Kansas Department of Social and Rehabilitation Services
Janet Schalansky, Secretary

Integrated Service Delivery - Candy Shively, Deputy Secretary (785) 296-3271
Economic and Employment Support - Sandra Hazlett, Director (785) 296-3349

MEMORANDUM

This memo provides background information and implementation instructions for reducing Child Care Subsidy Program expenditures beginning in state fiscal year 2003 (with savings seen in March 2003). Effective February 1, 2003, the income eligibility threshold for child care subsidy will change to 150% of the federal poverty level.

Background

• Fall 2001 - It became apparent that the state did not have enough revenue to keep doing business as usual. At that time, SRS made some administrative, program and service cuts.
  
  
• January 2002 - SRS recommended additional cuts to the Governor.
  
  
• May 2002 - After much debate and a long Legislative session, the Governor signed a budget bill for fiscal year 2003 (July 1, 2002 through June 30, 2003) that did not fully fund current state services.
  
  
• July 2002 - State revenues came in lower than expected, compounding the budget shortfall.
  
  
• August 2002 - The Governor imposed $41 million in allotment reductions on state agencies. This allotment was designed to reduce state spending in fiscal year 2003. The August allotment directed SRS to cut $6 million for fiscal year 2003. Cuts were made in Family Preservation, Child Support Enforcement, Head Injury Waiver, Medicaid Cost Avoidance, and Administration.
  
  
• November 2002 - Governor releases plan to assist in addressing fiscal year 2003 shortfall. This includes a 3.9% reduction to all agencies except K-12, Blind School, Deaf School, BIDS, Legislature and Judiciary. SRS allotment reduction, including state hospitals, equals $26.6 million.

Detailed information can be found at http://content.srs.ks.gov/ees/briefing/Sec_briefing02.html

Child Care Subsidy Program Reduction

Beginning February 1, 2003, the income eligibility threshold will be reduced from 185% of the federal poverty level to 150% of the federal poverty level. Families with countable income exceeding 150% of the FPL according to household size, will not be eligible for child care assistance. It is expected that 1,288 families and 2,092 children will lose eligibility resulting from this change. The expected savings is $831,798 in state general funds and $2,089,944 in all funds.

Reasoning

The state is mindful of key values as reduced resource options are contemplated. These values include:

1. managing the budget across the entire SRS system
   
   
2. re-engineering the way SRS does business to better meet consumer needs
   
   
3. minimizing the impact on Kansas' most vulnerable citizens
   
   
4. retaining core services that can be restored when the economy improves
   
   
5. avoiding reductions in areas which would create greater need in other areas of SRS
   
   
6. sharing the impact of limited resources with consumers, partners, communities, and other state agencies
   
   
7. continuing to provide short-term, transitional services
   
   
8. refining service priorities and avoiding putting consumers at risk
   
   
9. limiting the impact on consumers and preserving service capacity in our state hospitals

Choosing to reduce child care subsidy spending by lowering the income eligibility threshold is seen as meeting many of the values listed above. In the past, program reductions were made in a variety of ways including putting eligible families on waiting lists for services, limiting the number of child care hours paid by the state per month, and eliminating access to child care for education/training activities. These types of reductions impact program integrity and result in less of a value for those who qualify. Reducing the income eligibility threshold does reduce the number of families who qualify for child care assistance, but it insures that those who do qualify receive a good benefit. It allows the state to see more immediate fiscal savings. It also allows the basic program structure to remain, provides services to the most in need, and provides an opportunity to quickly and easily restore the program when the economy improves.

Implementation

Beginning February 1, 2003, to be eligible for child care assistance, the total countable gross income must not exceed 150% of the current federal poverty guidelines based on the household size. All families, existing and new, with countable income above the new standard will not qualify for the program.

Current Cases - A case listing is attached to this memo to assist workers in identifying cases with income above the new standard. This listing was compiled using numerous variables and should be seen as a tool for identifying cases needing possible action in accordance with the new guidelines. Workers should carefully review cases to insure appropriate action is taken. Families who will not be financially eligible beginning 2/1/03, should be sent a State Eligibility Reduction notice (C500) no later than December 31, 2002. This notice will inform the family that services will not be paid by the state after 1/31/03. An example is attached to this memo. Child care plans will then need to be terminated on CHCP 1/31/03.

Providers must also be notified of the termination of assistance at the same time the family is notified. The Provider Notice - Case Closed (P502) should be used. Using this provider notice will preserve client confidentiality in regard to income.

Interim Cases - Cases processed prior to 2/1/03 having income between 150% and 185% FPL shall not have plans extending beyond 1/31/03. Workers can identify these cases as they are processed using information shown on INEL. Workers can reference the Family Income and Share Schedule to identify cases with income above 150% FPL. A special Temporary Eligibility notice (C200) may be sent to the client for these situations. An example notice is attached. The provider is notified of the end date of authorization as the child care plan will indicate an end date of 1/31/03.

Clean up Reports - A case listing program will be run on or about 1/1/03 and again after 2/1/03 to insure that cases are identified and closed appropriately. This will account for any cases opened in the interim and also insure that the state is able to see the expected fiscal savings for FY03.
KsCares Table Change - The monthly gross income ceiling will be updated on the Family Income and Share Schedule to reflect changes in the new federal poverty guidelines. KsCares will be updated after 5:00 pm on 1/17/03 with the changes effective 2/1/03. An edit stating "means test failed" will appear on all cases processed which have income above the new standard. Any cases processed on or after 2/1/03 will use the new Family Share table with the new income ceiling.

KEESM - The following manual sections will be revised on the internet version of KEESM effective February 1, 2003 - 2840, 2835, 7440, Appendix #78 Definition of Common Terms, and Appendix #48 Family Income and Share Schedule for Child Care Services. Updates will be made to the hard copy with the May 2003 revision.

Child Care and Development Fund State Plan - CCDF regulations state that approved Plans be amended whenever a substantial change in the program occurs. A Plan amendment is to be submitted within 60 days of the effective date of the change. The Kansas CCDF State Plan will be amended prior to April 1, 2003.

Impact on Families - Families losing child care assistance may need to make new child care plans for the future without state assistance. Due to the impact of this program reduction, current families should be given at least 30 days notice rather that the 10 day notice requirement indicated on the Child Care Plan. Giving families more notice may allow for a smoother transition to private pay status, and lessen the potential risk that parents will be forced into unsafe child care arrangements in order to maintain employment. Families continue to have a right to a Fair Hearing on any adverse agency action. If a family requests a Fair Hearing solely due to the fact that the state income eligibility limit has changed, hence making them ineligible, workers may complete a Motion to Dismiss. A sample Motion to Dismiss is attached.

Community Resources - In order to maintain independence from cash assistance, families should continue to be informed of various resources for which they may qualify. Child Care Resource and Referral Agencies have been alerted and are ready to assist families who may need to make alternate child care arrangements. Though financial assistance may not be provided through CCR&R, referrals to alternate child care providers with openings and their fees charged can be provided.

RK:jmm

cc:   Sandra Hazlett
        Alice Womack
        Dennis Priest
        Ann Hinkle
        Kathy Valentine
        Barbara Silliman
        Deb Wiley
        Helpdesk

Attachments:  Family Income and Share Schedule for family size 2-5 eff. February 1, 2003
                        C500 State Eligibility Reduction notice example
                        C200 Temporary Eligibility notice example
                        P502 Provider Notice - Case Closed example
                        Child Care Resource and Referral Agency listing
                        Motion to Dismiss example
                        Case listing
                        Area Totals