2024 CCDF Final Rule Transitional Waiver Flexibilities Guidance

Program Instruction

1. Log No: ACF-OCC-CCDF-PI-24-03
2. Issuance Date: April 23, 2024
3. Originating Office: Office of Child Care
4. Key Words: Child Care and Development Fund, CCDF, waiver 

To

State and Territory Lead Agencies administering the Child Care and Development Fund (CCDF) program, as amended, and other interested parties.

Subject

This Program Instruction (PI) transmits guidance to State and Territory Lead Agencies related to waiver flexibilities for provisions in the 2024 CCDF Final Rule and how to submit transitional and legislative waiver requests applicable to the Federal Fiscal Year (FFY) 2025-2027 triennium.

References

The Child Care and Development Block Grant (CCDBG) Act (42 U.S.C. § 9857 et seq.), as amended by the CCDBG Act of 2014 (Pub. L. 113-186); section 418 of the Social Security Act (42 U.S.C. § 618); 45 CFR Parts 98 and 99, as amended by 2024 CCDF Final Rule published in the Federal Register on March 1, 2024 (89 FR 15366).

Purpose

The purpose of this guidance is to support State and Territory Lead Agencies with requesting transitional and legislative waivers for CCDF requirements related to the 2024 Final Rule. 

Background  

The 2024 Final Rule makes important changes to the Child Care and Development Fund (CCDF) program for families and providers. For families, changes include lowering child care costs, increasing child care options, and enabling easier and faster enrollment. The 2024 Final Rule also includes changes for Lead Agency payment practices to providers, including more stabilizing payment practices, making payment more aligned to costs, and making it easier for providers to participate in CCDF. 

The 2024 Final Rule goes into effect on April 30, 2024, but OCC recognizes that it may take Lead Agencies^[1] some additional time to fully implement these changes. The CCDBG Act allows the Secretary of Health and Human Services (the Secretary) the option to temporarily waive requirements, and OCC is using this authority to allow Lead Agencies to apply for temporary waivers from provisions in the 2024 Final Rule in certain circumstances. For transitional and legislative waivers, Lead Agencies may apply for waivers for no more than 2 years, as updated by the 2024 Final Rule and specified at § 98.19(b)(1)(i).^[2] There are specific administrative requirements at § 98.19 for the temporary waiver requests; the types of waivers allowed (including transitional and legislative waivers); the contents of the waiver requests; and the restrictions on what can be waived.

Lead Agencies can apply for transitional and legislative waivers May 1, 2024, through November 30, 2024, for certain required provisions related to the 2024 Final Rule. When approved, these waivers temporarily exempt Lead Agencies from meeting certain CCDF requirements.

This document provides guidance to Lead Agencies for requesting transitional and legislative waivers. OCC recommends that Lead Agencies communicate with their Regional Office to discuss questions and timeframes about these waiver flexibilities. 

Implications for the FFY 2025-2027 CCDF Plan

Lead Agencies will be expected to demonstrate compliance with new regulations established in the 2024 Final Rule, in addition to existing regulations, beginning with the FFY 2025-2027 CCDF Plan. The CCDF Plan serves as the Lead Agency's application for a three-year cycle of CCDF funds and is a primary mechanism OCC uses to determine Lead Agency compliance with the requirements of the CCDBG Act and CCDF regulations.

As noted in the Program Instruction for the FY 2025-2027 CCDF Plan for States and Territories (CCDF-ACF-PI-2024-01), even if a Lead Agency applies for a waiver, the Lead Agency must fully complete the Plan, including plan responses for questions related to any provisions eligible for a transitional and legislative waiver request. 

Lead Agencies not meeting all CCDF requirements as of October 1, 2024, will have their Plans approved with conditions and must submit action plans detailing how they will come into compliance with unmet regulations. OCC will provide technical assistance to aid Lead Agencies in meeting the requirements. Lead Agencies remain subject to this preliminary notice of possible non-compliance issued as a result of Plan review until the Lead Agency demonstrates compliance with requirements by submitting a Plan Amendment to be approved by OCC.

Guidance  

Provisions for Which Transitional and Legislative Waivers May Be Requested

A narrow set of provisions that were substantively updated in the 2024 Final Rule are eligible for a transitional and legislative waiver. 

The following provisions are eligible for a waiver:

• § 98.45(b)(5) and § 98.45(l)(3) — Co-payments capped at 7% of family income 
• § 98.45(m)(1) — Pay providers prospectively 
• § 98.45(m)(2) — Use enrollment-based payment 
• § 98.16(z), § 98.30(b)(1), and § 98.50(a)(3) — Some grants or contracts for direct services for infants and toddlers, children with disabilities, and children in underserved geographic areas
• § 98.33(a)(4)(ii) — Consumer education requirement to post full monitoring reports which must include compliances and non-compliances and cannot be a blank checklist

Process for Submitting Transitional and Legislative Waivers

To request a transitional and legislative waiver, the Lead Agency must email a written request to their OCC Regional Program Manager (RPM). The written request must be addressed to the OCC Director and signed by an official with signing authority on behalf of the Lead Agency.   

Consistent with the CCDBG Act and CCDF regulations, requests for transitional and legislative waivers must contain the following information: 

• Reason why the Lead Agency is requesting the transitional and legislative waiver, including a description of the legislative action needed or Lead Agency change process that prevents the Lead Agency from meeting the above listed regulations and timeline required;
• Detail on the provision(s) for which the Lead Agency is seeking a temporary waiver using the precise regulation citation(s) from the list above; 
• Description of how a waiver for each listed provision, by itself, will improve the delivery of child care services for children and families;
• Certification and description of how the health, safety, and well-being of children served through CCDF will not be compromised as a result of the waiver; and
• Preferred start date (which may be retroactive to April 30, 2024) and the duration of the waiver.

OCC will review requests for this required content in addition to evaluating the reason or need described. Requests must sufficiently describe the state or territory legislative action steps, Lead Agency rulemaking process, and/or information technology (IT) systems change requirements that prevent them from implementing the above-listed provisions by April 30, 2024. Requests must also describe the timeline of these processes in the context of the requested waiver duration. For transitional and legislative waiver requests related to limiting family co-payments at § 98.45(b)(5) and § 98.45(l)(3), IT reasons alone will likely not be an accepted demonstration of need. 

Timing for Transitional and Legislative Waivers

The 2024 Final Rule specifies at § 98.19(b)(1)(i) that transitional and legislative waivers are limited to a 2-year period. OCC has determined that all waivers submitted in response to this Program Instruction will expire August 1, 2026, unless the Lead Agency requests an earlier expiration date. As stated previously, compliance with the new provisions of the 2024 Final Rule will be assessed through review of the submitted FFY 2025-2027 CCDF Plan. OCC will not issue a preliminary notice of possible non-compliance for the 2024 Final Rule until that review is complete, to be effective October 1, 2024. It is at the Lead Agency’s discretion whether to request a transitional and legislative waiver if they expect to be compliant with the new 2024 Final Rule provisions by October 1, 2024 (and therefore a waiver may not be needed). 

Within the allowable 2-year period, Lead Agencies should consider the actual time needed to make the policy and/or procedure changes to their CCDF programs when making their request. Transitional and legislative waivers are conditional, dependent on progress towards implementation, and may be terminated by the Secretary at any time in accordance with paragraph § 98.19(e). OCC will use information submitted through the Appendix to the FFY 2025-2027 CCDF Plan to assess progress towards implementation of all non-compliant provisions, including those under a waiver.

Lead Agencies may request transitional and legislative waivers for the allowable provisions beginning May 1, 2024, using the process described above. Lead Agencies will have until November 30, 2024, to submit these requests. Please note that requests submitted after July 1, 2024, may not be reflected in the preliminary notice of possible non-compliance issued as a result of FFY 2025-2027 CCDF Plan review decisions.