Child Care Affordability: An Issue for Community Economic Success

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Child Care Affordability An Issue for Community
Economic Success

• Helen Blank Danielle Ewen
• National Womens Law Center Center for Law and
  Social Policy
• hblank_at_nwlc.org dewen_at_clasp.org
• December 10, 2008

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Families are Working
Source Congressional Research Service (CRS)
estimates based on analysis of U.S. Census
Bureau, Current Population Survey (CPS) data
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But Work May Not Pay

• Over a quarter (28 percent) of low-income working
  parents are employed in the service sector.
• Likely to have lower earnings and less access to
  benefits.

Source National Center for Children in Poverty
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Families Need Help Meeting Basic Costs

• Basic family budgets
• The amount needed for a family to pay for
  housing, food, health care, child care and other
  expenses is well over the federal poverty level.
• The median basic family budget across the US was
  39,984 in 2004.
• The federal poverty level in 2004 was 15,670 for
  a family of three.

Source Economic Policy Institute
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Child Care is Expensive for All Families

• Average cost of full-time, center-based care for
  an infant ranges from 4,388 to 14,647 and the
  average cost of center-based care for a 4-year
  old ranges from 3,794 to 10,920 annually.

Source National Association of Child Care
Resource and Referral Agencies.
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And Particularly For Poor Families
Source U.S. Census Bureau, Whos Minding the
Kids? Child Care Arrangements Winter 2002. 2005.
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The Cost of Child Care

• Average price paid per family
• 107 (all children, regardless of age)
• Average cost of quality
• Head Start programs spend 7,000 for a half day
  program
• Early Head Start costs 11,000 per child
• State pre-kindergarten spend an average of 3,000
  per child for part-day and year programs.

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Many Young Children Are in Care
Source National Center for Education Statistics,
2005 National Household Education Survey.
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Quality Matters for Children

• Quality child care helps children across all
  developmental domains
• Yet most child care is poor to mediocre,
  regardless of setting
• Studies of state licensing rules have found very
  few states hold centers or family child care
  homes to standards linked to better quality care
• Negative impacts of low quality care are more
  likely felt among more disadvantaged children

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Children Can Benefit from Quality Child Care
Source Peisner-Feinberg, E. S., Burchinal, M.
R., Clifford, R. M., Culkin, M.L., Howes, C.,
Kagan, S. L., Yazejian, N., Byler, P., Rustici,
J., Zelazo, J. The children of the cost,
quality, and outcomes study go to school
Executive summary. 1999.
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Especially Low-income Children
Source Peisner-Feinberg, E. S., Burchinal, M.
R., Clifford, R. M., Culkin, M.L., Howes, C.,
Kagan, S. L., Yazejian, N., Byler, P., Rustici,
J., Zelazo, J. The children of the cost,
quality, and outcomes study go to school
Executive summary. 1999.
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Families Need Child Care to Work

• 12 million children are in out of home care on a
  regular basis
• Child care is a key part of the economy across
  the country, generating nearly 580 billion in
  labor income and 69 billion in tax revenue and
  providing more than 15 million jobs.

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Whats the Goal?
Source Early Childhood Systems Working Group
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Federal Funds for Child Care and Early Education

• Generally state administered
• TANF, CCDBG, CACFP, Even Start
• Some federal to local
• Head Start, Title I of NCLB
• Most federal funding is stagnant
• Various federal agencies
• HHS TANF, CCDBG, Head Start
• ED NCLB, Even Start
• USDA CACFP
• IRS Child and Dependent Care Tax Credit
• Two ways to think about uses of funds
• Delivery of direct services
• Quality improvement activities

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State and Local Financing Initiatives

• Local Property Taxes (Seattle, San Francisco,
  Hillsborough County, FL)
• Sales Taxes (Aspen, CO)
• Tobacco and alcohol taxes (CA, AR)
• Real estate exaction tax (CA counties)
• Lottery revenues (MO)
• Tax credits (28 states)
• Tax credits linked to quality (ME, AR)

Source Child Care Financing Matrix, compiled by
Louise Stoney and Karen Edwards, Memorandum on
Developments in Federal and State Child Care Tax
Credits in 2006, National Womens Law Center
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CCDBG Helps Families Afford Child Care

• CCDBG serves very low-income families. In 2005,
  the median monthly income of families receiving
  CCDBG-funded assistance was 1,283 or 15,396
  when annualized. This is slightly higher than in
  previous years. Nearly half (49) of all families
  receiving CCDBG-funded assistance had incomes
  below the federal poverty level (which was
  16,090 for a family of three in 2005). Thirteen
  percent had incomes above 150 percent of poverty,
  or 24,135 in 2005.
• States serve families well below the maximum
  eligibility level set by federal law. Nearly all
  (45) states set eligibility for CCDBG-funded
  assistance below 85 percent of State Median
  Income (SMI), the maximum level established by
  federal law. Eligibility levels in states range
  from 28 to 85 percent of SMI. On average, states
  report income eligibility to equal 59 percent of
  SMI, which is lower than the 62 percent of SMI
  reported in FY 2002-2003.

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Child care helps parents work

• A study found that single mothers of young
  children who received child care assistance were
  39 percent more likely to still be employed after
  two years and former welfare recipients were 82
  percent more likely to still be employed after
  two years than those who did not receive any help
  paying for child care.
• A national study of families who had left welfare
  found that families receiving child care
  subsidies were less likely to return to welfare.
  Twenty-eight percent of families who did not
  receive child care assistance within three months
  of leaving welfare returned to welfare, while 19
  percent of those who did receive child care
  assistance returned to welfare.
• By making it possible for parents to work, the
  licensed child care sector allows Americans to
  earn more than 100 billion annually.

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But it doesnt help go far enough

• Only 1 in 7 eligible children receives help
  paying for child care
• States have extensive waiting lists
• Approximately 6 percent of CCDBG funds go to
  quality
• Licensing
• Compensation
• Facilities improvements
• Training

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States are reducing child care help

• Arkansas reduced its income eligibility limit
  from 35,724 a year for a family of three (203
  percent of poverty) to 28,345 a year for a
  family of three (161 percent of poverty) as of
  July 1, 2008.
• Nevada began a waiting list for child care
  assistance on July 1, 2008. Any new applicants
  for child care assistance with incomes above
  22,880 a year for a family of three (130 percent
  of poverty), up to the income limit of 38,916 a
  year for a family of three (221 percent of
  poverty), are automatically placed on the waiting
  list.
• Rhode Island eliminated state-sponsored health
  care insurance for child care center providers
  and family child care providers serving children
  receiving child care assistance as of July 1,
  2008.

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A Vision for Child Care

• Ensure Children and Families Have Access to
  Affordable, Healthy and Safe Care
• Improve Quality to Promote Early Learning

• Improve and Expand Care for Infants and Toddlers
• Provide Needed Research and Technical Assistance

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Economic Recovery and Child Care

• To create millions of new jobs, will need child
  care supports and other investments in early care
  and education
• 3 billion in new funds for CCDBG
• 3 billion for Head Start
• Investments both support families and have a
  stimulative effect on the economy
• Low-income families are hardest hit by the
  downturn and will benefit from child care
  assistance.

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The Obama-Biden Plan for Early Childhood Education

• Zero to Five Plan
• Comprehensive Zero to Five" plan will create
  Early Learning Challenge Grants to promote state
  Zero to Five efforts and help states move toward
  voluntary, universal pre-school.
• Expand Early Head Start and Head Start
• Obama and Biden will quadruple Early Head Start,
  increase Head Start funding, and improve quality
  for both.
• Provide affordable, High-Quality Child Care
• Increase access to affordable and high-quality
  child care to ease the burden on working
  families.