Michigan Office of Administrative Hearings and Rules

Administrative Rules Division (ARD)

MOAHR-Rules@michigan.gov

REGULATORY IMPACT STATEMENT

and COST-BENEFIT ANALYSIS (RIS)

AGENCY INFORMATION:

Department name:

Lifelong Education, Advancement, and Potential

Bureau name:

Office of Early Childhood Education

Name of person filling out RIS:

Chanti Cole

Phone number of person filling out RIS:

313-820-7634

Email of person filling out RIS:

ColeC5@michigan.gov

RULE SET INFORMATION:

ARD assigned rule set number:

2024-12 LP

Title of proposed rule set:

Licensing Rules for Family and Group Child Care Homes

COMPARISON OF RULE(S) TO FEDERAL/STATE/ASSOCIATION STANDARDS

1. Compare the proposed rules to parallel federal rules or standards set by a state or national licensing agency

or accreditation association, if any exist.

There are no parallel federal rules or standards set by a state or national licensing agency.

A. Are these rules required by state law or federal mandate?

These rules are required by state mandate, MCL 722.112 and MCL 722.113e of the Child Care Organizations

(excerpt), 1973 PA 116. In addition, these rules are required by the Child Care and Development Fund, 45

CFR Part 98 and Procedure for Hearings for the Child Care Development Fund – 45 CR Part 99.

B. If these rules exceed a federal standard, please identify the federal standard or citation, describe why it

is necessary that the proposed rules exceed the federal standard or law, and specify the costs and

benefits arising out of the deviation.

These rules do not exceed a federal standard.

2. Compare the proposed rules to standards in similarly situated states, based on geographic location,

topography, natural resources, commonalities, or economic similarities.

The development of the proposed rules includes researching standards for rules in other similarly situated states,

specifically, Illinois, Indiana, Minnesota, Ohio, Pennsylvania, and Wisconsin. The standards that were researched

included staffing requirements, training requirements, adult to child ratios, and discipline.

Staffing Requirements: In reference to staffing requirements, the proposed rules for Michigan appear to be somewhat

similar to those of Illinois, Ohio, Wisconsin, and Pennsylvania. The staffing requirements of Indiana and Minnesota

are stricter than the proposed rules.

Training Requirements: The training requirements in the proposed rules appear to be similar to those of Indiana,

Pennsylvania, and Wisconsin. Illinois and Minnesota training requirements are stricter than Michigan’s proposed

rules and the proposed rules exceed the training requirements for Ohio.

MCL 24.245(3)

RIS-Page 2

Adult to Child Ratios: The adult to child ratios in the proposed rules appear to be similar to those of Illinois, Ohio, and

Pennsylvania. The proposed rules are stricter than Indiana, Minnesota, and Wisconsin.

Discipline: The proposed rules for discipline appear to be somewhat similar to those of Illinois, Minnesota, Ohio and

Wisconsin. Michigan’s proposed rules seem stricter than those of Indiana and Pennsylvania.

A. If the rules exceed standards in those states, please explain why and specify the costs and benefits

arising out of the deviation.

The proposed rules exceed standards of other states in the area of training requirement, adult to child ratios,

and discipline. The training requirements in the proposed rules require more ongoing professional

development. The training hours might create an added cost to the licensee for training; however, it also

provides an opportunity for continued professional development and growth of the staff as well as support and

enhance health and safety of children. Regarding the adult to child ratios, the proposed rules have lower ratios,

thus requiring less children for each staff member. This supports the supervision of children, providing more

assurance for their health and safety. The discipline requirements in the proposed rules provide more methods

of discipline. This supports positive methods of discipline used with children to guide their behavior.

3. Identify any laws, rules, and other legal requirements that may duplicate, overlap, or conflict with the

proposed rules.

To the best of the bureau’s knowledge, the proposed rules do not duplicate, overlap, or conflict with any laws, rules, or

other legal requirements.

A. Explain how the rules have been coordinated, to the extent practicable, with other federal, state, and

local laws applicable to the same activity or subject matter. This section should include a discussion of

the efforts undertaken by the agency to avoid or minimize duplication.

The process of revising the proposed rules involved gathering extensive feedback from many stakeholder

groups in effort to avoid or minimize duplication. Feedback was received from various agency representatives

including, Licensing and Regulatory Affairs Bureau of Fire Services, Michigan Department of Health and Human

Services, and Michigan Department of Lifelong Education, Advancement, and Potential. Substantive portions

of the rules are federally required to access Child Development and Care funding. These rules have been

aligned with those requirements. There is no federal regulatory agency for child care home licensing, so beyond

alignment there is no overlap of regulatory functions.

PURPOSE AND OBJECTIVES OF THE RULE(S)

4. Identify the behavior and frequency of behavior that the proposed rules are designed to alter.

The licensing rules for child care homes were evaluated and revised in 2019, effective December 13, 2019. The

current rule set is complex due to federal and state requirements. Licensees and applicants struggle with the licensing

requirements, which leads to difficulty in recruiting and retaining staff, understanding the rules themselves, and

meeting the cost to comply with the rules. Also, families have difficulty finding affordable child care, which negatively

affects Michigan's economy. The proposed rule revisions are necessary to address the challenges faced by licensees,

clarify requirements of the federal Child Care and Development Block Grant, and provide for the health, welfare and

safety of children in affordable, quality licensed child care settings.

A. Estimate the change in the frequency of the targeted behavior expected from the proposed rules.

The proposed rule revision would assist in licensees’ finding and retaining of qualified staff, understanding the

requirements of the rule, support growth of home providers, streamline processes, and reorganize sections to

improve the public’s understanding of the rules. The proposed rules will also address changes required by the

federal Office of Child Care to comply with Child Care and Development Fund (CCDF) requirements.

B. Describe the difference between current behavior/practice and desired behavior/practice.

The current rules are cumbersome to comprehend and are difficult to implement. The proposed rules would

provide organization and clarification of requirements.

C. What is the desired outcome?

The desired outcome is to support growth of the number of licensed child care homes, assist licensees’ and

parents’ understanding of the rules, comply with federal requirements, and provide for the health and safety of

children in quality child care settings.

MCL 24.245(3)

RIS-Page 3

5. Identify the harm resulting from the behavior that the proposed rules are designed to alter and the likelihood

that the harm will occur in the absence of the rule.

The proposed rules for licensed child care homes are essential for increasing compliance with federal requirements

and state regulations, expanding access to quality licensed child care facilities, and protecting the health and safety of

children. In the absence of these rules, it is likely that the barriers experienced by licensed providers and families will

continue. Licensees will continue to struggle to find and retain quality staff. Staff will continue to lack an

understanding of how to properly implement rules and ensure child safety. Families will continue to experience

difficulty finding affordable, quality child care in their area.

A. What is the rationale for changing the rules instead of leaving them as currently written?

The licensing rules for child care homes were evaluated and revised in 2019, effective December 13, 2019. The

rule set is complex due to federal and state requirements. Licensees and applicants struggle with the licensing

requirements, which leads to difficulty in recruiting and retaining staff, understanding the rules themselves, and

meeting the cost to comply with the rules. Also, families have difficulty finding affordable child care, which

negatively affects Michigan's economy.

6. Describe how the proposed rules protect the health, safety, and welfare of Michigan citizens while promoting

a regulatory environment in Michigan that is the least burdensome alternative for those required to comply.

The proposed rule revisions were developed by the bureau in collaboration with stakeholders representing each type

of child care organization, parents of children in care, Licensing and Regulatory Affairs Bureau of Fire Services,

Michigan Department of Health and Human Services, Michigan Department of Education, Michigan Department of

Lifelong Education, Advancement, and Potential, and community partners. The proposed rules promote the health,

safety, and welfare of children by providing minimum standards and regulations for what the child care homes must

do to keep children safe. Some examples of safety standards/regulations in the proposed rules are: mandatory food

allergy plan; minimum indoor and outdoor space requirements, and minimum requirements for staffing, including

background check and training requirements. The proposed rules accomplish this in the least burdensome way by

focusing on essential health and safety protections and aligning with existing federal requirements to reduce

duplication.

7. Describe any rules in the affected rule set that are obsolete or unnecessary and can be rescinded.

Licensing Rule R400.1926 was rescinded as it was found to be confusing and difficult for providers to implement.

Requirements from that rule were added to licensing rules R400.1903(1)(o) and R400.1913(9) in an effort to make it

easier to for providers to understand and implement. Other rules that are rescinded in the rule set are renumbered.

FISCAL IMPACT ON THE AGENCY

Fiscal impact is an increase or decrease in expenditures from the current level of expenditures, i.e., hiring

additional staff, higher contract costs, programming costs, changes in reimbursements rates, etc. over and

above what is currently expended for that function. It does not include more intangible costs for benefits, such

as opportunity costs, the value of time saved or lost, etc., unless those issues result in a measurable impact on

expenditures.

8. Please provide the fiscal impact on the agency (an estimate of the cost of rule imposition or potential savings

for the agency promulgating the rule).

The proposed rules are not anticipated to have a fiscal impact on the agency.

9. Describe whether or not an agency appropriation has been made or a funding source provided for any

expenditures associated with the proposed rules.

There have not been any appropriations made, or a funding source provided for any expenditures associated with the

proposed rules.

10. Describe how the proposed rules are necessary and suitable to accomplish their purpose, in relationship to

the burden(s) the rules place on individuals. Burdens may include fiscal or administrative burdens, or

duplicative acts.

The proposed rule revisions impose an administrative burden to providers and parents with the new requirement to

develop and implement a food allergy plan. The providers are required to develop a written plan for the prevention of

and response to emergencies due to food and allergic reactions. The new rule is necessary to promote the health,

safety, and well-being of children. This addition of this rule is also necessary to maintain compliance with federal

requirements.

MCL 24.245(3)

RIS-Page 4

A. Despite the identified burden(s), identify how the requirements in the rules are still needed and

reasonable compared to the burdens.

The proposed rule revisions are needed to promote the health, safety and well-being of children as well as

maintain compliance with federal and state requirements. The burdens imposed by the proposed rules are

narrowly tailored to actions necessary to provide the health protections they seek to ensure.

IMPACT ON OTHER STATE OR LOCAL GOVERNMENTAL UNITS

11. Estimate any increase or decrease in revenues to other state or local governmental units (i.e., cities,

counties, school districts) as a result of the rule. Estimate the cost increases or reductions for other state or

local governmental units (i.e., cities, counties, school districts) as a result of the rule. Include the cost of

equipment, supplies, labor, and increased administrative costs in both the initial imposition of the rule and

any ongoing monitoring.

The proposed rules do not directly increase or reduce costs for state and local governmental units; however, to the

extent that new providers become licensed as a result of the changes, local health departments may see increased

requests for environmental health inspections which may or may not be fee funded.

12. Discuss any program, service, duty, or responsibility imposed upon any city, county, town, village, or school

district by the rules.

There would be no program, service, duty, or responsibility imposed on any city, county, town, village, or school

district by the proposed rules.

A. Describe any actions that governmental units must take to be in compliance with the rules. This section

should include items such as record keeping and reporting requirements or changing operational

practices.

There are no actions governmental units must take to be in compliance with the rules.

13. Describe whether or not an appropriation to state or local governmental units has been made or a funding

source provided for any additional expenditures associated with the proposed rules.

There are no additional expenditures associated with the rules; therefore, no appropriations to state or local

government were made.

RURAL IMPACT

14. In general, what impact will the rules have on rural areas?

It is anticipated that with the revisions to ratio requirements for group homes requirements, the rules will impact rural

areas positively through an increase in available child care openings.

A. Describe the types of public or private interests in rural areas that will be affected by the rules.

The revisions to the rules should help increase child care options for families, including those in rural areas.

Changes to the rules decreased the infant/toddler maximum, which opens up more spaces for infant and toddler

care. Additional changes to ratios allow for before and after school care, which provides more spaces for

additional school-age children.

ENVIRONMENTAL IMPACT

15. Do the proposed rules have any impact on the environment? If yes, please explain.

The proposed rules do not have an impact on the environment.

SMALL BUSINESS IMPACT STATEMENT

16. Describe whether and how the agency considered exempting small businesses from the proposed rules.

MCL 24.245(3)

RIS-Page 5

The bureau did not consider exempting small businesses from the proposed rules as statute does not allow for such

exemptions. Many child care homes are small businesses, and the bureau did include representatives from child care

homes in the development of the proposed rules.

17. If small businesses are not exempt, describe (a) the manner in which the agency reduced the economic

impact of the proposed rules on small businesses, including a detailed recitation of the efforts of the agency

to comply with the mandate to reduce the disproportionate impact of the rules upon small businesses as

described below (in accordance with MCL 24.240(1)(a-d)), or (b) the reasons such a reduction was not lawful

or feasible.

The proposed rule revisions would not have a disproportionate impact on small businesses. All licensed child care

home providers must comply with the same rules now, and the proposed rule revisions will also apply to all.

A. Identify and estimate the number of small businesses affected by the proposed rules and the probable

effect on small businesses.

There are approximately 3,291 licensed child care homes in Michigan, many of which could be considered a

small business. The proposed rules should positively impact the providers by supporting these small business

providers by allowing them to increase their child care spaces through the changes in the ratios for

infant/toddlers and school-age children. This supports business growth, sustainability, and expansion of access

to care.

B. Describe how the agency established differing compliance or reporting requirements or timetables for

small businesses under the rules after projecting the required reporting, record-keeping, and other

administrative costs.

The bureau did not establish differing compliance requirements because many child care homes could be

considered small businesses. The bureau included representatives from these businesses in the development

of these proposed rule revisions.

C. Describe how the agency consolidated or simplified the compliance and reporting requirements for

small businesses and identify the skills necessary to comply with the reporting requirements.

The bureau did not consolidate or simplify the compliance and reporting requirements for small businesses, per

se, because many child care homes are small businesses. However, the department tried to streamline these

rules to the extent possible within the parameters of the statute while ensuring the health and safety of children.

D. Describe how the agency established performance standards to replace design or operation standards

required by the proposed rules.

The proposed rule revisions would update performance standards for the design and operation of licensed child

care homes to comply with current law and best practices.

18. Identify any disproportionate impact the proposed rules may have on small businesses because of their size

or geographic location.

The proposed rule revisions would not have any disproportionate impact on small businesses due to their size or

geographic location.

19. Identify the nature of any report and the estimated cost of its preparation by small businesses required to

comply with the proposed rules.

The proposed rule revisions would not impose any more cost to small business owners than they have with the

current rules. Compliance with the proposed rule revisions may indirectly reduce overall costs for these businesses

because they would reduce the risk of harm to children in their care. The bureau is not aware of any reports required

by small businesses as a result of these rules.

20. Analyze the costs of compliance for all small businesses affected by the proposed rules, including costs of

equipment, supplies, labor, and increased administrative costs.

The proposed rule revisions would not impose any new costs on small businesses.

21. Identify the nature and estimated cost of any legal, consulting, or accounting services that small businesses

would incur in complying with the proposed rules.

Small businesses would not incur any new costs for legal, consulting, or accounting services to comply with the

proposed rule revisions.

22. Estimate the ability of small businesses to absorb the costs without suffering economic harm and without

adversely affecting competition in the marketplace.

All licensed child care homes are subject to the current rules. The proposed rule revisions would not impose any

additional costs.

MCL 24.245(3)

RIS-Page 6

23. Estimate the cost, if any, to the agency of administering or enforcing a rule that exempts or sets lesser

standards for compliance by small businesses.

The Child Care Organizations Act does not permit lesser standards of compliance. However, introducing revised rules

would still necessitate additional training for consultants to ensure consistent and accurate enforcement, leading to

increased operational costs. Additionally, any modifications to the rules would require adjustments to the licensing

system to accommodate these changes and streamline historical information, further increasing costs related to

design, implementation, and training.

24. Identify the impact on the public interest of exempting or setting lesser standards of compliance for small

businesses.

Setting lesser standards for licensed child care homes could jeopardize the health and safety of children in care.

25. Describe whether and how the agency has involved small businesses in the development of the proposed

rules.

Licensed child care homes, many of whom are small business owners, were included in the development of the

proposed rule revisions.

A. If small businesses were involved in the development of the rules, please identify the business(es).

The bureau completed extensive outreach to licensed child care home providers when developing the proposed

rules. Many small businesses were actively involved during the stakeholder outreach when the bureau

gathered feedback about the current rule set. Small businesses were also a part of the ad hoc committee. The

committee conducted a thorough review of the proposed rule set, held two public hearings to gather further

input, and developed final recommendations to the bureau based on this comprehensive review.

The following small businesses served on the ad hoc committee: Abundance of Care, Tams Sunshine House,

Healthy Start Child Care, Maria and Eric Blair, Jasmine Burrell, Sunshine Family Childcare, Kelli Bowling-Miller,

Lettes daycare, Babies & Beyond, Karyn Mericle, and Felicia Davis. Other small businesses provided

engagement through stakeholder engagement and the ad hoc committee public hearings.

COST-BENEFIT ANALYSIS OF RULES (INDEPENDENT OF STATUTORY IMPACT)

26. Estimate the actual statewide compliance costs of the rule amendments on businesses or groups.

The statewide compliance cost of the proposed rules is not anticipated to be substantially different than the

compliance cost of the current licensing rules. Some recordkeeping obligations are introduced through the food

allergy plan that are anticipated to have negligible impacts overall.

A. Identify the businesses or groups who will be directly affected by, bear the cost of, or directly benefit

from the proposed rules.

Businesses directly affected by the proposed rules are licensed child care homes. Parents using the home

child care business will be both directly and indirectly affected. Home providers may bear minimal costs related

to training or compliance with updated requirements; however, they will benefit from better clarity on

requirements that support compliance, enhance quality, and promote safe environments for children. Providers

and families will also benefit through increased access to care, as the proposed changes in ratios for

infant/toddler and school-age children allow more spaces for care to be offered.

B. What additional costs will be imposed on businesses and other groups as a result of these proposed

rules (i.e., new equipment, supplies, labor, accounting, or recordkeeping)? Please identify the types and

number of businesses and groups. Be sure to quantify how each entity will be affected.

Additional costs imposed by the proposed rules are anticipated to be minimal, with minor recordkeeping costs to

licensed child care homes associated with documenting compliance to the food allergy plan provisions added.

Due to other existing obligations that require recordkeeping actions, new obligations on this front should largely

be absorbed into existing processes and have a negligible impact overall.

27. Estimate the actual statewide compliance costs of the proposed rules on individuals (regulated individuals or

the public). Include the costs of education, training, application fees, examination fees, license fees, new

equipment, supplies, labor, accounting, or recordkeeping.

No new compliance costs would be imposed. The proposed rule revisions update the current rules to ensure they

comply with state law and federal standards.

A. How many and what category of individuals will be affected by the rules?

MCL 24.245(3)

RIS-Page 7

Licensed child care homes are the businesses that would be affected by the proposed rule revisions. There are

approximately 3,291 licensed child care homes in Michigan.

B. What qualitative and quantitative impact do the proposed changes in rules have on these individuals?

Qualitative Impact: The proposed rule set will help support child care homes by addressing challenges faced by

licensees, such as workforce shortages, clarifying training requirements, and providing more flexibility for

programming.

Quantitative Impact:

The proposed rule set provides an opportunity for financial gain as the proposed rules eliminate the requirement

for tuberculosis testing, thus providing a cost reduction. The proposed changes to infant/toddler and school-age

ratios allow providers to serve more children, which can increase revenue by expanding available enrollment

spaces.

28. Quantify any cost reductions to businesses, individuals, groups of individuals, or governmental units as a

result of the proposed rules.

Cost reductions for providers may be achieved through the proposed rules by elimination of the requirement of a

tuberculosis test for staff. This change reduces the regulatory burden and associated costs for providers.

29. Estimate the primary and direct benefits and any secondary or indirect benefits of the proposed rules. Please

provide both quantitative and qualitative information, as well as any assumptions.

The primary benefits of the proposed rule revisions are to improve the health and safety of children in child care and

to ensure these child care homes meet the requirements of the federal Child Care and Development Block Grant.

The proposed rule revisions have secondary or indirect benefits. Flexibility in adult to child ratios and staffing

requirements should lower the marginal cost of providing services and therefore make child care services more

affordable.

30. Explain how the proposed rules will impact business growth and job creation (or elimination) in Michigan.

The proposed rules are expected to support business growth by allowing child care homes to expand enrollment

through infant/toddler and school-age ratios. The proposed rules clarify training requirements, which can improve

workforce recruitment and retention. The proposed rules will not result in job elimination in Michigan.

31. Identify any individuals or businesses who will be disproportionately affected by the rules as a result of their

industrial sector, segment of the public, business size, or geographic location.

No individuals or businesses would be disproportionately affected by the proposed rules.

32. Identify the sources the agency relied upon in compiling the regulatory impact statement, including the

methodology utilized in determining the existence and extent of the impact of the proposed rules and a cost-

benefit analysis of the proposed rules.

To assist in determining the existence and extent of the impact of the proposed rules, the bureau formed an ad hoc

committee consisting of representatives from the Licensing and Regulatory Affairs Bureau of Fire Services, Michigan

Department of Health and Human Services, Michigan Department of Education, Michigan Department of Lifelong

Education, Advancement, and Potential, licensed child care providers and parents. The committee conducted a

thorough review of the proposed rule set, held two public hearings to gather further input, and developed final

recommendations to the department based on this comprehensive review.

The bureau also researched standards for rules in Ohio, Indiana, Illinois, Wisconsin, Minnesota, and Pennsylvania to

learn how the proposed rules compare to the standards in states within the same region. The following websites were

used for the research:

Ohio (https://emanuals.jfs.ohio.gov/ChildCare/FamilyChildCare/Rules/)

Indiana (https://www.in.gov/fssa/carefinder/files/Homes_Interpretative_Guide_effective_2-2016.pdf)

Wisconsin (https://dcf.wisconsin.gov/files/publications/pdf/205.pdf)

Illinois (https://dcfs.illinois.gov/content/dam/soi/en/web/dcfs/documents/about-us/policy-rules-and-

forms/documents/procedures/procedures-406.pdf)

Pennsylvania

MCL 24.245(3)

RIS-Page 8

(https://www.pacodeandbulletin.gov/Display/pacode?file=/secure/pacode/data/055/chapter3280/chap3280toc.html&d=

)

A. How were estimates made, and what assumptions were made? Include internal and external sources,

published reports, information provided by associations or organizations, etc., that demonstrate a need

for the proposed rules.

The need for the proposed rules were a result of the extensive outreach from the bureau with the ad hoc

committee, community partners, licensed providers, state partners, and bureau members. The feedback

showed that the current rules are difficult to understand, are duplicative, cause difficulty for licensees to recruit

and retain qualified staff, and cause families difficulty in finding affordable, quality child care.

ALTERNATIVE TO REGULATION

33. Identify any reasonable alternatives to the proposed rules that would achieve the same or similar goals.

There are no reasonable alternatives to the proposed rules that would achieve the same or similar goals.

A. Please include any statutory amendments that may be necessary to achieve such alternatives.

There are no statutory amendments necessary.

34. Discuss the feasibility of establishing a regulatory program similar to that proposed in the rules that would

operate through private market-based mechanisms. Please include a discussion of private market-based

systems utilized by other states.

To this bureau’s knowledge, there are no states that use a private market-based system to regulate child care

organizations. Establishing a private market-based system for regulation of the proposed rules would not be feasible

for Michigan. Regulation of the administrative rules as operated by the State of Michigan, ensures consistency in

regulation, technical assistance, disciplinary actions, processes, and training for both providers and regulatory staff.

This consistency is essential to maintaining the safety and quality of home child care facilities across the state and

could not be achieved through a private market-based system.

35. Discuss all significant alternatives the agency considered during rule development and why they were not

incorporated into the rules. This section should include ideas considered both during internal discussions

and discussions with stakeholders, affected parties, or advisory groups.

The bureau gathered input from various stakeholder groups, internal discussions, and the ad hoc advisory committee,

including during ad hoc public comment hearings. The bureau incorporated as many recommendations as possible

while ensuring the rules continued to support the health, safety and welfare of children while maintaining compliance

with federal requirements.

However, some ideas were introduced and discussed but not incorporated in the rules. These included reducing the

number and type of exclusionary criteria for criminal background check and removing certain training requirements.

The proposed alternatives were not incorporated because they would have led to non-compliance with federal

requirements.

ADDITIONAL INFORMATION

36. As required by MCL 24.245b(1)(c), please describe any instructions regarding the method of complying with

the rules, if applicable.

A technical assistance and consultation manual as well as any necessary forms will be created when the rules are

finalized. An informational overview detailing changes to the rules when finalized will be available.

MCL 24.245(3)