State of California M E M O R A N D U M REFERENCE CODE: 2002-026 DATE: April 29, 2002 TO: Personnel Officers Labor Relations Officers Work and Family Coordinators FROM: Department of Personnel Administration Policy Development Office SUBJECT: Work and Family Program - New Dependent Care Benefit CONTACT: Syd Perry, Work and Family Coordinator (916) 324-2763 FAX: (916) 324-0524 E-mail: SydPerry@dpa.ca.gov This memorandum contains important information regarding a new State- negotiated Dependent Care Benefit for State employees. The Dependent Care Benefit was designed by the Joint Labor-Management Committee on Work and Family to help State employees deal with the high cost of dependent care. This new benefit has been negotiated for 2003 and 2004. Under this program, employees can apply for a $400/year employer contribution to a FlexElect dependent care account to pay for "qualified" dependent care expenses. Qualified expenses include care for children under age 13, care for a parent, or special care for a disabled dependent. ELIGIBILITY REQUIREMENTS Individuals who meet the following eligibility criteria are eligible to apply for this new benefit: - The employee's total annual household income is under $42,000 a year; - The employee qualifies for a dependent care tax credit on his/her federal tax return, even if he/she does not claim it; To qualify for a dependent care tax credit, all of the following must apply: - The employee must be able to claim an exemption for his/her dependent (child, disabled spouse, or dependent who was physically or mentally not able to take care of himself or herself). If divorced or separated, the employee's expenses may qualify if he/she is the custodial parent, even if he/she cannot claim the child's exemption. - The employee must pay for dependent care expenses so he/she (and his/her spouse, if married) could work or look for work. - The employee (and his/her spouse, if married) paid over half the cost of keeping up his/her home. - If the care is for a dependent who is disabled, that person must live in the employee's home. - The person providing the care was not the employee's spouse or a person whom the employee could claim as a dependent. If the employee's child provided the care, he/she must have been age 19 or older by the end of 2001. - The employee identifies and reports the care provider on his/her tax return (Form 2441, "Child and Dependent Care Expenses" or Schedule 2 if filing a Form 1040A). and - The employee is in Bargaining Units 1, 2, 3, 4, 6, 8, 11, 12, 13, 15, 16, 17, 18, 19, or 21, or is an excluded employee. To apply for the employer contribution, employees must also be eligible to participate in a FlexElect dependent care account. To be eligible to participate in a FlexElect dependent care account, the employee must meet the following criteria: - The employee must work in a permanent position that is half time or greater or, if the position is temporary, have a right of return to a permanent position. - The employee must have dependent care expenses in 2003 that qualify for reimbursement from a FlexElect dependent care account. Employees should refer to the FlexElect Handbook and Internal Revenue Service Publication 503 to ensure they qualify for a FlexElect dependent care account before applying for the employer contribution. ENROLLMENT PROCEDURE To apply for this benefit, interested employees must complete, sign (original signature required), and mail the attached Dependent Care Benefit Application (DPA 684) to: Department of Personnel Administration Work and Family Program 1515 "S" Street, Suite 400 Sacramento, CA 95814 The application must be postmarked no later than June 15, 2002. Faxed, e-mailed, or late applications will not be accepted. This program has been funded to provide dependent care benefits to 2,500 employees in 2003. If the number of qualified applicants exceeds available funds, the Department of Personnel Administration (DPA) will hold a drawing to select which applications will be approved. Employees will be notified by DPA by August 1, 2002, whether or not their application has been approved. If the application is approved, employees will be required to enroll in a FlexElect dependent care account during the FlexElect open enrollment period (September 1 - October 15, 2002). The $400 dependent care contribution will be deposited into the employee's FlexElect account on January 1, 2003. All eligible State employees will be mailed an information packet containing information on the dependent care benefit, a dependent care benefit application, and a description of the FlexElect Program. This information is also available online at http://www.dpa.ca.gov, under Work and Family. DPA will provide additional marketing and program materials to departmental Work and Family Coordinators in the near future, including posters for the worksite. If your department has not designated a Work and Family Coordinator, Personnel Offices should ensure that program information and marketing materials are distributed to eligible employees and employee worksites. Your assistance will help ensure that all eligible State employees have an opportunity to enroll in this exciting new benefit program. Bob Painter, Chief Policy Development Office Attachments will be distributed via mail.