HQ
778.65
.C2
C37
2001
IGSL
UCB

 

PACE

How to Pay for
Child Care?

Local Innovations
Help Working

Families

By Judith Carroll
Yale University

From the Growing Up

in Poverty Project,

a collaborative effort of
Berkeley, Yale, and
Teachers College,

Columbia University.

_, yarzear , ,

About the Early Eaveai’an’sefie,
The second in a series of briefs
that inform policy makers

and practitioners about
child-care and early education

practices that work.

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UNIVERSITY Of CAUT- URN iii:

POLICYBRIEFff 8 a

hild care—from
high—quality
preschools to paid
babysitters—
commonly costs from $5,000 to
$7,000 a year. Many families can’t
afford to pay this much, especially
parents who are struggling to get off

welfare or hold down low—wage jobs.

Financial supports for child care,
aiming to help low—income fami—
lies, have grown dramatically over
the past decade. Yet in many
communities, less than one—fourth
ofall eligible families sign up for
these subsidies. In some states, new
child—care funds are going unspent.
State and local leaders are trying to
determine why families are not
more eager to participate, and

how their agencies can become

IDOI‘C accommodating.

The policies determining which
families receive subsidies vary

tremendously throughout the

country. This threatens to preserve

 

«ween-angst. - : 3:1,:51: ->;> ea rs,“ . , p52. Sean/arena:

disparities in access. The good
news is that this dissimilarity is
producing a number ofinnovative

ways to help parents take advantage

of child care.

The intent of the What VVor/es series
is to examine these variations and
provide decision-makers with
concrete examples of effective
programs and policy strategies.
This briefis drawn from data
obtained through the Growing Up
in Poverty Project (CUP), a research
effort that recently found highly
variable rates of eligible parents
using child-care subsidies across
five study sites in California,
Connecticut, and Florida. This
research revealed uneven participa—
tion in center—based and child—care

voucher programs (Figure 1).

To investigate why these rates were
so variable—and to gather ideas for
how to increase participation—we

spoke with county welfare and child-

care administrators, advocates and

 

POLICY BRIEF

 

 

PACE

 

FIGURE 1 Share Of poor families using their child-care SUbSidV... And widely

varying definitions Of utilization

% of poor families using child-care subsidy

70% .— . p._ .V
60% . .
50% .
40%
30%
20%

10%

 

0%
Florida

Nationwide

LA. County

 

Santa Clara
County

Definitions of utilization rates vary widely. Nationwide percentage is for all eligible welfare-poor
and working-poor families, according to the federal eligibility standard. L.A. estimate is for
current welfare parents involved in work activities. Santa Clara County, California estimate is
for a sample of welfare parents who have selected a child-care provider

child-care directors. Under highly
decentralized family welfare pro-
grams, much of the action is local.

First, we provide background
information about the nature and
importance of child-care assistance
under welfare reform. Second, we
discuss possible reasons for low
levels of parents’ use of subsidies.
And finally, we present the reader
with an array of novel strategies
devised by local agencies to increase
subsidy utilization.

Child-Care Aid for Working
Poor Families

As the ultimate goal of welfare
reform, achieving economic self—
sufficiency is not an easy task for
parents receiving TANF benefits.1
There are many reasons why

a HOW TO PAY FOR CHILD CARE?

self-sufficiency presents a challenge,
one of which is the cost and avail-
ability of child care. Subsidies were
originally designed in the 19405 to
help specific parents pay for the
cost of child care. Indeed, subsidies
can be effective: parents are less
likely to work and more likely to
rely on welfare benefits when they
cannot gain access to their states
child—care subsidy program.2 Along
with maintaining a parent’s ability
to work, subsidies play an important
role in ensuring the well—being and
healthy development of the chil—
dren. Without a public child—care
subsidy, the likelihood that a low—
income working mother can afford
quality care is slim. Frequently
what low—income mothers can
afford may be care of questionable
quality.3 So, a child—care subsidy

has the potential, through its
purchasing power, to place high
quality care within reach of a low—
income family, advancing the
child’s emotional and cognitive
development.4

Public money earmarked for child—
care subsidies takes two forms. The
first, called either a grant or con-
tract, is awarded to local child—care
organizations based on the number
of children served. Financial
support provided through this
mechanism ensures that the doors
of early education programs always
remain open despite the changing
financial circumstances of the
families whose children are en—
rolled. Vouchers, the second type of
subsidy, are given directly to
parents or providers for individual
children. Vouchers allow parents to
choose the type of care that best
suits their needs and those of their
children. These two types of
assistance can serve complementary
aims, giving parents financial
options and local child-care organi—
zations a measure of stability.

Parents' Low Use of Subsidies

Passage of federal welfare reforms
in 1996 required state social service
administrators to make program—
matic changes quickly, focusing
initial attention on reducing case
loads and assisting clients in
becoming ready for employment.
As time goes by, however, and
public scrutiny has shifted to the
reasons for job turnover, states are
finding that many eligible parents

 

are not taking advantage of the
child-care subsidies available to
them. Policymakers and analysts
speculate about why this is so.

Research data suggest that mothers
often equate subsidy use with
center care. If centers are not
valued by a mother or if she feels
her child is too young for a group
situation, she may not feel inclined
to apply for child-care assistance,
not realizing that a subsidy in most
states may now be used for care
provided by a family child—care
home or a kith or kin member.S

Low levels of participation also
might be due to parents’ unwilling-
ness to become entangled with the
welfare bureaucracy, their errone—
ous belief that the new time limits
apply to child—care subsidies, the
fear felt by some informal providers
oflosing Social Security Income
(551) or their own welfare benefits,
or the fact that a child may already
be enrolled in a Head Start or
subsidized center—based program.

Finally, the lack ofinformation
about the subsidy program may act
as a barrier to participation for
some parents. Limited information
may be due, in part, to administra—
tors’ fear of their inability to serve
all who might come forward for
assistance, despite the fact that
many states are returning unspent
child—care funds to the state or
federal government.

In short, child—care subsidies are
important facilitators of low—income

parents’ ability to be gainfully
employed. Paradoxically, though
this aid is more widely available to
families, it is not being used fully.

Models tO Improve Subsidy Use

To determine what policies and
programs can improve the prob-
ability that parents will take advan-
tage of child-care funding, Growing
Up in Poverty staff conducted a series
of interviews with a number of key
stakeholders in San Jose and San
Francisco, California and Tampa,
Florida. Administrators in these
cities are working hard to increase
their subsidy take—up rates. Repre-
sentatives from county and city
government, center directors, and
resource and referral agencies spoke
of their program successes and
concerns, revealing that they are
united in their desire to help
families and children thrive. As one
participant stated: “It’s all about
options. Many of the families we
deal with don’t have many. It’s my
job to work to improve the few
options that they have.”(’
While many models of subsidy
innovation exist across the country,
the following examples illustrate
what some large urban communi—
ties are doing to help their families
balance child care and work obliga—
tions. The programs discussed
below are either currently adminis—
tered or being implemented by
state or local managers of the
subsidy programs in the GUP
study sites.

Strategy 1: Creating a state child—
care guarantee

One step toward increasing parent
participation in a state or county
subsidy program is the establish—
ment of full support for the child—
care costs ofTANF parents. Called
a child—care guarantee, this fiscal
policy opens subsidy eligibility to
all working parents receiving
assistance and ensures access to
those who apply. The child-care
guarantee consists of two parts.
First, states establish the criteria
that determine family eligibility.
Second, they must appropriate a
pool of money adequate to meet
the needs of all families that
qualify. Sometimes this entitlement
extends to working—poor families.

This state policy is the devolved
equivalent Of the federal guarantee
to states established under the
Family Support Act of 1988,
eliminated with the passage of
welfare reform legislation. The
federal guarantee required states to
provide child—care assistance to any
AFDC parent who chose to work
in return for partial reimbursement
of that state’s child—care spending.
The elimination of the guarantee,
the subsequent cap on federal
child—care dollars, and the growing
need for child care by TANF
mothers means that decisions
pertaining to child—care financing
now depend on state—level priori—
ties. The current dilemma of
unspent Child Care and Develop-
ment Fund (CCDF) dollars in part
is due to the fact that states have

LOCAL INNOVATIONS HELP WORKING FAMILIES a

POLICY BRIEF

 

 

PACE

been unable to effectively distribute
money to all eligible families. In
addition, state policymakers have
been unwilling to make the fiscal
commitment to more fully support
the child—care needs of parents
moving into the workforce.

Other state leaders well understand
the link between employment and
child—care assistance, and several
states have been willing to take on
more fiscal responsibility for low—
income parents who are now
expected to work. For example,
California’s governor and legislature
have established a state child—care
guarantee for parents on CalWORKs
who are employed, or those whose
benefits have ended yet they still
earn less than 75% of the state
median income (equaling about

250% of the federal poverty level).7

A limited number of other states
have created a guarantee that
extends to parents earning 200%
of poverty, some ofwhom are
employed and have never received
assistance, a provision allowed
under federal welfare regulations.
This policy depends on the
availability of state and federal
money and periodic review by the
state legislature.

Such fiscal guarantees also allow for
the creation of innovative programs
to encourage parent application.
Santa Clara and San Francisco
county officials have come to
realize that parents who have left
the CalWORKs child-care subsidy

program may not be aware of their

n HOW TO PAY FOR CHILD CARE?

continued eligibility for child—care
assistance. Indeed, the guarantee has
allowed administrators to seek out
these parents who otherwise might
have been left to their own devices
in making child—care ends meet.

Short of a child—care guarantee,
states can implement policies such
as those found in Florida, where
efforts are made to serve as many
low—income families as possible.
Employers are drawn into the
state’s funding efforts through a
“child—care purchasing pool,”
whereby company funds spent to
assist employees with their child—
care costs are matched by the state.

Strategy 2.- Expanding local

child-care organizations

Boosting parental access to con—
tracted child—care centers is an
important provision that states
should consider when attempting
to improve parental use of subsi—
dies. First, many TANF parents
who are eligible for a child—care
voucher confront few options,
feeling that they can only purchase
care from the informal, unregulated
network ofproviders or from a
family member. Given this di—
lemma, increasing the number of
contracted centers in high need
neighborhoods would be one
means ofproviding support to
parents while building organiza—
tional capacity.

Second, notwithstanding the
importance of parental choice and
the significant role relatives may

play in supporting parents and
children, the use of public money
to finance care provided by indi-
viduals not subject to licensing
standards raises questions for some
policymakers over issues of quality
and public accountability. Expand-
ing the number ofcontracted
centers through grants to local
schools and community agencies
helps to address these concerns.

To be effective, grants to licensed
centers can be used in conjunction
with vouchers and affordable co—
paymcnts. Without building the
capacity ofthis center—based sector,
parents in low-income neighbor—
hoods who qualify for child—care
subsidies and prefer centers will
continue to have few real options.

Strategy 3: Creating adequate
payment rates and afiordable
parent fees

While it is important that fiscal
measures are taken to ensure that
adequate numbers of parents can
be accommodated by a state’s
subsidy system, it is also important
that reimbursements made to
providers cover the cost of quality
care. When payments do not
match actual costs. center directors
and other providers must cut the
number of subsidized children that
they serve, shave the quality of care,
or simply shut down.

For children on CalWORKs who
are enrolled in licensed care, San
Francisco and Santa Clara counties
pay the provider up to the regional

 

market rate, defined as the 93rd
percentile of the rates charged by
licensed providers in the commu—
nity. Parents who choose a provider
that charges above this amount
must pay the difference.

When parents are expected to
shoulder a portion of the price
through a co—payment, that
amount should not be overly
burdensome. In fact, some na—
tional experts encourage states to
eliminate co—payments for em-
ployed parents earning less than
200% of the federal poverty level
and to maintain co—payments at or
below 10% of family earnings. In
California, parents pay nothing for
child care while they are enrolled in
CalWORKs, then begin to pay a
fee when their earned income
reaches 50% of the state median.S

Strategy 4: Frequent review
of fizmily caseloads

Some states and counties distin—
guish between subsidy programs
according to the employment status
of parents. Those receiving cash
assistance and going to work often
are given priority. In fact, in many
states with restricted funding for
non’welfare families, TANF parents
may be the only ones able to
receive child—care assistance. Their
counterparts who are employed but
not receiving welfare benefits
typically are required to put their
names on waiting lists.

To keep the distribution of subsidy
money fluid, local managers in

California frequently review their
eligibility or waiting lists for
CalWORKs families. This practice
provides the opportunity to iden—
tify former clients who inadvert-
ently have dropped out of the
subsidy program. This monthly
process also minimizes competition
for different kinds of subsidies.
Santa Clara and San Francisco
county administrators are success—
fully identifying many CalWORKs
parents who are eligible to receive
child—care subsidies.

Strategy 5.- Co-locatz'on of
child-care staflat welfizre ofi‘ices

A service delivery concept that is
gaining popularity is that of “one—
stop shopping” which means that

many services exist at a single
location; easy access is intended to
support parents’ full participation.
Situating local resource and referral
(R8CR) agency staff, whose primary
job is to inform parents of child-
care availability, in welfare offices is
one example of co-location. It
provides parents with the physical
and programmatic support needed
to navigate through an often
confusing and complicated system.

Co—location at the “one—stop”
centers established in Hillsborough
County (Tampa), Florida, has
provided a social service staff
person to personally visit each site
ensuring that TANF mothers are
receiving the services for which

 

BOX 1

States vary Widely in WhICh families are eligible for child-care aid...

 

Families are eligible for subsidies if income is under:

 

As multiple of As percent of

poverty line state median income
Alabama 15 49%
California 2.2 75%
Florida 1.5 85%
Michigan 2.0 52%
New York 2.0 65%
Wisconsin 1.7 55%

 

...and hOW MUCH parents must contribute in co—payments.

 

For a single mother with two children earning $12,000 per year,
each month for full-time child care she must pay:

California $0 monthly
Connecticut $5 monthly,
Florida $48 monthly

 

 

LOCAL INNOVATIONS HELP WORKING FAMILIES a

 

POLICY BRIEF

 

 

PACE

they are eligible. This policy helps
to explain the high use of child-care
subsidies revealed by the GUP
study. Likewise, the interconnec-
tion between welfare reform and
child-care information is believed
to be so important that the Califor-
nia state legislature has mandated
co-location of R8CR child-care
counselors at all of its county
welfare offices. Upon entering the
CalWORKs program, parents
participate in an orientation session
at which RESCR staff often provide
parents with an overview of the
child—care program, counsel them
on options, and link families to
other needed services.

After participating in the orienta—
tion session, parents can contact
the R&R staff for help in finding
child care as long as they partici—
pate in good stead in the
CalWORKs program. Both face—
to—face and phone interviews are
encouraged. During a focus group
discussion conducted to determine
mothers‘ responses to subsidy
policies, one California mother
talked about how helpful it was to
have access to someone from an
R8lR. “It gives you a jump start,”
she said. “And they tell you what to
look for, what questions to ask at
those certain facilities when you‘re
searching for them.”

The co—location model can most
effectively assist parents when R8£R
staff conduct in-person interviews
with all TANF parents, not only
those who expressly voice a need

a HOW TO PAY FOR CHILD CARE?

for child care. All parents attending
the welfare orientation sessions
should be given information on the
benefits of quality child care;
assistance in completing the sub—
sidy application; advice on licensed
child care; and when preferring
kith or kin care, given information
on how vouchers can reimburse
their individual caregiver. In many
states, all providers who receive a
subsidy, except immediate relatives,
must submit to a criminal back-

ground check.

Strategy 6.- Efiéctive child—care

orientations

Welfare orientation sessions are
often overwhelming situations for
parents facing a panoply of rules
and strict work requirements.
Even the savviest parent can feel

overloaded by the amount of
information given to them.
Adding details about child care to
the long list of other topics can
cause a parent to become over—
whelmed and uncertain of what
they’ve heard. Because the intent
of these sessions is to help
parents think about their life in
new ways, the method of presenta—
tion is as important as the content
of the message.

To ensure that the child—care
subsidy message is portrayed
accurately and consistently, and to
accommodate different literacy
levels, the San Francisco Depart—
ment of Human Services (DHS) is
in the process of developing an
instructional video that will be used
during the child—care portion of

 

BOX 2

child-care aid.

needs children.

 

What is San Francisco doing to boost child-care subsidy use?

I Linking employment support and childcare caseworkers, and
streamlining the referral process.

I Mounting public information campaigns and videos of current
clients discussing child—care options and subsidies.

I Conducting periodic outreach and follow-up with parents who
are not drawing child—care subsidies.

I Working closely with centers and licensed family child-care
providers to ensure that eligible parents are drawing

I Developing quick response services for emergency child-care.

I Developing an inclusion project to support parents with special

 

 

 

 

their CalWORKs orientations.
Mothers currently on assistance or
those who successfully have moved
into the workforce will speak on
camera, explaining child—care
options, how the subsidy program
works, the steps parents have to
take to apply, and the importance
of financial assistance in keeping a
job and supporting a family. The
video will augment rather than
replace the RESCR staff person’s
presence at the orientation session
and will be produced in English,
Spanish. and Chinese.

Strategy 7: Cross training of
welfare and child-care stafip

Parents can be supported most
effectively in their pursuit of
employment and child-care
services if everyone involved in the
case management process under—
stands parental needs, program
requirements, and service availabil—
ity. This translates into having case
managers and employment techni—
cians who are well versed in the
subsidy program and child-care
staff who are familiar with the
work requirements that parents
must meet.

The cross—training model allows
welfare and resource and referral
staff to maintain an effective
understanding of child care and
welfare policies and programs.
Along with updates on program
changes, the staff of each unit
attend information sessions together.
At such sessions, which occur
regularly rather than as one—time

iiiiiiiiiiiiiiiii

 

BOX 3

 

Which parents are less likely to draw child-care aid?

I Parents from immigrant communities, including Latina and
Vietnamese mothers, who may not speak English fluently.

I Parents with children under 3 years old who believe that
subsidies are fused to center-based programs, unaware of the
options available with child-care vouchers.

I Parents with stronger support networks who often find a kin
member to provide child care, losing out on voucher support.

I Parents with no prior experience with welfare or center-based
child care, those with the least knowledge of subsidy options.

I Parents who live in lower middle—income neighborhoods with a
scarcity of centers and family child—care homes.

 

 

events, child—care providers and
advocates speak to staff about the
role of quality child care in sup—
porting the healthy development of
children. Parents on assistance also
can be involved in these sessions,
talking about the confusion they
might feel in sorting out various
child—care options, the role of
subsidies in furthering their em—
ployment goals, and the fears they
have in placing their children in
care, Whether the provider is a
relative or a center teacher.

New research findings can enrich
training efforts by identifying
parents who are less likely to push
for child—care assistance. For
example, the GUP study has
pinpointed several client attributes
that help to predict which mothers

may need more focused counseling
about the availability of child—care

subsidies. See Box 3.

Strategy 8: Parent outreach
and engagement

As parent participation in many
support services, such as Medicaid,
food stamps, and child care seems
to be stagnating, program adminis—
trators are searching for the reasons
why. Qualitative and quantitative
research suggests that mothers are
assuming that the TANF time limit
also applies to these family support
programs which are not time—
limited. As a result, a significant
movement has developed to
engage parents and increase their
participation in community—
based programs.

LOCAL lNNOVATlONS HELP WORKING FAMILIES

POLICY BRIEF

 

 

 

PACE

Understanding the integral role

outreach efforts play in engaging
parents personally. the San Fran—
cisco DHS

( ouncil..\

and the Childrens

\an 1 1anc1scos largest
R&R. are working with l’arent
\‘oices. an advocacy organization
dedicated to providing a vehicle for
parent engagement in the political
process. DHS is aware of how
ineffective the outreach message
might be with some clients if it
were to come directly from their
agency. As a result. an outreach
worker. herself a former
Cal\\HORl\is recipient. is coordinat—
ing the initiative. finding and
working with parents to encourage
participation. Going out into
communities where parents live
and work. knocking on doors. and
talking to members of different
religious communities the effort in
many neighborhoods is proving to
be quite successful. To date. well
over €00 former Cal\\”ORl\is
families have been re—enrolled in
the child—care subsidy program
through l’arent Voices and the

Childrens Council.“

In addition. the Childrens Council
is working with a multi—media
company to produce public infor»
mation materials to support the
work of l‘arent \Voices. l’osters.
billboards. and brochures will be
made available. sending the simple
message that ifa parent has ever
been enrolled in ’l';\t\'li. they may

he eligible for child—care assistance.

I] HOM/TOPAYFORCHHDCARE?

Conclusion

Ultimately. a combination of
approaches should be taken to
increase a state or countys child-
care suhsidy take—up rate. as no one
method will be adequate. Prior to
implementing these policies. local
policymakers might conduct a
community—based needs assessment
to understand current usage pat—
terns. barriers to take-up. and the
many factors that influence

parents options.

lfthe utilization ofcurrent subsidy
dollars can be raised and a wider
range of working—poor families can
be served. millions of additional
parents would become more
e111ployable. Stronger revenue
streams would help boost the
sustainability and enrollment
capacity ofcenters and family
child—care homes. and fuel much
needed gains in program quality. In
the absence of these advances. we
should not be surprised when low—
income mothers fail to hold down
a iob or when millions ofchildren

begin kindergarten already behind.

Thanks

Dissemination and policy engage—
ment activities of the Growing L p
in Poverty l’roiect are funded by
the .\lac;\rthur. Mailman. and
Packard foundations. the Graustein
.\lemorial Fund. and the California

Department of Social Services.

Endnotes

'l'.1\1\'l'.\\hieh stands foi 'lemporary Assistance to
Needy families. replat ed the .-\id to Families with
Dependent Children program under the 111% federal

welfare reform act.

‘ l'S, Department of l lealth and Human Sen ices.
:\dmini.stration for Children and liimilies ll‘l‘W).
.-\ceess {11(‘ltild (are lot low ltuome \Vorking
Families. .-\1ailable at littpz1"i'\v\\\\,.1tfdhhs.gov/ne\vs/

press " l W)" "cert-pt 11'1 , h 1 m

; (irowing l'p in I’m e111 l’roiett (3000i. Remember
1/11‘ ( 71/71/1111: JIM/1111 It’ll/.mtt' 11‘211-1~.1m/1 /11/(/(,111'1‘
Mir/1'1 lit/1.111 N111” w, lie1keley. ( "\z l'11i\ersityof

(‘aliliu'nim lierlxelu .1iitl \ale l'niyeisitv.

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il‘Mfit Mei/xlftaux /1’1‘1/1/.:/~' H11 l’w'ri /'11wr/11111/Sim/1

//'1'1111|q/1 in C V \psilanti. \lithigati: Ilighlbtope l‘ress.

(ironing hp 111 l’mtitv l‘itiieti CNN“,

11 1'sonal distussiiiii \Hlll \111 llk le Rutherford.
('hild( .ue ( iiiiil‘tllllaltil. \111 l tantiseo Department

of l luman M11111» [line 5'. fill)”.

( .1l\\URl\s. \shith stands lorkalifor11ia\Vork
Upportunm and Respons1bilit1 to Kids. is the states

\\tll.llk prngiam.

‘ tl1lilor111a subsidy 1egulations also require that
pim ide1s tanuoi t barge subsidi/ed parents more than

1l1.11\\hith1|11\ thaige fee paying families.

\\1i11en toniinunitatitin with l innea Klee.
l\t\llll\t‘ Diteettir. Ch1ld1’ens Countil ofSan
lIatitmo.Member10.1000.

For additional information

Natienai ,-\sseciati011 for Child Care Resource
and Refei 1.11 AgenCies

1519 r Strt “et N‘W §uite 500

\Xas‘i1iiiut011, DC 2000-1» 1 i06

Cit yand Countv of San Frantisco
Department of Human Sen/ices
P0 Box 7988

San Frantisco CA 94120

a1eont\ lCGS
1i1antiseoCi111dren's Comm!
75 Suttei Stieeti Floor
111F1anc1sce CA 941 02-li03

ll) 'fl

County of Santa Clara
Employment Support initiative
1725 Technology Drive 2 ‘Fleer
an Jose CA 9511c

ttl1iSL1iief.Si

ES 0 CIEQSE tail
‘10-’64l7333