Expect New Fed Regs To Increase Childcare Costs

March 30, 2016

By Cynthia Marcotte Stamer

Childcare providers, employers sponsoring programs that reimburse childcare expenses and American workers and families can expect increases in childcare costs and possible loss or disruption of childcare providers in response to efforts by the Department of Health and Human Services (HHS) to increase regulation, oversight and enforcement against childcare providers when implementing the Child Care and Development Block Grant Act of 2014 (CCDBG).  See Child Care and Development Block Grant Act (CCDBG) of 2014: Plain Language Summary of Statutory Changes.  

Affordable Childcare Availability Shared Concern For Employers & Employees

For most employees with young children and their employers, limitations on the availability of affordable, reliable childcare presents a shared concern for both the employer and the employee.  Studies validate the experience of many employers and employees that employee’s struggle as parents to secure high-quality, consistent child care services often impacts employee employment decisions, attendance and performance. See e.g. The impact of child care problems on employment: findings from a national survey of US parents.

Both cost concerns and limitations in the availability of childcare contribute to the childcare crisis experienced by many American families.  See Cost and Availability of Child Care Continues To Burden American Families; 2-1-1 Child Care Affordability and Availability Report;  Annual Child Care Capacity, Availability and Enrollment Survey 2014

While the cost of child care varies widely across states, child care expenses often present a significant financial burden for families with young children.  See Parents and The High Cost of Childcare 2015 Report.   For instance, the Childcare Aware Child Care Cost Data In Each State shows:

  • In California, a year of infant care in a center for a married couple family is 14%, but for a single parent family this figure is three times more at almost 45%. Single parents with two children can expect to pay over 75% of income on center based care and a married couple with two children living at the poverty line will pay over 80% of their income on center-based care. A year of infant center based care is almost 29% higher than the cost of one year’s tuition at a four-year public college in the state.
  • In Texas, single parents pay 66% of their income for two children in a center care. Similarly, married couple families with two children living at the poverty line pay almost 64 % of their income for child care. The cost of infant care is $8,759, nearly identical to the cost of a 4 year public college at $8,830.
  • In South Carolina, single parents pay almost 32% of their income for infant center care. Married couple families with two children at the poverty line pay 46% of their income for child care. The annual cost of child care for an infant and a four-year-old in a center is $11,126.

While many U.S. employers attempt to mitigate some of these challenges by offering employees the opportunity to pay some of these childcare expenses on a pre-tax basis by including dependent care assistance plan options in their cafeteria plans, employer-sponsored or subsidized child care, or family friendly leave and scheduling practices, the substantial cost of child care remains a burden for many employees and their family.  Furthermore, even with American families with young children expending significant portions of their income for childcare, limited availability of childcare to meet existing demand makes finding childcare challenging for many families. See, e.g. Annual Child Care Capacity, Availability and Enrollment Survey 2014.   With U.S. employees with young children already facing difficult choices finding and maintaining affordable childcare, employees with children requiring childcare and their employers generally share concerns about government regulations or other actions that could drive up costs or further restrict the availability of affordable childcare.

Quality Concerns Prompting HHS To See Tighter Federal Childcare Regulations

As part of federal efforts to mitigate the impact of childcare expenses on low income workers, the U.S. Child Care and Development Fund underwrites the care of nearly 1.5 million children from low-income families every month.  In 2015, the U.S. government spent about $5.4 billion of taxpayer dollars to help states, territories and tribes subsidize child care for low-income working families.  Increased federal scrutiny of these programs and their expenditures as well as reports of concerns about the quality of the child care programs they fund are prompting both additional federal regulation and oversight of these programs.

The Child Care and Development Block Grant Act (CCDBG) enacted by Congress in 2014 imposed requirements for childcare worker criminal background checks, CPR training, SIDS prevention planning and other health and safety requirements for childcare providers receiving federal subsidies.  CCBDG also gave HHS authority to set caseload limits for state inspectors, conduct annual inspections and to impose other requirements to regulate, monitor and enforce quality, health and safety and other standards for subsidized child care providers. See Child Care and Development Block Grant Act (CCDBG) of 2014: Plain Language Summary of Statutory Changes.   Based on audits of compliance with current state regulations and other requirements for child care providers by the HHS Office of Inspector General (OIG) now is gearing up to use this authority to tighten federal requirements for federally subsidized childcare and in anticipation of its announcement of proposed regulations, is conducting an aggressive public relations campaign to generate public support for HHS implementing regulations of the CCDBG that will substantially tighten federal requirements for subsidized childcare facilities.  While HHS as of now has not published the expanded safeguards that it plans to impose, its high profile public relations campaign indicates that it plans both to substantially tighten these requirements and the required oversight and enforcement against childcare providers in light of widespread deficiencies in the compliance of federally funded childcare centers with applicable state regulations that OIG reports it uncovered in a series of OIG health and safety audits.

According to OIG, a series of audits conducted by OIG of federally funded childcare facilities uncovered what OIG considers “major health and safety violations” at many state-licensed day care providers around the country. OIG reports that 96 percent (218 out of 227) of childcare centers by OIG in unannounced site visits had at least one health and safety violation. OIG has posted results of these audits by region here, including two just released reports of findings from audits performed in Florida.  See, e.g. Some Florida Childcare Centers Did Not Always Comply With State Health and Safety Licensing Requirements; Some Florida Family Childcare Homes Did Not Always Comply With State Health and Safety Requirements.

The audit reports identify a wide range of safety concerns.  Some of the deficiencies OIG reports finding at these facilities included:

  • Childcare workers leaving children unattended;
  • Understaffed facilities;
  • Childcare workers with pending criminal charges for corruption of minors, child endangerment or other concerning criminal charges or convictions and others not background checked;
  • Fire hazards;
  • Storage of chemicals, liquor, Tree trimming saw and other lawn equipment or other unsafe items left in unlocked locations accessible by children;
  • Playgrounds with exposed rusty nails; and
  • Others.

Based on these findings, HHS is gearing up to tighten federal requirements for federal funding of childcare and is engaged in an aggressive public relations campaign to publicize its findings to engender support for tighter federal regulation.  As part of this aggressive public relations outreach, OIG has posted a u-Tube video, Eye On Oversight: Childcare Safety Lapses and is conducting an aggressive public relations outreach to expand awareness of its concerns about the childcare industry and its calls for tighter regulation.  In a recent editorial opinion published by CNN, Americans footing bill for substandard child care, for instance, Joanne Chiedi, HHS Principal Deputy Inspector General wrote that families whose children are cared for in childcare centers receiving federal subsidies cannot trust the safety of these environments. While conceding that some childcare facilities passed the OIG audits, Ms. Chiedi writes, “the overwhelming number of problems uncovered make it clear that conditions for the subsidized care of low-income children need to change — and quickly.”

To address these concerns, OIG has announced plans to exercise powers granted under the CCDBG of 2014 to tighten the legal requirements that the federal government states must meet to qualify for federal funding of childcare.  While HHS has not yet published proposed regulations defining the requirements that it plans to impose to address these concerns, it is inviting public input and comment. In the meanwhile, Ms. Chiedi’s CNN editorial opinion provides some insight to HHS’ future plans for regulating childcare when she writes:

Until recently, the federal government gave the money to states so long as each certified that it had certain minimal health and safety requirements designed to protect the health and safety of children. States received the money whether their health and safety requirements were strict or lenient. …

Setting adequate standards is an important step, and effective oversight is necessary to ensure that providers comply. Child Care Aware of America, an organization advocating for quality child care standards, recommends that states employ one inspector for every 50 child care providers. Yet during our visits to the five states that reported their ratios, caseloads ranged from Connecticut’s 332 providers per site inspector to Pennsylvania’s 143 providers per inspector.

The 2014 law also authorized annual inspections for subsidized child care providers and established appropriate caseloads for inspectors.  he Administration for Children and Families in the Department of Health and Human Services must implement the law’s new requirements to the full extent of its authority.

All states should also examine their child care requirements and oversight and make improvements where needed, with the understanding that lax requirements and unsafe conditions risk jeopardizing federal tax dollars.

Our children are precious. They should not be cared for in places that have unsecured weapons, toxic chemicals and blocked fire escapes.

Childcare Providers, Employers & Employees Must Provide Input To HHS About Childcare Regulation

While American families and their employers generally view childcare safety as important, increased federal regulation, oversight and enforcement federal childcare standards are likely both to increase childcare costs and further restrict the availability of childcare. Employees that rely on the availability of affordable childcare and their employers need to ensure that well-intentioned efforts by HHS to promote quality are properly tailored to avoid unduly restricting the availability or affordability of necessary childcare.  Childcare providers obviously need to carefully monitor the HHS analysis and proposals and provide meaningful input by commenting on this analysis and proposals.  However, industry input alone is not sufficient.  American families with young children and their employers concerned about the availability, cost or quality of childcare and their communities also must join the discussion and provide input to HHS about what actions HHS can and should take and other concerns about the cost, availability and regulation of childcare.  Interested persons can start monitoring and participating in HHS’ discussion on twitter at #ProtectOurKids, and can learn more on the Office of Child Care of the HHS Administration For Children & Families at www.occ-cmc.org, and can register to receive Office of Child Care updates here.

About The Author

Recognized as a “Top” attorney in employee benefits, labor and employment and health care law extensively involved in health and other employee benefit and human resources policy and program design and administration representation and advocacy throughout her career, Cynthia Marcotte Stamer is a practicing attorney and Managing Shareholder of Cynthia Marcotte Stamer, P.C., a member of Stamer│Chadwick│Soefje PLLC, author, pubic speaker, management policy advocate and industry thought leader with more than 28 years’ experience practicing at the forefront of employee benefits and human resources law.

A Fellow in the American College of Employee Benefit Counsel, past Chair and current Welfare Benefit Committee Co-Chair of the American Bar Association (ABA) RPTE Section Employee Benefits Group, Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, former Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, an ABA Joint Committee on Employee Benefits Council Representative and Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, Ms. Stamer is recognized nationally and internationally for her practical and creative insights and leadership on health and other employee benefit, human resources and insurance matters and policy.

Ms. Stamer helps management manage. Ms. Stamer’s legal and management consulting work throughout her nearly 30- year career has focused on helping organizations and their management use the law and process to manage people, process, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.

Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce management operations and compliance. She supports her clients both on a real time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy. Well known for her extensive work with health care, insurance and other highly regulated entities on corporate compliance, internal controls and risk management, her clients range from highly regulated entities like employers, contractors and their employee benefit plans, their sponsors, management, administrators, insurers, fiduciaries and advisors, technology and data service providers, health care, managed care and insurance, financial services, government contractors and government entities, as well as retail, manufacturing, construction, consulting and a host of other domestic and international businesses of all types and sizes. Common engagements include internal and external workforce hiring, management, training, performance management, compliance and administration, discipline and termination, and other aspects of workforce management including employment and outsourced services contracting and enforcement, sentencing guidelines and other compliance plan, policy and program development, administration, and defense, performance management, wage and hour and other compensation and benefits, reengineering and other change management, internal controls, compliance and risk management, communications and training, worker classification, tax and payroll, investigations, crisis preparedness and response, government relations, safety, government contracting and audits, litigation and other enforcement, and other concerns.

Ms. Stamer uses her deep and highly specialized health, insurance, labor and employment and other knowledge and experience to help employers and other employee benefit plan sponsors; health, pension and other employee benefit plans, their fiduciaries, administrators and service providers, insurers, and others design legally compliant, effective compensation, health and other welfare benefit and insurance, severance, pension and deferred compensation, private exchanges, cafeteria plan and other employee benefit, fringe benefit, salary and hourly compensation, bonus and other incentive compensation and related programs, products and arrangements. She is particularly recognized for her leading edge work, thought leadership and knowledgeable advice and representation on the design, documentation, administration, regulation and defense of a diverse range of self-insured and insured health and welfare benefit plans including private exchange and other health benefit choices, health care reimbursement and other “defined contribution” limited benefit, 24-hour and other occupational and non-occupational injury and accident, expat and medical tourism, onsite medical, wellness and other medical plans and insurance benefit programs as well as a diverse range of other qualified and nonqualified retirement and deferred compensation, severance and other employee benefits and compensation, insurance and savings plans, programs, products, services and activities. As a key element of this work, Ms. Stamer works closely with employer and other plan sponsors, insurance and financial services companies, plan fiduciaries, administrators, and vendors and others to design, administer and defend effective legally defensible employee benefits and compensation practices, programs, products and technology. She also continuously helps employers, insurers, administrative and other service providers, their officers, directors and others to manage fiduciary and other risks of sponsorship or involvement with these and other benefit and compensation arrangements and to defend and mitigate liability and other risks from benefit and liability claims including fiduciary, benefit and other claims, audits, and litigation brought by the Labor Department, IRS, HHS, participants and beneficiaries, service providers, and others. She also assists debtors, creditors, bankruptcy trustees and others assess, manage and resolve labor and employment, employee benefits and insurance, payroll and other compensation related concerns arising from reductions in force or other terminations, mergers, acquisitions, bankruptcies and other business transactions including extensive experience with multiple, high-profile large scale bankruptcies resulting in ERISA, tax, corporate and securities and other litigation or enforcement actions.

Ms. Stamer also is deeply involved in helping to influence the Affordable Care Act and other health care, pension, social security, workforce, insurance and other policies critical to the workforce, benefits, and compensation practices and other key aspects of a broad range of businesses and their operations. She both helps her clients respond to and resolve emerging regulations and laws, government investigations and enforcement actions and helps them shape the rules through dealings with Congress and other legislatures, regulators and government officials domestically and internationally. A former lead consultant to the Government of Bolivia on its Social Security reform law and most recognized for her leadership on U.S. health and pension, wage and hour, tax, education and immigration policy reform, Ms. Stamer works with U.S. and foreign businesses, governments, trade associations, and others on workforce, social security and severance, health care, immigration, privacy and data security, tax, ethics and other laws and regulations. Founder and Executive Director of the Coalition for Responsible Healthcare Policy and its PROJECT COPE: the Coalition on Patient Empowerment and a Fellow in the American Bar Foundation and State Bar of Texas, Ms. Stamer annually leads the Joint Committee on Employee Benefits (JCEB) HHS Office of Civil Rights agency meeting and other JCEB agency meetings. She also works as a policy advisor and advocate to many business, professional and civic organizations.

Author of the thousands of publications and workshops these and other employment, employee benefits, health care, insurance, workforce and other management matters, Ms. Stamer also is a highly sought out speaker and industry thought leader known for empowering audiences and readers. Ms. Stamer’s insights on employee benefits, insurance, health care and workforce matters in Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, Modern Healthcare, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications. Ms. Stamer also regularly serves on the faculty and planning committees for symposia of LexisNexis, the American Bar Association, ALIABA, the Society of Employee Benefits Administrators, the American Law Institute, ISSA, HIMMs, and many other prominent educational and training organizations and conducts training and speaks on these and other management, compliance and public policy concerns.

Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer presently serves on an American Bar Association (ABA) Joint Committee on Employee Benefits Council representative; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the ABA RPTE Employee Benefits & Other Compensation Committee, its current Welfare Benefit Plans Committee Co-Chair, on its Substantive Groups & Committee and its incoming Defined Contribution Plan Committee Chair and Practice Management Vice Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; the former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. She also previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association. For additional information about Ms. Stamer, see CynthiaStamer.com or StamerChadwickSoefje.com or contact Ms. Stamer via email here or via telephone to (469) 767-8872.

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