The New Functional Test

Although C-26-01 does not use the phrase “functional test,” that is effectively what it
adopts.

OCDEL will look beyond the name of the program and examine questions such as:

• Are children dropped off without their parents?
• Are staff responsible for supervising the children?
• Does the program operate for part of a day?
• Are children unrelated to the operator?
• Is there an established schedule?
• Is tuition or fees charged?
• Is there an enrollment process?
• Are educational and care services provided together?

If these characteristics are present, OCDEL indicates that the program likely falls within the
child care statutes unless a specific statutory exemption applies. (The Pennsylvania Key –)

Importantly, the announcement repeatedly emphasizes that labels such as “preschool,”
“nursery school,” “Mother’s Morning Out,” or “church school” are not dispositive.

IV. Religious Instruction Is No Longer the Deciding Factor

Many church preschools devote substantial time to:

• Bible stories,
• chapel,
• prayer,
• Christian songs, and
• religious education.

These remain entirely permissible.

However, under C-26-01, religious curriculum does not determine whether the program is
subject to certification. OCDEL distinguishes between the content of instruction and the
nature of the service being provided.

A preschool can simultaneously provide religious education and regulated child care. If it
does, OCDEL takes the position that certification requirements still apply. (The
Pennsylvania Key –)

EXPLANATION OF NEW FUNCTIONAL TEST FOR CHURCHES & CHURCH PRESCHOOLS
Rev. Mark I. Salvacion, Chancellor EPA-UMC

Expansion of the Religious Exemption Under OCDEL Announcement C-26-01

One of the most significant aspects of OCDEL Announcement C-26-01 is not that it
eliminates a religious exemption—it does not—but that it redefines how the exemption is
analyzed in practice. Many churches have historically believed that because a preschool
was operated as a ministry of the church or provided religious instruction, it was
automatically exempt from OCDEL certification. C-26-01 expressly rejects that assumption
in favor of a functional, fact-specific analysis. (The Pennsylvania Key –)

I. The Historical Understanding

For many years, Pennsylvania churches often operated nursery schools and preschools
under the belief that religious ownership itself created an exemption from state child care
licensing. This understanding developed because religious nursery schools occupy an
unusual intersection of two different regulatory systems:

1. The Pennsylvania Department of Education (PDE) regulates private academic
   schools.
2. The Department of Human Services (DHS), through OCDEL, regulates childcare.

Historically, many churches focused on the first system. A religious nursery school is
generally, exempt from licensure by the State Board of Private Academic Schools, leading
some to conclude that no state licensure was required at all. However, the Department of
Education has long distinguished between academic school licensure and child care
certification. Its current guidance expressly states that although a religious preschool may
be exempt from PDE licensing, it may still require a Certificate of Compliance from OCDEL
if it meets the statutory definition of a childcare facility. (Pennsylvania Government)

Thus, C-26-01 does not create a new legal obligation so much as it announces that OCDEL
intends to enforce the existing statutory framework according to the actual operation of the
program.

II. What Changed Under C-26-01?

The practical shift is substantial.

Before C-26-01

Many churches effectively asked:

“Is this a church preschool?”

If the answer was yes, many assumed the inquiry ended there.

After C-26-01

OCDEL now asks a different question:

“Is this program providing child care as defined by the Human Services Code and Chapter
3270?”

Religious ownership is now only one fact among many. The controlling inquiry is whether
the program’s day-to-day activities fit within the statutory definition of regulated childcare.
(The Pennsylvania Key –)

III. The New Functional Test

Although C-26-01 does not use the phrase “functional test,” that is effectively what it
adopts.

OCDEL will look beyond the name of the program and examine questions such as:

• Are children dropped off without their parents?
• Are staff responsible for supervising the children?
• Does the program operate for part of a day?
• Are children unrelated to the operator?
• Is there an established schedule?
• Is tuition or fees charged?
• Is there an enrollment process?
• Are educational and care services provided together?

If these characteristics are present, OCDEL indicates that the program likely falls within the
child care statutes unless a specific statutory exemption applies. (The Pennsylvania Key –)

Importantly, the announcement repeatedly emphasizes that labels such as “preschool,”
“nursery school,” “Mother’s Morning Out,” or “church school” are not dispositive.

IV. Religious Instruction Is No Longer the Deciding Factor

Many church preschools devote substantial time to:

• Bible stories,
• chapel,
• prayer,
• Christian songs, and
• religious education.

These remain entirely permissible.

However, under C-26-01, religious curriculum does not determine whether the program is
subject to certification. OCDEL distinguishes between the content of instruction and the
nature of the service being provided.

A preschool can simultaneously provide religious education and regulated child care. If it
does, OCDEL takes the position that certification requirements still apply. (The
Pennsylvania Key –)

V. Churches Should Separate Two Different Legal Questions

One source of confusion has been the use of the word “exempt.”

Churches should now ask two separate questions:

Question 1: Is the preschool exempt from PDE private academic school licensing?
For many religious nursery schools, the answer is yes.

Question 2: Is the preschool exempt from OCDEL child care certification?
That answer requires a separate analysis under the Human Services Code and Chapters
3270–3290. C-26-01 emphasizes that exemption from one regulatory scheme does not
automatically create exemption from the other. (Pennsylvania Government)

VI. What Churches Need to Know Now

For churches operating preschool ministries, several practical points emerge:

• Do not assume that church ownership or nonprofit status creates an exemption.
• Do not rely solely on historical practice (“we’ve always operated this way”).
• Review the actual operation of the program against OCDEL’s criteria.
• Expect OCDEL to evaluate substance over form.
• Recognize that religious instruction and child care are not mutually exclusive for
  regulatory purposes.

VII. Special Issues for Churches Leasing Space

Churches that simply lease classrooms to an independent preschool remain in a stronger
position.

If the church:

• is only the landlord,
• does not employ preschool staff,
• does not collect tuition,
• does not supervise children,
• does not establish curriculum, and
• does not control daily operations,

then the church ordinarily should not be considered the “operator” of the child care
program. In that circumstance, responsibility for OCDEL compliance generally rests with
the independent preschool rather than the church. However, if the church retains
substantial operational control despite the lease arrangement, OCDEL could look beyond
the lease to determine who is actually operating the program. (The Pennsylvania Key –)

VIII. Remaining Areas of Uncertainty

Despite its detailed guidance, C-26-01 leaves important questions unanswered. For
example:

• How much church oversight over an affiliated preschool is enough to make the
  church the “operator”?
• Does a shared governing board automatically indicate common operation?
• How should churches structure ministries such as “Mother’s Morning Out” or short
  duration preschool enrichment programs?
• What weight will OCDEL give to corporate separateness if a preschool is organized
  as a separate nonprofit but shares facilities and leadership with a church?
• How will OCDEL treat hybrid ministries that combine worship, education, and child
  supervision?

These questions are likely to be resolved through future administrative guidance, individual
certification decisions, or judicial interpretation.

IX. Practical Advice for Churches

In light of C-26-01, churches should conduct an immediate compliance review rather than
assuming an exemption applies. That review should include:

1. Determining who is the legal and practical operator of the preschool.
2. Reviewing governing documents, leases, employment relationships, and financial
   arrangements.
3. Comparing the program’s operations against the statutory definition of regulated
   child care.
4. Evaluating whether any statutory exemption clearly applies.
5. If the program appears to require certification, engaging with OCDEL before
   enforcement becomes an issue.

For churches that have operated for many years without OCDEL certification based on a
good-faith belief that they were exempt, C-26-01 represents a significant shift in
enforcement expectations. The announcement suggests that OCDEL will no longer accept
religious affiliation alone as a sufficient basis for avoiding certification. Instead, every
church-operated preschool should be prepared to demonstrate, based on its actual
operations, either (1) that it falls outside the statutory definition of regulated child care, or
(2) that a specific statutory exemption applies. (The Pennsylvania Key –)