Section 49.155 (1m) (c), Stats., provides that when calculating farm and self-employment income for determining financial eligibility for the child care subsidy program, the department or county department or agency shall include the sum of net earnings reported to the Internal Revenue Service and depreciation expenses, personal business and entertainment expenses, personal transportation costs, purchases of capital equipment and payments on the principal of loans. The emergency rule creates a provision in the eligibility section requiring that a parent who is self-employed file personal and business taxes with the internal revenue service annually and provide a copy of the parent’s tax return to the child care administrative agency when the parent submits the initial request for assistance and at each annual eligibility redetermination.
Authorizations
New business. The emergency rule provides that a child care administrative agency shall consider a parent’s self-employment to be a new business for the 24 months following the date that the parent began the business. An agency may consider the parent’s self-employment to be a new business until the parent’s next eligibility redetermination following the end of that 24-month period. While a parent’s self-employment is a new business, a child care administrative agency may authorize payment for the number of hours of child care that the parent states is needed, up to a maximum of 50 hours per week. A parent may begin a new type of self-employment that is considered a new business no more than once every 24 months.
Ongoing business. If a parent’s self-employment is not a new business, the child care administrative agency shall determine the maximum number of hours of child care that may be authorized for the parent per week by dividing the parent’s average monthly gross earnings from self-employment by the higher of the minimum wage under state or federal law and dividing that amount by 4.3 weeks.
Summary of Factual Data and Analytical Methodologies
The emergency rule incorporates existing department policies.
Summary of Related Federal Law
None
Comparison to Adjacent States
Minnesota
To be eligible for child care assistance for self-employment, a parent must work for at least an average of 20 hours per week (10 hours if a full-time student) with a gross income of at least the minimum wage. If the parent meets this minimum activity requirement, the number of hours of subsidized child care that is authorized is the lesser of the following:
The parent’s annual gross earned income from the self-employment activity, divided by 52 weeks, and then divided by the applicable minimum wage.
The actual hours the parent spends in the self-employment activity. Iowa
The number of hours of subsidized child care authorized for a self-employed parent is based on a statement from the parent on the number of hours needed, unless the agency has a reason to question the parent’s statement.
Illinois
The numbers of hours authorized cannot exceed the parent’s income divided by the state minimum hourly wage.
Michigan
Child care assistance is approved based on a parent’s completion of a form with self-employment income and expenses.
Effect on Small Businesses
The rule will affect small businesses operated by parents who receive a subsidy for child care expenses incurred while the parents operate their businesses. The effect will be minimal.
Analysis Used to Determine Effect on Small Businesses
The primary effect of the rule is to incorporate existing department policy into rule.
Agency Contact
SECTION 1. DCF 201.036 (3m) is created to read:
DCF 201.036 (3m) Self-employment. A parent who is self-employed shall file personal and business taxes with the internal revenue service annually and provide a copy of the parent’s tax return to the child care administrative agency when the parent submits the initial request for assistance and at each annual eligibility redetermination.
SECTION 2. DCF 201.039 (8m) is created to read:
DCF 201.039 (8m) Authorizations for a parent who is self-employed. (a) New business. 1. In this subsection, a child care administrative agency shall consider a parent’s self-employment to be a new business for the 24 months following the date that the parent began the business.
2. A child care administrative agency may consider a parent’s self-employment to be a new business until the parent’s next eligibility redetermination following the end of the 24-month period under subd. 1.
3. While a parent’s self-employment is a new business, a child care administrative agency may authorize payment for the number of hours of child care that the parent states is needed, up to a maximum of 50 hours per week.
4. A parent may begin a new type of self-employment that is considered a new business under this paragraph no more than once every 24 months.
(b) Ongoing business. If a parent’s self-employment is not a new business under par. (a), the child care administrative agency shall determine the maximum number of hours of child care that may be authorized for the parent per week by dividing the parent’s average monthly gross earnings from self-employment by the higher of the minimum wage under state or federal law and dividing that amount by 4.3 weeks.
SECTION 3. EFFECTIVE DATE. This rule shall take effect upon publication in the official state newspaper as provided in s. 227.24 (1) (c), Stats.
