INTRODUCTION
Background
The Community Child Care Council of Santa Clara County (4Cs) is a nonprofit agency that provides a variety of comprehensive services and serves as a community child‑care connection for families and child‑care professionals who live and work in Santa Clara County. 4Cs was founded in 1972 and had the same individual serving as executive director for the majority of its existence, until his retirement in August 2017. Since that time, 4Cs has appointed an interim executive director. 4Cs is governed by a board of directors and employed 88 staff as of June 2017. According to the unaudited database of the California Department of Education (Education), 4Cs' contracts with Education covered nearly 2,800 children as of July 2017. For fiscal year 2016–17, $39.8 million, representing 95 percent of 4Cs' total revenue and support, came from federal grants and state apportionments to provide child‑care services to families. Families receive these services through a variety of options: licensed child‑care centers, licensed family child‑care homes, and unlicensed providers, such as a family member, neighbor, or friend.
4Cs has a formal process for enrolling families wishing to receive child‑care services. As we show in Figure 1, after a family applies for services, a case manager reviews the application and approves or denies the services based on family size, income, and need. If 4Cs approves services and authorizes a child to receive care, it gives the family and the child‑care provider a child‑care service certificate, which specifies the authorized child‑care schedule and the rate of reimbursement to the child‑care provider. After initial certification and enrollment, 4Cs recertifies the need and eligibility of each family at least annually. 4Cs' case managers send families a letter notifying them of their recertification due date, and it is the responsibility of the parent or guardian to contact the case manager, schedule a recertification appointment, and complete the recertification in a timely manner. Failure to recertify by the required date can lead 4Cs to terminate child‑care payment and services for the family. Parents are also responsible for completing daily attendance sheets for each child, which the child‑care provider must maintain and submit monthly to 4Cs to obtain payment for the child‑care services provided.
At the time of enrollment or recertification, 4Cs notifies families if they are required to pay a family fee to 4Cs for their child‑care services. Family fees are determined by a family fee schedule that Education established based on the gross monthly income and size of the family. If a family is required to pay a family fee, 4Cs charges the fee for each month the family receives child‑care services, and the family must pay the fee to 4Cs in advance for the upcoming month. 4Cs mails family fee statements on the 28th day of each month for the next month, and the family must pay the fee by the 8th day of that following month. Nonpayment of family fees can also lead to a Notice of Action (notice) for termination of services and, if not resolved, termination from the program.
Figure 1
Families Seeking Eligibility for Services May Appeal Denials
Sources: State regulations, Education's Funding Terms and Conditions, and 4Cs' contracts and documentation.
* This is not a comprehensive list of all the documentation case managers review to determine eligibility.
In addition to a notice for termination of services for nonpayment of family fees, families may receive a notice for other reasons, such as changes in income reported by the family, an upcoming annual recertification, or changes in child‑care need. 4Cs generates these notices by entering information into its child‑care data system, which it contracts with a computer consulting firm to maintain. 4Cs has an appeal process for parents who receive a notice but do not believe the action is justified. Parents may request a hearing by filing with 4Cs a written request for appeal within 14 days of receiving the notice. State regulation requires the 14‑day response time, and provides an additional 14 days to dispute the decision to Education if the family disagrees with 4Cs' decision about the appeal. We discuss problems with this appeal process in detail later in this report.
Role of the California Department of Education
State law requires Education to administer the federal Child Care and Development Fund, which it does through a variety of child‑care and child development programs. To fulfill this responsibility, Education contracts with local entities, such as 4Cs, to provide low‑income families with safe and healthy environments for education and child care. From fiscal years 2014–15 through 2016–17, Education had seven contracts with 4Cs to provide child‑care program services to families in Santa Clara County, six of which provided child‑care subsidies, as shown in Table 1. The other contract was its Resource and Referral Program contract to assist families in finding appropriate child‑care programs for their needs.
State regulation requires that Education conduct monitoring reviews of its contractors providing child development programs at least once every three years and as resources permit. To fulfill this obligation, Education developed a monitoring guide for staff in its Early Education and Support Division—the division within Education responsible for administering child‑care and child development programs—to use in performing monitoring reviews. The monitoring guide covers key contract compliance areas, such as ensuring that child development contractors are appropriately determining family eligibility, correctly recording and reporting attendance, and assessing the family fee, if applicable, based on the family's circumstances. Additionally, Education developed review guides for the California Child Care Alternative Payment Program (alternative payment program) and for programs based in child‑care centers in order to implement federal guidelines for reducing errors in Child Care and Development Fund programs. The review guide contains instructions for selecting a statistically valid sample of children receiving subsidized child‑care services, analyzing the family and provider files associated with those children for errors, and recording and aggregating those errors for administrative improvement. Specifically, based on its review and identification of errors in four categories (eligibility, need, attendance, and family fees), Education makes an error rate determination. If a child development contractor's error rate exceeds 10 percent, the contractor is required to develop an error rate reduction plan to assist it in analyzing, correcting, and validating its processes to ensure compliance. In its fiscal year 2013–14 review, Education determined 4Cs' error rate for the alternative payment program was 13 percent; because of this, Education conducted a follow‑up review in fiscal year 2014–15 in which it determined that 4Cs' error rate had decreased to 2 percent. The monitoring reviews that Education conducts do not include a review of the contractor's administrative costs.
| Child Care Program | Function | Description |
|---|---|---|
| California Alternative Payment Program | Provides child‑care subsidies and parental choice of child‑care provider who meets program provider requirements | Voucher‑based program. Parent can choose licensed family child care, child‑care center, or unlicensed care (family, neighbor, or friend). |
| CalWORKS–Stage 2 Alternative Payment Program | Provides child‑care subsidies | Voucher‑based program. Parent can choose licensed family child care, child‑care center, or unlicensed care (family, neighbor, or friend). Parent must either be a CalWORKS cash aid recipient or be transitioning from CalWORKS*. |
| CalWORKS–Stage 3 Alternative Payment Program | Provides child‑care subsidies | Voucher‑based program. Parent can choose licensed family child care, child‑care center, or unlicensed care (family, neighbor, or friend). To qualify for the program, a parent must have been off CalWORKS cash aid for 24 months. |
| California Family Child Care Home Education Networks | Provides child‑care subsidies | Provides child care within licensed family child‑care homes for children 0–5 years old. Parents can choose from a list of licensed family child‑care homes participating in the program. |
| General Child Care and Development Programs | Provides child‑care subsidies for children 0–13 years old. | Provides age and developmentally appropriate activities for children, parenting education and parent involvement, health services, and nutritional services. |
| Resource and Referral Program | Provides information and referral services | Provides access to child‑care and development services through resource and referral services. |
| California State Preschool Program† | Provides child‑care subsidies and education | Provides child care and preschooling within licensed child‑care centers for children 3–4 years old. |
Sources: Education's contract documentation and website, and documentation provided by 4Cs.
* CalWORKS is a public assistance program that gives cash aid and services to eligible families that have children in the home. The program is operated locally by county welfare departments.
† 4Cs relinquished this contract in June 2017.
State regulation also requires child development contractors to obtain an annual independent financial and compliance audit and to submit the audit report to Education. Education's Audits and Investigations Division (audits division) is responsible for reviewing those audit reports. Education requires that the independent audits conform with the federal Office of Management and Budget's Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (uniform cost principles), which establish principles for determining allowable costs by nonfederal entities receiving federal awards.