Bill Summary – FastDemocracy

Fiscal Note
                                       Fiscal Services Division
HF 302 – Child Care Assistance Off-Ramp (LSB1130HV.1)
Staff Contact: Christopher Ubben (515.725.0134) chris.ubben@legis.iowa.gov
Fiscal Note Version – Final Action
Description
House File 302 creates a graduated eligibility phaseout component for the Child Care
Assistance (CCA) Program in the Department of Human Services (DHS).
The Bill would provide that if families were previously eligible for the CCA Program, they would
be eligible for a graduated eligibility phaseout program under the following conditions:
• Their income is above 225.0% of the federal poverty level (FPL) but less than 250.0% FPL
   for basic care.
• Their income is above 225.0% FPL but less than 275.0% FPL for special needs care.
Families in the income ranges specified for service care needs will be responsible for the
following share of the cost of child care based on the cost of care currently reimbursed by the
DHS.
The Graduated Phaseout Program is required to be implemented no later than July 1, 2022.
Background
The table below presents the FPL by family size and calculated percentages of FPL for
FY 2021.
                       Table 2: Federal Poverty Levels (FPL)
            Family Size     100.0%   145.0%   225.0%   250.0%   275.0%
            Family of 2    $ 17,420 $ 25,259 $ 39,195 $ 43,550 $ 47,905
            Family of 3       21,960  31,842   49,410   54,900   60,390
            Family of 4       26,500  38,425   59,625   66,250   72,875
            Family of 5       31,040  45,008   69,840   77,600   85,360
            Family of 6       35,580  51,591   80,055   88,950   97,845
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Iowa’s CCA Program currently has two main components: the CCA Program and the CCA Plus
Program. Eligibility for the CCA Program is limited to families with income no more than 145.0%
FPL and is limited to a 12-month eligibility segment. The CCA Plus Program has a 12-month
eligibility segment and an income limit of more than 145.0% FPL up to 85.0% of the State
median income (approximately $49,800).
Final federal rules relating to the CCA Plus Program require that there be no time limit for
eligibility, only an income limitation. The DHS Notice of Intended Action ARC 4937C brings the
CCA Plus Program into conformance with federal law, covering families with an income not to
exceed 225.0% FPL for an indefinite period of time for basic care and special needs care under
the current copayment structure.
Currently, a copayment for services is required if a family’s income is at or above 100.0% FPL.
The copayment scale starts at 1.0% of family income and increases up to 7.0% of family
income. The DHS utilizes a provider billing portal for the CCA Program for payment of services
and determination of copayment amounts.
Assumptions
• The rulemaking proposed in ARC 4937C has been adopted and filed with an effective date
   of July 1, 2020 (FY 2021).
• A significantly new copayment schedule based on the rate that providers charge cannot be
   implemented until programming changes to the provider billing portal are completed.
• Programming changes will require 2,000 hours of programming time, plus part-time work
   from the DHS Bureau of Project Management. This will push the launch of the Graduated
   Phaseout Program into FY 2022.
• An estimated 120 children will be eligible for the CCA phaseout program in FY 2022, and
   the same number will become eligible each year thereafter.
• The current average cost of care for a child in the CCA Plus Program is $4,368 per year.
• The exact point where eligible families will fall on the cost share table is unknown. The cost
   of care will also be dependent on the reimbursement rate of the child care provider type
   selected by the family. The estimate assumes that families will be responsible for 40.0% of
   the current average cost per child.
Fiscal Impact
The DHS programming and project management costs for the provider billing portal in FY 2021
are estimated at $312,000. The following table outlines program cost increases by fiscal year
after the programming changes are completed in FY 2021.
                            Table 3: Program Cost by Year
                                                          Graduated
                                      IT Programming       Phaseout
                          FY 2021     $        312,000    $         0
                          FY 2022                    0        201,000
                          FY 2023                    0        572,000
                          FY 2024                    0        943,000
                          FY 2025                    0      1,314,000
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The current projected balance for the Federal Child Care Development Fund is $47.8 million for
the end of FY 2021. Based on current DHS estimated revenues and expenditures for child
care, the Department anticipates a sufficient projected balance of federal funds to be carried
forward at the end of FY 2021 and FY 2022 so as not to require an increase from the General
Fund appropriation in FY 2022 or FY 2023 for the rate increase proposed under the Bill.
Current estimates indicate that federal funds would be fully expended in FY 2024, and an
appropriation would be required to fully fund the program beginning in FY 2024.
Sources
Department of Human Services
U.S. Department of Health and Human Services
LSA analysis and calculations
                                                                        /s/ Holly M. Lyons
                                                                          June 28, 2021
Doc ID 1221613
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in
developing this fiscal note is available from the Fiscal Services Division of the Legislative Services
Agency upon request.
                                            www.legis.iowa.gov
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