety, and well-being of children is the most important priority. Parents should be able to make their Choice from a pool of ~ quality child care arrangements, not from a potpourri of unregulated care which includes low- quality, unsafe, and substandard programs. Because the Federal and State governments would be subsidizing care under these programs, they have a responsibility for ensuring that such care meets basic standards, at minimum. Federal child care programs that target low-income families and require States to lower their health and safety requirements for subsidized care are unconscionable. II. PARENTAL. CHOICE VS. STATE FLEXIBILITY IN REGISTRATION In another effort to increase parental choice, the Task Force has emphasized informality and minimal procedures in the process of registering child care services exempt from State and local regulatory requirements. Thus, DHHS interferes with State efforts to use the registration process to ensure that providers adhere to health and safety standards, as some States have wisely done in the past. 1. Child Care and Development Block Grant Section 98.45(d) of the Interim Final Rule states that "Both the registration requirements and the registration process ... must be consistent with the safeguards for parental choice. . . ` These "safeguards" disqualify a PAGENO="0219" 213 Grantee if State or local registration requirements exclude a significant number of providers. NBCDI recommends that States be required to offer a minimum number of contact hours for in-home or on-site training in health, nutrition, child safety, and child development to relatives, family day care providers, church-based care and other forms of care that might be exempt from State or local regulatory requirements. As a model, NBCDI recommends The Essentials for Child Development Associates developed by the Council for Early Childhood professional Recognition. 2. At-Risk Program Section 257.41(b) of the Proposed Rule mandates that States institute only the most minimal registration requirements for providers which are exempt from meeting State and local stdndards under the previous section. States may `collect only such information about providers as is necessary for the State to make payment to the provider or furnish information to the provider." Thus, States are virtually limited to collecting names, addresses, and telephone numbers. NBCDI recommends that Section 257.4l(b)(2)(i), which limits registration, be deleted. Thus, States would have latitude in devising registration procedures. The registration issue is a critical one. From our affiliates across the country who have reviewed their State plans, we have learned that some States (for example, New Jersey, Missouri, and the District of Columbia) have set aside funds for quality improvement and upgrading only for programs attempting to meet State licensing requirements. No funds have been made available for the improvement of exempt programs. With no incentive to provide a healthful environment, exempt programs will see no need to meet established health, safety, or quality standards. The outcome is a two-tiered system. The first tier will be composed of the limited supply of licensed centers and family day care homes. The second tier will be comprised of unlicensed, unregistered care that has no accountability and no incentive for accountability in the areas of safety, health, nutrition, child development, or other components that can create a quality early childhood environment. The Federal Government will be abrogating its responsibility if it does not -- at minimum -- allow States to set quality and safety expectations as well as accountability requirements for services secured with taxpayer dollars. III. SLIDING FEE SCALE M~D FEE REQUIREMENTS The proposed regulations for the Child Care and Development Block Grant require grantees to establish sliding fee scales. Grantees are allowed to waive contributions from families at or below the poverty level. The waiver provision is commendable; however, the regulations do not mandate that States ensure that family co- payments for care under the sliding fee scale are within reasonable limits. The proposed regulations for At-Risk child care require States to develop a sliding fee scale that charges a parental co-payment to ~fl recipients. In the preamble discussion of this section, DHHS states that "... a co-payment, even a token amount, reinforces the PAGENO="0220" 214 sense of responsibility in parents for the care and support of their children." While NBCDI supports the notion of instilling families seeking self-sufficiency with a sense of responsibility, under the proposed regulations, low-income families may be forced to pay more than they can afford in order to receive quality care for their children. 1. Child Care and Development Block Grant Section 98.42 of the Interim Final Rule requires that grantees establish sliding fee scale(s) that provide for cost sharing by families receiving Block Grant child care services. Grantees may waive contributions from families below the poverty level. NBCDI recommends that States be required to develop a reasonable and realistic sliding fee scale, specifying a ceiling on the percentage of income that families on APDC and working poor families must pay toward care. 2. At-Risk Program Section 257.31(b) of the Proposed Rule mandates that each State agency provide for some level of contribution by ~fl recipients. This inflexible requirement would exclude the most needy families from participation in this program. The employment situation of parents at- risk of going onto Aid to Families with Dependent Children (AFDC) because of a lack of child care services is well described in the preamble. Examples are provided of parents who are between jobs, parents who are unemployed and seeking work, and parents who are struggling to remain employed. For some of these families, any co-payment at all may be prohibitive. In addition, the regulations provide insufficient guidance on setting co-payment rates; this could result in unreasonable fees. NBCDI recommends that Sections 257.31(a) and 257.31(b) be revised to require some level of contribution by all recipients who are ~hle~to p~y. The regulation should also be revised to encourage States to establish a sliding fee scale for this program by utilizing the scale currently used for Title XX services and/or the Child Care and Development Block Grant. The scale should be revised such that 1) families earning less than seventy-five percent (75%) of the poverty level would be exempt from making co-payments, and 2) families earning seventy-five percent (75%) of the poverty level or more would make token payments limited to a maximum of two percent (2%) of family income. Our concern for access to quality care on behalf of working poor families outweighs, in this instance, our concern for State flexibility. In some States, New Jersey for example, if a parent earns a few dollars over the limit in the sliding fee scale, parents must pay the "full cost of care." This is especially unfortunate because the New Jersey scale is only now in the process of being updated using 1989 State median income guidelines, after years of concerted effort by child advocates and county officials. In other States, there is leeway in what a program can or must charge. States should be provided with some guidance in developing PAGENO="0221" 215 sliding fee scales. NBCDI is especially concerned about low-income families with more than one child receiving child care. IV. AT-RISK PROGRAN ALLOWABLE EXPENDITURES The Proposed Rule for the At-Risk Program permits Federal financial participation only for the actual cost of care but not for more than the "applicable market rate." States are required to utilize survey information to determine the rates for various types of care and then to set local market rates at the 75th percentile of the rates for the type of care. Strict adherence to the market rate ceiling would unduly restrict access to care for some families. Child care providers whose actual cost of care is greater than the market rate would either not be reimbursed for full cost of care or would not be eligible to serve children through this funding stream. The result would be a disruption in care for some children and no care for others. The following are two examples: Disruption in Care. At-Risk care, in some circumstances, is different from the newly secured care covered in the Family Support Act and Transition Child Care [defined in the CFR 255.4(a) (2) and (a)(3)J. Thus, if a parent has a child in a child care setting which costs more than the market rate and the parent becomes unable to pay for care because of unemployment or furlough, the full cost of care in that setting would not be covered because it is above the market rate. No Available Child Care Options. In many communities, the demand for low-cost care often exceeds the number of slots. When the low-cost slots are filled, low-income parents have no child care option other than the higher cost care. As these examples illustrate, strict adherence to the market rate ceiling would not always meet the unique needs of participating families and communities. A more prudent rule would allow States some flexibility in subsidizing child care above the local market rate. NBCDI recommends revising Section 257.63(a) to allow States some flexibility in responding to the needs of parents for whom care that costs more than the market rate is the only available option and when care above the market rate had been retained before the family became eligible for the At-Risk Program. NBCDI also recommends adding language to clarify the regulations regarding 1) calculation of the market rate, and 2) the establishment of statewide limits. The language regarding local market rates is misleading in that it reads as though seventy-five percent (75%) of the local market rate would be covered, rather than that the market rate would be set at the seventy-fifth (75th) percentile of local rates. The language regarding statewide limits follows this section, so it reads as though States are allowed to set local market rates at more or less than the 75th percentile, rather than allowing States to limit total allocations for the program. PAGENO="0222" 216 V. AT-RISK PROGRAH ELIGIBILITY Section 257.30(c) of the Proposed Rule outlines terms which enable a State IV-A agency to provide interim child care during periods of parental unemployment. The section allows for subsidized care for a two-week period prior to employment, and "for up to one month during a break in employment if subsequent employment is scheduled to begin within that period." These regulations provide participants with insufficient time to secure employment. For low-income parents with few skills, it is likely to take more than one month to secure new employment. The loss of child care during this period would only serve to hamper the job search process, adding the burden of locating safe, acceptable child care to a parent without any income. NBCDI recommends amending the language of Section 257.30(c) to lengthen the period of time a family would qualify for the At-Risk Program to one month after the start of employment and up to three months during a break in employment. CONCLUSION In the development of the legislation for families flat_risk of needing AFDC, the intent of child care advocates and the U.S. Congress was to remove barriers to employment, continuation of employment, and maintenance of employed status after furlough or unemployment. The Child Care and Development Block Grant targets funding toward low-income children. Both programs may directly affect the 48.4% of African American children under age six who live in low-income families.1 Although there are many positive aspects to the proposed rules submitted by the DHNS Child Care Task Force, the attempt to Federally sanction unsafe environments for poor children is indefensible. Therefore, the National Black Child Development Institute registers serious concern about the ~ppQsed Rule and Interim Final Rule. These regulations show a lack of regard for quality, health, and safety issues, and a preoccupation with parental choice. Stated simply, parents should be able to make their choice from diverse types of m~~jy care, not from a potpourri which includes low- quality and substandard programs. Parents need options, but quality is not optional. The Task Force should not assume that a safe and healthful environment in home-based or center-based care is easily accessible to low-income and African American families. In 1988, over 70% of low-income African American children were living in neighborhoods where one fifth or more of the residents had incomes below the poverty line, as were 30% of poor White children.2 The Proposed ~ and Interim Final Rule should encourage unlicensed child care providers in these impoverished areas -- and throughout the country -- to meet basic standards.~ The Task Force should also be reminded of the first of the National Education Goals developed by the President and the Governors. This goal states that "all children will enter school ready to learn." 1 National Black Child Development Institute, Th8$tatusof African American Children, Twentieth Anniversary Report 1970-1990, Washington, DC, 1990, p. 40. 2 Ibid, p. 27. PAGENO="0223" 217 .] ~ fl NATIONAL Ii ~ DEVELOPMENT EJ INSTITUTE. INC REVISED PAGE 8 Unfortunately, the artificial dichotomy between parental choice and quality presented in the proposed regulations serves as an excuse to ignore this opportunity to improve the quality of early childhood settings and make progress toward the goal of school readiness. Furthermore, the proposed rules directly contradict congressional intent; the regulations would not increase access for low-income families to quality child care and early childhood education programs. Under no circumstances should the Federal Government be in the business of funding unsafe child care environments. This nation cannot afford to continue to maintain a two-tiered child care delivery system -- a high-quality tier for children whose parents can afford care or who live in the "right' neighborhood and another for the poor. In develop~ng viable regulations, the DHHS child care Task Force must acknowledge four crucial points: 1) child care services -- regardless of quality -- are in short supply relative to the need, 2) the Federal Government has a responsibility for advocating for the safest and most healthful work, care, and living environments possible for all of its citizens, 3) parents should not be encouraged to remain in the paid labor force rather than to stay at home if they cannot secure a safe and healthful environment for their children, and 4) the Federal Government should not erect barriers or cause additional disruptions for "at-risk" families as they attempt to remain in the paid work force. If these points are considered during the amendment of the proposed regulations, American children and families will benefit greatly. If they are not taken into consideration, the Federal Government will be shirking its responsibility for protecting the lives of American children and promoting the viability of American families. All of the comments made in this document by the National Black child Development Institute can be summed up in a quote from its publication, The Status of African American chiidFSIP Advocates for children have long called for a comprehensive child care delivery system. Such a system should recognize the value of diversity in child care arrangement while enhancing accessibility and quality of care." ~ Washington, DC, 1990, p. 61. PAGENO="0224" 218 Acting Chairman DOWNEY. Thank you, Ms. Jackson. Ms. Brackin. STATEMENT OF SUSAN BRACKIN, EXECUTIVE DIRECTOR, EAGLE FORUM Ms. BRACKIN. Good afternoon, Mr. Chairman and members of the committee. Thank you for allowing me the opportunity to testify before your committee today on this important subject of day care for our children. I represent Eagle Forum today, a national profamily organiza- tion of about 80,000 members. I am here speaking for the parents in our organization today. My testimony will be restricted to a dis- cussion of the child care and development block grant. Is there anyone in the real world-and sometimes I have to dis- tinguish between Washington, D.C., and the real world-is there anyone in the real world who really thinks that the Government can take better care of their children than their own parents? With the collapse of socialism and communism all over the world, it seems very ironic to me that here in our country that anyone is even asking this fundamental question that we have been debating today "Parents, do you want more Government regu- lations or do you want more freedom in raising your own chil- dren?" Senator Jay Rockefeller's Commission on Children report said that most American children are healthy, happy, and secure. They belong to warm, loving families. For them, today is filled with joys of childhood. Now despite this, we know that there are some children whose families are living in poverty and who need some type of financial relief in order to pull themselves out of the tragic situation that they are in. Compassion dictates that these people can't be ignored. However, they should be dealt with and helped in a dignified fashion that works to strengthen their family, not in an elitist, bu- reaucrat-knows-best manner that undermines their parental rights and parental responsibilities. The child care and development block grant signed into law by President Bush is a program designed to help those low-income families with their day care needs while at the same time respect- ing their parental rights. The regulations issued by the Bush ad- ministration clearly puts the parents in the driver's seat when de- ciding what is best for their own children. The regulations guarantee eligible parents the right to a certifi- cate that can be used with any type of provider that the parents select, be it grandmother, neighbor down the street, center care, church, or church care even when they engage in religious activi- ties. Opponents of the regulations argue that they send conflicting sig- nals about quality protection because they won't allow States to impose more stringent requirements on recipients than on nonreci- pients, and that these more stringent requirements eliminate cate- gories of providers. But if the State has standards that really are absolutely vital to the health and safety of children, they should pass them for all PAGENO="0225" 219 child care settings in the State, not just those serving low-income recipients of Government assistance. I am afraid what we see is State bureaucrats asking for cover. I attended the briefing that HHS did for the bureaucrats all across the country on the regulations. I went to it, and I heard them com- plain time after time about this provision that wouldn't allow the States to impose more stringent regulations that would limit pa- rental choice. A representative from my State of Alabama stood up and said listen, the political reality is that we can't pass more stringent reg- ulations in our State. Come on guys, help us out. You know, if we try to do this in our own State, the people in the State won't allow us to pass these types of rules and regulations. So what he was basically asking for is Uncle Sam to cloak him and give him an excuse to pass regulations and rules that the people in the States don't want or don't desire or have rejected. Here is the list of our recommendations for incorporation into the regulations, and I will go through them quickly because many of them have been discussed today. We like the fact that a large part of the-75 percent of the money can be used for certificates. We would like to see even more of that. We think that the best thing that can be done is to give more of the money directly to parents so they can choose the kind of care that they think is appropriate for their child. Give the money directly to the parents instead of funneling it through dif- ferent levels of bureaucracy. We like the parental choice test. As I said, if States want to pass more stringent regulations, they should do so, and nothing in these regulations prevent the States from doing that. It just doesn't give them a cloak or a shield in which to do so. We like the parental choice so much we would like to see the De- partment of Health and Human Service issue a brochure that tells people about all their choices and their options with regard to the certificates. We think it is terribly important that these certificates are avail- able to a parent year around. We don't want to see the State agen- cies and local agencies going ahead and contracting all the money out before the end of the year so that when a parent comes to get a certificate they say whoops, they money is already gone. We have already given it all out in the form of contracts. There has been a lot of discussion on the child care debate, but I think the bottom line is the parental control and parental rights and responsibility, and we truly believe that the family is the foun- dation of this country, and third, no matter what, it can't be re- placed by a wide assortment of Government programs. It hasn't worked in Sweden, it hasn't worked in the Soviet Union, and it won't work here. Thank you. [The prepared statement follows:] 51-713 0 - 92 - 8 PAGENO="0226" 220 TESTIMONY OF SUSAN BRACKIN, EXECUTIVE DIRECTOR EAGLE FORUM Good Morning Mr.'aiairman and Members of the Committee: Thank you for allowing me the opportunity to testify before your committee today on the important subject of daycare for our children. I represent Eagle Forum, a national pro-family organization of 80,000 members. Is there anyone in the world who thinks that the government can take care of children better than their own parents? With the collapse of socialism and communism all over the world, it seems ironic that here in OUR country, anyone is asking the fundamental question, "Parents do you want more government or do you want more freedom in raising your children?' Policymakers should not fall into the trap of "fixing" family problems with temporary bandaids instead of real cures. Senator Jay Rockefeller's "Commission on Children Report" says that "Most American children are healthy, happy and secure. They belong to warm, loving families. For them, today is filled with the joys of childhood..." Despite this, we do know that there are some children whose families are living in poverty and who need some type of financial relief in order to pull themselves out of their tragic situation. Compassion dictates that these people cannot be ignored. However, they should be helped in a dignified fashion that works to strengthen their family, not in an elitist bureaucrat-knows- best manner that undermines parental rights and responsibilities. The Child Care and Development Block Grant (CCDBG) signed into law by President George Bush is a program designed to help these low-income families with their daycare needs while respecting parental control. The real debate over the regulations that govern the CCDBG is really over whether or not we people in Washington D.C. trust the parents in this country to look out for the best interests of their children. Do we trust the parents--even poor parents -- better than "big brother" federal government to dictate what constitutes appropriate child care for children? The regulations issued by the Bush Administration clearly puts parents in the driver's seat when deciding what daycare is best for their children. These interim regulations recognize that it is parents who know what is best for their children. These regulations guarantee eligible parents the right to a certificate that can be used with any type of provider the parent selects-- be it granny, neighbor down the street, center care, or church care where they engage in religious instruction or activities. Furthermore, these regulations provide for a "parental choice" test that should prevent states from imposing overly stringent and burdensome regulations that would limit parental choice. Opponents of the regulations argue that they send conflicting signals about quality protection because they will not allow a state to impose more stringent requirements on recipients than on non-recipients, if these more stringent requirements would eliminate categories of providers. No one argues that health and safety are not important. However, the regulations recognize that what is appropriate for one setting may not be appropriate for another. It may not be appropriate to require a criminal record check to be completed on a family friend before the parent can use this friend as a provider. Parents know best what is appropriate for each situation. Why should the parent have to wait for this background check if the person is a personal friend? Do we really want the parents to pay for this type of unnecessary, costly, schedule-disrupting regulation if it is not appropriate? PAGENO="0227" 221 Furthermore; if the state has standards that really are absolutely vital to the health and safety of children, they should pass. them for all childcare settings in the state, not just those serving low-income recipients of government assistance. Opponents claim that the regulations put too much money into the hands of parents in the form of direct childcare slots or certificates, and not enough into "quality improvement." We strongly disagree with this. More of the money should go to parents and less to bureaucrats-- not the other way around. They say that parents should not have the right to a certificate for the whole year because they think that this may make it more difficult to offer contracts to center-based care and that this may inhibit parental choice in centers. Nonsense! Parents can still use the centers using certificates for payment, if that is what they choose. The following is a list of our recommendations for incorporation into the regulations: 5All~te more than 75% of the funds for certificates. The regulations now state that all but 10-15 percent of the 75 percent of the money should be used for direct services. They allow for 15 percent the first year and ten percent in following years to be used for administrative costs and quality improvement. The other 25 percent of the grant is to be used for more quality improvement and before and after school care. Direct aid to parents in the form of certificates is a more efficient use of money than having the funds trickle through various government employees. Parents are usually better able to look after the best interests of their children than anyone else. Let them have the certificate money and they will select the best quality care available for their child. Do not impose any health and safety standards on recipients that would limit the range of parental choice. The regulations should state that any secondary standards placed on providers who accept a certificate must not limit parental choice. In order to impose these additional, more stringent regulations, the state should be required to explain why these additional regulations will NOT in any way limit the choice of parents to select any provider who is currently operating lawfully. Furthermore, additional standards should not be established without showing the need for them and without multiple public hearings that involve parents and providers. Furthermore, curriculum and credential requirements should not be imposed. The preaihble language indicating that states can meet training requirements for home care providers by simply mailing them information about fire and health codes, and by allowing churches to just conform to current building and fire codes, should be incorporated into the regulations. This is completely appropriate. *The resource and referrals funded by states should be private and should not in any way bias parents toward any type of provider. Publicly funded resource and referral agencies should not be allowed to render daycare services as this could set up a conflict of interest. *To help ensure parental choice, the United States Department of Health and Human Services should develop and widely distribute a brochure that explains the certificate program and informs parents of their right to use certificates with grandparents, neighbors, and daycare that includes religious instruction. We also suggest that the back of the actual certificates provide basic information about where they can be used. *The regulations should be more specific about requiring states to show how their parental choice tests will work. This is a very good provision and should be strictly enforced. * The regulations are absolutely correct in requiring the certificates to be available all year upon parental request. Otherwise, the state agency would be too tempted to promise away and spend the parents' money on grants and contracts, thereby denying parents their choice. *ft should be very clear that religious providers who accept certificates are exempt from nondiscrimination prohibitions in employment and that they may require employees to adhere to their religious teaching and tenets both on and off the job, and that the certificate is considered aid to the parcnt, NOT the provider. PAGENO="0228" 222 5A11 of the direct s'crvices money should be used for certificates. tSince there is absolutely NO evidence that licensed providers provide higher quality service than unlicensed informal providers, it is NOT acceptable to pay them at a higher rate because they are licensed. *1~e~ should not be denied their right to use their certificate for use with religious providers who engage in religious activities. The provisions in the regulations that directs states to allow this is absolutely right--even if they have to segregate state and federal funds in order to do so. Child advocacy groups in this country have long called for the "Swedish Childcare Model," which means government-regulated daycare from birth. This, they have said, is what we in this country should emulate. It is time for these liberals to move out of the past and face reality. On September 16th of this year, the Washington Post reported that the Swedes rejected their cradle-to-grave social welfare policy at the polls. "The ruling party, Western Europe's most successful left-wing political movement, was projected to make its poorest showing since 1928..," according to the Washington Post. Carl Bildt, the new leader of Sweden, pledged to cut taxes and introduce private alternatives to Sweden's sacrosanct public-health and child-care systems. America should not make the same mistake. Furthermore, child advocate and House Act for Better Child Care leader Congressman George Miller said in a Mother Jones interview, "But the fact is that I spent eight years in getting the child-care bill passed in Congress, and at its zenith, there was never a child-care movement in this country. There was a coalition of child-advocacy groups, and a few large international unions that put up hundreds of thousands of dollars, and we created in the mind of the leadership of the Congress that there was a child-care movement-- but there was nobody riding me...There wasn't a parents' movement." Right on George! Families do not need more government programs. They need more of their money returned to them through tax relief so that they can care for and make decisions about their own children. The Assistant Secretary for Children and Families in the U.S. Department of Health and Human Services and author of the regulations, Jo Anne Barnhaxt, summarized the whole regulations debate very well in her "Taking Exception" piece in a recent Washington Post article. She said, "What our regulations do accomplish is rather straightforward: we give low-income parents the freedom to choose from the same range of providers as families whose child care isn't subsidized--bc they family, neighbors, churches or large centers. "Some critics contend that this would result in `second-class' or `chancy' care for the poor. The implications of this are that poor parents would somehow make poor choices about their child's care arrangement.... "I must ask, by what right do the `experts' know what is best for these children? Nobody is in a better position to make the important decision as to who shall care for children than arc their parents. The love, caring and nurturing that naturally flows from parenthood should be respected in this instance." The family, rich and poor, is the foundation of our country and it cannot be replaced by a wide assortment of government programs. It didn't work in the Soviet Union, it didn't work in Sweden, and it won't work here!!! Thank you. PAGENO="0229" 223 Acting Chairman DOWNEY. Thank you. Mrs. Johnson. Mrs. JOHNSON. No questions, Mr. Chairman. Acting Chairman DOWNEY. Mr. Grandy. Mr. GRANDY. No, Mr. Chairman. Acting Chairman DOWNEY. Thank you for your intriguing testi- mony. The subcommittee will now hear from the last panel. We'll hear first from La Petite Academy, Inc., Robert Rodriguez, executive vice president; and the National Child Care Association, Daniel F. Kingsbury, vice president, government affairs. STATEMENT OF ROBERT A. RODRIGUEZ, ED.D., EXECUTIVE VICE PRESIDENT, LA PETITE ACADEMY, INC. Mr. RODRIGUEZ. Thank you, Mr. Chairman. I am not an attorney; I am not a lobbyist-I am a child care pro- vider. I have been involved in child care as a sole proprietor; I have been involved in church-sponsored child care; and I have been for the last 9 years and continue to be executive vice president of a proprietary chain of child care centers: La Petite Academy. We have 770 child care centers currently serving over 80,000 children this afternoon. I also am a little hesitant to say I am from Missouri. [Laughter.] I am a native Missourian, and I think some of the earlier com- ments this morning, unfortunately, were in fact pretty accurate, because those of us who call ourselves Missourians have not done a good job of ensuring the safety and well-being of all children in child care in the "Show Me State." I have to make my comments brief here, so I really want to just address one particular kind of competing principle, if you will, and that is that we need to strike a balance in maximizing parental choice versus the need for public accountability in all child care settings. If we at La Petite accept children in our centers who are subsi- dized by Federal funds, we have to comply with additional require- ments, such as section 504 of the Rehabilitation Act of 1973. Likewise, if we accept children who are subsidized by State funds, we must often comply with additional requirements. We don't always like it, but we understand that this is the price we must pay for accepting taxpayer funds. We understand that if we take public funds, the Government has some minimal obligation to ensure that the money is being spent wisely. If someone wants to use their hard-earned money and purchase substandard care, unfortunately I guess that is their business. I personally think and believe that the State ought to have some minimal safeguards for all child care settings, even when they are not subsidized. However, when we are talking about a subsidized arrangement that I, as a taxpayer, am helping to support, then I want to make sure that the provider meets certain minimal State requirements. I recognize some cynics will argue that I am simply trying to drive the competition out of business, but I can assure you this is not the case. PAGENO="0230" 224 Does it irk me that in-home providers don't have to meet safety requirements? It most certainly does, but not because those chil- dren are being taken away from La Petite, but rather because I have seen the effects of no accountability. The entire field of child care gets a black eye when one of these unlicensed, unregulated child care settings, in-home or center- based-it makes no difference-gets profiled on "20/20" or "60 Minutes." Yes, probably some of the best care provided is in-home or in a family child care setting, but so is some of the worst, and the same could be said for center-based care. It represents some of the best and, unfortunately, sometimes some of the worst. I believe we should encourage States to better regulate all child care environments, in-home, center, profit, not-for-profit, and church-sponsored child care. I don't think Congress intended regis- tration to mean simply send us your name so we can send you a check. In conclusion, La Petite strongly supports maximizing parental choice, but we believe that other goals of these grant programs, namely ensuring quality child care and public accountability, should also be given proper emphasis. Thank you. [The prepared statement follows:] PAGENO="0231" 225 Testimony of Robert A. Rodriguez, Ed.D. Executive Vice President La Petite Academy, Inc. before the Subcommittee on Human Resources Committee on Ways and Means U.S. House of Representatives on The Administration's Proposed Federal Child Care Regulations September 26, 1991 Mr. Chairman and Members of the Subcommittee: My name is Robert Rodriguez. I am executive vice president of La Petite Academy, Inc., the second largest private, proprietary child care provider in the nation. La Petite has been in the child care business for over 22 years. Today we operate 770 child care centers in 33 states. Our 12,000 teachers, directors, and staff care for over 80,000 children ranging in age from a few months to 1 2 years. I have been in the child care field in one form or another for the past 22 years, as a teacher and principal, a preschool director and owner, and, now, as a corporate manager of 770 child care centers. I would like to thank the Subcommittee for allowing me to testify today on the Administration's proposed regulations to implement the Child Care and Development Block Grant (the "Block Grant"l and the Aid to Families with Dependent Children At-Risk Child Care Program. At the outset, let me say that I recognize that formulating the proposed regulations for these grant programs was not an easy task. Like many other federal programs, these grant programs are designed to achieve a number of goals, some of which are occasionally in conflict. With only a few exceptions, we believe the regulations accurately reflect the will of Congress, and adequately balance the competing goals, The proposed regulations weighed a number of competing principles: maximizing parental choice vs. State flexibility; maximizing parental choice vs. ensuring quality child care; and maximizing parental choice vs. the need for public accountability. We believe that the proposed regulations should be changed to reflect a more true balance of interests. I will take each of these competing principles one at a time. First, maximizing parental choice vs. State flexibility. Again, while we applaud the emphasis that Congress and the Administration place on parental choice, we think the proposed regulations go overboard. The States should be given the flexibility to regulate previously unregulated care settings. At a minimum, States should be allowed to establish reasonable requirements for unlicensed, unregulated child care settings without fear of running afoul of the requirement of maximizing parental choice. In its extreme, one could conceive of a situation where any requirement at all could "exclude a significant number of potential providers in a category of care," and be at odds with the proposed regulations. Second, maximizing parental choice vs. ensuring quality child care. It seems to me that if we are going to use public funds to provide child care, then we ought to make at least some minimal effort to ensure that the money is being spent in a safe and healthy environment. During the debate on federal child care legislation, my company testified strongly against federal regulations. We thought PAGENO="0232" 226 then, and we think now, that the states are in the best position to regulate child care. Center-based care is regulated in all 50 states. All 770 La Petite child care centers must comply with a multitude of regulations regarding health, safety, training, etc. And that is how it should be. As a child care provider, as a parent, and as a taxpayer, I believe that the State should have considerable flexibility in deciding what settings should be regulated. You can't have it both ways. You can't be in favor of State regulation and at the same time be in favor of mandating that a State be prohibited from regulating. The Block Grant legislation clearly explains that States are not prohibited from imposing more stringent standards and licensing or regulatory requirements on child care providers that utilize Block Grant funds [Section 658Elc)l2llElj. Furthermore, the Block Grant legislation plainly requires that the States provide assurances that there are in effect within the State, under State or local law, requirements designed to protect the health and safety of children that are applicable to child care providers utilizing Block Grant funds. The law states that these requirements shall include: the prevention of infectious diseases (including immunizationl; building and physical premises safety; and minimum health and safety training appropriate to the provider setting [Section 658Elc)(2)(Fl]. I quite frankly don't think it is enough, for example, to simply supply home care providers with information regarding applicable health and safety codes. The law states that this section is not to be construed to require the establishment of additional health and safety requirements for child care providers that are already subject to State or local requirements in the above-referenced categories. Therefore, it logically follows that this section j~ to be construed to require the establishment of ~QE~ health and safety requirements for those child care providers that are not currently subject to health and safety requirements. The third set of competing principles is maximizing parental choice vs. the need for public accountability. If we accept children in our centers who are subsidized by federal funds, we have to comply with additional requirements, such as Section 504 of the Rehabilitation Act of 1973. Likewise, if we accept children who are subsidized by state funds, we often must comply with additional requirements. We don't always like it, but we understand that that is the price we pay for accepting taxpayer funds. We understand that if we take public funds, the government has some minimal obligation to ensure that the money is being spent wisely. If someone wants to use their hard-earned money and purchase substandard care, that's their business. Again, I personally think that the state ought to have some minimal safeguards for all child care settings, even when they're not subsidized. However, when I, as a taxpayer, am paying for it, I want to make sure that the provider meets certain minimal requirements. I recognize that some cynics will argue that I am simply trying to drive the "competition" out of business, but I can assure you that is not the case. Does it irk me that in-home providers don't have to meet any safety requirements? It most certainly does -- not because they're taking kids away from La Petite, but rather because I have seen the effects of no accountability. The entire field of child care industry gets a black eye when one of these unlicensed, unregulated child care settings gets profiled on 20/20 or 60 Minutes. Yes, probably some of the best care is provided in an in-home or family child care setting. But so is some of the worst. I believe we should encourage states to better regulate all child care environments. I don't think that Congress intended "registration" to be simply "send us your name so we can send you a check." In conclusion, we strongly support maximizing parental choice, but we believe that other goals of these grant programs -- namely, ensuring Qi,i.~jjt child care and public accountability -- should also be given proper emphasis. Thank you. PAGENO="0233" 227 Acting Chairman DOWNEY. Thank you, Mr. Rodriguez. Mr. Kingsbury. STATEMENT OF DANIEL F. KINGSBURY, VICE PRESIDENT, GOV- ERNMENT RELATIONS, NATIONAL CHILD CARE ASSOCIATION Mr. KINGSBURY. Mr. Chairman and members of the committee, thank you for the opportunity to appear before you today on behalf of the National Child Care Association. My name is Daniel Kingsbury, and I am from Denver, Cob. As the author of a book on child care centers and vice president of government relations for the National Child Care Association, I have been asked to bring the concerns of this young, growing, and viable industry to your attention as they relate to the interim rule for the child care and development block grant and title TV-A. The broad spectrum of parent need, expectation, and choice has afforded this Nation its diverse child care system, of which the members of this association are a part. Thanks to the wisdom of the Congress, we can expect that this diversity will continue. We commend the Congress for its positive initiatives to provide much needed child care for low-income families, to improve the quality of child care, and to expand the delivery system for parents and families in this country. Now that major child care legislation is a reality, NCCA has turned its attention, as you have, to the interim final rule for the child care and development block grant and title TV-A. We feel that four basic principles should be addressed and kept in balance as the final rule is formulated. Those principles are, one, the parent's right to an informed choice about the child care provider for their children. Number two, the child's right to equal protection and basic safety and health in the child care learning environment. Number three, the State's right to make appropriate decisions about the overall administration of child care block grant pro- grams. And number four, the taxpayer's right for public accountability in the expenditure of public funds. In order to ensure these principles and to fulfill clear congres- sional intent in implementing the block grant and title TV-A, we propose that the following areas of the interim rule are in need of review and change. Section 98.45, registration-we strongly advocate for a clearer, more definitive criteria in section 98.45 dealing with registration. Perhaps no other section of the rule has the potential, if not care- fully formulated, to thwart one of the basic premises of the act. The rule should declare that a provider who is exempt from li- censing and providers in States where there is no licensing for cer- tain types of care must fulfill a Federal registration requirement with that State. This simplified registration procedure should ensure that all children are afforded equal protection wherever they are cared for. This process still allows for true parental choice across various categories of care without jeopardizing child health or safety. PAGENO="0234" 228 Additionally, we recommend that such registered providers should furnish tax identification numbers and/or Social Security numbers for -payment purposes. Parents must also have unlimited access to their children during normal hours of provider operation. In truth, after reading the simple procedures contained in the in- terim final rule, Registration conceivably could be reduced to simply forwarding a name, address, and bill for child care services and receiving in turn from the State a payment and a pamphlet on safety and health reminders. Something more should be required if important values and prin- ciples are to be honored, even in a subordinate way. What we are strongly recommending is that additional require- ments should actually take place, drawn from the health and safety requirements referenced in section 98.41. Concerns that these minimal requirements would cause providers to opt out of the block grant program and adversely impact parent choice are far overstated. If a provider chooses not to perform essential tasks, such as pro- vide a tax I.D. number or declare that CPR and first aid training has been undertaken or have an operating smoke detector or fire extinguisher, parents will not be adversely impacted by having a potentially poor care option ruled out. Certificates-certificates must be viewed as the principle tool to make true parent choice work and maximize the empowerment of parents with reference to a broad spectrum of child care provider options. The rule needs to be strengthened as it relates to certificates. Al- though States need flexibility in developing and administering cer- tificate programs, they also need a clearer vision of the real intent here. The five characteristics of a certificate elaborated in section 98.3 need to be viewed in the States as requirements. Child care services-concerning quality improvement activities, in section 98.5, more preeminence should be given to training, since it is widely accepted that the training of teachers contributes most to favorable outcomes in children. Language should also be added to section 98.51 that resource and referral agencies must provide unbiased referrals, reflecting the full range of child care options for parent choice. In conclusion, I wish to once again thank you for this opportuni- ty to present testimony before the subcommittee. These remarks and comments have been offered in a positive mode-and short- ened version-in the hope that they will improve the rule in areas of potential confusion or deficiency. We stand ready to work with you to improve the opportunity for positive developmental outcomes for the children we all so deeply cherish. Thank you. [The prepared statement and attachment follow:] PAGENO="0235" 229 TESTIMONY OF DANIEL F. KINGSBURY NATIONAL CHILD CARE ASSOCIATION Mr. Chairman and Members of the Caninittee: Thank you for the opportunity to appear before you today on behalf of the National Child Care Association (NCCA). My name is Daniel Kingsbury and I sin frcsi Denver, Colorado. As Vice-President of Government Relations of the National Child Care Association, I have been asked to bring the concerns of this young, growing and viable industry to your attention as they relate to the Interim Final Rule for the Child Care and Development Block Grant and Title IV-A. The National Child Care Association is an association of private child care centers and preschools. Most of the members of NCCA are tax paying small business proprietors of single center operations. NCCA was formed as a coalition of State Associations representing private child care centers and preschools. It has been estimated that the proprietary sector of the child care industry supplies sane 40% to 50% of all licensed child care delivered in the United States. As the only national association of proprietary child care providers, NCCA is uniquely situated to participate in the policy debate concerning pending federal rules on the Child Care and Development Block Grant and Title IV-A. In 1977, the US Census Bureau identified 18,300 licensed child care centers in this country. In 1985, that figure had risen to 61,079 licensed centers -- a 70% increase. And it is much higher today. This nations's child care industry currently adds $15.3 billion to gross revenue, and according to an article in the Wall Street Journal, an annual growth rate of 21% through 1995 is expected. At that time the child care industry will contribute an estimate $48 billion to our economy. Additionally, the ~nsus Bureau identified 1,060,000 child care center employees in 1984. It is well over that figure today. In 1985, 25% of working women with preschool age children used licensed child care centers, compared with 16% in 1982. The broad spectrum of parent need, expectation and choice has afforded this nation its diverse child care system of which the members of this association are a part. Thanks to the wisdom of the Congress we can expect that this diversity will continue. NCCA has always supported the need for a strong national policy on child care, one which appropriately addresses the best interests and needs of low income parents and their children. We have consistently provided leadership and example for affordable and available care that offers children the learning and development opportunities for positive outcomes in an environment of basic safety and health. NCCA commends the Congress for its positive initiatives to provide much needed child care for low income families, to improve the quality of child care and to expand the delivery system for parents and families in this country. Now that major child care legislation is a reality, NCCA has turned its attention, as you have, to the Interim Final Rule for the Child Care and Development Block Grant and Title IV-A. At the outset, I weuld like to express NCCA' s complete and enthusiastic endorsement of the overriding principle of informed parent choice enunciated throughout the Interim Final Rule. We strongly support the affirmations about parental choice in Section 98.30 (g), and urge the retention and guiding use of the "parent choice or effects test" contained therein. The full range of PAGENO="0236" 230 child care options must be available to parents. Federal, State and local rules, requirements, procedures, and policies must not have the effect, either explicitly or operationally, of causing restrictions in the range of child care options. Hence, ~e support the strong affirmation in the explanatory preamble: "Any Grantee rules or requirements for the purposes of providing child care under the Block Grant which causes a reduction in the availability of care would be contrary to Congressional intent" (page 26203). We feel that four basic principles should be addressed and kept in balance as the Final Rule is formulated. Those principles are: 1.) The parent's right to an informed choice about the child care provider for their children 2.) The child's right to equal protection in basic safety and health in the child care learning environment 3.) The right of the State to make appropriate decisions about the overall administration of Chiid Care Block Grant programs and 4.) The right of the taxpayer for public accountability in the expenditure of public funds. In order to ensure these principles and to fulfill clear Congressional intent in implementing the O21~G and Title IV-A, wo propose that the follcMing areas of the Interim Final Rule are in need of review and change. I. Section 98.45 -- REGISTRATION NCC1~ has been a consistent advocate for the formation of licensing requirements and the enforcement of those requirements on a state level. We believe this procedure to be appropriate, more effective in dealing with regional differences, and most responsive to the input and needs of parents and providers. The Congress has gratefully supported this position as well. H~ever, of equivalent importance to this Association is equal enforcement of minimum health and safety standards and protection for all children. The Interim Final Rule neglects the intent of the Act to establish, monitor and enforce minimum requirements for all children in out of home care, whether that child be in a child care center with 100 children, in a fanily day care home with 6 children or cared for by a non-related individual. NCCA has seen the benefit of licensure and monitoring in improving quality in the Nation's child care community. We strongly advocate for a clearer, more definite criteria in Section 98.45 dealing with Registration. Perhaps no other section of the Rule has the potential, if not carefully formulated, to thwart one of the basic premises of the Act. Parents and the public in general have the right to be assured that their children will receive equal protection wherever they are cared for, that they will not be subjected to adverse conditions and that the parents will be further empoc~red ty making informed choices. The Rule should declare that a provider who is exempt from licensing, and providers in states where there is no licensing for certain types of care, must fulfill a Federal registration requirement with the state. This simplified registration procedure should ensure that all children are afforded equal protection wherever they are cared for. The Grantee should not only provide assurances to the Secretary that there are requirements already in place ("on the books") to protect the basic health and safety of children, but also that all providers participating in this Federal funding are observing aed fulfilling the requirements. According to Section 98.41, all participating providers are: 1) taking appropriate measures to prevent and control infectious diseases (including immunization checks); 2) maintaining safe buildings and physical premises; 3) receiving minimal health and eafety training PAGENO="0237" 231 appropriate to their setting even if this simply means First Aid and/or CPR. This process still allows for true parental choice across various categories of care without jeopardizing child health or safety. Additionally, we recommend that such "registered" providers should furnish tax identification numbers and/or social security numbers for payment purposes. If their status is of a tax exempt, non-profit nature, their non-profit declaration documents should be furnished. These providers should also declare their voluntary willingness to admit authorized persons of the State or local Health, Building, Fire, and Safety Departments to inspect their facility or home. Parents must also have unlimited access to their children during normal hours of provider operation (Section 98.31). In truth, after reading the simple procedures contained in the Interim Final Rule, "~94~ration" conceivably could be reduced to simply forwarding a name, address and bill for child care services, and receiving in return from the State a payment anda pamphlet on safety and health reminders. Something more should be required if important values and principles are to be honored even in a subordinate way. Parents need information in order to make an informed choice, even if this is a simple statement that the provider they are considering is not subject to State or local licensing, regulation and monitoring by trained and paid inspectors. In addition, the rights of children for equal protection in a safe and healthy care environment that will optimize their positive developsent, the public interest of the State and taxpayers in ensuring that basic safety and health issues are addressed adequately, and that public funds are being spent in an accountable manner all must be promoted. What we are strongly recommending is that additional requirements should actually take place drawn from the health and safety requirements referenced in Section 98.41. Thus, the Grantee should not only provide assurances that basic health and safety ordinances have been enacted by the State, but also that the providers are observing these. Concerns that these minimal requirements would cause providers to opt out of the Block Grant program and adversely impact parent choice are overstated. If a provider chooses not to do essential tasks such as provide a tax identification number, declare that CPR/'First Aid training has been undertaken, or have an operating snoke detector and fire extinguisher, etc., parents will not be adversely impacted by having a potentially poor care option ruled out. ii. Section 98.30 (c) -- CERTIFICATES Certificates must be viewed as the principal tool to make true parent choice wark and maximize the empowerment of parents with reference to a broad spectrum of child care provider options. We strongly recommend that all references to certificates in the Rule should stress the element of handing over of someth~ (a document; voucher; restricted redeemable coupon) with a dollar value directly to parents, who in turn use it in making an independent and individual choice about a provider of care for their children. This is to delineate it clearly from a contract, minimize direct State/provider relationships, preserve the free and independent choice of the parent, and avoid any constitutional issues. The Rule needs to be strengthened as it relates to certificates. Although States need flexibility in developing and administering certificate programs, they also need a clearer vision of the real intent here. The five characteristics of a certificate elaborated in Section 98.30 Cc) (1-5), (d) and (e) need to be viewed in the States as requirements. They are as follows: PAGENO="0238" 232 It is issued directly to the parent, and is assistance to the parent. It must be of a value commensurate with the subsidy value of child care services by contract or grant. It may be used for child care services provided by a sectarian organization or agency if those services are chosen by the parent. It may be used by providers for any sectarian purpose or activity. It must be available for parent use no later than October 1, 1992 and must remain available to the parent throughout the program year, i.e., it must be a true option for parents. On the one hand, the Administration for Children and Families wants to leave implementation details to the discretion of the States. But on the other hand, this is a new Block Grant program requiring a greater level of Federal monitoring and involvement than other consolidated block grants and as such the Rule itself should express sufficient direction to make the certificates a true avenue of parent choice and a timely, viable means for purchasing child care services. III. Section 98.50 -- CHILD CPRE SERVICES Overall, we are pleased with the Interim Final Rule's accurate interpretation of the Conference Report's clear intention that a p~e~ponderance of the 75% set-aside of total Block Grant funds be used for child care services, with a minimal amount spent on other activities and administration. Concerning quality improvement activities in Section 98.50 (a)(2) and 98.51 (b)(2), more preeminence should be given to training since it is widely accepted that the training of teachers contributes most to favorable outcomes in children. Language should also be added to Section 98.51 (b) (2) (i) th~E~source and Referral agencies must p~vide unbiased referrals reflecting the full range of child care options for parent choice. IV. Section 98.53 -- SUPPLE24ENTATION The OCtB~ Act is quite explicit in requiring that supplementation, not supplantation, take place with reference to the amount of expenditures for existing child care and related services at all levels within the State and the need for "supplement language" is expressly required by the Conference Report (page 924). We recoeunend deleting Section 98.53 (b) (3) and substituting language establishing a reasonable requirement that each Grantee declare in its Block Grant Plan what each existing Federal, State, and local publicly funded child care and related program is including the administrative cost as indicated in Section 98.52. A dollar value then should be assigned to each in determining the initial base period. Express language should be added that this declaration is subject to audit, review, monitoring and appropriate penalties, and that this is an item to be included in the annual report to the Secretary of HHS. In (b)(3), the existing services are defined as "those services and programs which are included by the Grantee for funding under its Block Grant Plan". By limiting what must be declared under the initial base period only to thooe pregi~arn~ fOr PAGENO="0239" 233 which funding actually is being sought in the State Plan, it beccines possible for a State to omit other current child care and related expenditures, and then later, to cut back those expenditures. This would cause an unallowable supplantation of needed child care services. V. "SEAMLESS SERVICE" It must be noted that mixing a variety of subsidized child care services with overlapping eligibility criteria may adversely impact other programs. A current example of this is the existing requirement for proprietary child care centers to participate in the USDA Child Care Food Program, 25% of the children must be funded by the Title XX Block Grant Program. With the recent enactment of additional child subsidy programs under Title P1-A and the Child Care and Developelent Block Grant, children may very well not be funded through Title XX. The result is that centers and their otherwise eligible children no longer attain the 25% threshold qualifying them for much needed nutrition programs. Careful review needs to be applied here and elsewhere so as to avoid conflict between programs. In conclusion, I wish, to once again thank you for this opportunity to present testimony before the Subcamsittee on Human Resource, Committee on Ways and Means, U.S. House of Representatives. These remarks and cosments have been offered in a positive mode in the hope that they will improve the Rule in areas of potential confusion or deficiency. We stand ready to work with you to improve the opportunity for positive developsental outcomes for the children we so deeply cherish. Attached please find a complete copy of the National thild Care Association's coirments on tbe Interim Final Rule for the Child Care and Development Block Grant as communicated to the Administration for Children arri Families on August 2, 1991. PAGENO="0240" 234 NATIONAL CHILD CARI~ ASSOCIATION August 2, 1991 ADMINISTRATWE OFFICE: Lynn L White Mr. Mark Ragan Executive Oireoor Child Care Task Force 1029 Railroad Street Administration for Children and Families Conyers (Atlarla), GA 30207 370 L `Enf ant Promenade, S . W., Fifth Floor 1-800-5437161 Washington, D.C. 20447 Dear Mr. Ragan: The National Child Care Associgtion (NCCA), which represents the interests and con~~a--of proprietary or for-profit child care centers nationwide, is pleased to offer these comments on the Interim Final Rule on the Child Care and Development Block grant (CCDBG) which appeared in 56 FR (June 6, 1991). As you know, the proprietary centers comprise the largest part of center-based child care in the country-~55% of all licensed private centers. 1 NCCA has always supported the need for a st!rong national policy on child care, one which appropriately addresses the best interests and needs of low income parents and their children. We have consistently provided leadership and example for affordable and available care that offer children the learning and development opportunities for positive outcomes in an environment of basic safety and health. We commend you and the ACF for the development of such fine rules and guidelines interpreting and implementing the CCDBG part of the national child care legislation enacted last November. We realize that this new Block Grant was the result of some compromises between conflicting points of view on public policy objectives. Like yourselves, we are primarily concerned with outcomes, especially positive developmental outcomes, and opportunities for children. In achieving those purposes, we feel that four basic values or principles should be addressed and kept in balance: 1) the parent's right to an informed choice about the provider of care for their children; 2) the child's right to equal protection in basic safety and health in the learning environment; PAGENO="0241" 235 3) the right of the State to make appropriate decisions about the overall administration of child care Block Grant programs; and 4) the right of the taxpayers for public accountability in the expenditure of public funds. At the outset of these coimnents, we would like to express our complete and enthusiastic endorsement of the overriding principle of informed parent choice enunciated throughout the Interim Final Rule. We strongly support the affirmations about parental choice in S98.30 (g), and urge the retention and guiding use of the "parent choice or effects test" contained therein. The full range of child care options must be available to parents. Federal, State and local rules, requirements, procedures and policies must not have the effect, either explicitly or operationally, of causing restrictions in the range of child care options. Hence, we support the strong affirmation in the explanatory preamble: "Any Grantee rules or requirements for the purposes of providing child care under the Block Grant which causes a reduction in the availability of care would be contrary to Congressional intent. "(p. 26203) Thus, we urge that there be a fair competitive market whereby all providers are treated equally, especially in the area of public accountability of regulation and appropriate supervision and thus remain viable options for parental choice. In order to ensure this and fulfill clear Congressional intent in implementing the CCDBG, we propose the following areas where improvements need to be made in the Interim Final Rule. I. .45 - REGISTRATION We propose that the concept and procedure known as "registration' be treated more clearly. The Rule should declare in (a) that whenever the State (Grantee) exempts a category or type of provider from licensing and regulation (which oftentimes includes periodic monitoring by trained and paid public officials) g~ registration, in order to participate in the Block Grant program and prior to payment, the provider must fulfill a Federal registration reouireinent with the State. Under (b), this simplified registration procedure should ensure that all children are afforded equal protection wherever they are cared for. The Grantee should not only provide assurances to the Secretary that there are requirements ~iready in place ("on the books") to protect the basic health and safety of children, but also that ~ providers participating in Block Grant funding are observing/fulfilling~ requirements. Thus, according to §98.41, ~jJ. participating providers 1) are taking appropriate measures to prevent and control infectious diseases (including immunization checks); 2) are maintaining safe buildings and physical premises (e.g., through compliance with local building and fire codes, that they have operable smoke detectors and fire extinguishers on the premises, etc.); and 3) have received minimum health and safety training PAGENO="0242" 236 appropriate to their setting or type of operation (e.g., the providers have certified that they have taken CPR and first aid courses). Additionally, we recommend that such "registered" providers should furnish tax identification numbers, or if they are non-profit or tax-exempt, their non-profit status declaration documents. We also recommend they declare their voluntary willingness to admit authorized agents of the State/local health, building, fire and safety departments to inspect/monitor their facility or home, and that parents have unlimited access to their children during normal hours of provider operation (S98.3l). Finally, appropriate references to these requirements should be added wherever `registration' is discussed in the Rule (S98 .2 (x), §98.15 (i,j,k), §98.16 (a)(lO)). RP~TIONALE: Perhaps no other section of the Rule has the potential, if not carefully formulated, to thwart one of the basic premises of the Act and implementing Rule. Parents (and the public in general) have the right to be assured that their children will receive equal protection wherever they are cared for, that they will not be subjected to adverse situations and that the parents will be further empowered by making informed choices. This Section interprets, augments and implements Sec. 658E (c)(2)(E) of the CCDBG Act. In formulating the Rule concerning "registration" of those providers who are exempt under State and local law from any form of licensing, regulation or registration, it is important that the Department (ACF) carefully balance four principles, implicitly or explicitly contained in the Act and accompanying Conference Report (p. 924), namely: 1) that parents have a right to an informed choice about the provider for their children; 2) that their children have a right to equal protection with emphasis on basic safety and health; 3) that the State has an obligation to administer and implement the Block Grant program in the most effective and efficient manner; and 4) that there must be public accountability for the expenditure of Federal funds. Thus, in considering the Rule concerning "registration", it is important that this be read and reviewed in tandem with the Rules covering Sectarian organizations or Sectarian child care providers and their activities and purposes (998.2 (ii,jj); S98.30 (c)(3,4) (f), S98.46-.47); the rights and responsibilities of parents, especially regarding consumer education (998.30, .33, .34; §98.15 (g)(h)); and requirements about basic health and safety (998.41; §98.15 (i,j,j,k); and 998.16 (a)(lO)). It is important to consider the current State context of regulation and licensing. According to the Children's Defense Fund [Who Knows How Safe? The Status of State Efforts To Ensure Quality Child ~, Washington, D.C., 1990], the following are the current characteristics of: PAGENO="0243" 237 CENTER-BASED CARE * Sectarian/Religious Centers are fully exempt in 4 States and partially exempt in another 10 States; * Public School-Based Centers are fully exempt in 25 States and partially exempt in an additional 10 States; * `Drop-In' or "Short-Term" Centers are almost fully exempt; and * Centers/Programs Operating in Adult Recreational Facilities are fully exempt in 28 States, while another 21 States exempt them under certain conditions. - FAMILY CHILD CARE CENTERS OR HOMES * 36 States exempt homes caring for 3 or fewer unrelated children; * 22 States exempt homes caring for 5 or fewer unrelated children. (There is strong indication that even if licensing or registration is required, many providers are not regularly and consistently monitored.) All of the above according to the Federal CCDBG Rule must "register" with the State prior to receiving payment for child care services, even after they have been chosen by parents to provide care. (Please note that neighbors/friends providing care in their own homes or the children's homes are also exempt from State regulation and registration; only grandparents, aunts and adult- age aunts and uncles are expressly exempt from health and safety requirements under the Act). In truth after reading the simple procedures contained in the Interim Final Rule, "registration" conceivably could be reduced to simply forwarding a name, address and bill for child care services, and receiving in return from the State a payment together with a pamphlet on safety and health reminders. Something more should be required if the other values/principles are to be honored even in a subordinate way. Parents need information in order to make an informed choice, even if this is a simple declaration that the provider they are considering is not subject to State or local licensing, regulation and monitoring by trained and paid inspectors. In addition, the rights of children for equal protection in a safe and healthy care environment that will optimize their positive development, the public interest of the State and taxpayers in ensuring that basic safety and health issues are addressed adequately, and that public funds are being spent in an accountable manner, all must be promoted. The explanation in the Preamble of the Interim Final Rule that State registration requirements are not a subset of overall licensing and regulation procedures does not seem to be accurate. PAGENO="0244" 238 In §98.40 (a)(l), the reference to registration means that which a provider must do under current State law when not required to be licensed or regulated (i.e., apart from any consideration of this Block Grant). This is borne out by the Definition Section (S98.2 (x)): "Licensing or regulatory requirements means requirements necessary for a provider to legally provide child care services in a State or locality, including registration requirements established under State, local or tribal law other than those required pursuant to S98.45." In 598.40 (a)(2) a different situation is envisioned. When the provider is exempt under State law from licensing, regulation and registration, the Federal government requires those providers participating in the Block Grant program to register with the State. Therefore, it is that which a provider must do under the new Federal CCDBG when no such requirement currently exists under State law. In §98.45, the Federally required registration procedure is further defined or described. First, in (a), consistent with the Assurance Section (S98.l5 (h,i)), the Grantee has to assure the Department of BBS that providers who are exempt from State mandated licensing and regulation, and no State registration is required, will follow the new Federal requirement of registering with the State prior to receiving payment under the BG program. In §98.45 (b), the Grantee's Federally mandated registration procedures are further described as 1) facilitating appropriate and prompt payment, 2) permitting the Grantee to furnish certain information to the provider on the availability of health and safety training, etc. and 3) comprising a simple, timely process through which the Grantee authorizes the provider to receive payment for providing child care services. What we are strongly recommending is that additional requirements should actually take place, drawn from the health and safety requirements referenced in §98.41. Thus, the Grantee should not only provide assurances that basic health and safety ordinances have been enacted by the State, but also that the providers are observing these. Because S98.41 (f) makes it incumbent upon the Grantee to assure that compliance procedures are in effect, additional health and safety requirements would not seem too burdensome for the provider. Concerns that these minimal requirements would cause providers to opt out of the BG program and impact adversely parent choice safeguards (S98.4l (b) and §98.3 (g)), are overstated. If a provider chooses not to do essential tasks (e.g., provide a tax identification number, declare that CPR/First Aid training has been undertaken, have an operating smoke detector and fire extinguisher, etc.), parents will not be adversely impacted by having a potentially poor option ruled out. PAGENO="0245" 239 In this way, the proper balance can be maintained between the four principles enunciated above, in the best interests of all concerned, especially children and parents. II. §98.2 (1~; §98.30 (c) - CERTIFICATES We strongly recommend that all references to certificates in the Rule should stress the element of handing over of something (a document; voucher; restricted redeemable coupon) with a dollar value directly to parents, who in turn use it in making an independent and individual choice about a provider of care for their children. This is to delineate it clearly from a contract, minimize direct State provider relationships, preserve the free and independent choice of the parent, and avoid any constitutional issues. States should have certificate programs operational as soon as possible, but no later than October 1, 1992, and these should remain available for parent use throughout the program year. RATIONALE: Certificates are the principal tool to make true parent choice work, and maximize the empowerment of parents with reference to a broad spectrum of child care provider options. Sec. 658P of the CCDBG Act defines child care certificates as `a certificate (that may be a check or other disbursement) that is issued by a State or local government. . .directly to a parent who may use such certificates only as payment for child care services." According to §98.2 (j) certificates are not to be considered grants or contracts, and thus, may be used for sectarian child care services, among several options, if freely chosen by parents. Because (j) clearly affirms that a child care certificate is assistance to the parent, not assistance to the provider, "a child care provider that receives assistance" (k) is not to be equated with a parent who uses a certificate. §9J.30 (c)(1-5),(d')(e) elaborates five characteristics of a certificate: * it is issued directly to the parent, and is assistance to the parent; * it must be of a value commensurate with the subsidy value of child care services by contract or grant; * it may be used for child care services provided by a sectarian organization or agency, including those that engage in religious activities, if those services are chosen by the parent; * it may be used by providers (even if they themselves are not sectarian organizations) for any sectarian purpose or activity, including sectarian worship or instruction; and PAGENO="0246" 240 * it must be available for parent use no later than October 1, 1992 and must remain available to the parent throughout the program year, i.e., it must be a true option for parents. According to the National Governors' Association (Taking Care: State Developments in Child Care, Washington, D.C., pp. 9-10), as of the time of their 1989 State survey, ten states have "PROVIDER AGREEMENTS' in operation, described as "open-ended arrangements between the state and provider stipulating that if a subsidy- eligible family requests service, the provider will serve that family for a predetermined fee (on a space available basis)." In some of these ten states, this program is not statewide, and 23 other states have a mix of direct contracts and provider agreements. Eased on this description, it must be questioned whether those provider agreements truly meet the description of a child care certificate as described in the Rule. They appear to be more of a contract between State and provider that is triggered or activated by parent choice. One of the acknowledged best examples of a system currently operating is that of the State of Arkansas. After a parent has been given information about the program, he/she fills out an application that describes their eligibility and indicates the provider of their choice. A voucher is prepared by the State and sent directly to the provider. Both the parent and provider countersign the voucher, which is paid monthly. Two obstacles must be foreseen and avoided if certificates are to provide parents with the full discretion in selecting the provider of their choice. Parents must be made aware through an appropriate public awareness campaign (Bg~ than just S98.33's Consumer Education) that they have a right to a certificate, how certificates work, and that certificates may be used with providers who are not yet eligible, but may become eligible (even with other BG funds to assist them in meeting standards) prior to the time of their payment. Provider payments must be timely and speedy so that providers will opt to be part of a certificate program. Since most providers are either individuals or small businesses, they will not long survive if made to wait an extended period of time for State payment; therefore, parent options may be diminished. On the one hand, the ACF rightly wants to leave implementation details to the discretion of the States, but on the other hand, the Rule itself (since this is a new BG program requiring a greater level of Federal monitoring and involvement than other consolidated block grants) should express sufficient direction to make the certificates a true expression of parent choice and a timely, viable means for purchasing child care services. PAGENO="0247" 241 Although the final operational date for implementation of a certificate mode of payment is October 1, 1992, States should be encouraged to implement one ~jg~ to that date. Costs for establishing a certificate program are allowable administrative expenses (598.52 (iii)). It shou.d be insufficient for a State Plan to provide assurances that a certificate program will be implemented (598.15 (b)(2)) without expressly assigning costs during Federal FY `91-' 92 for that purpose. III. S98.50 - CHILD CARE SERVICES and §98.51 - ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE AND TO INCREASE THE AVAILABILITY OF EARLY CHILDHOOD DEVELOPMENT PROGRAMS AND BEFORE-AND-AFTER SCHOOL CARE SERVICES 1) Several initial observations are in order. First, the types of service provided in each of these sections are substantially identical. We are dealing here basically with child care services for children from infancy to Kindergarten age, and before and after school care (or so-called School Age Child Care) for children in K through approximately the fifth or sixth grade (up to their 13th birthday). Secondly, the quality improvement activities envisioned under both proposed Sections are substantially the same. 2) For clarity, we recommend that a new provision §98.50 (b)J~1 be added expressly to state that these child care services may be provided through all types and categories of providers and may include before and after school programs. The Definition Section (598.2 (1)) also should make reference to before and after school services. RATIONALE: Since many sectarian providers also provide before and after school programs for eligible children (frequently those attending their regular elementary school program), which may or may not include religious instruction or activities, it should be clarified that these programs are eligible for funding under §98.50 through certificates (and/or grants and contracts where no religious activities are involved). 3) Under S98.5l (e), there is a problem arising from the wording of the Act and Interim Final Rule that requires clarification. To have year-round "before and after school" is difficult since most locales have an extended summer holiday period of several months. Did Congress intend that such programs effectively would become day-long programs when schools were closed for summer vacation? It would be clearer to present the definition in terms of normal school hours with child care PAGENO="0248" 242 provided (or available) for ages infant to 13 during vacations and holidays. 4) Overall, we are extremely pleased with the Interim Final Rule's accurate interpretation of the Conference Report's clear i~itention that a preponderance of the 75% set-aside of total Block Grant funds be used for child care services, with a pipipal amount ("the least possible") spent on other quality improvement activities and all administrative costs (598.50 (a)(2) and (c)(2)), i.e., on "all other non-service expenditures". The 90%/lO% distribution (with a to-be- justified but permissible 5% increase for start-up administrative costs, including developing a certificate program, during the first two years) meets the intent of the Act well, and should ensure cost-effective, timely administration. Should other support services be performed, such as counseling, these should be funded from FSA and other Federal/State sources. 5) Concerning quality improvement activities (S98.50 (a)(2) and §98.51 (b)(2)), more preeminence should be given to training since it is widely accepted that the training of teachers contributes most to favorable outcomes in children. Language also should be added to §98.51 (b)(2)(i) that Resource and Referral agencies must provide unbiased referrals reflecting the full range of child care options for parent choice. IV. 99~52 - ADMINISTRATIVE ACTIVITIES The Grantee in its annual application (998.13 (b)) has to provide an aggregate estimate of administrative costs, including, but not limited to, those described in §98.52 (b)(l-6) that are incurred on all Block Grant funded levels (including subgrantees). The language in the explanatory preamble should be incorporated into the Rule (under §98.52 (b)), namely,"... ~p~stimate represent~pg iheaggregate of costs associated with administrative activities, including the costs of all agencies involved in the administration and isplementation of the program, at both the State and local ievel." It should be added, in order to achieve the purpose of the Act and public accountability: ~This estimate will be sublect to I,h~~compliance process." RATIONALE: These emphases seem to safeguard the clear intent of the Act and Conference report that using more than a minimum amount for administrative costs (also under §98.51) would limit the program from achieving its stated purpose__increasing the availability of quality child care service options for parents. PAGENO="0249" 243 Moreover, there is no reason that the aggregate administrative costs, or even their specific detail, should not be part of the oversight and compliance review, and should be expressly addressed in the annual audit and Report to the Secretary. (598.64, .65, §98.70, .71). V. §98.53 - SUPPLEMENTATION We recommend deleting §98.53 (b)~3I and substituting language establishing a reasonable requirement that each Grantee declare in its Block Grant Plan what each existing (currently operatingi Federal, State and local publicly funded child care and related program is (including its administrative cost as indicated in §98.52). A dollar value then should be assigned to each in determining the initial base period. This declaration should not be limited to those kinds of programs which in whole or in part are being proposed for new Block Grant funding under the State Plan. Also, express language should be added that this declaration is subject to audit, review, monitoring and appropriate penalties, and that this is an item to be included in the annual report to the Secretary of ENS. RATIONALE: The CCDBG Act is quite explicit in requiring that supplementation, not supplantation, take place with reference to the amount of expenditures for existing child care and related services at all levels within the State (Sec. 658E (c)(2)(J)), and the need for "supplement language" is expressly required by the Conference Report (p. 924). The Interim Final Report, however, provides a rather restrictive definition in §98.53 (b)(3) about what Federal, State and local expenditures must be included in establishing the initial base period. According to §98.53 (a), the Grantee must provide assurance "that funds received under the Block Grant will be used only to supplement, not supplant, the amount of Federal, State and local funds during an initial base period" and that "the amount of funding for such services from these other sources is maintained at least at the level of effort established for the base period" (S98.52 (b)). In (b)(3), the existing services are defined as "those services and programs which are included by the Grantee for funding under its Block Grant Plan". By limiting what must be declared under the initial base period expenditures only to those programs for which funding actually is being sought under the State PJ~sn, it becomes possible for a State to omit other current child care and related program expenditures, and then later, to cut-back those expenditures, thereby causing an unallowable supplantation or diminution of needed child care services. PAGENO="0250" 244 For example, a State or County currently nay be funding Program X to provide care for a certain class of children with State or local funds. If the State Block Grant Plan does not express an intention to provide funding or services for that kind of program, it would not be held to include those current costs in declaring its initial base period aggregate, and then, could cut back that spending or eliminate the program (or even attempt to fund it later using only BG funds), or if some of those children qualified on other grounds for BG funding they, then, could be put on the BG rolls and it would appear that additional children were being served. Both the stated purpose and language of the Act would seam to Preclude circumscribing "the amount of Federal, State and local funds otherwise expended for the support of child care services and related programs in the State" to include gj~j,~ those services and programs "included by the Grantee for funding under its Block Grant Plan", when the initial base period funding is determined. More~ver, since it is such an important statutory principle that Block Grant funds provide additional or enhanced services, the difficulty of effort we propose in accomplishing this initial base period determination is well warranted. The Grantees should be held reasonably accountable for these figures or estimates, and these figures should be subject to audit and close monitoring review. As the explanatory section accompanying the Interim Final Rule states; "Given Congress' strong interest in expanding services and not displacing existing Federal, State and local funding for services, these expenditures will be closely monitored and reviewed as a basis for continued Block Grant funding" (p. 26211). In addition, "evidence of inappropriate intentional cost shifting of existing programs to Block Grant funds will result in reevaluation of continued eligibility for Block Grant funds" (P. 26212). To assure this, the actual expenditures of the BG related to the initial (and subsequent) baseline periods should be subject to the annual audit (required under §98.65), and if failures are found, the Grantee should be subject to the penalties described in §98.92, and information about actual expenditures compared to the base period should be added as a specific information item to the annual report to the Secretary of ~B!S requirement (S98.70 and .71). The language of all these sections should be amended to reflect these specific requirements. VI. "SEAIILESS SERVICE" There are several references to the objective of providing "seamless service" contained in the explanatory preamble (pp. 26197; 26200), BUT NOT IN THE TEXT OF THE Interim Final Rule itself. S9LJ2 (~j does call for a certain effort at program coordination at various levels. "Providing a fabric of seamless PAGENO="0251" 245 service' appears to be very complex and a goal to be pursued. The description given is somewhat vague and subject to various interpretations. On the one hand, it could be interpreted as indirectly providing a sort of monopoly of ongoing service for a single provider, and thereby impact through confusion the more important, overriding principle of parent choice. Consider, for example, the desirability of a situation whereby the infant child of a teenage mother was originally cared for in a public school setting, and figuratively, moved up the hall in the ensuing years to a toddler room, to a pre-K room and on into Kindergarten within the same formal public school setting. In addition, because various Federal child care subsidy programs were enacted at different times, each with their own statutory and regulatory requirements, it may not be easy to modify those rules and procedures, even with the best intentions (e.g., establish common definitions, payment rates, etc.). On the other hand, if there was one State agency determining the eligibility of children, qualifying the providers, disbursing the funds, and providing adequate information for parents to make an informed choice about provider options, the concept has merit. What should be made quite clear, however, is that such efforts are not invitations to establish new infrastructures, bureaucracies and incur new construction or rent costs without falling under the clear administrative caps of the CCDBG. If other services, such as counseling are desired, these should be funded from other sources than the Block Grant. One point, however, should be clarified--such a concept should not serve as the basis for a widespread public policy push towards establishing "family resource centers" on the premises of public schools, a key thrust of the still to be proven beneficial "School of the 21st Century" movement, which oftentimes is a mask for establishing an impregnable control of educational services at all levels in the public schools. Finally, it should be noted that mixing a variety of subsidized child care services with overlapping eligibility criteria may adversely impact other programs. A current example of this is the existing requirement, only applicable in proprietary or for-profit centers, where to qualify for the USDA Child Care Food Program, 25% of the children must be funded only by the Title XX Block Grant program. With the recent enactment of additional child subsidy programs under Title IV A of the Family Support Act, children have been moved from Title XX to Title IV A programs, causing centers and their otherwise eligible children to no longer attain the 25% threshold qualifying them for much needed nutrition programs. PAGENO="0252" 246 VII. ~98.2 (ii)(1i~ - DEFINITIONS - SECTARIAN ORGANIZATIONS OR SECTARIAN CHILD CARE PROVIDERS: SECTARIAN PURPOSES AND ACTIVITIES We recommend that a less open-ended, amorphous description of a sectarian organization or provider be utilized. Because of the constitutional sensitivities associated with the definition and activities of such organizations, and the important relationship specifically with child care certificates, perhaps it would be better to employ language similar to that used in the recent Final Rule of the U.S. Department of Justice regarding the Americans With Disabilities Act (Cf. U.S. Dept. of Justice, 28 CF Part 35: "Final Rule on Discrimination on the Basis of Disability by Public Accommodations and In Commercial Facilities", SGFR (7/26/91), Preamble, p. 35554, Sec. 36.102) namely, "a religious organization or entity controlled by a religious organization, including a place of worship." This would establish a factual test-- "whether the church or other religious organization controls the operations (even through a lay board) or of the service, or whether the school or service is itself a religious organization". Coupled with this should be the determination by the IRS or State that the organization is tax-exempt or non-profit under Sec. 501 (c)(3) of the IRS Code. RATIONALE: The definition provided in the Interim Final Rule could be construed that an organization (or individual) could ~ declare that because it engages in religious activity or conduct, or seeks to maintain a religious identity in some or all of its functions, that it is a sectarian organization or child care provider. This, in turn, would trigger certain prerogatives and exemptions available under the Act--the limited exemption from certain antidiscriminatory prohibitions in employment and enrollment, as well as other exemptions potentially favoring its marketing activities, e.g., exemption from Federal and State taxes, exemption from property taxes, the ability to use public service announcements, etc. To assure public accountability, it is important that the sectarian entity receive a declaration of non-profit or tax-exempt status from the Federal Government or State. Moreover, the definition itself is interreligjously insensitive since it references non-affiliation with a church or synagogue, which applies mainly to Christians and Jews, but would not apply to Eastern religions, Muslims, Buddhists., Unitarians, Mormons, 7th Day Adventists, etc. According to the IRS, every church is a religious organization, but not every religious organization is a church. PAGENO="0253" 247 Moreover, the concern of the definition in the Interim Final Rule that "there is no requirement that a sectarian organization or provider be managed by clergy, or have any particular degree of religious management, control or content" seems too open-ended and would not admit the factual test contained in the Justice Department's ADA Final Rule, whether the church or other religious organization controls the operations of service. Presumably, it might be best to utilize the traditional definition or understanding drawn from judicial decisions about pervasively sectarian organizations. Because of traditional Church/State limitations and the express preference for the use of certificates which are not direct assistance to the provider, this is not the place to forge new and wider definitions of sectarian organizations. Regarding "Sectarian Purposes and Activities", this seems to be a question of quantity, emphasis or context. For example, certain activities already may be permissible under the Constitution, e.g., the so-called "objective study about religion" whereby religious themes are considered in their cultural context, or the religious content of literature, songs, art, poems, holidays, etc., is studied or explained. VIII. S98.3 - EFFECT ON STATE LAW We strongly support this provision whereby sectarian organizations or institutions will be able to expend Federal Block Grant funds and will be able to segregate State and Federal funds. As the explanatory preamble notes, Federal Block Grant funds also can be utilized, within appropriate spending limitations, for administrative purposes. IX. S98.46-.47 - NONDISCRIMINATION IN ENROLLMENT AND EMPLOYMENT ON THE BASIS OF RELIGION Although the explanatory preamble declares that the CCDBG is new legislation with limited legislative history (p. 26196), it is hard to see how the Senate Committee Report, Congressional debate during June, 1989 and the final text of S.5 could not at least provide some guidance in the interpretation of these Sections. In addition, it may be a little overreaching and hard to enforce the stipulation about religious organizations requiring that employees adhere to the rules of the organization forbidding drug and alcohol use both on and of f the lob, as the preamble states (p. 26209). PAGENO="0254" 248 X. S9L. 11 - ADMINISTRATION UNDER CONTRACTS AND AGREEMENTS We recommend that the restrictive phrase "Which are in effect. on ~st.atewide basis" be deleted from ~98J.l (b)~j. RATIONALE: The overall coordinating responsibility of the Lead Agency must be sustained even when it contractually shares responsibilities for program implementation and operation with other agencies. it is quite important that it establish the parameters for the program, namely, policies, all rules and regulations governing program administration, types of services and activities, etc. Therefore, it is logical to expect that this ultimate responsibility would cover all aspects of the Block Grant program, and not merely affect qu~y those parts of the program that are in effect statewide. "Overall" should not be subject to unnecessary limitations. It should be noted also that the explanatory preamble does not indicate any such limitation (p. 26199; S98.ll (2)). XI. OTHER POINTS FOR CONSIDERATION 1) S9~8.13 (6~ (i,ii~, (8~, (i,ii]~ While on the one hand, it is understandable that broad estimates may suffice for initial budget declarations, it should be noted with reference to administrative costs, that S9Q~ is quite explicit in enumerating the detail of costs to be included in administrative costs. Given these specifics, it is not unreasonable for the Rule to request accuracy,-. and not a general estimate. This relates also to the sum of expenditures currently being expended for child care services on the Federal, State and local levels. Because of the extensive monitoring desired by Congress, it is hard to substantiate the declaration in the explanatory preamble that budget data will not be subject to compliance review (p. 26201). Rather, it should be expressly stated in the Rule that these figures will be part of the financial reporting and audit requirements in £9~64, .65, .70 and .71. 2) £9L33~ It should be expressly stated that a function of consumer education, especially for parents, should be to foster awareness about the availability and use of child care certificates. (The assurances under S9~J~5 (gj should also declare this.) In addition, the Rule should state that such information should be made available to all parents who are ~lioiible for Block Grant services, and not merely, as the explanatory preamble states (p. 26203), to parents who are offered Block Grant services. PAGENO="0255" 249 3) §98.16 (a) (7) (iii~ and (S) (iii) is confusing. A reading of these provisions could lead to the understanding that 75% and 25% respectively of ~ funds are to be reserved for certain purposes. It would be better to state that 75% and 25% of the Block Grant total funds should be reserved. Explicit mention could be made that these reserved amounts also cover administrative costs. 4) §98.18 (b~: it should be stated that plan amendments for substantial changes should be submitted ~jg~ to the changes, will be approved/disapproved within 60 days, and can only be effected after approval. 5) §98.40 (b~ (1): It is difficult to understand the logic behind this provision which would permit more stringent licensing and standard procedures for providers who receive Block Grant funds, i.e., different from rules or other providers (and programs) especially when the desirability of more uniform standards and operations for child care and related programs have been repeated elsewhere. In addition, it is similarly hard to justify the expectation in the explanatory preamble that the ACF expects substantial variation in Grantee's programs and that these programs ng.~ be statewide (p. 26196). 6) §98.43 (b): If the general emphasis is on equal access to comparable care within the area being served for subsidized children, the Rule should stress the use of market rate payments. The market rate should be established by utilizing an independent analysis by a financial analyst, and following conmion practice, the rate should be set no less than the j~h percentile level, which is not merely 75% of the average market rate. Input in determining this should come from providers and consumer oriented groups. 7) ~98.71: In the Rule covering the content of the annual report to the Secretary of EMS, there should be a separate, explicit requirement for information concerning the status of the child care certificate program in the State, i.e. ,~ status of the implementation process; the actual participation rates by parents using them; the Block Grant funds expended; the administrative costs, etc. Given the fact that parent choice is central to the Act and certificates are the principal means of maximizing this choice, it seems warranted for greater specificity to be provided in this regard. 8) §98.83 - COMPLAINTS AND THE NEW PART 99 PROCEDURE FOR HEARINGS Because child care involves both small, needy children and providers are usually small businesses or individuals, and because the principle of parent choice rules, it would seem PAGENO="0256" 250 wise and necessary to introduce a provision in the Rule for an e~pe~ited review of and decision about a complaint. Even though the Federal machinery grinds exceedingly slow, to allow only for a process that permits the responding Grantee 60 days to respond to a complaint, and then, the Department to provide a written response within another 120 days does not seem to serve the parental and public interests well. Furthermore, under S98.43 (d) regarding payment rates, it seems somewhat arbitrary to exclude a private right of action, and limit recourse only to the complaint procedures in S98.93. The explanation in the preamble (p. 26207) is more declaratory than Supportive. These remarks and comments have been offered in a positive mode in the hope that they will improve the Rule in areas of potential confusion or deficiency. Again, we commend you for an excellent effort and stand ready to work with you to improve the opportunity for positive developmental outcomes for the children we so deeply cherish. Cordially, Gene Little, Daniel Kingsbury, President Vice President, Government Relations Dr. William J. Tobin, Lynn White, Director of Government Relations Executive Director GL/DK/WJT/LW: gh PAGENO="0257" 251 Acting Chairman DOWNEY. Thank you. Mrs. Johnson. Mrs. JOHNSON. Thank you, Mr. Chairman. Your comments, Mr. Kingsbury, about the registration requirements are very interest- ing. In the at-risk bill, that is the one way in which we do go beyond the standard in the law, which says that complying with State and local requirements is necessary. We do require that pro- viders at least give their name by registering with the State. Your comments are kind of interesting, in light of all the controversy we have had here about State and local law and who should have au- thority. But the virtue of registration is that by bringing those names for- ward, it is likely that more States will do what a State earlier testi- fied that they do, having two categories of day care. I think the im- portant thing is that the State make those decisions, rather than that we make them from Washington, because I think then you do get into this danger making so many requirements for registration that there will be no way to have your neighbor take care of your child and that access issue and the balance between those. I appreciate the thoughtful testimony. I regret that I had to miss some of it. Mr. Chairman, before the close of this hearing, I do want to per- sonally apologize to you on the record for my earlier silence. I do respect not only the quality of your leadership of this committee substantively, but your effort to deal with all of this fairly, and I respect the need you have to confer with your colleagues. I was simply overwhelmed by the frustration of not being able to get the dialog going among us that might enable us to agree on the facts so that we can then deal with some of the changes that might need to be made in the regulations, and I do regret it. Acting Chairman DOWNEY. That is very gracious of you. Thank you. The incident is completely forgotten. Mr. Grandy. Mr. GRANDY. Thank you, Mr. Chairman. I just want to reiterate something that I said this morning and ask our two panelists to comment on this. As I listened to the ongoing dispute over what the regulations said and what they meant and the varying and warring interpretations here, I have to go back to asking this ques- tion. Is it a good idea when we dole out Federal child care subsidies to subsidize six different categories of programs, all of them with varying statutory requirements? Let me go specifically to the last bill that we passed in OBRA last year, when we created the at-risk grant and the child care and development block grant. Did we perhaps make an error by creat- ing two separate categories there? Would we have been wiser to embrace the concept that perhaps we should provide a subsidy to all children, and assume they are reasonably all at risk if they are going to be in a system that could deliver some inadequate care. Have we in a sense exacerbated this problem ourselves by creating two separate grant pools and, subsequent to that, conflicting regu- lations? Mr. Kingsbury, go ahead. Mr. KINGSBURY. Well, I think it is important that we realize that by mixing a variety of subsidized child care services with overlap- ping eligibility criteria that we may adversely impact other pro- grams. 51-713 0 - 92 - 9 PAGENO="0258" 252 Let me give you a simple example of that. The child care nutri- tion program the Department of Agriculture sponsors, there are so many different criteria now and there are so many different fund- ing streams that children who are in attendance at a child care fa- cility fall under that the requirement that a proprietary center reach a 25 percent level of children who are subsidized through title XX will, in most cases, no longer apply because we have the child care block grant, we have the JOBS program, we have such a variety of subsidized programs that the specific wording in a pro- gram like the food program is that it be 25 percent of title XX. So I do think that we need to have a careful review of that over- lap, of those conflicting eligibility requirements, of those various funding streams, just to make sure that we don't actually do a dis- service in the long run. Mr. GRANDY. Thank you for that. Mr. Rodriguez, do you want to weigh in on that? Mr. RODRIGUEZ. That really isn't anything I could answer, sir, I mean add to what Dan has already said. I think he has covered the matter clearly. Mr. GRANDY. OK. I appreciate that, because obviously I don't know if we have generated more heat than light in this particular deliberation today, but I do think that if there is a problem here- and there probably is, because obviously how could Members of Congress be wrong- Mrs. JOHNSON. Especially when we disagree. Mr. GRANDY [continuing]. Especially when we disagree. Maybe what we have to do is go back to the source from whence all these blessings flow and look at the statute itself before we begin to com- ment on the regulations. Thank you, gentlemen. Acting Chairman DOWNEY. I would observe that I think the gen- tleman from Iowa has made an excellent point. It was the inten- tion of this gentleman and others, and we had some royal fights with some of our friends in the room here about this, not to have two programs but one. It was my intention to expand dramatically title XX, which is there, which is understood, and which is an enti- tlement that could be funded. Collectively, we chose another path. But having chosen that path, I don't think the extra legislative activity of the Department of Health and Human Services in inter- preting what we have done has added any light to this process. As one of the last panelists said, and I think it is appropriate, aside from haggling over the question of whether the safety regulations are or aren't sufficient, the surest way to limit parental choice is the 75th percentile rule, which will guarantee that it will be limit- ed. Both of you have been excellent witnesses- Mr. KINGSBURY. May I make one comment- Acting Chairman DOWNEY. Sure. Mr. KINGSBURY [continuing]. About the 75th percentile, because I have heard that several times in the last few panels, and in Colora- do only I can speak, we did a study, and we found that payment-I think one thing that the Congress needs to realize is that payment in the States and in the counties by departments of social services for the purchase of child care is woefully inadequate, and that the PAGENO="0259" 253 75th percentile actually would mean such a dramatic difference that it would open the door to numerous child care options for par- ents, even at the 75th percentile. I myself, being a provider, would like to see it even higher. But that in and of itself would be a dramatic improvement over the system that we see in many, many States. Acting Chairman DOWNEY. That is interesting. Mr. KINGSBURY. There are some States who are now paying 100 percent of what someone charges, but those are not that numerous. Acting Chairman DOWNEY. Well, it is good to know that at least in Colorado this will not have an adverse effect. I'd like to thank both of you for your extraordinary patience and very fine insight. We greatly appreciate your testimony and hope that you will keep the lines of communication open. And to you, Mr. Rodriguez, for all my picking on the State of Missouri, which I certainly did not mean to do other than to use it as an example, I appreciate your not skewering me by saying that the State's proc- ess is wonderful. Thank you again very much. Mr. KINGSBURY. Thank you. Mr. RODRIGUEZ. Thank you. Acting Chairman DOWNEY. The subcommittee is adjourned. [Whereupon, at 4:24 p.m., the hearing was adjourned.] [Submissions for the record follow:] PAGENO="0260" 254 Statement of Gerald W. McEntee, International President, American Federation of State, County & Municipal Employees, AFL-CIO The American Federation of State, County and Municipal Employees (APSCME) appreciates the opportunity to submit this statement on the proposed regulations implementing state grants for child care. AFSCME has four major concerns with the proposed `At Risk' regulations: the limitation on the ability of states to set minimal standards; the weak registration process; sliding fee scales; and, the proposed definition of low income. Contrary to the spirit of the statute, the regulations severely threaten quality protections by allowing states to only apply standards to subsidized care that they apply to all child care In the state. This regulation would allow `At Risk' funds to be used for child care that meets no standards at all. The statute specffically states that child care paid with `At Risk' funds must meet applicable state and local law. The proposed regulations, however, provide that the only standards that apply to the child care funded by "At Risk' program and to the Family Support Act (FSA), are those that apply to all care of a particular type in a state no matter what the source of the funding may be. Under the regulations, children receiving "At Risk' child care and FSA will be subject to unnecessary hazards due to a lack of safety protections. This Is disastrous to low income children who particularly need these protections. Under the regulation, states cannot apply even minimal safety and protection standards to the `At Risk' child care and FSA programs unless they are applied to all care in the state within a particular category. States should continue to have the right to apply health and safety protections to subsidized child care If they choose to do so. In the past~ these protections have been very modest and have resulted in protecting children while not interfering with parental choice. The "At Risk" registration process for unregulated providers also causes us concern. The statute clearly states thatwith the exception of caregivers who are family members, providers paid with `At Risk' funds must be licensed, regulated, or registered. The regulations conflict with the statute by providing that states can only collect enough Information needed to pay or furnish information to providers, namely the collection of their name and address. The statute resolved the debate over whether the federal government or the states should be responsible for child care standards. The regulations, however, have ignored congressional intent by denyIng states the flexibility they need to impose such standards. Under the regulations, the registration process could not be used to ensure that providers are capable of providing even minimal protections to children, although states have successfully used the registration process in this manner in the past. By limiting the registration process, the regulations weaken protection and could actually threaten the well-being of children. The regulations would prevent states from requiring a criminal records check for employees, having a fire extinguisher, and providing even minimal training in first aid. Who would want their child to spend their days in a facility where the caretakers did not know basic first aid or where there was not a smoke detector? In the past~ states have imposed minimal registration requlrementswithoutlimitlngaccess to informal child care. States should have the option of creating their own registration procedures. In addition to our concerns regarding child care standards and the registration process, we are also concerned that the regulations do not reflect the statute's provision on sliding fee scales. The statute provides that states must Implement a sliding fee schedule based on a family's ability to pay. The regulations do not contain sufficient guidelines to ensure that states impose fees which actually reflect a family's ability to pay. Under the Family Support Act~ states were given broad latitude to develop fee scales. The guidelines given were not enough to prevent abuses. We believe, as reflected In the `At Risk' statute, that federal guidance to states Is necessary to ensure that states set copayments that families can afford. The size of a family and the family income should be considered when setting a copayment. Low income families must have affordai~le~child care that gives them equal access to child care and allows them to remain off of welfare. PAGENO="0261" 255 The statute allows states to provide `At Risk" care to any low Income family that is not a recipient of AFDC, who needs child care to prevent the family from going on AFDC. This sole eligibility requirement is a fundamental and critical aspect of the statute. The regulations impose a severe hardship on families by requiring them to meet other criteria for being at risk. This regulation would slow down the eligibility process and possibly disqualify families who are truly at risk of needing AFDC. Many states successfully use only the low income requirement to determine eligibility In other subsidized child care programs. Imposing additional criteria on the "At Risk' program will cause confusion and result in error. Moreover, low income alone is a predictor of high child care costs putting many poor and near poor families at risk of going on AFDC. The statute has determined that the low income requirement is sufficient enough to determine eligibility. States should have the right to use the statute's low income requirement. We also have some concerns with the Child Care and Development Block Grant regulations. These concerns include: the percentage of funds allowable for quality improvements; quality standards; weakening provisions in the preamble concerning quality; the registration process; the prohibiting differential rates; sliding fee scales; and, contracts v. certificates. Of particular concern to our membership is the provision in the regulations which limits states' ability after the first two years to use more than 10 percent of the allowable funds for quality improvements and administration. The Block Grant allows 75 percent of funds to be used for child care services and for activities designed to improve the quality and availability of care. We do not believe that it was the intent of Congress to so severely limit the use of funds in this section. We recommend that a 15 percent cap be placed on administrative costs. We also recommend that a minimum of 10 percent of the 75 percent funds be available for quality or other authorized activities. As with the "At Risk" regulations the regulatory provisions on health and safety in the Block Grant regulations do not comply with the provisions in the statute. Congress, we believe, was concerned both about parental choice and about safe and healthy child care. The regulations indicate that the content of health and safety standards developed for the Block Grant are to be weighed against their impact on parental choice. We believe that they give states extremely confusing directions. They attempt to chill states' abilities to create protections that ensure that children are safe and weil cared for. The test included in Section 98.30 (g) of the regulations should be eliminated. We also strongly supported the Block Grant's provisions to allow states to set more stringent standards for children receiving Block Grant funds. This provision allowed the states that now have separate requirements on programs receiving public funds to continue to do so. These states have recognized that poor children may need more enriched child care as is recognized in the Head Start program. Section 98.30 (g) relating to "parental choice" gives greater weight to parental choice than to the ability of states to create stronger quality protections for children receiving Block Grant funds. The preamble to the regulations also contains guidance to states which could result in children receiving child care under the Block Grant which fails to meet the basic health.and safety protections included in the statute. For example, the preamble states that the training requirement can best be met by states merely mailing fire and health code information to providers. We do not believe that mailings are, or ever will be, an effective approach to helping providers learn about useful child care practices especially in areas such as first aid. This guidance would cause a situation that poses a serious threat to the health and safety of children. Another example is the language in the preamble that notes that in states that exempt churches from child care regulations, current building and fire codes governing the safe operation of the building might be sufficient to meet building and premises safety requirements - even if such codes are based on commercial use by adults rather than child-related considerations. This also could result in a potentially life threatening situation in cases of fires or other emergencies. PAGENO="0262" 256 Much like the regulations for "At Risk" funds, the Block Grant regulation's definition of registration is also of great concern. It provides little, if any, protection to children. It also creates an administratively cumbersome situation for states which alreadyhave more comprehensive registration requirements. Again, we do notbelieve that the statute Intended that a registration process could involve simply giving the provider's name and address to the state agency. Rather, the statute gives states the necessary flexibility to develop reasonable registration requirements. Another regulatory provision limits state flexibility and discourages states from trying to improve the quality of care that children receive. The Block Grant instructs states to set payment rates that "take into account the variations in the costs of providing child care In different settings..." However, the regulations require states to pay formal and Informal caregivers identically even if they must meet different regulations and are providing care in different settings. This provision will mean that states will be able to pay providers who offer less expensive and lower quality care the same rates as providers who are offering children higher quality and usually higher cost child care. We recommend that the preamble be altered to indicate that states may set lower rates of reimbursement for providers within a general category of care If such providers are subjectto less rigorous requirements than other providers within the same general category of care. We are also concerned with the lack of guidance to the states in the regulations concerning sliding fee scales. We are aware that under the FSA, a number of states set unrealistic family contributions toward the cost of child care. We believe, as Is reflected in the statute, that federal guidance is necessary to states to ensure that they set copayments that families can afford. We strongly urge the implementation Block Grant regulations that would result In reasonable affordable copayments for families. Finally, we believe that the regulations make it impossible for states to offer parents the choice of a contract because of the requirement that certificates be available throughout the year. AFSCME works with many child care centers located in low income neighborhoods. We have found that contracts are necessary in order for them to stay in business and provide the choice of a center for low income families. Because contracts ensure that centers will be able to serve a certain number of children, they offer a reliable source of support. The centers that we work with in poor areas often only service children receiving public funds because other parents cannot afford to choose these centers. We also believe that contracts are especially necessary if programs are to be able to serve children who may need special help such as those In need of protective services or children of teen parents. Unless states are allowed by the regulations to prOvide some contracted care, many parents will have very limited choices. While we do not encourage one form or choice of child care over another, we realize that most higher income parents seek a center-based preschool experience for their three- and four-year olds. We feel that low income parents should have the same ability to choose such programs. We recommend that the regulatory provision that requires certificates to be available throughout the year be deleted so that states can offer parents the choice of a contract. We urge you to consider these observations on the child care regulations. Our union played an Instrumental role In the development of the child care legislation which was based on the desire to provide families with safe and afforable child care. That was the intention of the statute and that should be the objective of the implementing regulations. PAGENO="0263" 257 STATE ME NT of Richard T. Fottin, Director of Governmental Affairs on behalf of THE AMERICAN JEWISH COMMITTEE on PROPOSED REGULATiONS PROMULGATED BY THE ADMINISTRATiON FOR CHILDREN AND FAMIUES, DEPARTMENT OF HEALTH AND HUMAN SERVICES, TO IMPLEMENT THE CHILD CARE AND DEVELOPMENT BLOCK GRANT ACT OF 1990 to the SUBCOMMITTEE ON HUMAN RESOURCES COMMITTEE ON WAYS AND MEANS HOUSE OF REPRESENTATIVES September 26, 1991 I. Introductory Statement The American Jewish Committee (AJC), a national organization founded in 1906 with over thirty chapters nationwide, thanks the Committee for the opportunity to express our views on two interrelated matters of serious concern to all Americans: the provision of child-care services to our nation's children and the constitutional principle of separation of church and state. AJC policy favors government programs to enhance the provision of child-care services. We also support the constitutional principle of separation of religion and government, which we view as essential to the protection of the civil and religious rights of Jews, along with the rights of Americans of all faiths. At the outset, let me stress the depth of AJC's commitment to the principle that quarrty child care must be made available to all Americans as well as our strong belief in the important role the federal government must play in enhancing the provision of child care. The Jewish commitment to social service -- to care for the young and the old, for the poor and the sick -- runs deep in our religious and cultural traditions, and is evident in the many self-help institutions the Jewish community has established. It is evident also in AJC's 1986 and 1988 policy statements on, respectively, social and family policy, as well as in AJC's forceful advocacy, not only of child-care legislation, but also of legislation on parental leave and in other similar areas. For these reasons, it is no surprise that AJC was among the early supporters of the legislation that uitimately became the Child Care and Development Block Grant Act, and was an active member of the coalition that participated in its formulation. There is no question, further, that the provision of child care - - by sectarian and nonsectarian institutions alike - - is a positive value in our society. Churches, synagogues and other sectarian institutions that provide nonsectarian and nondiscriminatory child care should receive federal funds along with other providers. We also strongly believe that, when these institutions provide child care that is sectarian in nature or discriminatory, those services, however worthwhile, should, as a matter of sound social policy and constitutional principle, not be funded by the government. The child.care funding program created by the Child Care and Development Block Grant Act of 1990 (the `Acr) extends government aid to private child-care providers, including both nonsectarian and sectarian institutions. As such, constitutional questions arising out of the principle PAGENO="0264" 258 of separation of church and state inevitably arise.1 The Act does not include provisions to protect church-state separation which the MC urged be made part of the bill during the legislative process. Regrettably, the Act allows government funds to be used to subsidize child-care services that are sectarian in nature when the funding takes place In the form of certificates (as opposed to grants arid contracts). Accordingly, notwithstanding our original strong support for the bill, we found it necessary to oppose the legislation as contrary to the principle that the provision of governmentally- funded child care, a crucial public need, should not be treated as mutually exclusive with sound social policy and constitutional tenets. But we are not submitting this statement to reargue the pros and cons of the Act as it emerged last year. We acknowledge that the Act, as enacted, did not prohibit sectarian use of government funds in certificate programs. But church-state issues may leave the program more or less susceptible to constitutional challenge, depending on how the legislation is interpreted through regulations and applied by the Administration for Children and Families. We are concerned, as this Statement discusses, that the interim final rule does not carry out the Intent of Congress insofar as the Act did address church-state issues, and unduly leaves the administration of the Act open to constitutional challenge. In short, we believe that the Interim final rule gives too little weight to, or misunderstands, safeguards that were enacted with respect to the participation of sectarian Institutions in the program. In so doing, the rule increases the likelihood of a successful challenge, and also fails to carry out Congress' intention with regard to church-state separation and nondiscrimination. II. Areas of General Concern Firstly, the interim final rule misstates a general purpose of the Act. As noted in the legislative history of the Act, the purpose of the block grant program is to increase `the availability, affordability, and quality of child care'.2 More specifically, the block grant's purpose is to offer parents a variety of choices to meet their family's child care needs and to expand child care options for all families who need services.3 Although the Act and the legislative history indicate that parents have a wide range of child care arrangements from which to choose, including sectarian child care services through the certificate program, nowhere is it stipulated that block grant funds are to be used for sectarian activities per se. Rather, the purpose of the funds is to provide child-care services that, only in the case of certificates, may include sectarian child-care activities. In no event does the Act contemplate the funding of sectarian activities othtr than sectarian child care. The regulations seem to lose sight of this crucial distinction. For example, Section 98.54(d) of the rule, page 26233, citing Section 98.2(j), states that `Funds provided under grants or contracts to providers may nor be expended for any sectarian purpose or activity, including sectarian worship or instruction. Pursuant to Section 98.2(j), assistance provided to parents through certificates is not a grant or contract. Funds provided through child care certificates may be expended for ~(j ~j~gj~ sectarian purposes and activities. (emphasis supplied) In contrast, Section 98.2(j), page 26225, follows the exact wording of Section 656P(2) of the Act in stating that `Nothing in this part shall preclude the use of such certificates for sectarian child care services, if freely chosen by the parent.' (emphasis supplied) Thus, the wording in Section 98.54 of the rule confuses sectarian purposes and activities with sectarian child care services, thereby violating the intent of the Act itsef, i.e., to fund sectarian child care activities, not other sectarian activities, through the use of certificates. Similarly, Section 98.30(c)(4) of the rule, page 26229, states that child care certificates chosen by parents may be used by providers for `any sectarian purpose or activity.' (emphssis supplied) However, as noted previously, Section 658P of the Act merely states that nothing shall preclude the use of the certificates for sectarian ~nt services. Clearly, the use of certificates for sectarian activities other than sectarian child care services would violate the Act, and the rule should be drafted to so reflect. Another example where the regulations confuse the purpose of the Act is evident on page 26212 under the heading `Sectarian Purposes and Activities.' The last sentence of this section states that providers who accept certificates may carry out any sectarian activities without restricting their eligibility for certificates under the block grant program. This language is overbroad and In this statement, AJC limits its comments to the implications of the principle of separation of church and state for those portions of the rule that contemplate funding, whether through grants, contracts or certificates, of sectarian child-care providers. However, we are also concerned that the rule adequately protect the health and safety of children, even as it promotes parental choice, and otherwise be drafted in a fashion consistent with administrative needs at the state level. The Committee will be considering the comments of other witnesses on these issues. 2 H.R. Rep. No. 964, 101st Cong., 2d Sess. 922, reprinted in 1990 U.S. CODE CONG. & AD. NEWS 2374, 2627. Id. PAGENO="0265" 259 misleading because it Implies that block grant funds are available for sectarian activities in general. in reality, the certificate funds are available for a limited purpose: the purchase of child care services, both sectarian and nonsectarian. AJC is also concerned that the regulations do not adeguately highlight the provisions of Section 658M prohibiting the use of block grant funds for sectarian purposes and activities when made available through grants and contracts, and they fail to set up a structure to safeguard against the misuse of block grant funds expended through contracts or grants for sectarian activities. Section 658M is clearly applicable to all providers, nonsectarian and sectarian alike, funded through grants or contracts. The regulations should include safeguards to implement this provision. Such a provision could stipulate, for instance, that an agency will lose its funding for violating Section 6SSM. These safeguards would make clear that sectarian institutions, even those that are pervasively sectarian, are providing a nonsectarian service in a discrete area of activity, notwithstanding their customary sectarian role. Finally, AJC is concerned that the rule generally treats sectarian organizations as favored entities. For example, the regulations consistently highlight the certificate option. in addition, the rule asserts that the program is intended to include `a broad range of child care providers, including center-based, family child care, and in-home care, care provided by relatives and sectarian child care providers.' Section 98.1(b)(2) of rule, page 26224. This treatment of sectarian providers as a separate category, when in fact they are merely a subset of center-based providers, appears in various places in both the rule and the comments (see, e.g., page 26196), and creates the Impression that the Government, as opposed to treating them as one type of care providers among others, favors sectarian child-care providers, AJC proposes that the regulations take the focus off the sectarian institutions and treat them as a subset of care providers, rather than as a separate category of providers. Thus, the above-quoted language should provide that the program is intended to include `a broad range of child care providers, including center-based (both nonsectarian and sectarian), family child-care, and in-home care and care provided by relatives.' This would bring the regulations in line with the Act which does not give sectarian institutions special treatment or aid. lii. Provisions Concerning Nondiscrimination in Enroilment and Empioyment on the Basis of Religion AJC notes with great concern that the rule interprets the employment and enrollment religious nondiscrimination provisions of the Act so as to offer providers the broadest possible discretion to discriminate. This interpretation both fails to carry out Congress' intent and opens the door for constitutional challenges based on failure to properly provide for separation of church and state. (The constitutional issues raised by the rule's formulation are discussed at further length below.) For example, the comments to Section 98.46 of the rule, page 26208, state that under Section 658N(a)(2) of the Act, child care providers, other than family child care providers, that receive assistance through grants, contracts or loans under the Act, shall not discriminate in enrollment decisions against any child on the basis of religion. Similarly, Section 98.46(a) of the rule, page 26230, states that child care providers (other than family child care providers) that receive assistance through grants and contracts under the Act, shall not discriminate in admissions against any child on the basis of religion. The above-cited provisions fail to carry out the explicit provision of Section 658N(a)(2)(A) of the Act, which protects children against all types of discrimination on the basis of religion. The Act reads, `A child care provider (other than a family care provider) that receives assistance under this subchapter shall not discriminate against any child on the basis of religion in prgyjdi~g child care services.' (emphasis supplied) Thus, the Act does not limit the focus of the discrimination to admissions decisions. By limiting the nondiscrimination provisions to admissions, the rule misconstrues the Act and has the effect of allowing discrimination based on religion, as long as ft does not pertain to admissions decisions. AJC proposes that Section 98.46(a) of the rule be modified by deleting the words `in admissions', and that the corresponding comment be modified accordingly. in addition, Section 98.46 of the rule limits the prohibition against discrimination on the basis of ifeligion to programs receiving grants or contracts. However, Section 658N of the Act makes no such limitation. Certainly, in enacting regulations, the presumption should be against any congressional intent to allow for discrimination in the use of public funds. Instead, the rule has been drafted so as to allow discrimination in enrollment decisions by providers receiving certificate funding. Such discrimination must not be allowed by providers receiving government funds. Similarly, Section 98.47 of the rule is interpreted by the comment at page 26209 to allow sectarian organizations funded by certificates to discriminate in employment on the basis of religion. However, Section 658N(a)(1)(3)(A) makes no such exception for institutions that receive funding PAGENO="0266" 260 through certificates. Further, the comments to the regulations at page 26209 state that Section 658N of the Act provides that nonsectarian child care providers shall not discriminate on the basis of religion in hiring caregivers. However, the Act does not distinguish sectarian and nonsectarian providers. Under the plain language of the Act, no providers are allowed to discriminate, if anything, providers may under certain circumstances prefer people from their own community, as is enunciated in Section 658N(a)(3)(B). However, this should not be construed as a license for religious discrimination. The comments to the regulations regarding Section 98.47, page 26209, also state that the Act allows religious organizations to require that employees adhere both on and off the job to rules of the organization with respect to adherence to religious tenets and teachings, and forbidding drug or alcohol use. Absent an explicit expression of intent by the Congress, the Act should not be construed so as to extend to the employee's private life, as opposed to allowing the employer to set standards for conduct while at work. Extension of this provision of the Act beyond the workplace allows for intrusion into private lives in a fashion that may have nothing to do with job performance. In addition, the use of stale funds in enforcing religious beliefs raises grave problems under the First Amendment's prohibition of government establishment of religion. Finally, interpretation of Section 658N in the fashion suggested by those comments would contradict the nondiscrimination provisions that, as discussed above, are applicable to ~)j recipients of program funds. IV. ~gristfrutlonal Issues RaIsed by the Rule Sectarian institutions currently provide an estimated one.third of this nation's child care. A great many of these providers are churches and synagogues. No institutions are more clearly pervasively sectarian than houses of worship. In Bowen v. Kendrick, 487 U.S. 589 (1988), the U.S. Supreme Court stressed the distinction between assistance to pervasively sectarian institutions and assistance to sectarian institutions which provide at least some services in a secular setting. It is quite possible, in light of ~58~jck, that the courts will find that the Act does not provide safeguards sufficient to allow churches and synagogues constitutionally to receive program funds. Moreover, sectarian institutions which receive grant or contract funds under the Act - whether or not their sectarianism is pervasive - are clearly more likely to violate the Act's strictures on use of those funds for sectarian purposes in the absence of meaningful barriers to their ability to utilize child care centers for sectarian instruction or worship. To the extent those uses are barred by the Establishment Clause, extensive violations of this nature could endanger the entire program of aid to sectarian institutions. But, whether or not the entire program of aid to sectarian institutions is endangered, the individual sectarian institutions are particularly vulnerable to a challenge which could lead to their being stricken from the program either for violations of the Act or for constitutional violations on an `as applied' basis. It remains imperative, then, that the rule carry out those `church-state safeguards' which are inherent in the Act. With respect to sectarian institutions which are not pervasively sectarian, such safeguards may make it less likely that violations of church-state separation would be so endemic as to endanger the entire program. Individual institutions would also have a structure in place that makes it less likely that they would violate the Act or engage in an `as applied' violation. The chance that funding provided under the Act to pervasively sectarian institutions will survive challenge may similarly be improved by clearly carrying out Congress' intent that these institutions, along with all recipients, are obligated not to discriminate. The courts would at least be afforded a basis upon which to treat the child care center function as separate from the pervasively sectarian institution in which it is set, thereby distinguishing assistance to child care providers from types of aid which have been struck down in the past. Explicit prohibitions against use of program funds for sectarian purposes when funded through grants and contracts and against discrimination however funded (the latter now part of the Act but not of the rule) would make clear that even pervasively sectarian institutions are, at least when funded through grants or contracts, undertaking to provide a nonsectarian service in a discrete area of activity, notwithstanding their usual sectarian role.4 The requirement that federally funded programs be administered in a nondiscriminatory and nonsectarian fashion is not without precedent in eariier instances of cooperation between the stale and sectarian institutions. The statutory authorization for Head Start requires certification by funded institutions that they operate their programs on a nondiscriminatory basis. 42 U.S.C. Section 9849. Moreover, in its majority opinion, the Kendrick court relied on early Supreme Court precedent, Bradfield v. Roberts, 175 U.S. 291 (1899), allowing federal aid to a sectarian hospital, but specifically noted that in the earlier case there was no allegation that the hospital discriminated on the basis of religion or operated in a fashion inconsistent with its secular charter. 487 U.S. at 609. PAGENO="0267" 261 Obviously, the issue of excessive entanglement is of particular concern in the context of churches and synagogues. Under the analysis suggested here, however, the child care center could be regarded as analogous to a sectarian social weffare institution affiliated with a denomination. These latter types of institutions, under ~~Lick, are permitted to be subjected to at least a moderate level of supervision. ~ 487 U.S. at 615-17. A child-care center, at east if funded through grants or contracts, would be distinguishable from a parochial school because the child-care center is explicitly intended to operate on a nonsectarian basis, as opposed to parochial schools which, by virtue of their educational function, at all times have a mission of inculcation of religious belief. Further, the supervision necessary to ensure nonsectarian use of government funds for these grants or contracts-funded institutions might not be excessively entangling, since the particular activity being monitored is a discrete, avowedly nonsectarian function of the institution. However, in the absence of binding nondiscrimination provisions, this already touchy analysis may be impossible to sustain. AJC believes that the failure to bar sectarian use of program funds received through certificates (as those uses are barred in the case of grants and programs) makes the certificate portion of the program unconstitutional insofar as it extends to sectarian institutions - regardless of whether the nondiscrimination provisions are or are not extended to certificates-only programs. Nevertheless, we do not dispute that the Act, as enacted, did not extend the sectarian use prohibition to certificate programs. Rather, AJC contends that the interim final rule allows for religious discrimination by sectarian providers although this was not Congress' intent. The rule also fails to provide safeguards against misuse of public funds, even those provided by grants and contracts, for sectarian purposes. These failings not only do not carry out the legislative intent, but also leave the block grant program more susceptible to constitutional challenge. Conclusion For the reasons set forth above, we believe - and have so urged the Administration for Children and Families in our written comments -- that the interim final rule should be amended to, among other things, clarify that the religious nondiscrimination provisions of the Act are applicable to sectarian institutions receiving funds under the program, including certificates; address the tone of the rule insofar as it suggests a favored role for sectarian care providers; clarify that insofar as funds provided through certificates may be used for sectarian child-care services, that those funds may only be used for child-care related activities - and not for `any sectarian activities'; and establish safeguards against use of grant and contract funds for sectarian activities. Such changes in the rule, while not resolving our opposition to the certificate program, would give due weight to safeguards enacted by the U.S. Congress with respect to the participation of sectarian institutions in the block grant program, and would decrease the likelihood of a successful challenge to that program. PAGENO="0268" 262 ASSOCIATION OF CHRISTIAN SCHOOLS INTERNATIONAL NATIONAL/INTERNATIONAL HEADQUARTERS MAILING ADDRESS: P.O. BOX 4097. WHITTIER, CA 90607 STREET ADDRESS: 731 N. BEACH BLVD.. LA HABRA, CA 90631 (213) 694-4791 COMMITTEE ON HUMAN RESOURCES COMMITTEE ON WAYS AND MEANS HEARING ON THE ADMINISTRATION' S PROPOSED FEDERAL CHILD CARE REGULATIONS WRITTEN TESTIMONY BY DR. JOHN C. HOLMES ASSISTANT TO THE EXECUTIVE DIRECTOR ASSOCIATION OF CHRISTIAN SCHOOLS INTERNATIONAL September 26, 1991 The Association of Christian Schools International (ACSI) is the largest service organization for evangelical Christian schools in the United States, representing over 2800 member pre-schools, schools and colleges with over 530,000 students. As assistant to ACSI Executive Director Paul Kienel, I submit this written testimony to the Committee on Ways and Means' Subcommittee on Human Resources concerning the proposed federal regulations for the child care program. ACSI has contended for the principles listed below all along during the child care debate. We are pleased that the Administration for Children and Families of the Department of Health and Human Services has chosen to apply most of these when they shaped the final regulations for the "at risk" portion of the funds: 1) The regulations should ensure that parents have a right of choice in child care. All parents receiving assistance should have an unequivocal right to receive a certificate that could be used to pay for care by relatives, neighbors, churches, synagogues or pervasively religious child care that is operated by a lay board. 2) No State should be allowed to prohibit a parent from using a voucher to pay for daycare in a church or other pervasively religious daycare. A parent's right to select religious child care should not be weakened. 3) States should not be premitted to use regulations to restrict a parent's range of choice in child care. States should not impose regulations on caregivers receiving vouchers that are more stringent than the normal regulations within a state applying to daycare which does not receive public funds. Child care providers, like grandparents or churches, who were not subject to State regulation but eligible to receive vouchers, would remain exempt from State regulation. We are now aware that many States have attempted to violate these basic premises already through their State plans. We will continue to encourage Assistant Secretary JoAnne Barnhart and her staff to reject those State plans, plan-by-plan, until the States realize their need to comply with regulations that allow for parental choice, religious non-discrimination and fairness when it comes to eligibility. PAGENO="0269" 263 Statement of Nancy H. Evans, Policy Chair, Government Affairs, Association of Junior Leagues International The Association of Junior Leagues International is pleased to have the opportunity to submit written testimony to the Subcommittee on Human Resources of the House Ways and Means Committee on the interim final regulations for the Child Care and Development Block Grant Regulations (Block Grant) and the proposed regulations to implement the At-Risk Child Care Program. The Association of Junior Leagues International is an organization of women committed to promoting voluntarism and improving the community through the effective action and leadership of trained volunteers. Today, there are 267 Junior Leagues in the United States with approximately 184,000 members. The Association's commitment to the improvement of services for children and families is long-standing. Junior League volunteers have been providing such services since the first Junior League was founded in New York City in 1901. The issue of child care has been a longstanding priority for the Association as well as individual Junior Leagues. We have consistently advocated for a shared responsibility among the various levels of government as well as the public and private sector in addressing the need for child care. In the past four years we have articulated that, within this partnership, the role of the federal government in ensuring child care was especially critical. Moreover, we repeatedly have stated and continue to believe that the federal government is in the unique position both to provide essential leadership and to assure the establishment of a stable infrastructure which ensures that child care throughout the country will be affordable, accessible and of good quality. We believe that the passage of the child care provisions in the Omnibus Reconciliation Act of 1990, and its signing into law by the President in the 101st Congress indicates that we all share a similar value about children and their child care needs. Child Care and Development Block Grant Interim Final Regulations In the months that have passed since the law's enactment much has been done. We note the commendable efforts of the Department of Health and Human Services to reach out into and meet with members of the child care community as well as its efforts to provide states with some guidance prior to the issuance of the interim regulations as the states began their tasks of developing state plans etc. However, while the regulations have specific strengths, such as giving states broad flexibility to implement Block Grant provisions, allowing payments to be high enough to allow eligible children to receive care at its prevailing costs and ensuring that states use the federal money to supplement and not replace current state efforts, the Association has some significant concerns that the regulations may undermine the state's ability to help protect the health, safety and well-being of children in child care. For example: * The statute requires that states provide assurances that there are state and local requirements in effect to protect the health and safety of children whose care is provided for under the Block Grant services. States need not adopt new or additional health and safety procedures if the existing requirements are in compliance with the act. States, however, must ensure that adequate procedures are in place for the prevention and control of infectious diseases (including immunization); for building and premises safety; for minimum health and safety training for care providers; and for unlimited parental access to care settings. These requirements are imposed on all providers receiving Block Grant funds with the exception of grandparents, aunts, and uncles caring for related children. Although the regulations restate the statutory language, the preamble of the regulations which, as we know, is not binding but PAGENO="0270" 264 does highlight and further explain issues, uses extraordinarily weak examples of health and safety requirements. In so doing, it indicates an intent which we find very disturbing. For example, the preamble indicates that states sight meet training requirements for home care providers simply by sailing them information about fire and safety codes. The Association believes that it is important that this and other statutory weakening examples are discarded and not relied upon as guidance by the states since the examples used fall well below the minimum health and safety activities required by the federal statute. The Association recommends that the Department use meaningful examples of health and safety protections to clarify and send a message consistent with the statute and Congressional intent. R The statute allows states to set more stringent standards and licensing or regulatory requirements on child care providers of Block Grant services. However, although the regulations reiterate this requirement (Section 98.40(b) (1)), they further stipulate that whatever requirements are established cannot have the effect of reducing the availability of a particular type of care and that such additional requirements cannot "significantly restrict" parental choice by expressly or effectively excluding any category of care, type of provider, or any type of provider within a category of care; having the effect of limiting parental access to or choice from among such categories or care or types of providers; or by excluding a significant number of providers in any category of care or of any type (Section 98.30(g)) The Association believes that parents have the right to choose child care arrangements and settings that meet their families individual needs. However, meaningful parental choice must ensure that parents have quality, safe child care options from which to exercise their parental choice. Moreover, if parental choice is to be successful, families need to be apprised of and educated about the options available to them for good, quality child care. ~The Association recommends that Section 98.30(g) be eliminated. By using this vague measure for whether additional state protections limit parental choice, states may be discouraged from adopting additional protections (i.e. home visits, fire extinguishers, smoke detectors, a criminal records check) if such protections could be perceived as limiting parental choice. It is important for states to appropriately balance and support parental choice with the ability to reasonably protect the welfare of children in child care. ~ The federal statute requires that all providers of services paid for under the Block Grant who are not licensed or regulated must be registered. Registered providers, (with the exception of grandparents, aunts, and uncles), must also meet the minimum health and safety requirements set out in the law. The regulations (Section 98.45) establish a pared-down registration process that must be simple and timely. However, as is the case with health and safety protections, the registration provisions of the regulations require that registration cannot limit parental choice. Here also, although the law is clear and provides states flexibility, states may potentially be reluctant to create a meaningful registration process. States must have the right to establish appropriate registration requirements (such as, health department certification requirements, i.e. requiring fire extinguishers, smoke detectors, reasonable access in case of emergencies, etc.) in order to ensure the health and safety of children. The Association recommends that the final regulations allow states the flexibility to define registration in a manner that would include appropriate safeguards, eg. criminal background checks, fire inspections etc. and still allow parents to have an informed choice. PAGENO="0271" 265 Title tv-A At-Risk Child Care Proprosed Regulations The Association has similar concerns with the At-Risk proposed regulations has it has with the Block Grant interim final regulations that is, in some instances, the proposed regulations may undermine the state's ability to help protect the health, safety and well-being of all children in child care and say unwittingly re-enforce a two-tier system of subsidized child care. For example: ~ The "At-Risk" statute provides that child care paid for with "at-risk" funds must meet applicable standards of state and local law. However, the Department once again emphasizing the importance of parental choice has proposed regulations (Section 257.41(a) (2)) that prohibit states from setting health and safety standards for children receiving child care supported with public funds (eg. the Family Support Act) unless the standards apply to all child care in the state whether paid for with child care subsidies or privately by parents. This not only runs counter to the intent of the statute but will unnecessarily endanger children by allowing them to be placed in potentially unsafe child care settings. Moreover, it appears to reinforce an already existing two-tiered system of child care--with those children who are the poorest and most vulnerable getting the poorest quality of care. Meaningful parental choice must ensure that parents have quality, safe child care options from which to exercise their parental choice. The Association recommends that Section 257.41(a) (2) of the proposed regulations be deleted. We believe that consistent with Congressional intent, states should be allowed to continue to set health and safety protections for children receiving Title tV-A child care subsidies. ~ The "At-Risk" proposed regulations significantly narrow the definition of what can be included in the registration process for unregulated child care providers (Section 257.41(b) (2). This denies states the right to continue their current practice of placing some minimal quality protections and safeguards on programs receiving public funds. Again, we do not believe that this was the legislative intent. In fact-- quite the contrary-- the statute authorizes grants to states to help them improve their licensing and registration requirements and procedures, including monitoring. The Association recommends that the final regulations should allow states to use a registration process, if they choose, to apply minimum health and safety protections including, immunization, fire prevention techniques such as fire extinguishers and smoke detectors, minimal training in first aid, and child abuse and neglect criminal background checks. The quality of child care services has been and remains a very important issue for Junior Leagues. From such diverse states as North Carolina, Oklahoma, Pennsylvania, New York, Kansas, and others, Junior Leagues have been involved in their communities in working to improve state licensing and regulatory requirements and to ensure that ~A children have adequate health and safety protections in child care settings. The Association expects nothing less with respect to the child Care and Development Block Grant and Title IV-A At- Risk Child Care Programs. The Association of Junior Leagues International appreciates this opportunity to submit written testimony to you on these important regulations. We appalud your leadership and oversight on this critical matter. The Association looks forward to working with you to ensure meaningful implementation of the Child Care and Development Block Grant and the Title IV-A At Risk Child Care Programs. Nancy H. Evans Policy Chair, Government Affairs PAGENO="0272" 266 ~ BIG BEND ç HILD CARE Pamela B. 1.., OUNCIL Executive Director * Subsidized Child Care * Family Support SeMces 5 Child Care Program Development & Education September 23, 1991 Robert J. Leonard Chief Counsel Committee on Ways and Means U.S. House of Representatives 1102 Longworth House Office Building Washington, D.C. 20515 Dear Mr. Leonard: Please accept this letter on behalf of the Subcommittee on Human ReSources as my agency's response to the HHS Family Support Administration's proposed federal chi'd care rules. I must precede my comments with a brief explanation of my background to help you understand my dismay with what I perceive the ramification these rules will bring to our state. I am an early childhood educator who has taught on numerous levels from preschool to college (at Florida State University). I spent more than eleven years working for the Florida Department of Health and Rehabilitative Services as a licensor, program monitor, contract manager and as Program Administrator for the subsidized child care program for the State of Florida. During the past year, I became Executive Director of a "central agency" which provides subsidized child care and other family support services to more than 1,600 children, contracting with 50 child care centers and 20 family day care homes. As a member of the Florida Children's Forum, I also served on the state work group for developing Florida's state plan for the CCDBG funds. Below is a summary of my overall concerns of these issues. 1. NO PROVISION FOR RATE DIFFERENTIATION In Florida, we have worked very hard to establish state level of expectations for programs from which subsidized care is purchased. Providers are expected to provide a developmentally appropriate curriculum with qualified staff. An attempt is being made to pay a "comparable rate for comparable care". This means it is the child care program's responsibility to provide a quality program on a competitive basis from which parents can choose. It does not mean that parents are not given choices and nor denied child care arrangements of their preferred choice. Instead, as in all types of businesses throughout the country, the market is driven by consumer choice. In allowing parents to make their choices and paying a rate based on the quality of the service, the state is being a "wise consumer" for the care purchased with state (and federal) funds. The quality is driven by BOTH the parent's choice and state's willingness to pay for comparable rates for comparable care. It is extremely inappropriate for any government to pay the same rate regardless of the level of quality in the program. THIS IS EXACTLY WHAT THESE NEW RULES WOULD ENCOURAGE SINCE THERE IS NO MOTIVATION ON THE PROVIDER'S SIDE TO IMPROVE THEIR SERVICES BECAUSE THEY CAN GET PAID THE SANE RATE I 2003 ApalaChee Parkway, Suite 207 N Tallahassee, FL 32301 N(904) 878-0636 FAX (904) 878-6344 Member otthe Florida Chtdren's Forum PAGENO="0273" 267 Subcommittee on Human Resources Committee on Ways and Means Page Two Finally, where are states' rights in this issue? It seems that the federal government is mandating LOWER QUALITY. Why can states not have the right to expect a higher level of care? If states CAN attain a higher quality of service at the same time as permitting parents who receive a subsidy the same choices as families who do not receive a subsidy, why are states not entitled to do so? This simply makes no sense! 2. PURCHASING UNREGULATED CARE FOR AT-RISK CHILDREN My agency's at-risk child care enrollment is currently more then 37% of our child care population. We have found that in serving these children in ggpd, queli~y early childhood programs, there have been: o less than 10% recurring reports of abuse/neglect on protective services children in subsidized child care; o 13% of the children's families have left the welfare program to become more self sufficient since October. It is my professional opinion that these children need MORE safeguards in their child care arrangement for the primary reason their economic and environmental conditions enable their eligibility. For this reason alone we must install a "safety net" and require a higher level of service than "the norm". The federal government has recognized these factors with the successful Head Start program. Why is it not recognizing them for other early childhood programs as well? What hypocrisy! 3. RESTRICTIONS ON ALLOWING STATES TO DIRECT CCDBG FUNDS FOR QUALITY IMPROVEMENT During the past Florida Legislative Session, efforts were made to move to one set of standards for all children in licensed child care. These efforts should result in helping parents make choices based on an understanding of options, not just location and cost. Unfortunately, our goal was to use a larger portion of the CCDBG funds to "prime the pump" to enhance our existing resources for developing the infrastructure desperately needed for these services. The limitations established by federal ~gi~ requiring 90% of the funds be used for direct services (meaning purchasing slots) critically restricts our attempt to provide other direct services (such as family support, health screenings, transportation, "enhanced" resource and referral to name a few). Again, these services are permitted under Head Start regulations but not subsidized child care. Children and families BOTH directly benefit from these support services which have proven to provide more long term improvements in our families' lives. In closing, I ask you to consider these issues. We who have been waiting for so many years for this type of federal legislation are greatly disappointed in the Department of Health and Human Services' rules for implementing Congress' intent. I am confident that the concerns I have identified are equally shared throughout not only the State of Florida, but also across the country. We are "in the trenches' and deal on a daily basis with these families. S PAGENO="0274" 268 Subcommittee Human Resources Ways and Means Committee Page Three On behalf of the 1,600 children I represent, please accept our concerns and have the federal FSA rules for the Child Care Development Block Grant funds revised. Thank you for the opportunity to submit my comments and concerns. incerely, Pamela B. Davis Executive Director cc: Governor Lawton Chiles Representative Pete Peterson - PAGENO="0275" 269 JOHN P. HART, VICE CHAIRMAN BOARD OF COUNTY COMMIS~~! COUN~'( September 23, 1991 Robert J. Leonard, Chief Counsel Committee on Ways and Means U.S. House of Representatives 1102 Longworth House Office Building Washington, D.C. 20515 Dear Mr. Leonard: It is with a great deal of concern that I am writing to urge you to amend the Interim Final Rule of the Child Care and Development Block Grant and the Proposed Notice of Rule Making for the Title IV-A At Risk Program. Please consider the following items: Recognizing the legally unregulated provider as a category of care and requiring states to set payment rates for these providers that are adequate and appropriate for that type of care. Allowing states to require licensure of family day care homes receiving public subsidies even if the state does not yet license all family day care homes. Allowing parents of At-Risk children to choose child care providers from a list of developmentally appropriate programs that will be licensed and monitored frequently as opposed to allowing them to use unregulated providers. Allowing states to use 75 percent of the reserve for direct services (which may include activities that assist the parent or the child in enrolling in care, such as eligibility de- termination, health screenings, and resource referral). The remainder of the funds (25 percent) should be used for quality improvement activities and/or administration of the program or grant. Thank you for the opportunity to offer comments on these proposed regulations and I hope that you will incorporate these suggestions in the final regulations. * ncerely, d John P. H rt Vice Chairman Broward County Board of Commissioners JPH: is PAGENO="0276" 270 Th Nat n s La gest Fully 1. - Ac di dSch / System THE SCHOOL BOARD OF BROWARD COUNTY, FLORIDA BOARD MEMBERS OFFICE Robert D. Parks 765-6659 FAX B765-6568 Chairperson DianaWasserman 765-6306 Vice Chairperson September 11 1991 Karen Dokerhoot 765-6305 MiAam M. Oiphant 765-6197 DonaldJ. Samuels 765-6657 Eileen S. Schwartz 765-6005 ToniJ. Siskin 765-6467 VirgilL Morgan Mr. Robert J. Leonard Supenn endent Chief Counsel Committee on Ways and Means U.S. House of Representatives 1102 Longworth House Office Building Washington, DC 20515 Dear Mr. Leonard: urge you to amend the Interim Final Rule of the Child Care and Development Block Grant and the Proposed Notice of Rulemaking for the Title IV-A, At-Risk Program. Specifically, I request that you consider the following items: (1) recognizing the legally unregulated provider as a category of care and requiring states to set payment rates for these providers that are adequate and appropriate for that type of care; (2) allowing states to require i~ainsure of family day care homes receiving public subsidies even if the state does not yet license all family day care homes; (3) allowing parents of At-Risk children to choose child care providers from a list of developmentally appropriate programs that will be licensed and monitored frequently as opposed to allowing them to use unregulated providers; ________________________________ Equal OpportunityEnerployer UsingAfuirmatiueACtiOn Gu,dehneo ADMINISTRATION OFFICES * 600 SOUTHEAST THIRD AVENUE * FORT LAUDERDALE, FLORIDA 33301 * 305/765.6000 PAGENO="0277" 271 Page 2 September 11, 1991 (4) allowing states to use 75 percent of the reserve for direct services (which may include activities that assist the parent or the child in enrolling in care, such as eligibility determination, health screenings, and resource and referral). The remainder of the funds (25 percent) should be used for quality improvement activities and/or administration of the program or grant. I appreciate the opportunity to offer comments on these proposed regulations and hope you will incorporate these suggestions in the final regulations. Sinc rely, Toni J. Siskin School Board Member District IV TJS/deb PAGENO="0278" 272 TESTIMONY BY THE HONORABLE PETE WILSON, GOVERNOR O~' CALIFORNIA, BEFORE TEE HOUSE WAYS & MEANS SUB-COMMITTEE ON HUMAN RESOURCES ON THE ADMINISTRATION'8 PROPOSED FEDERAL CHILD CARE REGULATIONS SEPTEMBER 26, 1991 Thank you for the opportunity to submit written testimony on the interim final rule promulgated by the Department of Health and Human Services for the new federal Child Care and Development Block Grant. As an active participant in the debate surrounding the passage of historical child care legislation last year, I can attest to the accuracy with which the interim final rule reflects congressional intent. I wish to commend the Department of Health and Human Services for its diligent efforts in this regard. It is anticipated that other witnesses who will be heard this morning will take a different view. If the California state planning process is any indication, some will wish to achieve through regulation what they could not achieve through Congress. Some tried to impose unnecessary, stringent standards on the States and failed. Some tried to place the choice as to the moat appropriate type of child care with the bureaucracy rather than with parents and failed. Some tried to devote a greater share of limited federal resources to quality enhancement activities and failed. Some even tried to regulate grandmothers and failed. There is a saying that one should not read into that which is not there. Congress very clearly stated its intentions in the conference report which included the Child Care and Development Block Grant Act of 1990, and I quote from page 923 of that report: "It is the conferees' intent that a preponderance of the block grant funds be spent specifically on child care services and a minimum amount on other authorired activities, PAGENO="0279" 273 -2- The conference report continues: "The managers believe that parents should have the greatest choice possible in selecting child care for their children. Thus, parents assisted under section 658(c) (3) (B) would have complete discretion to choose from a wide range of child care arrangements, including care by relatives, churches, synagogues, family providers, centers, schools, and employers." The interim final rule correctly reflects this report language. In particular, I am heartened by the strong emphasis the rule places on parental choice. The choice as to the type of child care should remain in the hand of the person that rocks the cradle rather than in the hand of the bureaucracy. Bureaucrats, no matter how well-intentioned, sitting in Washington and Sacramento cannot possibly know better than Mr. and Mrs. Jones what is best for little Bobby Jones or the Jones family living in Los Angeles or Lodi. For that reason, we must continue to promote policies that empower parents to make the decisions which affect their children's lives. Long ago California recognized the intrinsic value of parental choice by establishing the Alternative Payment (AP) Program, California's child care certificate program. Under this program, parents may choose from a wide variety of child care programs without undue influence or interference by the State. In fact, the success of the AP program and its emphasis on parental choice led to California choosing to place the majority of new federal child care funds into this program. The final rule must continue to safeguard parental choice to the maximum extent possible. The final rule also should continue to place a high priority on funding for direct services. The genesis of the legislation which lead to the creation of the Child Care and Development Block Grant was the growing crisis caused by the lack of affordable, quality child care. Congress took great care to address this need by ensuring that a majority of the Block Grant funds be used for direct services by unequivocally stating in the conference report that the preponderance of funds be provided for that purpose. PAGENO="0280" 274 -3- I imagine that the Subcommittee will receive testimony from a variety of groups advocating the need to divert funds from direct services to quality enhancement activities. However, this clearly was not the design of Congress. On behalf of thousands of California fa~ilies who are without child care, it is imperative that direct services remain our first priority. Moreover, any activities which divert funding from direct services must be examined closely to determine whether the benefit derived from the expenditure outweighs the benefits of underwriting additional child care slots. Finally, the interim rule appropriately gives states the~ flexibility to design their child care systems to ensure the health and safety of their children while safeguarding parental choice. The final rule should continue to do so and must not force states to impose stringent and unnecessary requirements upon child care providers, especially if doing so will not result in any substantial increase in program quality but~ instead will shrink the pool of available, qualified providers entering the child care field. I want to make it clear that I am not advocating abolishing state regulation of day care. I wholeheartedly support minimum standards to ensure the health and safety of our children. Hut states shouldbe left to define those standards. There is one concern regarding the interim final rule which I must bring to the Subcommittee's attention and that is the restriction which has been placed on the use of funds for administrative purposes as it relates to state certificate programs. I firmly believe that administrative costs must be kept to a minimum. However, I am concerned that the ten percent cap on administrative costs seriously will impair California's ability to operate an effective and efficient certificate program. As Ihave mentioned, California currently operates one of the largest and oldest certificate programs in the nation, Given the intense, individual attention and services provided to families under this program, administrative costs have run as high as fifteen percent. PAGENO="0281" 275 -4- Therefore, I am hopeful that the Department of Health and Human Services will give serious consideration to increasing the cap for "other authorized activities" to fifteen percent under the seventy-five percent of funds available for direct services, and that the five percent increase be tied specifically to administrative activities. Congress took important action last year to help meet the child care needs of thousands of families across the Nation. For those of us directly involved in the debate, which at times was quite spirited, we witnessed the evolution of a federal child care policy which in its infancy side-stepped states regulatory systems, limited child care options, placed little faith in parents, and failed to recognize the value of providing assistance through the tax code to parents who choose to remain at home during the early stages of their children's development. However, when all was said and done, Congress rightfully endorsed a child care policy rooted in the belief that the federal government's role in the child care arena should be to expand the availability of all forms of affordable, quality care, to maximize parental choice and options, and to grant states flexibility in administering child care programs. The Department of Health and Human Services interim final rule accurately reflects this final policy. To say otherwise simply is not fair. Thank;you for your consideration of the comments I have made. "I PAGENO="0282" 276 n CAWYG CALIFORNIA ASSOCIATION FOR THE EDUCATION OF YOUNG CHILDREN 9/8/9 1 WRITTEN TESTIMONY FOR THE SUBCOMMITTEE ON HUMAN RESOURCES, COMMITTEE ON WAYS AND MEANS, U.S. HOUSE OF REPRESENTATIVES, 9/17/91 The following statement is a synopsis of letters already sub- mitted to the Assistant Secretary for Children and Families~by Ree Williams, CAEYC Public Policy Chair. CHILD CARE AND DEVELOPMENT BLOCK GRANT REGULATIONS: HEALTH AND SAFETY - While the regulations themselves correctly reiterate the language of the statute, the preamble examples suggest that states can meet the health and safety requirements by activities that clearly fail to provide the health and safety protections contemplated by the statute. Final regulations should clarify that health and safety requirements for providers receiving Block Grant funds must be in 2.~.~GR' in order to protect the welfare of children. Such protections support parental choice by offering parents a supply of child care providers who can ensure that their children will be in a healthy and safe environment. QUALITY AND AVAILABILITY IMPROVEMENT - The regulations severely limit the states' ability to actually use any portion of the 10-15% of the 75% intended to be used for child care services and activ- ities to improve the quality and availability of care for the quality and availability activities.Many states will have to spend the 10-15% on administrative costs with little left for quality and availability improvement.It is unrealistic to expect states to expand child care services without recruitment and retention of a stable child care work force. Funding activities for recruitment and training of new providers in areas lacking an adequate supply of child care can expand and enhance services - again supporting parental choice. TITLE IV-A REGULATIONS: Payments under the Title IV-A program will continue to be limited to no more than the 75th percentile. This will limit parental choice of higher quality services, despite the high priority the regulations place on parental choice in general. Allowing payment below the 75th percentile violates the principal of "market rate" as stated in the statute, further compromising access to quality and parental choice. Eligibility requirements may impede families' access to care.In- come level alone should be sufficient proof of the risk of welfare dependancy. Requiring additional evidence adds to the complexity of the intake procedure and may impede access to services. This is particularly true in California, where so many of our low- income families are limited or non-English speaking. - P.O. Box 160373 Sacramento, CA 95816 * Phone 916/442-4703 PAGENO="0283" 277 CALIFORNU STATE DEPARTMENT OF EDUCATION Bill Honig 721 CapItol Mall; P.O. Box 944272 Superintendent Sacramento, CA 94244-2720 of Public Instruction September 12, 1991 Robert Leonard, Chief Counsel Committee on Ways and Means U.S. House of Representatives 1102 Longworth House Office Building Washington, D.C. 20515 Dear Mr. Leonard: To facilitate The House Ways and Means Subcommittee on Human Resources oversight hearing on September 17,1991 we are sending you a copy of the California Department of Education, Child Development Division comments on the Child Care and Development Block Grant (45 CFR 98 and 99) as submitted to Mark Ragan, Child Care Task Force, Washington, D.C. Comments on the At-Risk Child Care program are not included as the California Department of Education did not have any comments, We trust the enclosed will be of assistance. If you have any questions, please contact Susan Thompson, Child Development Division at (916) 324-82%. Sincerely, A. rantes, PILD. iatant Superintendent Child Dcrdlopment Division Enclosure PAGENO="0284" 278 COMMENTS By The STATE OF CALIFORNIA Depar{meni. of Social Services LONNIE M. CARLSON Interim Director Section 255.4 Cc) (2) Allowable costs and matching rates Section 257.41 Child Care Standards EB2~I~.IQ~ These sections preclude States from establishing additional child care standards and regulations which would apply only to publicly funded child care and not be applicable to privately purchased care. Child care funded under Title TV-A (JOBS, TCC and At Risk) must meet standards that are generally applicable to care of a particular type in a State regardless of the source of payment for care. DISCUSSION In the preamble ii. is st~1ed that child care for which there Is no applicable standard; I.e., no licensing or regulatory requirement set by the State, is considered legal care and should be available to At Risk Child Care recipients and other recipients of Title TV-A child care. States are specifically precluded from imposing additionsl requirements upon this form of care. The justification for this position is that recipients el child care funded under Title TV-A should be given the same access to the care provider of their choice as other private consumers. California fully supports this concept; however, as the contractor of service, we believe the public would want States to be accountable for the health and safety of the children served by the program. Making payments to known felons or child abusers would produce a public outcry and place States In a precarious political and legal position. These types of concerns might even generate political pressure to produce a mandate for government to purchase licensed care only. RECOMMENDATION Consistent with our recommendation on parental choice (see comments on Section 257.4 (a), (b) and Cc)), California recommends that the final rule allow States the flexibility to ensure the health and safety of children by, at minimum, permitting fingerprinting and child abuse registry checks for unregulated care. We believe such controls would enhance rather than impede parental choice by offering parents critical information In their selection of a child care provider; I.e., criminal record and child abuse history. The final rules should also contain the authority to deny payment if such controls are not met. PAGENO="0285" 279 Section 257.10 (b) md (c) State IV-A agency administration EBQ~LI~1Q~ These sections provide States the flexibility to carry out the At Risk Child Care Program through contracts with other State agencies including allowing such agencies to determine individual eligibility in accordance with rules set by the State IV-A Agency. The flexibility of this provision will allow California to utilize an existing child care delivery system already In place statewide with minimal modifications and will aid In the promotion of a seamless child care system. California supports the contracting flexibility provided to States. However, this section requires the State IV-A Agency to issue the rules and regulations governing the program. In California, authority for subsidized child care programs resides with the California Department of Education (CUE). CUE governs Its programs through its statutory authority, the Education Code. The State IV-A Agency has no authority to revise the Education Code. Therefore, to contract with CUE to operate the At Risk Child Care Program, we intend to negotiate an Interagency Agreement with CUE to govern program operations. It is our intention to work with CUE to develop the necessary changes to its code sections and regulations to govern the program. A provision within the Interagency Agreement will require CDE to develop the changes necessary and will preclude CUE from changing the Education Code and regulations specifically related to the At Risk Child Care Program without the review and approval of the State IV-A Agency. RECOMMENDA1 ION HHS should retain the option to implement the At Risk Child Care Program via contract in the final rule. Additionally, the final rule should be modified to allow the State IV-A Agency to adopt the existing regulations of its contractor to govern the program, with any changes expressly limited to only those requested and/or - approved by the State IV-A Agency, by contract provisions. Section 257.21 (b) (1) and (2) State plan content eaQ~1~1QN These regulation sections require States to include definitions for at risk and `low-Income' In the State Plan. California supports the flexibility provided to States to define "at risk" and "low income" to meet the unique demographic needs of each State. RECOMMENDA1 ION HHS should retain, this ffexibility in the final rule. PAGENO="0286" 280 Section 257.30 Cc) Eligibility PROVISION This section provides that the State may provide child care to an eligible individual during short breaks in employment if the child care arrangements would otherwise be lost. DISCUSSION This section allows States to pay for child care during short gaps in employment) thus avoiding unnecessary disruptions in child care arrangements which can sometimes impede an individual's early return to employment. However, it would be more helpful to States if,~definitlons and timeframes for gaps in employment could be left to the discretion of each State. This would allow each State the opportunity to more closely align the At Risk Child Care Program with other subsidised child care programs operated within the State. The ability to define gaps in employment consistently with other programs would aid In developing a more "seamless' approach to child care in the State. RECOMMENDATI ON HHS should retain the provision to pay for gaps in employment; however, California recommends that the final rule allow States the flexibility to define breaks in employment and the appropriate timeframes for these breaks. Section 257.31 (b) Fee Requirement. PROVISION This section directs States to establish a sliding fee scale which provides for some level of contribution by all families. DISCUSSION CalifOrnia supports the flexibility provided to States in the establishment of a sliding fee scale. However, we believe the proposed regulations go beyond the statute in requiring a minimum fee payment from all families. Section 402(1)(3)CA)(l) of the Omnibus Budget Reconciliation Act of 1990 requires a contribution based on the family's ability to pay. In California, families whose income falls below the poverty level are not assessed a fee for child care subsidies. It is our position that such families do not have the ability to pay given their low level of income. It would be more harmful than beneficial to require these families to pay any minimum fee. In addition, the administrative costs associa'ed with collecting such minimal fees would not be a cost-effect ive practice. RECOMMENDATION Given that the statute allows States the flexibility to establish a fee scale based on the family's ability to pay) California recommends that the final rule provide States the flexibility to establish a sliding fee scale that includes a zero share-of-cost for families at the lowest Income levels. This would allow States to provide equitable treatment for families of like size and Income, and to provide consistency with existing child care programs to create a more seamless child care delivery system. PAGENO="0287" 281 Section 257.40 (a), (b), and Cc) Methods of providing child care These sections outline methods a State may use in providing child care, which require at least one method by which self-arranged child care can be paid. They additionally require that the caretaker relative be provided an opportunity to choose the arrangement for care when more than one type of child care is ave i lab I e. Although these regulatory sections do not specifically require maximum parental choice ~n the selection of child care, the preamble to these sections implies that a parent be provided a choice between self-arranged and other types of child care. California strongly supports the concept of maximum parental choice; however, we also believe that States should have more flexibility to establish minimum protections in this area. For example, States should be able to set minimum standards to ensure that children from At Risk families are not left with providers who have been convicted of child abuse, or that infants are not left in the care of other young children. In addition, many States are utilizing existing child care subsidies to provide the matching funds necessary to obtain the At Risk Child Care Program grant. Existing child care subsidies that can be utilized as a match for this program are currently available in specific child care settings, Including centers, family day care homes, and alternative payment programs (California's parental choice program). The use of these existing funds, therefore, may imposesome limits and restrictions upon parental choice. Section 2S7.40 (a) (4) makes reference to the `caretaker relative". This term Is not used anywhere else in the regulations; instead "parent" and/or "family" are used. "Caretaker relative" is a term that is commonly used in the Aid to Families with Dependent Children Program with avery specific definition. Utilization of this term in the At Risk Child Care Program may create confusion. RECOMMENDATION California fully supports the concept of parental choice. However, we recommend that the regulations be modified to allow States to have the flexibility to ensure safety protections for At Risk children by at least allowing fingerprinting and child abuse registry checks. California also recommends that the final rule allow States to maxlmi2e parent choice to the extent fiscal limitations will allow. Additionally, we would recommend deleting the term "caretaker relative" and instead utilize the more frequently used terms "parent" or "family' in the final rule. If "caretaker relative" is used, then we would recommend it not be defined and provide States with the flexibility to define it to meet their own circumstances. PAGENO="0288" 282 Section 257.5 Reporting requirements EBQ~LI~IQN This section requires States to prepare and submit an annual report to the Secretary beginning in Fiscal Year 3993. The report should contain the number of children receiving services and the average cost separately by type of care, the child care licensing and regulatory requirements in effect in the State, and the enforcement policies and practices in effect in the State. California acknowledges end appreciates the period of time the rule provides States to implement, program, or modify existing reporting systems before requiring the submission of statistical reports. *However, the requirement to report the number of children receiving service and the average cost by provider type including center-based, group, family and relative care is an onerous requirement. Current reporting mechanisms can provide the number of children receiving services and the average cost of such services with a characteristics survey conducted to ascertain the types of providers utilized; however, average cost per child by type of care is not currently available. To reprogram systems to gather child-specific data by type and cost would be very expensive. California recommends that this reporting requirement be reexamined. States should only be required to report the actual number of children receiving services and the aggregate average cost of care on an annual basis. If specifi.c information is required on the utilization and cost of care by type of provider, States should be allowed to provide this information via a statistically valid survey methodology. Section 257.60 (b) Cl) Availability of funding. EE2~liIQt~ This section describes the method utilized in determining a State's share of the national total of funds available for the At Risk Child Care Program. States are allotted the same ratio of program dollars as the number of children residing In the State is to the national total of children under 13. DlSCUSSTON~ - Under Section 257.30 (b), Eligibility, the regulations state that child care may be provided to any child under the age of 13 or under age 18 if the chlld.ia physically or mentally incapable of self-care or under court supervision. The funding methodology does not take into account the children with special needs under 18. California recommends that the final rule include the number of special needs children under the age of 18 residing in the State along with the children under age 13 to determine the ratio of funds to be allocated to each State. PAGENO="0289" 283 Section 257.62 Cc) (1) Matching requirements PROVT SION This section allows States to use existing public funds as the States share for meeting the matching requirements so long as the funds are not Federal funds or used to match other Federal funds California appreciates the flexibility provided in the rules which allows States to utilize existing public funds to meet the matching requirements. Given the budgetary crises faced by several States, many would not be able to take advantage of the At Risk Child Care Program grant were it not for this flexibility. RECOMMENDATION HHS should retain this option for States in the final rule. 51-713 0 - 92 - 10 PAGENO="0290" 284 i~ CALIFORNIA STATEDEPARTMENT OF EDUCATION Bill HonIg 721 Capitol Mall; P.O. Box 944272 - Superintendent Sacramento, CA 94244-2720 of Public instruction August 1, 1991 Mark Ragan Child Care Task Force Fifth Floor, 370 L'Enfant Promenade, SW Washington, DC 20447 Dear Mr. Ragan: This transmits our comments on the Interim Final Rule for the Child Care and Development Block Grant (45 CFR 98 and 99). As reflected in these comments, we are very concerned about the implications of the regulations for the health and safety of children served by registered providers. While these regulations speak to those health and safety concerns, the emphasis placed by these regulations on parent choice appears to make setting health and safety standards for these providers a futile gesture. We also believe that the registered provider provision is a serious problem for agencies administering the certificate program, from a liability point of view. California funds the Alternative Payment Program, which operates on the same principles as the certificate program described in these regulations. Our contractors generally avoid the kinds of situations contemplated in the registered provider provision. We suggest Department of Health and Human Services (DHHS) consult closely with operators of programs like our Alternative Payment Program to identify the practical problems involved, and to work out solutions. We are also concerned about the utterly inadequate provision made for administrativp costs in these regulations. While we share DHHS' view that most of this money should be spent on direct services, in order to properly implement this program certain administrative activities are essential and must be adequately funded. We believe the 10% percent limitation on administrative costs fundable with child care services money is "penny~wise but pound-foolish." We recommend that local administrative costs be defined as direct services. Finally, DHHS issued these regulations for comment during the same period that prospective grantees had to prepare their applications and plans for Federal Fiscal Year 1991. The applications and plans were due on July 24, 1991 (postmark date). The attached comments were to be delivered to DHHS by August 5, 1991. Consequently, the staff who wrote the plans, and who are most qualified to comment on these regulations, had the least time to do so. We believe that it would be to DHHS' advantage to extend the comment period for prospective grantees through September 30, 1991. Thank you for the opportunity to comment on these regulations. If you have any questions on this, please contact Robert Cervantes, Assistant Superintendent, Child Development Division, at (916) 322-6233. Best regards, 747L~~ Bill Honig / ATTACHMENT BH RHb PAGENO="0291" 285 COMMENTS ON FEDERAL REGULATIONS CHILD CARE AND DEVELOPMENT BLOCK GRANT Section 98.20 Eligibility In order to be eligible for services a child must reside with a parent or parents who are working or attending a job training or education program; or receive, or need to receive, protective services. Comment Add "homelessness" and "seeking employment" to the criteria for establishing eligibility. California's current subsidized program recognizes these eligibility criteria because: 1) Homeless or unemployed parents need child care and development services so that they can assure that their children are in a properly supervised, safe and healthy setting while they seek housing or employment, 2) Children living in vehicles and shelters benefit from the stability, and the educational opportunities and support services, provided by a quality child care and development program, and 3) For many of these children, the meals served by the child development agency are the only nutritionally balanced meals they receive each day. Section 98.20 Eligibility The regulations cap family eligibility at 75% of the state median income. Comment California's current subsidized child care and development system requires that families be at or below 84% of the state median income at initial eligibility but the family can continue to receive subsidy until its income reaches 100% of the state median income. This allows low income families to continue to receive partial subsidy until they are more likely to be financially able to assume the full cost of care. A family earning 75% of the state median income will not have financial resources available to assume the full cost of care and the likelihood is high that the family will have to return to welfare assistance if the child care subsidy is lost. The federal intent is to provide "seamles&' services and this word is sprinkled liberally throughout DHHS' comments explaining the Final Interim Regulations. To meet this intent, the states should be permitted to fashion their block grant child care 1 PAGENO="0292" 286 system to compliment existing systems. Capping eligibility at 75% will create a cliff over which many families will fall since California's current subsidized system is saturated and state funds will most likely not be available to continue funding for these families. We recommend that DHBS take those steps necessary to enable families, once determined to be federally eligible, to continue be income eligible until their income equals or exceeds 100% of the state median income. Section 98.30 (g) Parental Choice Through the certificate process, federal regulations provide parental autonomy in selecting the provider of service. It accpmplishes this by mandating that federal block grant funds be made available to parents who wish to secure services from various types of providers, including those who provide services in the parent's home, and other providers who for various reasons are exempt from licensure. Comments This policy raises certain liability problems which have caused state, local and private agencies to avoid these types of service delivery mechanisms. While mandating that services be provided through individual providers, whether services are provided in the parent's home or the provider's home, these regulations provide no mechanism for satisfying legitimate concerns about this approach. Liability for Bad Choices by Parents We discuss in relation to section 98.41, our concerns for the consequences to children of allowing their placement in situations which do not satisfy fundamental health and safety requirements. We believe that the better policy is to put the~ basic health and safety issues ahead of parental choice as a priority. Assuming that the Federal Government is committed to allowing parental choice to prevail over health and safety concerns, when children are injured, the Federal Government must accept the moral and legal responsibility for these priorities. Is DHHS willing to assume liability for injuries proximately caused by the good faith implementation of its parent choice policy? We recosmend that DHHS reconsider its policy on parental choice. The policy should be changed to make the health and safety of the children the paramount consideration. DHHS should assume responsibility for finding an acceptable policy formula which 2 PAGENO="0293" 287 maximizes parental choice within the context of assuring the health and safety of the children while taking into account the states' responsibility as parens patria and the responsibilities necessarily assumed when the government finances parental decision making. Individual Providers Federal block grant regulations require that parents have the option of securing services from persons who are not licensed, who will frequently be, in fact, individuals operating as independent contractors, who may provide services in their own homes or in the parent's home. The providers may or may not be relatives, since at least under california law child care services may be delivered in a limited number of circumstances by providers who are not relatives but who are exempt from licensure. While parents with the resources to purchase their own child care have been able to utilize these resources, agencies providing subsidies for such care have been unwilling to do so. There are significant tax and vicarious liability issues raised when this delivery mode is selected. Tax Liability. In theory, the certificate is provided to the parent who finds and contracts with the provider for services. In this apparently simple relationship, the provider is either an independent contractor or the employee of the parent, but has no relationship to the agency which provided the subsidy to the parent. The Internal Revenue Service and various state tax agencies are responsible for collecting withholding or payroll taxes. Independent contractors are responsible for paying the taxes on their own. If the provider is an employee, the employer is obligated to collect the employee's share and pay the employer's share. The IRS and other tax agencies do not necessarily accept the representations of the parties as to whether the provider is an independent contractor or an employee, and, indeed, this question may come into dispute among the parties when a tax agency comes to collect overdue taxes and penalties. The Internal Revenue Service has been focusing, in recent years, on the "gray market" where people receive compensation for services rendered and do not pay withholding and payroll taxes on the income. No doubt because of the difficulty in finding and the cost of trying to collect from individuals who do not pay their taxes and who are not employees, the IRS has attempted to resolve this problem by identifying a sitting duck with deep pockets. In the case of individual child care services providers, even if they desire to pay all applicable payroll and other taxes, it is likely that many will lack the sophistication to do so, and will lack the resources to hire someone who can perform the accounting PAGENO="0294" 288 and payment functions. Parents are also not likely to have the ability to comply with the obligations which tax authorities impose on employers, even if they desire to do so. In order to assure that all taxes are paid, IRS has gone to the source of the subsidy for the child care services and has maintained that that organization is the employer and obligated to pay payroll taxes and withholding, includinp back taxes, interest and penalties, if Liability under the Doctrine of Respondeat Superior. The problem does not end with tax liability. An employer is liable for the tortious conduct of his employee both directly and vicariously. An employer is also responsible for worker's compensation claims, and for labor relations matters. The legal criteria for determining whether an agency is an employer for tax purposes is generally the same criteria for determining whether an agency is an employer for the purposes of Respondeat Superior. Generally, the test is the degree of control the purported employer exercises over the physical conduct of the work performed. Arguably, if an agency is an employer for tax purposes, this is evidence that he is an employer for other purposes. Under the federal certificate program as described in these regulations, the essential facts are that an individual is employed to supervise and care for a preschool child in a private home. Federal regulations require that the grantee or its delegatee have a significant relationship with the provider through the registration and payment processes. If the grantee or its delegatee is also required to receive and investigate parental complaints about a provider (see our comments about section 98.32), this requirement leads to the plaintiff's argument that the grantee or its delegatee is somehow responsible for the provider's performance. The child is vulnerable to injury and needs protective supervision, indeed, this is the reason for the child care - provider. Yet under the Federal program the child may be placed with an unlicensed person whose performance is subject only to the supervision and control of the absent parent. Since the individual provider is likely to b.e judgment-proof, the agency making payment, or the grantee, are likely to be named co- defendants in any circumstance where the child or a third person is injured by the provider while acting, arguably, within the scope of his employment. Not only is the Federal government mandating that the grantee or its delegatee be a sitting duck, but through its registry and complaint collection and investigation requirements, it is putting a loaded shotgun in the plaintiff's hands. If the Federal Government mandates a certificate process through which services may be purchased from judgment-proof, unlicensed, 4 PAGENO="0295" 289 unsupervised individual providers, it should also take the following steps: 1. By federal statute or regulation, declare as a matter of law that contractors, grantees and subgrantees which provide funding or certificates to parents who select and contract with providers, are not the employers of said providers and are not liable directly or vicariously for the provider's wrongful or tortious conduct, nor are they liable for any tax which may be due based on the performance of the contract between the parent and the provider. 2. If the Federal Government intends that tax collection obligations arising out of the provider's performance of its contract with the parent be satisfied by the grantee or its delegatee, it should say so and should authorize the use of adequate amounts of block grant or other federal money to pay for the resulting administrative costs. Even in this case, the Federal Government should act to insulate grantees, subgrantees and contractors from being held to be employers by virtue of actions taken in compliance to the federal block grant and implementing federal regulations. Section 98.32 parental Coiuolaint~ The regulations require grantees to maintain a record of substantiated parental complaints and make information regarding such parental complaints available to the public on request. DHHS' comments on this section interpret these regulations as requiring that the grantee or its delegatee assume the responsibility for substantiating the complaints. cp~~er~t In California there is an existing system for collecting and investigating complaints against licensees, and for allowing public access to information about substantiated complaints. There is no such mechanism, currently, for unlicensed providers. If this requirement also applies to complaints about "registered" providers, one of two alternatives pertain: -Only complaints substantiated by some existing investigative agency in the normal course of its activities (e.g., the police department, the protective services program, or some similar agency) must or can be maintained and made available to the public. A * problem with this approach may be that in many cases *2-the reports will not be available for public viewing on a timely basis, if ever (e.g., child protective services files are normally confidential). -Alternatively, additional investigative resources wil' PAGENO="0296" 290 have to be secured to investigate any complaints received. Whereas, investigations of licensees affect the services provided to children in group setting~; investigations of registered providers are likely to affect the services of one or only a few children from the same family. Consequently, the cost per child~. served of these investigations necessarily will be~ considerably higher than are experienced in licensing investigations. These Final Interim Regulations make no adequate provision for the significant but unknowable costs that will be incurred as a result of this policy. If this requirement applies to `registered" providers, except for alleged violations of child protective services or criminal statutes, it is difficult to know what criteria should be used to determine what complaints need to be substantiated. Basic licensing standards, which relate to health and safety concerns, will not apply. Does DHHS expect that there will be investigations of alleged failures to comply with standards which registered providers are not obligated to comply with, and that their failure to do so will be made a matter of public record? We recommend that DHHS place greater emphasis on the health and safety of children than parental choice. Failing that, if DHHS is not willing to rely exclusively on parental choice and supervision of child care placements, we recommend that DHIIS, through its regulations and not its comments, specifically state the nature and scope of the responsibility to investigate complaints about registered providers which it is imposing on the grantee or its delegatee. Further, we recommend that DHHS make adequate provision for funding these additional administrative costs, as well as the liability claims which will have to be paid as a result of this approach. Section 98.41 Health and Safety Requirements While states must have health and safety standards in place, it appears that under section (b) they may not apply them nor enforce them if they are inconsistent with the parental choice safeguards. Comment California feels strongly that applicable provisions of its current health and safety standards for family child care homes and for center-based care must be applied uniformly to all providers operating under the federal block grant. These standards were set in place to protect children in child care settings. The standards protect the providers, as well, because they prevent injuries which can result in liability. Also, protection of the health and welfare of children supports PAGENO="0297" 291 parental choice in that parents are better able to assure that they are selec :ing providere who operate safe and healthy programs. We reccrmeni that this regulation be altered to sake clear that tne first priority is the health and safety of chilcoen, while preservatior. of parental choice is the second priority. This modification should allow the apclication of the same basic health and safety standards to all child care providers, as appropriate, whether licensed or registered. Even if DHHS is concerned that health and safety standards will be use. as a pretext for excluding certain categories of prowiders, this does not justify making parent choice a higher priority than health and safety. The better approach would be for DEWS to sake clear that health and safety are the first priority, but that such regulations cannot be use to ills irately restrict parental choice. Further, DEWS would be veil served to investigate some of the reasons that stats and icca agencies have either directly or indirectly restricted access to certain types cf delivery sodas to determine whether are legitimate reasons for doing so, and what steps DEWS should be taking to address these concerns in view of i:s policy not to restrict access.. See cur discussion of section 93.30. Section 95.41 115~~h end SafetvRermiremenre This pcvtion of the retulations is a narrow interpretation of the statutory language contained in Section 658G, Activities to irprove the Quality of Child Care, subsection (4) on training which reads as follows: "?roviding training and technical assistance in areas appropriate to the provision of child care services, such as training in health and safety, nutrition, first aid, the recognition of corounicable diseases, child abuse detection.~ and prevention and the care cf children with special needs." It is recor.cended that DEHS be core specific in its reference to "nutrition." Section 93.41 rust be expanded to incorporate the congressional intent of including nutrition as an integral element of training. Nutrition has an essential role in the healthy growth and devslcptant of children. Nutrition training for child care staff has a darect impact cn shaping healthy focd habits in young children and in the quality of meals served in child developoent programs. Section 98.50(d)(2)(ii) Administrative Cost Limnitelipt This provision limits the amount of federal block grant funds PAGENO="0298" 292 which may be used for administrative costs, with certain exceptions specified elsewhere, to 10% of the funds available for child care services [section 98.50(b)]. The regulations do not say so, but it has been reported that DHHS reads this ten percent limit as applying not only to state administrative costs and local administrative costs associated with the implementation of the block grant and other program administration functions, but also to the administrative costs associated with delivery of direct services. Comment DHHS has not defined what it means by `administrative costs," thereby setting grantees up for future audit exceptions when they are unsuccessful in guessing what DHHS has in mind. In i~s explanation of the 10% limit, DHHS points to information indicating that Congress intended that a preponderance of the child care services funds be used for direct services. Congressional intent that a preponderance of the money be used for direct services does not support the conclusion that only 10% of the money may be use for administrative costs. The term "preponderance" is not a novel term at law, and generally means more than half. For example, "preponderance of the evidence" generally means "evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it;..." Black's Law Dictionary. While 90% is no doubt preponderant, so is 51%. DHHS offers no empiric~l basis for concluding that a 10% limitation on administrative cost bears any reasonable relationship to the costs of implementing the block grant program described in these regulations and of delivering services with block grant funds. The California Department of Education, in contrast, has extensive experience administering child care and development programs through both direct services contracts and contracts with alternative payment (Certificate) programs. All of California's state-subsidized child care and development programs are administered through contracts with a variety of public and private entities at the local level. As a result of its experiences, California has developed extensive statutory and regulatory provisions related to the reimbursement of contractor's costs of delivering child care and development services. In general, to be reimbursable all costs must be both reasonable and necessary. In addition, statutory provisions limit administrative costs for all state-funded Child care and development programs to a maximum of fifteen percent (15%) of the contract amount. Within the administrative cost limit is an eight percent (8%) limit on indirect costs. State and federally subsidized child care and development programs require adequate administrative resources to deliver the comprehensive, high quality programs needed by the eligible PAGENO="0299" 293 families which are low income and have other special needs. All contractors are required to maintain extensive records on family eligibility, attendance accounting, expenditure accounting, cost allocation plans and provider license/registration information as well as undergo an extensive independent audit each year. We have found over the years that the average cost of direct services administration for our one thousand plus contracts each year is fifteen percent. At the State level the administrative agencies must assure that broad purposes and outcomes of the block grant are met. In order to achieve these purposes the State must: increase the availability and the quality of child care and development services; maximize parental choice allowing access to a broad range of providers; coordinate with other state and federally funded child care and development services to devise a seamless system; collaborate with a large number of varied interest groups in developing and maintaining the state plan for the Block Grant; promulgate all rules and regulations governing the administration of the program; determine the usage and priorities for the expenditure of the Block Grant funds; conduct oversight activities to ensure contractor compliance with the plan and state and federal statutes and regulations; collect program data on families and providers as required; submit all reports required by the Secretary; oversee the expenditure of funds by contractors; monitor programs and services, and fulfill responsibilities in any complaint, compliance, hearing or appeal action under subpart J or part 99. These activities all require the expenditure of block grant funds for State level administrative activities. The total cost of these ongoing activities is an estimated three percent (3%). In view of the mandated administrative responsibilities at the state and local levels for the implementation and ongoing oversight of the block grant, the limitation of ten percent (10%) for both state and local administrative costs is grossly inadequate. There are two possible alternative solutions to this problem. The first alternative is to increase the limit to a percentage that would take into account the varying needs of the fifty states for administrative costs at both the state and local levels. Finding a percentage that is reasonable and meets the needs of the various administrative structures in all states will be very difficult. A simple alternative is to treat local level administrative costs as an integral part of the cost of providing child care services. We recoxrtmerid that local administrative costs under the 75%set- aside be considered program service costs, and therefore, not sftject to the percentage limitation. This amendment to the interim rule would alleviate the pressure on the percentage of funds allocated for state and local level administration. In PAGENO="0300" 294 addition, this change Would provide consistency in treatmer.t of block grant funds, since these local administrative costs c~ the 25% sat-aside are considered part of the cost of providing the services. This change would also be consistent with the regulations for the administration of GAIN, TCC and Title IV-A At Risk child care and development services. The Administration for Children and Families should defer to the States the responsibility for determining any reasonable and necessary limits on the costs of providing child care and development services in order for the block grant funds to fit "seamlessly" into existing state and federally funded programs. Aveilabiljt~r of Child Nutrition Fundinc to Reoistered Providers Does DHHS intend that unlicensed, registered providers will be eligible to receive funding under the Child Nutrition program? If sc, has DHHS met with USDA to assure that there are no conflicts between the two federal departments regardin~ when and under what circumstances registered providers will be able to receive USDA funding, and what, if any, special administrative requirements and procedures will be established by USDA to accomplish this? We recommend that DHHS meet with USDA on this matter, jf it has not done so already, and advise all prospective granteas cn the results as soon as possible. 10 PAGENO="0301" 295 Statement of Daniel Alvarez, Sr., Commissioner, Department of Human Services, City of Chicago, Illinois The Child Care and Development Block Grant (CCDBG) and the Health and Human Services regulations governing it wiil have a dramatic impact on the delivery of child care services in Chicago and throughout the country. The City of Chicago's Department of Human Services administers a 7,435-slot, 21 million dollar Title XX Child Care program in Chicago, as well as a range of other social services for families and children. On behalf of families critically in need of quality, affordable child care in Chicago, I would like to submit some constructive comments on the CCDBG implementation. There are five compelling issues in the regulations that the U. S. Department of Human Services has proposed for this program which need to be addressed: 1. REIMBURSEMENT RATE DIFFERENTIALS The regulations for the CCDBG need to allow different reimbursement rates for licensed and license-exempt child care. This rule ignores the realities of higher operating costs for licensed care and in effect penalizes licensed centers for providing a higher standard of safety and quality for children. The creation of a perverse disincentive to quality care undermines one of the primary objectives of the CCDBG legislation: safe, high quality care for children. In Illinois, such a requirement would mean revision of the entire child care payment system, which is based on the actual cost of care. This could only be accomplished after overturning state law that establishes the cost-of-care standard. We support the continuation of a reimbursement system that allows for different rates for different categories of care. 2. FLEXIBILITY TO ADDRESS QUALITY AND SUPPLY The regulations strictly define the percentage of funds that may be used for different activities, leaving no room for states to address the particular gaps in their system. Child care delivery systems vary radically from state to state, and the needs of working parents who must operate within those vary accor- dingly. In keeping with the block grant concept, states should be given maxi- mum flexibility in allocating funds among the allowable activities. From the perspective of a municipal administering agency, we must point out the unfair competition that the regulations set up between administrative funds and those allowed for increasing child care availability and improving quality.. None of these three important functions can be adequately addressed when only 10-15 percent of the 75 percent portion of the grant can be dedicated to these ends. Availability and quality activities detailed in the legislation that would be in- hibited by the 10-15 percent cap include: resource and referral, staff development and training, program improvements, salary improvements, assis- tance in meeting standards, and monitoring of compliance with, and enforce- ment of, licensing and regulatory requirements. These are all critical to developing and maintaining a strong, stable child care market that provides parents with safe and positive options for care. 3. INADEQUATE ADMINISTRATIVE COSTS As outlined above, the bundling together of three separate but crucial activities - including administrative expenses - under a 10-15 percent cap greatly understimates the need in each area. Administrative expenses should be considered separately, and capped at no less than 15-20 percent. PAGENO="0302" 296 4. MAINTAIN ELIGIBILITY STANDARDS The interim regulations set eligibility for subsidized services under CCDBG at 75 percent of the state's median income. We support this level. While families with lower incomes will be given priority it is important that this ceiling not be lowered so far that a family whose income increases after it is in the program is forced out before it can realistically afford market-rate care. 5. QUALITY AND SAFETY STANDARDS IMPROVEMENT INHIBITED By stating that state and local licensing regulations, registration, health and safety requirements and payment rates must not significantly restrict parental choice, the interim regulations stymie improvements in efforts to protect and nuture children. In an attempt to address parent choice, the regulations actually reduce the potential for development of good choices by discouraging states from upgrading regulation of child care. Any regulation of quality necessarily reduces parental choice by eliminating some unsafe and unqualified caregivers from the market. Consumer protection requires the loss of some vendors or services in exchange for the overall up- grading of the industry. Must parents be given the "choice" to buy poisonous food, defective cars, or unsafe toys when these, like unsafe child care, are not choices they would knowingly make? The existence of federal agencies to monitor these industries assures parents that a certain level of quality can be assumed among these products. Similiary, parents would prefer to choose among a number of Z2~ child care options than a slightly larger pool of options that include unsafe or inadequate care. Therefore, we recommend that the language in the regulations which inhibits standards improvements be eliminated. 6. PROTECTIVE SERVICE FEES One exception that should be made to the fee for service requirement is parents whose children are receiving protective child care. Such care is provided as a respite for parents at risk of or with a history of abusive or neglectful behavior. A fee requirement in these cases would serve as a disincentive to take advantage of an important preventive and therapeutic service. Language should be included in the regulations to explicitly waive fees for these families. In closing, I would like to commend the U.S. Department of Health and Human Services on several aspects of the regulations, including: - setting the ceiling for eligibility high enough to allow families to graduate to non-subsidized child care - setting payment levels high enough to allow children to receive care at the prevailing regional cost - ensuring that states use the CCDBG to supplement current child care invest- ments, not replace them. With some adjustments the regulations can ensure that parents and children enjoy the full benefit of the much-needed new block grant. Thank you for your consideration of these suggestions. PAGENO="0303" 297 Child Care Association of America 14102 Wars4ck IMed. Nomport Nce~, Va. 23602(804)886-0862 FAX (804)874-2344 STATEMENT OF THE CHILD CARE ASSOCIATION OF AMERICA SUBMITTED TO SUBCOMMITTEE ON HUMAN RESOURCES, COMMITTEE OH WAYS AND MEANS SEPTEMBER 26, 1991 Mr. Chairman and Members of the Subcommittee: This Statement regarding the Interim Final Rule on the Child Care and Development Block Grant (CCDBG) and the Title-.1V4"At-RiSk" Proposed Rule proposed by the Administration Ofl Children and Families is submitted on behalf of the CHILD CARE ASSOCIATION OF AMERICA (CCAA), which represents over 1400 licensed, private child care centers caring for over 12,000 youngsters in 7 Sunbelt States and Connecticut. The CCAA allies itself with the remarks presented to the Subcommittee by Representative Charles Steliolm (D-TX) to whom we have long looked for leadership in advocacy con- cerning quality center-based care in licensed and regulated environments ensuring the healthy and safe development of youngsters. In particular, we strongly support the parental choice provisions contained in §98.30 of the Interim Final Rule and urge the retention of the `parent choice or effects test" enunciated therein. We also strongly endorse the interpretation of the Conference Report position that the preponderance (90%) of the "Child Care Services" portion of CCDBG funds should be used for actual payments for the care of children, stress that administrative expenses at all levels be kept to a minimum and urge that it be expressly declared that these Child Care Services funds can be used for both Early Childhood and School-Age Care. In order to achieve the intent of the CCD9G, we feel that 4 basic principles or values be maintained in balance: 1) the right of parents to make an informed choice about the provider for their child; 2) the right of the child to equal protection in the areas of basic safety and health; 3) the right of States and localities to make applied decisions about programs for which they are responsible (the"p~iple_ML subsidiarj~y"); and 4) the right of the public to an accountable use of the funds they have paid through taxes. The main `problem in the Interim Final Rule lies in applying due concern to the areas of "registration" ((98.45) and basic health and safety requirements ((98.41), especially in the light of the principles presented in the paragraph above. On the one hand, there is the new Federal requirement that a simple procedure be established to "register" all providers who currently are exempt under State law from licensing, regulation and State registration so that they may be paid expeditiously and receive information about basic safety and health procedures; on the other hand, there is legitimate concern about the risk of parents choosing (unwisely and presumably. unimformedly) unsafe and unhealthy child care environments for their children. As currently drafted, the Interim Final Rule could be reduced to the simple situation of an unlicensed and unmonitored provider sending in their name, address and a bill for services to the State, and receiving in return some information (a pamphlet) about basic health and safety procedures in child care. How are safety, health and accountability best addressed? Who are those providers that currently are exempt under State law from regulation, monitoring and enforcement? They include religious child care centers, fully or partially in 14 States, public school-based child care in 35 States, "Drp-In" or "Short-Term' centers in almost all States, Family Child Care Nones caring for 5 or fewer children in 22 States (and family day care for 3 or less children in another 14 States), and relatives and neighbors in in-home situations. Treating the situation realistically and objectively, attention should be focused and limited to unlicensed and unregistered (i.e., not even self-certified) Family Child Care Nones where the vast majority of reported and verified violations in basic health and safety have been found. One can either subscribe to the "Sy Sims' approach to child care ("an educated consumer is our best customer") and devote significant resources to public education and consumer awareness, or a decisive attempt should be made to link more closely the simplified "Federally required registration process" to the provisions about prevention and control of infectious diseases, building and physical premises safety. and ninimum health and safety training appropriate to the provider setting (as enumerated itt §98.41). Unlicensed and unregistered Family Day Care Homes are not subject currently to the scrutiny of periodic inspections and monitoring. - It is not sufficient (under principles 2 and 4 enunciated above) for the State to declare merely that there are basic safety and health requirements in effect (`on the books'). The State should have the obligation to make sure that those minimal PAGENO="0304" 298 provisions are indeed being observed and followed. At a minimum, CCAA feels that except Family Child Care providers should report their Social Security number (and thus be forced out of the potentially non-tax-paying underground), should submit voluntarily to inspection by local fire and health officials, should have on premises a working smoke detector and fire extinguisher, and should provide evidence of qualifying in CPR and basic first aid abilities. Such requirements are neither onerous nor excessive, but reflective of good business and basic child care procedures. Parents also should be aided and educated through consumer awareness programs that they routinely inquire whether such basic precautions and practices are in effect. They should be assisted and enabled to make an informed and prudent choice about the child care situation to which their precious young ones will be exposed. The choice of a child care provider should not only be based on geographic convenience or low price to the dt~riment of basic health and safety considerations. Something more has to be dose than merely allowing a complaint procedure regulate the situation after the fact. Basic proficiencies, practices and qualifica- tions should be demonstrated by all providers of out of home child care. Furthermore, an even, competiti~re market has to be encouraged positively, lest State, regional or local Resource and Referral Agencies tend to be biased in their referrals and effectively limit the wide spread of options that parents deserve and require when selecting a child care arrangement. Also, in an effective effort to promote true supplementation of existing child care and allied services, the State's aggregate estimates of current base period expenditures (under §98.53) should be scrutinized carefully by the ACF and raised to the level of a measure upon which future Federal funding depends. Finally, proposals for so-called "Head-Start Wrap-Around" should be carefully evaluated. Head Start has been shown empirically to have achieved its objectives. However, when the last Congress reauthorized Head Start and expanded its authorized funding levels, it consciously decided against expanding the program to a full-day status, opting instead to reach more eligible children. It would be contrary, it seems, to Congressional intent to use CCDBG funding to "end-run" Congress and effectively make it a full-day program. The CCDBG program was deliberately designed to serve a certain class of children and their working parents, for whom previously there had been no child care subsidies available. To take from the vast numbers of "have-nots" to give to the "partially- haves" (i.e., those currently enrolled in highly effective half-day Head Start) would not seem to be in accord with expressed Congressional intent. Regarding the Title IV-A "At-Risk" proposed rules, several observations are in order. First, concerning the so-called "Two-Tier" regulatory systems. Historically, certain States, due to the political/social process, have required stricter standards for centers caring for publicly subsidized children. Since many economists would attribute higher costs to more stringent standards, a certain reasonable level has to be found. In other words, if standards are stricter (usually staff/child ratios and group sizes that have not been found empirically to have a direct correlation to positive developmental outcomes in children) at certain centers that care for subsidized children, those standards should be adjusted to the more minimal level. In the long run, there exists a delicate equilibrium between availability, affordability and quality improvement efforts in child care, and overly restrictive and unnecessary,costly standards should be adjusted to a more minimal level without detriment to the health safety and positive development of the children. The same arguments concerning "registration" and basic health and safety requirements made above are applicable to the "At-Risk" program. However, in reviewing the concept of "applicable standards" ((257.41 (a)(2), one can envision the situation where the vast majority of child care centers in a State are licensed, regulated,moiiitored and held to certain generally applicable standards, and yet State law exempts a certain class (type) of centers, e.g., those run by municipalities through Park and Recreation Authorities. On the one hand, these could be considered as "legal care" and eligible for "At-Risk" funding; on the other hand, a stronger argument should be made that for fending eligibility they need to observe the regulations and standards applicable to the majority of center-based care. Public and child accountability seems to demand the latter interpretation. CCAA pledges continued support for the ACF's efforts to reach as many eligible children as possible with various streams of subsidized support, and we look forward to working with the Chairman and Subcommittee in implementing both these n~w programs. ~Cordiall~ Dr. William J. Tobin Director of Government Relations PAGENO="0305" 299 October 15, 1991 Robert J. Leonard Chief Counsel Committee on Ways & Means U.S. House of Representatives 1102 Longworth House Office Bldg. Washington, D.C. 20515 Dear Mr. Leonard: On behalf of the staff, board and members of the Child Care Employee Project, I am pleased to have this opportunity to comment on the Administration's proposed federal child care regulations. The Child Care Employee Project is a national non-profit membership organization dedicated to upgrading the quality of child care services through improving compensation and access to training for child care teachers and providers. In 1989 the Child Care Employee Project released the National Child Care Staffing Study (NCCSS), the most comprehensive examination of center based child care in the United States conducted in over a decade. Our findings revealed an alarming state of child care quality in the majority of centers we studied across the country. These centers were negatively affecting children. In particular we found that in centers with high teacher turnover, children were delayed in their language and social development. However, the NCCSS also revealed a remedy to the situation. Better quality centers paid higher teacher wages, allowing them to attract and retain better trained personnel. Higher quality centers were also governed by stricter regulations for staff/child ratios and professional preparation. For these reasons, we hailed the Child Care Development Block Grant emphasis on improving the quality, as well as expansion of child care services for low-income families. We believed that the federal government's acknowledgment of the need to enhance services, as well as create more options, signaled an important breakthrough in our national child care policy which would benefit children most in need of high quality services. And, in this light, we are very pleased to see that the interim regulations allow payments for CCDBG funded care at the full market rate rather than at the 75th percentile as in the Family Support Act. This will enable low income parents access to high quality programs in their community. Unfortunately, however, we believe that other aspects of the proposed regulations actually limit parents' access to high quality services for their children and we hope these will be modified in the final rules. We are primarily concerned that the limit of 15% in the first and second years (and 10% in subsequent years) of the 75% portion of the CCDBG for administration and quality activities essentially eliminates any of these funds being used for quality enhancement activities. This is because the administrative costs alone will consume the entire 15% or more. While we understand that the intent of the legislation was to ensure that the preponderance of the 75% portion of the funds be spent on direct services, we believe your proposed ruling to require 90% of these funds for this purpose essentially violates that intent. It eliminates the option for any meaningful expenditure on activities to improve the quality of services. This portion of the funds and the 5% eannarked portion is not sufficient to address all the pressing quality issues. In California, for example, substantially over 60% of the public comment called for more funds to be allocated toward activities to improve the compensation of teachers and providers. But the public will cannot be addressed given the restriction discussed above. This ruling also seems to contradict federal activity in other arenas. Consider the quality set aside in the Head Start Reauthorization and the Caregiver Personnel Pay Plan included in the Military Child Care Reauthorization of 1989. These federal initiatives commit funds specifically to upgrading compensation and training. However, because of other competing and necessary quality improvements such as support for Resource and Referral and licensing enforcement an equivalent effort to support the training and compensation of providers of CCDBG funded care is impossible. Why should one group of children receiving federally subsidized care be restricted to poorer quality services? Essentially, CCDBG funded children will be discriminated against if monies are not available to raise wages and create accessible training options .. the most important predictors of quality services. Therefore, we suggest that the portion of the 75% to be used for quality and administration be raised to at least 25%. PAGENO="0306" 300 2 We have several other issues of concern. These relate to both the CCDBG and Title N-A at-risk child care. 1) We believe that consumer education should be expanded to include information for parents about how to identify a quality program. As we know from the recent horrible story on Prime Time Live parents need assistance in assessing the services available to them. 2) We believe the registration system for "exempt' providers should be strengthened. We also believe that the Title IV-A guidelines discourage states from applying even minimal health and safety prevention to the registration process. Name and address is little assurance of quality. These regulations suggest incorrectly that more involved requirements somehow limit parental choice. 3) Along these lines, it appears to be a violation of Congressional intent and an intrusion of federal policy to prohibit states from applying health and safety standards to At-Risk Child Care and child care authorized under the Family Support Act if such standards are not applied to all forms of regulated child care in the state. 4) Similarly, the regulations suggest that higher rates for higher standards will not be permitted. Yet we know from research that better quality programs adhere to better standards, and these standards do involve increased costs. We would aigue that the right to choose bad quality care really violates the spirit of the legLclation and the notion of parental choice. Parents should only be able to choose beiween a range of options that ensure the well beiAg and safety of their children~ To suge,est that parents have the right to choose sereices even if they endanger their children makes a mockery of the notion of parental choice. With respect to Title N-A Child Care, by capping the child care reimbursement rate at the 75th percentile of "local market rate," parental choice is limited to low cost child care settings. 5) Finally, under the discussion of parental choice the interim regulations for the CCDBG states that child care certificates must be made available to any parents offered services anytime that child care services are provided. This provision essentially makes it impossible to reserve funds for contracts or grants with providers for a certain number of slots on an annual basis. Yet for contracted programs to be able to survive and provide quality services, reserved slots are essential. If this provision is enforced in the name of parental choice, parents will lose access to contracted or grant driven programs, thus limiting their choice. We know you will receive a great deal of commentary. On behalf of those who teach and care for young children, we hope you will alter the regulations to allow for better compensation and access to training for child care teachers and providers. When child care becomes a career someone can choose to stay in, without taking a vow of poverty, parents will have a real choice and children will receive the caliber of services they need to develop properly. The Child Care Employee Project has many resources for policy makers related to compensation and training. Please feel free to call on us if we can be of assistance. Executive Director Child Care Employee Project 6536 Telegraph Avenue, Suite A-201 Oakland, CA 94609 (510) 653-9889 PAGENO="0307" 301 Statement of Barbara Coccodrilli Carlson, Staff Attorney, Child Care Law Center, San Francisco, Calif. My name is Barbara Coccodrilli Carison and I am a staff attomey at the Child Care Law Center is San Francisco, CA. I submit this testimony on behalf of the Child Care Law Center, the only legal services organization in the United States exclusively dedicated to creating affordable, quality child care. Our organization serves as a support center to California legal services offices on child care issues and provides direct legal services to child care programs and agencies, particularly those serving low income families. We work to eliminate legal barriers to the provision of child care services throughout the country, as well as to develop sound policy approaches to the expansion and improvement of child care services. We have been actively involved in the implementation of the Child Care and Development Block Grant and the Title IV-A "At.Risk" child care programs in California, by serving at the invitation of the Superintendent of Public Instruction on the state plan advisory committee. Law Center staff served on the Local Planning and Coordination, Regulation and Allocation subcommittees and developed proposals for various aspects of the program. As attorneys and advocates for better child care, we have serious concems about the overly restrictive manner in which both sets of regulations limit the states' ability to effectively regulate child care programs. In particular, any efforts to improve the states' regulation of family day care or impose a meaningful "registration system" for currently unregulated caregivers are seriously compromised by the proposed regulations. Both accountability for federal dollars and, more importantly, the safety of children may be jeopardized by the current approach. 1. The concept of "parental choice" has been used by the Administration to limit states' ability to apply more stringent standards to Block Grant and lV-A providers, while in effect prohibiting parents receiving these subsidies from having any meaningful "choice". The catch phrase "parental choice" has been used by she administration to support an agenda which has little to do with quality child care. True parental choice means that 1) quality child care programs are supported and encouraged, 2) parents are given adequate information to assist them in their search for child care and in their ability to assess what they see, and 3) each parent has available financial resources adequate so allow for the purchase of quality child care in a particular community. In both sets of regulations as currently drafted, she limits on funding for quality improvements coupled with the lack of requirements to ensure that states' payment rates and sliding fee scales are adequate to allow families so purchase decent care undermine true parental choice. A. The Block Grant regulations ~pppatediy emphasize that additional health and safety requirements cannot "significantly restrict" parental choice by : 1) effectively excluding any type of provider, category of care,or type of provider within a category of care; 2) limiting parental access to such types of providers and categories of care; or 3) excluding a significant number of any type of provider from any category of care. § 98.30(g). This extremely broad and vague standard could seriously deter states from imposing any reasonable and necessary health and safety protections. Under the regulations as drafted, even she requirement of a smoke detector or fire extinguisher could be viewed as infringing on parental choice if a significast number of providers did not or could not comply. The language of this section has no basis in the statute, and must be redrafted so that states will not be deterred from adopting reasonable safety standards as is tgg.g.jied in the language of the Block Grant statute. B. The IV-A "At~Risk" regulations, under the guise of "parental choice", mandate states to pay a provider regardless of his or her criminal records or child abuse history, yet prohibit she same parent from choosing a provider who is unwilling to allow parental visits at naptime for fear of disturbing the sleeping children in her care. 45 CFR 257.41(c). Although we agree with the Secretary that parents are concemed about the welfare of their children and that parental access is a valuable tool which allows them to safeguard their children, an equally valuable tool to families who place their children in child care is the peace of mind and knowledge that their PAGENO="0308" 302 provider's health will not endanger their child's health, and that their provider does not have a relevant criminal or child abuse record. Prohibiting states from providing all of the abovementioned safeguards prohibits parents who receive child care benefits under Title IV-A from having any meaningful choices. The abovementioned restrictions are particularly problematic with regard to the group of providers required by both sets of regulations to be "registered." Under the P1-A "At-Risk" program, the regulations outright at § 257.4l(b)(2) limit states to collecting ~ii such information as is required to make payment and fumish information. The Secretary has taken a different tact with the Block Grant Regulations: here, it is only in the preamble that states are "advised" to limit their registration system in this manner. Again, any effort a state might make to impose a meaningful registration system for currently unregulated caregivers, such as requiring criminal records checks and health screenings, are seriously compromised by both sets of regulations. 2. Instead of facilitating states' ability to weave a "seamless system" of child care services, the Block Grant and IV-A Regulations prohibit states from developing a child care delivery system which maximizes parental choice through regulatory protections and adequate reimbursement rates while easing the transitions for families between these two programs and other state and federal subsidized child care systems. A. Payment Rates In the IV-A "At-Risk" regulations, § 257.63 limits the payment rate so the 75th percentile of the local cost of care and authorizes states to set a statewide limit which is below this local market rate. The unintended effect of such a limitation on payment rates will certainly result in a situation where some parents, particularly those residing in rural areas, will have no choice of providers since the limited choices in such an area (e.g. public school based program) may in fact cost more than the 75th percentile limit. The Block Grant regulations, on the other hand, give states' far more latitude in establishing payment rates and in fact require such rates to ensure "equal access" for eligible children to comparable child care services provided to children whose parents are BQ! eligible to receive Block Grant Services. Mrs. Smith, potentially eligible for both these new subsidies, will have a much "greater" degree of parental choice in terms of purchasing power if she is lucky enough to have a Block Grant subsidy as opposed to a IV-A "At-Risk" subsidy. Does this kind of unfair distinction achieve the Secretary's stated goal of mandating "seamless" child care delivery systems in the stases? B. Eligibility Determinations The "At-Risk" statute defines eligible families as any low income family that is not receiving AFDC, needs such care in order to work, and would be at risk of becoming eligible for AFDC if such care were not provided. In comparison, proposed regulation § 257.30(a)(5) adds an additional requirement to this statutory definition in requiring families to "meet such other conditions as the State may describe in its approved At-Risk Child Care Plan." These additional "conditions" are not mandated by the statute, and requiring states to create yet another layer of eligibility conditions increases the risk of excluding families clearly intended by Congress to be eligible for benefits under this program. Again, the proposed regulations create yet another barrier to the "seamless system." Respectfully submitted, Barbara Coccodrilli Carlson Staff Attorney Child Care Law Center October 15, 1991 PAGENO="0309" 303 CHILD DEVELOPMENT CENTER (818) 914-8501 BOARD OF TRUSTEES ________________ Dr. Diana N. Lockard, Presldent(Claremont) Dr. Gary L Woods, Vice Presldent(Azusa) CItI'L1S Michael Bevllacqua, Clerk/Secretary(Glendora) e g e Dr. Robert T. McLean, Member(Monrovia/Bradbury) Dr. Edward C. Ortell Member(Duarte/Azusa) Jesse Martinez Carlos, StudentTrustee September 11, 1991 Mr. Robert J. Leonard, Chief Counsel Committee on Ways and Means U.S. House of Representatives 1102 Longworth House Office Building Washington, D.C. 20515 Dear Mr. Leonard: Please accept this written testimony on the proposed federal child care regulation. I have serious concerns about Section 98.30 (g) which provide that States cannot undertake additional regulatory activity if it "significantly restricts" parental choice. Since the setting of standards by definition eliminates programs which fall below the standard, it appears that states will be encouraged to allow continued operation of low quality and unsafe environments. Surely child care standards and parental choice are both important concepts which are not mutually exclusive. Please eliminate Section 98.30 (g). Sincerely, Diane Minds Coordinator de CITRUS COMMUNITY COLLEGE DISTRICT * 1000 W. Foothill Blvd * Glendora, California 91740-1899 - PAGENO="0310" 304 Statement of Guy M. Cooley, LCSW, Executive Director, Coordinated Child Care of Pinellas, Inc., PineHas County, Fla. I am writing to voice several serious concerns that I have related to the Interim Final Rule of the Child Care and Development Block Grant and the Proposed Notice of Rulemaking for the Title IV-A At-Risk Program. My concerns emanate from each of the following roles that I enjoy: Executive Director of Coordinated Child Care of Pinellas, Inc., the Central Agency for subsidized child care in Pinellas County, Florida which serves up to 3,000 low income families on a daily basis; member of several Pinellas County Early Childhood Councils; Vice-President of the Florida Children's Forum; Executive Committee member of the State Coordinating Council for Early Childhood Services; member of the Florida CCDBG workgroup; parent; and tax payer. These concernsx~fleot, in many respects, those developed, by the State Coordinating Council for Early Childhood Services in Florida. My two major concerns are outlined in the following paragraphs. Preface: I agree that it is healthy and appropriate to broaden the definition of "Parent Choice", but I believe that the interim final rule has gone too far in this area. Parents should have an array of choices, but the choices offered should only include licensed facilities which provide developmentally appropriate programs. Implementation of this higher standard would provide the maximum benefit for our tax dollars since high quality child care is directly related to improved school readiness and other positive outcomes. Unfortunately, the broader definition of Parent Choice will probably prevail. If parents are allowed to select unregulated child care, then I strongly, ~ required ito~p,ay un~egul &prQviderS at the same rate are ]-e~I prmvJ~ders~s,ince this practice will have the effect of: undermining incentives to existing regulated providers; cutting any incentive for unregulated providers to become regulated; wasting tax payer dollars and artificially inflating local costs for non-subsidized care by forcing overpayment for generally lower priced services. The regulations require states to pay unregulated providers the same rate as regulated providers. This provision is particularly troublesome because there is no association between the cost of care and the rate of reimbursement (not to mention the quality of care). Under typical federal programs, states must assure that payment rates are reasonable and do not exceed the normal cost to provide a service. This regulation ignores that guideline. Further, in states like Florida that do not have a statewide licensure law for family day care homes, there is no incentive for family day care homes to voluntarily license. In the past, we have been able to work with family day care homes and encourage them towards licensure through payment of an enhanced rate. This provision undermines that practice. It is recommended that the regulations recognize the legally unregulated provider as a separate category of care and require states to set payment rates for these providers that are adequate and reasonable for that type of care. It is further recommended that States be allowed to pay contracted, regulated providers on a differential reimbursement schedule based on their score on a standardized Child Care Program Assessment tool. These changes would allow Florida to continue efforts to reinforce high quality care. PAGENO="0311" 305 Concern II: The law seems to focus much attention on improving quality of care, yet not enough resources are dedicated for improving quality of The regulations limit the ability of Florida to improve the quality of child care programs. Since Florida is moving towards a single standard for all children, it is vital that we focus attention on activities which are designed to assist parents in making an informed choice of good quality care -- additional training for child care workers, increased monitoring of programs through licensure, enhanced resource and referral services and other similar activities. By requiring that 90% of the funds set aside for direct services/administration/quality improvement be spent of the purchase of child care slots, Florida's ability to utilize these new dollars to ensure that these critical activities are adequately funded has been severely restricted if not completely undermined. I am recommending that this provision of the regulations be amended as follows: 75% of the reserve shall be used for direct services which may include activities that assist the parent or the child in enrolling in care (such as health screenings, transportation, and resource and referral). The remainder of the funds (25%) may be used for quality improvement activities and/or administration of the program/grant. Thank you for considering these recommendations. Submitted By: Guy M. Cooley, LCSW Executive Director Coordinated Child Care of Pinellas, Inc. October 14, 1991 GMC/nlw PAGENO="0312" 306 19G6 Colonial Drive Coral Springs, Florida 33071 `September 23. Iggi The Honorable Robert J. Leonard Chief Counsel Committee on Ways & Means House of Representatives 1102 Longworth House Office Bldg. Washington. D.C. 20515 Dear Mr. Leonard: I urge you to amend the Interim Final Rule of the Child Care & Development Block Grant and the Title IV-A At-Risk Program. I request that you consider the following items: 1) Recognizing the legally unregulated provider as a category of care and requiring states to set up payment rates for these providers that are appropriate for that type of care. 2) Allowing states to require licensure of family day care homes receiving public subsidies even if the state does not vet license all family day care. 3) Allowing parents of At-Risk children to choose child care providers from a list of appropriate programs that will be licensed and frequently monitored as opposed to allowing them to use unregulated providers; I appreciate the opportunity to comment on these issues. Sincerely. JOYCE CROSS JC/kc PAGENO="0313" 307 Statement of Shelley Peck, Advocacy Associate, Day Care Action Council of IlK.~~ The Day Care Action Council of Illinois (DCAC) is a 21 year-old, statewide advocacy organization. The Day Care Action Council (DCAC) believes that child care enhances family and community life; works towards affordable, available, quality child care for all families who need it; and promotes standards of excellence in all forms of care. We commend Acting Chairman Downey and the Human Resources Subcommittee for holding this hearing on the proposed regulations set forth by the Department of Health and Human Services to implement the landmark child care programs passed by Congress last year. These regulations are extremely important to the efforts within the state of Illinois to implement these new programs in the manner we believe Congress intended. Indeed, the HI-IS regulations could mean the difference between the success and failure of states to provide decent and affordable child care to struggling working families. First, we would like to offer some observations about the proposed rules for the new Child Care and Development Block Grant. DCAC is very pleased by a number of the provisions of this rule: o We are delighted by the emphasis placed on the prohibition against using these funds to supplant current spending on child care and related services. o We are very glad to see that the rule reinforces the statutory provision that rates must be sufficient to allow equal access for eligible children. o We are also pleased that the rule clarifies that children served by the funds earmarked for early childhood development and before- and after-school care should meet eligibility requlrements. However, DCAC is troubled by some of the other provisions of the rule, which are extremely restrictive. We are particularly disappointed by this restrictiveness as we had expected that like other block grants, this one would come with considerable state spending discretion and flexibility. In fact, the state of Illinois had already begun its planning process when the interim final rule was released and now is forced to abandon many of the initiatives agreed to by the state administration and the child care community. There are several specific areas of restriction that we would like to highlight. o We are greatly distressed by the severe limitation that the rules place on the amount of money states can spend on quality and resource development. Such initiatives were among the most exciting and creative developed by the Illinois planning committee. The child care system in Illinois, as elsewhere, has been starved by years of underfunding. Parents should have not merely the widest possible array of options, but should be able to choose among many ~ijt~ possibilities. To ensure these quality choices, the state must be able to invest in quality. Otherwise, parents--especially low income parents--may only be able to choose little more than warehousing for their children and not the high quality early childhood development experience they most desire. o When parents select child care, particularly child care that the state is helping them pay for, they should be able to assume that their children will be safe and healthy. That is why the statute requires states to have in effect health and safety requirements for all providers receiving Block Grant funding. Yet, the HHS regulations suggest that even the most limited and reasonable state protections could be viewed as limiting parental choice. While only a parent can determine what type of care is appropriate for her child and which provider she trusts, parents should not have to be responsible for ensuring, for example, that the piovider and other children in care are free of communicable PAGENO="0314" 308 diseases and that there are working smoke detectors in place in the facility. Finding child care is difficult enough already. Therefore, we are very disturbed that HHS chose to restrict such regulation in the name of protecting parental choice. It has been our experience in Illinois that health and safety requirements not only support but also great enhance parental choice by offering parents a supply of child care providers who can ensure that their children will be protected. o On a similar vein, we strongly urge HFIS to reconsider the restriction that states pay the same rates of care for the same "types' of care, regardless of their licensing status. In Illinois, this requirement would mean that our entire rate structure would have to be redesigned. Currently, the state pays a different rate for licensed home care than it does for license-exempt care. We agree that it is important for the license-exempt rate to be high enough to make this type of care a realistic option for parents. However, licensed family day care providers are professionals who choose to follow regulations and further their training for the betterment of the children they serve. Naturally, these providers incur higher operating costs for which they should be compensated. o We are confused by the requirement that states must make certificates available at all times. Clearly, a certificate program is required by the legislation and is an important way to ensure that parents can select the providers of their choice, including neighbors and relatives. By requiring it to be offered at all times, however, it is virtually impossible for states to plan for the other mechanism required by the legislation: contracts. We do understand the desire to prevent states from setting up a rigidly controlled system of state- run centers that are the only option for parents using subsidized care. Our experience in illinois has shown, however, that a competitive bidding process for contracts ensures that providers who understand and can respond to the specific needs of their communities are selected for contracts, while our client- based option (similar to the certificate program) meets the needs of parents who prefer less formal arrangements. Additionally, without the stable and predictable funding of a contract, many centers, particularly in low income areas, could not function. In order to provide parents with the a full range of choices, states must be able to support with contracts those providers who could otherwise not operate. o Finally, we strenuously object to the provision in the rule that prohibits states from waiving the family fee for children in protective services care. Often child care can be part of a successful intervention to prevent future abuse or neglect and can even help to prevent families from disintegrating. Because child care is generally a part of the protective services plan, however, it may be unreasonable to expect these families to make a financial contribution. In addition, the Day Care Action Council has concerns about the proposed rules for the At-Risk Child Care program. o We are extremely confused by two provisions that fly in the face of the preamble's promotion of "a fabric of seamless service" and the professed concern for parental choice. The proposed rule indicates that states cannot put standards in place for At-Risk providers that are not required of ~jj, providers, including unsubsidized license-exempt ones. While Illinois does not have different licensing standards for subsidized and unsubsidized care, the state does require some very basic certifications of subsidized license-exempt providers. This requirement enables the state--and the parents--to be sure that the providers are indeed exempt from licensing and that certain basic health and safety standards, such as smoke detectors, are in place. We believe that if the state is paying for care, parents have the right to assurances that their children will be safe and healthy. And without such assurances, parental choice is jeopardized. Additionally, preventing the state from consistently applying the same requirements to all subsidized care prevents them from developing the very "seamless service' for which HHS advocates. We strongly support the elimination of this provision. PAGENO="0315" 309 o The other provision that works against this "fabric of seamless service" regards the market rate. As in the Family Support Act rules, these rules require states to pay no more than the 75th percentile of market rate. This restriction very dearly affects parental choice, as parents will not have access to facilities that charge over the 75th percentile. It also has implications for "seamless service" systems. If a state decides to set its basic rate for subsidized child care at a higher level than the 75th percentile, then families served through the At-Risk program and the Family Support Act will not have the same access to care that other families using other subsidized care programs will have. And if a family's eligibility changes, they might even have to change providers. We hope that this provision will be reworded so that it is consistent with the far preferable language guaranteeing equal access in the Child Care and Development Block Grant rule. Before addressing our third concern, I would like to add a few words about Illinois's efforts to develop a "fabric of seamless service." About two and a half years ago, the Governor's Office convened a child care summit which induded representatives of the Illinois Department of Public Aid, the Department of Health and Human Services, the State Board of Education, as well as advocates and providers. The outcome of the summit was a vision, endorsed by all participants, of a comprehensive, coordinated child care and early childhood education system that has only one point of entry and is managed so that as a parent's eligibility changes, she does not have to reapply nor does she have to find a new provider. Key elements of this system are consistent provider payment rates and provider eligibility requirements. Illinois has been working towards this vision over the past two and a half years and has made some exciting progress. We hope that the final rule for the At-Risk program will not jeopardize its final implementation. o We do have one final concern regarding the rules. The requirement that states make eligibility determinations about a family's risk of welfare dependence iii additioni~ its low income and employment status is absurd. Particularly in today's economy, states cannot possibly figure out which poor families are more likely to go on welfare than others. While we understand that the statute does say that the money should be used for child care for low income working families at risk of AFDC dependence, we strongly suspect that this language was intended as rhetorical explication rather than as instructions to set up two different tests of eligibility. We therefore urge you to remove this requirement from the rule. In conclusion, we urge Congress to protest loudly and forcefully the restrictive nature of these rules which will hamper the efforts of the state of Illinois to effectively and efficiently provide desperately needed child care assistance to scores of hard working, but struggling, families. Once again, DCAC appreciates the opportunity to express our concerns. We hope you will find our experiences in the state of Illinois helpful as you continue to explore this subject. PAGENO="0316" 310 September 23, 1991 Mr. Robert J. Leonard, Chief Counsel Committee on Ways and Means U. S. House of Representatives 1102 Longworth House Office Building Washington, DC 20515 Dear Mr. Leonard: I am writing to the Subcommittee on Human Resources to address the administration's proposed federal child care regulations. Episcopal Child Care & Development Centers serves 1,200 children of low income working families in Northeast Florida. We have taken extraordinary care to provide the best quality services to children, and we fear that the interim final rule and the proposed at-risk child care regulations will negate the standards o.f quality assurance already in place in Florida. Florida responded to federal cutbacks in subsidized child care by spending $30 million in state general revenue on subsidized care. Florida is also one of the few states which allocates a substantial portion ($56 million) of its Social Services Block Grant to subsidized child care. With this significant investment of public funds in subsidized child care, Florida recognized its obligation to provide a higher standard of child care in return. The state established higher standards and stricter regulations for child care which is funded by public dollars. At issue for Florida is this: if the state is to receive the federal child care funds it desparately needs, it must comply with the proposed changes in the child care regulations which will force the state to discontinue its methods of ensuring quality care for the dollars invested. Of particular concern are the four provisions of the Interim Final Rule and the proposed "At Risk" regulations: 1. The Interim Final Rule requires states to pay unregulated providers the same rate as regulated providers. This provision has no procedures for fiscal accountability; without monitering the use of funds, rampant misuse will be likely and will be beyond our control. In addition, Florida's policy of setting rates to match the cost of the services will have to be abondoned; this policy provides an incentive for family day care providers to become licensed in order to receive a better rate for the services they offer. 2. The proposed "at risk" regulations do not allow states to require licensure of family day care homes receiving public funds unless all family day care homes are licensed. Florida is making steps toward legislation that would require family day care homes to be licensed, but getting this legislation enacted will take time and money. Even without licensure laws, Florida has invested in licensing staff to moniter family day care homes which receive public child care dollars, in addition to providing better rates to homes which are licensed. These PAGENO="0317" 311 practices ensure better quality family day care services and improve its image; we do not see any benefits to discontinuing these practices while we strive for legislation that mandates licensure for family day care homes. 3. The proposed "at risk" child care regulations which prohibit states from conducting background and criminal records checks on otherwise unregulated providers receiving public funds is a disastrous step backward in our efforts to protect children. If we are to attempt to quiet parents' legitimate concerns about the safety of their child while in child care, are we making any gains in that direction by telling the parents it is against the law to try to find out whether the provider has anything in his/her past which might make him/her unsuitable to care for children? 4. The Interim Rule and the proposed regulations are designed to emphasize parental choice, which is valid and worthy, yet parental choice without consumer protection cancels out the benefits to parents for making their own choices. Without funds for training, resource and referral, and child care licensing, the choices open to parents will be of largely substandard quality. The provision in the Interim Rule that requires 90% of the funds set aside for direct 5~~~j~es/administratiofl/quality to be spent on the purchase of child care slots will greatly detract from Florida's ability to improve the quality controls already in place in this state. We implore you to advise the Administration for Children and Families to revise these rules. If enacted, they will create setbacks of devastating proportions in a state that has been recognized as one of the nation's best child care systems. Sincerely, Susan S. Wilkinson Executive Director PAGENO="0318" 312 Michael J. Gage 12286 N.W. 31st Drive Coral Springs, Florida 33065 September 13, 1991 Robert J. Leonard Chief Counsel Committee on Ways and Means U.S. House of Representatives 1102 Longworth House Office Building Washington, DC 20515 Dear Mr. Leonard: I urge you to amend the Interim Final Rule of the Child Care and Development Block Grant and the Proposed Notice of Rulemaking for the Title. IV-A At-Risk Program. Specifically, I request you consider the following items: (1) Recognize the legally unregulated provider as a category of care and require states to set payment rates for these providers that are adequate and appropriate for that type of care. (2) Allow states to require licensure of family day care homes receiving public subsidies even if the state does not yet license all family day care homes. (3) Allow parents of At-Risk children to choose child care providers from a list of developmentally appropriate programs which will be licensed and frequently monitored. Do not allow At-Risk children to be placed with unregulated providers. (4) Allow states to use less than 90 percent but not less than 75 percent of the reserve for direct services (which may include activities that assist the parent or the child in enrolling in care, such as health screenings, and resource and referral) as long as the remaining funds are used for quality improvement activities. This would ensure adequate quality improvement activities are taking place while maintaining the limits on administrative expenditures. In order to properly safeguard our children, our goal must be the placement of children in known safe and developmentally appropriate programs. To allow parental choice to be as informed as possible, funding must be available for guidance and resource and referral services. I appreciate the opportunity to offer comments on these proposed regulations and trust you will incorporate these suggestions in the final regulations. Very truly yours, Michael J. ~age / MJG/arb PAGENO="0319" 313 `y ~wc~ DAYTON 141 W. Third Street * Dayton, Ohio 45402-1814 September 23, 1991 Mr. Robert Leonard, Chief Counsel Committee on Ways and Means u.s. House of Representatives 1102 Longworth House Office Building Washington, D.C. 20515 Dear Leonard: As parent of a child attending the YWCA of Dayton "up With Kids" Child Development Center, I am writing in response to the Federal Government's proposal that Title XX funds lose current regulations on use and distribution. Needless to say, distribution of these funds without appropriate regulations practically assures that centers who cater to parents in need of child care financial assistance will no longer be able to guarantee such financial support. As of now, these monies have to go through a center licensed by the state and in contract with the community Department of Human Services. This practice allows parents to pursue educational and employment goals while receiving needed assistance with child care costs. The regulations also assure that the center will maintain certain standards in terms of cleanliness, teacher/child ratio, educational activities, etc. In that respect, I am writing in support of continued regulations on Title XX funding. Child development center's, such as the YWCA's "up With Kids," have been instrumental in providing affordable, adequate child care for adults struggling with the dual responsibilities of parenting and securing appropriate employment or obtaining higher education. Your backing on this view is important to the success of community parents who utilize this service. sincerely, annienne A. Jones A United Way Agency PAGENO="0320" 314 Bamett Bank of South Florida, NA. September 19, 1991 1 East Broward Boulevard Fort Lauderdale, Florida 33301 305/765-1591 Mr. Robert J. Leonard Chief Counsel Committee on Ways and Means U.S. House of Representative 1102 Longworth House Office Building Washington, DC 20515 Dear Mr. Leonard: I urge you amend the Interim Final Rule of the Child Care and Development Block Grant and the Proposed Notice of Rulemaking for the Title IV-A At Risk Program. Specifically, I request that you consider the following items: (1) recognizing the legally unregulated provider as a category of care and requiring states to set payment rates for these providers that are adequate and appropriate for that type of care; (2) allowing states to require licensure of family day care homes receiving public subsidies even if the state does not yet license all family day care homes; (3) allowing parents of At-Risk children to choose child care providers from a list of developmentally appropriate programs that will be licensed and monitored frequently as opposed to allowing them to use unregulated providers; (4) allowing states to use 75 percent of the reserve for direct services (which may include activities that assist the parent or the child in enrolling in care, such as eligibility determination, health screenings, and resource and referral). The remainder of the funds (25%) should be used for quality improvement activities and/or administration of the program or grant. I appreciate the opportunity to offer comments on these proposed regulations and hope you will incorporate these suggestions in the final regulations. Sincer y,, / Marty P,~1ahark Senio /Vice President MPM:e)~" PAGENO="0321" 315 Statement of Susan Buigrin, R.N., M.S., C.P.N.P., Portage, Wisconsin, National Association of Pediatric Nurse Associates & Practitioners Mr. Chairman and Members of the House Ways & Means Subcommittee on Human Resources, the National Association of Pediatric Nurse Associates and Practitioners (NAPNAP), concerned with childrens' health and safety issues, appreciates the opportunity to comment on the proposed child care regulations that appeared in the Federal Register on June 5, 1991 and June 26, 1991. Both documents spoke specifically to the implementation of the Child Care and Development Block Grant (CCDBG) and the TV-A At-Risk Child Care Entitlement funds (At-Risk). NAPNAP would like to commend the Committee on its leadership in enacting a comprehensive federal child care bill that affords the opportunity to provide quality child care that is accessible and affordable. The child care package, first enacted in 1990, supported the opportunity to provide expanded child care to our nation's children. Our concern is that presently, the Administration's p~pposed child care regulations would actually reverse some of the work that Congress has done to make child care available, and would limit states' ability to give families safe, regulated child care options. The proposed regulations impose onerous federal requirements on states, limit states' flexibility to determine spending priorities within the parameters of the statutes, and may have the effect of reducing the quality of child care in states rather than improving it. Specifically, NAPNAP is concerned with the following provisions enacted in the proposed rules for the At-Risk Entitlement funds and Child Care and Development Block Grant Programs: o The proposed rules prohibit states from setting meaningful standards specifically for child care programs that are supported with CCDBG and Title TV-A funth. The proposed regulations prevent states from implementing requirements to ensure a minimum level of quality. In most states, publicly funded child care providers are held to higher standards than non-funded providers. Parents expect that, if a program is publicly funded, quality child care services are safe and reliable. States have an obligation to ensure that the child care services they fund are of reasonable quality and are, at a minimum, safe. The CCDBG statute provides that states are not prohibited "from imposing more stringent standards and licensing or regulatory requirements on child care providers within the State that provide services for which assistance is provided under this subchapter than the standards or requirements imposed on other child care providers in the State." 658E(c)(2)(E). The At-Risk statute states that funded child care must meet "applicable standards of State and local law," thus leaving to state and local governments the decision regarding which requirements funded programs must meet. 402(i)(5)(B). The regulations for both programs limit the ability of states to hold funded programs to higher standards than non-funded programs. The concern for this policy is that such standards limit parental choice. In Section 98.30(g) of the CCDBG, regulations provide that states not implement requirements that will have the effect of limiting parental choice. The At-Risk regulations state that for the purposes of child care, "Applicable standards are licensing or regulatory requirements which apply to care of a particular type in the State, local area or reservation, regardless of the source of payment for the care" 257.41 and 255.4(c)(2). This regulation preamble clarifies that states are required to pay for care even if that care does not meet the state's standards for publicly funded care. The preamble states that "parental choice" must be a paramount consideration in determining child care providers. No mention is made to the assurance of "quality care" as the provider is chosen. 51-713 0 - 92 - 11 PAGENO="0322" 316 NAPNAP believes that the At-Risk and CCDBG regulations should not bar states from setting more rigorous standards for funded child care providers than for nonfunded child t~tr~providers. o Under the proposed rule, the Department of Health and Human Services (HHS) would not let states use child care registration systems as an avenue for modes of health and safety protections for children receiving care in otherwise unregulated child care settings. The Block Grant statute requires that states establish requirements designed to protect the health and safety of children" in care funded by the Act. 658E(c)(2)(F). These requirements must include: - the prevention and control of infectious diseases (including immunization); - building and physical premises safety; and - minimum health and safety training appropriate to the provider setting. The proposed CCDBG regulations restate these categories but include parenthetical information suggesting that states should interpret these health and safety requirements in the most minimal way. The regulation indicates that "compliance with local building and fire codes" would fulfill the building and physical premises safety requirement, and that "routinely supplying health and safety information" is sufficient to meet the training requirement 98.41(a)(2)(3). This is too minimal of a requirement. As priority requirements are minimized, the proposed Block Grant regulations would place children at greater risk and severely undermine the ability of states to ensure the safety of the children they serve through the Block Grant. The present regulations requiring health care, immunizations, quality nutrition, safety inspections, and infectious disease control must be maintained and enhanced. NAPNAP believes that the proposed regulations provide for minimal regulations and that ~tatesie monitored to provide children with the maximum degree of safety, rather than to ensure that they are weak enough that virtually every provider in the state will meet them. o The CCDBG regulations deny states flexibility to use funds to increase the quality and availability of child care. The purpose of the Child Care and Development Block Grant "is to increase the availability, affordability, and quality of child care." The statute divides funds under the Block Grant into two portions: a twenty-five percent portion that may be used for early childhood development and before and after school child care programs, and for activities to improve the quality of child care; and a seventy-five percent portion that may be used for child careservices and to increase the availability and quality of care. The statute offers states flexibility to determine how to allocate 75 percent of funds under the Block Grant among services and availability and quality activities. The regulations in 98.5O(d)(2) provide that the share of funds that may be spent on activities other than services may well have the practical effect of preventing the expenditure of funds for "quality and availability activities" in day care. The regulations provide that not more than ten percent of the funds may be expended for activities to improve the availability and quality of child care and all other non-service expenditures, including administrative activities 98.50(d)(2)(ii). This amount is considered minimal and must be used to provide the necessary services: enforcing compliance with state law; providing for an expeditious registration process; and substantiating parental complaints. PAGENO="0323" 317 Given the many demands on the ten percent, it is unlikely that states will be able to use any of the 75 percent portion of the Block Grant funds for quality or availability of child care activities. Quality enhancement is needed in the areas of staff development and retention; health and safety; and research and development of programs and facilities. NAPNAP believes that the administrative costs be maintained at ten percent of the 75 gercent share of funds and that the majority of the remaining funds be used for~dIrect service provisions. Further, states must have flexibility to use block grants for activities designed to increase the quality and supply of child care. o The At-Risk and CCDBG regulations do not adequately provide for payment rates to child care providers necessary to ensure that families have access to high quality care. The At-Risk regulations provide that states limit reimbursement rates to no more than those limits reimbursed under the Family Support Act (FSA) regulations which is the 75th percentile cost of such types of care in the local areas 225.4(a)(2)(iii). This 75th percentile limitation excludes recipients from accessing quality child care services that may be in their communities but is not avallable due to the low reimbursement rates provided to the caregivers. The Block Grant's original intention of providing child care reimbursement in an amount equal to the actual costs of child care, up to a specific market value, must be maintained. Payment rates vary from setting to setting and from geographic area to geographic area. Just as income and benefits vary because of multiple variables, so should payment rates be allowed flexibility. NAPNAP believes that child care payments be permitted in an amount equal to the actual costs associated with the child care provided in the specific geographic area and that there be flexibility in reimbursing day care providers within categories of care and in the setting in which this care is provided. In closing, NAPNAP thanks the Chair and the Subcommittee for allowing the opportunity to present written testimony on behalf of all pediatric nurse practitioners in the nation. More important, the nation's children also thank you for considering the recommendations presented by our Association. PAGENO="0324" 318 NATIONAL CENTER FOR CLINICAL INFANT PROGRAMS 2000 14th Street North, Suite 380 Arlington, Va. 22201-2500 Eleanor S. Szanton, Executive Director Testimony Provided for the Subcommittee on Human Resources House committee on Ways and Means October, 1991 The National Center for Clinical Infant Programs (NCCIP) appreciates this opportunity to provide testimony for the Sub-committee on Human Resources, House Committee on Ways and Means, Oversight Hearing on the Child Care and Development Block Grant Interim Final Rule and the Proposed Rule fOr the Social Security Title IV-A Child Care Program. NCCIP is an association of leaders in infant and toddler health, mental health and child development with representatives from the fields of mental health, pediatrics, nursing, occupational therapy, psychology, psychiatry, human development, social work, education, special education, business and philanthropy. NCCIP's goal is to improve and support policies and practices that facilitate optimal development of children and families in the earliest years of life wherever they may be. We believe that the assurance of quality child care for infants and toddlers should be a national priority. Poor quality care for our youngest children can affect healthy development and early learning, which in turn can have consequences for functioning in school and later life. LOVERALL COMMENTS ON PROPOSED REGULATIONS FOR RECENTLY ENACTED CHILD CARE LEGISLATION NCCIP believes that the passage of the Child Care and Development Block Grant offers the country an important opportunity to expand and improve child care for low- income families. We are particularly concerned about the critical need to ensure an adequate supply of high quality services for our most vulnerable children, those below the age of three. As you know, this is one of the fastest growing segments of the child care population. The National Research Council reported that in 1988 more than six million infants and toddlers had mothers in the work force. Although historically a high percentage o1 these children have been cared for by relatives, increasingly parents are choosing out-of home non-relative care for their youngest children. Accordingly, the passage of Title IV-A At Risk Child Care legislation offers low- income parents an important support for their efforts to become or remain self sufficient. Most important, this legislation, like other components of Title IV of the Social Security Act (e.g.the Family Support Act, including Transitional Child Care) hold out the promise of a two generational approach -- i.e., offering the skills training and job opportunities that will lead to self-sufficiency for the adult while providing the infant and young child a safe, healthy, learning environment in child care that supports his/her growth and development in such a way that he or she has the opportunity to grow up to be a self-supporting, well- functioning adult. To fulfill the promise of Title IV to both generations, quality child care is essential. II. NCCIP'S CONCERNS ABOUT TITLE IV-A AT-RISK PROPOSED REGULATIONS A. GENERAL COMMENTS In looking at the proposed regulations, the Hippocratic oath First do no harm, comes to mind. We believe that the proposed regulations do not pass that test. NCCIP is concerned deeply about the proposed regulations. Our concerns center on the inadequate attention to overall quality issues and to the fundamental protection of the health and safety of infants and toddlers in child care. As a result, the interim rule contravenes Title IV-A PAGENO="0325" 319 3 care funding plans so as to create a "seamless web of services" with other child care and social service funding streams. An fourth, these regulations require reimbursement for child care services "at the market rate." The net effect of this funding-some of it direct to child care centers, most in the form of vouchers for parents to use where they want-would be to bring much more family day care out from underground. Families of infants and toddlers, who by and large have chosen family day care, will, with their vouchers, provide an incentive for family day care providers to come forward, be registered, and be subject to at least a few basic health and safety regulations. States could then provide these homes with information and technical assistance. They must provide them with at least some health and safety- related training opportunities, and ensure that homes take basic measures to ensure safety and infectious disease control, including assuring age-appropriate immunizations. States might go further and enact more comprehensive reforms, setting up an available health network for child care providers to plug into, keeping track of primary health care received by the children as well as screening for physical, developmental, or mental health problems (as long as these reforms do not limit "parental choice.") In contrast, the draft At Risk regulations require that funds utilized for families struggling to get off or stay off of AFDC may not be used for quality improvement and may not require health and safety practices of currently unregulated providers. The language of the proposed regulations states that registration cannot be used as a way of ensuring that informal caregivers receiving these funds meet even the most minimal health and safety standards, even if states have previously linked registration to health and safety requirements. The proposed regulations limit reimbursement of providers to no more than "75 percent of market rate," thus forcing low income parents into substandard care and depressing the income of an already hopelessly underpaid set of providers. Thus states wishing to create both the "seamless web of services" called for in the CCDBG legislation as well as some innovative quality standards for young children in care will be forced to choose one or the other. One result will be that, unless a state rolls back its other standards, individual parents who qualify financially first for the Title IV-A and then the block grant funds may have to change child care providers in order to remain eligible for funding. This, of course, controverts the practice, so essential to infants and toddlers, of continuity of care. Another result will be to create an increasingly two-tiered system of child care, one for the "have's," the other for the "have nots." It is hard to understand what principles underlie these regulations-certainly not the principle that by the Year 2000 all children should arrive in school healthy and ready to learn. In fact these regulations do not even follow the time-honored principle of allowing states to set their own funding requirements for child care within their borders. B. SPECIFIC RECOMMENDATIONS 1. The proposed regulations contravene both the Title IV-A At-Risk Child Care statute and the Family Support Act. A. Proposed regulations contravene the Title IV-A At-Risk Child Care statute. Sec. 402 (i)(5)(B) of the statute provides that child care of all types receiving funding under the Title IV-A program must meet "applicable standards of state and local law." [~ statute clearly directs the state Title N-A agency to respect state and local standards applied to child care funded under this authority. To insist, as these proposed regulations do, that the federal government was not intended by this statute to permit states to either use their licensing requirements as funç~jpg requirements or to establish and/or apply funding requirements is inconsistent with a reading of the entire statute. Where Congress intended for state policymaking to be subject to PAGENO="0326" 320 4 federal rulemaking, it explicitly stated this intent, as is indicated by the section on market rate (Sec. 5081 (a)(i)(3)(B)). Furthermore, Sec. 402 (g)(6)(A) (42 U.C. 602 (g)(A)) is explicitly amended by this statute to provide funds for states to enable them to "enforce standards with respect to child care provided to children under this part" (Sec. 5081 (a)(i)(3)(c)(2)) (Emphasis ours). The Statement of Managers reinforces this provision by stating that these grant funds for enforcement of standards "apply to all children receiving services under Title W-A." (P.L 101-508, chapter 6, sec. 5081.) (Emphasis ours.) The proposed regulations, however, at section 257.41 (a)(2), would deny low-income parents whose children participate in federally funded child care authorized under this statute even the assurance that their children will be in care which safeguards them from injury and infectious disease. The proposed regulatory interpretation of "applicable standards" is "licensing or regulatory requirements which apply to care of a particular type in the State, local area, or Indian reservation, regardless of the source of payment." (257.41 (a)(2)) In other words,if a state or local standard does not apply to all child care within the same type of care in the state or locality, it is proposed that this standard can ~ be applied to Title IV-A funded child care. For example, if these proposed regulations were to be adopted, the state could not apply and enforce minimum health and safety requirements for a church-run center that is exempt from state licensing but has applied to receive At-Risk Child Care funding, if such requirements do not apply to church-run centers that are not receiving At-Risk Child Care funding. NCCIP believes that this is a clear violation of statutory intent. We strongly recommend that the final regulations affirm that Congress intended for states to apply state and local standards to child care funded under this authority and leave to state discretion, as Congress intended in this statute, the policies and procedures whereby states realize this goal. 2. The proposed regulations contravene the Family Support Act. It is disturbing that the proposed interpretation of "applicable state and local standards" would apply to all child care funded under Title W-A (including JOBS and Transitional Child Care). The proposed regulations amend section 255.4 (c)(2) on "applicable standards" to apply to all child care provided under the Family Support Act. NCCIP notes that in the passage of the Family Support Act, Congress explicitly indicated that states were to establish "procedures designed to ensure that center-based child care will be subject to State and local requirements designed to ensure basic health and safety, including fire safety." (Section 402 (g)(4). Thus centers exempt from state licensing who wish to receive funds authorized by the Family Support Act (e.g. centers run by religious organizations or public school systems which, by state policy in some states, are exempt from state licensing) are expected clearly to meet health and safety requirements established by state and local governments. Further Congress indicated in this statute that it wanted guidelines developed for family child care programs which are exempt from state licensing, but wish to receive funds authorized by the Family Support Act. (Sec. 402 (g) (4). To argue, then, as these proposed regulations do, that Congress did not intend for states to apply existing standards or to develop and apply new standards which protect the health and safety of the children in child care authorized by the Family Support Act is an act of complete contradiction to clear Congressional intent. NCCIP strongly recommends that illS be directed to revise the regulations to conform to statutory language. PAGENO="0327" 321 5 3. The proposed regulations contradict Executive Order 12612 on Federalism. Executive Order 12612 on Federalism limits federal actions that lead "to Federal control over traditional State responsibilities or decrease the ability of the States to make policy decisions with respect to its own functions (45 CFR Part 255, p. 29055). Although the proposed regulations claim to comply, NCCIP believes that they are intrusive on states' rights to improve the quality of the child care system, including ~Quii subsidized and non- subsidized child care. Most importantly. these proposed regulations represent an intrusion that will result in greater risks to the health and safety of the infants and very young children involved. NCCIP believes that the Department of Health and Human Services has contradicted the Executive Branch's own policy on respecting states' rights, as well as Congressional intent. NCCIP recommends that HHS be directed to revise the regulations to conform to the statutory mandate of Executive Order 12612. 4. The proposed regulations contravene the statute by denying low income parents who use registered child care providers the security of minimum health and safety protections for their infants and young children. States are required to establish a registration process in order to reimburse child care providers who may be currently unlicensed or exempt from licensing in a particular state. The proposed regulations restrict states' rights to define the registration process. Instead, states are limited to collecting names, addresses and social security numbçrs-Th~ Preamble description of 257.41 (b)(2) is very explicit in proposing a definition of registration as a process that "is intended only for information exchange with unlicensed and unregulated providers." The proposed regulations again contradict the statute. There is nothing in the Title TV-A At-Risk Child Care statute that indicates Congress intended such a restrictive interpretation of the registration requirement. There it evidence that the opposite was intended. Congress signalled its view of registration by specifically describing registration requirements as a form of regulation. Sec. 5081 (a)(1)(6)(B)(iii) of the Title IV-A At-Risk Child Care statute calls for the states to report to the Secretary on "the child care licensing and regulatory (including registration) requirements in effect in the State with respect to each type of service specified ..." (Emphasis ours.) Congress further signalled its intent in this regard in the section of the statute which authorizes grants to states to help them improve their licensing and registration requirements and procedures, including monitoring. This section of the Title TV-A At-Risk Child Care statute amends Sec 402(g)(6)(D)(42 U.S.C. 602(g)(6)(D). In 1988, Sec.301 of the Family Support Act amended Section 402 of the Social Security Act. In Sec. 402 (g)(6)(A) of that statute Congress clearly indicates that it views registration as another form of state regulation of child care that would contain requirements of providers: "The Secretary shall make grants to States to improve their child care licensing and registration requirements and procedures and to monitor child care provided to children receiving aid under that State Plan..." (Emphasis ours.) Congress also reiterated its view of registration as a form of regulation in the Statement of Managers concerning these grants to states reauthorized under Title TV-A At Risk Child Care. In the Statement of Managers, Congress states: PAGENO="0328" 322 2 and Family Support Act statutes, Executive Order 12612 mandates, and unnecessarily constrains State decision making about market rate reimbursement. We are particularly concerned that this is done in the name of broadening parent choice. NCCIP supports efforts to broaden parents' child care options. However. "parent choice" between one potentially harmful child care situation and another is no "choice." There must be an ample supply of quality child care of different types (e.g., family child care, center-based care, group family child care) from which to choose. Parents must also have information about quality in order to make an informed choice and they must have the time to consider what kinds of child care would best meet their needs. Low-income working parents, who are at-risk of becoming AFDC dependent, are least likely to have quality child care alternatives from which to choose or the information and time needed to consider the options and make an informed choice. Research on child care indicates that families experiencing psychological and economic stress are more likely to use low quality child care settings. Single parents, teenage parents, parents with little education and few job skills are the target population for the At- Risk Child Care Program. Yet they -- and their infants and young children - are least likely to benefit from the "parental choice safeguards" unless these are accompanied by an increased supply of ~jjty child care alternatives, parent education regarding quality in child care, and enforcement of basic health and safety protections by states. NCCIP strongly disagrees with the use of restrictive regulatory language which preempts the state's right to establish a floor of minimum basic health and safety standards that should be the right of all infants and young children in child care. We strongly believe that licensing and registration standards are a parent empowerment tool that helps parents protect their children from harmful environments. Support for parental choice is used as the rationale for these proposed regulations. NCCIP strongly disagrees with this approach to support parental choice. First, support for parent choice is not a policy which Congress intended to promote above all other considerations, including the need to assure protection of children from risks of damage. Second, to support parental choice, the federal government would do better to provide more funds for child care, remove the cap on market rate and explicitly fund resource and referral services. The Department's interpretation of parental choice is contrary to legislative intent and dangerous to the population it is intended to serve. Ideally, states would use these Title IV-A funds tO set up "Head Start-like comprehensive child development programs to improve the odds for the children served. However, the newly proposed federal regulations not only have the effect of strongly discouraging such a move, they permit states to fund non-licensed child care and forbid states to require non-licensed child care to meet certain minimal health and safety standards as a condition for this federal funding. To better understand what is at stake it is important to look at the Child Care and Development Block grant regulations for comparison: In line with the legislation it implements, the interim final rule for the CCDBG regulations lays out some very important principles for states to follow. First, states must have basic health and safety regulations in place, applicable to all child care providers, including family day care providers, with the single exception of close relatives. Second, states are required to set a substantial sum aside to address issues of quality improvement, defined in the regulations as (1) grants and loans to help child care providers bring their facilities up to present state standards; (2) improving states' regulations; (3) increasing the ability to monitor child care facilities; (4) increasing opportunities for training; (5) increasing salaries of child care providers; and (6) developing a network of resource and referral agencies. Third, states are asked to develop their child PAGENO="0329" 323 6 "The $35 million currently authorized for grants to improve child care licensing and registration requirements and procedures... is increased to $50 million..." (Sec. 5081 of the Conference Agreement, Public Law 101-508). NCCIP strongly recommends that Congress act to bring the final regulations in line with statutory intent. Further, we strongly recommend that the final regulations clearly specify that states may apply minimum health and safety requirements including immunizations, fire prevention techniques such as fire extinguishers and smoke detectors, health and safety training, child abuse and neglect criminal background screening and whatever else that state deems appropriate, as part of registration. 5. The proposed regulations unnecessarily constrain state decisionmaking about market rate. The Title N-A At-Risk Child Care statute instructs the state Title IV-A agency to make payments to child care providers in "the amount that is the lesser of -- (i) the actual cost of such care; and (ii) the applicable local market rate (as determined by the State in accordance with regulations issued by the Secretary)" (Section 5081 (a)(3)(B)). While we recognize that here Congress intended that state discretion would be expected to accord to federal regulations, the proposed regulation is inappropriate and will be detrimental to both the protection of children and the assurance of parent choice. The proposed regulation maintains the statewide limit on reimbursement rates to the 75th percentile of the local market rate for each type of child care (e.g.,center-based, family day care, group family day care, in-home care). The proposed language contradicts the principle of parental choice by limiting eligible parents to lower cost child care. In a child care market that is already severely depressed, many child care providers will continue to be reluctant to take AFDC child care recipients. NCCIP strongly recommends that the restriction of reimbursement to the 75th percentile of market rate be deleted and that HITS be directed to establish a definition of market rate in the final regulations, that is similar to that established for the Child Care and Development Block Grant. III. NCCIP'S CONCERNS ABOUT CCDBG PROPOSED REGULATIONS NCCIP has concerns about the pending Child Care and Development Block Grant regulations regarding overall quality issues and the protection of infants and toddlers in child care, as well. We believe that by law states should have discretion to make the critical quality improvements necessary to ensure optimal child care environments for very young children within their jurisdiction. Therefore, we believe the regulations as presently written deny states the right to set policy and allocate funds to protect and improve the quality of child care available in that state. Our concerns lie in several areas: First, the regulations limit the states' ability to make quality improvements in child care. Secondly, the emphasis on broadening parents' options for safe and healthy care for their children will actually limit them. Thirdly, the regulations raise concerns regarding coordination of child care with child health, early intervention and family support services; consumer education; co-payments; sectarian care; and reporting and data collection. Finally, we call on the Department to enhance its technical assistance capacity at the federal level. PAGENO="0330" 324 7 A. Pending Regulations Limit Quality Improvement (1) The Quality Improvement Set Aside (Subpart F Use of Block Grant Funds) We are extremely concerned that the regulations severely limit the States' ability to use a portion of the "75%" funds for quality, by establishing a limit of 15% for the first two years and 10% thereafter for quality and administrative costs. It was clearly the intent of Congress to allow States more discretion to use these funds to improve child care services. This is stated in statute and reaffirmed in the "Statement of Managers". We disagree with the rationale used by HHS to put restrictions on these funds. ía) Mingling of Administrative Costs. By capping a set aside within the 75% for services and quality improvement and assuming that administrative costs should come out of this portion of the funds, the federal government makes it virtually impossible to use any of these funds for quality improvements in the child care system. It is our understanding that states may have to spend 10-15 percent of their overall state allotment on administrative costs in order to run an effective certificate program which will ensure parental choice. At this rate, states will not even have enough money from this portion of the funds to cover administrative funds. Moreover, because there is no cap on administrative costs on the "25%" set-aside for quality and availability of early childhood services, the funds targeted for quality improvement and quality assurance in the state's child care system may be further reduced. Ib) Interpretation of "preponderance of funds" Although the "Statement of Managers" states that it was "the conferees' intent that the preponderance of the block grant funds be spent specifically on child care services and a minimum amount on other authorized activities", nowhere in the statement or statute is preponderance defined as 90 percent of the 75% established for service reimbursement. In fact, preponderance for service could be interpreted as anything more than 50 percent, allowing much more than 10% for quality. (c) De - emphasis on public hearings. States are required to have public hearings and provide citizen input to the planning process. In fact we have heard from a number of states that quality is a major area of concern for providers, parents and advocates. The restrictions on the amount allowed to be spent on quality improvement therefore impedes the states' ability to respond to public concern. For these reasons, NCCIP recommends that states be allowed to use at least 25 percent of the 75 percent of the funds for quality improvements. B. Pending Regulations Intended To Broaden Parental Options Will Limit Them. "Parent Choice" must mean genuine choice from among an adequate supply of quality child care alternatives. NCCIP believes that there are at least three ways that the pending regulations limit parental options for safe and healthy care. These are: a) by sending conflicting signals on health and safety protection; b) by limiting the ability of states to use grants and contracts to expand the supply to a reasonable amount; and c) by appearing to preclude the use of higher payment rates for care that meets higher standards within categories of care. Our rationale for each of these concerns is described below. 1. Pending regulations send conflicting signals on health and safety protection. (a) General health and safety issues. In all sections noted above, the federal government, seems to be on the verge of adopting a stance towards "parents' choice" to the extent that they compromise parents' rights to have their children protected from potential injury, disease, abuse and neglect or other forms of damage. NCCIP strongly believes that licensing should be construed as a parent empowerment tool to help parents protect their children from harmful environments. PAGENO="0331" 325 8 The research literature documents that parents are anxious about the quality of care their infants are receiving when they are away from them, and for good reason. In fact, infants and toddlers are at greater risk of injuly, infectious illness, abuse, neglect and developmental damage than are older children. Infants are often non ambulatory and are therefore totally dependant on the adult's ability to evacuate them rapidly in the event of fire or emergency. Thus, regulations which suggest that strong state fire prevention regulation for all child care providers would limit "parent choice" are not only contradictory but dangerous. For infant care in particular, this kind of activist stance by the federal government against state-established protection of infants' (safety and parents' freedom from anxiety) is wrong. "Parent choice" between one harmful setting and another is no "choice." Furthermore, while the statute allows states to impose more stringent standards and licensing requirements on child care providers using CCDBG funds and the regulations correctly reiterate this requirement (Section 98.40 b.1), pending regulations add that additional state requirements must be "consistent with parent choice" (Section 98.40 b-2 and Section 98.41 b). This seems to contradict the statute itself. Again, according to section 98.30 (g), such provisions cannot "significantly restrict parent choice by expressly or effectively excluding any category of choice, type df provider or type of provider within a category of care; by limiting parent access to or choice from among such categories of care or of any type of provider". NCCIP believes that the wording of these provisions sends a message to states that basic protection for the child may limit parent choice. We are very concerned that this may discourage states that want to further protect children from acting to do so. We have similar concerns over section 98.45 (d) which state that both the registration requirements and the registration process must be consistent with the safeguards for parental choice. Final regulations should clarify and be consistent with the legislation in requiring that state-established health and safety standards for providers receiving CCDBG funds must be in place. Furthermore such protection, and any additional health and safety standards put in place by the state, should support real parent choice by offering a supply of child care providers, of all whom can assure parents that their children will be healthy and safe. Furthermore, we are extremely concerned with the examples HHS uses in the preamble to the regulations regarding the type of activities which might suffice to meet the health and safety requirements set forth under section 98.41. While the regulations themselves correctly reiterate the language of the statute, the examples in the preamble suggest that states can meet health and safety requirements by activities that clearly fail to provide the health and safety protection set forth by the statute. The examples in the preamble which amplify the section on health and safety activities are unacceptable and should be deleted, since they are below the minimum health and safety efforts required by the statute. Final regulations should instead reference or give examples from the model standards developed by the American Public Health Association and the American Academy of Pediatrics. (b) Registration. Registration should be construed as a parent empowerment tool just as well as licensing. Both help parents protect their children frOm harm. Therefore, states must have basic health and safety standards in place before registered family day care homes can accept CCDBG funds. Therefore, we are concerned about the example used in the preamble discussion of section 98.45 (c). This section says that the registration process should be simple and timely. The preamble states that the registration process may involve simply giving the state agency the provider's name and address. Even for the large number of infants and toddlers now cared for by grandparents, aunts and uncles, who are required by the statute and by the regulations to meet only registration requirements, such a stripped down system of registration is not appropriate. For example, states may wish to provide these relatives with educational information as to best practices in child care. The example of a simple registration system (using name and phone number only) should be deleted. PAGENO="0332" 326 9 (c) Immunization. We commend HHS for consistency with the statute in the immunization area. Except for grandparents, aunts and uncles, all child caregivers not ordinarily touched by state or local regulatory law (e.g., family child care providers who are not regulated by the state or local law; sectarian providers who are exempt from state or local licensing requirements) must comply with CCDBG-required , state-established health and safety requirements if they wish to receive CCDBG funds in any form, including a voucher or certificate. The statute explicitly mentions immunization as one of these requirements; and the regulations confirm the statutory language here. We recommend that HHS be directed to make the regulations clarify that state- established immunization requirements are consistent with safeguards on parent choice. We suggest that states also be permitted and encouraged to include evidence of immunization in their registration requirements. Giving states the flexibility to adopt as a registration requirement evidence of immunization for all children in CCDBG funded care by grandparents, aunts and uncles is particularly important in states where epidemics of infectious diseases are resulting in high rates of morbidity, hospitalization, disability and death. We further recommend that the HHS be directed to encouraged state policy development that reflects the most recent scientific knowledge about immunization and about effective methods of outreach to families. 2._Pending regulations will limit the ability of states to use contracts or grants. Paragraph (e) under the parent choice provisions states that child care certificates must be made available to any parents offered services: Paragraph (a) states that such choice must be available any time that child care services are provided. NCCIP believes that the regulations incorrectly interpret the statute's requirements for parent choice by requiring that the certificates be made available throughout the year. Such a requirement makes it almost impossible to reserve funds for contracts or grants with providers for a certain number of slots on an annual basis. This option is critical, particularly for infant care, since it helps build the supply of services, therefore enhancing parent choice. We recommend that the illS be directed to emphasize the need for multiple funding systems that include significant allocations to annual contracts and grants, in order to ensure an adequate supply of child care and increase the stability of the child care market. 3. Pending regulations appear to preclude the use of higher payment rates for care that meets higher standards within categories of care This section (Subpart E Program Operations and State and Provider payment rates 98.43 ) states that in establishing payment rates, states must take into account variations in the cost of providing care between different categories (i.e. center based care, group care, family child care, in-home care). The preamble explanation of this section discusses the intention of this provision. In the preamble it states that payment should not be based on the type of care. Although type of care is not fully defined in the regulations, it appears from the preamble discussion that variations in payment within category may be disallowed. We are particularly concerned that rates set to encourage higher standards within categories (such as accredited programs) could therefore be restricted. The statute states that "payment rates for the provision of child care services be sufficient to ensure equal access for eligible children to comparable child care services in the state or substate area that are provided to children whose parents are not eligible to receive assistance". Low-income parents have a right to be able to access quality care with public dollars. In order to provide incentives for quality care, NCCIP recommends that HiS be instructed to allow higher payment rates within categories for providers meeting higher standards. PAGENO="0333" 327 10 IV.AN ENHANCED FEDERAL TECHNICAL ASSISTANCERQLE In closing, we would like to encourage HHS to provide additional federal leadership to help ensure high quality services to young children and their families. At our recent conference, "Finding and Funding Quality Child Care and Head Start Services for Infants and Toddlers: A Technical Assistance Forum", state agency administrators from 45 states and the District of Columbia, along with infant and toddler experts and funders, called on the federal government to exert more leadership in promoting quality child care for infants, toddlers and their families. The group unanimously approved a resolution which recommended the establishment of a clearinghouse and a technical assistance capability to provide leadership in the development of quality services, including the dissemination of model training and standards initiatives, staff compensation and career development approaches, monitoring and service integration strategies, and new knowledge about research and best practice". For example, technical assistance on model standards or best practices could be particularly helpful in encouraging states to ensure that children cared for by all providers that are receiving public dollars be immunized. We hope that you give serious consideration to these recommendations and to the concerns that we have outlined regarding the regulations pertaining to the Child Care and Development Block Grant. Sincerely, ~ Eleanor S. Szanton, F'h.D. Executive Director PAGENO="0334" 1M CARE LE ESAV'.I ents, usually-the mother, its not clear what factors are re- sponsible. How ~ltucb, is due to the time spent- away from home and the lack of individual attention? How much is due to the varied quality of day care? How much is due to the potent forces-pos ti,e and negative-of fatally life and the R ~ Whether day care-either m a large center or a home- ESEARCHERS~. losseil setting-is gool or bad depends largely onhow one reads the research and on the political agenda of those DEBATE reading it. In many ways, the debate over the impact of day car~lilrthildren has become a proxy for-the larger debate THE EFFECTS over the role of somon~~~ae work force and in the family ~ With more than half of the ~bees~won1en'wbo base chil- dren under the age of I working orltsakiriIfor work, the ON CHILDREN debate has major repercussions. - - "Mothers are not going to go home," said Deborah A. Phillips, a psychologist at the University of Virginia who has BY SARAH GLAZER studied day care and its effects. "Most mothers who work have to work, and it's time that we in this-country take the -` needs of their children seriously and not pose child care as somehow in competition with mothering." Despite these new realities, however, some experts bar- ber serious reservations about the effects of day care cen- ters op very young children, "My own feeling at this stage is that children under 3 don't belong in institutions," said Lilian G. Katz, professorof earlychildhood education at the University of illinois, Urbana-Champaign, who de- scribes her view as controversial. "By definition ... insti- tutions have to be operated or conducted independently of the individuals in them . . . That gives them this almost impersonal quality. The younger the child is the more per- sonal it has to be." Quality of Programs A five-year government study, unprecedented in size and scope, now beginning at the National Institute of Child Health and Human Development; is aimed at taciding many of the complex questions about day cern. Twelve hundred infants of working and non-working mothers will be observed at regular intervalsfrom birth toage 3, both at homeand is thefull gamut of day care settings. Frum the study, researchers hope to gain first-hand knowledge of how children fare in day care settings. They will also examine the way families reinforce-or offset- the influenceof day care. The new study follows an acrimoniOus debate among ex- ports over the effects of day care on thildreia shown in studies over the past deinde, Those conflicts drove leading professionals to convene a summit in 1987 to reach consen- suson the research. `~There was agreement that -where parents had choices and where thequality of care was good, there's absolutely no evidence to show that it's harmful to infants and toddlers lobe in care," said Eleanor ton executive directorof the-National Cente - - t the - gton-based organization of early c pro essionals that called the-summit meeting. "But the fact in in the U.S today those conditions do not apply: In many, many cases quality does not apply and parents do not have choices." Recent studies provide a dismal picture of the quality of child care in this country. A study of 227 child care centers in five cities released last year by the Child Care Employee Project, an Oakland, Calif., organization devoted to improv- ing child care, revealed that the quality of services provided by most centers was `barely adequate," when rated on such' characteristics as staff-to-child ratios, harshness of staff - toward children and staff turnover. The lowest quality was - 328 ~iine!" shrieked 2-year-old Rachel as she pounced on a toy while - - playing at our house, My son looked at Rachel uncompre- - hendingly, as did I. How had this docile child, with whom he'd played weekly since infancy, suddenly turned into a shrieking harpy? `She learned this at daycare'naid Rachersmother, who had placed her daughter in part-time day care a few months before, At the time, I accepted the explanation. But in hindsight I'm not so sure. Shortly thereafter, my son and many of his 2-year-old friends turned equally aggressive on the battle- field of play-oven without the prod of day care. Researchers, much like parents, are straggling to disen- tangle just how day care contributes to a child's behavior and development, Although they find some differences be- tween children in day care and those cared for by their par- PAGENO="0335" 329 ACCORDING TO THE BUREAU OF LABOR STATISTICS, IN THE UNITED STATES 59 PERCENT OF WOMEN WHO HAVE CHILDREN UNDER AGE 6 ARE IN THE WORK FORCE. found in infant classrooms. Four out of 10 child care work- ers leave their jobs each year, the study found. "If there's anything infants and toddlers need, it's continuity of care. To have that kind of revolving door is really wrong," Szanton said, Researchers have found that children generally fare best, both emotionally and intellectually, in situations with high staff-to-child ratios, small class sizes and high levels of staff education or specialized training. Nonetheless, researchers generally find that compared with preschoql-age children raised solely by parents, chil- dren who attend day care programs are more self- confident, outgoing and assertive and more comfortable in new situations, There's a dark side to this sociability, ac- cording to the same studies, Such children are often louder, less polite, more boisterous, more rebellious, less compliant with adults and more likely to hit, kick and punch than chil- dren who have not been in day care, "In a way, [day care childrenj end up being self-sufficient and spunky," said Susan Holloway, associate professor of human development at the University of Maryland at Col- lege Park, `Whether you see that as being a positive or a negative depends on what attributes of kids you value." First Year of Life Some researchers are troubled, however, by the mes- sage they see such children receiving. "I wonder if what's going on is kids are being bred to learn that others can't be counted on that much," said Jay Belsky, professor of human development at Pennsylvania State University. "You've got to take advantage when you can and one way into be super- ficially cooperative and manipulative. It's going to be a world in which everyone is out there for themselves." Jeree Pawl director of the infant-surest oroeram at the TTyi. veW~l~~ornia-San Francisco is concerned that a geser centers will have trouble developing trusting, lasting relationships as adults. "In most day cares, it's a pecking order; it's like a bunch of wild chickens ins hen yard," said Pawl. In these settings, said Pawl, the loudest, most obnoxious behavior is rewarded with attention from over- worked adults and intimidated neer~ My guess would be that this ultimately would create a whole population of people who wouldn't have some of the personal qualities in their relationships that we treasure," Indeed, the most hotly debated aspect of child care con- cerns full-tune care for children under the age of 1. Several studies have found that such infants are more likely to have "insitcure attachments" to their mothers than those whose mothers stay home. Psychologists consider this infant-par- ent bond an essential foundation for a person's sense of well-being and (or the ~ility to form solid relationships. Belsky set off the confroversy in 1986 with a review of the research warning that more than 20 hours of day care per week in an infant's first year puts a baby at risk of developing an "in- secure attachment" and of developing aggressive, rebellious behavior in the preschool and early school years. However, other researchers have questioned the reliability of the stan- dard psychological test for measuring attachment, saying it mimics the kind of daily separation from the mother to which infants in day care are already accustomed. In the test, known as"the strange situation," an infant is left alone to play with an unfamiliar woman in an unfamiliar room and is then returned to the mother for comforting. If the child avoids or ignores his mother upon her return, this is considered a sign of an insecure relationship. Alison Clarke-Stewart of the University of California-Irvine ob- jects that the scenario is "similar to the kind of experience that infants in day care go through regularly." Infants ac- customed to day care may not need to seek physical close- ness with their mothers right away, she said. Only a minority of day care babies demonstrate this in- secure attachment in the studies, although researchers dif- fer over the exact proportion. Belsky said recent studies just confirm his initial con- cerns that infant care in America is potentially detrimental. "Day care in America for infants is unstable care of limited quality, with parents under stress, without job Eenviron- ments] to support them. I still say the ecology of infant day care in America is a risk.' He favors government policies to encourage parental leave for working parents. In fhe day care center at the Federal National MortgageAssociation, 4000 Wisconsin Ave. NW, a toddlerdismountsfrom her rocking horou - PAGENO="0336" White Pawl cart cite "wonderful" centers, which have eiauugh well-trains staffers to become weli-acquaint~ with the children, these are relatively rare, If the child has a whole lot of peopte to whom you have to relate constantly who really dsn't know you. ..ysu have to develop a two- step to fit everyhody," said Pawl, "Ultimately, you wouldn't deselop eithec the depth nr pleasure in a more intimate fluid mutual relationship that you should." The problem is acute for infants, said Pawl. The first 12 mouths are a crucial time to experience "the delights and pleasures of what it's like to really know somebody and be known," she explained. "It's a real deprivation to spend eight to 10 hours per day-maybe 50 hours a week-in the presence of people who can't respond to you that way,,, Professional Training The University of Virginia's Philtipo, as early critic of Belsky's analysis, said, "The important variable is not the age at which the child esters care, it is the quality, and I feel confirmed in that given what we're finding about the quality of infant care." Phiaps objects that the infant care studies cited by Belsky have failed to distinguish between high-quality and low-quality prOgrams. -. It's not that day care can't be basdied well. A study of 119 Swedish ll-year-otds published in Child Development Os 1989 fousd that children esterisg day care before their first birthday performed better on achievemest tents and appeared mom persistent and less anxious than those who bad remained with theirmothers or wbo began child care at a later age. However, Sweden's heavily subsidizedcbild care centers are noted for their professional traisingand quality. B~ contrast, a atudy of 236 Dallas 8'year'olds publlshed last December in Early Childhood Research Qoat-terly foend that children in extensive child care since iefuttcy were rated by teachers and parents as having poor relation- ships with friends, poor work habits and as being more dif- ficult to discipline. They also had poor grades and test scores. Unlike Sweden, Tens has minimal requirements for staff education and ratios, noted study author Deborah Lowe Vasdell of the University of Wisconsin Center for Educational Reoearcb at Madison. For parents seekingadvice, the research to date leaven many quentiom unasswered. Mont studies hove focused no day care centers, even though moot children of working mothers are cared for in homes-either is their own home by a relative or nitteromin the borne of someone else, such as a relative or fain- lly day care provider. Until recently, most studies examined high-quality centers run out of universities, which may have presented a falsely optimistic picture of the standard of care moot children experience. Comparisons amoog different forms of child care are rare, One of the few compacative studies, of 2- to 4-year-olds in Chicago, foend that children in centers and nursery schools were on average six to nine months more advanced on tests of intellectual competence compared with those cared fur by mothers, nannies and family day care providers. The-author, Umversity of California-llrvine researcher Clarke-Stewart, at- tribotes those gains to the more structured, stimulating car- ricialum in centers and prenchools. But other studies find such early superior test scares are a temporary speeding up in the rate at which children acquire knowledge, an advantage that generally disappears by the end of first grade, Clarke-Stewart observed. 330 Stress on Parents A major wealmeos of sorh studies in that they tend to look at children's day care oltoation is a vacooon. "Everyone has looked atwithrr family life or child care, but they don't lookat all these things together," said Ellen Galiooky, ca-preoldent of the Foes- aes and Work Institute in New York City, which conducts re- search en the interartioo between family life and work A moth- er's attitude about woridng-wirether it's guilt over time opent at the office or boredom otaying hunre-nrakes adifference is whether a child will prosper, said Galiesky. * Parents' job stresses also make a difference. "It's not helpful if parentt are exhausted when they come to pick up their children," said Szaotoo. A recent study by the Families and Work Institute, according to Galinolty, "found if a child in in a terrible family oltuatios, good quality child care can't buffer that.. . Children in terriblef child care but with wonderful families can't make up for cruddy child car&" - Parents' criteria for good child care may sot always ce- inside with those of researchers. Academic studies tend to praise formal otaff training and curriculum, which are moot likely to be associated with centers, over frequent hugging sod flexible nap schedules, which characterize home-based babysitting or full-time cure by the baby's mother. Some parents view centers aoa faceless unknown. * Parents may feel more comfortable leaving their childreo with a neighbor or relative that they know, eves if the care- taker doesn't hove the training reconunesded by profes- sionals, observed Pawi. In addition, the wide range in cul- tural and pemoenal styles of child-rearing in the United Staten means that parents may differ from child care ox- ports when it comes to delicate arenas like discipline em touching, noted researcher Holloway. "There's a danger in trying to identify a technology of pedagogy and assenting that tlaio technology can be learned by a variety of care givers from different cultural bach- grounds and social classes," she said. "Even if we were to implement i~whether it would have a desirable effect on a wide variety of children in an open question." No matter where the experts stand en the solution today care, however, moot agree that the latest findingS of Tow quality and high turnover are extremely dinturbing, espe- cially since centers am the faotest growing form of day care in America. To Laao Katz, the findingo are "very frighten- ing" in their implications for the olabaty of human relation- ships and moral values in the next generation. "All child- rearing is future-oriented :. . your picture of what the fu- ture requires," she said. "Unless we make major strides is quality, we are going to pay for thin." a PAGENO="0337" 331 NATIONAL COUNCIL OF JEWISH WOMEN 53 West 23rd Street New York, New York 10010 (212) 645.4048 1101 15th Street, N.W. Washington, D.C. 20005 (202) 296-2588 TESTIMONY ON THE PROPOSED FEDERAL CHILD CARE REGULATIONS Submitted on September 17, 1991 to the Honorable Thomas J. Downey, Acting Chairperson, Subcommittee on Human Resources, Committee on Ways and Means, U.S. House of Representatives by Joan Bronk, NCJW National President. From its inception in 1893, the National Council of Jewish Women (NCJW) has focused on the needs of children and their families. Since 1911, NCJW has had a National Resolution calling for "quality, comprehensive child care which is affordable, available and accessible to all." In 1968, NCJW volunteers conducted a groundbreaking survey on child care in diverse communities across the nation. The bleak findings of the unmet needs of families and dire conditions in many child care programs were set out in NCJW's 1972 publication, Windows on Day Care. The NCJW Center for the Child was established in 1983 to conduct applied research toward the goal of promoting the well-being of children and families in the United States. In 1988, NCJW began the National Family Day Care Project, designed to pioneer effective roles for volunteers and other community groups in increasing the quality and supply of regulated family day care, through demonstration projects in 30 communities nationwide. Yale University's Bush Center in Child Development and Social Policy and Bank Street College of Education's Research Division are evaluating the effectiveness of this initiative. It is against this background that NCJW is responding to the U.S. Department of Human Services' proposed rules for an At-Risk Child Care Program, published in the Federal Register on June 25, 1991. Limits on State Regulations NCJW is extremely concerned that the proposed regulations do not permit states to set regulatory standards for federally subsidized child care unless those standards apply to all care, regardless of how they are funded [Section 257.41(a)(2)}. We believe that the states have a responsibility to set standards for the use of public funds. We urge that the language of the proposed At-Risk Child Care Program Regulations require states to ensure that public funds are accompanied by regulations to safeguard the lives, health and well-being of children. The Department has clearly indicated its commitment to "empower parents with decision making over who should care for their children." NCJW believes that an informed consumer is in the best position to make such choices. Parents generally choose to purchase flame resistant pajamas for their children when they are aware that there is such a standard. Car seats for infants and toddlers have saved many lives, yet states have had to mandate their use in order to ensure compliance with a safety standard, thus ensuring safety, but limiting parental choice. Many states have used the availability of federal subsidies as leverage to institute minimum regulations for health and safety concerns while some states have not enacted even these minimal protections to children in child care. This is truly another definition of at-risk children. Allowing and encouraging states to use these funds for regulation will help to diminish that risk. PAGENO="0338" 332 Standards also provide measurable compliance tools for accountability regarding the responsible use of federal funds. If standards are lowered, regulations limiting the number of children cared for by a provider will be jeopardized. Florida has already relaxed this ratio in response to the publication of the proposed rules. NCJW does not believe that parents of children in subsidized care would choose lowered standards, nor do we see that as an intent of Congress in passing this legislation. It is confusing to see two parallel tracks of subsidized child care emerging. Under the Child Care and Development Block Grant, states must have systems meeting minimal health and safety requirements and may even set additional standards, yet, under the At- Risk Program this is not permitted. The absence of regulations under the At-Risk Child Care Program would potentially limit the choice of obtaining high quality care of working poor parents struggling to avoid becoming AFDC recipients. Child Care Registration Systems NCJW is also concerned about the narrow definition of what can be included in the registration process for unregulated providers [Section 257.41(b)(2)]. Our experience in family day care, which is often unregulated, has extended to 30 communities in 21 states. We have found that family day care providers want to offer safe, healthy care for children and welcome any help, including training, they can get in doing so. This is especially so when access to the USDA Child Care Food Program is part of the inducement. The effectiveness of regulatory systems in California, Massachusetts, and Minnesota demonstrate how effective regulation can be implemented to the benefit of providers as well as the children in their care. We recommend that states be able to use the registration process similarly to help ensure minimal standards of healthy and safe care. Reimbursement The HHS limit on child care reimbursement to the 75th percentile also sets up a two-tier system and further penalizes the working poor. Driven by their own costs, providers will understandably tend to give preference in enrollment to those eligible for the Block Grant. At-risk families will be further displaced from the inadequate number of slots for subsidized child care, resulting in less choice for the parents. The regulations should ensure that payment rates for families with at-risk children are equal to those rates provided by the Block Grants. We hope that you will give these comments your serious consideration. PAGENO="0339" 333 NATIONAL GOVERNORS (h `ASS(~1ATION 4 4 * * * *. September 11, 1991 The Honorable Thomas J. Downey Acting Chairman Subcommittee on Human Resources Committee on Ways and Means U.S. House of Representatives Washington, D.C. 20515 Dear Mr. Chairman: I understand that you will be holding an oversight hearing on the Department of Health and Human Services' proposed regulations for implementing the state grants for child care. NGA was actively involved in the passage of the child care bill and as a result will actively follow the implementation of the final regulations. I have enclosed, for the record, copies of two NGA letters sent to the Department of Health and Human Services on the proposed regulations. These letters are reflective of the Governors' position on the proposed regulations, Thank you for the opportunity to present the Governors' position. look forward to working with you in the future. Sincerely, Go rotor John R. McKerna*~JJr Governor Bill Clinton Chair Committee on Human Resources PAGENO="0340" 334 NATIONAL - - GOVERNORS - ASS~JATION August 2, 1991 Assistant Secretary for Children and Families Mark Ragan Child Care Task Force 5th Floor 370 L'Enfant Promenade, S. W. Washington, D. C. 20447 Dear Mr. Ragan: Approval of the Child Care and Development Block Grant and the Title IV-A "At-Risk" Child Care heralded a significant step forward in increasing the supply of quality child care for the nation's children. The National Governors'. Association played a major role in securing passage of the legislation and is now providing technical assistance to states as they implement these programs. While we applaud ItliS's diligence in issuance of the interim final regulations for the CCDBG in such a timely manner, we, and the states, are concerned that the proposed rules for both programs seriously undermine state efforts to improve the quality of child care even though the stated purpose of the CCDBG is to increase the availability, affordability, and quality of child care services. There are two major areas in the interim regulations for the CCDBG that we are concerned with. Each provision is followed by our comments. Regulation §98.50(d)(2)(i) - "At least 90 percent of the funds reserved for assistance under this section must be expended for services pursuant to paragraph (a)(l) of this 8ection, and (ii) Not more than 10 percent of the funds may be expended for other authorized activities as described in paragraph (a)(2) of this section including all administrative activities." Comments - The statute states that 75 percent of the overall funding must be used to provide assistance with child care services, improve quality, and expand availability. The conference report indicates that the preponderance of these funds are to be spent on child care assistance. PAGENO="0341" 335 Mark Ragan Page Two August 2, 1991 We believe that the restriction on the use of these funds as stated in section 98.50(d)(2)(ii) seriously limits state flexibility as to how the CCDBG funds will be spent. States have reported that they anticipate their administrative costs to be somewhere between 8 - 15 percent. A 10 percent cap will leave virtually no funds in this category for quality improvement or to expand availability. We encourage the Administration to remove the proposed cap on expenditures for administrative costs, quality improvement, and availability and allow states to determine the use of the 75 percent of the overall funds. This would be consistent with existing block grant programs which allow states maximum flexibility in spending. Regulation §98.45(a) - "Grantees must assure that providers of child care services for which assistance is provided under the Block Grant who are not licensed or regulated under State or local law for the purpose of providing child care are registered with the Grantee prior to receiving payment under the Block Grant. (d) - "Both the registration requirements and the registration process under paragraph (a) of this section must be consistent with the safeguards for parental choice in §98.30(g)." §98.41(b) - "Grantees may not set health and safety standards and requirements under paragraph (a) of this section, that are inconsistent with the parental choice safeguards in §98.30(g). §98.30(g) - "With respect to State and local regulatory requirements under §98.40, health and safety requirements under §98.41, payment rates under §98.43, and registration requirements under §98.45, Block Grant funds will not be available to a Grantee if State or local rules, procedures or other requirements promulgated for purposes of the Block Grant significantly restrict parental choice Comments The statute allows states to impose more stringent standards and licensing or regulatory requirements on child care providers who receive CCDBG funds than the standards imposed on other child care providers within the state. The statute requires states to have requirements in place that are designed to protect the health and safety of children that provide services under the Act and to have procedures in effect to ensure that all providers comply with applicable health and safety requirements. The statute also discourages states from reducing existing standards. PAGENO="0342" 336 Mark Ragan Page Three August 2, 1991 The vague provision in §98.30(g) raises the specter that funds may be denied to a state if potential providers claim that they would be unable to comply and thus parental choice is restricted. Such wording has the potential to discourage states from mandating even the most basic health and safety standards, including home visits, smoke detectors, heat, and running water. Similarly, the proposed regulationk would appear to place states at the mercy of providers who might object to establishment and/or maintenance of meaningful registratisn requirements, e.g., criminal background checks or checks against child abuse registries. We urge HHS to give states maximum flexibility to establish meaningful registration processes and to maintain or establish minimum health and safety requirements which will ensure quality child care for all children. Compliance with parental choice provisions can be monitored through state plans to ensure that overburdensome provisions are not implemented. The proposed regulations also have several positive features. The regulations give states broad flexibility in implementing the majority of the provisions. Most notably, they allow states to establish their own mechanisms for determining market rates and do not restrict provider payments to the 75th percentile. Including the current year in calculation of the base for non-supplantation takes into consideration the fiscal crisis many states are in. And, finally, the regulations ensure that the intended population is served by clarifying that children in early childhood development programs and before and after school programs meet eligibility criteria. Thank you for this opportunity for input into the final regulations. Sincerely, Exec ive Director PAGENO="0343" 337 NATION~AL GOVERNORS ASSc~LAT1ON * * August 23 1991 * * Assistant Secretary for Children and Families Attn: Mary Ann Higgins OFA/JTF, Fifth Floor 370 L'Enfant promenade, SW. Washington, D. C. 20447 Dear Ms. Higgins: Approval of the Child Care and Development Block Grant and the Title IV-A At-Risk Child Care program heralded a significant step forward in increasing the supply of quality child care and for making child care more accessible for the nation's children. The National Governors' Association played a major role in securing passage of the legislation and is now providing technical assistance to states as they implement these programs. While we applaud HHS's diligence in issuance of the regulations for the CCDBG and the At-Risk program in such a timely manner, we, and the states, are concerned that the proposed rules for both programs seriously undermine state efforts to improve the quality of child care for disadvantaged children. Comments have been submitted previously on the CCDBG. We take this opportunity to again express our concern regarding the provisions that appear to discourage states from imposing minimum standards. to ensure that all children receive quality care. The specific provisions are followed by our comments. Regulation §255.4(c)(2) "The care meets applicable standards of State and local law, and/or Tribal law, where applicable. Applicable standards are licensing or regulatory requirements which apply to care of a particular type in the State, local area, or Indian reservation regardless of the source of payment of the care." §257.4l(a)(l) "Child care provided with funds under this part must meet applicable standards of State and local law, and/or Tribal law. (2)Applicable standards are licensing or regulatory requirements which apply to care of a particular type in the State, local area, or Indian reservation, regardless of the source of payment for the care. PAGENO="0344" 338 Mary Ann Higgins August 23, 1991 Page Two (b)(l)All providers of care who are not required to meet applicable standards as provided in paragraph (a) of this section and who are not individuals providing care solely to members of the individual's family, must be registered by the State or locality in which the care is provided prior to receiving payment. (2)Registration procedures must: (v)Not exclude or have the effect of excluding any categories of child care providers." Comments The statute limits funding for child care services to care which meets applicable standards of State and local law and where the provider is licensed, regulated, or registered by the State or locality in which the care is provided. There is no indication in the statute nor in the conference report that Congress intended that states forego or eliminate meaningfulregistration requirements for child care provided through Title IV-A. The preamble to the regulations justifies the Administration's position in terms of maximizing parental choice. The preamble further suggests that if the state wishes to regulate child care funded through Title IV-A they must impose such standards on all child care provided in the state. While this is an admirable goal and one which many states are striving for, the regulations prohibit the use of these funds for services to improve the quality of care, including training for child care providers and licensing activities. The preamble suggests that states may use the CCDBC and the Child Care Improvement grants for these purposes. The interim final regulations for the CCDBG limit funding for quality activities sM administration to ten percent of the 75 percent; the remaining 25 percent must be split between quality activities and before- and after-school programs. Similarly, limited funding under the Child Care Improvement grants further restricts the states ability to regulate all child care. The preamble further suggests that should a state's existing registration process fail to meet the requirements under the proposed regulations, that these processes will have to be modified. At the same time, the preamble discusses the concept of a "seamless system of child care services." Both the statute and the regulations for the CCDBC and the Social Services Block grant allow states to impose higher standards on publicly funded child care than those imposed on other types of care. The stated goal of the CCDBG is to improve the "availability, affordability, and quality of child care services." Since both legislative bills were argued and approved at the same time, we do not believe that Congress intended that recipients of AFDC or those at risk of being on AFDC receive less than quality care. - PAGENO="0345" 339 Mary Ann Higgins August 23, 1991 Page Three The proposed regulations coupled with the language in the preamble raise the specter that funds may be denied to a state if potential providers claim that they would be unable to comply and, thus, parental choice is restricted. The vague wording in Section 257.41(b)(2)(v) ` has the potential to discourage states from mandating even the most basic health and safety standards, including home visits, smoke detectors, heat, and running water. Similarly, the proposed regulations would appear to place states at the mercy of providers who might object to establishment and/or maintenance of meaningful registration requirements, e.g., criminal background checks or checks against child abuse registries. We urge KHS to give states maximum flexibility to establish or maintain meaningful registration processes and to maintain or establish minimum health and safety standards which will ensure quality child care for all children. We support the concept of parental choice for all families. We believe that registration processes which are overburdensome can be monitored through the state supportive service plans. The proposed regulations have several positive features. The regulations allow and the preamble encourages state IV-A agencies to contract with other entities to perform administrative functions, including determination of eligibility. This should encourage those individuals who feel uncomfortable approaching the welfare office to use the new program. Making the state plan for At-Risk Child Care an amendment to the state's supportive services plan will reduce the administrative burden on states. We also note the provision to allow families to continue their child care arrangements while the parent is between jobs and to access child care services prior to actually going to work, but after a job offer has been made and accepted. We appreciate the opportunity for input into the final regulations. Sincerely, Exec ive Director 51-713 0 - 92 - 12 PAGENO="0346" 340 GE: NATIONAL INDiAN EDUCATION ASSOCIATION / 1819 H STREET, ftW.SUITE 800 / (202) 835-3001 STATEMENT SUBMITTED FOR TNE hEARING OF THE SUBCOMMITTEE ON HUMAN RESOURCES OF THE COMMITTEE ON WAYS AND MEANS BY THE NATIONAL INDIAN EDUCATION ASSOCIATION AND INDIAN AND NATIVE AMERICAN EMPLOYMENT AND TRAINING COALITION REGARDING PROPOSED REGULATIONS ON THE CHILD CARE AND DEVELOPMENT BLOCK GRANT SEPTEMBER 17, 1991 The following comments are submitted on behalf of the National Indian Education Association and the Indian and Native American Employment and Training Coalition on the interim final rule implementing the Child Care and Development Block Grant program published in the Federal RagJ.stec on June 6, 1991. These comments relate exclusively to the application of the rule to programs operated by eligi- ble Indian tribes, intertribal consortia and Native Alaskan organizations. (As used in these comments, the term "tribe" includes all forms of eligible Indian and Native Alaskan entities.) PAGENO="0347" 341 Reservation of Funds for Tribal Programs (Sec. 98.62(b)). We are appreciative of, and in full support of, the decision of the Department of Health and Human Services to allocate 3% of the appropriated funds to tribes and tribal organizations as authorized in the statute. The 3% is justi- fied based on: 1) the legal status of tribal governments as sovereign and distinct from state governments; 2) the needs of Indian and Alaska Native children and their families; and 3) the fact that, even though some tribes will apply as con- sortia of tribal governments, there are approximately 500 Indian and Alaska Native governments, and so the economy of scale will be different than among the 50-odd state and ter- ritorial governments. The severity of the need for child care services in Indian communities fully justifies the reservation of the full 3%. Currently, such services are almost non-existent on many reservations. Establishing a strong network of child care providers and the tribal capacity to support such a net- work is important to the success of many programs, including those, such as JOBS, which can also provide financial assis- tance for these services. Child care is an important component of an economic development strategy in Indian Country. As tribes work to stimulate the establishment of more private sector jobs, child care will often be necessary to enable reservation res- idents to take advantage of such employment opportunities. The cost of child care is unusually high in Indian com- munities. The geographic !solation of many communities makes adequate transportation support for child care a necessity. This, combined with other factors such as the need for the improvement of facilities used to house child care services, increases the cost of many types of care above the costs of similar services in urban areas. In view of all these factors, we urge HHS to revise the regulations to provide for the ongoing reservation of the full 3% permitted by law for tribal programs under the Block Grant. Tribal Allocation Formula (Sec. 98.62(b)). We support the "base amount" concept in the interim final rule, includ- ing the exclusion (in Sec. 98.50(e)) of the base amount from the calculation of the ceiling on costs for activities described in Sec. 98.50(a) (2). The base amount arrangement is essential to enabling smaller tribes to participate in the program. It is also consistent with the federal government- wide principle of self-determination. At the same time, the base amount concept should not be implemented in such a way as to make the distribution of funds grossly inequitable to tribes with greater numbers of Indian children in need of services. The revised final regulations should explicitly provide for the notification of all eligible tribal entities of the allocations available to them not later than 90 days before tribal applications are due to HHS. Only in this way can tribes intelligently plan the use of the funds to be provided to them. Such a provision would also be consistent with the advance information on funding available under other federal programs that provide financial assistance on a formula basis. Reallocation of Tribal Money Only to Tribal Programs (Sec. 98.62(c)). The provision in the interim final rule that all funds not actually obligated in grant awards to tribal grantees be reallocated to the states or returned to the federal government makes the stated intention to reserve the full 3% of Fiscal Year 1991 Block Grant funds to tribes PAGENO="0348" 342 an empty gesture. Nothing in the statute requires such real- location. Other programs which contain a set aside of funds for tribes, such as the Indian programs under the Job Training Partnership Act, do not permit the reversion of tribal funds to non-Indian entities. Neither should the regulations gov- erning the Child Care and Development Block Grant program. Tribal governments and tribal people have so little in the way of available child care services -- much less than is available throughout the general population. It would be most appropriate to redistribute any unused tribal child care monies to tribes with eligible Child Care and Development Block Grant applications. Tribes have virtually no source of child care monies outside of the Head Start program. Tribal governments do not receive, for instance, any direct funding from the $2.8 billion Title XX Social Services Block Grant program -- a source of money available to states for child welfare services. The degree to which tribes have expressed their interest in this program clearly demonstrates that there will be enough eligible tribal applicants to use the full percentage of funds available under the law. The number of tribal staff participating in the HHS seminars on the program, followed by the number of applications received from tribes is very high in view of the limited period of time during which informa- tion has been available on the program. The revised final regulations must explicitly provide that the full amount made available to tribes stays available to tribal programs serving Indian children. In addition, the revised final regulations should pro- vide for a procedure for reallocating any unused portion of the tribal money to those tribes which are operating programs under approved plans. application of Percentage Limitations on Activi.ties (Secs. 98.50 and 98.51). The provisions of law governing the percentages of funds which must be spent on specified activi- ties apply only to state grantees. These percentage limita- tions should not be imposed on tribes by regulation where tribal circumstances make them inappropriate. Host tribal allocations are small. To require tribes with formula funding of $5,000, $10,000 or even $90,000 to divide their limited monies according to these arbitrary per- centages makes little sense. To impose such a requirement under these circumstances, as the interim final rule does, preempts tribal priorities by making tribes spend tiny amounts of money on activities which may not be effective. At the same time, this deprives tribes of the ability to spend funds on activities which could significantly expand the child care services for their reservations. The end result will only be contrary to the fundamental purposes of the law. While in some cases, the division of funds may work well in those cases where the block grant funds can be a supple- ment to already on-going efforts. But for tribes with virtu- ally no child care services in place and little or nothing in the way of child care codes or referral services, dividing the money into categories may make the money virtually mean- ingless. It is relatively easy to devise a way to al-locate the 75% pot of money by using vouchers or certificates, but the costs of activities to improve the quality and accessi- bility of child care services may initially be relatively costly. PAGENO="0349" 343 We propose that all allocations of less than $120,000 (including the base amount) be required to spend only 50% of their funding on the child care services described in Sec. 98.50, with the remainder of their funding available without further restrictions on improving the quality of services and increasing the availability of services through the activi- ties described in Sec. 98.51. This requirement would be con- sistent with Congressional intent that the preponderance of funds be spent on services. For tribes with total allocations of $120,000 or more, the revised final regulations should provide only that they must spend 75% of their funds on the services described in Sec. 98.50 and 25% on the services described in Sec. 98.51. The further percentage restrictions in Sec. 98.51 should not be applied to these tribal programs. Carryover Funds (Sec. 98.60(d)). We object to the pro- vision in the interim final rule which would prohibit the carryover of any unobligated funds. This is contrary to the practice of virtually all other federal programs. We are es- pecially concerned that in the initial year of the program when tribes are attempting to establish programs, that there might be carryover funds. There is no logical reason why t'ribes should not be able to carry over and utilize these funds for their intended purpose. If HHS interprets the applicable statute as prohibiting such carryover, it has the obligation to seek a technical amendment to the law to make such carryover possible. Parental Choice Between Contract Care and Certificates (Sec. 98.30(a)). The interim rule requires tribal programs to offer parents a choice between contract care and certifi- cates. Insofar as contract care would normally involve con- tracts with organizations providing center-based care, this is a choice which is simply not available on some reserva- tions. The lack of regular funding for full-day child care services has meant that child care centers are rare on many reservations. They are non-existent on some. Further, the limited funding available to most tribes, coupled with the requirement in Sec. 98.30(e) that certifi- cates be available at any time funds are available to the grantee, will severely restrict -- eliminate in some cases -- the funding avai~able for contract care. Therefore, HHS staff must exercise flexibility and com- mon sense in monitoring for tribal compliance with the rule in Sec. 98.30(a). Ability of Tribal Grantees to Define Eligibility Terms (Sec. 98.20(a) (3) (i)) . The interim final rule wisely allows tribal grantees to define the critical terms "working" and "attending a job training or educational program" which form part of the eligibility requirements for children who qualify for Block Grant-supported services. The seasonal and sometimes sporadic availability of paid employment in reservation areas and in Alaska makes it impor- tant that tribal grantees have flexibility in defining these terms. The program must be able to provide a minimal level of continuity of services in order to maintain a child care provider network. The children must be able to become famil- iar with their providers and the environment in which care is provided. This requires that "working" be defined at the tribal level in such a way as to permit the start-up of ser- vices before seasonal work becomes available and to enable the continuity of services during short periods of interrup- tions in seasonal employment. PAGENO="0350" 344 Audit Requirements.(Sec. 98.65). The interim final rule applies the Single Audit Act and the relevant OHS Circular (A-128) to the BloOk Grant program. This is appropriate. All tribes are already covered by the Circular and most have had years of experience in successfully implementing its re- quirements. However, the supplementary information which precedes the interim final rule defines all Block Grant funding as a `major Federal Assistanceprogram for all grantees.' (See the last sentence of the second paragraph under the subhead- ing "Audits" in the third column on page 26217.) For tribes whose total allocations are less than $300,000, this defini- tion directly conflicts with the definition of `major" pro- gram in the Circular itself. It would be completely inconsistent with the single au- dit process for HHS to invent definitions which contradict those in the Circular. The definition in the Circular should prevail. Submitted by: Karen J. Funk Legislative Analyst National Indian Education Association 1819 H St., N.M. Suite 800 Washington, D.C. 20006 (202) 835-3001 Norman C. DeWeaver Indian and Native American Employment and Training Coalition 1000 Wisconsin Ave., N.M. Washington, D.C. 20007 (202) 342-0594 PAGENO="0351" 345 PILGRIM CHILD DEvELOPMENT CENTER OF PILGRIM CONGREGATIONAL UNITED CHURCH OF CHRIST 6315 Central Avenue St. Petersburg, florida 33710 813/347-1227 October 11, 1991 Robert J. Leonard, Chief Counsel Committee on Ways and Means U.S. House of Representatives 1102 Longworth House Office Building Washington, D.C. 20515 Dear Mr. Leonard, Something is horribly wrong! All the necessary information has not been given to the legislature or the regulations listed in the Interim Final Rule of the Child Care and Development Block Grant and the proposed Notice of Rulemaking for the Title IV-A At Risk Program would never be considered. Pilgrim Child Development Center is only a small center with 70 children, 12 staff members and not a lot of money, but I do know what is happening in Early Childhood. I see it and live it every working day of my life. I cannot afford to lobby. I can only write and hope you will read my letter, listen to what I have to say, and realize I am speaking not only for myself, but for the many others who work with subsidized children as well. Perhaps, as an involved center, I can offer some insight the lobbyists don't have. Although the staff of Pilgrim Child Development Center earns an average of $7 per hour, 33% of them have a BA in Education, 40% have an AA in Early Childhood, 7% have a Vocational Education Degree in Early Childhood, and the other 20% are actively in- volved in getting their certification. Most of them have been teaching at our center from 6 to 15 years. Our program is checked by the health department quarterly, the fire inspector an- nually, and our local licensing board for children's centers twice per year to make sure we have a safe, healthy, appropriate environment for young children. But by far the most intensive monitoring for quality is done twice per year by Coordinated Child Care of Pinellas, the grantee agency for Title XX funds in our area. They use the state mandated tool HRS-CYF Form 5048 (Generic) and HRS-CYP Form 5048 (Preschool). This tool is quite comprehensive and includes 27 generic items plus 122 items for each and every classroom. When they come, they spend two days monitoring my 4 class- rooms checking a total of 515 items in my school. I am enclosing a copy of this monitoring tool for your information for the committee files. Our last score was 96%. As you can see, my staff works very hard to meet the areas listed on this tool because we feel the tool, as a whole, reflects quality care for young children. I felt you should be aware of this to give you some background of our program and its philosophy, so you realize my staff are truly experienced professionals. They know and practice developmentally appropriate practices for early childhood to give children the highest quality care possible. Because our expections are so high, I was totally shocked and incensed to learn that the way the Interim Final Rule of the Child Care and Development Block Grant and the proposed Notice of Final Rulemaking for the Title IV-A At Risk Program is written, little Johnny's grandmother, or mom's boyfriend who doesn't have a job, will suddenly be getting the same fee for subsidized care that we are! While with them, Johnny may or may not be in a nurturing environment with people who have know- ledge of proper practices for Early Childhood. I understand they will not necessarily. be monitored, depending on individual state decisions, which will mean in some areas no efforts will be made to assess the quality of care being given these children. YET THEY WILL BE PAID THE SAME AMOUNT FOR CARE THAT WI ARE! With our local licensing and the HRS-CYF monitoring tool, we are well regulated in Pinellas County, Florida. However, not all counties in Florida have to meet the same regulations as Pinellas, and only Title XX and Title IV-A centershave to be monitored under the HRS-CYF 5048 forms. Under the proposed rules, if parents can choose a non-contracted place of care, these tools will not even be used. By doing that you are, in effect, deregulating our high standards of child care (and we all know what happened when the Savings and Loans were deregulated). I understand in some states even "licending" means only a check by the local health department. If that is the case, then what will "registering" with the state mean? Just a name and address on a list? You must understand that these Title XX children, above all others, need the highest quality care that can be purchased. There are so many obstacles they must "Where your child is nurtured to grow and learn with love" PAGENO="0352" 346 Pilgrin Child Development Center Page 2 overcome. Many are emotional cripples. Many need special services that I an fearful untrained caregivero will not know about or even realise they need. I'm talking about the boy who throws chairs and toys in anger. He is the one who cane to school with a cut on his arm and he told the teachers that daddy got mad. Moirmy was painting and daddy didn't like the color,so he put his fist through the window. That's how the glass cut him and why mommy has a huge butterfly bandage covering most of her thigh. I'm also talking about the little girl who didn't get to play with the toy she wanted, so tried to gouge the eyes out of the child who had the toy. She is the one whose mom came in with a black eye because daddy got drunk again. These examples are just a few of the many I could give. Our school is full of them. That is why my teachers have undergone specialized training, above their cre- dentials, not only to learn to deal with these children, but also to learn what services are available to meet their many needs. We can get these children the help and counseling they need, but will an untrained caregiver realize why the child is acting that way or know how to handle it? Will they know where to refer the family? Or worse yet, will the caregiver be a family member who is part of the child's problem! Please do not misunderstand. I am not against giving parents a choice as to where they put their child. I would propose to continue to give parents a choice. However, national guidelines need to be set up to rate caregivers as credentialed or uncredentialed and that information must be mandatory knowledge for the parents before placing their child. Additionally, the payment for care needs to go directly to the caregiver, not the parent, to make sure the funds are not misused by the parent and never get to the caregiver. We have found it is often most difficult to collect even a $2 fee from subsidized parents. If we had to wait a month and then collect a month's fees it would be almost impossible. We have learned that many Title XX clients would rather take their children to Disneyworld (yes, that actually has happened) or buy another case of beer than pay their child care costs. Caregivers must be assured of payment and paying them directly is the only way to provide that assurance. But with this assurance comes responsibility. We must ask caregivers to make a choice. If they desire to have market rates for caring for these children, then they must agree to abide by the same tool we must use and be monitored by that tool. They must also agree to have the same training and education requirements that our teachers do. IT IS IMPERATIVE THAT WE KEEP TOP DOLLARS RESERVED FOR TOP QUALITY CAPE! If a caregiver chooses not to have the education and training,or meet the criteria indicated in the monitoring tool, then it is only right and prudent spending of funds for them to receive substantially lower payment for their services. Even though I feel parents should have a choice, that does have a qualified exception. I feel it is IMPERATIVE that those children labeled "at risk" and under HRS protective service have a choice of only those caregivers who are credentialed. These children are the ones who nearly always have some sort of behavior disorder, whether it is agression or withdrawal, from the abuse or neglect they have suffered. We cannot afford to trust their care and education to someone not fully trained in the field, who may not recognize the cause of their behaviors or know what to do. Now let me change roles for a moment. I am a taxpayer. From that point of view, I deeply resent the same amount of my tax dollars being spent for babysitting as is spent for the education of young children. Why should an untrained caregiver receive the same fee as a professional Early Childhood Educator? This practice would be a wasteful and grave misuse of my tax money. We in Early Childhood have labored for years to raise the public consciousness to realize we are true professionals. It is beginning to work. The Department of Labor has recognized us as a profession and granted us a Child Care Apprenticeship Program. Parents are learning we ore not just a place to warehouse children. They are beginning to ask questions. They are taking an interest in what their children are learning, and are realizing their children are learning much with the right kind of guidance from teachers. We have chosen to get credentials in the field of Early Childhood Education because we feel these young children are the future of our country. We know how important the first five years are in shaping the rest of their lives. We have cre- dentials because these children are so precious to us that we have to make sure they are educated in the proper way, using the frost up to date knowledge available about children. We want to be sure they are educated in a way that will help then become self-assured and successful in their lives. I implore you to take another look at what has been proposed. Please do not do this to us now, after we've come so far. To give untrained caregivers the same rate as trained professionals, and to leave the most vulnerable "at risk" children with untrained caregivers is a real slap in the face to our profession. It is a slap in the face that knocks -us way down again to the status of babysitters. Or is that all you feel we are? Sincerely, Diane Brown, Director Pilgrim Child Development Center PAGENO="0353" 347 L ~1~I State of Florida ________ Department of Health and Rehabilitative Services CHILD CARE PROGRAM ASSESSMENT - GENERIC Date of Assessment lime In Time Out rteniemeu INSTRUCTIONS: Complete each section of the assessment form after observing the program during the peak periods of Its enrichment activities. Indicate whether the program meets the standard by listing the score. MANAGEMENT AND ADMINISTRATION Point mOd Fcococ ~IANAGEMENT Vaiue vsn 1. The child care facilitys current license is posted. License Number: Eopiration 2 2 Violations which may have been cited during the last two quarterly licensing Inspectionsi have been corrected. 1 3 The designated person In charge is en-site and has been authorized in writing to function in the capacity of the director. 1 4 The child care program meets Civil Rights requirements: funds are not used to promote religious training. Comments: SUBTOTAL L....i ADMINISTRATION Vaiue vsn 1 [5. Reguiarstatt meetings are held at least once a month. 1 I~~Ezch staff member receives an annuaiwrlnen evaluation. Name of Center Center Director sddress of Center Telephone Number lame of Central Agency Licensing Agency Uvansad Czpaoity Data Lost Prog. Azsmt. Subsdzed Cspacity 125ev h.i Total Number of Children: Infants/Toddlers _._..~__- Pre-School: ._......... School Age: Check INITIAL REVIEW MID-YEAR ASSESSMENT CONTRACT REVIEW One: (sew program not under contracti Iprior to renewal of contracti 7. A copy of she current application is maintained in the chitdsfoider. a. The enrollment roster ~ properly coded maintained daily ant 9. ApproprIate documentation of absences is maintained. HRS-CVF FORM5O01 IGonelot. Juigo Iobnoietes praniouseditionsohlth may not be usedi Stock Numbar.574BOOtSO*B2l PAGENO="0354" 348 PARENT INVOLVEMENT 11. Parents are welcomed visitors in the center at all times (to observe, eat lunch, volunteer, help in the classroom, 12 arn.,,. ~ .v.,.z ca ~aa~,'a ,,,nn,xm thru renvlar eeu,isloncr5 bulletin buards/ocrent information center. frequent notes. telephone calls, and othersimilar measures (list opportunities oeiow(. a~,._ *a.~i.. .~reait t,~ tia i,'c,nl,,art in ha nrncram in vannus ways Ilakino into consideration 13. ~ ....-.,-- *~,.. ~,a.rea. rea,at `in. "ini,v,an and nrn,'avt,,res hulidavo and are uadated about any chances 14. Pn.n,a panun. rv~"'~~ "~ a'a'"i ~v""'a *-~- -~*- -----*~-` .--- - - ~omments: SUBTOTAL PHYSICAL ENVIRONMENT - INDOOR SPACE 61 1 1 Point 15. indoor environment is clean, attractioe and spacious. 1 - 16. There isa minimum at 25 square feet perchild. 2 - 17. Space is arranged so that children can work Individually. togatherln small groups, nrin a large group. 1 - 16. Thraughautthe entire day developmentally appropriate materials and experiences are available to all children. 6 - 19. individual spaces for atoring children's personal belongings are provided and are clearlylabeted with each child's name. 1 - 20. The environment includes soft elements, such as rugs, cushions and cooking chairs. 1 21. The environment reflects cultural diversity in such Items as books, pictures, wall displays, toys and food. 1 - 22. There is no evidence of gender, race or disability bias. 2 23. Wall hangings are at child's eye-level. 1 - 24. Bulletin boards are child-oriented and display the children's current individual work. 1 - 25. The room is orderly and reflects regular cleaning and is clear of material not currently being used. 1 26. Furniture used by children is child-sized. . 1 27. Play space Is comfortable, well ventilated, and properly lighted. 1 - Comments: ii I ~: II: ~ 21 I 21 1 it SUBTOTAL 201 i1 PAGENO="0355" 349 MINIMUM STANDARDS FOR MEAL PATTERNS Food Children Children BREAKFAST Category Served Children 1 up to 3 years 3 upto 6years 6 up to 12yesrs Milk, fluid 1/2 cup 3/4 cup 1 cup 1/2 1/2 cup Juice or fruit or vegetable Bread and/or cereal, cup enriched or whole grain 1/2 slice 1 slice Bread or .-~ 1/2 1/3 3/4 cup Cereat: Cold dry or 1/4 cup 1/4 cup 1/4 cup 1/2 cup Hot cooked cup AM SNACK (Select 201 these 4 components) 1/2 1/2 cup 1 cup Milk, fluid cup 1/2 1/2 ounce 1 ounce Meat or meat alternate .~ ounce 1/2 3/4 cup Juice orfruit or vegetable Bread and/or cereal, 1/2 cup cup enriched or wholit grain 1/2 slice 1 slice Bread or 1/3 3/4 cup Cereal: Cold dry or ._-_---- 1/4 cup 1/4 cup 1/4 cup 1/2 cup Hot cooked ._-___ cup LUNCH Milk, fluid 1/2 cup 3/4 cup 1 cup Meat or meal alternate Meat, poultry, or fish, cooked (lean meat without 1 1 1/2 ounces 2 ounces bone) ounce 11/2 ounces 2 ounces Cheese ......._.- ounce 1 1 Egg 1 1/4 3/8 cup 1/2 cup Cooked dry beans and peas cup 2 3 tablespoons 4 tablespoons Peanut Butter Vegetable and/or fruit 1/4 1/2 cup 3/4 cup (two or more) cup Bread or bread alternate, 1/2 slice 1/2 slice 1 slice enriched or whole grain P.M. SNACK (Select 2 of these 4 components) Milk, fluid 1/2 cup 1/2 1/2 cup 1 cup 1/2 ounce 1 ounce Meat or meat alternate .~ 1/2 cup 3/4 cup Juice or fruit or vegetable Bread and/or cereal, cup enriched or whole grain Bread or 1/2 slice 1/2 slice 1 slice 1/3 cup 3/4 cup Cereal: Cold dry or cup 1/4 1/4 cup 1/2 cup Hot cooked cup DIRECTiONS: * Check food category to Indicate food item was served. a If meal and snack patterns meet the recommended patterns, list the point in the appropriate box. * If supper Is nerved, follow same meal patters as lunch. IMPORTANT NOTES: * Older children may need larger quantities of required foods. * Juice may not be served when milk Is the only other component. * Bread can always be replaced with an equivalent serving of enriched whole grain rice or pasta or acceptable bread product. * There must be at least two servings of different kinds of fruits and vegetables. PAGENO="0356" 350 ASSESSMENT OUTCOME GENERIC Point Initial Follow-up Components: Value Visit Visit Management 5 - - Administration/Recordkeeping 12 - Parent Involvement 6 - - Physical Env.-Indoor Space 20 - Subtotal: 43 - - INFANT Components: Point Value Initial Follow-up Visit Visit PhysIcal Environment 32 - - Curriculum/DallyRoutine 14 - Teacher/Intent Interaction 34 - - NutrItion 8 - - Napping 2 - - Health 5 - - Subtolal: 95 - - TODDLER Components: Point Value Initial Follow-up Visit Visit Physical Environment 54 - - Curriculum/Daily Routine 17 - - Teacher/Infant Interaction 38 - - Nutrition 5 - - Napping 2 - - Health 5 - - Subtotal: 121 - - Point Components: Value Initial Visit Follow-up Visit % Generic 43 - - Infant 95 - - Toddler 121 - - Preschool 170 - - School-Age 81 - - Total: 510 - - _________________ the center director, acknowledge the receipt of the HRS Child Care Program ASSESSMENT. PRESCHOOL Point Initial Follow-up Components: Value Visit Vinil Physical Environment 87 - - Curriculum/Daily Routine 31 - - Teacher/Child Interaction 42 - - Nutrition 5 - Napping 3 - - Health 2 - - Subtotal: 170 - _% _% SCHOOL-AGE Point Initial Follow-up Components: Value Visit Visit Physical Environment 32 - - Daily Routine/Program Activities 13 - - Teacher/Child Interaction 34 - Nutrition 2 - - Subtotal: 81 - - _% _% Reviewer's Signature Date Signed Provider's Signature 4 Date SigneO PAGENO="0357" 351 State of Florida Department of Health and Rehabilitative Services ____ CHILD CARE PROGRAM ASSESSMENT - PRESCHOOL ~djuie d center Room/Teacher Reviewed By Recheck Da~j INSTRUCTIONS: Complete each aection of the assessment form after observing the program during the peak periods of Its enrichment activities. Indicate whether the program meets the standard by listing the score. PHYSICAL ENVIRONMENT The following age-appropriate Items are available and accessible: 17. Magnifying glass 18. Magnets EARNING ENVIRONMENT - 2 Ii. Languege Indoor physical environment is arranged ~~scovery Into a minimum of six (6) clearly defined I~i:atic play learning centers. 4. Block ~~ative experiences ~bletsys `i - 2 - - - 2 2 - 2 7. All learning centers are accessible on a daily basis. V~JVsfl INDOOR EQUIPMENT sll~xlettvarletyanddur8blltY accessible, age-appropriate play expenenceS per Child for each group and/or play area of g'r~~is end manipulativeS are readily accessible to children and arranged on low, open shelves to promote independent 15 Room Items, play equIpment and shelves are labeled with words and pictures (words optional for two year olds(. `j - "~` I 2 I ~NGUAGE ~tch$i 11. At (east six (61 age-approprIate books displayed. 1 - - The following age-appropriate items are available and accessible: 1~~ppets hid 1 - - board and v5W/iiing materials - crayons, markers, or pencils end unlined - - paper (pencils not appropriate for Iwo year olds( - player `1 - 15. 1 - . - 16. Records/taPes Point Value Initial Oct !fyc.c~V~HY 18. Nesting measuring cups 2s.Courlting frames/toys -. 1 - 21. Sheila, rocks, natural substances (optional for two year olds( 1 22Ptants iII- 23. Pets (cagedi or fish (aquariums( 1 1 24. Sensory material rice, etc. `1 25. FluId play - sand, water, 26. Other (Identify item( ii H8S-~VF FORM 5048 iPreschooli, Jul 80 (Obsolotss precious editions which may not be ussdl (Stock Number: s749.c04504u-6i PAGENO="0358" hmAIIA,-Is~Ouuy 27. Varietyof child-sized furniture T 28. Pots, pans and dishes `~ - - re a t. Dressup clothes, costumes (men ~Z women), and props 30. Place to store dress-up clothes 1 31. Dollsanddollclothes 1 - 32. Small table and chairs = 33. Doll bed/buggy 1 I. Assorted food cans, boxes, playfruit `~ a and vegetables 35. Playtelephones 1 36. Other (identify item) 1 - 2' ~ ~ LOCKS V.' 37. Standard unit blocks 1 `~ 38. Transportation toys which may include large * and small trucks, trains, tractors, planes 4 39. Variety of accessories which may include wood or rubberavimals and people 40. Other (identIty Item) `1 is ran - - - - - - in 2 yearold area, large hollow, large cardboard or oversized plastic blocks may be substituted. - - (FATIVEEXPERIENCES 68 1. Easel paInting 1 nt tn06i us vist 2. Smocks 1 - - 3. Tempera and finger paints 1 44. Large easel brushes (a minimum otsio( 1 45. Assortment otpaper 1 46. Large crayons 1 7.Chalk 1 ~ 48. Play dough and accessories 1 - - - - - - - - 49. Washable markers. 1 7. Blunt point scissors (optional fortwo year 1 1 51. Craft supplies (a minimum ottlve( 1 52, Glue or paste 3. Rhythm instruments 1 - - - - - - - 4. Woodworking equipment (a minimumot 1 tool and 5 materialiiopiionaltortooyearoldsl Comments: 352 55. Wooden, loom, or kricbbed puzzles 1 56. Peg board and pegs 57. Large beads end lace sets nit. Construction toys (a minimum ot tue ~5 varieties) 59. Stacking or nesting toys 60. SellIteip materials -for lacing. buciiicii~'" anapping, zipping, and buttoning ,~ 61. Sortingtoys 1,2. Pound board or bench and pounding tool ~ (optional fortour yesroldsl 63. Other (identity item) - 1 - 1 - 87J I TARt tCTrlVG SUBTOTAL PAGENO="0359" 353 CURRICULUM/DAILY ROUTINE AND PROGRAM rtMt V~f'tt ITIMO 78. The daily schedule is planned to a. tndoor e. Individual k. Large muscle promote a balance of activities on b. Outdoor I. Small gmups I. Small muscle these dimensiono: c. Quiet g. Large groups j. Child Initiated 4. Active k. Staff Initiated 1 - - 79. Them Is evidence that the daily schedule Is being followed. 2 90. Stall are flexible enough to change the planned or mutine activities as well as the room arrangement according to the needs or Interests of the children. 1 - - 81. Staff conducts smooth and unregimented transitions between activities. Transitions are planned as a vehicle for leamlng. 1 82. Children are not always required to move from one activity to another ass group. 1 - -- 83. There Is scheduled free-choice of teaming/actIvIty centers at least twice a day. 84. Leemlng/actlvtty centers awls use brat least one continuous hour In the morning after8:30. 1 2 - - - - PAGENO="0360" 354 103. Staff converse frequentlywith children, asking openended questions. 2 - 104. ChIldren are encouraged by staff to solve problems, Initiate actbsties, explore, experiment, question and learn bydoing. 2 - - - - 05. Staff provide opportunities fur children to see how reading a. Reading stories and poems and renting are useful by: b. Taking dictation In chldren'a own tanguage c. Seeing classroom charts orother print in can 2 106. Staff assist children to be comfortable, relaxed, happy and involved In play and other activilies. 2 - - 107. The sound of tIre classroom environment is primarily marked by pleasant conversation, spontaneous laughterand exclamations of excitement rather than harsh, stressful noise or enforced quiet. 100. Staff use only posItive techniques In assisting children to develop aelf-tolletlng skIlls. - 2 2J I PAGENO="0361" 355 infantsL~ toddlers PINELLAS INTERAGENCY COLLABORATIVE COUNCIL FOR INFANTS & TODDLERS 301 Fourth Street S. W. Largo, Florida 34640 (813) 588-6023 Fax: 588-e202 September 18, 1991 Robert Leonard, Chief Counsel Committee on Ways and Means U. S. House of Representatives 1102 Longworth House Office Bldg. Washington, D.C. 20515 Dedr Mr. Leonard: The Pinellas Interagency Collaborative Council for Infants and Toddlers represents fifteen public and private organizations in Pinellas County who, by virtue of their position, interest and/or training, contribute to the quality of services provided to young children and their families. Individual members and agencies supported the passage of the Child Care Development Block Grant. However, in continuing to advocate for the maximum utilization of available and potential resources for young children and their families, the following issues regarding the Interim Final Rule of the Child Care and Developmental Block Grant are of concern to the Council. 1. A dichotomy In the quality of care appears to be supported when children are allowed placement in unregulated settings. While parental choice should be encouranged and supported, maintaining assurances of safe and developmentally appropriate care for all children must be guaranteed. There must be assurances that parents select from care that is regulated and developmentally appropriate. Only by adherence to regulatory and certification standards can this guarantee begin to be met. For the welfare of all children, we must provide guarantees that care will be aafe, equitable, and developmentally appropriate. To place the expectation of selection upon families without the benefit of standards, places families at a disadvantage in making informed choices and places children in jeopardy of receiving inadequate and potentially harmfut care. Parents choosing to place their children in care could do so knowing that their selected provider chose to participate in a certification process to assure safe and developmentally appropriate care. Ills our recommendation that standards be developed at the local level and these must be made available to parents in their making informed choices. 2. Rules indicate that established uniform rates will be made to providers regardless of their regulatory status. There is no provision for quality of care in the determination of rates for services rendered. This provision is especially troublesome in the following areas: Undermines incentives for providers to pursue minImal licensure standards. The Impact on children in their care will result In less than quality care for each child. Wastes tax dollars by artificially inflating costs of care when care tied to licensure or certification is not supported. Impedes providers in the participation of educational and inservice programs to implement, maintain and enhance developmentally appropriate care. PAGENO="0362" 356 We recommend that tocal communities provide established fee structures commenserate with the tovet of care provided and the degree of certification maintained. In no case should fees be paid that are greater than the ones established by the provider for private day care. 3. Current rules will require an additional regulatory system for monitoring of minimal standards of care as well as avoiding abuses of funds. This addition will either impose impractical demands on an already overburdened system or will result in the implementation of a new monitoring authority. Either scenario will result in more tax dollars being spent in an attempt to ensure available care but without any auarantee of quality care. We recommend the implementation of standards to provide accountability for monitoring. Parents need to be informed of the degree of regulation realistically available in their choice of child care. 4. The Rules are unduely restrictive in statements of funding utilization. While the legislation indicated the "preponderance" of funds should be spent in direct services for care, the 90% set aside for purchase of child care slots precludes adequate funding for quality improvement and administration, If there is committment on the part of ACF to supporting the legislative intent on improving quality of care, the figures cited in the Rule will need to revision. Pinellas Interagency Collaborative Council for Infants and Toddlers supports the recommendations of the Juvenile Welfare Board of Pinellas County, Coordinated Child Care of Pinellas County, and Florida's State Coordinating Council on Early Childhood Services that 75% of the reserve shall be used for direct services. This would allow 25% to be used for quality improvement activitias and/or administration of the program/grant. We appreciate the opportunity to offer these comments on a critical issue that will touch so many lives. Please keep up informed on the status of any hearings or call for comments that may occur in the future regarding Child Care and Developmental Block Grant Rules. incerely, ~ Q~9~ Jikt Mills, Co Chairperson ~ Shari Olsen, Co Chairperson CC: Honorable C. W. Bill Young Honorable Michael Bilirakis Honorable Bob Graham Honorable Connie Mack Mr. Mark Ragan, Child Care Task Force Ms. Sandi Harris, Florida Department HRS Dr. Pamela Phelps, Chairman, State Coordinating Council for Early Childhood Services Enc: Membership Chart of Pinellas Interagency Collaborative Council for Infants & Toddlers PAGENO="0363" infants!~ toddlers J~ ~©~©~? ~ ©©~©aL ~ ~\~II1F~ ~ JWB MEDICAL JAMES E. MILLS EXECUTWE DIRECTOR RON LIPTON JOHNNIE RUTH CLAF*~ECENTER DR. MARY PAVAN PCH PARENTS OF PINELLAS I I PINELLAS I I I I ~NEU)SCOUNTYSCHOOLS I BETH HARTSTEIN I I COUNTYCOMMSSIONERS I i I SHARI OLSEN I I BARBARA SHEEN-TODD I I JUDITH WESTFALL I GEORGIA PAPPAS CH~JRPERSON J I ASSOCLAJESUPERINTENDENT I REUGIOUS COMMUNITY UNITED WAY SER~CES ELLEN JENSEN DOUG OAKES VICE PRESIDENT OF PRESIDENT PLANNING & ALLOCATION PINELLAS ECONOMIC PINELLAS OPPORTUNITY DEVELOPMENT COUNCIL CO~J'J~IL DAVID H. KNOWLTON FRED ZECKER PRESIDENT DEPUTY DIRECTOR RNELLAS COUNTY EARLY PINELLAS COUNTY ~SAC CHILDHOODCOUNCIL PREK INTERAGENCY COUNCiL DAYCARE & EARLY CHILDHOOD COMMIII'EE SANDI BROIDA JANE MULLIGAN KATHY MULRENNAN CO~CH,AJRPERSON CHAiRPERSON CRAJRPERSCN PICCIT JAN WALLIS PROJE~TMANAGER HRS 1-COPE MICHAEL BECKER RICHARD CLAWSON DISTRICT ADMINISTRATOR CHAIRPERSON ADVISORY COMMITTEE WANDA BLANTON, PROGRAM ADMINISTRATOR, HRS SANDI BROIDA, SUPERVISOR, PRE-K HANDICAPPED GUY COOLEY, DIRECTOR, COORDINATED CHILD CARE JEAN M DAVIES, COORDINATOR, YSAC LYNNE FAIMAUE. PROGECT MANAGER, FLORIDA FIRST START WILLIAM FILLMORE, DIRECTOR, HEAD START MARCIA MACKENZIE, JULE PARENTSERVICES LUCIE MALINSKI, PASTCHAIRPERSON, EARLY CHILDHOOD COUNCIL DONNARIPPLEY, SUPERVISOR, PREKEARLY INTERVENTION ELITHIA STANFIELD, EXECUTIVE ASST.,JWB ANDREATROW, SUPERVISOR, FLDRS JOYCE WILLIAMS, COORDINATOR, HEADSTART PAGENO="0364" 358 ~f~1 DAY CARE LJ~..A. Da~Ca~J NEVVSLETTER ~ [~atsn Se~ce THE INDEPENDENT BIWEEKLY NEWSLETTER OF 91N~R~~TION SERVICE Vol. 20, No. 18 September 9, 1991 Proposed regs come under congressional scrutiny Ten months have passed since three years of partisan congressional bick- ering over child care legislation finally resulted in enactment of two new subsidy programs. But the bickering in Congress over the legislation contin- ues. The House Ways and Means Subcommittee on Human Resources plans an over- sight hearing Sept. 17 on the proposed regs for the Child Care & Development Block Grant (Day Care USA, 6/17/91) and the At-Risk Child Care Program (Day Care USA, 7/1/91). - Liberal Democrats, including Acting Subcommittee Chairman Tom Downey (D- NY), want to blast the administration for its emphasis on parental choice that would severely restrict states' ability to regulate providers getting funds under the programs. Several House Democrats have condemned the adxsinistra- tion's proposal, saying it violates Federalism by encroaching too much on states' rights to ensure safe environments for children. Republicans charge that the Democrats are continuing to use the issue to accuse them of not caring about children. The trouble with figuring out con- gressional intent is that Congress passed two grant programs at once with different regulatory and parental choice provisions. Downey plans to grill the administration at the hearing. Republicans may counter by scheduling a witness to state that evidence is insufficient that highly regulated care is better for children than less regulated care. And they also may remind Downey that he had oversight jurisdiction over the Depen- dent Care Tax Credit for years when parents were taking that federal subsidy and using it for unregulated care -- yet he never showed any concern about it. They also plan to note that the House rejected several amendments to the leg- islation that would have weakened parental choice. Congressional conservatives also are planning to testify in favor of the proposed regs. Scheduled witnesses include Rep. Vin Weber (R-MN) and Charles Stenhoim (D-TX), who fought hard in the last session for a child care subsidy bill with few regulations. "Our feeling is that the regulations preserve what Congres~ intended, certainly what we thought Congress intended when we voted for" passage, says Becca Tice, Stenholm's legislative director. Individuals or organizations wishing to submit written testimony should send six copies by Oct. 15 to Robert Leonard, chief counsel, Com~zittee on Ways & Means, U.S. House of Representatives, 1102 Longworth House Office Bldg., Washington DC 20515. PAGENO="0365" S. SUE SHEAR STATE REPRESENTATIVE DISTRICT 87 200S. BRENTWOOD CLAYTON. MISSOURI 63105 359 ROOM 305 STATE CAPITOL JEFFERSON CITY. MISSOURI 65101 3 14/75 1-4 163 September 25, 1991 Honorable Thomas Downey Subcommittee on Human Resources Committee on Ways and Means B-317 Rayburn Building Washington, D.C. 20515 Dear Representative Downey: This letter is to express my dissatisfaction with the proposed regulations on the child care block grant. When the child care block grant passed child advocates hailed it as a major step forward (and rightly so). The proposed regulations are, in contrast, a major step backwards. They violate a basic premise of the child care block grant - to ensure quality child care. As you may be aware, Missouri is the only state which has absolutely no health and safety standards for religious child care centers. Because the regulations choose parental choice over safe child care Missouri children in the 1,100 centers are in further danger. Perhaps more importantly these regulations do not represent real parental choice when a parents' only choice is to have their child in unsafe child care. In conclusion, while parental choice is good idea in states which have adequate health and safety standards it is a terrible idea in a state like Missouri unless parents are ensured a minimum of health and safety for their children. Sincerely, Sue Shear State Representative Th Ifouse Of JRepresentatives PAGENO="0366" 360 Southern California Association f ** ~ft~ff Education of Young Children EYC October 10, 1991 Honorable Thomas J. Downey Acting Chairman Subcommittee on Human Resources Committee on Ways and Means United States House of Representatives 1102 Longworth House Office Building Washington, D.C. 20515 Dear Representative Downey, The Southern California Association for the Education of Young Children welcomes the opportunity to provide written testimony on the Health and Human Services proposed regulations to implement the Child Care and Development Block Grant (CCDBG) which were published in the Federal Register on June 6, 1991. 1. The CCDBG regulations are overly restrictive in limiting the amount of funds that can be used toimprove the availability and quality of child care. The CCDBG requires that 75% of the funds be used to pay for child care services and to improve the availability and quality of child care. While the conference report (Report 101-964) does stipulate that a `preponderance" of these funds be spent on direct services, the regulations interpret this to mean that at least 90% of these funds be used for direct care. Congress expressly required that some portion of funds be used to Improve child care quality. Since it is not unreasonable to expect that administering the block grant could consume 10% of the funds, especially given the state mandate to establish a voucher program, virtually no money would be available for quality improvements in direct defiance of Congressional intent. In California, activities such as provider training, parent education, low cost, vocational teacher training through the extensive community college system, and resource and referral networks currently operate to improve child care quality. In spite of these efforts, parents find they have great PAGENO="0367" 361 -2- difficulty locating stable child care. Recent salary surveys by the Southern California Association for the Education of Young Children of their 3,500 members throughout the greater Los Angeles area, found that the turnover rate of early childhood teachers and child care- givers in southern California remains at a stubborn 32_40%.* Low wages and lack of worker benefits are the primary reasons given by trained caregivers leaving the field of early childhood teaching whether in center-based group care, or in the family day care home. When all child care settings have a constant stream of unfamiliar adults to care for children, parents are offered no choices in their attempts to locate stable, caring, quality care. Parental choice can be guaranteed only when an adequate and stable supply of trained child care teachers is available. CCBDG set-aside funding must address the critical need for improved teacher compensation and benefits as an integral part of efforts to improve the quality of care. The Southern California Association for the Education of Young.Children urges that the regulation be revised to allow greater state flexibility to improve the quality and availability of child care, while also providing incentives to do so, by requiring that no less than 51% of the 75% set-aside be used for direct services and capping administrative costs at 10%. 2. The regulations seriously impede the states' ability to impose even minimal health and safety regulations for the CCBDG. First, the broad, vague standard in the CCDBG regulations, which repeatedly emphasizes that additional health and safety standards cannot significantly restrict parental choice, has the effect of deterring states from adopting reasonable safety standards and reducing ones they have. In C'a/ifornia, wti/c/i hìas hiadmandator,vilea/t/ì andsafet,vregu/at/ons enforcedt,v licensing inspect/on for 50 years., efforts to rec2Jce ilea/t/i ano safetyregu/ations to simple, se/f-certification are underway These efforts have teen given a toost ty t/ie vague standards imp//ed m tile CCD56G interim regulations No one disagrees that parental choice is an important principle, but Congress intended to provide assistance to families for quality child care, not unsafe or unhealthy care. Furthermore, we do not believe that parental choice is in any way harmed by reasonable state efforts to regulate providers in order to protect the health and safety of their children. PAGENO="0368" 362 -3- Second, in the preamble, it is implied that only the most minimal health and safety standards will be acceptable. For example, the regulations suggest that states could meet the law's training requirement by mailing providers information regarding health and safety codes, rather than by actually providing more direct effective training opportunities. This is a disgrace, given what we know about the importance of training to stable and nurturant child care. In the most comprehensive study of child care in the nation to date, the National Child Care Staffing Study found that at a minimum, 1 5 hours of training for children's health and safety are necessary to provide safe, quality care. The Southern California Association for the Education of Young Children urges that the final regulations be revised so that states may require providers to meet health and safety standards that protect children and assure parents a wide range of safe and healthy child care from which to choose. We urge your consideration of this testimony, and that the sub- committee direct needed revisions, and the publication of final regulations in a timely fashion. Sincerely, Sally Sanger S.C.A.E.Y.C. President 13601 Whittier Blvd. Whittier, CA ~0605 (213)696-2143 PAGENO="0369" 363 Southern California Early Childhood Salary Survey: 1991 In reponse to the current interest in salaries and working conditions of child care workers, the Southern California Association for the Education of Young Children (SCAEYC) has conducted a survey of child care centers in the greater Los Angeles area. Six chapters of SCAEYC participated by sending surveys to a sample of the child care centers in their areas. This report summarizes the data from 192 completed surveys returned to the chapters. The purpose of the survey was to learn more about the salaries, working conditions, and indicators of quality of the schools in the greater Los Angeles area. We are interested in supporting the work of child care pro- fessionals, community leaders, and politicians who support the improvement in quality of child care centers locally. In order for us to move forward it is necessary to have reliable data concerning the indicators of quality which have already been identified. Previous research has shown that children who attend centers where there are low teacher turn-over rates, high levels of staff education, and low child/teacher ratios receive higher quality care. These indicators of quality have been associated with salaries, working conditions, and benefits of child care workers, and we feel it is important to be able to accurately describe conditions in our local centers. Description of Sample The sample was collected by choosing schools at random and then calling their directors to ask for their cooperation in participating. Subsequently, surveys were mailed to all directors who agreed to participate. The following chapters participated: ______________ __________ ______________ Chapter # of Centers [ # of Staff # of Children Antelope Valley 10 137 1,208 * Long Beach 46 524 3,755 Metro 27 332 2,129 North Bay 41 426 3,087 Valley 55 780 6,211 Whittier 13 214 . 1,643 Program Type # of Centers # of Children # of Staff Average Teacher/Child ratio Private Proprietary 51 3,485 480 1:9.1 Private Non-profit 120 11,588 1,506 1:9.1 Public/School District/Campus 16 2,722 390 1:10.1 Characteristics of Schools PAGENO="0370" &64 Demographics The table below describes the sex, ethnicity and age range distribution of employees in this sample. Sex Per Cent Ethnicity Per Cent Age Range Per Cent Male 5.0 % White 57.2 % less than 20 4.3 % Female 95.0 % Hispanic 23.7 % 20 - 24 19.2 % Black 11.3 % 25 - 29 18.0 % Asian/Pacific 6.0 % 30 -39 23.8 % Other 1.8 % 40 - 49 19.6 % 50 and over 15.1 % Salaries The salaries listed on the next page are the average hourly rates currently being paid to employees. A number of respondents did not fill in the salasy questions, therefore the number of those who did is indicated in a separate column. It is noteworthy that among teachers there is a statistically significant difference (p < .01) between private proprietary and nonprofit schools, and public schools. The private proprietary and nonprofit schools tend to pay teachers a lower salary than the public schools. Among assistant teachers the difference is similar, though not as great. Directors of public programs earn statistically higher hourly rates than private proprietary directors or nonprofit directors. These differences are consistent with what has been found in other communi- ties around the country. Interpretation of Salaries The survey did not ask respondents to identify how many teachers and assistants earned lowest or highest rates or rates in between. However, it is reasonable to assume that staff who have been employed for the longest would be at the high end. Approximately half of all the teachers and one third of the Assis- tant teachers have been in their positions three years or more so it is probably a fair assumption that the average salaries are somewhere close to the mid-range rates indi- cated in the Mid-Range Hourly Rate column. Staff Turn-over Rates Research has demonstrated that children need consistent caretakers. The child who says to mom, "Who will be my teacher today?" demonstrates what many if not most of our children experience - the uncertainty of who will be there, what the expectations of the day will be, and the extra anxiety that is produced with that uncertainty. Extra stress is also created for parents who wonder if there will be a caregiver who genuinely "cares" for their children, for staff who fear that too few teachers and assistans will show up that day, and for directors who have an extremely difficult time getting and keeping qualified employees. in some communities annual turn-over rates have been reported to be as high as 50% to 60%. We are faring somewhat better with an PAGENO="0371" annual turn-over rate for teachers at 27% and for assistant teachers at 32%. However, when the higher paying public school based centers are removed from the sample the turnover rate increases to 30% and 35% respectively for teachers and assistants. The most common reason given by directors that staff leave a program (other than to accept a job in another early childhood education program or other personal reasons) is dissatisfaction with the current pay. Benefits and Working Conditions Experts in business management have suggested that workers will often stay in work environments where they are given significant benefits and experience desirable working conditions. The employees in our sample 365 receive very few benefits. An example is that only 19% of the centers reported providing paid maternity leave and only 48% provide ~j~~jd maternity leave. This lack of important benefits promotes the view that child care work is temporary. Few will stay long enough to be able to say they have made a career out of child care work. Most child care centers and schools give their employees some sick leave pay (average of 8 days per year), holidays (average of 10 per year), and vacation (average of 10 days per year, usually after one or two years of employment). Most employees are receiving at least some preparation time (62%), have a written employment contract (51%), receive an annual cost of living allowance (66%) and receive merit pay raises (64%). Employee Salaries and Turn-over Rates Number of Average Low Average High Midpoint Turnover Schools Hourly Rate Hourly Rate Hourly Rate Rate Reporting Wages Teachers Proprietary 47 6.83 8.59 7.71 30 % Nonprofit 115 7.00 8.87 7.94 29 % Public 12 10.42 15.04 12.73 10 % Assistant Teachers Proprietary 38 5.50 6.37 5.94 38 % Nonprofit 104 5.47 6.39 5.93 34 % Public 10 7.45 9.28 8.36 13 % Teacher/Directors Proprietary 24 8.78 9.41 9.10 7 % Nonprofit 57 9.25 10.41 9.83 12 % Public * * * * * Directors Proprietary 24 11.78 12.64 12.21 5 % Nonprofit 86 12.03 13.29 12.66 15 % Public 11 21.61 24.59 23.10 0 % * 1~h~.t** i***ffi-i~.** d*t* nr me*nin*ful average PAGENO="0372" Teacher Training and Education 366 In California a person can be a teacher in a classroom of 12 children with a minimum of twelve college units of Early Childhood Education and one year experience. A director only needs three more units of administration and four years of experience. Most of the schools in this survey hire new teachers and directors with these minimum requirements. Only 47.0 % of the schools surveyed report that they require more education or experience than the legally required minimum. The good news is that most of the schools (69%) provide some support for additional training either by way of staff development, or they provide educations stipends to cover the cost of workshops, conference, or college level courses. Thus, staff who have more years of service tend to have more education and training. Tuition Rates Many of the public schools did not report a tuition rate, presumably because parents pay on a sliding scale due to subsidies. It is difficult to equate such tuition with other fee mechanisms. The average tuition for proprietary progran;s at $89.41 per week for full-time care is somewhat higher than that of non-profit programs at $72.99. Overall, the average weekly tuition for infants is $101.05, $85.34 for pre-schoolers, and $66.43 for school age children. Conclusion at this time is not good. In California one out of five of our children are growing up in poverty. In some communities the school drop-out rate is as high as 50% and we have an average drop-out rate of 40%. Many studies have demonstrated that high quality early childhood education can improve the opportunities for those who are poor and at risk of droppingout and becoming delinquent. In spite of the overwhelming data which demonstrates the importance of providing high quality programs for our children, those programs remain nearly unavailable at any price. When the majority of those who care for our children earn poverty wages or below, are undereducated and undertrained, receive few benefits, and work under extremely stressful conditions, many of them leaving within a year, it is obvious that our future is at risk. It is imperative that we make a commitment to providing conditions that will encourage people to make child care and education a career because they deserve fair and decent employemnt and because our future depends on their abilities. Childcare workers need higher salaries, support to expand their education and knowledge of child growth and development, adequate cost of living allowances, and benefit packages which will encourage them to stay in the profession. The cost may appear to be high, but the costs of ignoring our children will certainly be higher. Many of us believe that children represent our future. The status of children in this country This studywas coordinated by Dr. Barbara J. Nicoll, Chair, Child Development Program, University of La Verne, 1950 Third Street, La Verne, California 91750, and supported and published by the Southern California Association for the Education of Young Children. Data analysis and presentation was done by Arnold V. I.overidge. The survey instrument was adapted from the Child Care Staff Salary and Working Conditions Survey published by the Child Care Employee Project in Berkeley, California. Permission to copy this document is granted to those who v~tl use the information to promote high quality child care. PAGENO="0373" In response to the current interest in salaries and working conditions of child care workers, the Foothill Affiliate of the Association for the Education of Young Children has conducted a survey of child care centers in our area. This survey was supported in part by a MAG Grant from the National Association for the Education of Young Children. The survey is a random sample of 43 of 305 full day centers in the cities of Pomona, La Verne, San Dimas, Ontario, Chino, Covina, West Covina, Walnut, and Montclair. The purpose of the survey was to learn more about the salaries, working conditions, and indicators of quality of the schools in the Foothill area. We are interested in supporting the work of child care professionals, community leaders, and politicians who support the improvement in quality of child care centers locally. In order for us to move forward it is necessary to have reliable data concerning the indicators of quality which have already been identified. Previous research has shown that children who attend centers where there are low teacher turn-over rates, high level of education of staff, and low teacher/child ratios receive higher quality care. These indicators of quality have been associated with salaries, working conditions, and benefits of child care workers, and we feel it is important to be able to accurately describe conditions in our local centers. Description of Sarnpk The sample was collected by choosing schools at random, and then calling directors to ask for their cooperation in participating. Subsequently, surveys were mailed to all directors in the random sample. A response rate of 63% was obtained. Too few statistics were collected from public schools to include them in our report. Characteristics of Schools The tables below describe the age ranges, ethnicity, and sex distribution of employees in our sample. Ethnic Distribution [flhi~anic rBlack [Ailan [Other Ethnicity ~mber of Employees ~4I T~ Per Cent -~ 68% ]-~ 18~ 6% 4% 4% 367 The Pomona Valley Early Childhood Salary Survey: 1990 ~of #ofTea Centers I Children & Assistants Demographics PAGENO="0374" 368 Age Distribution Age Range Number Of Employees Per Cent 20-29 272 47% 30-39 163 28% 40-49 83 15% 50-up 55 10% Sex Distribution Sex Number Per Cent Male 19 3% Female 571 97% Salaries The salaries listed below are the average hourly rates currently being paid to employees. There is a tendancy for private proprietary schools to pay employees a slightly lower salary than the nonprofit schools, however this tendancy is not statistically significant as has been found in other community surveys of child care conditions. Employee Salaries Number of Average Low Average High Average Hourly Schools Hourly Rate Hourly Rate Rate Responding Teachers Proprietary 24 $5.54 $7.00 $6.27 Nonprofit 24 $5.91 $7.81 $6.86 Assistant Teachers Proprietary 17 $4.72 $5.54 $5.13 Nonprofit 18 $4.69 $5.83 $5.26 Directors Proprietary 13 $9.68 $10.26 $9.87 Nonprofit 23 $10.57 $11.38 $10.88 PAGENO="0375" 369 Ini~rpretation of Salaries It is likely that most teachers and assistants earn a rate that would fall in the column "Average low hourly rate." The survey did not ask respondents to identify how many teachers and assistants earned lowest or highest rates. However, it is reasonable to assume that staff who have been employed for the longest would be at the higher rates. Considering the high turn-over rates reported below, as well as the fact that it has been estimated that the average length of time for any teacher or assistant to remain in the field of early childhood education is three years, it is logical to assume that most employees do not earn the higher rate, rather they earn the lower rate. Additionally, it should be noted that many, perhaps most, teachers and assistants are earning a wage that is at poverty level or below. According to the United States Bureau of the Census the poverty level hourly wage was about $6.08 per hour in 1989. Siaff Turn-ovetRatta Research has demonstrated that children need consistent caretakers. The child who says to mom, "Who will be my teacher today?" demonstrates what many if not most of our children experience--the uncertainty of who will be there, what the expectations of the day will be, and the extra anxiety that is produced with that uncertainty. Extra stress is also created for parents who wonder if there will be a caretaker who genuinely "cares" for their children, for staff who fear that too few teachers and assistants will show up that day, and for directors who have an extremely difficult time getting and keeping qualified employees. In some communities annual turn-over rates have been reported to be as high as 50% to 60%. Our schools are doing a little better. The annual turn-over rate for teachers in this survey was 34%, and the rate for assistant teachers was 30%. ~gp~fits and Working Conditions Experts in business management have suggested that workers will often stay in work environments where they are given significant benefits, and experience desireable working conditions. The employees in our sample receive very few benefits. Only 16% of the schools reported giving employees some health insurance benefits, and none reported giving any retirement benefits. Even maternity leaves are not generally given to child care workers. Only 14% report giving some paid maternity leave. This lack of important benefits insures that child care workers will view their years in this line of work as temporary. Few will stay long enough to be able to say they have made a career out of child care work. Additionally, most child care centers and schools give their employees some sick leave pay (9 days per year average), vacation (8 days after the first year average), and holidays (10 days per year average). Most employees are receiving at least some preparation time (72%), have a written employment contract (70%), receive an annual cost of living allowance (66%), and receive merit pay raises (65%). ~g~cher Training and Education In California a person can be a teacher in a classroom of 12 children with a minimum of twelve college units of Early Childhood Education and one year experience. A director only needs three more units of administration and four years of experience. Most of the schools in this survey hire new teachers and directors with these minimum requirements. Only one of the schools surveyed report that they require more education or experience than the legally required minimum. However, some schools (52%) provide additional on-site training, and some (74%) provide educational stipends to cover at least the partial cost of workshops, conferences, or college level courses. Thus, staff who have more years of service tend to have more education and training. Tuition Rates There is too small a difference in tuition rates between proprietary and nonprofit schools to report. Therefore, tuition rates are reported here as an average of both types of programs. PAGENO="0376" 370 The overall average weekly tuition rate for preschool programs is $70.00. The overall average weekly tuition for infants is currently $117.00, and for school age care it is $60.00. Conclusion The status of children in this country at this time is not good. In California one out of five of our children are growing up in poverty, in some communities the high school drop-out rate is as high as 50% and we have an average drop-out rate of 40%. Many studies have demonstrated that high quality early childhood education can improve the opportunities for those who are poor and at risk of dropping out and becoming delinquent. In spite of the overwhelming data which demonstrates the importance of providing high quality programs for our children, those programs remain nearly unavailable at any price. When the majority of those who care for our children earn poverty wages or below, are undereducated and underirained, receive few benefits, and work under extremely stressful conditions, many of them leaving within a year, it is obvious that our future is at risk. It is imperative that we make a conmiitment to provide conditions that will encourage people to make child care and education a career because they deserve fair and decent employment and because our future depends on a work force that is educated and confident in their abilities. Childcare workers need higher salaries, support to expand their education and knowledge of child growth and development, adequate cost of living allowances, and benefits packages which will encourage them to stay in the profession. The cost may appear to be high, but the costs of ignoring our children will be certainly higher. This study was done by Dr. Barbara J. Nicoll, Chair, Child Development Program, University of La Verne, 1950 Third Street, La Verne, California, 91750, and was supported by the National Association for the Education of Young Children, and the Foothill Affiliate of NAEYC. The survey instrument was adapted from the Child Care Staff Salary and Working Conditions Survey published by the Child Care Employee Project in Berkeley, California. Permission to copy this document is granted to those who will use the information to promote high quality child ca~ PAGENO="0377" 371 The Pasadena/San Gabriel Valley Early Childhood Salary Survey: 1989 In response to the current interest in salaries and working conditions of child care workers, the Foothill Affiliate of the Association for the Education of Young Children has conducted a survey of child care centers in our area. This survey was supported in part by a MAG Grant from the National Association for the Education of Young Children. The survey is a random sample of 51 of 260 full day centers in the cities of Pasadena, Sierra Madre, Arcadia, Temple City, San Marino, Alhambra, Rosemead, San Gabriel, Monrovia, El Monte and Whittier. The purpose of the survey was to learn more about the salaries, working conditions, and indicators of quality of the schools in the Foothill area. We are interested in supporting the work of child care professionals, community leaders, and politicians who support the improvement in quality of child care centers locally. In order for us to move forward it is necessary to have reliable data concerning the indicators of quality which have already been identified. Previous research has shown that children who attend centers where there are low teacher turn-over rates, high level of education of staff, and low teacheilchild ratios receive higher quality care. These indicators of quality have been associated with salaries, working conditions, and benefits of child care workers, and we feel it is important to be able to accurately describe conditions in our local centers. Description of Sample The sample was collected by choosing schools at random, and then calling directors to ask for their cooperation in participating. Subsequently, surveys were mailed to all directors in the random sample. A response rate of 70% was obtained. Characteristics of Schools Program Type # of Centers # of Children # of Teachers & Assistants Average Teachei/Child ratio Private Proprietary 26 1583 265 1/11 Private Nonprofit 16 1104 148 1/10 Public/School DistlCampus 9 763 96 1/9 Demographics The tables below describe the age ranges, ethnicity, and sex distribution of employees in our sample. Ethnic Distribution [ Ethnicity Number of Employees Per Cent IWbite Hispanic 318 172 55% 30% I Black 35 6% [Asian 22 4% TOther 23 5% 51-713 0 - 92 - 13 PAGENO="0378" 372 Age Distribution Age Range Number Of Employees Per Cent 20-29 204 36% 30-39 147 26% 40-49 93 16% 50-up 70 12% Sex Distribution Sex Number Per Cent Male 17 3% Female 553 97% Salaries The salaries listed below are the average hourly rates currently being paid to employees. A number of respondents did not fill in the salary questions, therefore the number of those who did is indicated in a separate column. It is noteworthy that among teachers there is a statistically significant difference (P< .01) between the private proprietary schools and the nonprofit schools, and public schools. The private proprietary schools tend to pay teachers a lower salary than either the nonprofit schools or the public schools. Among assistant teachers the difference is similar, though not as great. Directors of public programs earn statistically significant higherhourly rates than private proprietary directors or nonprofit directors. These differences are consistent with what has been found in other communities around the country. Employee Salaries Number of Average Low Average High Average Hourly Schools Hourly Rate Hourly Rate Rate Responding Teachers Proprietary 21 $5.76 $7.88 $6.82 Nonprofit 15 $7.42 S9.52 $8.46 Public 7 $7.42 $9.81 $8.61 Assistant Teachers Proprietary 20 $4.75 $5.36 $5.05 Nonprofit 12 $5.40 $6.58 $5.99 Public 7 $5.48 $6.96 $6.22 Directors Proprietary 17 $9.00 $10.20 $9.60 Nonprofit 14 $11.71 $12.32 $12.01 Public 6 $13.46 $21.19 $17.32 PAGENO="0379" Interpretation of Salaries 373 It is likely that most teachers and assistants earn a rate that would fall in the column "Average low hourly rate." The survey did not ask respondents to identify how many teachers and assistants earned lowest or highest rates. However, it is reasonable to assume that staff who have been employed for the longest would be at the higher rates. Considering the high turn-over rates reported below, as well as the fact that it has been estimated that the average length of time for any teacher or assistant to remain in the field of early childhood education is three years, it is logical to assume that most employees do not earn the higher rate, rather they earn the lower rate. Additionally, it should be noted that many, perhaps most, teachers and assistants are earning a wage that is at poverty level or below. According to the United States Bureau of the Census the poverty level hourly wage will be about $6.08 per hour in 1989. Staff Turn-over Rates Research has demonstrated that children need consistent caretakers. The child who says to mom, "Who will be my teacher today?" demonstrates what many if not most of our children experience--the uncertainty of who will be there, what the expectations of the day will be, and the extra anxiety that is produced with that uncertainty. Extra stress is also created for parents who wonder if there will be a caretaker who genuinely "cares" for their children, for staff who fear that too few teachers and assistants will show up that day, and for directors who have an extremely difficult time getting and keeping qualified employees. In some communities annual turn-over rates have been reported to be as high as 50% to 60%. Our schools are faring little better. The annual turn-over rate for teachers in this survey was 35%, and the rate for assistant teachers was 51%. The average combined turnover rate for both teachers and assistants is 48%. The most common reason given by directors that staff leave a program was dissatisfaction with current pay. Those child care workers who leave generally go to other programs where the pay is higher, to elementary programs (also where the pay is higher), or they leave the field altogether. Benefits and Working Conditions Experts in business management have suggested that workers will often stay in work environments where they are given significant benefits, and experience desireable working conditions. The employees in our sample receive very few benefits. Only 27% of the schools reported giving employees some health insurance benefits, and only 7% give some retirement benefits. Even maternity leaves are not generally given to child care workers. Only 12% report giving some paid maternity leave, and only 35% report giving unpaid maternity leave. This lack of important benefits insures that child care workers will view their years in this line of work as temporary. Few will stay long enough to be able to say they have made a career out of child care work. Additionally, most child care centers and schools give their employees some sick leave pay (9 days per year average), vacation (8 days after the first year average), and holidays (10 days per year average). Most employees are receiving at least some preparation time (72%), have a written employment contract (60%), receive an annual cost of living allowance (64%), and receive merit pay raises (56%). However, 35% of schools surveyed are not giving any of these additional benefits. Teacher Training and Education In California a person can be a teacher in a classroom of 12 children with a minimum of twelve college units of Early Childhood Education and one year experience. A director only needs three more units of administration and four years of experience. Most of the schools in this survey hire new teachers and directors with these minimum requirements. Only 9.8% of the schools surveyed report that they require more education or experience than the legally required minimum. The good news is that most schools (62%) provide some support for additional training either by way of staff development, or they provide educational stipends to cover the cost of workshops, conferences, or college level courses. Thus, staff who have more years of service tend to have more education and training. On the other hand, the high tarn-over PAGENO="0380" 374 rate results in most staff having little education or training. Tuition Rates Many of the public schools did not report a tuition rate, presumably because parents pay on a sliding scale due to subsidies, and it is difficult to report tuition accurately. There is a small difference in tuition between proprietary and nonprofit schools, with nonprofit schools charging slightly higher fees. The average full time weekly preschool tuition for private proprietary schools is $71.50, and for private nonprofit p~rograms it is $80.50, and the overall average weekly tuition rate for preschool programs is $75.50. Too few schools reported tuition rates for infant programs to permit comparisons between proprietary and nonprofit schools. The overall average weekly tuition for infants is currently $115.00, and for school age care it is $52.50. Conclusion Many of us believe that children represent our future. The status of children in this country at this time is not good. In California one out of five of our children are growing up in poverty, in some communities the drop-out rate is as high as 50% and we have an average drop-out rate of 40%. Many studies have demonstrated that high quality early childhood education can improve the opportunities for those who are poor and at risk of dropping out and becoming delinquent. In spite of the overwhelming data which demonstrates the importance of providing high quality programs for our children, those programs remain nearly unavailable at any price. When the majority of those who care for our children earn poverty wages or below, are undereducated and undertrained, receive few benefits, and work under extremely stressful conditions, many of them leaving within a year, it is obvious that our future is at risk. It is imperative that we make a commitment to providing conditions that will encourage people to make child care and education a career because they deserve fair and decent employment and because our future depends on a work force that is educated and confident in their abilities. Childcare workers need higher salaries, support to expand their education and knowledge of child growth and development, adequate cost of living allowances, and benefits packages which will encourage them to stay in the profession. The cost may appear to be high, but the costs of ignoring our children will be certainly higher. This study was done by Dr. Barbara J. Nicoll, Chair, Child Development Program, University of La Verne, 1950 l'hird Street, La Verne, California, 91750, and supported by the National Association for the Education of Young Children, the Foothill Affiliate of NAEYC, and the Temple City Association of University Women. Published by the Southern California Association for the Education of Young Children. Permission to copy this document is granted to those who will use the information to promote high quality child care. PAGENO="0381" Capitol Office: ROOM 113- STATE CAPITOL JEFFERSON CITY, MO 65101 (314) 751-4481 Home Address: 13 LONGHENRICH DRIVE FLORISSANT, MO 63531 (314) 838-7083 Or 837-0074 September 25, 1991 The Honorable Thomas Downey, Chair Human Resources Subcommittee Ways & Means Committee Rayburn Office Building, B-317 Washington, D.C. 20515 Dear Representative Downey, I take this opportunity to comment on the pending federal regulations for the child care block grant. I feel the rules as proposed could adversely affect the health and welfare of Missouri's children. One of my concerns is that the regulations allow money to go to providers who are not subject to childlstaff ratios. As you know these ratios are crucial for health, safety and developmental reasons. In addition, the regulations do not allow different levels of reimbursement based on the quality of care. The emphasis of the regulations on parental choice is to be commended. However, this emphasis as applied in Missouri's situation is at the expense of health and safety. Because Missouri is the only state in the country without any standards for church-operated child care facilities, the regulations leave too many of Missouri's children in unsafe, unsanitary, and unprotected settings. While parental choice is beneficial in most states that have adequate health and safety guidelines, it could adversely affect many of Missouri's children. Allowing unlicensed church-run facilities to receive federal subsidies without meeting sufficient health and safety rules appears to be a violation of the spirit of the federal child care block grant. One laudable goal of public policy is to ensure that funds are well spent. If these regulations are adopted, we will be subsidizing even those child care facilities with inadequate safeguards. Thank you for your consideration in this matter. Kindest perso regards, KA H. STEINMETZ State Representative, District 74 KHS:bm COMMITTEES Chair- Childten,Youth and Families Administrattue Rules (Jan: Statutory) Appropraians - Socal Sotutcos & Correctons Ctccal Decrsrors Insurance Vtco-Chair - Misscu4 Childterils Sotcices Commission (Interagency Statutory) 375 STATE REPRESENTATIVE ~ 1~fl~!A'(E H. STEINMETZ DISTRICT 74 _________ MISSOURI HOUSE OF REPRESENTATIVES S I1D[I11I1E1i1fl~ PAGENO="0382" 376 John V. Surr 8217 Lilly Stone Drive Bethesda, Maryland, 20817-4505 (301) 469-9170 October 3, 1991 Robert J. Leonard, Esq., Chief Counsel Committee on Ways and Means 1102 Longworth House Office Building Washington, D. C., 20515 Dear Mr. Leonard, I understand that the record is still open for last week's hearings on the proposed HHS Regulations to implement the Title IV- A At-Risk Child Care provisions of the Budget Reconciliation Act of 1990, as well as the Interim Final Regulations on the Child Care and Development Block Grant provisions of the same Act. I would appreciate it if you could enter for the record my following comments on some of the provisions of those two sets of Regulations which, I feel, require reversal by Congressional action. I am writing only as a voter hoping to secure a better future for America's children, although I am a child care worker and a lawyer and am active in a number of child care and child advocacy organizations. The Title IV-A Regulations: States' Rights and Children's Safety: The cynical requirement in the proposed Regulations that State governments refrain from putting conditions on the receipt, even by illegal child care providers, of the benefits of the Title TV-A At- Risk money, probably would hurt the children of America more than the Title TV-A money and the other programs covered by the proposed Regulations would help them. I say "cynical, because it comes as one of many Federal conditions on the States' receipt of the Title TV-A money, and in the name of parental choice it actually prevents parents from being able to choose to rely on governmental assistance in selecting safe and healthy child care. The requirement appears to be unsupported by the long legislative history of the Child Care Bill. The Bush Administration appears to be infringing on the Constitutionally-reserved rights of States to spend their own money (which often accompanies Title TV-A money) according to their own decisions. They are as adamant and doctrinaire in forcing choice down our gullets here as they are in preventing it for abortion; they PAGENO="0383" 377 may be sacrificing as many young lives to abusive or negligent child care in this context as they feel they are saving in the other context. HHS Assistant Secretary Jo Anne Barnhart defended the requirement in the Washington Post (August 27, 1991) as giving low-income parents the same options as other parents, but she ignored the fact that wealthier parents have more community resources to help them in choosing good child care than the At-Risk population, and that financial incentives are needed for providers serving low-income populations to promote or even permit adherence to minimal health and safety standards. What is needed is a technical amendment to some upcoming Bill that would preserve the States' rights to protect their children by prohibiting Federal Regulations that would prevent States from paying more for child care that meets health and safety standards than child care that does not. Without this preservation of States' rights and affirmation of a child's right to grow in a safe and healthy environment, the future of America's children looks bleak. Child Care Block Grant: Exemptions for Relatives and In- Home Care Also in the name of parental choice, the Interim Final Regulations for the Child Care and Development Block Grant would require subsidies to be paid for in-home child care and for care by grandparents, aunts and uncles, whether or not they met State health and safety standards. This requirement also has been interpreted administratively to prohibit higher payments to providers in these categories who meet health and safety standards than those who don't. Federal administrative undercutting of State health and safety requirements in this context is particu~arly anomalous, as the legislation that the Interim Final Regulations implements requires States to maintain or improve their health and safety standards. I believe that parents in all income levels should have a right to choose legal child care for their children, but I believe even more strongly that the State and Federal Governments should not put themselves into the position of having to subsidize child care in a crack house or house of prostitution, or by a known convicted child abuser chosen by a misguided parent. Which Congressmen would like to run on an election platform endorsing or condoning that use of Federal funds? Technical amendments might be appropriate in this context, for Title IV-A child care, and for the JOBS Bill (P.L. 100-485) to limit parental choice for subsidized child care to child care that meets appropriate State health and safety standards. Thank you very much for considering these comments. Sincerely, John V. Surr cc Representative Beverly Byron Representative Connie Morella Senator Paul Sarbanes Senator Barbara Mukulski Mary Ann Higgins, HHS Mark Ragan, HHS Helen Blank, CDF Barbara Willer, NAEYC PAGENO="0384" 378 EXECUTIVE COMMITTEE United Way AIUth~ C~rnyAd!!!~t~hoV of Alachua County PU$tPU~ October 11, 1991 Gaines~ille.F1onda32602 SUVB~'~kIVGUThUU!'i!IU - (904) 378-1343 ~ Robert J. Leonard, Chief counsel C~p~g~ CXX committee on Ways and Means U.S. House of Representatives A04h~C~TT.N.A~ 1102 Longworth House Office Building K yCsa Washington DC 20515 CV.V,d,~~Vh Dear Mr. Leonard: BOARDOFD!RECTORS This letter is prepared for the Subcommittee on Human ThUG~XXXIIVSU Resources in response to the administration's federal PXI!yF~eXXhDoXghty proposed child care regulations. UXV~sVOfF!UVda If implemented, these regulations would have serious E90~X~C.FI~'04g implications for the quality of child care in Florida NUflhF!U~04U! and would interfere with the state's right to protect R~UbXAG~90y its own investment in subsidized child care. UXVXy~fFUVdU Florida currently spends $30 million in state general ~ revenue on subsidized child care and allocates a major CV~dUTGUy,LUXg, portion ($56 million) of its Social Service Block J,~,yLHnes Grant to subsidized child care. To protect this IBM investment of state funds in child care, Florida has F! d established higher standards for child care receiving ~ public funds. ~ It appears that in order to obtain the new federal HeafthUVd child care money that is so urgently needed, Florida R&hab,!U!~~ SUF~,ceU will have to abandon its own procedures for ensuring FlU,, RV~L,gU!S:X/!!~U that state dollars for child care are spent on quality P,gNatfres~ care. CUFV'MUUUY VokIVteeX ~ Of particular concern are: (1) The Interim Final Rule requires state to pay R~b,8J.Rya~ unregulated providers the same rate as regulated CO~XVLSW~X~ providers. This provision interferes with Florida's AUdX,yLXXoX1Sch~b~~ policy of establishing rates to match the cost of the IV$UUIB04CVIIBHUUVUPO!VY service provided. In the past, Florida has been able SaVUFVCUVXMUVVCUIIBB' to encourage family day care providers to become T,,yVaXNOB~!Xk licensed in return for an enhanced rate. This P!ad~UXOX Uk provision prohibits that practice and seems to violate the most elementary principles of fiscal AUXhUUCOUTy.N.A. accountability. J~h~ P. W,!d,~& MaUX BlUhX~s,'JoXd~.!, MUUh P~UI 5. WhIt~ CITy of Goi,,osol/o EXECUTIVE DIRECTOR PAGENO="0385" 379 (2) The proposed "at risk" regulations do not allow states to require licensure of family day care homes receiving public funds unless all family day care homes are licensed. Florida is moving toward legislation that would require licensure of all family day care homes. In the meantime, Florida has invested in licensing staff to inspect family day care homes receiving public subsidies. It is difficult to understand why this practice should be abandoned while a policy that requires licensure is being developed. (3) The proposed "at risk" child care regulations would indeed place children at risk. These proposed rules would prohibit states from conducting background and criminal records checks on otherwise unregulated providers receiving public funds. I doubt that congress intended to require states to dispense public child care funds to known child abusers. (4) Both the Interim Rule and the proposed regulations place a high premium on parental choice. this is a fine principle, but it depends upon building strong licensure, training and child care resource and referral systems as a framework for consumer protection. Thus, I am concerned about the provision in the Interim Rule that requires 90 percent of the funds set aside for direct services, administration and quality to be spent on the purchase of child care slots. This provision would greatly restrict Florida's ability to make the improvement needed in child care licensure, training and resource and referral. In summary, I urge you to call upon the Administration for Children and Families to revise these rules to reflect the spirit of the legislation you enacted. Florida has been recognized by the National Governor's Association and the Family Support Administration as one of the nation's leaders in developing a "seamless" child care system. Yet, the proposed regulations would undo much of the progress that has been made. Sincerely, Steve Reardon Executive Director SR/tlg PAGENO="0386" Mr. Robert Leonard, Chief Counsel Committee on Ways and Means U. S. House of Representatives 1102 Longworth House Office Building Washington, D.C. 20515 Dear Mr. Leonard: On behalf of the Virginia Council on Child Day Care and Early Childhood Programs, I am pleased to have the opportunity to comment on the interim final rule governing the Child Care and Development Block Grant. As the lead agency in Virginia for administration of the grant and as the agency responsible for child care policy, the Council has followed this legislation over the past several years. Although we have significant concerns about the regulations, we are pleased to have national recognition of child care issues. For states with a vision for child care, many aspects of these regulations are problematic. Attached is a detailed paper outlining some of the Council's concerns and proposed recommendations for necessary changes. Some issues cannot be overemphasized and thus are highlighted in this letter. One of the most disturbing factors is that the interim final rule takes away Virginia's flexibility to direct child care policy in ways that meet the needs of individual communities. These regulations should provide state flexibility similar to other federal block grants. Imposing federal control over traditional state responsibilities, decreases our ability to make decisions regarding child care policy in Virginia. 380 LINDA SAWYERS DIRECTOR SUITE 1118 WASHINGTON BUILDING 1115 BANK STREET Council on Child Day Care and Early Childhood Programs RICHMOND.VIRGINIA03G9 1664) 371-6603 FAX NO. (804) 371-6S70 JAMES M. WELLS (II CHAIRMAN C. FRED BATEMAN, Ed.D. COMMONWEALTH of VIRGINIA JACQUELYN GARDNER CALLIE B. GASS (NEZ HOLLOMAN MARIAN M. HOUK, Ed.D. GLORIA F JOHNSON TERRY D. LEWIS THOMAS A LISK DARREL D. MARTIN CHERYL M. STOVER SUZANNE F. THOMAS MONA W THORNTON Ed D. PATRICIA S TICER MARY ELLEN VERDU EX OFFICIO THE HONORABLE HOWARD M CULLUM THE HONORABLE JAMES W. DYKE, JR. THE HONORABLE LAWRENCE H. FRAMME. III September 10, 1991 SE? 199! PAGENO="0387" 381 States must be allowed to determine the way the registration process under the block grant will operate to ensure that it is consistent with state regulatory policy for child care. States should be able to decide what constitutes adequate protections and not be forced to reduce the standards currently applicable. Use of regulated or unregulated care should be at the discretion of the state. Since its inception, the Council has promoted the goal of increasing the availability of quality child care for all families including those that are low income. Because the thrust of these regulations is toward subsidies at the expense of quality for low income families, it is extremely disheartening to find ourselves in a position of being instrumental in providing money in support of poor quality care for low income families. These regulations may actually result in states being forced to pay more money for less quality services, it is difficult to believe that this was the intent of Congress when it passed the Act. The cap on funds at 15%/1O% of the 75% set aside for all activities which are not direct subsidies must be eliminated. It is difficult to see how the purposes of the Act as stated in the regulations "to increase the availability, affordability and quality of child care" are adequately being met with these caps imposed. States are in the best position to decide the appropriate balance between funding subsidies and funding for other child care needs and should be allowed to make these choices. Although the rule includes provisions that require coordination with child care and early childhood programs, these regulations inhibit rather than promote coordination even with Head Start programs. No incentives are offered for streamlining, or wraparound programs with existing resources. Fear of the reporting requirements alone may force the use of less efficient delivery methods. Financial management and reporting requirements as outlined in the regulations are extremely cumbersome and atypical for a "block grant." Under these current requirements, the administrative burden of state and local agencies will increase dramatically, yet administrative funds are also capped. The Council appreciates the opportunity to provide comments. In Virginia we have a vision for child care. We ask you to join in partnership with us in making that vision a reality, and give careful consideration to these comments. Sincerely, Linda Sawyers Director LS/lce Attachment PAGENO="0388" 382 COUNCIL ON CHILD DAY CARE AND EARLY CHILDHOOD PROGR&JVIS COMMENTS ON CHILD CARE AND DEVELOPMENT BLOCK GRANT: INTERIM FINAL RULE Department of Health and Human Services Regulatory Approach A significant factor in the discussion of these regulations is the issue of congressional intent with regard to state's discretion over the use of these funds to meet individual state child care needs. Although HHS offers a lengthy explanation of the rationale behind such excessive regulation of a "block grant" program, several issues regarding this rationale bear comment. First is the issue of"history" for the Child Care and Development Block Grant. While a significant emphasis has been placed on the need for prolonged history in order to allow the states the flexibility of implementing a block grant program, the foundation upon which this argument is based lacks sufficient strength to support the contentions. In discussing the rule, HHS says that other federal block grant programs began as "federal programs" and were converted to block grants at a later date. This reason is used as justification for the excessive regulation of this program. This logic, however, would suggest that a block grant may never exist unless it has first been proven to be less than ideal as a federal program, requiring the change to a block grant. If it were the intent of the Congress to have this operate as a federal program, then in all likelihood the statute would clearly state this posture. By naming the Act a block grant and stating the intent that it be administered as a block grant, there is considerable reason to suggest that HHS has overextended its regulatoiy authority. HHS should implement this program similar to the Social Services Block Grant, Community Services Block Grant, Maternal and Child Health Block Grant or a host of other funding sources which are in fact "block grants." HHS also suggests that the massive over-regulation of this program is a means of "helping" states by incorporating all statutory requirements in the regulations so one would need only to refer to one document. Althouglrthiintent to "help" is laudable, the result is further restrictions on the state's latitude to interpret the statute relative to specific situations. The "one size fits all" regulatory focus given this program neglects the statutory intent to allow states flexibility to design programs which meet their child care needs rather than meet the administration's need for ease of comparison. Recommendation TheAdmihirz'ratipn for Children and Families should adminirtertheAct as- a block grant to the states-. PAGENO="0389" 383 Justification for the Promulgation of an Interim Final Rule Given the authority exercised by HHS in the development of these regulations, in order for comment to be adequately collected and analyzed, the Notice of Proposed Rulemaking (NPRM) approach is necessary. By omitting this step, the opportunity to present different interpretations of congressional intent is limited. This process restricts alternative interpretations, in many cases, to the disadvantage of the states. Recommendatiori~ I-Il-IS should allow an interim process whereby approval fg given to the application and initial p~z in the "interim." The comment period should be extended and adequate consideration gil!eit to the public comment. The final rule should incorporate changes based on the comments receiv&L States should be allowed to submit revisions to reflect the final rule~ Registration and the Use of Standards HHS has interpreted the statutory requirement for a registration process as .a payment processing issue rather than a regulatory item. This interpretation appears contradictory to the purposes of the Act and completely lacks a statutory base. Regulation and protections support the notion of parental choice by ensuring consistency among the supply of providers. Many states have adopted either laws or regulations governing providers of child care services and should not be forced to pay for unregulated care through the block grant. The registration process outlined in the regulation raises liability issues for states. A process of registration with no accompanying standards gives parents a false sense of protection for their children. To the general public, governmental involvement is frequently associated with a "a stamp of approval." The awareness that a registration process exists evokes an unwritten notion that providers have met some standards. By requiring a registration process with no standards, parental deception rather than parental choice is promoted. Recommendation: ~ates should be allowed to design registration systems and apply the standards they believeare 22p!Ppr ate. Activities to Increase the Availability and to Improve Quality Although the Act says a preponderance of funds must be used for services, there are no statutory requirements that preponderance be defined as 90% of the 75% set aside. It PAGENO="0390" 384 would appear that anywhere from 51% to 100% could be defined as a preponderance. Based on the individual needs within a particular state, that percentage may vary. It also appears that when defining preponderance, HHS has neglected to consider that a portion of funds under the 25% set aside will be used for direct services for children through early childhood development and before and after school. For parents to have adequate choice of providers, a sufficient number of providers must exist. While quality providers may be prevalent in some states, in other states they do not exist with the same frequency. It is clear from the statute that Congress intended for low-income parents to have access to the same resources as parents not receiving services under the block grant. When quality child care resources are limited or non-existent in a community, then low-income parents do not have choices of any type much less the same access as the general public. While the regulations use parental choice as the justification for most of the provisions, it is extremely difficult to see a logical relationship between capping quality funds at 10% and promoting parental choice. For example, parents in areas with limited or no child care resources--no matter how much subsidy money is available--caimot purchase child care if it does not exist. In areas where resources are scarce and of poor quality, parents essentially have no choices. Based on the data and analysis of child care needs in Virginia derived from the local governments' survey, regional and statewide public hearings, public comment questionnaires, oral and written testimony, and a variety of other Council information, two major themes are evident in Virginia: (1) child care resources available across the state are insufficient io meet the demand, limiting parental choice of providers; and (2) a consistent level of quality among providers is needed to afford parents a wide variety of quality options from which to choose. Some of the findings from the data analysis are cited below: Joint Legislative and Review Commission Study Regulation and Provision of Child Carein Virginia. September l9~9j + Parents have reported difficulty in finding certain types of care, and while R&R programs are among the most helpful services for parents, these programs are not operational across the state. + The majority of regulated and unregulated providers recognize the need for additional educational opportunities to improve quality which complement the regulatory process. Council Report: An Evaluation of the Child Day Care Fee System. October 1990 + 72% of the responding localities reported that the demand for subsidized child care was greater in their area than the spaces available. PAGENO="0391" 385 4 Localities NOT participating in the program identified their reasons for non- participation as the lack of providers and the inability to develop sufficient resources. CpunciLResult~ ~Local Government S~irvey f~or child Care gnd Dey~e1oprnent Blpçk 4 Of the 28 major child care needs reported by localities, access to quality child care resources ranked #2. 4 The majority of respondents indicated that improving quality and increasing supply of child care resources was a "very important issue: action definitely required" within their localities. Council ~~ult~s: Public Comment Questionnaire 4 Provider recruitment and training ranked #1 out of the 18 categories of priorities enumerated by the general public. 4 Respondents ranked the need to increase the supply of quality child care resources as the third highest statewide priority. Council Analysis: Public Hearing Oral and Written Testimony 4 Quality child care and early childhood programs meet both the needs of working parents and the developmental needs of their children. The issue of quality within these programs is a concern for local communities as well as parents and child care professionals. Quality programs should demonstrate high standards of operations and be available in all communities 4 To ensure all families in Virginia have access to quality child care services, many communities will need to develop resources, some designed to meet special needs. Communities may lack licensed child care centers, Head Start programs, early childhood development programs, family day care homes, resource and referral or any combination of these services. Planned development of child care resources as identified by communities is essential for a quality child care system statewide. 4 With the increasing awareness of child care needs, regardless of socioeconomic status, quality child care is becoming a topic of interest not only to parents but to policy makers, business leaders and the media. Child care systems in many communities historically evolved from the caretaking needs of the parents rather than the developmental needs of children. In order to ensure a system meets both needs simultaneously, it is important that PAGENO="0392" 386 quality be defined, recognized and promoted. To ensure high standards, improvement within the child care systems of many communities is needed. While this represents only a sample of Virginia's child care needs, it is evident that in order for parents to have comparable choices throughout the Commonwealth of Virginia activities must be conducted to increase the availability of quality care, and to improve and to enhance the quality of existing child care resources. The provision of funds for subsidies in communities where parents have limited or no resources results in an inability for the parent to benefit from the subsidy funds. The outcome is a situation where the parent has NO choices. The best method to ensure parental choice is to ensure that parents have resources from which to choose. The caps placed on the funding of child care services make it virtually impossible to meet two of the three purposes of the Act: to increase the availability and to improve the quality of child care. Recommendatjonj. ~S~tates should be allowed to decide the definition of preponderance bared on the child care zzeedr within the state. The cap on ftuidr to improve quality and increare availability should be ~khninat&L Payment Rates It appears that the regulations prohibit states from paying higher rates for higher quality care programs. States would then be prohibited from paying higher rates for licensed or regulated care, or even higher payments to child care settings that are nationally accredited. Recommendation S ssh be allowed to offer incentives to inyprove quaz~ity such ar tl~e pa~m en! of higher iaveLr for programs nationally accredited. Coordination Although the rule includes provisions that require coordination with child care and early childhood programs, the regulations actually inhibit local coordination rather than promote it. These regulations inhibit contracting for wraparound programs and may force the use of less efficient delivery methods. PAGENO="0393" 387 Recommendation. ~ies should be given the flexibility to contract easii~v with otherfederal programs. such as Head art, and be provided with incentives rather than disincentive~s to promote coordinated efforts~ Reporting Requirements The financial management and reporting requirements as outlined in the regulations are extremely cumbersome. Under these requirements, the administrative burden of state and local agencies will increase dramatically. Administrative funds, however, are very limited. It is reasonable to have some restriction on administrative costs; however, the restriction should be commensurate with the administrative burden, ensuring both are kept to a minimum and funds are focused on services. Recommendation.~ The financial management and reporting requirements for the block grant should be reduced in order for states to provide the maximu~n amount of fundingifor services. Seamless Service System While the preamble to the regulations discusses frequently the intent to promote a seamless service system, the regulations continue to emphasize categorical eligibility of the parents. Children may not fit neatly into one niche or another. This reinforces a one-sided philosophy where the level of quality of care a child receives is dependent upon what program the parent is enrolled. Recommendation, Eligibility for child care subsidies should be based on parents' income and famiz~y size. Quality child care setting that meet the developmental needs of the children should be promoted in all child care programs. PAGENO="0394" 388 Tommy G. Thompson Mailing Address: Governor I West Wilson Street Gerald Whitburn Post Office Box 7850 Secretary Madison, WI 53707-7850 Telephone (608) 266-3681 State of Wisconsin Department of Health and Social Services November 4, 1991 Robert J. Leonard, Chief Counsel Committee on Ways and Means U. S. House of Representatives 1102 Longworth House Office Building Washington, D.C. 20515 Dear Mr. Leonard: Enclosed are the comments Wisconsin submitted on proposed regulations for the At Risk Child Care program and interim regulations for the Child Care and Development Block Grant program. The proposed regulations for the At Risk Child Care program seriously jeopardize the safety of children in publicly'subsidized child care. To use At Risk Child Care funds in unregulated care in Wisconsin would be in violation of state law. We are committed to more responsible stewardship of public funds and a more concerned approach to the well-being of children than the proposed federal regulations appear to allow. In the process of submitting our plan for use of Child Care and Development Block Grant funds, we encountered unanticipated problems in ACF's application of the interim regulations that were not addressed in our comments on the regulations. Our long-standing statewide voucher system and our rate-setting policies have not been approved, apparently because ACF thinks they do not provide equal access to all types of child care. We strongly support and encourage parent choice of any type of care, as long as it is regulated. The Block Grant regulations and ACF's interpretation of them overstep the intent of the law and the boundaries of state flexibility and decision-making- Sincerely, , Gerald Whitburn Secretary Enclosure cc Rep. Steve Gunderson Rep. Scott Klug Rep. Thomas Petri PAGENO="0395" 389 State 0f Wisconsin \ DEPARTMENT OF HEALTH AND SOCIAL SERVICES DIVISION OF COMMUNITY SERVICES 1 WEST WILSON STREET P.O. B0X7851 MADISON, WISCONSIN 53707 608-266-2701 August 7, 1991 Ms. JoAnne B. Barohart Assistant Secretary for Children and Families Administration for Children and Familiea Attention: Mark Ragan, Child Care Task Force 370 L'Enfant Promenade, SW. Washington, D.C. 20447 Dear Ms. Barnhart: This is to offer comments on the interim rules for the Child Care and Development Block Grant program. I appreciate the timeliness of the rules and the technical assistance provided to state staff in the forums last month. In general, the rules parallel regulations already in place in Wisconsin. The Block Grant will assist Wisconsin in achieving affordable, quality child care. Our primary concern with the regulations is the limitation on the amount of funds that may be spent to improve quality and availability. The Block Grant statute specifies that 75% of the funds be used for direct child care services and for activities to improve quality and availability. Congress indicated that a "preponderance~ of the 75% funds be used for direct child care services. The regulations interpret "preponderance~ as 90% of the 75% funds, with the exception that only 85% must be used for direct child care services the first two years of the program (Section 98.5O(d)(2 and 3). Any administrative costs for direct child care services, as well as quality and availability activities under Section 98.50, must be funded from the remaining 10 or 15 percent. As a result of the interim regulations, we were forced to reduce the amounts we planned to spend on start.up and expansion of programs, on quality improvements, and on resource and referral services. We deleted a statewide information service for child care providers from our proposal. Funding for these activities was far from adequate even without the 85% ilimitti Clearly, direct child care services funds are also needed. There is a large waiting list for Wisconsin's major low-income direct child care service program. However, we are convinced that availability and quality activities are essential to serve children and families well. The Child Care and Development Block Grant Act promised an opportunity to initiate such activities and move toward making them an integral part of our child care service system. I am requesting that you reconsider the funding limitations under 98.50, to allow states more flexibility in use of the funds. The second area of concern is with Section 98.30(g), which requires that state regulatory requirements not restrict parental choice. We strongly endorse parental choice. All providers who receive funds through our current low-income child care program must be regulated - either certified or licensed. Our certification rules include standards for the protection of children's health and safety, however, they do not significantly restrict parental choice. We have placed some limits on parental choice of in-home care. Parents may choose in-home care when there are 3 or more children in the home needing care, when the child has a special need, or when other care is not available. There are several reasons for the limitation. Wage and hour laws require that in-home caregivers be paid minimum wage. Either the parent or the county must be responsible for paying FICA and unemployment insurance, as well as withholding income taxes. These requirements and related concerns make in-home care difficult to administer and monitor. Therefore, I am requesting that states be allowed to impose reasonable regulations, when necessary for program administration and child safety, even though parent choice may be somewhat restricted. Thank you for the opportunity to comment on the regulations. Sincerel)~~,<,,f~ Eloise Anderson Administrator PAGENO="0396" 390 Tosay C. Tho.peoS Govunor i W~WI~k,S GeraidWhitbsri PoeO~3cz7$SO Sea~y M~W~3107.7150 Te~(6~66.36i1 State of Wisconsin Department of Health and Social Services August 23, 1991 The Honorable Jo Anne B. Barrthart Assistant Secretary Administration for Children and Families OFA/JT?, Fifth Floor 370 LsEnfant Promenade, SW Washington, DC 20447 Dear Ms. Barnhart: Thank you for the opportunity to comment on the proposed regulations for the At-Risk Child Care Program. Our comments are in the enclosed paper. One aspect of the regulations is of grave concern to us. That is the prohibition against using standards for At-Risk and other Family Support Act child care providers, unless the standards are "applicable regardless of the source of payment for the care." That prohibition would require a reversal in Wisconsin's current and planned regulatory policy. We believe that requiring simple standards for pu.blicly-funded child cars is in th. best interest of children and families. I strongly urge that the proposed regulations be modified to give states the flexibility to require such standards. Please let me know if we can provide further information. Sincerely, ~t~j Gerald Whitburn Secretary PAGENO="0397" 391 COMXUT$ 01 PROPO8ED RZGUL&?!011 10* AT-RIU CHILD CAU from Wisconsin Department of Health and Social Services Child Cars Standardsi Sections 255.4 and 257.41. These sections preclude states from applying standards for At- Risk Child Cars which do not also apply to unsubsidized child care. The proposed regulations would require a major shift in Wisconsin's approach to child care regulation. The proposed regulations, `and the preamble to them, emphasize parental choice as a paramount consideration. Parental choice is a very important consideration. However, the safety of the child is of equal, if not more, importance. When government helps parents pay for child care, it shares responsibility for the adequacy of the care. We are, in a sense, endorsing it. We are accountable for minimum health and safety protections for children in subsidized child care. It is commonly accepted that publicly subsidized activities are subject to standards that differ from standards for private activities. Stewardship of public funds, application of social "consensus~ norms, and in this case, protection of a vulnerable group are the bases for such special standards. Wisconsin has, a certification program, which has been used in conjunction with our major low-income child care program for many years. It applies to family day care homes not required to be licensed (those serving fewer than 4 children under age 7), including relatives, and to other programs which are exempt from licensure. it effectively balances the importance of parental choice with the protection of the child. Certification requires minimal standards and becomes, rather than an interference with families, a positive support and back-up for parental choice. Certification is completed within a week or two of parent choice of provider. It includes a reference check and a home visit. Providers have 6 months to complete 10 hours of required training. Certification has been well received by family day care providers, who often use it as the first stage of becoming licensed. It has been well-received by parents, who learn from reviewing a standards check-list with their chosen provider. Our interim plan for At-Risk Child Care requires use of certified or licensed care, and we have begun implementing the program in that way. *Last January, as part of the 1991-93 budget proposal, this Department and the Governor initiated plans to extend the protection of regulated child care to families receiving child care under the Family Support Act and the JOBS program. The legislature enacted that proposal, to be effective January, 1993. PAGENO="0398" 392 Wisconsin has worked diligently to develop a certification program that balances quality of care issues with parental choice. We have enacted strategies to create a more `seamless' system of child care service with consistent regulatory policies for all child care funding. Now, the proposed regulations threaten our progress. me regulations would force us to reverse ourdirection and allow families in some of our- low~income chil4 care programs to use unregulated care. They would require us to establish a third system, in addition to licensing and certification, to register unregulated providers. Of greatest concern, they would prevent us from providing the most minimal protections for children whose care we are funding. The regulations should give states the discretion to apply standards to At-Risk and other subsidized child care, even though such standards are not applicable to unsubsidized care. Foster Parent5i Section 257.30(a) (1) , (2). These proposed sectiorts specify that eligible families be low~ income and not receiving AFDC. The regulations do not address the specific needs of foster families. Foster families who are working, and need child care in order to work, should be eligible for At-Risk Child Care. Income eligibility should be based on the child's income rather than that of the foster family. Second Parent in Trainiflg~ Section 257.30(a) (4). we have been told by federal officials that the eligibility criteria "needs child care in order to accept employment or remain employed" in Section 257.30(a) (4) means that a two-parent family with one parent working and one in training would not be eligible for At-Risk Child Care. The proposed regulations should clarify that this kind of family i~ eligible. To deny eligibility to such a family is counter to the goal of keeping the family of f~ AFOC. Forcing one parent to give up an education program may mean that both parents are caught in low-paying jobs. Neither may ever acquire the skills necessary to assure the family's self-sufficiency. ~ Re tiremefltL Section 257.31. The proposed regulations would require that families receiving At-Risk Child Care contribute toward the payment for care, based on the family's ability to pay. Minimal or `token" fees create administrative problems. Collection problems are commor~, because the small fee is not perceived as serious. In Wisconsin, we use a standard sliding fee scale, based on income and family size, which requires parent co-payments for those earning 50% or more of the median income. The co-payment amount is not affected by the cost of the child care. Under Transitional Child Care, a minimum payment is required of all participants, as an eligibility requirement. This approach assures that the fee is paid in order for the family to receive assistance. The proposed regulation requiring a minimum fee should either be eliminated or should be the same as Transitional Child Care, which requires the f cc to be paid as a condition of eligibility. PAGENO="0399" 393 Ruthann Woodbury 2761 N.E. 57th Street Ft. Lauderdale, FL 33308 September 24, 1991 Robert 3. Leonard Chief Counsel Committee on Ways and Means U.S. House of Representative 1102 Longworth House Office Building Washington, DC 20515 Dear Mr. Leonard: I urge you to amend the Interim Final Rule of the Child Care and Development Block Grant and the Proposed Notice of Rulemaking for the Title IV-A At Risk Program. Specifically, I request that you consider the following items: (1) recognizing the legally unregulated provider as a category of care and requiring states to set payment rates for these providers that are adequate and appropriate for that type of care; (2) allowing states to require licensure of family day care hones receiving public subsidies even if the state does not yet license all family day care homes; (3) allowing parents of At-Risk children to choose child care providers from a list of developmentally appropriate programs that will be licensed and monitored frequently as opposed to allowing them to use unregulated providers; (4) allowing states to use 75 percent of the reserve for direct services (which may include activities that assist the parent or the child in enrolling in care, such as eligibility determination, health screenings, and resource and referral). The remainder of the funds (25%) should be used for quality improvement activities and/or administration of the program or grant. I appreciate the opportunity to offer comments on these proposed regulations and hope you will incorporate these suggestions in the final regulations. ~rel~~ Ruthann Woodbury PAGENO="0400" 394 Erepared Comments Submitted to Subcommittee on Human Resources Committee on Ways and Means Robert Boisture Director of Public Policy. YMCA oftheUSA 1701 K St. NW. Suite 903 Washington, DC 20006 September 17, 1991 Mr. Chairman and Members of the Committee: On behalf of the National Board of the YMCA, representing over 12.5 million constituents, I am pleased to comment on the proposed federal regulations for implementing the State child care grants that were enacted pursuant to the Omnibus Reconciliation Act of 1990. As an organization concemed about the health and welfare of children and one of the nation's largest providers of child care -- last year, YMCAs provided child care to more than 500,000 children -- the YMCA National Board unanimously endorsed the federal child care legislation in March, 1989 and was actively involved in the passage of the legislation. YMCAs responded quickly to the new law by working with state policymakers to develop comprehensive child care plans to submit to the Department of Health and Human Services for funding. Therefore, YMCAs were very interested in the proposed federal regulations on both the Title TV-A At-Risk Child Care program and the Child Care and Development Block Grant. Key provisions of the proposed regulations reflect the YMCA position on federal child care policy. Specifically, the YMCA supports the provisions that: o Encourage states to coordinate the federal finds with other child care programs and use the existing delivery system. The regulations give clear direction to the stales to work with child care agencies to provide services and administrative functions. These provisions will not only make the services more accessible to parents at the community level, but will help to strengthen the child care system. o Target resources at lost-income families. Low-income working families are clearly the most in need of child care assistance. Often state regulations provide assistance only to families that are welfare-eligible" and exclude those that are working hard to remain off the welfare rolls. These families are struggling to make ends meet and have difficulty providing good child care for their children. o Seek to `create a fabric of seamless service' for families. The YMCA agrees that states should provide children with continuity of care as parents move toward self- sufficiency. o Underscore the nonsupplantation requirements of the ova programs. YMCAs in states facing tight budgets have been especially concemed that the regulations specify that states may not reduce the current level of support. While the YMCA strongly supports these key provisions, the YMCA has concems about several critical requirements of the regulations. The concerns and recommendations are: TITLE tV-A AT-RISK CHILD CARE 1. The regulations should be revised to allow states to set appropriate child care standards. More specifically, the regulations should not set limits on the stales' ability to improve licensing standards. PAGENO="0401" 395 ~p~irngnta ~~gj~gulation allowing states to use Title IV-A child care fundsJo reimburse for unlicensed child care is inconsistent with thejaw. The law requires child care providers to meet applicable standards of state and local law [(Sec. 5081(a)(i)(5)(B)]. The regulations prohibit states from enacting standards for the At- Risk child care program unless they apply to all providers of the particular type of care [Sec. 257.41(a)(2)]. The law does not give the Secretary specific authority to determine what constitutes an applicable state or local standard (as it does with regard to determining local market rates) [Sec. 508l(a)(i)(3)(B)(ii)]. Therefore, the regulations are inconsistent with Congressional intent to provide states with the flexibility and authority to improve child care standards. YMCAs feel strongly that licensing and regulation of child care is a state respon- sibility. The proposed regulations allow states to reimburse for unlicensed child care and may impede efforts to improve quality. The federal government should not limit or restrict the state's authority to improve child care services through increased regulation. In addition, the regulations conflict with the standards provisions required for the Child Care and Development Block Grant. The different standards requirements will be confusing to parents and providers; and, the difference in the quality of child care may depend on parents' employment ntatus. ~gcpmmendatioec ~j~ine Sec.257.41(2) -- "Applicable standards are licensing~or rcg~!1a1ory requirements which apply to care of a particular type in the State. local g~gg~~r Indian reservation, regardless of the source of payment for the care. 2. The regulations should not limit provider payments to 75% of the market rate or allow states to set a statewide limit on child care rates. ~p~rnents~ The regulations regarding market rate do not reflect the provisions of iheJ~~. The law provides that states must reimburse for At-Risk Child Care at a rate that reflects the actual cost of care or the applicable market rate (whichever is lower) [Sec. 5081(a)(i)(3)(B)]. The regulations conflict with the law by defining local market rate as limited to 75% of the local cost of care, not the actual local market rate. [Sec. 257.63(a)(l)]. In addition, the regulations allow states to establish a statewide limit [Sec. 257.63(b)] that is inconsistent with the local market rates. The definition of local market rate differs from that of the Child Care and Develop- ment Block Grant and may result in a two-tiered child care system in the community. A consistent payment rate is necessary if states are to provide care to alt children regardless of the source of subnidy funds. Rn~mendatioec Eliminate Sec. 257.63(1) and Section 257.63(l)th) -- (l)The g~licable local market rate must be determined in accordance with the provisionsof ç~~55.4(a)(2) and (a)(3~ of this chapter. (b)The State agency may establish a statewideilmit 3. The regulations don't strike an appropriate balance between contract and voucher programs. Comments~ ~~g~~eamble to the regulations places a strong emphasis on voucher ~~grtlljcate~ payment programa [Page 29060]. ".. .we believe that two (payment plans) can most effectively be used to ensure parental choice, and we strongly urge that States adopt at least one of these methods. These are providing the parents with cash or vouchers in advance or reimbursing the caretaker relative for child care expenses incurred." In contrast, the law does not mandate certificates, but rather states iggy provide child care through direct care, through contracts or vouchers, or through relative care [Sec. 5081(a)(i)(2)]. While the YMCA National Board position on federal child care policy strongly supports certificates as a way of providing parental choice, certificate programs may limit access of low-income families to child care by diminishing the supply. For example, many centers located in hard-to-nerve communities depend on contracts to maintain a stable funding base to provide services. If contracts are terminated with these centers they may be forced to close their doors, thereby leaving parents with fewer choices of child care providers. ~gçQmmendati~i1 The preamble should be revised to encourage stales to maintain ggjgthg contracts with centers located in "hard-to-serve" communities~ In addition, the definition of "parental choice" should be expanded to include the need for parents to have ggçgg~ to child care in order to purchase child care. True parental choice is PAGENO="0402" 396 only possible if child care is available in all communities (especially low-income communities). 4. The regulations too narrowly define eligibility. States should have the flexibility to use At-Risk Child Care funds for any low-income working family that is not receiving AFDC. Comments: The regulations limit states' flexibility to determine eligibility and exclude parents enrolled in training programs. The law authorizes states to use At- Risk Child Care funds to help low-income families that are not receiving AFDC, need child care in order to work, and would be at-risk of receiving AFDC without child care assistance [Sec. 5081(a)(i)(1)]. The preamble to the regulations place an unnecessary constraint on states by requiring a two-step process of defining eligibil- ity. This must include a definition of low-income, as well an defining `at-risk of receiving AFDC." The preamble provides guidance to states on defining `at-risk;" however, most experts agree that if a family is `low-income' then, they are "at-risk" of being eligible for AFDC. In addition, the preamble also defines "in order to work" as limited to those parents who are employed, not those enrolled in training programs. This restriction excludes parents who enroll in training to improve their job performance. The limitation also conflicts with the goals of welfare reform, which recognize that training is essential to achieving self-sufficiency. Recommendation: The preamble should be revised to give states the flexibility to define "eligible" families based on economic status, without other eligibility criteria. And, the definition of "in order to work" should be changed to allow a parent to receive At-Risk Child Care funds if they are working and enrolled in a training program. 5. The regulations should allow states to count private child care subsidies, such as United Way funds, as part of the federal match requirements. Comments: The regulations will adversely affect states with limited budgets by not allowing private agencies to be counted as full partners. Many states have indicated that they may not be able to apply for At-Risk Child Care funds because they are unable to meet the match requirements. The regulations limit the match requirements to only those state and private funds controlled by the welfare agency [Sec. 257.62]. Most private nonprofit agencies that provide child care subsidies will not be willing or able to transfer administrative authority of these funds to the welfare agency. While the law does not directly address the issue of match requirements, it was clearly Congress' intent that states be encouraged to participate in the program. The proposed match requirements will affect those states where public/private partnerships have been developed to support the child care system. By involving the private sector, these states will be in a strong position to continue child care programs if the federal funds are ever eliminated. States that areable to demonstrate strong support from the private sector should be rewarded, not penalized. Recommendation: Allow states to include private in-kind donations as part of its match requirements. Eliminate Sec. 257.62(2)(i), (2)(ii), and (2)(iii): `Funds donated from private sources may be considered as the State's share in claiming FFP when the funds: (i) Are transferred to the State or local agency and under its administrative control; (ii) Are donated without any restriction which would require their use for assisting a particular individual or organization or at particular facilities or institutions; and (iii) Do not revert to the donor's facility or use either directly or indirectly. And, change Sec. 257.62(c)(4) to read: "Third-party in-kind donations may be used." CHILD CARE AND DEVELOPMENT BLOCK GRANT The regulations may disqualify school-age child care programs that offer alterna- tives during the summer from pan'icipating in the early childhood/school-age child care program. Comments: ~h~regulations should clarify that the statutory requirement for year- round programs does not disqualify providers which offer summer child care at a different site than their school year programs. The law requires that programs funded through the 18.75% setaside be provided throughout the year, including school holidays and vacations [Sec. 658H(b)(2)]. The regulations do not provide a more detailed definition [Sec. 98.51(e)(1)]. If the regulations are not revised to PAGENO="0403" 397 clarify that eligible providers may offer alternative options during the summer, then states may inappropriately disqualify school-age child care programs that operate part-day during the school year and often need to hire different staff and co-locate their programs (due to reduced participation) during the summer. Recommendation: Revise Sec 98.51(e)(ll to include school-age child care programs that offer alternative options during the summer -- (e) Before- and after-school programs funded under this section: (1) Must be provided Monday through Friday. including school holidays and vacation periods other than legal public holidays, to children attending early childhood development programs. kindergarten, or elemen tary or secondary school classes during such times of the day and on such days that the regular instructional services are not in session. During non-school days. the grantee may operate the program at a different site within the community served. 2. The regulations inappropriately connect licensing requirements with parental choice mandates. The regulations should not discourage states from enacting stronger licensing standards. Comments: The regulation requiring states to balance licensing and regulatory requirements with parental choice is inconsistent with the law. The law allows states to strengthen standards [Sec. 658(c)(2)(E)] and only addresses parental choice in the context of certificates [Sec. 658(c)(2)] and sectarian care. In contrast, the regulations prohibit states from strengthening standards to improve the quality of child care (Sec. 98.30(g)] if parental choice is limited. The regulations are in direct conflict with legislative intent. The law allows states to improve standards and provide parents with choices in child care, but does not link the two. The regulations may act as a disincentive for states to improve the quality of child care and may result in families purchasing "less than ideal" child care. Recommendation: Eliminate Sec. 98.30(g) With respect to state and local regulatory requirements under Sec. 98.40. health and safety requirements under Sec. 98.41, payment rates under Sec. 98.43. and registration requirements under Sec. 98.45. Block Grant funds will not be available to a Grantee if State or local rules, proce dures or other requirements promulgated for purposes of the Block Grant significant ly restrict parental choice by: (1) Expressly or effectively excluding: (i)Any category of care or type of provider, as defined in Sec. 98.2: (ii)Any type of provider within a category of care: or (2) Having the effect of limiting parental access to or choice from among such categories of care or types of providers as defined in Sec. 98.2: or (3) Excluding a significant number of providers in any category of care of any type as defined in Sec. 98.2. 3. The limitation on the 75% setaside should be revised. Comments: ~hg~gulations severely limit states' flexibility to use the Block Grant funds for state child care priorities. The law requires states to spend the 75% setaside on child care services, including subsidies for working parents and activities designed to improve the availability and quality of child care [Sec. 658(c)(3)]. While the Conference Report indicates that Congress intended that a "preponderance" of the 75% funds be spent on subsidies, the law gives definite authority to the states to decide how the funds will be spent. The law expressly provides funds to improve the affordability of child care, while also improving the supply and quality of child care providers. In comparison, the regulations restrict the states' ability to use the funds to improve the delivery system [Sec. 98.50(d)(2)(i)]. Although the YMCA has been actively encouraging states to use a majority of the funds for subsidies, many states do not have the infrastructure in place to provide children and families with quality child care. In effect, if these states are not able to use the funds to strengthen the system, parents will have subsidies, but may be unable to locate eligible providers. Recommendatioec Eliminate the provisions in the regulations which define "prepond erance"_and require states to spend 90% of 75% setaside on subsidies. If the regulations must define "preponderance" Congress should provide guidance to the regulators on the appropriate amount. The YMCA recommends that the states should be allowed to spend no more than 49% of the 75% funds on activities that improve the availability and quality of child care. 4 The regulations should not require states to make certificates available to all eligible parents. Comments: The requirement that states must inform alt parents of the certificate PAGENO="0404" 398 option makes it impossible for states to reserve a portion of the funds for contracts. The law states that parents must be given the option gjthgr of contracted child care or certificates [Sec. 658(c)(2)}. The regulations are much more prescriptive and require states to inf.Qi:tn all parents of the options [Sec. 98.30J. The regulations would prevent states from operating contracted programs, if they must demonstrate that all parents are informed of the certificate option throughout the year. As stated earlier, while the YMCA is a strong proponent of certificate programs, provisions must be made to ensure access to child care in hard-to-serve, low-income communities. Recommendation: Theregulations should reflect the law. Revise Sec. 98.30(a~ to read: The parent or parents of each eligible child within the State who receives or is offered child care services for which financial assistance is provided under Sec. 98.50 are the option either: (1) to enroll such child with a child care provider that hasagrant or contract for the provision of such services: or (21 to receive a child care certificate as defined in Sec. 98.1(i). The new federal child care programs provide an opportunity for the states to develop new and innovative approaches to meeting the child care needs of working parents. Congress deliberated many years over what form the legislation should take and agreed upon a good compromise. Therefore, it is critical that the regulations reflect the concerns and compro- mises reached by Members of Congress. The YMCA commends the Chairman and Members of the Committee for taldng the time to address these important issues. As we have demonstrated through the more than 20 training sessions we have sponsored on the legislation, the YMCA is committed to working with Congress, the Department of Health and Human Services, State agencies, and communities to provide children with quality child care. Thank you again for the opportunity to submit comments and recommendations for changes in the proposed federal regulations. PAGENO="0405" 399 `7 ~wc~ DAYTON 141 W. Third Street * Dayton, Ohio 45402-1814 September 20, 1991 Mr. Robert Leonard, Chief Counsel Committee on Ways and Means U.S. House of Representatives 1102 /Longworth House Office Bui1d'~ing Washington, D.C. 20515 Dear Mr. Leonard: As Executive Director of the YWCA of Dayton, I am responding to the Federal Government's plan for Title XX funding to lose current regulations. It is my understanding that these monies assist low- income and at-risk families with child care costs. Currently, the allotted monies are distributed to centers licensed by the state of Ohio with a contract to accomodate Human Services clients. Many of the adults who utilize child care assistance through Human Services are working hard (either through higher education or employment) to better their current situation and are in dire need of said assistance to continue, sucessfully, toward their goals. ~ As such, I am writing in support of continued federal regulations on child care funding. The removal of present regulations on Title XX monies would undermine the support given to community members in their respective pursuits. Without regulations on the distribution of these funds, there will be no way to insure that the appropriate centers, designed to accomodate this specific population within the community, receive needed assistance. The children who attend these centers are also protected due to the fact that centers utilizing such funding are required to adhere to county and state rules in terms of cleanliness, teacher-child ratio, meals, etc. Professionals, who work with programs that utilize subsidized funding for its clients, and government officials, who have the authority to affect rules and regulations for funding of those programs, must work together to ensure that our community members receive full support in their various pursuits of success. Your support in favor of continued regulations is essential. Respe tfully, Linda L. Kramer Executive Director 0 51-713 0 - 92 (408) PAGENO="0406" 7