Licensing and Exemptions
The CCDBG Act requires states to have licensing requirements in effect for child care providers. Licensing is a process administered by state governments that sets a baseline of requirements below which it is illegal for facilities to operate. States have regulations that include the requirements facilities must comply with, and policies to support the enforcement of those regulations. The CCDF Plan requires Lead Agencies to certify that they have licensing requirements applicable to child care services provided within the state. 
The National Database of Child Care Licensing Regulations has the full text of all states’ child care licensing regulations.
Lead Agencies have the flexibility to exempt providers from licensing requirements. However, the CCDBG Act requires that if states use CCDF funds to support child care providers that are exempt from licensing requirements, their CCDF Plans must include a description stating how such licensing exemptions do not endanger the health, safety, and development of children who receive services in their care.
Though states may exempt center-based and home-based providers from licensing requirements, such child care providers are subject to health and safety requirements in the CCDF law if they receive payment for services to a child receiving a subsidy. The only exception to this requirement is for providers who are caring only for their own relatives. States have the option of exempting relatives from some or all of CCDF health and safety requirements.
Relative providers are defined as those persons
- who are 18 years or older, and
- who are providing care only to children who are, by marriage, blood relationship, or court decree, their
- siblings (if the provider lives in a separate residence), or
- nieces or nephews.
Many states exempt certain types of child care providers from licensing; for example, school-age programs operated by public schools, summer camps, and programs operated by religious organizations. In addition, states have different thresholds for requiring family child care (FCC) providers to become licensed. For example, some states require FCC homes to become licensed when they serve two or more unrelated children, while other states allow FCC providers to care for up to five children before becoming licensed. If such providers serve children receiving subsidies, those providers must receive the required health and safety training and receive inspections under the law, even if they are exempt from state licensing laws. 
 CCDBG Act of 2014 658E(c)(2)(F); 658E(c)(2)(K); Child Care and Development Fund, 45 C.F.R. §§ 98.16(u), 98.42 (2016).
CCDF regulations define state as follows: “any of the states, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands of the United States, Guam, American Samoa, the Commonwealth of the Northern Marianas Islands, and includes tribes unless otherwise specified” [Child Care and Development Fund, 45 C.F.R. § 98.2 (2016)]. For ease of reading, the term state is used inclusively throughout this resource unless otherwise specified.
 Office of Child Care. (2016). Child Care and Development Fund final rule frequently asked questions. U.S. Department of Health and Human Services, Administration for Children and Families. https://www.acf.hhs.gov/occ/faq/child-care-and-development-fund-final-rule-frequently-asked-questions