8-Attachment 7 Child Care Start-Up FY25 Policy 041025 (2).docx

Child Care Expansion Initiative Program for New Child Care Providers

Policy Guidance

Child Care & Early Learning Division

Contents

GENERAL

What is the Child Care Expansion Initiative Program (CCEI Program)?

The CCEI Program is a funding opportunity offered by the Texas Workforce Commission (TWC) for new child care providers. The purpose of the program is to increase the supply of high-quality child care across Texas. TWC is selecting an entity to serve as the CCEI Program Administrator, and this entity will oversee the CCEI Program.

The CCEI Program supports new licensed child care centers. The program includes two separate awards (the first award is the Start-Up Award and the second award is the Initial Operating Award) to offset costs that new child care centers incur during launch and the first few months of operation.

Who is eligible to apply for the CCEI Program?

Child care centers are eligible to apply for funding to open a new location. Child care centers are eligible if they:

· Plan to open a new licensed child care center in Texas that:

· is located in a child care desert (as determined by TWC) and/or

· provides employer-supported site-based child care (in partnership with an employer or consortium of employers).

· Have not been permitted by Texas Health and Human Services Commission’s Child Care Regulation (HHSC CCR) division for the new location.

· Have evidence of a secured location (such as a fully executed lease or mortgage documentation for the location of the center) prior to receiving the Start-Up Award.

· Expect to be permitted within seven (7) months of receiving the Start-Up Award. Limited exceptions may be approved by TWC if the child care provider applicant can demonstrate there were factors outside of their control that impacted their ability to receive their permit within seven (7) months. Exceptions will only be considered if a child care provider applicant can demonstrate that they applied for a permit at least sixty days prior to their deadline and did not delay in taking necessary steps to become permitted. For example, a delay in receiving a local occupancy or fire permit will not be considered as outside the provider’s control if that permit was not submitted in a timely manner.

· Are not on any type of adverse action or corrective action/probation with HHSC CCR at the time of CCEI Program application or award. This includes other locations owned by the individual or entity applying for the CCEL Program award.

· Are in good standing with TWC and the Texas Comptroller of Public Accounts regarding debarment, unpaid wage claims, unpaid taxes, equal opportunity violations, or findings of fraud. This includes other locations owned by the individual or entity applying for the CCEL Program award.

· Agree in writing to the following:

· Incur expenditures after full agreement execution;

· Open the new facility and remain open for a minimum of twelve (12) months;

· Expend all CCEI Program funds per the deadline;

· Participate in child care services (CCS) once licensed;

· Provide documentation of registration, or complete registration once licensed, on the TECPDS Texas Workforce Registry;

· Participate in evaluation efforts to assess the effectiveness of the CCEI Program if TWC decides to conduct or commission a program evaluation;

· Keep a record-keeping system to account for use of all award amounts;

· Report actual expenditures to the CCEI Program Administrator, including receipts and payment documentation, to clearly demonstrate how funding was used based on a reporting schedule and the template specified by the CCEI Program Administrator;

· Fully comply with the process for all providers selected for monitoring and the reporting process required for all providers receiving awards; failure or refusal to comply will result in providers repaying the CCEI Program Administrator the funds for which proper documentation for expenditures has not been submitted; and

· Return funds to the CCEI Program Administrator if a provider has incurred any unallowable expenses under the CCEI Program awards.

What would disqualify a child care provider from being eligible for the CCEI Program?

Child care provider applicants will be disqualified from receiving a Start-Up Award if they fail to secure a location for the new center.

Child care provider applicants will be disqualified from receiving the Initial Operating Award if they fail to attain a permit issued by HHSC CCR within seven months of receiving the Initial Operating Award.

Are home-based child care providers eligible for funding through the CCEI Program?

No. Home-based child care providers may be eligible for start-up funding through the statewide Family Child Care Network (FCCN). TWC awarded the FCCN grant in Spring 2025. Comment by Whitney,Colleen E: Has this launched? Suggest updating this as we are now in summer. Comment by Lin,Fu-An: @Curry-Ikner,Dallas @Oster,Katie Please share with Cathi Arwood so she can review the edits to this document. Comment by Arwood,Catherine: Reviewed.

A child care provider applicant owned a child care business but had to close it. Is the provider eligible to apply for the CCEI Program to open a new child care center?

An entity that owned a child care operation and closed may apply for the CCEI Program to reopen at the same location if they were closed for at least six (6) months before submitting the CCEI Program application.

What is a child care desert?

A child care desert is defined in Texas Labor Code §302.0461(b)(2)(A)(i) as an area where the number of children younger than six years of age who have working parents is at least three times greater than the capacity of licensed child care providers in the area. A list of pre-determined zip codes that are considered child care deserts can be viewed here.

What does it mean to be in a partnership with an employer or consortium or employers?

Child care provider applicants for CCEI Program awards planning to open in partnership with an employer (or consortium of employers) means a single employer or the lead entity of a consortium of employers offering employer-supported site-based child care for employees with children and working within the State of Texas.

What is employer-supported site-based child care?

Employer-supported site based child care means child care services available to an employee that are (1) either available on the workplace premises or nearby and (2) supported by the employer’s clear financial commitment for the eligible child care provider. Comment by Arwood,Catherine: Updated 8.1.25

The child care services may be provided by the employer or a third-party child care provider partnering with the employer. Typically, the child care services are offered by a third-party provider; the employer is an employer partner. If an employer chooses to be the operator and seeks licensure to provide child care services, the employer may be considered as both an eligible child care provider and an employer partner.

Does the funding for the CCEI Program need to be paid back?

CCEI Award funding is not a loan and does not need to be repaid if award recipients comply with the terms and conditions of receiving funding as specified in the CCEI Program award agreement(s). Funding not spent, including what is not spent on documented allowable expenses, must be returned by the CCEI Program award recipient. For example, if an award recipient uses funding to purchase a vehicle, which is an unallowable expense, the recipient must repay those funds. Additionally, an award recipient that does not remain open for a minimum of twelve (12) months may be required to return funds. For example, an award recipient that is unable to reach their desired enrollment level and decides to close after six (6) months would be required to repay their Initial Operating Award. However, an award recipient that is forced to close due to damage resulting from a natural disaster would not be required to repay funds that were used for allowable expenses. Comment by Oster,Katie: @Flood,Gavra J Language was added by Cathi A. Do you have any comments or concerns? Comment by Flood,Gavra J: This language is acceptable.

Note: This is not intended to be a comprehensive list of example scenarios in which funding must be repaid by an award recipient.

Can a child care provider apply for this funding to open a new classroom or increase capacity at an existing child care center?

No. The CCEI Program is funding for new eligible child care centers that open in a child care desert as defined above or provide employer-supported site-based child care.

If a child care provider applicant purchased a child care business that closed, is it eligible to apply for the CCEI Program?

A new entity that opens a child care business at a location previously owned by a different entity may apply for the CCEI Program if the new entity does not include the same owners or corporate officers as the previous ones (verified by state data) and the location has been closed for at least three (3) months prior to new owner securing the location.

What if a child care provider applicant’s situation changes during the application process?

Eligibility is confirmed before any payments are made. Award recipients are required to comply with monitoring and reporting requirements or risk recoupment of funds. If a provider’s situation changes and may no longer be eligible for funding, they should reach out to the CCEI Program Administrator as soon as possible, so the case can be reviewed. If an award recipient received funds and is no longer considered eligible, the award recipient may be required to return the award funds.

Will child care providers need to pay taxes on award funds?

Yes. All funding received from the CCEI Program is considered income. Please consult with a tax professional on any tax-related questions.

APPLICATION

What is the CCEI Program application process?

The CCEI Program Administrator will issue separate applications for two types of programs: 1) new providers opening in a child care desert, and 2) new providers opening to support employer-supported site-based child care.

Each child care provider will submit one application for their new child care program and may receive two awards of funding: the Start-Up Award and the Initial Operating Award. Each of the awards has a defined timeline.

The application process is divided into two timelines – one for the Start-Up Award and one for the Initial Operating Award. All child care provider applicants begin with the Start-Up Award timeline. The application submitted in the Start-Up Award timeline below applies to both the Start-Up Award and the Initial Operating Award.

· Start-Up Award Timeline (first award)

· Prepare for Application

· Explore available resources

· Begin creating business plan

· Submit application

· Complete one application for both awards

· Provide evidence of a secured location

· Finalize business plan

· Sign Start-Up Award Agreement (If confirmed eligible. Failure to comply can result in recoupment of funds.)

· Receive Start-Up Award

· Begin keeping records of all funds spent for upcoming expenditure reports/potential monitoring

· Support from CCEI Program Administrator for award recipients starts after receipt of the Start-Up Award and continues through the end of the CCEI Program

· Expenditure reporting and monitoring begin and continue through the end of the CCEI Program

· Initial Operating Award Timeline (second award)

· Apply for HHSC CCR permit

· To be eligible for the Initial Operating Award, a child care provider must be permitted within seven (7) months of receiving the Start-Up Award (limited exceptions may be made by TWC)

· If not permitted within seven (7) months, a child care provider can reapply when permitted, pending funding availability Comment by Lin,Fu-An: We need to keep this because there may not be funding when they reapply.

· Sign Initial Operating Award Agreement (if confirmed eligible. Failure to comply can result in recoupment of funds.)

· Receive Initial Operating Award

· Continue recordkeeping of all funds for expenditure reporting/potential monitoring

· All CCEI Program funds must be expended by Year 2, Quarter 3 of the program. The CCEI Program Administrator will publish the deadline once dates are determined.

The two images below show the Start-Up Award and Initial Operating Award timelines described above.

A

How can child care provider applicants prepare for the application process?

All applications require a business plan for the new child care center. The CCEI Program Administrator will score each application, including the quality and feasibility of their submitted business plan. The CCEI Program Administrator will competitively award funds.

Child care providers should consider the following when preparing to submit a business plan:

· Business and value proposition: Why will families in the area choose this specific child care center to care for their children?

· Market and location: Is there a need for more child care services in the community? Is the new center located in a child care desert or is my center employer-supported site-based? Is a location secured for the new center?

· Step-by-step timeline or activity plan for opening the new center.

· Operations, personnel, and financials: What is the plan for hiring and training the employees needed to staff the new child care center? What is the budget and projected cash flow? What are the findings from the cost of care analysis?

Are there resources available to prepare for the application and business plan?

There is a guide to help child care provider applicants develop a business plan at https://www.sba.gov/business-guide/plan-your-business/write-your-business-plan.

Additional resources are available at https://www.twc.texas.gov/programs/child-care/free-child-care-business-resources including a Guide for New Child Care Businesses available in both English and Spanish.

The CCEI Program Administrator, once procured by TWC, will prepare a program guide, including resources and instructional videos for applicants to refer to during the application process.

How do child care providers apply?

The application is completed online. Each award (Start-Up Award and Initial Operating Award) and type (child care desert and/or employer-supported site-based child care) has a specified window to apply.

What does the application involve?

The application includes but is not limited to general information about the applicant individual, business, and a business plan.

What is the CCEI Program timeline?

· CCEI Program Administrator Ramp Up (first 120 days)

· Material development (60 days)

· Outreach activities and TWC approval of security for technology (90 days)

· Launch application process, business plan template (120 days)

· Child Care Desert (months 5-15)

· Application period (months 5-6)

· Application review/Start-Up Awards (months 7-8)

· Initial Operating Awards issued (months 10-15)

· Employer-Supported Site-Based Child Care (months 7-17)

· Application period (months 7-8)

· Application review/Start-Up Awards (months 9-10)

· Initial Operating Awards issued (months 12-17)

· Award Recipient Support (months 7-24)

· Deadline for awarded new child care centers to expend all funds (last day of month 21; CCEI Program Administrator may establish specific deadline for expending funds)

· Monitoring conducted by CCEI Program Administrator (months 10-24)

The visual below shows the timeline described above.

What happens after the application is submitted?

The CCEI Program Administrator reviews and confirms eligibility to apply. Once eligibility is confirmed, the business plan is reviewed for completion, thoroughness, and risk against scoring criteria.

Approved business plans are reviewed for signs of potential risk. Approved applications will move forward to funding.

How will applications be scored?

This application is highly competitive due to the extent of interest in this program. Each application is scored by the CCEI Program Administrator through an objective review process. Applications are processed as quickly as possible, following the application deadline.

How are business plans scored?

A business plan outlines the goals, services, target market, and financial projections of a business. Business plans are scored in categories that include, but are not limited to the following:

· Description of business

· Market analysis

· Organizational and operational structure

· Project budget

· Cashflow analysis

· Marketing strategies

· Implementation timeline

FUNDING

What are the awards available through the CCEI Program?

The two available awards are a Start-Up Award (first award) and an Initial Operating Award (second award). One application serves as the application for both awards.

· Start-Up Award

· For child care providers opening a new child care center that do not have a permit at the time of application.

· This is the first award, issued once a business plan is approved, and is designed to help with costs associated with launching the program.

· Each award recipient will receive no more than one Start-Up Award per new child care center location.

· An award recipient will not receive a Start-Up award if it failed to provide proper documentation for a secured location.

· Initial Operating Award

· For award recipients that receive their permit from HHSC CCR within seven (7) months of the Start-Up Award and continue to meet eligibility requirements.

· This award assists with expenses incurred during initial operations.

· Each award recipient will receive no more than one Initial Operating Award per location.

· A child care provider applicant will not receive an Initial Operating Award if it fails to attain a permit from HHSC CCR by the established deadline. Limited exceptions may be approved by TWC if the child care program can demonstrate there were factors outside of their control that impacted their ability to receive their permit within seven (7) months. Exceptions will only be considered if a child care program can demonstrate that it was actively pursuing a permit and did not delay in taking necessary steps to become permitted.

How much money can award recipients expect to receive?

The Texas Workforce Commission approved a methodology for the CCEI Program based on the increase in capacity (addition of new slots) of the provider. Comment by Whitney,Colleen E: This link bled. Suggest updating. Comment by Arwood,Catherine: updated Funding is calculated differently for the Start-Up Award and Initial Operating Award and will be based on capacity. Capacity is defined in the Texas Administrative Code as “the maximum number of children that a permit holder may care for at one time” (also see Minimum Standards for licensed providers from the Texas HHSC).

Start-Up Award

Initial Operating Award Calculation of the Initial Operating Award amount: Number of new slots x Market Rate Survey 75th percentile average daily market rate x 3 months (63 days). The initial cohorts will be based on the 2025 Texas Market Rate Survey. (Market Rate Survey information can be accessed via this website, https://txicfw.socialwork.utexas.edu/research/project/child-care-market-rate-survey/.) Comment by Lin,Fu-An: 5/15/25: Parenthetical note added based on comment received on RFP draft. Comment by Arwood,Catherine: Updated language Comment by Arwood,Catherine: @Whitney,Colleen E What can award recipients spend CCEI Program funds on?

Allowable costs vary from business to business, depending on circumstances, but generally funding can be used toward:

· Regular monthly rent or mortgage payments and utility bills of your secured location (down payments, security deposits, and other one-time payments associated with securing a location are not permitted);

· Indoor, outdoor, and office furnishings, supplies, and equipment (No purchase of equipment based on a per-unit cost of $10,000 or more in Start-Up Awards. Equipment purchases for Initial Operating Award must receive prior approval);

· Education, classroom, kitchen, and safety materials or supplies;

· Permitting fees and required background checks, for example, for CCR or as related to inspections;

· Staffing costs to support operations;

· Outreach costs associated with recruitment of families and staff; and

· Minor renovations.

Unallowable costs include but are not limited to the following:

• Goods or services for personal use;

• Construction of new facilities and major renovations;

• Down payments, security deposits, and other one-time payments associated with securing a location by the child care center;

• Purchase of real properties, including the purchase or improvement of land;

• Purchase or any cost related to vehicles; and

• Expenditures incurred before full agreement execution between the eligible child care provider and the CCEI Program Administrator, except for (1) background checks required for the submission of the permit application to HHSC CCR and (2) the amount paid for the permitting fees.

The CCEI Program Administrator will work closely with TWC to make additional determination related to allowability inquiries received from award recipients, and TWC will update this Policy Guidance document as needed.

Why is construction or major renovation not covered under the CCEI Program?

The federal source of the funding for this program prohibits using this award for construction or major renovations, or the purchase or improvement of land.

Major renovation is defined as: any renovation that has a cost equal to or exceeding $350,000 for child care centers, which amount shall be adjusted annually for inflation and published on the Office of Child Care website. If renovation costs exceeds this threshold and does not include: (1) Structural changes to the foundation, roof, floor, exterior or load-bearing walls of a facility, or the extension of a facility to increase its floor area; or (2) Extensive alteration of a facility such as to significantly change its function and purpose for direct child care services, even if such renovation does not include any structural change; and improve the health, safety, and/or quality of child care, then it shall not be considered major renovation.

If a child care business is a part of a larger entity, what is the amount of expenses that will be covered by the CCEI Program?

Programs that are a part of a larger business/entity, such as a child care business operating out of a church basement, may need to prorate their costs to determine what portion of the larger expenses can be allocated specifically to their child care business.

DOCUMENTING EXPENSES, REPORTING, AND MONITORING

Do award recipients need to keep track of how their CCEI Awards are spent?

Yes. To participate in the CCEI Program, all child care providers that receive funding must account for the use of their award amount during a reporting and/or monitoring process conducted by the CCEI Program Administrator. All award recipients should have a solid record-keeping system in place.

All award recipients should keep documentation, including receipts and invoices showing the date the expense was incurred and that the award funds were used for allowable purposes in case they are selected for monitoring by or receive an inquiry from the CCEI Program Administrator regarding expenses.

Do award recipients need to submit CCEI Award spending documentation?

All award recipients are required to participate in a reporting process to demonstrate how funding was used. In addition, the CCEI Program Administrator will select certain award recipients for monitoring purposes. Providers must account for all the use of awarded funds. Complying with monitoring and reporting is required for all providers receiving funding. Failure to comply can result in recoupment of funds.

What is the reporting process?

All award recipients are required to submit interim and final reports detailing how the CCEI Program award funds were used. Award recipients may be asked to provide documentation such as receipts and payment documentation as a part of the reporting process.

What is the monitoring process?

The CCEI Program Administrator will assemble a monitoring program to prevent and address any misuse of funds or fraud by any award recipient.

At least fifty percent (50%) of award recipients will be selected for monitoring. When an award recipient is selected, the CCEI Program Administrator will ask for documentation such as receipts and invoices demonstrating that the award was used for allowable purposes.

Any award recipient who is unresponsive or fails to provide documentation of allowable expenses will be disqualified from receiving future funding and may be required to repay funding that was not expended on allowable expenses.

When do child care providers submit the interim report?

After funding is disbursed, award recipients will receive communication informing them of the interim report date. Award recipients must submit the interim report by the due date.

Some award recipients may own multiple program sites and receive an award for each site. What will the reporting process look like?

Reporting must be completed for each award.

APPENDIX – TWC RFP 3202500192 PROGRAM ADMINISTRATION REQUIREMENTS

INSERT 2.2 FROM RFP HERE WHEN FINAL Comment by Oster,Katie: Add 2.2 language when final.

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