Child Care Falling Short for Low Income Working Families
Excerpted from publications by
Helen Blank, Gina Adams, Nancy Ebb, Karen Schulman
March 23, 1998
The vast majority of young American
children spend at least some time in child care before
they enter school; an estimated 13 million children
younger that six are cared for in child care each day.
For many older children, after-school programs keep them
safe and help them succeed in school. Access to quality
child care is critical if parents are to be able to work
and support their families, young children are able to
enter school ready to learn and succeed, and older
children are to have places to go that keep them out of
trouble while helping them to do well in school. Yet,
many low- and moderate-income families are unable to
access good quality child care or after-school programs.
Even prior to the 1996 welfare law,
states had a significant level of responsibility for
child care and early education. However, states varied
widely in their commitment. For example, in 1994, the ten
states with the highest commitment to child care and
early education invested four-and-a-half times as much
per child as did the ten states with the least
commitment.
The 1996 welfare law further expanded
the state role in child care and early education, in part
due to state policy makers arguments that they
could better serve families and children if they were
given more responsibility and flexibility. In addition,
the law increased federal funding by $600 million in FY
1997.
Some states are taking bold strides
forward; others are slipping backwards. In light of the
favorable conditions of the past year, one would have
expected to see most states moving ahead. In 1997, states
experienced strong economies, shrinking welfare
caseloads, low work requirements for TANF (Temporary
Assistance to Needy Families) families, and increased
federal child care funding. [States received a total of
approximately $600 million in new federal child care
money (if they provided matching funds), and states were
able to use a portion of their new federal welfare grants
under the new welfare program (TANF) for child care.]
Given these conditions, 1997 is exactly the year when every
state should have been showing strong signs of
progress in improving their policies and investments in
child care. It is of great concern that a number of
states actually took steps backwards during this period.
Guarantees of Child Care Assistance
Prior to the 1996 welfare law, states
were required by federal law to "guarantee"
child care assistance to families working to get off of
welfare and families who had recently left welfare. This
meant that any eligible family who needed child care
assistance would receive it, and that the funding would
be automatically available to cover that
assistance. However, the 1996 welfare law eliminated this
guarantee. Consequently, it is now up to states to decide
which families receive child care assistance and whether
to "guarantee" assistance to any categories of
families.
States have responded in various ways.
Half the states say they have maintained what they call a
"guarantee" for at least those families who are
on welfare while 27 maintain a guarantee for those who
just left welfare -- though it is not completely clear
that all of these states are providing a true
guarantee of assistance (which is when they ensure that
funds are automatically available to serve all eligible
families that apply). Other states that do not have a
true guarantee report that they have enough funds to
provide child care assistance to at least those families
who are on TANF or who are making the transition off --
some of these states call this a "guarantee subject
to appropriations" (which, again, is not a true
guarantee as defined here). And still other states have
eliminated all guarantees of child care assistance
-- even to families on or leaving welfare.
Some states have recognized the
importance of providing child care assistance to
low-income families, regardless of whether they receive
TANF. These states have not legally "entitled"
all families below a certain income level to child care
assistance, but they believe they have enough funding
available to provide help to all families below a certain
income level who they think need and will use child care
assistance, or to serve all families on their current
waiting list. As noted above, however, these states are
not providing a true "entitlement," because the
availability of child care assistance will depend on the
future availability of funds.
States have taken a variety of
approaches to fund their expansions of child care
assistance, including appropriating new state funds (such
as Illinois), transferring TANF dollars to their
CCDBG (Child Care and Development Block Grant) (such as Washington
state and Wisconsin), and combining new federal
funds with existing dollars. It is important to note that
although more families are now being helped, some of
these states have other policies that undercut the value
of the child care assistance to families. For example,
Washington state is paying rates far below the 75th
percentile for all but infant care, which means that
parents choice of providers is severely limited.
And families in states such as Wisconsin are
encouraged to use informal, less expensive -- and
sometimes less safe -- care because the state requires
lower copayments for such care.
Even with the new funds that were
available in 1997, a 1998 Childrens Defense Fund
survey of state child care administrators from all 50
states (and the District of Columbia) underscores the
urgent need for additional investments in child care if
the country is to promote both work and family -- not
only by helping welfare parents leave welfare but also by
ensuring that low-income, nonwelfare workers have the
child care assistance they need to stay employed and off
welfare and to help their children thrive. Nine out of
ten children who are eligible for child care assistance
do not receive help:
- State child care subsidy
programs are so underfunded that they cut off
eligibility at family income levels far below
what is allowed by federal law and what is needed
by familieswith the result that families
earning as little as $20,000 a year for a family
of three are not eligible for help in many
states. The CCDBG allows states to help
families with incomes up to 85 percent of state
median income ("state median income"or
SMIis the income level in each state below
which half of all families fall). However, across
the country all but four states disqualify
families for help before they reach this
federally authorized level. In some states, the
income eligibility cutoffs are so low that only
the poorest of the working poor can qualify: West
Virginia, for example, cuts off income
eligibility at $15,000 per year for a family of
three (barely above the 1997 federal poverty
level of $13,330), whereas Iowa and South
Carolina cut off eligibility at $16,700. As
of January 1998, three out of five states would
not have provided any help to a family of three
earning $25,000 (slightly over 185 percent of
federal poverty) who applied for child care
assistance.
- Even those low-income working
families who do meet state
income guidelines frequently cannot get the help
they need. Low state income cutoffs keep
demand for state child care subsidy help
artificially low. Yet even with low income
cutoffs, many states face demand they simply
cannot meet. As of January 1998, about half the
states had to turn away eligible low-income
working families or put them on waiting lists for
help. Waiting lists stretch out across the
country. In California, over 200,000
familiesmostly nonwelfare, low-income
workersare on the child care subsidy
waiting list. In Florida, 25,000 children
were on the waiting list as of September 1997,
and Texas had 30,000 families waiting for
child care assistance as of January 1998. These
waiting list numbers often underrepresent the
real need: administrators told us that many
families do not put themselves on the list
because they feel, in many cases correctly, that
it is futile.
- The waiting list numbers are
only one measure of the inability of the current
system to serve eligible families. Forty-three
states told CDF that they were not confident that
they could serve even those eligible families who
met their current low income eligibility
guidelines if these families knew they were
eligible. One administrator, when asked if
his/her state could serve all eligible families
if they knew they were eligible, replied bluntly,
"God, no." Only eight states reported
that they would be able to serve all
eligible families if they knew they were
eligible, and most of these eight states had
severely restricted the number of eligible
families by setting very low income cutoffs. Many
potentially eligible families never apply for
help because states do not publicize the
availability of child care assistance as they
know they cannot meet even the existing demand.
Two out of three state administrators were not
confident that all eligible families in their
state knew they were eligible for help. States
such as Texas and Virginia, with
long waiting lists, explained that they could not
possibly conduct an outreach campaign to tell
more families about the program when they cannot
even serve all the eligible families already
asking for help. Wisconsin goes a step further. Wisconsins
caseworker manual for W-2 (the states
welfare program) gives confusing instructions
that could result in TANF families not knowing
that they are even eligible for child care help
unless they ask for assistance. The manual states
that "the new system should provide only as
much service as an eligible individual asks for
or needs. Many individuals will do much better
with just a light touch." These principles
may confuse caseworkers even though they are also
told that child care assistance is available for
all families.
Low Rates
In many states, child care subsidy
rates are so low that many providers are unwilling to
accept children who have subsidies or limit the number of
children with subsidies they are willing to accept. Some
providers may take subsidies, but only if parents pay
them the difference between what the subsidy rate will
cover and the providers actual rate (in addition to
the copayment the parent is already required to pay). The
effect of these practices is that parents often have
little choice of caregivers. They may be driven to choose
the lowest-cost, often lower-quality, care, since that is
what the state subsidy rate will pay for. Or parents may
have to pay providers the difference, spending extra
money on child care that their very eligibility for a
child care subsidy indicates they cannot afford.
- Only a minority of states set
rates that are sufficient (under criteria in
proposed federal regulations) to ensure parental
choice. Only 18 states set rates that were
based on a recent survey of local market costs
and that would enable parents to afford the rates
charged by three-quarters of local providers. The
gaps are often disturbingly wide between what
states will pay and what care really costs. Delaware,
for example, pays a maximum subsidy rate for
a four-year-old in center-based care that is over
$200 a month lower than the rate that would allow
parents access to three-quarters of local
providers. Similarly, Missouri pays a
maximum rate that is $170 a month lower than the
rate needed to allow parents this range of
choices; and Arizona pays a maximum that
is $108 lower than needed. Massachusetts pays
a maximum that is more than $140 a month less
than what parents would have needed to access 75
percent of the providers in 1994, which
means it is even less adequate. Such low rates
make a real difference in the quality of care
parents can purchase with subsidies and the range
of choices they have. Many get subsidies, but
then are faced with the difficult choice of
losing their jobs or putting their children in
substandard care.
- Many states pay rates that are
too low, or that are based on such outdated
information about the real cost of care that the
rates are inadequate. Sixteen states
based their subsidy amounts on market rate
surveys that were more than two years out of
date. Indeed, three of these statesConnecticut,
Maine, and Rhode Islandused
surveys that were five to seven years old. These
states had not increased their rates to reflect
the fact that their information was outdated.
Another nine states paid rates based on
recent market rate surveys, but set maximums that
would not enable parents to afford the costs
charged by three-quarters of local providers. Nebraskas
experience underscores how far subsidy rates
lag behind the real cost of care if the state
relies on old market data: last year the state
increased rates to pay the 75th percentile of the
1995 market rate survey. This enabled the
state to pay the current rates charged by
60 out of 100 local providersso that 40 out
of 100 local providers would not accept the fee
level paid by the state subsidy program.
High Parent Cost-Sharing
Child care subsidy programs also close
doors to families when they ask parents to pay such high
parent fees that child care remains unaffordable. States
generally require working families who are receiving
child care assistance to pay "parent fees" or
"family copayments." These payments are
established using a sliding scale, with families earning
higher incomes required to pay higher fees. Experts
recommend that low-income families should not have to pay
more than 10 percent of their income for child care, with
the poorest families paying nothing or only small fees. Yet
in a number of states, working low-income families who do
manage to get subsidies are facing such high copayment
levels that their child care costs remain prohibitivedespite
the appearance that states are subsidizing the costs of
their care.
For example, although experts recommend
that low-income families above poverty pay no more than
10 percent of income as parent fees, some states require
three-person families at $20,000 a year (150 percent of
poverty) to pay child care fees as high as 20 percent to
30 percent of their income:
- In South Dakota, the
parent fee would be $500 per month, or 30 percent
of the familys income of $1670 per month.
- In Oregon, a family at 150
percent of poverty would be required to pay $365
in parent fees22 percent of family income.
- Nevada charges such parents
about 18 percent of income in parent fees; Utah
requires parents to pay 13 percent; Iowa, Maryland,
and North Dakota require parents to
pay 12 percent.
The effect of such high parent fee
requirements is that low-income working parents who are
approved for subsidy payments are often left to pay
nearly as much in fees as they would if they were paying
for child care on their own. In South Dakota,
the parent fee of $500 per month is more than most
parents with one child are likely to have to pay for
child care based on the local cost of care. South Dakota
parents with one child in care will effectively have to
pay the entire cost of care even though they qualify for
a subsidy. And such high fees probably help account for Oregons
observation that many families stop participating in the
child care assistance program as their incomes rise, even
though they are still eligible for assistance.
Similarly, although experts
recommend that families earning below
poverty should pay nominal fees, or no fees at all, 21
states require three-person families at the federal
poverty line to pay 5 percent or more of their income in
parent fees. Families at the poverty level have no
money to spare, and need all their funds for clothes,
food, rent and transportation. There is little left over
for child care. Yet in some states the cost-sharing
requirements for families at or below poverty are
staggering:
- Some states require families
earning less than $13,330 for a family of three
(the poverty level) to pay as much as $1 out of
every $10 earned for child care. Colorado and
Oregon require parents at the poverty
level to contribute 11 percent of their income
for one childabout $120 for child care out
of a gross monthly income of $1110 for a family
of three; Virginia requires 10 percent;
and North Carolina and Texas
require 9 percent (Texas is proposing to
allow localities to charge parent fees of up to 20
percent of income for families earning as
little as $10,000).
- Four out of five states require
three-person families earning only about $10,000
a year (75 percent of poverty) to pay parent
fees. North Dakota requires a parent fee
of up to 13 percent$105 per month out of a
monthly income of $833, while Colorado, North
Carolina, and Texas require such
families to pay up to nine percent of income in
parent fees for one child.
Other Access and Supply Issues
Just getting to work and child care is
an enormous challenge for low-income families. Child care
rates are generally based on a 10-hour day. However,
given the lack of transportation and access to job sites,
many mothers trying to leave welfare find themselves with
very long commutes and dependent on inadequate public
transportation in urban areas or friends with cars in
rural areas. Some are paying burdensome additional
charges to child care providers who are keeping children
for 12 to 14 hours a day.
Mothers working to get off AFDC or TANF
who are able to find work are also likely to face jobs
that require evening and weekend hours. Nearly one in
five full-time workers (14.3 million) worked nonstandard
hours in 1991. More than one in three (five million) of
them were women. One-third of working-poor mothers with
incomes below poverty and more than one-fourth of
working-class mothers (those with incomes above the
poverty line but below $25,000 a year) worked weekends.
The demand for non-traditional hours outstrips the
supply. In Chicago, for example, CCR&R staff estimate
that about 30 percent of the requests that they receive
are for evening or weekend care. Based on a survey of
providers, they found that only 8 percent of providers
will consider evening care and only 3 percent weekend
care.
The instability of parents work
schedules also presents a challenge for families trying
to find child care. One study found that almost half of
low-income working parents worked on a rotating or
changing schedule, compared with one-quarter of working-
and middle-class mothers and one-third of working- and
middle-class fathers. This presents a greater obstacle to
finding child care than either a regular weekend or
evening schedule.
Other Shortcomings
These state developments must also be
viewed in the context of a child care system already
plagued with serious shortcomings:
- National studies continue to
reveal alarming deficiencies in the quality of
care in many communities. According to a 1995
study, Cost, Quality, and Child Outcomes in
Child Care Centers, six out of seven child
care centers provide care that is mediocre to
poor. One in eight might actually be jeopardizing
childrens safety and development. Equally
disturbing patterns were found in a study by the
Families and Work Institute of home-based care:
one in three settings provided care that could
conceivably hinder a childs development.
- Low wages continue to be the norm
for child care providers. Child care teachers and
providers today earn less per year than the
average bus driver ($20,150) or garbage collector
($18,100). Staff employed in child care centers
typically earn about $12,000 per year (only
slightly above minimum wage) and receive no
benefits or paid leave. As a result, turnover
among child care providers is high, shattering
the stable relationship that infants and children
need to have with their caregivers to feel safe
and secure.
- There are major flaws in the basic
health and safety standards for child care in
many states. Staff education and training are
among the most critical elements in improving
childrens experiences in child care. Yet 39
states and the District of Columbia do not
require providers who look after children in
their homes to have any prior training, and 33
states require no training for teachers before
they go to work in child care centers. In
contrast, becoming a licensed hair styler or
manicurist requires approximately 1,500 hours of
training at an accredited school.
- Even the standards that are in
place are often inadequately enforced because of
a growing number of child care facilities coupled
with insufficient licensing and monitoring staff.
A 1994 Inspector Generals report on
licensed child care centers in five states found
a significant number of unsafe and unsanitary
conditions. Furthermore, relatively few child
care centers meet the higher standards required
for accreditation. In 1997, for example, only 6
percent of all child care centers were accredited
by the National Association for the Education of
Young Children.
- Families with babies younger than
three continue to face especially daunting
challenges in finding safe and supportive child
care. This situation is particularly troubling in
light of the much publicized research on brain
development in the first three years of life.
Both the supply and the quality of care have been
found wanting. In one national poll, three out of
four parents of young children said there was an
insufficient supply of infant care in their
communities. The Cost, Quality, and Child
Outcomes study found that half of the rooms
serving infants and toddlers in child care
centers provided such poor care as to jeopardize
childrens health, safety, and development.
- The considerable need for before-
and after-school care has barely been addressed.
Nearly 5 million children are left unsupervised
by an adult after school each week. The
consequences are grim. Juvenile crime peaks
between 3:00 and 7:00 PM- the after-school hours
when many children are on their own. A 1990 study
found that eighth-graders who were left home
alone after school reported greater use of
cigarettes, alcohol, and marijuana than those who
were in adult-supervised settings. The dearth of
good after-school options is especially acute in
low-income neighborhoods . In 1993, only
one-third of schools in such neighborhoods
offered before- and after-school programs.
- Finally, many low-income working
families have scarce resources to pay for child
care and little hope of receiving help. According
to the Census Bureau, poor families earning less
than $14,400 per year spend 25 percent of their
incomes on child care. New Jersey reports that as
many as 15,000 children are on waiting lists for
child care subsidies, and Texas has a waiting
list of 37,000 families. New York State can
provide child care subsidies to only one in ten
eligible children.
Children and families pay a heavy price
for these gaps. According to a recent report by the
Carnegie Corporation, Americas child care and early
education services "have so long been neglected that
they now constitute some of the worst services for
children in Western society." This report observed
that the care that most children are in can not only
"threaten their immediate health and safety, but
also can compromise their long-term development."
Kindergarten teachers estimate that one in three children
enters the classroom unprepared to meet the challenges of
school.
Future years will bring more
challenges, as the demand for child care assistance is
likely to expand significantly due to sharply increasing
work requirements for TANF families. This means that in
coming years all states will face an increased need for
child careeven assuming that state economies remain
strong. If state economies should turn sour, the needs
will be even greater. As a result, larger investments in
child care will be necessary if states are to establish
policies that promote childrens safety and
development and make it possible for parents to obtain
and keep jobs. Yet federal funds for child care are only
slated for minimal increases over the next four years.
For more information , contact the
Child Care and Development Division of the
Childrens Defense Fund at (202) 662-3544. Or order
State Developments in Child Care and Early Education or
Locked Doors, Child Care Publications, from the CDF
Publications Office --
address: 25 E Street, NW,
Washington, DC 20001
phone: 202-662-3652 website address:
www.childrensdefense.org
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