State of California M E M O R A N D U M REFERENCE CODE: 2004-014 DATE: April 30, 2004 TO: Personnel Officers Labor Relations Officers Work and Family Representatives FROM: Department of Personnel Administration Policy and Operations Division SUBJECT: Work and Family Program - Dependent Care Benefit CONTACT: Rosanne McHenry, Work and Family Coordinator (916) 327-0522 FAX: (916) 324-0524 Email: RosanneMcHenry@dpa.ca.gov This memorandum contains important information regarding the 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 2005. Under this program, employees can apply for up to a $1,000/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 salary does not exceed $48,000 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 2004. -- 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 (BU) 1, 3, 4, 6, 7, 8, 9, 10, 11, 12, 14, 15, 17, 18, 19, 20, 21, or is an excluded employee. - Employees in BUs 2, 5, 13, and 16 are not eligible to receive this benefit at this time. 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 2005 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 a TWO-STEP PROCESS: Step #1. Complete the Application Form - Sign (original signature required) and mail the attached Dependent Care Benefit Application (Department of Personnel Administration [DPA] 684) to: Department of Personnel Administration Work and Family Program 1515 "S" Street, North Building, Suite 400 Sacramento, CA 95814 The application form can be downloaded from the DPA Work and Family Web site at www.dpa.ca.gov/workingfamilies. Copies of the application will also be available through department Personnel Offices. THE APPLICATION MUST BE POSTMARKED NO LATER THAN JULY 30, 2004. Faxed, e-mailed, or late applications will not be accepted. Since funding for this program is limited, should the number of qualified applicants exceed available funds, DPA will hold a drawing to select which applications will be approved. Employees will be notified by DPA during August 2004, whether or not their application has been approved. Step #2. Enroll in the FlexElect Program - If the application is approved, employees will be required to enroll in a FlexElect dependent care account during the FlexElect open enrollment period (Fall 2004). The dependent care contribution will be deposited into the employee's FlexElect account during January 2005. PROGRAM INFORMATION All eligible State employees will be mailed a brochure containing information on the dependent care benefit and a description of the FlexElect Program. This information is also available online at http://www.dpa.ca.gov/workingfamilies. DPA will provide additional marketing and program materials to departmental Work and Family Representatives in the near future, including posters for the work site. If your department has not designated a Work and Family Representative, Personnel Offices should ensure that the program information and marketing materials are distributed to eligible employees and employee work sites. Your assistance will help ensure that all eligible State employees have an opportunity to enroll in this important benefit program. Bob Painter, Chief Policy and Operations Division Attachments (Brochure sent via hard copy)