Strategies to Maximize Opportunities forChild Care Local Match

Discussion Paper

Background

Federal matching funds are available to the state contingent upon the availability of state and local expenditures for allowable activities as described in the Texas Workforce Commission’s (TWC) Child Care Development Fund (CCDF) State Plan that meet the goals and purposes of the Child Care Development Block Grant (CCDBG) Act.Local Workforce Development Boards (Boards) are required to leverage local funds as matches for federal funds.The amount of state and local match funds required to draw down federal matching funds is based on the state Federal Medical Assistance Percentage (FMAP) rate, which has decreased in recent years.This decrease requiresBoards to increase the amount of local funds necessary to draw down the full federal matching funds.

Several modifications could help Boards to identify and secure local funds to draw down the full federal matching funds available to the state. The following actionscould modify the current local match process to increase local funds:

  • Securefederal matching funds through local match agreements applied statewide.
  • Designate Boards to receive local funds to be used as match.
  • Simplify documentation requirements to certify local direct child care expenditures.

This discussion paper describes these potential changes and makes recommendations for policy and procedure modifications to facilitate greater use of local funds for federal matching funds.

Issue 1:Statewide Use of Federal Matching Funds Secured through Local Match Agreements

TWC’sChild Care Services rule §809.17(a):

  • encourages Boards to secure local public and private funds tomatch federal funds in order to maximize resources for child care needs in the community;
  • encourages Boards to secure local funds in excess of the amount required to match federal funds allocated to the local workforce development area(workforce area) in order to maximize the workforce area’s potential to receive additional federal funds ifthey become available; and
  • provides that the Board may be eligible for incentive awardsdepending on the Board’s performance in securing and leveraging local funds tomatch federal funds.

In some cases, Boards secure more local funds than are required to match federal funds allocated to the workforce area in order to be prepared fortimes when a contributor is unable to fulfill its commitment.

Pursuant to CCDF regulation at 45 CFR §98.60(d)(3), both the federal and nonfederal shares of matching funds must be obligated at the state level by September 30 of the federal fiscal year in which they are granted to the state and liquidated by September 30 of the next federal fiscal year. For funds allocated to workforce areas, the state-level obligation of the federal and nonfederal matching funds occurs through annual allocations made in accordance with TWC’s General Administration rule §800.58. The process results in annual 15-month grant awards with workforce areasthat facilitate management of the federal grant award. If additional federal funds become available to the state during the year, those funds are also allocated in accordance with §800.58.

Currently, when Boards secure local funds in excess of amounts required to match federal funds allocated to the workforce area, the excess local contributions remain with the workforce area and expire, because they are not considered to be obligated under 45 CFR §98.60(d)(3).With a procedural change, these excess amounts could be aggregated and obligated at the state level within required timeframes and used to reduce local leverage amountsthat all workforce areas would otherwise be required to secure in order to access the federal matching funds allocated to workforce areasin the following year.

The excess local funds remain with the workforce area and expire because the local match agreement states that the contributed local funds and associated federal matching funds will be used to provide allowable child care services and activities only in the workforce areas named in, and party to, the agreement. That express limitation prevents excess local funds arising under the agreement from being aggregated and obligated in a way that permits their use statewide. However, this conditionis procedural. TWC’s rules do not require that the local leverage or the federal matching funds that result from the local funds be used only in the workforce areafor which the funds were secured. A procedural change would make it easier to aggregate and obligate the excess local match at the state level, provided that the parties to the local match agreement consent to use such a match for statewide use.

Boards have noted that thecurrent process inhibits federal matching funds to be used statewide. Where a local contribution does not depend on the use of the resulting federal matching funds in one or more workforce areas, Boards have suggested that TWC develop strategies such that local contributors can agree that the local funds may be used statewide.

Decision Points

Staff recommends that TWCclarify that local contributors are allowed to state on the local match agreement whether the contributor agrees that local funds secured in excess of the amount needed to drawdown the federal match amount allocated to the workforce area may be used for statewide match purposes.

Staff recommends also that any excess local funds be aggregated and obligated at the state level, consistent with the contributor's agreement. The excess amounts wouldbe applied to the local leverage amounts that all workforce areas would be required to secure to access federal matching funds allocated among all workforce areas in the subsequent year.

Issue 2: Designating Boards to Receive Local Private Donations

Federal CCDF regulations at 45 CFR §98.55(f) state thatit is not necessary to transfer private donated funds to or under the administrative control of the Lead Agency in order to qualify as an expenditure eligible to receive federal matching funds.The private donated funds may be given to one or more public or private entities designated by the state, through a written agreement, and identified in the state plan to receive donated funds.

The CCDF state plan for Texas does not designate other entities to receive donated funds.Therefore, TWC is the designated entity in Texas to receive private donated funds.Furthermore, TWC rules are consistent with this arrangement, stating at §809.17(e)(1)(A) that private donations are paid to TWC and considered complete when the funds are received by TWC.Because the state plan does not designate other entities as eligible to receive private donated funds, the private donations must be paid to TWC directly from the local private entity.

However, several Boards have said that local private charitable organizations require that their donations go only to local entities and that the requirement that private funds be paid directly to TWC is a barrier to the donation of funds for child care by local private entities.

Decision Points

Staff recommends amending the CCDF state plan in accordance with 45 CFR §98.55(f) to identify the 28 Boards as allowable entities designated in the state to receive private donated funds to be used as local match for federal matching funds.

Staff also recommends that Boards certify receipt of the donated funds to TWC to satisfy §809.17(d) and (e), with approval by TWC constituting completion of the donation pursuant to §809.17(e)(1)(A).

Additionally, staff recommends issuing guidance to Boards about the policies and procedures that must be in place for the acceptance of local donated funds, including any necessary changes to Board bylaws andways to avoid potential conflicts of interest in accepting private donations.

Issue 3:Requirements for Certifying Local Direct Care Expenditures

Section 809.17(c) requires that public entities that certify expenditures for direct child care determine and verify that the expenditures are for child care provided to an eligible child. At a minimum, the public entity shall verify that the child:

  • is under 13 years of age, or at the option of the Board, is a child with disabilities under 19 years of age; and
  • resides with:

a family whose income does not exceed 85 percent of the state median income for a family of the same size; and

a parent who requires child care in order to work or attend a job training or educational program.

The TWC Child Care Services Guide at Section C.202a clarifies that the public entity may use a family’s eligibility for such grants or assistance as the free and reduced-price lunch program and/or the Children’s Health Insurance Program (CHIP) to determine the amount of certified local funds available for local match.

Several Boards have reported that it is hard for some local public entities to get the certification requirements in rule and policy guidance related to individual family and child eligibility.This is because some public entities that fund before- and after-school services provide these services regardless of the family’s income or participation in work, training, or education.Additionally, those entities do not collect or maintain information on an individual family’s eligibility for the free and reduced-price lunch program, CHIP, or other public assistance programs.

However, federal CCDF regulations provide states with flexibility regarding expenditures for child care activities used for state and local match.CCDF regulations at 45 CFR §98.55 require that expenditures used as matching funds must be “for allowable activities, as described in the approved State Plan, that meet the goals and purposes of the [Child Care and Development Block Grant] Act.”This regulatory language has been in place since the inception of the CCDF regulations in 1998.

The preamble to the 1998 regulations states:

Under these regulations, States will have flexibility to define child care services, so long as those services meet the requirements of the statute. For example, State expenditures for child care for those populations previously served by the title IV-A or CCDBG child care programs would be eligible for Federal match. Similarly, State investments in child care through the use of State funds to expand Head Start programs or to otherwise enhance the quality or comprehensiveness of full-day/full-year child care would also be eligible for Federal Matching funds since these activities meet the goals of the Act.

(Federal Register 63, no. 142 (July 24, 1998): 39964)

The goal of the CCDBG Act is to expand access to child care services, with an emphasis on high-quality child care services, to children in low-income families.However, there is no requirement in the CCDBG Act or CCDF regulations that an individual child’s eligibility related to family income and parent work status must be determinedin order to be an allowable state or local expenditure for match.

Decision Points

Staff recommends providing guidance to Boards that the requirements of §809.17(c) may be satisfied by the local public entity certifying that the matchexpenditures are for child care services delivered to low-income children under 13 years of age.

Additionally, staff recommends that the amount of local match expenditures beproportional to the:

  • poverty rate of the children served by the child care facility based on the U.S. Census Bureau, American FactFinder data;
  • number of children receiving the free and reduced-price lunch program in the workforce area served by the child care program; or
  • number of children receiving CHIP or other public benefits in the workforce area served by the child care program.

DP – Local Match Strategies – Notebook (6 20 17)1