Module 4

Contract Requirements

When you sign the contract with DHS to receive subsidy payments, you are agreeing to meet certain requirements.

In this module you’ll learn about the requirements for:

  • Record keeping and overpayments
  • Changes to the business
  • Location of care
  • Collaborations
  • Avoiding civil rights violations
  • Drug-free workplace
  • Availability of records
  • Access to facility
man reading his contract.

Record Keeping and Overpayments

As has been stated several times, you must agree to keep accurate business records.

This includes ensuring attendance information transmitted through the EBT system and payments made by DHS to your facility are accurate.

You must also keep the daily written attendance records that are required to maintain your license.

Three file folders indicating three years.

All business records must be made available to any DHS auditors, investigators or other representatives of the agency who request them.

You’ll learn more about audits in the final module, Auditing and Your Rights.

An important part of the record keeping process is ensuring that you do not receive overpayments.

This is important because DHS Finance Division will recover any payments made to you in error. In addition, some contract violations will result in a percentage of your total subsidy payment for the month being recovered.

Violations can also result in a contract being cancelled.

POS machine with card being swiped.

Remember, records include all information transmitted through the POS machine.

Mistakes most often occur when you allow attendance information to be transmitted electronically for payment that does not accurately reflect the time and date a child was in care.

It is your responsibility to void any transaction within ten days of the date of attendance when a mistake is made checking children in and out of care.

Parents must swipe the EBT card through the POS machine to record attendance. This must be done within 10 days of the date that the care was given.

However, it will be much easier for you to keep track, and to avoid any mistakes, if you require parents to swipe their card daily at the time of “check in” and “check out.”

A POS Machine.

Your POS machine will automatically record the date and time the card is swiped.

However, if you allow a parent to come in later to enter previous check-ins and check-outs, the dates and times of the actual attendance must be entered into the POS machine.

Again, it is your responsibility to ensure that this information is entered correctly by the parent, and that no mistake in payment occurs.

You should pay close attention to the Provider Notice of Action. You will receive this when the family’s application for subsidized child care benefits has been approved.

Provider Notice of Action; Note that the contents are not readable.

Information on the notice includes:

  • Child’s name and DOB
  • Child’s case number and person code
  • Child’s authorization number
  • Action taken
  • Type of care (full time, part time, blended or weekly) and number of days approved
  • Effective date of payments
  • Co-payment amount and effective date

You will also receive these notices an all changes and closures.

Remember: information contained in the notice is readily available on the Provider Web.

Check Your Understanding

Now answer this question.

Shawn usually swipes his EBT card each morning when he brings his son, Charlie, to child care and each evening when he picks him up. However, this week he changed wallets and didn’t have his card with him. Charlie attended Tuesday through Thursday. Monday was a holiday that Shawn didn’t work so he kept Charlie at home.
The next Monday Shawn swipes his card for the previous week including Monday. You failed to review your attendance report every day.

Which of the following statements is true?

Changes to the Business

The contract to receive subsidy payments from DHS is also very specific concerning changes in your child care business.

Some changes may require a new contract. It is important that you contact AFS Child Care Subsidy as soon as you become aware of any changes. Failure to notify DHS of changes may effect your payments.

You must notify the AFS Child Care Subsidy at least 30 days before any major changes in your business.

Major changes include:

  • Change in address
  • Change in your business entity
  • Change in facility status
  • Change in ownership
  • Change of contract signor
  • Closing the business

If you decide to change your business entity (for example change from a sole proprietorship to a partnership, or a Limited Liability Company, etc.), you will be required to apply for a new contract with AFS Child Care Subsidy.

Note: You will also be required to apply for a new license and stars certification.

playground equipment.

Remember, you must notify AFS Child Care Subsidy no less than 30 days before you plan to sell your child care facility.

The new owner will be responsible for qualifying for a new contract if they are interested in receiving subsidy payments.

You should note the contract terminates immediately when a facility is sold to a new owner, or the previous owner dies.

Check Your Understanding

Mrs. Sims, the previous owner of the child care facility, has recently died. You have taken over as the new owner and want to receive subsidy payments.

Which of these statements is true?

Location of Care

The contract you signed with DHS is very specific about the Location of Care.

multiple child care facility locations.

You must have a separate contract for each location if you own more than one child care facility.

Remember that the contract and the POS machine are tied to a specific location. You are NOT authorized to move the POS machine to another location unless you receive prior written approval from AFS Child Care Subsidy.

Approval may only be given when there is a legitimate business reason for providing care at another licensed location owned by you.

Children must be cared for ONLY at the location shown on the contract.

You are NOT permitted to move children approved for child care subsidy from one location to another and will not be paid without prior written approval from AFS Child Care Subsidy.

Check Your Understanding

Your child care facility recently had a small fire and you found a temporary location within 5 days of the fire, until the fire damaged area is restored.

Which of the following statements is true?


Pie chart with Head Start labeled a third, school labeled a third, and child care labeled a third.

You must notify DHS and provide documentation if you have an agreement, contract, or partnership with Head Start, Early Head Start, public schools, 21st Century Learning Grant, or any other program funded by state or federal funding sources.

We expect you to provide AFS Child Care Subsidy a copy of any agreement you have signed within 30 days of entering into such collaboration or agreement.

If you are approved for a contract, you can only be paid by DHS for the hours of care NOT covered by one of these other programs.

This means that the hours of Early Head Start, Head Start, Pre-K, school, or other federal or state funded programs cannot be counted as subsidized care for the children enrolled in those programs.

You may only allow the parent to enter attendance times for the hours before and/or after these programs.

Because you are already receiving funding from other sources for these program hours, DHS cannot pay for the same hours.

Check Your Understanding

Now try this question.

Nita brings her daughter, McKinley to your child care facility from 8:00 a.m. to 2:30 p.m.

At 9:30 a.m. McKinley attends the Head Start program offered by your facility. The hours of Head Start are 9:30 a.m. to 2:30 p.m. McKinley does not require care after Head Start.

Which of the following statements is true?

Other Requirements and Availability

In addition to the topics mentioned previously, there are some additional requirements that you agree to when you sign the DHS contract to receive subsidy payments.

owner providing records to DHS inspector.

First, you agree that you will not charge a discriminatory rate, nor will you violate anyone’s civil rights.

Second, you agree to maintain a drug-free environment at your facility.

You agree to allow parents unlimited access to areas of the facility used for care during normal business hours.

You also agree to make the physical facility and all records available to DHS staff at any time, with or without notice, to ensure your facility is in compliance with the terms of the contract.

Check Your Understanding

Now try these questions to review what you have learned.

Which of these statements is NOT true when you are approved for a DHS contract to receive subsidy payments?

If you are approved for a child care provider contract, which of these are you allowed to do?

Which of these statements is NOT true when you are approved for a child care contract to receive subsidy payments?


In this module you learned the most important things required of you when contracting with DHS to receive subsidy payments.

Woman reading this course on a tablet.

In this module you learned the most important things required of you when contracting with DHS to receive subsidy payments.

This included:

  • Record keeping and avoiding overpayments
  • Changes to the business
  • Location of care
  • Collaborations
  • Avoid civil rights violations
  • Drug-free workplace
  • Access to facility
  • Availability of records

Failure to comply with all contract requirements may result in cancellation of the contract.

Click the button labeled Rates and Fees below to continue to the next module.