Ensuring Compliance with Licensing Requirements

Provider compliance with licensing requirements helps  protect children’s health and safety.   

Statute requires all childcare providers, unless explicitly exempted, be licensed by DFS; once licensed, they must continue to demonstrate their ability to meet DFS minimum standards.  Since the goal of childcare licensing is to minimize the risk of harm to children in out-of-home care, a licensing entity must first define the point at which the level of risk to children is unacceptable.  Second, it needs to devise rules and policies to ensure no provider operates below this level.

Enforcing compliance with statute and rules is not intended to force providers out of business, but rather to ensure that they at least meet minimum standards that protect the health and safety of children in their care.  In that vein, DFS management reports it is shifting to a more facilitative and supportive approach to enforcement.  While this is a legitimate approach, DFS also needs to identify a means of ensuring provider compliance when the facilitative approach fails.  In this way, truly unsafe providers, whether licensed or unlicensed, can be removed from operation.

Finding 4:

Illegally Operating Providers Undermine Licensing System

W. S. 14-4-102 requires that all childcare facilities, except those specifically exempted, be licensed before they provide care to minors.  However, DFS is not regulating all providers of this description.  We found that the current process for requiring illegally operating providers to become licensed is ineffective.

DFS Does Not Regulate All Providers

Required to Hold Licenses

Most children
are not in
licensed care.

Most Wyoming children in childcare are not cared for by licensed providers.  Of the 86,000 children in the state, we estimate that about 53,000 require regular childcare, but only about 28 percent of them are in licensed care.  Providers known by DFS to be exempt from the licensing requirement care for another 8 percent of children.  Little is known about the care for the remaining 64 percent of children (see Appendix B), although evidence suggests that these children are cared for in both legally exempt and illegally unlicensed care. 

Illegally Operating Providers

Exist in Wyoming

Many agree illegally operating providers are a problem.

Many childcare providers are legally exempt from the requirement to be licensed, but some providers are operating illegally, without licenses.  Because of the higher visibility of childcare centers and the ease with which home childcare can go undetected, it is likely that most illegal providers are home childcare providers.

We found strong agreement among providers that illegally operating providers are substantial in number.  In our survey of licensed providers, we asked them to respond to statements about illegally operating providers; 79 percent of those responding believed that providers were operating illegally in their communities. 

DFS staff and child advocates around the state believe illegally operating providers are a ubiquitous problem that is more serious in some areas than others.  Licensers estimated that the proportion of providers operating illegally ranges from ten percent to 80 percent of all providers, depending on the area of the state.

DFS is Unable to Determine

Extent of Illegal Population

DFS is aware of illegally operating providers, but knows little about them.

DFS does not know how many illegal providers are operating in Wyoming, but does know of their existence. In 2000, 61 percent of the recorded complaints DFS received concerned providers alleged to be operating illegally.  DFS investigated 233 of these complaints and substantiated 126, but did not track what became of them and thus does not know whether they ceased operations, went on to become licensed, or continued to operate illegally. 

Another source of information on the illegally operating provider population could be the licensing application receipt.  When picking up a licensing application, providers fill out a receipt including name and address.  However, DFS does not track prospective providers who collect but fail to turn in the application.  Following up on this information could be a rich source of information about the size and makeup of the illegally operating population in Wyoming.  

Illegally Operating Providers

Undermine Licensing Mission

Some believe licensing is voluntary.

Requiring licensed providers to meet standards while other providers ignore them undermines the credibility of the licensing unit with parents, legally operating providers, and the public.  We learned that even some DFS staff see the licensing requirement as voluntary, rather than mandatory.  Additionally, licensers expressed frustration based on their perception that DFS is unable to compel illegally operating providers to become licensed. 

DFS Cannot Assure Protection
of Children in Unlicensed Care

DFS cannot ensure that unlicensed providers meet minimum standards.

DFS cannot ensure children in illegal care are receiving the same level of protection as children in licensed care.  DFS standards are meant to ensure that children in out-of-home care receive a minimally acceptable level of protection.  The health and safety of children who are cared for by an unlicensed provider cannot be guaranteed, and these children may be at risk. 

For example, license applicants must undergo a Child Protective Services Central Registry Screen and a Division of Criminal Investigation prescreen.  This prevents inappropriate providers from offering licensed care.  However, DFS has no way to prevent such providers from operating illegally, so children in unlicensed care are not assured the same protection from inappropriate providers. 

Illegally Operating Providers

Create Unfair Competition

Illegally operating providers can avoid costs associated with being licensed.

By not ensuring that all providers are operating legally, unfair competition may inadvertently be supported.  The state has an obligation to protect a regulated industry from unfair competition.  According to NARA, once a state begins to regulate an industry, it has an obligation to apply regulations to the industry fairly and equitably.  This obligation is broken when a state allows illegal providers to continue providing care.  Illegal providers can undercut licensed providers by avoiding the costs involved in responsible care as defined by statute and rule.

Current Methods for Dealing With Illegally Operating Providers Are Ineffective

Fines for illegal operation are
rarely levied.

DFS has not developed an effective procedure for suppressing illegal childcare operations.  Although statute stipulates that providing childcare without a license is a misdemeanor for those prosecuted and convicted, and provides for a fine of $50 to $200 per day of illegal operation, this fine has rarely been used.  DFS does not believe this provision is enforceable because it does not believe it has the authority to investigate unlicensed providers.  Moreover, the perception that prosecuting childcare providers is not a priority for most prosecuting attorneys is pervasive. 

State Lacks System to Investigate

Illegally Operating Providers

Statute does not explicitly authorize DFS to investigate unlicensed providers. 

DFS does not have explicit authority to investigate illegal providers.  Consequently, the agency has difficulty gathering the evidence necessary to prosecute a criminal case.  If a provider claims to be exempt under state law, the licenser has little means to verify this claim.

Statute provides licensers with the right of access to the facilities of all licensed providers and applicants for license, to inspect licensed and applicants’ facilities, verify the number and ages of children present, and check the condition of the facilities, among other factors.

Statute is silent regarding DFS’ right to access the facilities of unlicensed providers.  Without access to unlicensed facilities, DFS cannot hold unlicensed providers to screening, monitoring, and complaint investigation processes.  In essence, DFS cannot verify whether unlicensed providers are legally exempt; therefore licensers have difficulty gathering enough evidence to recommend a case for prosecution.

Prosecution of Illegal

Providers Rare

Prosecution
requires support
and cooperation from county or district attorneys.

If providers do notcomply with requirements to become licensed, they  are considered to be operating illegally and can be referred for prosecution.  However, DFS prefers that licensers try to work with illegally operating providers by encouraging them to meet exemption criteria or become licensed, rather than referring them for prosecution.   Prosecution is seen as the last step for DFS to ensure all appropriate providers are operating legally, and inappropriate providers are enjoined from operation. 

Prosecuting an illegal provider requires evidence of illegal operation as well as the support and cooperation of county and district attorneys.  However, prosecution rarely if ever occurs.  DFS staff say prosecuting attorneys will not take legal action in these cases, while some prosecuting attorneys indicate that cases are not referred to them.  Absent program-level policy or procedures, individual licensers are dependent on their own efforts to interest prosecuting attorneys in prosecuting local childcare providers. 

Like DFS, many prosecutingattorneys do not believe they have the resources to investigate such cases.  In addition, expecting locally elected officials to prosecute someone who may be the only provider in town and who appear to be doing a good job, is at best a low priority.  Without the threat of being prosecuted and fined, illegal providers cannot be compelled to become part of the licensing system.

Recommendation:  DFS needs to take the lead in developing a workable process for enforcement of licensure.

The current process is not protecting children.

DFS needs to explore, with the Legislature and prosecuting attorneys, statutory changes that will create an effective means by which licensers can investigate and require illegally operating providers to either become licensed, meet exemption criteria, or cease operations.  The current system, where licensers believe investigation and prosecution of illegal providers is not a real alternative, and prosecuting attorneys are asked to do a politically unpopular job, is at an impasse and does not serve to protect children in care.

Other states have addressed the investigative issue through statutory changes.  A recent change in Oregon’s statute allows licensers access to all childcare providers, not just licensed providers, when they have a reasonable suspicion that a provider is operating without a license.  This investigative authority enablesthe licensers to determinewhetherproviders are operating illegally or are truly exempt from licensure. 

Some attorneys in Wyoming have suggested that changing the penalty from criminal to civil and enforcing it at the state level, or increasing the fine, might be a solution.  However, until all parties involved are comfortable with the process and are willing to participate, it is unlikely that enforcement actions will be taken against illegal providers.

Finding 5:

Inconsistencies Mean Children

in Licensed Care May Not Be

Uniformly Protected

Licensers enforce rules differently across the state.

Licensers in different areas are inconsistent in their implementation and enforcement of current rules.  As a result, children may not be uniformly protected and providers may not be treated equitably throughout the state.  We believe the primary reason for inconsistency within the unit is the lack of clear and concise written policies and procedures, an issue that requires prompt attention from DFS. 

Licensing Unit Not Consistent

With Rule Implementation

Collectively, inconsistencies undermine the mission of the unit.

Inconsistencies within the unit occur in many different forms, some of which are readily apparent while others are more subtle.  For example, an individual licenser may not be consistent in regulating different providers.  Similarly, several different licensers may treat one provider differently, or a whole class of providers, such as FDCH providers, might receive different treatment from different licensers.  We observed many inconsistencies and while each may seem minor on its own, we believe that collectively, they undermine the mission of the unit and put children in licensed care at risk. 

Consistency Is Necessary
in a Regulatory Setting

Experts agree that consistency within a regulatory function is a necessity.  In one of its principles for effective regulation, NAEYC states that regulations should be vigorously and equitably enforced.  According to a recent GAO report, licensers need to learn to apply a state’s childcare requirements in a consistent and objective manner. 

Similarly, NARA’s training curriculum states that licensing rules and procedures must be uniformly and consistently applied statewide.

When a state’s childcare requirements are enforced in a consistent and fair manner, the public can have confidence that children are receiving uniform protection and providers are treated equally.  If rules are not enforced consistently, questions of safety and fairness can arise.  

Monitoring of Providers Is Sporadic

Monitoring is a key oversight activity to effectively enforce regulations.

We found that DFS does not consistently monitor all licensed providers during the year’s time that elapsesbetween renewal inspections.  While the program manager stated that monitoring visits are supposed to be done at least once a year, only one licenser reported being able to make such visits on a regular basis.  Instead, monitoring of providers consists primarily of investigations undertakenin response to complaints about particular providers. 

Without a system for routinely monitoring providers, DFS lacks a means of ensuring that licensed providers are complying with requirements.  NAEYC and NARA both agree that on-site monitoring visits, or unannounced visits throughout the year, are a key oversight activity for the effective enforcement of regulation. 

Regions Implement

Rules Differently

Licensers in different regions vary in their approach to ensuring provider compliance.

We identified variations in enforcement procedures throughout the state.  For example, the two regional supervisors direct their licensers to seek compliance differently.  In both regions a “Licensing Information Request Form” is sent to providers who have not yet come into compliance with DFS standards.  However, licensers in one region send out the form, sometimes repeatedly, as a gentle reminder to providers asking them for compliance, while in the other region, licensers send the form out as a final notice to providers that if specific compliance requests are not met, a negative action will be taken against their license.  We did not find written policy regarding how this form is to be appropriately used, nor does the form itself provide indication. 

Another inconsistency within the unit is the timeliness with which licenses are issued to providers.  One regional supervisor issues licenses one time a month, while the other issues them weekly.  Consequently, providers in one region may have to wait more than a month to receive their licenses, while those in the other region receive licenses in a more timely manner.  For many providers who need a current license to receive subsidies from the state, a delay in license renewal could mean lost revenue.

Licensers Have Different Ideas

About Regulating Providers

Licensers disagree on how strictly compliance should be enforced.

Licensers across the state do not share the same attitudes regarding how providers should be treated.  Some believe their job is to help a provider become licensed and remain compliant with standards, while others believe this is primarily the provider’s responsibility.  One licenser reported, “I don’t like enabling them (providers)… I am tired of holding their hands,” while another said, “I am trying to educate providers and I stress that I am there to help them.”

We also found differences among licensers in their understanding of how licensing rules should be implemented.  Their opinions regarding when standards should be strictly enforced vary widely, from “We’re supposed to bend over backwards to keep all providers in business” to “I draw the line immediately.” Furthermore, some licensers readily acknowledge differences in the ways rules are implemented across the state.  

Providers Not

Treated Equitably

Providers do not believe licensers  treat them equally.

Providers appear to receive different treatment, depending on the region in which they provide care.  Licensers reported that the way in which childcare licensing is carried out across the state varies, with one licenser acknowledging that she might not even be consistent from one inspection to another. 

We found that some providers believe they are not treated fairly by licensers.  The results of our provider survey show that about one-third of providers do not agree that licensers interpret rules consistently.  Additionally, some provider comments indicate that licensers may not be treating providers consistently across the state, nor are they always consistent within the same area.  As one provider stated, “… interpretations of the current rules and regulations differ among licensing individuals and the daycares they license in the same community.”

Furthermore, DFS’ inconsistent style of enforcement is frustrating to some providers who do comply with DFS regulations.  We found that about half the providers who responded to our survey disagreed or strongly disagreed with the following statement:  “DFS enforces regulations against licensed providers who are not following licensing rules.” 

Children May Not be
Adequately Protected

Regulations cannot be effective unless they are enforced.

Licensing of childcare providers provides a basic protection for children in out-of-home care.  NAEYC states that, “The fundamental purpose of public regulation is to protect children from harm, not only threats to their immediate physical health and safety, but also threats of long-term developmental impairment.”  When states fail to vigorously and equitably enforce standards, regulations become less effective and the health and safety of children in out-of-home care cannot be assured.

DFS Cannot Ensure Provider
Compliance with Regulations

Without effective monitoring, noncompliance cannot be detected.

Without consistent implementation of rules and regulations, as well as an effective monitoring system, DFS cannot ensure that all providers comply with minimum standards.  When licensers are only in a provider’s facility once a year for a renewal visit, it is likely that incidents such as these will not be brought to the attention of DFS.

Without an effective monitoring system, chronic non-compliant providers may be allowed to continue to operate while not meeting minimum standards; this is an inherent risk to the health and safety of children.  Some licensers believe that a portion of providers in the state are chronically non-compliant.  Lacking program data, we were unable to determine how prevalent non-compliance is among providers.  However, several licensers agreed that 80 percent of their non-compliance problems come from 20 percent of their providers.

Compliance May not be

Perceived as Mandatory

In the absence of an effective and consistent monitoring system, compliance with licensing rules may not be perceived as mandatory.  Without routine monitoring, non-compliance is less likely to be discovered, and under these circumstances, providers may come to see compliance with standards as optional.  If the standards are not evenly enforced, there is risk that even those children in licensed care are not being uniformly or adequately protected from harm. 

Unit Lacks Policies and
Procedures Manual

Written direction available to licensers is confusing and contradictory.

We found the primary reason for inconsistencies among licensers is the lack of a clear and concise policies and procedures manual to which they can turn for guidance.  The NARA curriculum explains that it is particularly important for the licensing agency to have written expectations of rule intent, and consistency among licensers can only occur when staff have a clear understanding of the licensing process.

While licensers have both a training manual and a clarification manual available to them, the content of both is often unclear or outdated.  Much of the language in the training manual is permissive, using words such as may, optional, and can.  DFS officials admit that the clarification manual is also confusing and that very few of its clarifications are recent.  It contains memos clarifying rules that no longer exist, and responses to letters or e-mails that provide no context for a licenser needing guidance.

Interpretation of Rules

Not Available to Licensers

Licensers must
rely on their
own interpretations
of the rules.

Several licensers believe they could be more consistent in many areas if there were a place to turn for written information.  However, we found that DFS has been reluctant to provide written clarification.  For example, one rule reads, “Measures that unduly frighten or demean a child shall not be allowed.”  Because this rule has not been clarified in writing, each licenser must interpret on their own what the measures might be that could unduly frighten or demean a child. 

DFS also has not clarified procedures created for implementing rules at an operational level.  For example, complaint protocol requires that investigations of “emergency” complaints begin within 24 hours of complaint receipt, investigations of “serious” complaints within one week, and of “routine” complaints within three weeks.  Without

Licensers rely on experience and discretion rather than policy to direct their decisions.

written guidelines regarding the definition of these categories, licensers are left to decide for themselves what category a complaint falls under. 

More importantly, DFS has not developed an operational definition of the point at which risk to children is unacceptable.  Without clear guidelines, licensers use their discretion in deciding when non-compliance with rules endangers the health and safety of children in a provider’s care, and should be reported to a supervisor or the program manager.  While licensers agree that when a problem is truly important, they will take action, what is “truly important” is left to individual interpretation.

DFS Believes Licenser

Discretion Appropriate

Experts believe rules must be applied uniformly to the regulated population.

We found part of the reason DFS has not provided written interpretation is a belief among DFS staff that licensers should be able to exercise discretion.  However, according to NARA, allowing licensers to exercise discretion when regulating is less appropriate for a licenser than for a child protective services worker.  NARA stresses that this is because the application of licensing rules must be consistent and uniform.  DFS officials and some licensers seemed comfortable with allowing licensers discretion in applying rules.  One DFS official said, “there should be room left for licensers to have discretion.”  However, other licensers were not comfortable interpreting rules on their own and wanted additional guidance from DFS. 

Turnover Breeds

Inconsistencies

Turnover also has a significant impact on the consistent implementation of licensing rules.  Without a policies or procedures manual to refer to, new licensers tend to rely on their own limited experience, or on their trainer and mentor’s interpretation of rules. 

Recommendation:  The licensing unit should develop a policies and procedures manual.

Written policies and procedures will help licensers enforce regulations equitably across the state.

Without a policies and procedures manual in which DFS interprets rules and clarifies procedures for implementing them, licensers will continue to interpret rules and policy individually and will use discretion when applying the rules.  A policies and procedures manual can reduce inconsistencies among licensers and help create a situation where rules are equitably enforced statewide.  We believe such a manual is even more important because of the high turnover the unit has been experiencing. 

The licensing unit should devote the variance period, during which providers will transition under the new rules, to creating a policies and procedures manual for licensers.  We urge the unit to develop a manual that interprets the new rules and spells out how licensers are to apply them, by the end of the variance period, July 1, 2002.