D-101: A Child’s General Eligibility for Child Care Services

Workforce Development Boards (Boards) must be aware that, with the exception of children receiving or needing protective services as described in D-700: Child Care for Children in Protective Services, eligibility for subsidized child care services requires the following  at the time of eligibility determination or redetermination:

  • The child is under 13 years of age or, at the option of the Boards, is a child with disabilities under 19 years of age.
  • The child is a U.S. citizen or legal immigrant as described below in D-103: Child’s Age & Citizenship or Immigration Status.
  • The child resides with one of the following:

- Rule Reference: §809.41(a)

D-101.a: Children of Parents on Military Deployment

Boards must be aware that for a child with a parent or parents on military deployment, child care eligibility is based on the income and work, education and job training activities of one of the following:

  • The parent on military deployment
  • The individual standing in loco parentis for the child 

If eligibility is based on the circumstances of the parent on military deployment, it is assumed that military deployment automatically allows the parent to meet the minimum work requirements.  

Boards must be aware that it is the responsibility of the deployed military parent or parents to ensure that the information necessary to determine eligibility is made available to the Board’s child care contractor.  However, the Board also must work with deployed military parents in situations in which deployment does not allow the parent to provide information within the required time frames.

D-101.b: Board Policies for Parents Attending Educational Program

Boards must establish policies, including time limits, for the provision of child care services while a parent is attending an educational program (as required by TWC rule at 40 TAC §802.1(f) and as detailed in WD Letter 10-07 PDF, Board members must take such actions in an open meeting).

- Rule Reference: §809.41(b

Boards must ensure that time limits for parents attending educational programs include the provision of child care services for four years, if the eligible child’s parent is enrolled in an associate’s degree program that will prepare the parent for a job in a high-growth, high-demand occupation (also known as “in-demand or target occupation”) as determined by the Board.

- Rule Reference: §809.41(c)

Boards may establish a policy for the provision of child care services based on the type of education or degree level (such as an advanced degree) pursued by the parent.

Boards must be aware that there is no requirement that a student’s career field be attached to a target or high-demand occupation in order to be eligible for child care services. However, a Board may choose to have a local policy that places this restriction as a condition of initial eligibility or eligibility redetermination.

If a parent with an enrolled child in one workforce area moves to a workforce area with a different educational requirement for eligibility, the educational eligibility requirement of the Board in the new workforce area can only be applied at the parent's scheduled 12-month redetermination.

D-101.c: Making Progress Toward Successful Completion of the Job Training or Educational Program

As required in B-302, Boards must develop a policy to determine if a parent is making progress toward successful completion of the job training or educational program.

Boards have the flexibility to determine that being enrolled in and meeting attendance standards of the program meet the Board’s standard for making progress toward completion of the program.

Boards must be aware that, in accordance with the definition of “attending a job training or educational program” in A-100, the policy is applied only at the 12-month eligibility redetermination. 

Rule Reference: §809.2

Past performance or attendance in an education or job training program must not be considered in initial eligibility for child care. A parent’s progress toward completion of the education or job training program must be based only on the parent’s performance while receiving child care, as a lack of stable child care can contribute to a parent’s inability to work toward successful completion of the education or training activity.

D-101.d: Income Eligibility Phase-Out

Boards may establish an initial income eligibility threshold lower than 85 percent of the state median income (SMI).

However, Boards that implement lower income thresholds must ensure that a family’s children remain income-eligible for care after passing the Board’s initial income eligibility limit up to 85 percent of SMI.

Boards that implement lower income thresholds at initial eligibility determination also must ensure that the family income limit at the 12-month eligibility redetermination is less than 85 percent of SMI.

Rule Reference: §809.41(e)

Resource: Income Eligibility & Graduated Phaseout: TWIST Instructions Desk Aid PDF

D-101.e: Eligibility for Non-Child Care Development Fund Child Care Services

Boards must be aware that, unless otherwise specified, the provisions of Part D apply only to child care services using funds allocated pursuant to §800.58, including local public transferred funds and local private donated funds, as described in Part C.

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D-102: Child Care Eligibility Determination & Verification

Workforce Development Boards (Boards) must ensure that their child care contractors verify all eligibility requirements for child care services before authorizing child care.

Boards must be aware that self-attestation is only acceptable for verifying that the value of a family’s assets does not exceed $1 million, and to verify initial eligibility for families experiencing homelessness.

Notwithstanding the period of time required to review a customer’s application for child care services, the Board also must ensure that eligibility is redetermined no sooner than 12 months following initial determination or more recent redetermination.

Rule Reference: §809.42

To ensure that children receive a minimum of 12 months of services, Boards must ensure that if a customer’s eligibility end date falls on a weekend or holiday, the eligibility end date is extended to the next working day.

Boards must be aware that a family is considered eligible when the parent is notified of the determination of eligibility and acknowledges the eligibility determination and parent share of cost as described in Section D-1004. Any changes in the parent’s status after the eligibility notification are treated as changes reported during the 12-month eligibility period.

For more information, see Section D-1000: Eligibility Determination Processes.

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D-103: Child’s Age & Citizenship or Immigration Status

Workforce Development Boards (Boards) must be aware of the following:

  • Because the child is the primary beneficiary of child care services, only the child’s citizenship or immigration status is subject to documentation.
  • Documented receipt of Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP) benefits, Medicaid or other public assistance in which citizenship or immigration status is a requirement for eligibility and is considered valid documentation of citizenship or immigration status.

Boards must ensure that appropriate staff verify a child’s age and U.S. citizenship or legal immigrant status as part of child care services eligibility requirements.

Resource: Child Care Eligibility Documentation Log, Appendix J PDF

D-103.a: Verifying Age and Citizenship or Immigration Status

Boards must ensure that appropriate staff:

  • Use only the documents listed in this section as acceptable sources for documenting the age and citizenship or immigration status of a child receiving child care services
  • Retain appropriate documentation of the child’s citizenship or legal immigration status, as well as age, in the child’s case file
  • Do not require documentation of citizenship or immigration status prior to placing a child on a Board’s waiting list

Boards may:

  • Request one document that provides both proof of the child’s age and the child’s citizenship or immigration status
  • Accept photocopies of the documentation to expedite the eligibility process during the initial enrollment period

Boards must be aware that the following are acceptable primary and secondary verification documents:

Primary verification documents for age and citizenship

  • Birth certificate (United States or its possessions)
  • Current U.S. passport
  • Hospital or public health birth record (United States or its possessions)
  • Church or baptismal record (United States or its possessions)
  • TANF, SNAP benefits, Medicaid or other related public assistance records

Secondary verification documents for citizenship or immigration status only--if no primary documents for age and citizenship are available, the following are acceptable sources to verify a child’s citizenship or immigration status:

  • U.S. Citizen
  • Immigrant/“Qualified Alien”
  • Secondary verification documentation for age only

If no documentation listed under the primary age and citizenship category is available, the following are acceptable sources to verify a child’s age:

  • Adoption papers or records (United States or its possessions)
  • Divorce and/or court custody decrees
  • Bureau of Indian Affairs or Tribal records
  • Immigration and Naturalization Service records
  • Child support paternity records
  • School records/identification card 

D-103.b: Termination of Services at a Child’s 13th Birthday

Boards must do the following:

  • Terminate subsidized child care when a child turns 13 years of age, effective on the  child’s 13th birthday
  • Provide written notification to the parent at least 15 days before a child’s 13th birthday
  • Ensure that when a child reaches his or her 13th birthday before the last day of a calendar month, the provider reimbursement and the parent’s share of cost for that month are prorated
  • Ensure that eligibility is extended to age 19 for children subject to court supervision if so requested by the Texas Department of Family and Protective Services (DFPS)

It is recommended that Boards use Report #CC0003, Clients Too Old for Care, in the Child Care Service Delivery Application, to identify children who are within 30 to 45 days of their 13th birthdays.  Boards may use that information to provide notice of termination of subsidized child care to the parent at least 15 days before the effective termination date. 

Additionally, Boards may extend eligibility, in accordance with local policy, to age 19 for children with documented physical or mental disabilities that prevent those children from caring for themselves.

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D-104: Residence

As defined in A-100: Definitions, a child is considered to be residing with the parent when the child is living with and physically present with the parent during the time period for which child care services are being requested or received.

D-104.a: Residency for Children of Parents Attending an Educational Program

Workforce Development Boards (Boards) may establish a policy to allow parents attending an educational program that leads to a postsecondary degree from an institution of higher education to be exempt from residing with the child.  (As required by TWC rule at 40 TAC §802.1(f) and as detailed in WD Letter 10-07 PDF, Board members must take such actions in an open meeting.) 

- Rule Reference: §809.41(e)

D-104.b: Residency for Children of Parents on Military Deployment

Boards must be aware that children of parents on military deployment may reside with a caretaker while the parent is on military deployment.

- Rule Reference: §809.41(

D-104.c: Residency During Custody and Visitation Arrangement

Boards must be aware that a child who is temporarily living with a parent on court-ordered visitation is considered to be residing with the parent during the visitation arrangement.

Boards may allow child care to continue or be suspended, depending on the particular family and child care arrangements, for custody arrangements of short duration (for example, two weeks during the summer or one week a month).

Boards must be aware that child care services may only be suspended at the concurrence of the parent, as described in section D-806.

D-104.d: Residency for Children Experiencing Homelessness

A child whose family is experiencing homelessness might not have a stable residence to report. Therefore, the family’s primary sleeping location at time of eligibility determination should be used to determine county of residence. Homeless families have three months to provide documentation of eligibility, including primary night-time residence.

Resource: Child Care Eligibility Documentation Log, Appendix J PDF

Boards must also be aware that The Workforce Information System of Texas (TWIST) requires a residence address in "Intake Common," although families experiencing homelessness lack primary residences. Board child care contractors should work with families and other agencies that serve them to identify the best means to communicate and use the most practical address in TWIST.

Some options for the residence address field in TWIST include using the address of the workforce center, a homeless shelter, or the child care provider (if the provider agrees). United States Postal Service “General Delivery” may also be used if the customer is able to get to a post office that makes that service available.

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D-105: Determining the Family Size

When determining family size, Workforce Development Boards (Boards) must be aware of the following definitions.

D-105.a: Family and Household Dependents

A “family” is the unit composed of two or more individuals related by blood, marriage, or decree of court, who are living in a single residence and are included in one or more of the following categories:

  • Two individuals, married—including by common-law—and household dependents
  • A single parent and household dependents.

A “household dependent” is an individual living in the household who is one of the following:

  • An adult considered as a dependent of the parent for income tax purposes
  • The child of a teen parent
  • A child or other minor living in the household who is the responsibility of the parent

D-105.b: Parent

A parent is an individual who is responsible for the care and supervision of a child and is identified as the child’s natural parent, adoptive parent, stepparent, legal guardian or person standing in loco parentis (as determined in accordance with Texas Workforce Commission (TWC) policies).  Unless otherwise indicated, the term applies to a single parent or both parents.

D-105.c: In Loco Parentis

Boards must be aware that, in situations in which a child’s natural parent, adoptive parent, stepparent or legal guardian is unavailable to care for the child, it is sometimes necessary for the child to be cared for by an individual who is not the child’s legal guardian—that is, standing in loco parentis.

TWC defines in loco parentis as the following:

An individual 18 years of age or older who is responsible for the day-to-day care and supervision of the child when the child’s natural parent, adoptive parent, stepparent or legal guardian is not available to care for the child.  The individual must document the reason the child’s parents are unavailable to care for the child and that he or she is exercising parental responsibility for the child.

Boards must be aware that the documentation requirements for Texas Department of Family and Protective Services Child Protective Services (CPS) placement set forth in the following table apply only to situations in which CPS has not authorized child care as described in D-700: Child Care for Children in Protective Services.

Boards must ensure that individuals standing in loco parentis provide documentation verifying the following:

  • The reason the parent is unavailable to care for the child
  • That the caretaker is responsible for the child as set forth in the following table

Table 1: Documentation Requirements for In Loco Parentis

Reason Parent is Unavailable

Documentation Verifying Reason Parent is Unavailable

Documentation Verifying Caretaker is Responsible for the Child

Medical Incapacitation

OR

In Treatment or Rehabilitation

A document from a licensed medical professional, for example, physician, psychiatrist or psychologist, stating the medical condition that makes the parent unable to care for his or her child. 

OR

A document from a licensed professional such as a counselor or therapist is an acceptable alternative as long as the recommendation or diagnosis does not exceed the licensed professional’s authority.

If the parent is in a treatment or rehabilitation center, a letter from the facility verifying admission must be signed by an authorized representative of the facility and include both the admission and anticipated release date.  A copy of the order mandating the placement will suffice.

Caretaker must have a notarized power of attorney or a sworn affidavit of temporary custody/guardianship of the child. 


CPS Placement

Documentation must include at least one of the following:

  • A recent (within six months) CPS safety plan or CPS placement agreement
  • A court order naming the individual as the caretaker
  • A letter from CPS that confirms the child’s placement with the caretaker or foster parent is ongoing

No other documentation is necessary.

Military Deployment

  • Military orders
  • A suitable alternative such as a confirmation by the base commander or other military official

 

A military power of attorney appointing the caretaker as guardian of the child

OR

In lieu of a military power of attorney, a military family plan that gives the caretaker the authority to execute decisions on child care matters

Incarcerated

Documentation must include at least one of the following:

  • A commitment order from the court
  • Verification from the Texas Department of Criminal Justice (TDJC) Offender Information Search database for offenders who are incarcerated in a TDJC facility
  • A letter from the sheriff’s office confirming incarceration if the parent is in a local jail  

The document must include the date of incarceration and anticipated release date.

Caretaker must have a notarized power of attorney or a sworn affidavit of temporary custody/guardianship of the child. 

 

Other Reasons Parent or Legal Guardian is Unavailable

 

A sworn affidavit of facts attesting to all of the following:

  • the circumstances of how and why the caretaker assumed responsibility for the child
  • the whereabouts of the natural parent(s)
  • the caretaker’s relationship to the child
  • the length of time the child has been with the caretaker

Caretaker must have a notarized power of attorney or a sworn affidavit of temporary custody/guardianship of the child. 

 

Additionally, the caretaker must have documentation from a verifiable source that establishes his or her parental responsibility for the child.  The documentation can be one of the following:

  • The caretaker’s most recent IRS tax return listing the child as a dependent 
  • A letter from a child care center or other independent, nonrelative, verifiable source that can establish the individual’s parental and financial responsibility for the child
  • A letter from an independent school district
  • Documentation that the caretaker is receiving TANF benefits on behalf of the child, or has received TANF benefits within the past six months

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D-106: Family Income

Workforce Development Boards (Boards) must be aware that, effective October 1 of each year, the Texas Workforce Commission (TWC) supplies Boards with eligibility code cards containing up-to-date income data for determining eligibility.  The income information is also loaded into The Workforce Information System of Texas (TWIST).  Eligibility code cards cover Federal Poverty Guidelines (FPG) information and state median income (SMI) levels. 

Boards may use either FPG or SMI to determine income eligibility limits, but in either case, family incomes cannot exceed 85 percent of SMI.

Boards must also ensure that for the purposes of determining family income and assessing the parent share of cost, family income is calculated as described in D-107.

D-106.a: Monthly Family Income

Boards must be aware that unless otherwise required by federal or state law, a family’s monthly income for purposes of determining eligibility and the parent share of cost includes all income sources that are not excluded under D-106.b: Excluded Income Sources, for each family member.

- Rule Reference: §809.44(a)

D-106.b: Excluded Income Sources     

In accordance with TWC income calculation rules at §809.44(b), Boards must ensure that monthly family income excludes the following income sources:

  • Medicare, Medicaid, Supplemental Nutrition Assistance Program benefits, school meals, and housing assistance
  • Monthly monetary allowances provided to or for children of Vietnam veterans born with certain birth defects
  • Needs-based educational scholarships, grants, and loans—including financial assistance under Title IV of the Higher Education Act—Pell Grants, Federal Supplemental Educational Opportunity grants, the Federal Work-Study Program, PLUS, Stafford loans and Perkins loans
  • Individual Development Account withdrawals for the purchase of a home, medical expenses or educational expenses
  • Onetime cash payments, including tax refunds, Earned Income Tax Credit (EITC) and Advanced EITC, onetime insurance payments, gifts and lump sum inheritances
  • VISTA and AmeriCorps living allowances and stipends
  • Noncash or in-kind benefits such as employer-paid fringe benefits, food, or housing received in lieu of wages
  • Foster care payments and adoption assistance
  • Special military pay or allowances, including subsistence allowances, housing allowances, family separation allowances, or special allowances for duty subject to hostile fire or imminent danger (see Appendix J)
  • Income from a child in the household between 14 and 19 years of age who is attending school
  • Early withdrawals from qualified retirement accounts classified as hardship withdrawals by the Internal Revenue Service (IRS)
  • Unemployment compensation
  • Child support payments
  • Cash assistance payments, including Temporary Assistance for Needy Families (TANF), Supplemental Security Income, Refugee Cash Assistance, general assistance, emergency assistance and general relief
  • Onetime income received in lieu of TANF cash assistance
  • Income earned by a veteran while on active military duty and certain other veterans’ benefits, such as compensation for service-connected death, vocational rehabilitation, and education assistance (see Appendix J)
  • Regular payments from Social Security, such as the Old-Age and Survivors Insurance Trust Fund (see Appendix J)
  • Lump sum payments received as assets from the sale of a house, in which the assets are to be reinvested in the purchases of a new home (consistent with IRS guidance)
  • Payments received as the result of an automobile accident insurance settlement that are being applied to the repair or replacement of an automobile
  • Any income sources specifically excluded by federal law or regulation

Rule Reference: §809.44(b)

Boards must be aware that employer reimbursements for work-related expenses such as travel are not considered income and therefore are not included in income calculations.

D-106.c: Income Excluded by Federal Law or Regulation

Boards must be aware of the following income sources specifically excluded by federal law or regulation.

Rule Reference: §809.44(b)(20)

 FEDERAL CITATION

INCOME EXCLUDED BY FEDERAL LAW

7 USC §2017(b)

The value of the allotment provided to an eligible household under the Food Stamp Act

Note: Currently exempted by TWC Child Care Services rule §809.44(b)(1)

PL 104-204

Payments to children with spina bifida born to Vietnam veterans     

Note: Currently exempted by TWC Child Care Services rule §809.44(b)(2)

20 USC §1087uu

Amounts of scholarships funded under Title IV of the Higher Education Act of 1965, including awards under federal work-study program or under the Bureau of Indian Affairs student assistance programs    

Note: Currently exempted by TWC Child Care Services rule §809.44(b)(3), which excludes all needs-based educational scholarships, grants and loans

26 USC §32(j)

EITC refund payments and Advanced EITC received                                                     

Note: Currently exempted by TWC Child Care Services rule §809.44(b)(4)(5)

PL 105-285

IDAs, including participant savings, matching contributions and any income earned thereon                                                                                                       

Note: IDA withdrawals are currently exempted by TWC Child Care Services rule §809.44(b)(4)

42 USC §12637(d);  

PL 101-610;

PL 93-113

Allowances, earnings and payments to persons participating in programs under the National and Community Services Act.  The exclusion applies to all payments made under the AmeriCorps Program and payments under Title I, VISTA.                                                                           

Note: VISTA and AmeriCorps living allowances and stipends are currently exempted by TWC Child Care Services rule §809.44(b)(6).

PL 108-447

Pay received by military personnel as a result of deployment to a combat zone                       

Note: Currently exempted by TWC Child Care Services rule §809.44(b)(9), which also excludes special military pay or allowances, for example, subsistence allowances, housing allowances and family separation allowances

29 USC §2931

Allowances, earnings and payments to individuals participating in programs under the Workforce Innovation and Opportunity Act of 2014, except for earned income received from taking part in on-the-job training programs

42 USC §8624(f)

Payments or allowances made under the U.S. Department of Health and Human Services’ Low-Income Home Energy Assistance Program

25 USC §459e

Income derived from certain submarginal land of the United States that is held in trust for certain Native American tribes

42 USC §3056(f)

Payments received from programs funded under Title V of the Older Americans Act of 1985

42 USC §9858q

The value of any child care provided or arranged (or any amount received as payment for such care or reimbursement for costs incurred for such care) under the Child Care and Development Block Grant Act of 2014

42 USC §5044(g), §5058);

PL 93-113

Payments to volunteers, such as Active Corps of Executives under the Domestic Volunteer Services Act of 1973, under Title II Retired Senior Volunteer Program (RSVP), Foster Grandparents and Title III Service Corps of Retired Executives

PL 100-435

Benefits from the Women, Infants and Children Program

42 USC §10602

Any amount of crime victim compensation (under the Victims of Crime Act) received through crime victim assistance (or payment or reimbursement of the cost of such assistance) because of the commission of a crime against the applicant under the Victims of Crime Act

PL 97-377 and

PL 97-424

Payments from federal energy assistance, for example, for insulation, weatherization and storm windows

PL 111-312

All federal tax refunds received from December 31, 2009, through December 31, 2012, must be disregarded as income and from consideration as a resource for a period of 12 months from receipt when determining eligibility for program benefits.

Note: Tax refunds are currently excluded by TWC Child Care Services rule §809.44(b)(6).

PL 111-291

The Claims Resolution Act of 2010 (PL 111-291) provides that amounts received from the Cobell v. Salazar settlement will not be treated as income for the month during which the amounts were received for purposes of any federally assisted program.  Therefore, amounts received from the settlement must be excluded from income for purposes of determining initial eligibility, ongoing eligibility or level of benefits for Child Care and Development Fund assistance.

D-106.d: Income Deductions

When calculating income eligibility for a family with a child with disabilities, Boards must ensure that the cost of the child’s ongoing medical expenses is deducted from the family income.

- Rule Reference: §809.50(d)

D-106.e: Income Verification

As detailed in D-1000 (Processes for Determining Eligibility), Boards must ensure that the child care contractors verify allowable income sources and ensure eligibility for child care services before authorizing child care.

Rule Reference: §809.42(a)

Boards must be aware that parents are responsible for reporting family income. Board contractor staff is responsible for reviewing the income reported and excluding those sources disallowed by rule from the calculation.

Boards must ensure that appropriate staff have a process to inform the parent of the requirements for reporting income and the consequences for not reporting any income discovered later.

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D-107: Calculating Family Income

Pursuant to §809.44(a), for the purposes of determining family income and assessing the parent share of cost, Boards must ensure that the family income is calculated in accordance with Texas Workforce Commission guidelines to:

  • Take into account irregular fluctuations in earnings
  • Ensure that temporary increases in income, including temporary increases that result in monthly income exceeding 85 percent of SMI, do not affect eligibility or the parent share of cost

Rule Reference: §809.44(a)

D-107.a: Determining Average Gross Monthly Family Income from Earnings at Initial Eligibility and at Eligibility Redetermination

Boards must ensure that calculation of a family’s income for the purposes of determining initial eligibility and redetermining eligibility is based on the average monthly family income for each family member.

Unless a family member has an insufficient work history or other constraints to obtaining necessary documentation, Board contractor staff must review the previous three months of income (for monthly pay periods), or 13 weeks (for weekly or biweekly pay periods), for each family member to determine average earnings and the family’s financial situation. 

Boards must be aware that three months is a guideline for determining earnings from continuous employment. Absent the full three months of documentation, the Board may use whatever documentation a parent is able to provide.

Boards must also be aware that a family member might be employed for three or more months but have irregular or no earnings within one or more pay periods. See Section D-107.c regarding fluctuations in income.

D-107.b: Substantial Change in Earnings

In some instances, such as when an individual has a substantial change in earnings during the most recent month, current employment status or anticipated earnings changes will be more representative of expected income than those of the past three months.

A family member is considered to have a “substantial change in earnings” if, at the time of eligibility determination or redetermination, the individual has experienced a permanent change in compensation or employment status within the most recent month of the three-month period, a change that will affect future earnings and would better reflect the family’s income. In this case, the income should be calculated from the period the income or employment status changed instead of the full previous three months. 

Changes in earnings or employment that are considered substantial are those due to any of the following:

  • A permanent decrease/change in employment status from full-time to part-time or vice versa
  • A permanent decrease/change in hourly wages or compensation
  • An employed family member adding or ending employment at one or more employers

D-107.c: Fluctuations in Earnings

Boards must be aware that a customer may have income fluctuations during the 3-month income calculation period. Income fluctuations that occur during the three months are calculated separately and averaged over the appropriate time period, in accordance with local procedures.

Fluctuations in earnings during sustained employment are income amounts that differ due to any of the following:

  • Variable work schedules without an expected number of hours per day or per week for a pay period
  • Overtime pay
  • Pay based solely on commissions or tips
  • Fixed compensation paid in different time periods, as in education
  • Seasonal or temporary employment

Boards must be aware that it is better to annualize some fluctuations in income rather than average them across the three-month period. Examples of income that should be annualized may include, but are not limited to, the following:

  • Coaching stipend paid only for season
  • Accrued vacation leave paid out in a lump sum at year end
  • Holiday employment

D-107.d: Bonuses and Lump Sum Payments

Boards must ensure that, if pay documents indicate that a family member received a bonus or other lump sum during the income calculation period or in the year-to-date amount, staff determines the number of months the bonus or lump sum covers and if there is any expectation of future repetition. In that case, the sum is averaged over the applicable number of months to reach an average monthly figure. For example:

  • Average an annual bonus by 12
  • Average a lump sum payment by 12
  • Average a quarterly bonus by 3
  • Average a onetime payment by 12

D-107.e: Calculating Unearned Income

A family member may receive income unearned outside of employment, such as merit-based scholarships, alimony payments, or rental income. If a family member has received countable unearned income within the previous three months, determine the frequency of the income and average accordingly to determine an average monthly amount of unearned income.

For example, if a merit-based scholarship was received during the previous three-month period, average the scholarship amount by 12 to determine a monthly amount to include in gross monthly income.

D-107.f: Income Documentation Requirements

Boards must ensure that documentation of all employment and income earned is obtained for the previous three-month period. If the family member does not have three full months of documentation because he or she has not been employed throughout the full three-month period, obtain pay documents for the period employed. 

If the family member started a new job, or experienced a substantial change in earnings, and does not have pay documents from that job, an Employment/Income Verification Form (included in the Eligibility Documentation Log, Appendix J) or other Board-defined employer verification must be completed.

If the family member is employed by the same employer or employers for the entire period, the family member must provide the past three months (if paid monthly) or 13 weeks (if paid weekly or biweekly) of consecutive pay stubs or payroll history from each employer to document and calculate average gross monthly income. 

If the family member is unable to obtain the required documents covering the time employed, but the amount earned over the most recent three months is reflected in the year-to-date information, then the average gross monthly income can be calculated using the documents provided. However, if the year-to-date information does not cover the period under review, an Employment/Income Verification Form (or other Board-defined employer verification) must be completed for the time period. 

If the family member is an employee who is paid in cash, an Employment/Income Verification Form must be completed by the employer. If the family member is not an employee, they are considered self-employed pursuant to D-109.

D-107.g: Income Calculation Methodology 

Gross monthly income for eligibility determination and parent share of cost are based on pay stubs, pay frequency, and/or employer verification of hours, wages, and pay frequency, when applicable. 

Average pay per pay period—gross earnings per pay period (less bonuses and lump sums) divided by the number of pay stubs.

Average base monthly earnings—average earnings per pay period times applicable pay frequency factor (see Table 1).

Gross monthly income—average base monthly earnings plus prorated bonuses and lump sums plus monthly unearned income.

Calculating earned income from pay stubs or employer verification:

  1. If there is more than one employer with differing pay periods, calculate an average base monthly for each separately then add them to obtain the total average base monthly earnings.
  2. Add the included gross pay (less bonuses and/or lump sums) from all check stubs and divide by total number of paystubs to get an average pay per pay period per employer.
  3. Multiply average pay by pay frequency factor for each employer to get the base monthly earnings (see Table 1).
  4. If using employer verification rather than paystubs, use the following formula to determine monthly earnings: Multiply hourly rate of pay by weekly hours by 4.33.
  5. If a bonus or other lump sum payment was included in the paystubs, divide the total by the applicable number of months to get the average monthly amount.
  6. Gross monthly income equals average base monthly earnings plus prorated bonus and/or lump sum plus any included unearned monthly income.

Table 1 Calculating Average Base Monthly Earned Income from Pay Stubs

Pay Frequency

Calculation

Weekly

Average earnings per pay period x 4.33

Biweekly (every other week)*

Average earnings per pay period x 2.165 or Average earnings per pay period x 2.167

Twice monthly

Average earnings per pay period x 2

Note: Boards automated income calculators may be programmed to use 2.165 or 2.167 depending on if the calculation methodology is based on 26 pay periods per year (2.167) or 4.33 weeks per month (2.165).  

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D-108: Income Changes During the 12- Month Eligibility Period

Boards must ensure that full eligibility determination only occurs at initial determination and at redetermination, which may not occur earlier than 12 months after the initial determination.

D-108.a: Determining if Monthly Family Income Exceeds 85 Percent of State Median Income During the 12-Month Eligibility Period

Boards must be aware that, pursuant to §809.73(b), during the 12-month eligibility period, parents are required to report changes in family income or family size that would cause the family to exceed 85 percent of SMI for a family of the same size. Families are only required to report changes in income that are substantial and permanent. See D-107.b.

For reported substantial and permanent increases in income during the 12-month period, the income must be calculated from the period in which the income or employment status changed.

Boards must be aware that temporary changes, including increases in income, which last three months or less, do not affect a customer’s eligibility for continuing to receive child care services. However, temporary increases in income that last longer than three months must be evaluated to determine if the change puts the customer over 85 percent SMI.

Temporary increases in income that occur during the 12-month eligibility period and last longer than three months are assessed against an annual time frame so that the calculated income reflects the customer’s earnings over the entire year.

For example:

  • A customer reports a temporary assignment that will last four months. During the four months, the customer’s income will be over 85 percent SMI
  • Board contractor staff recalculate income:

Board contractor staff must use the newly calculated gross monthly income to determine if the increase caused the family to have an average monthly income above 85 percent of SMI.  

D-108.b: Reducing the Assessed Parent Share of Cost Due to Reductions in Income During the 12-Month Eligibility Period

Boards must ensure that, pursuant to B-604.b, a new parent share of cost is assessed upon a parent’s report of a change in income, family size, or number of children in care that would result in a reduced parent share of cost assessment.

If the reported change in income is determined to be a substantial decrease in earnings, as defined in D-107.b, then the parent share of cost must be reassessed based on the new, lower reported income.

Boards must require documentation of a decrease in earnings when the parent share of cost is reduced. Additionally, Boards must ensure that the changes to the parent share of cost are documented in TWIST Counselor Notes or in the case file.

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D-109: Determining Self-Employment Income

Boards must be aware that for self-employment to be considered an eligible work activity, the individual is required to demonstrate engagement in an income-producing enterprise or activity that is distinguishable from a hobby or pastime.

D-109.a: Definitions for Self-Employment

Self-employed—An individual is considered self-employed if the individual works in an income-producing trade or business as one of the following:

  • The sole proprietor or independent contractor
  • A member of a partnership
  • Otherwise in business for him or herself and not a paid employee of the business or enterprise

Self-employment income—gross business income minus business operating expenses.

Established self-employment—a business or enterprise with demonstrated business income and expenses for more than three months.

New self-employment—a business or enterprise with demonstrated business income and expenses for less than three months.

D-109.b: Verification and Documentation of Self-Employment Income

Boards must ensure that Workforce Solutions Office staff verifies that a self-employment business or enterprise is in existence and covers the eligibility period for child care services at initial eligibility determination and at eligibility redetermination using one of the following documents:

  • Current property titles, deeds, tax records, or rental agreement for the place of business
  • Recent business bank statement
  • Recent business phone, utility, or insurance bill
  • Recent state sales tax return
  • Business records that provide proof of income and expenditures, such as:
  • Business registration or license (that is, DBA license or Assumed Name Certificate)

D-109.c: Identifying Self-Employment Gross Income

Boards must ensure that Workforce Solutions Office staff verifies income for self-employment enterprises at initial eligibility determination, eligibility redetermination, and following a reported change in family income.

Established Self-Employment

To verify income for established self-employment enterprises, Boards must require one of the following documents from the most recent tax year and/or most recent quarter:

  • IRS Form 1040 with IRS Schedule C, F, or SE federal income tax returns
  • IRS Tax Transcript
  • Any documents listed under New Self-Employment

New Self-Employment

To verify income for new self-employment enterprises, Boards must require one of the following documents covering a time period within the previous three months:

  • Statement of profit or loss
  • Recent business bank statements
  • Business records that document income and expenditures, such as:

D-109.d: Identifying Self-Employment Net Income

Boards must ensure that Workforce Solutions Office staff verifies business expenses for self-employment enterprises at initial eligibility determination, eligibility redetermination and following a reported change in family income.

Itemized Operating Expenses

Document and deduct operating expenses from the self-employment gross income for the same period. Operating expenses may include, but are not limited to:

  • Rent
  • Cost of utilities
  • Gas for automobile
  • Payroll
  • Booth rental

D-109.e: Using a Standard Deduction for Determining Net Income

Boards may implement a procedure to use a standard deduction rather than itemizing self-employment expenses. Such an approach offers a more efficient method for determining self-employment net income. Local procedures may define the amount of the standard deduction and any process to itemize expenses in lieu of using the standard deduction.

Boards must allow parents the option to itemize expenses or not itemize expenses and use the gross income.

Resource: Technical Assistance Bulletin 277: Implementing a Standard Deduction Policy for Determining Self-Employment Net Income

D-109.f: Verifying Self-Employment Work Hours

Examples of acceptable verifiable documentation for self-employed workers include, but are not limited to:

  • Quarterly federal tax returns
  • Signed year-to-date profit and loss statements for each business owned
  • Business ledgers, records, receipts, check receipts, and business statements
  • Customer contracts or work orders
  • Calendar of work appointments and money earned through these appointments

The federal minimum hourly wage for self-employed income is applied to calculate participation hours when the individual cannot provide verifiable documentation of work hours. The formula for determining work hours based on self-employment income and minimum wage follows:

  1. Monthly Net Self-Employment Income / Minimum Wage = Monthly Work Hours
  2. Monthly Work Hours / 4.33 = Average Weekly Work Hours

If a standard deduction is used to determine net income and using the minimum wage calculation results in the average weekly hours being below the Board’s requirement, then the parent must document the weekly work hours.

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D-110: Cash-Paid Earnings

If a family member is an employee paid in cash, an Employment/Income Verification Form must be completed by the employer. If the family member has cash earnings and is not an employee, consider the family member self-employed and subject to the provisions in D-109.

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D-111: Income Changes Reported During the 12-Month Eligibility Period

During the 12-month eligibility period, parents can report changes that Boards must act on, in accordance with §809.73.

Boards must be aware that when a parent reports a change in family size or income that result in a reduced family income, the Board must act upon that information to reduce the parent’s share of cost in accordance with §809.73. The Board must request that the parent provide documentation to determine the new income level and appropriate parent share of cost.

Boards must be aware that parents are not required to report income changes that do not place the family over 85 percent SMI. If a parent reports an increase and is unsure if it places them over 85 percent SMI, the Board may evaluate the new income information, taking into account temporary fluctuations in income in accordance with §809.44.

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Part A - Definitions

Part H - Consumer Education and Child Care Quality Activities

Part J - Appendix