As a rule that requires a RFA, RAFA or JIS, this rule will be initially reviewed in the calendar year 2017, which is no later than the 3rd year after the year in which this rule is being adopted.

The Office of Children and Family Services (OCFS) received comments from the New York City Administration for Children’s Services (ACS). ACS stated that the proposed market rates represented a substantial increase in rates for their district, and without additional funding, would require substantial cuts in existing child care services. ACS also requested that additional funds be made available to districts proportionate to the proposed changes in the market rates. ACS further expressed concern that the higher market rates reflected the inclusion of contracted high quality providers in the survey, with the result that ACS would be required to pay the higher market rate for non-contracted care of any quality.

OCFS reviewed the ACS’ comments and determined that local district child care allocations are sufficient to cover the costs of child care which the State mandates. New York State mandates that local districts pay for child care for those families that are on Temporary Assistance (TA) and participating in an approved activity, families that are transitioning off TA, and families that are eligible for TA but have chosen child care in lieu of TA. All other eligible families listed in Social Services Law and OCFS’ regulations are not mandated and are eligible only to the extent that districts have funds available. Furthermore, additional funding has been included in the Enacted 2014-2015 Budget for child care subsidy funding, which will be allocated to local social services districts as part of the Child Care Block Grant.

ACS’ concern that the inclusion of contracted high quality child care providers had raised the market rates, which then the district would be required to pay to non-contracted providers of potentially lesser quality, is not founded. The market rate survey randomly selects providers for inclusion; therefore higher quality programs are included in proportion to their occurrence in the local child care market, and the resulting market rates reflect the totality of the child care market including programs of all quality. Finally, the market rates are not required payment amounts; rather they are the maximum reimbursement rates districts may pay providers for subsidized child care. If a revised market rate that applies to a specific provider is an increase above the previous rate, that provider must demonstrate that they charge private pay families a higher rate or that their cost of providing care has increased before the district increases the reimbursement rate.

OCFS determined that no changes to the proposed regulations were required in response to ACS’ comments.

OCFS also received three comments from organizations representing home-based child care providers (CSEA, UFT, VOICE). The commenters representing home-based child care providers stated that establishing the market rates at the 69th percentile presented a hardship to providers who already operate on very low margins, and would reduce the availability of quality child care for parents receiving child care subsidy. The commenters suggested that the State re-instate the 75th percentile.

OCFS reviewed the comments of the organizations representing home-based providers suggesting that the state re-instate the 75th percentile for calculating the market rates. While it is true that the Federal Administration for Children and Families recommends use of the 75th percentile as ensuring equal access to care, the Federal Administration for Children and Families does not mandate the use of the 75th percentile and most states do not set payment rates at that high a level. Even at the 69th percentile of the most recent market rate survey, New York’s reimbursement rates exceed most other states, and provide equal access to care, despite the stagnation of federal funding. The reduction from the 75th to the 69th percentile reduces parental access slightly, but still allows both equal access to care, and parents receiving subsidies to be able to purchase child care from roughly 7 out of 10 providers. Furthermore, a parent receiving subsidy still has the option of selecting a provider from the 30% of providers that charge rates above the market rate, but the parent would have to pay the amount that exceeds the market rate. Finally, the market rates do not dictate what providers can or should charge, rather they indicate the maximum amount that local districts can reimburse for child care subsidy.

OCFS determined that no changes to the proposed regulations were required in response to the organizations representing home-based providers’ comments.