Child Care Licensing Policy Statement
Number: P-ECC-08

Child care and placement licensing regulations all contain provisions that address the financial stability of programs. Programs are expected to maintain accurate financial records and submit annual budgets. New programs are required to submit evidence of sufficient funds for two (in group and school age care) or three (in substitute care) months. Currently operating placement agencies must submit financial documents in accordance with the standards set by the Public Charities Division of the Office of the Attorney General of the Commonwealth. Currently operating residential program must submit a "current financial report, appropriate fiscal portions of contracts, if any, and a statement of the current rate of payment as set by the Commonwealth, if applicable".

Many EEC licensed providers are pre-qualified to contract with EOHHS agencies. The prequalification process includes a thorough annual review of the financial viability of the licensee by qualified professionals at EOHHS agencies.

The prequalification process results in one of five classifications. Prequalification may be unconditional, prequalification with a corrective action plan, conditional, provisional, or rejected. A classification of "unconditional" or "prequalification with corrective action plan" is sufficient evidence of financial viability for EEC purposes. Classifications of conditional, provisional or rejected prequalification indicate financial problems and are not sufficient evidence of financial viability. In certain cases, where very limited state funding is involved, EOHHS may do a "limited prequalification". In these cases a full review has not been conducted, and "limited prequalification" is not sufficient evidence of financial viability for EEC purposes.

EEC licensors will accept completed prequalification certification forms with classifications of "unconditional" or "prequalification with corrective action plan" in lieu of the required financial reports. Such prequalification certifications must be less than one year old. Licensors may also accept prequalification as evidence of tax certification, in lieu of the REAP form. Licensors may request copies of program budgets and evidence of contracts if concerns arise during the licensing study regarding financial issues in the program. Licensors may also, through management staff, request information from EOHHS regarding the current status of a program if financial concerns arise during licensing activities.

Information provided by the Department of Early Education and Care . Created: March 1, 2006; Last reviewed: January 10, 2008.