Error Rate Reporting

Determining whether payments have been made correctly depends on the rules that each state establishes within the limitations of how federal funds may be used. The law requires states to consider a child to be eligible for a full 12-month period despite temporary changes in the parents’ status as working or participating in training or education activities, and despite an increase in income above the state’s threshold (as long as income does not exceed the federal limit of 85 percent of state median income). This means that it is not necessary to have strict policies that require reporting of minor changes in circumstances, as these changes would likely not affect eligibility.

This practice of continuous eligibility also minimizes risk of a state issuing an improper payment. Lead Agencies may only increase copayments at redetermination or during the graduated phase-out period, thus eliminating the need for most reports of modest changes in income (while still permitting families to report changes that would affect their copayment favorably if their income falls and their ability to pay is reduced).

The final rule clarifies that the following situations are not considered errors or improper payments:

  • When a family’s circumstances change during the eligibility period, unless the family’s circumstances change so that they are no longer federally eligible [2] [3]
  • When a child experiencing homelessness or in foster care is permitted to initially enroll, but is found to be ineligible once all documentation is submitted [4]

The Administration for Children and Families encourages states to have in place strong internal controls and program integrity efforts to help ensure that program dollars go to the eligible children and families with lower incomes for whom assistance is intended; however, it is important to ensure that these efforts do not inadvertently impair access for eligible families.

The Improper Payments Information Act of 2002 (IPIA) requires federal agencies to annually review programs and activities they administer, identify those that may be susceptible to significant improper payments, and submit a report on actions taken to reduce improper payments.

To comply with IPIA, the CCDF Error Rate Reporting final rule was revised to provide for reporting of error rates in the expenditure of CCDF grant funds. This final rule was published in the Federal Register on September 5, 2007, with an effective date of October 1, 2007.

States conduct the error rate review process and calculate an error rate once every 3 years on a rotational cycle. The Data Collection Instructions provide instructions for implementing the required error rate methodology for the CCDF and submitting the State Improper Payments Report. Technical assistance is available to states.

Key Error Rate Reporting Dates to Remember

Key Dates

Action to be Taken

On or before October 31 of the calendar year before the ACF-404 report is due

Submit the Sampling Decisions, Assurances, and Fieldwork Preparation Plan

On or before December 31 of the calendar year before the ACF-404 report is due

Submit the Record Review Worksheet (ACF-403)

On or before June 30 of the reporting year

Submit the State Improper Payments Report (ACF-404)

Within 60 days of ACF-404 submission

If the state’s error rate is above 10 percent, submit the Corrective Action Plan (ACF-405)

Additional Resources

The Office of Child Care’s website on error rate reporting, Program Integrity and Accountability: Improper Payments Error Rate Review Process, includes the Data Collection Instructions and required submission forms.


[1] Child Care and Development Fund, 45 C.F.R. § 98.100 (2016).

[2] Child Care and Development Fund, 45 C.F.R. § 98.100(d)(2) (2016).

[3] Child Care and Development Fund, 45 C.F.R. § 98.21(a) and (b) (2016).

[4] Child Care and Development Fund, 45 C.F.R. § 9851(a)(1)(ii). (2016).