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Inadequate Child Care
Strains America's Working Families
Every day, three out of five preschoolers are in child care.¹
Children of working mothers are entering care as early as 6 weeks of age and can be in care
for 30 hours a week until they reach school age.²
Women work in the overwhelming majority of American families.
3 out of 5 women with children under age 6 work, and 3 out of 4 women with children ages
6-17 work.³
Child care costs are unaffordable for many working families.
About half of families with young children earn less than $35,000 per year.⁴ A family with
both parents working full-time at minimum wage earns only $21,400 per year.
Child care is a major household expense for working families. Full-day child care easily costs
$4,000 to $10,000 per year equal to what families pay for college tuition plus room and
board at a public university.⁵ The following are average child care costs for one three-year-
old child; care for babies and toddlers costs even more:6
Boston $8,840
Durham $4,630
Dallas $4,210
Boulder $6,240
Oakland $6,500
Minneapolis $6,030
Child care helps shape the way children think, learn, and behave
for the rest of their lives.
A recent report by the Carnegie Corporation confirmed that the quality of child care has a
lasting impact on children's well-being and ability to learn.⁷ Children in poor quality child
care have been found to be delayed in language and reading skills, and display more
aggression toward other children and adults.⁸
Child care quality for many American children is inadequate.
6 out of 7 child care centers provide care that is mediocre to poor, according to a recent
national study by a group of universities. One in eight centers were found to be providing
care that could jeopardize children's safety and development.⁹ Equally 10 alarming patterns
were found in a study of home-based care -- 1 in 3 could be harmful.
There are major gaps in the basic health and safety standards for child care in many states,
and even the standards that are in place are often inadequately enforced. For example, in
many states, care in smaller providers' homes is not inspected at all because licensing is not
required, and more than half the states do not annually inspect homes that are licensed.¹
Professional, quality child care is hard to find in a marketplace that pays child care teachers
and providers less than bus drivers ($20,150) or garbage collectors ($18,100). A national
wage study found that most child care workers earn only $12,058 per year (only slightly
above minimum wage) and receive no benefits or paid leave."
Oct-16-97 02:17P
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Staff education and training are among the most critical elements in improving children's
experiences in child care, but 41 states do not require providers who offer care in their homes
to have any training prior to serving children.¹⁴
Babies and toddlers are particularly vulnerable to poor quality care.
Almost half of babies who haven't reached their first birthday are regularly spending their
day in some form of child care.¹⁵
A recent national study found that half of rooms in centers serving babies and toddlers
provided such poor quality care as to jeopardize children's health, safety and development.¹⁶
Studies of home-based care produced equally troubling results.¹⁷
Scarcity of after-school programs leaves school-age children home alone.
Nearly 5 million children are home alone after school each weel:.¹⁸
Juvenile crime peaks between 2:00 and 6:00 p.m. and there is some evidence that more teen
pregnancies occur during this time.¹⁹
A 1990 study found that eighth-graders left home alone after school reported greater use of
cigarettes, alcohol, and marijuana than those who were in adult-supervised settings.²⁰
Good after-school activities for children and teens can be hard to find because options are
inadequate in many communities. This problem is even more serious in low-income
neighborhoods -- only one-third of schools in low-income neighborhoods offered before- and
after-school programs in 1993.²
America can help working families get affordable, quality child care.
1. Strong safety standards must be established and enforced for all centers and homes offering
child care. Programs to improve the quality of care and help parents find good options for
their children should be expanded.
2. Child care providers should be trained professionals, earning family-supporting wages.
Efforts must be made to increase the number of child care staff who are appropriately trained
and compensated. Scholarship and loan forgiveness programs should be expanded to support
careers in child development.
3. Structured after-school activities should be available in all communities. Investments should
be made to expand the supply of quality care for babies and toddlers, and to strengthen and
enrich existing programs.
4. Child care help should be available to low-income families to prevent welfare dependency.
Federal, state and local dollars should also help other working families with their child care
expenses and better afford quality care.
5. Employers should help their employees who need child care, and should invest in improving
the quality of child care in the communities in which they operate.
6. The Family and Medical Leave Act should be expanded to cover more workplaces and
employees to help enable working parents stay home with their children during the critical
early months of a child's life.
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Sources:
I
National Center for Education Statistics. Child Care and Early Education Program Participation of
Infants. Toddlers, and Preschoolers (Washington, DC: NCES, October 1996).
2
Testimony by Deborah Phillips before the Senate Committee on Labor and Human Resources,
March 1. 1995.
3
US Bureau of Labor Statistics, unpublished data from March 1995.
4
US Bureau of the Census, Current Population Reports. P60-197, Money and Income in the United States:
1996 (Washington, DC: US Government Printing Office, 1997).
3
Data on child care expenses from Child Care Information Exchange. July 1996. Data collected from
Resource and Referral agencies in each city. Data on average university costs cited in Statistical Abstract of the
United States 1994 (Washington DC: US Department of Commerce, 1994). Original data from The College Board.
New York, Annual Survey of Colleges 1993.
6
Child Care Information Exchange, July 1996. Data collected from Resource and Referral agencies in each
city.
7
Carnegie Corporation of New York, Starting Points: Meeting the Needs of Our Youngest Children (New
York: Carnegie Corporation, August 1994).
&
Testimony by Deborah Phillips before the Senate Committee on Labor and Human Resources,
March 1, 1995.
9
Helburn et al., Cost, Quality, and Child Outcomes Study: Executive Summary (Denver: University of
Colorado, 1995).
10
Galinsky et al., The Study of Children in Family Child Care and Relative Care: Highlights of Findings
(New York: Families and Work Institute, 1994).
11
Adams, How Safe? The Status of State Efforts 10 Protect Children in Child Care (Washington, DC:
Children's Defense Fund, 1995).
12
US Department of Labor, Bureau of Labor Statistics, Employment and Earnings (Washington DC:
USDOL, January 1994).
13
Helburn ct al., Cost, Quality, and Child Outcomes Study: Executive Sunmary (Denver: University of
Colorado, 1995).
14
Azer and Capraro, Data on Child Care Licensing (Boston: The Center for Career Development in Early
Care and Education, Wheelock College, 1996).
13
National Center for Education Statistics, Child Care and Early Education Program Participation of
Infants. Toddlers, and Preschoolers (Washington, DC: NCES, October 1996).
16
Helburn et al., Cost, Quality, and Child Outcomes Study: Executive Summary (Denver: University of
Colorado, 1995).
17
Galinsky et al., The Study of Children in Family Child Care and Relative Care: Highlights of Findings
(New York: Families and Work Institute, 1994).
18
School-Age Child Care Project, Factsheet on school-age children (Wellesley, MA: Center for Research on
Women, Wellesley College, September 1996). Teen pregnancy information based on anectodal evidence.
19
US Department of Justice. Juvenile Offenders and Victims: 1997 Update on Violence (Washington DC: US
DOJ, June, 1997).
20
Dwyer ct al., "Characteristics of Eighth-Grade Students Who Initiate Self-Care in Elementary and Junior
High School", Pediatrics, 86, 1990.
21
US Department of Education, The Condition of Education: 1993 (Washington, DC: National Center for
Education Statistics. 1993).
Oct-16-97 02:17P
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SAMPLE LETTER TO THE EDITOR
Dear XXXXX:
On Thursday, October 23, 1997, President Clinton and First Lady Hillary Rodham Clinton will
be convening the nation's first White House Conference on Child Care. This conference will
focus on the strengths and weaknesses of child care in America and explore how the nation can
better support working families' need for quality, affordable care for their children. It will also
highlight school-age care for our children and teens, responding to the concern that nearly five
million children are left home alone each week.
The Administration should be commended for focusing national attention on the child care needs
of our children and youth. We hope the conference will be the beginning of a renewed effort in
Washington and across the country to find solutions that make quality child care affordable for
all.
There is good reason to move ahead. Child care is an issue that affects many American families.
Every day, three out of five preschoolers are in child care. According to recent studies, many of
these children are not in the safe and nurturing settings they deserve. Six out of seven child care
centers provide care that is poor to mediocre, and care in as many as one-third of providers'
homes could be harmful to children. Yet, even average care remains unaffordable for many
working families. Parents can easily have to pay $4,000 to $10,000 per year for a child in child
care -- as much as tuition, room and board at many colleges.
In our state of XXXXX. [if available, insert local information about child care]
I hope the White House Conference on Child Care will help all of us in [your community] focus
on how parents, employers, communities, and all levels of government can work together to help
find innovative solutions to families' child care needs.
Sincerely,
March 27, 1998
MEMORANDUM
To:
Democratic Members, Committee on Ways and Means
From:
Deborah Colton
Shannon Rudisill
Subject:
Background on Child Care
In recent years, child care has become one of the most pressing issues facing
America's working families. There are several reasons why child care is an issue of
particular relevance now. More women are working than ever before, in order to
support their families, making the demand for child care higher than it has ever been.
In addition, the more stringent work requirements that result from welfare reform will
contribute to the already escalating demand for child care.
At the same time that more and more children are spending time in child care,
recent scientific research has pointed to the importance of the first years of life for early
brain development, the foundation for all of a child's future learning. Because of the
need to nurture early brain development, the quality of care which we provide for our
children is crucial. Mounting evidence indicates that the quality of much of the child
care in America not only fails to promote early development, but also places young
children's safety at risk.
Finally, the supply and quality of care for school-age children is also of
increasing concern. Because data suggest that school-age children are most likely to
engage in risky behaviors such as violence and substance abuse during after-school
hours, more emphasis is being placed on providing supervised arrangements for
school-age children during their out-of-school time.
This memorandum outlines the current facts about child care and its use in
the United States, briefly summarizes the major Federal programs that support
child care, and reviews President Clinton's FY 1999 child care-related budget
proposals. We hope you will find it a useful reference tool for the child care
debate.
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THE CURRENT STATE OF CHILD CARE IN AMERICA
RISING DEMAND FOR CARE:
Large numbers of working mothers
Of the 32 million American families with children under age 14, 69% have
a mother who worked sometime in the past year. (March 1997 Current
Population Survey)
In the nearly 18 million families with at least one child under 6, 65% of
mothers worked sometime in the past year. (March 1997 Current Population
Survey)
In married couples with children under 14, 73% have a mother who
worked during the past year. (March 1997 Current Population Survey)
In 1994, 62% of married mothers with a child under age 6 were in the
workforce, compared with 30% in 1970. (Child Care Bulletin, Issue 17,
Sept./Oct.1997)
In 1994, 40% of preschool children under the age of 5 hae full-time at-
home mothers. 18 percent of children younger than 5 have mothers who
work part-time. (Children's Defense Fund, Feb. 1998 from Census data)
WHERE THE CHILDREN ARE:
Large numbers of children are in child care
In 1995, of the 21 million children in the United States under age 6, 12.9
million were in child care. (National Center for Education Statistics)
As of 1995, forty-five percent of children under age one were in child care
on a regular basis. (National Center for Education Statistics)
Parents Choose a Variety of Settings
In 1995, 31% of children under the age of five with a working mother were
in center-based care (including preschool arrangements). (National Center for
Education Statistics)
According to the National Center for Education Statistics, in 1995, 16% of
children under five with working mothers were in family child care (in the
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home of a nonrelative). Another 4-5% of children received care from a
non-relative in the child's own home.
Over time, there has been an increase in the use of center-based care.
Experts attribute this in part to the fact that center-based care is often
more reliable and perceived to be of higher quality for preschoolers. This
hypothesis is buttressed by evidence that parents with higher incomes
and mothers' with higher educational attainment choose center-based
care more often than those with lower incomes and less education. This
is an indication that, as families can afford it, they tend to come into the
formal market for center-based care. However, for very young children,
families often indicate that they prefer home-based settings, particularly
with relatives.
Families in which a Parent Stays Home
Not all American families include a mother who works outside the home.
Of the 14 million families with children under age 14 with total family
incomes under $30,000, 35% have mothers who did not work at all during
the past year. For those families with total incomes of $30,000 or more,
19% have a mother who did not work at all during the past year. (March
1997 Current Population Survey)
Of the 22 million married-couple families with children under age 14, 27%
have a mother who did not work at all during the past year. (March 1997
Current Population Survey)
Even in families where the mother is not in the labor force, 32% of
preschool children participate in some type of child care or early education
program. (National Center for Education Statistics, 1995)
AVAILABILITY OF CARE:
A Crucial Workforce Issue
A recent Harris poll found that 43% of respondents indicated that they or
their spouse could not take a job that they wanted because they did not
have satisfactory child care.
When the supply of care is low, parents often are forced to choose ad hoc
arrangements, including leaving children with a variety of neighbors,
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cobbling together whatever arrangements they can. These sorts of
arrangements tend to be less reliable. A recent Parents Magazine poll
found that among the 452 respondent families, 588 full days of work and
2044 partial days of work were missed just in the preceding three months,
due to a child care emergency.
AFFORDABILITY ISSUES:
Parents Struggle to Afford Care
Families with annual incomes under $14,400 that paid for care for children
under age 5, paid 25% of their incomes for child care, compared with 6%
of incomes spent on child care for families with incomes of $54,000 and
above, according to Census data from 1993.
In 1993, the average weekly cost per preschool child in paid child care
arrangements was $60 ($3000 per year). For infant children, the cost
averaged $66 per week ($3432 per year). The average cost for families
with preschoolers was just over $4100 per year, reflecting the fact that
many families have more than one child in care. (Census Bureau)
In 1995, for families with annual incomes between $33,600 and $56,700
and children under age 2, child care was their third largest expense, after
housing and transportation. For families in that income range with
children between the ages of three and five, child care was second only to
housing. These families spent more on child care than they did on food or
health care. (Census Bureau)
As cited above, parents report paying between $3000-$3500 in 1993 for
care for their young child, not counting public subsidies or private benefits
(such as United Way funds or employer-provided subsidy) that may have
helped reduce the cost to the parent. In comparison, in 1996 the GAO
reported that tuition and fees at a public college or university averaged
$2700 per year, but a family might actually pay less if the student received
a scholarship. Therefore, for some families, the cost of care for young
children exceeds the cost of sending a child to a public college or
university. Furthermore, families pay for child care at an earlier stage in
their working lives, when they generally have lower incomes and fewer
accumulated resources than they will have when the child enters college.
(Financing Child Care, Mitchell and Stoney, 1997)
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States Stretch Child Care Dollars Thin,
Making Care Less Affordable for Families
In a February 1998 study, the HHS Inspector General found that although
experts recommend that poor parents should be required to pay no more
than 10% of their incomes for care, at least 22 States require families who
receive a subsidy to pay a copayment that is higher than 10% of their
incomes.
HHS expects State subsidy programs to reimburse providers at the 75th
percentile of the local market rate, to ensure that families using a subsidy
to pay for care can choose affordable care in the local market. Despite
this recommendation, the HHS Inspector General found that 29 States do
not make payments to providers based on the 75th percentile of the
market rate. In part because of the low reimbursement rates, some
providers require families to pay the difference between the subsidy and
the cost of care, over and above the copayment that the family has paid in
the subsidy program.
QUALITY:
What is Quality?
In the political arena, the definition and measurement of "quality" child care have
been controversial for many years. Nevertheless, child development and child care
experts have identified a range of practical characteristics which indicate child care
quality. Most of these factors are the same ones that would be in place in a safe and
healthy home environment, while others are specifically required because of the nature
of taking care of children in groups, outside of their own homes.
The following are examples of quality factors. This list is illustrative, not
comprehensive or exhaustive.
A Safe Facility
- Cleaning agents and medication out of children's reach
- Playground equipment in good repair
- Sanitary diaper and toileting areas
- Smoke detectors, fire alarms, and posted evacuation plans
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Well-Trained Providers
- CPR and First Aid Training
- Child Development Training
- An Early Childhood Education credential or degree
Appropriate Group Sizes and Staff/Child Ratios
- Small enough classes and enough adults to provide adequate
supervision
- Small enough classes and enough adults for individual attention
to the growth and development of each child
Low Staff Turnover
- Children, especially younger children, need to form lasting ties to
caregivers and not have relationships frequently severed
Appropriate Curricula and Classroom Policies
- Learning activities appropriate to children's ages and abilities
- Appropriate disciplinary practices
- Policies and practices that promote the inclusion of children with
disabilities
The Importance of the Early Years of Life
Neuroscientists have recently developed a better understanding of brain
development, particularly the importance of the earliest years of life.
In the first years of a child's life, the brain is developing rapidly by creating
"connections" between cells that allow the brain to function. By the time a
child is three years old, he or she may have developed up to 1000 trillion
connections, twice as many as he or she will have and use as an adult. In
order to increase the efficiency of the brain, the connections begin to
disappear as the child ages. The child's experiences determine, in large
part, which connections remain. Those paths that are used frequently
are made permanent, while those that are used less frequently disappear.
Therefore, a variety of experiences that utilize and stimulate the young
child's brain help determine the "brain circuitry" that will be in place
throughout life. ("Brain Facts," I Am Your Child Information Campaign).
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Impact of Child Care Quality on Development and School Readiness
The National Institute of Child Health and Human Development (NICHD)
released findings in April 1997 which showed "small but consistent
findings that the higher the quality of child care in the first three years of
life the greater the child's language abilities at 15, 24, and 36 months, the
better the child's performance on the Bayley Scales of Infant Development
at age two, and the more school readiness the child showed at age three."
(NICHD statement, April 3, 1997).
The National Center for Early Development and Learning reports that:
"Outcomes related to quality include cooperative play, sociability,
creativity, ability to solve social conflicts, self control, and language and
cognitive development." (Early Childhood Research &Policy Briefs, Fact Sheet,
Summer 1997)
Concerns about the Quality of American Child Care
A four-state study of quality in child care centers found only one in seven,
or 14%, were rated as good quality. (Cost, Quality, and Child Outcomes in Child
Care Centers, University of Colorado- Denver, 1995)
Thirteen percent of regulated and 50% of non-regulated family child care
centers offer care that is inadequate. (The Study of Children in Family Child Care
and Relative Care, Families and Work Institute, 1994)
Despite Risks for Children After School,
there is a Shortage of School-Age Care
Youth between the ages of 12 and 17 are most at-risk of committing
violent acts or being victims between 2:00 p.m. and 6:00 p.m. (Fight Crime:
Invest in Kids, Office of Juvenile Justice and Delinquency Prevention)
A study of low-income third graders in Milwaukee found that, even though
family incomes for children in formal after-school programs were lower,
they had better grades in reading, math, and conduct and were rated by
their teachers as having better work habits and peer relations than
children who were informally supervised or not supervised by an adult
after-school. (Posner and Vandell, Child Development 65, 1994)
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A study by the National Center for Education Statistics in 1993-1994,
found that 70% of schools did not offer extended learning programs.
WHAT THE FEDERAL GOVERNMENT IS DOING
Outlined below are the primary ways that Federal policy has sought to improve
the affordability, availability, and quality of child care.
(Note: These descriptions of current policy draw heavily on the CRS Issue Brief: Child
Care Legislation in the 105th Congress.)
STRATEGIES TO IMPROVE AFFORDABILITY & SUPPLY OF CARE
The Child Care and Development Block Grant
The Child Care and Development Block Grant (CCDBG) is the primary Federal
program that supports child care. The CCDBG was created in 1990 and reauthorized
and significantly expanded in the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996. In the House, both the Committee on Ways and Means and
the Committee on Education and the Workforce have jurisdiction over this program.
The CCDBG provides block grants to States, based on formulae, to provide child
care subsidies to low-income families. Families meet Federal eligibility guidelines if
they are working or in training, earn less than 85% of State Median Income (SMI), and
have a child under age 13. Under this definition, approximately 10 million children are
eligible for child care subsidies under CCDBG.
However, most States set their eligibility lower than 85% of SMI, due to the
heavy demands placed on the funds by families at lower income levels. States are also
required to target 70% of the funds to families who receive public assistance, are
transitioning off public assistance, or are at risk of going onto public assistance. States
are required to match a portion of the Federal funding, based on the Federal Medical
Assistance Percentage rate and meet maintenance of effort requirements.
States generally provide care through vouchers and certificates that allow
parents to place their children in the care of the provider of their choice, whether it is
center-based care, a family home provider, or, in some States, relative care. However,
providers are required to meet all applicable licensing standards as set by the State.
Where the supply of care is inadequate to meet the needs of families, some States
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provide contracts or grants to specific providers to increase the supply of care.
The Personal Responsibility Act allows the Secretary of HHS to set-aside not
less than 1% and not more than 2% for grants to Tribes. The Secretary has chosen to
provide a 2% set-aside for the Tribes. States must spend a minimum of 4% of the total
CCDBG on quality activities and may spend no more than 5% on administrative costs.
The CCDBG is funded through both discretionary and capped entitlement grants
on the Federal level. In FY 1998, $3.1 billion was appropriated for the CCDBG. Under
the Personal Responsibility and Work Opportunity Reconciliation Act, funding will
increase to $3.7 billion in 2002. According to HHS, CCDBG served about one out of
every 10 eligible children in 1995, the latest year for which data are available.
One question that has been raised regarding the expansion of the current
CCDBG is whether States are spending the funds which they receive under the current
authority. In fact, States have obligated (committed to spend through agreements,
contracts, etc.) over 99% of their FY 1997 funds. By law, they are not required to
actually expend the funds until the end of FY 1998.
Child care outlays drawn from the Federal Treasury were at 72% in FY 1997,
however HHS expects all States to expend all of the funds by the end of FY 1998, as
required by law. According to CBO, these outlays represent an 8% increase over FY
1996. Further, CBO projects that the outlay rate increase will be 20% between FY
1997 and FY 1998, indicating that States are utilizing the additional funds provided to
them in the Personal Responsibility Act. Although, as with many programs, States may
be experiencing an adjustment period to build an infrastructure to expend significant
additional funds, CBO does project that States will, within five years, "catch up" and
spend all of their money in the year in which it is received.
The Child and Dependent Care Tax Credit
The Child and Dependent Care Tax Credit (CDCTC) is a nonrefundable credit,
which equals a percentage of the taxpayer's child care expenses. The credit
percentage begins at 30% with $10,000 of adjusted gross income and is phased down
to 20% for taxpayers with adjusted gross incomes of $28,000 or more. The maximum
amount of eligible expenses is $2400 for one child (under age 13), and $4800 for two or
more children. The credit can also be taken to pay for care of a disabled dependent or
spouse. Due to the nonrefundable nature of the CDCTC, it does not assist taxpayers
who earn too little to have positive tax liability. Revenue loss associated with this tax
credit is estimated to be $2.5 billion in FY 1998.
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Head Start
Head Start is administered by the Federal government directly to community
grantees to provide comprehensive early childhood services to low-income children.
Head Start serves primarily preschool children, although the Early Head Start program,
which is much smaller than preschool Head Start, serves children ages 0-3. Head Start
has historically been designed to intensively serve the developmental needs of children,
but not to serve the child care needs of working families. Programs have typically
operated on a part-year and part-day basis. However, more and more grantees are
expanding their service to better fit the needs of working families, including the
formation of partnerships between Head Start programs and child care programs on the
local level. Head Start received $4.355 billion in appropriations in FY 1998. Head
Start's authorization expires at the end of FY 1998. It is within the jurisdiction of the
Committee on Education and the Workforce.
Social Services Block Grant (SSBG)
Title XX of the Social Security Act authorizes the Social Services Block Grant, a
capped entitlement to the States, allocated based on their populations. SSBG gives
States significant flexibility in funding, with no matching requirement and few
restrictions. The Congressional Research Service found that in FY 1995, approximately
15% of the SSBG was used by States to pay for child care. Child care services funded
under SSBG must meet applicable State and local standards. The current funding
ceiling is $2.38 billion, but Congress appropriated $2.299 billion in for FY 1998.
President Clinton's FY 1999 budget proposes to reduce SSBG funding by $400 million,
presumably, retargeting those funds to CCDBG. SSBG is within the jurisdiction of the
Committee on Ways and Means.
QUALITY ENHANCEMENT STRATEGIES
The Child Care and Development Block Grant requires that States set-aside not
less than 4% of the total funds to improve the quality of child care. States use this
money, as well as other resources, in a variety of ways to ensure the safety of children
in child care and promote children's healthy development. With the CCDBG money,
States can undertake quality activities to benefit all of the children in care in their State,
including those who do not receive subsidy. State child care administrators report
tension between funding quality initiatives and addressing the high, unmet demand for
subsidies. Based on discussion with state administrators, a 1995 report by the National
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Research Council, Institute of Medicine stated, "the set-aside appears to have shored
up relatively fragile state and local efforts to improve child care quality and protected a
pool of funds that would otherwise have been channeled directly into subsidies."
Ways to Promote the Elements of Quality
States and local communities, along with professional early childhood education
groups, have explored strategies to promote quality. Following are examples of the
types of activities States fund:
Licensing and Enforcement:
Strong State and local licensing standards
Enforcement through unannounced visits to programs
Grants and loans to help providers who want to obtain a
license, make required improvements, or offset the licensing
fee
Accreditation:
Grants and loans to help providers meet accreditation
standards
Technical assistance on meeting accreditation standards
Training Providers:
Affordable basic training in health, safety, and child
development
Scholarships to encourage attainment of credentials or
degrees
Training linked to better compensation to reduce staff
turnover
Lower Staff-Child Ratios and Group Sizes
Consumer Education:
Information and education for parents on how to find quality
care
Supports for Family Child Care Providers:
Training opportunities
Back-up care to cover provider's illness and emergencies
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Equipment and resource lending
Networks of family child care homes to provide support
services
Lower Staff Turnover through Increased Training and Compensation
Promote the Inclusion of Children with Special Needs
Specialized child care resource and referral for parents
Provider training on including children with special needs
Screen Providers
Criminal record and child abuse background checks
PRESIDENT CLINTON'S FY 1999 CHILD CARE PROPOSAL
As part of his FY 1999 budget, President Clinton has proposed a child care
initiative. The proposal is a direct response to the White House conference on child
care held in the Fall and is a combination of direct grants and tax credits.
The total package costs $21.3 billion over 5 years. The President has indicated
his desire to use part of the Federal share of Medicaid money resulting from the
tobacco settlement to fund a third of the package. The remainder is accommodated
within the Administration's overall budget. Specific "pay fors" have not been identified.
There are four elements to the President's proposal: expansion of the current
child care development block grant, an increase in the child and dependent care credit,
a new tax credit to reward businesses that help employees with child care, and a series
of initiatives designed to improve the quality of child care.
Child Care and Development Block Grant
Current law.-- Under current law, entitlement funds totaling $1 billion per year
are available to States through the Child Care and Development Block Grant (CCDBG),
the primary Federal subsidy program to pay for child care. The authorization for this
program was renewed in the 1996 welfare reform law, through 2002.
Proposal.-- The President is proposing to increase funding for CCDBG by
$7.5 billion over 5 years. This would double the number of children receiving child care
subsidies to more than 2 million. States may use the funds to subsidize child care and
to improve the quality of care.
-13-
Child and Dependent Care Tax Credit
Current law.-- There are two provisions of current law that provide benefits to
individuals incurring child care expenses necessary for employment, the dependent
care credit (section 21) and an exclusion of employer-provided child care assistance
(section 129).
The dependent care credit is a nonrefundable credit equal to a percentage of the
taxpayer's child care expenses. The credit percentage starts at 30 percent and is
phased down to 20 percent between $10,000 and $30,000 of adjusted gross income.
The maximum amount of expenses eligible for the credit is $2,400 for one child and
$4,800 for two or more children. An eligible dependent is a child under 13, or a
disabled dependent or spouse.
Current law also permits employees to exclude child care assistance provided by
their employers. The maximum exclusion is $5,000 ($2,500, if married filing separately)
regardless of the number of children. This provision is more beneficial than the
dependent care credit for employees with incomes subject to marginal rates above
20 percent, but is available to employees only if the employer offers this benefit.
Proposal. The Administration proposes to increase the credit percentage
applicable under the dependent care credit. The proposal would provide a 50-percent
credit rate for taxpayers with incomes under $30,000. The credit rate would be phased
down to 20 percent between $30,000 and $59,000 of adjusted gross income. The
proposal would not change the dollar limitation on the amount of expenses that can be
taken into account. Thus, the maximum amount of eligible expenses would remain at
$2,400 for one child and $4,800 for two or more children. The President's proposal
would increase the credit for families earning less than $60,000, providing an additional
average cut of $358 for these families and eliminating income tax liability for almost all
families with income below 200 percent of poverty ($35,000 for a family of four) that
take the maximum allowable child care expense under the law. It is estimated that the
proposal would cost $5.2 billion over 5 years.
The proposal also would provide a new tax credit to employers providing
dependent care assistance to their employees by building or expanding child care facil-
ities, operating existing facilities, training child care workers, reserving slots for
employees at child care facilities, or providing child care resource and referral services
to employees. The amount of the credit would be 25 percent of the employer's
expenses and may not exceed $150,000 per year. Under current law, employers
receive a normal business deduction for those expenses but do not receive any special
tax benefits. It is estimated that this proposal would cost $500 million over 5 years.
Analysis. The actual benefits received under the President's proposal vary
-14-
/
widely, depending on the number of children and marital status. It will have a far less
dramatic impact than one might have expected. Because the credit is not refundable, it
is useless for many families with incomes below $30,000. In addition, the alternative
minimum tax diminishes the benefit for single taxpayers with incomes of approximately
$30,000 or more.
Quality Initiatives
Finally, President Clinton has proposed a series of initiatives designed to
improve the quality of care for children. Included are:
An early learning fund.- providing challenge grants to States for distribution
to communities to improve early learning and child care for children zero to
five. A wide range of activities are permitted, designed to improve the
training and education of providers, help in meeting accreditation
requirements, establish better linkages to health professionals and permit
smaller child-to-staff ratios. A total of $3 billion over 5 years would be made
available to the fund.
An expansion of Head Start.- investing $3.4 billion over five years to deliver
on the President's commitment to serving one million children by 2002, and to
double the number of infants and toddlers in Early Head Start to 80,000.
More detail on this proposal will be available as part of the discussions on
reauthorizing Head Start, later this year.
Funds to improve licensing and enforce health and safety standards.--
funding State efforts, including increased unannounced inspections of child
care settings, and based, in part, on the military's model child care program.
A total of $500 million over 5 years would be available for this purpose.
Separately, the President has already taken steps to facilitate background
checks on child care providers.
Scholarships and training for child care providers.- investing $250
million over 5 years to support 50,000 scholarships per year to students
working toward a child care credential.
Investments in research.- totaling $150 million over 5 years to support data
collection, research and evaluation. This includes support for a National
Center on Child Care Statistics and a child care hotline that would help
parents find appropriate quality child care for children.
Better after-school care.-- including an $800 million expansion of the 21st
Century Community Learning Center Program which provides start-up funds
-15-
/
/
(with a local match) to school-community partnerships to establish before-
and after-school care for school-age children.
Parents who Choose to Stay at Home
The President's initiative does not include a proposal for parents who choose to
stay at home, however the Administration has said that they are open to ideas.
Most options to assist stay at home parents rely heavily on the tax system and
consist of either allowing them to take advantage of the Child and Dependent Care
Credit or expanding the Child Tax Credit for all families. Initial analyses of these
options show that they are expensive options on a national level and provide only
marginal benefits to individual families. While an additional benefit would be helpful for
single-earner families, the proposals that have been advanced thus far will not provide
enough money per family to allow or encourage many more parents to stay home.
J:\Srudisilwp\Final child care background memo.wpd
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"ocrText": "Oct-16-97 02:16P\nP.04\nInadequate Child Care\nStrains America's Working Families\nEvery day, three out of five preschoolers are in child care.¹\nChildren of working mothers are entering care as early as 6 weeks of age and can be in care\nfor 30 hours a week until they reach school age.²\nWomen work in the overwhelming majority of American families.\n3 out of 5 women with children under age 6 work, and 3 out of 4 women with children ages\n6-17 work.³\nChild care costs are unaffordable for many working families.\nAbout half of families with young children earn less than $35,000 per year.⁴ A family with\nboth parents working full-time at minimum wage earns only $21,400 per year.\nChild care is a major household expense for working families. Full-day child care easily costs\n$4,000 to $10,000 per year equal to what families pay for college tuition plus room and\nboard at a public university.⁵ The following are average child care costs for one three-year-\nold child; care for babies and toddlers costs even more:6\nBoston $8,840\nDurham $4,630\nDallas $4,210\nBoulder $6,240\nOakland $6,500\nMinneapolis $6,030\nChild care helps shape the way children think, learn, and behave\nfor the rest of their lives.\nA recent report by the Carnegie Corporation confirmed that the quality of child care has a\nlasting impact on children's well-being and ability to learn.⁷ Children in poor quality child\ncare have been found to be delayed in language and reading skills, and display more\naggression toward other children and adults.⁸\nChild care quality for many American children is inadequate.\n6 out of 7 child care centers provide care that is mediocre to poor, according to a recent\nnational study by a group of universities. One in eight centers were found to be providing\ncare that could jeopardize children's safety and development.⁹ Equally 10 alarming patterns\nwere found in a study of home-based care -- 1 in 3 could be harmful.\nThere are major gaps in the basic health and safety standards for child care in many states,\nand even the standards that are in place are often inadequately enforced. For example, in\nmany states, care in smaller providers' homes is not inspected at all because licensing is not\nrequired, and more than half the states do not annually inspect homes that are licensed.¹\nProfessional, quality child care is hard to find in a marketplace that pays child care teachers\nand providers less than bus drivers ($20,150) or garbage collectors ($18,100). A national\nwage study found that most child care workers earn only $12,058 per year (only slightly\nabove minimum wage) and receive no benefits or paid leave.\"\nOct-16-97 02:17P\nP.05\nStaff education and training are among the most critical elements in improving children's\nexperiences in child care, but 41 states do not require providers who offer care in their homes\nto have any training prior to serving children.¹⁴\nBabies and toddlers are particularly vulnerable to poor quality care.\nAlmost half of babies who haven't reached their first birthday are regularly spending their\nday in some form of child care.¹⁵\nA recent national study found that half of rooms in centers serving babies and toddlers\nprovided such poor quality care as to jeopardize children's health, safety and development.¹⁶\nStudies of home-based care produced equally troubling results.¹⁷\nScarcity of after-school programs leaves school-age children home alone.\nNearly 5 million children are home alone after school each weel:.¹⁸\nJuvenile crime peaks between 2:00 and 6:00 p.m. and there is some evidence that more teen\npregnancies occur during this time.¹⁹\nA 1990 study found that eighth-graders left home alone after school reported greater use of\ncigarettes, alcohol, and marijuana than those who were in adult-supervised settings.²⁰\nGood after-school activities for children and teens can be hard to find because options are\ninadequate in many communities. This problem is even more serious in low-income\nneighborhoods -- only one-third of schools in low-income neighborhoods offered before- and\nafter-school programs in 1993.²\nAmerica can help working families get affordable, quality child care.\n1. Strong safety standards must be established and enforced for all centers and homes offering\nchild care. Programs to improve the quality of care and help parents find good options for\ntheir children should be expanded.\n2. Child care providers should be trained professionals, earning family-supporting wages.\nEfforts must be made to increase the number of child care staff who are appropriately trained\nand compensated. Scholarship and loan forgiveness programs should be expanded to support\ncareers in child development.\n3. Structured after-school activities should be available in all communities. Investments should\nbe made to expand the supply of quality care for babies and toddlers, and to strengthen and\nenrich existing programs.\n4. Child care help should be available to low-income families to prevent welfare dependency.\nFederal, state and local dollars should also help other working families with their child care\nexpenses and better afford quality care.\n5. Employers should help their employees who need child care, and should invest in improving\nthe quality of child care in the communities in which they operate.\n6. The Family and Medical Leave Act should be expanded to cover more workplaces and\nemployees to help enable working parents stay home with their children during the critical\nearly months of a child's life.\nOct-16-97 02:17P\nP.06\nSources:\nI\nNational Center for Education Statistics. Child Care and Early Education Program Participation of\nInfants. Toddlers, and Preschoolers (Washington, DC: NCES, October 1996).\n2\nTestimony by Deborah Phillips before the Senate Committee on Labor and Human Resources,\nMarch 1. 1995.\n3\nUS Bureau of Labor Statistics, unpublished data from March 1995.\n4\nUS Bureau of the Census, Current Population Reports. P60-197, Money and Income in the United States:\n1996 (Washington, DC: US Government Printing Office, 1997).\n3\nData on child care expenses from Child Care Information Exchange. July 1996. Data collected from\nResource and Referral agencies in each city. Data on average university costs cited in Statistical Abstract of the\nUnited States 1994 (Washington DC: US Department of Commerce, 1994). Original data from The College Board.\nNew York, Annual Survey of Colleges 1993.\n6\nChild Care Information Exchange, July 1996. Data collected from Resource and Referral agencies in each\ncity.\n7\nCarnegie Corporation of New York, Starting Points: Meeting the Needs of Our Youngest Children (New\nYork: Carnegie Corporation, August 1994).\n&\nTestimony by Deborah Phillips before the Senate Committee on Labor and Human Resources,\nMarch 1, 1995.\n9\nHelburn et al., Cost, Quality, and Child Outcomes Study: Executive Summary (Denver: University of\nColorado, 1995).\n10\nGalinsky et al., The Study of Children in Family Child Care and Relative Care: Highlights of Findings\n(New York: Families and Work Institute, 1994).\n11\nAdams, How Safe? The Status of State Efforts 10 Protect Children in Child Care (Washington, DC:\nChildren's Defense Fund, 1995).\n12\nUS Department of Labor, Bureau of Labor Statistics, Employment and Earnings (Washington DC:\nUSDOL, January 1994).\n13\nHelburn ct al., Cost, Quality, and Child Outcomes Study: Executive Sunmary (Denver: University of\nColorado, 1995).\n14\nAzer and Capraro, Data on Child Care Licensing (Boston: The Center for Career Development in Early\nCare and Education, Wheelock College, 1996).\n13\nNational Center for Education Statistics, Child Care and Early Education Program Participation of\nInfants. Toddlers, and Preschoolers (Washington, DC: NCES, October 1996).\n16\nHelburn et al., Cost, Quality, and Child Outcomes Study: Executive Summary (Denver: University of\nColorado, 1995).\n17\nGalinsky et al., The Study of Children in Family Child Care and Relative Care: Highlights of Findings\n(New York: Families and Work Institute, 1994).\n18\nSchool-Age Child Care Project, Factsheet on school-age children (Wellesley, MA: Center for Research on\nWomen, Wellesley College, September 1996). Teen pregnancy information based on anectodal evidence.\n19\nUS Department of Justice. Juvenile Offenders and Victims: 1997 Update on Violence (Washington DC: US\nDOJ, June, 1997).\n20\nDwyer ct al., \"Characteristics of Eighth-Grade Students Who Initiate Self-Care in Elementary and Junior\nHigh School\", Pediatrics, 86, 1990.\n21\nUS Department of Education, The Condition of Education: 1993 (Washington, DC: National Center for\nEducation Statistics. 1993).\nOct-16-97 02:17P\nP.07\nSAMPLE LETTER TO THE EDITOR\nDear XXXXX:\nOn Thursday, October 23, 1997, President Clinton and First Lady Hillary Rodham Clinton will\nbe convening the nation's first White House Conference on Child Care. This conference will\nfocus on the strengths and weaknesses of child care in America and explore how the nation can\nbetter support working families' need for quality, affordable care for their children. It will also\nhighlight school-age care for our children and teens, responding to the concern that nearly five\nmillion children are left home alone each week.\nThe Administration should be commended for focusing national attention on the child care needs\nof our children and youth. We hope the conference will be the beginning of a renewed effort in\nWashington and across the country to find solutions that make quality child care affordable for\nall.\nThere is good reason to move ahead. Child care is an issue that affects many American families.\nEvery day, three out of five preschoolers are in child care. According to recent studies, many of\nthese children are not in the safe and nurturing settings they deserve. Six out of seven child care\ncenters provide care that is poor to mediocre, and care in as many as one-third of providers'\nhomes could be harmful to children. Yet, even average care remains unaffordable for many\nworking families. Parents can easily have to pay $4,000 to $10,000 per year for a child in child\ncare -- as much as tuition, room and board at many colleges.\nIn our state of XXXXX. [if available, insert local information about child care]\nI hope the White House Conference on Child Care will help all of us in [your community] focus\non how parents, employers, communities, and all levels of government can work together to help\nfind innovative solutions to families' child care needs.\nSincerely,\nMarch 27, 1998\nMEMORANDUM\nTo:\nDemocratic Members, Committee on Ways and Means\nFrom:\nDeborah Colton\nShannon Rudisill\nSubject:\nBackground on Child Care\nIn recent years, child care has become one of the most pressing issues facing\nAmerica's working families. There are several reasons why child care is an issue of\nparticular relevance now. More women are working than ever before, in order to\nsupport their families, making the demand for child care higher than it has ever been.\nIn addition, the more stringent work requirements that result from welfare reform will\ncontribute to the already escalating demand for child care.\nAt the same time that more and more children are spending time in child care,\nrecent scientific research has pointed to the importance of the first years of life for early\nbrain development, the foundation for all of a child's future learning. Because of the\nneed to nurture early brain development, the quality of care which we provide for our\nchildren is crucial. Mounting evidence indicates that the quality of much of the child\ncare in America not only fails to promote early development, but also places young\nchildren's safety at risk.\nFinally, the supply and quality of care for school-age children is also of\nincreasing concern. Because data suggest that school-age children are most likely to\nengage in risky behaviors such as violence and substance abuse during after-school\nhours, more emphasis is being placed on providing supervised arrangements for\nschool-age children during their out-of-school time.\nThis memorandum outlines the current facts about child care and its use in\nthe United States, briefly summarizes the major Federal programs that support\nchild care, and reviews President Clinton's FY 1999 child care-related budget\nproposals. We hope you will find it a useful reference tool for the child care\ndebate.\n-2-\n/\nTHE CURRENT STATE OF CHILD CARE IN AMERICA\nRISING DEMAND FOR CARE:\nLarge numbers of working mothers\nOf the 32 million American families with children under age 14, 69% have\na mother who worked sometime in the past year. (March 1997 Current\nPopulation Survey)\nIn the nearly 18 million families with at least one child under 6, 65% of\nmothers worked sometime in the past year. (March 1997 Current Population\nSurvey)\nIn married couples with children under 14, 73% have a mother who\nworked during the past year. (March 1997 Current Population Survey)\nIn 1994, 62% of married mothers with a child under age 6 were in the\nworkforce, compared with 30% in 1970. (Child Care Bulletin, Issue 17,\nSept./Oct.1997)\nIn 1994, 40% of preschool children under the age of 5 hae full-time at-\nhome mothers. 18 percent of children younger than 5 have mothers who\nwork part-time. (Children's Defense Fund, Feb. 1998 from Census data)\nWHERE THE CHILDREN ARE:\nLarge numbers of children are in child care\nIn 1995, of the 21 million children in the United States under age 6, 12.9\nmillion were in child care. (National Center for Education Statistics)\nAs of 1995, forty-five percent of children under age one were in child care\non a regular basis. (National Center for Education Statistics)\nParents Choose a Variety of Settings\nIn 1995, 31% of children under the age of five with a working mother were\nin center-based care (including preschool arrangements). (National Center for\nEducation Statistics)\nAccording to the National Center for Education Statistics, in 1995, 16% of\nchildren under five with working mothers were in family child care (in the\n-3-\n/\nhome of a nonrelative). Another 4-5% of children received care from a\nnon-relative in the child's own home.\nOver time, there has been an increase in the use of center-based care.\nExperts attribute this in part to the fact that center-based care is often\nmore reliable and perceived to be of higher quality for preschoolers. This\nhypothesis is buttressed by evidence that parents with higher incomes\nand mothers' with higher educational attainment choose center-based\ncare more often than those with lower incomes and less education. This\nis an indication that, as families can afford it, they tend to come into the\nformal market for center-based care. However, for very young children,\nfamilies often indicate that they prefer home-based settings, particularly\nwith relatives.\nFamilies in which a Parent Stays Home\nNot all American families include a mother who works outside the home.\nOf the 14 million families with children under age 14 with total family\nincomes under $30,000, 35% have mothers who did not work at all during\nthe past year. For those families with total incomes of $30,000 or more,\n19% have a mother who did not work at all during the past year. (March\n1997 Current Population Survey)\nOf the 22 million married-couple families with children under age 14, 27%\nhave a mother who did not work at all during the past year. (March 1997\nCurrent Population Survey)\nEven in families where the mother is not in the labor force, 32% of\npreschool children participate in some type of child care or early education\nprogram. (National Center for Education Statistics, 1995)\nAVAILABILITY OF CARE:\nA Crucial Workforce Issue\nA recent Harris poll found that 43% of respondents indicated that they or\ntheir spouse could not take a job that they wanted because they did not\nhave satisfactory child care.\nWhen the supply of care is low, parents often are forced to choose ad hoc\narrangements, including leaving children with a variety of neighbors,\n/\n-4-\ncobbling together whatever arrangements they can. These sorts of\narrangements tend to be less reliable. A recent Parents Magazine poll\nfound that among the 452 respondent families, 588 full days of work and\n2044 partial days of work were missed just in the preceding three months,\ndue to a child care emergency.\nAFFORDABILITY ISSUES:\nParents Struggle to Afford Care\nFamilies with annual incomes under $14,400 that paid for care for children\nunder age 5, paid 25% of their incomes for child care, compared with 6%\nof incomes spent on child care for families with incomes of $54,000 and\nabove, according to Census data from 1993.\nIn 1993, the average weekly cost per preschool child in paid child care\narrangements was $60 ($3000 per year). For infant children, the cost\naveraged $66 per week ($3432 per year). The average cost for families\nwith preschoolers was just over $4100 per year, reflecting the fact that\nmany families have more than one child in care. (Census Bureau)\nIn 1995, for families with annual incomes between $33,600 and $56,700\nand children under age 2, child care was their third largest expense, after\nhousing and transportation. For families in that income range with\nchildren between the ages of three and five, child care was second only to\nhousing. These families spent more on child care than they did on food or\nhealth care. (Census Bureau)\nAs cited above, parents report paying between $3000-$3500 in 1993 for\ncare for their young child, not counting public subsidies or private benefits\n(such as United Way funds or employer-provided subsidy) that may have\nhelped reduce the cost to the parent. In comparison, in 1996 the GAO\nreported that tuition and fees at a public college or university averaged\n$2700 per year, but a family might actually pay less if the student received\na scholarship. Therefore, for some families, the cost of care for young\nchildren exceeds the cost of sending a child to a public college or\nuniversity. Furthermore, families pay for child care at an earlier stage in\ntheir working lives, when they generally have lower incomes and fewer\naccumulated resources than they will have when the child enters college.\n(Financing Child Care, Mitchell and Stoney, 1997)\n-5'-\nStates Stretch Child Care Dollars Thin,\nMaking Care Less Affordable for Families\nIn a February 1998 study, the HHS Inspector General found that although\nexperts recommend that poor parents should be required to pay no more\nthan 10% of their incomes for care, at least 22 States require families who\nreceive a subsidy to pay a copayment that is higher than 10% of their\nincomes.\nHHS expects State subsidy programs to reimburse providers at the 75th\npercentile of the local market rate, to ensure that families using a subsidy\nto pay for care can choose affordable care in the local market. Despite\nthis recommendation, the HHS Inspector General found that 29 States do\nnot make payments to providers based on the 75th percentile of the\nmarket rate. In part because of the low reimbursement rates, some\nproviders require families to pay the difference between the subsidy and\nthe cost of care, over and above the copayment that the family has paid in\nthe subsidy program.\nQUALITY:\nWhat is Quality?\nIn the political arena, the definition and measurement of \"quality\" child care have\nbeen controversial for many years. Nevertheless, child development and child care\nexperts have identified a range of practical characteristics which indicate child care\nquality. Most of these factors are the same ones that would be in place in a safe and\nhealthy home environment, while others are specifically required because of the nature\nof taking care of children in groups, outside of their own homes.\nThe following are examples of quality factors. This list is illustrative, not\ncomprehensive or exhaustive.\nA Safe Facility\n- Cleaning agents and medication out of children's reach\n- Playground equipment in good repair\n- Sanitary diaper and toileting areas\n- Smoke detectors, fire alarms, and posted evacuation plans\nI\n-6-\n/\nWell-Trained Providers\n- CPR and First Aid Training\n- Child Development Training\n- An Early Childhood Education credential or degree\nAppropriate Group Sizes and Staff/Child Ratios\n- Small enough classes and enough adults to provide adequate\nsupervision\n- Small enough classes and enough adults for individual attention\nto the growth and development of each child\nLow Staff Turnover\n- Children, especially younger children, need to form lasting ties to\ncaregivers and not have relationships frequently severed\nAppropriate Curricula and Classroom Policies\n- Learning activities appropriate to children's ages and abilities\n- Appropriate disciplinary practices\n- Policies and practices that promote the inclusion of children with\ndisabilities\nThe Importance of the Early Years of Life\nNeuroscientists have recently developed a better understanding of brain\ndevelopment, particularly the importance of the earliest years of life.\nIn the first years of a child's life, the brain is developing rapidly by creating\n\"connections\" between cells that allow the brain to function. By the time a\nchild is three years old, he or she may have developed up to 1000 trillion\nconnections, twice as many as he or she will have and use as an adult. In\norder to increase the efficiency of the brain, the connections begin to\ndisappear as the child ages. The child's experiences determine, in large\npart, which connections remain. Those paths that are used frequently\nare made permanent, while those that are used less frequently disappear.\nTherefore, a variety of experiences that utilize and stimulate the young\nchild's brain help determine the \"brain circuitry\" that will be in place\nthroughout life. (\"Brain Facts,\" I Am Your Child Information Campaign).\n-7-\nImpact of Child Care Quality on Development and School Readiness\nThe National Institute of Child Health and Human Development (NICHD)\nreleased findings in April 1997 which showed \"small but consistent\nfindings that the higher the quality of child care in the first three years of\nlife the greater the child's language abilities at 15, 24, and 36 months, the\nbetter the child's performance on the Bayley Scales of Infant Development\nat age two, and the more school readiness the child showed at age three.\"\n(NICHD statement, April 3, 1997).\nThe National Center for Early Development and Learning reports that:\n\"Outcomes related to quality include cooperative play, sociability,\ncreativity, ability to solve social conflicts, self control, and language and\ncognitive development.\" (Early Childhood Research &Policy Briefs, Fact Sheet,\nSummer 1997)\nConcerns about the Quality of American Child Care\nA four-state study of quality in child care centers found only one in seven,\nor 14%, were rated as good quality. (Cost, Quality, and Child Outcomes in Child\nCare Centers, University of Colorado- Denver, 1995)\nThirteen percent of regulated and 50% of non-regulated family child care\ncenters offer care that is inadequate. (The Study of Children in Family Child Care\nand Relative Care, Families and Work Institute, 1994)\nDespite Risks for Children After School,\nthere is a Shortage of School-Age Care\nYouth between the ages of 12 and 17 are most at-risk of committing\nviolent acts or being victims between 2:00 p.m. and 6:00 p.m. (Fight Crime:\nInvest in Kids, Office of Juvenile Justice and Delinquency Prevention)\nA study of low-income third graders in Milwaukee found that, even though\nfamily incomes for children in formal after-school programs were lower,\nthey had better grades in reading, math, and conduct and were rated by\ntheir teachers as having better work habits and peer relations than\nchildren who were informally supervised or not supervised by an adult\nafter-school. (Posner and Vandell, Child Development 65, 1994)\n/\n-8-\n/\nA study by the National Center for Education Statistics in 1993-1994,\nfound that 70% of schools did not offer extended learning programs.\nWHAT THE FEDERAL GOVERNMENT IS DOING\nOutlined below are the primary ways that Federal policy has sought to improve\nthe affordability, availability, and quality of child care.\n(Note: These descriptions of current policy draw heavily on the CRS Issue Brief: Child\nCare Legislation in the 105th Congress.)\nSTRATEGIES TO IMPROVE AFFORDABILITY & SUPPLY OF CARE\nThe Child Care and Development Block Grant\nThe Child Care and Development Block Grant (CCDBG) is the primary Federal\nprogram that supports child care. The CCDBG was created in 1990 and reauthorized\nand significantly expanded in the Personal Responsibility and Work Opportunity\nReconciliation Act of 1996. In the House, both the Committee on Ways and Means and\nthe Committee on Education and the Workforce have jurisdiction over this program.\nThe CCDBG provides block grants to States, based on formulae, to provide child\ncare subsidies to low-income families. Families meet Federal eligibility guidelines if\nthey are working or in training, earn less than 85% of State Median Income (SMI), and\nhave a child under age 13. Under this definition, approximately 10 million children are\neligible for child care subsidies under CCDBG.\nHowever, most States set their eligibility lower than 85% of SMI, due to the\nheavy demands placed on the funds by families at lower income levels. States are also\nrequired to target 70% of the funds to families who receive public assistance, are\ntransitioning off public assistance, or are at risk of going onto public assistance. States\nare required to match a portion of the Federal funding, based on the Federal Medical\nAssistance Percentage rate and meet maintenance of effort requirements.\nStates generally provide care through vouchers and certificates that allow\nparents to place their children in the care of the provider of their choice, whether it is\ncenter-based care, a family home provider, or, in some States, relative care. However,\nproviders are required to meet all applicable licensing standards as set by the State.\nWhere the supply of care is inadequate to meet the needs of families, some States\n-9-\nprovide contracts or grants to specific providers to increase the supply of care.\nThe Personal Responsibility Act allows the Secretary of HHS to set-aside not\nless than 1% and not more than 2% for grants to Tribes. The Secretary has chosen to\nprovide a 2% set-aside for the Tribes. States must spend a minimum of 4% of the total\nCCDBG on quality activities and may spend no more than 5% on administrative costs.\nThe CCDBG is funded through both discretionary and capped entitlement grants\non the Federal level. In FY 1998, $3.1 billion was appropriated for the CCDBG. Under\nthe Personal Responsibility and Work Opportunity Reconciliation Act, funding will\nincrease to $3.7 billion in 2002. According to HHS, CCDBG served about one out of\nevery 10 eligible children in 1995, the latest year for which data are available.\nOne question that has been raised regarding the expansion of the current\nCCDBG is whether States are spending the funds which they receive under the current\nauthority. In fact, States have obligated (committed to spend through agreements,\ncontracts, etc.) over 99% of their FY 1997 funds. By law, they are not required to\nactually expend the funds until the end of FY 1998.\nChild care outlays drawn from the Federal Treasury were at 72% in FY 1997,\nhowever HHS expects all States to expend all of the funds by the end of FY 1998, as\nrequired by law. According to CBO, these outlays represent an 8% increase over FY\n1996. Further, CBO projects that the outlay rate increase will be 20% between FY\n1997 and FY 1998, indicating that States are utilizing the additional funds provided to\nthem in the Personal Responsibility Act. Although, as with many programs, States may\nbe experiencing an adjustment period to build an infrastructure to expend significant\nadditional funds, CBO does project that States will, within five years, \"catch up\" and\nspend all of their money in the year in which it is received.\nThe Child and Dependent Care Tax Credit\nThe Child and Dependent Care Tax Credit (CDCTC) is a nonrefundable credit,\nwhich equals a percentage of the taxpayer's child care expenses. The credit\npercentage begins at 30% with $10,000 of adjusted gross income and is phased down\nto 20% for taxpayers with adjusted gross incomes of $28,000 or more. The maximum\namount of eligible expenses is $2400 for one child (under age 13), and $4800 for two or\nmore children. The credit can also be taken to pay for care of a disabled dependent or\nspouse. Due to the nonrefundable nature of the CDCTC, it does not assist taxpayers\nwho earn too little to have positive tax liability. Revenue loss associated with this tax\ncredit is estimated to be $2.5 billion in FY 1998.\n-10-\n/\nHead Start\nHead Start is administered by the Federal government directly to community\ngrantees to provide comprehensive early childhood services to low-income children.\nHead Start serves primarily preschool children, although the Early Head Start program,\nwhich is much smaller than preschool Head Start, serves children ages 0-3. Head Start\nhas historically been designed to intensively serve the developmental needs of children,\nbut not to serve the child care needs of working families. Programs have typically\noperated on a part-year and part-day basis. However, more and more grantees are\nexpanding their service to better fit the needs of working families, including the\nformation of partnerships between Head Start programs and child care programs on the\nlocal level. Head Start received $4.355 billion in appropriations in FY 1998. Head\nStart's authorization expires at the end of FY 1998. It is within the jurisdiction of the\nCommittee on Education and the Workforce.\nSocial Services Block Grant (SSBG)\nTitle XX of the Social Security Act authorizes the Social Services Block Grant, a\ncapped entitlement to the States, allocated based on their populations. SSBG gives\nStates significant flexibility in funding, with no matching requirement and few\nrestrictions. The Congressional Research Service found that in FY 1995, approximately\n15% of the SSBG was used by States to pay for child care. Child care services funded\nunder SSBG must meet applicable State and local standards. The current funding\nceiling is $2.38 billion, but Congress appropriated $2.299 billion in for FY 1998.\nPresident Clinton's FY 1999 budget proposes to reduce SSBG funding by $400 million,\npresumably, retargeting those funds to CCDBG. SSBG is within the jurisdiction of the\nCommittee on Ways and Means.\nQUALITY ENHANCEMENT STRATEGIES\nThe Child Care and Development Block Grant requires that States set-aside not\nless than 4% of the total funds to improve the quality of child care. States use this\nmoney, as well as other resources, in a variety of ways to ensure the safety of children\nin child care and promote children's healthy development. With the CCDBG money,\nStates can undertake quality activities to benefit all of the children in care in their State,\nincluding those who do not receive subsidy. State child care administrators report\ntension between funding quality initiatives and addressing the high, unmet demand for\nsubsidies. Based on discussion with state administrators, a 1995 report by the National\n-11-\nResearch Council, Institute of Medicine stated, \"the set-aside appears to have shored\nup relatively fragile state and local efforts to improve child care quality and protected a\npool of funds that would otherwise have been channeled directly into subsidies.\"\nWays to Promote the Elements of Quality\nStates and local communities, along with professional early childhood education\ngroups, have explored strategies to promote quality. Following are examples of the\ntypes of activities States fund:\nLicensing and Enforcement:\nStrong State and local licensing standards\nEnforcement through unannounced visits to programs\nGrants and loans to help providers who want to obtain a\nlicense, make required improvements, or offset the licensing\nfee\nAccreditation:\nGrants and loans to help providers meet accreditation\nstandards\nTechnical assistance on meeting accreditation standards\nTraining Providers:\nAffordable basic training in health, safety, and child\ndevelopment\nScholarships to encourage attainment of credentials or\ndegrees\nTraining linked to better compensation to reduce staff\nturnover\nLower Staff-Child Ratios and Group Sizes\nConsumer Education:\nInformation and education for parents on how to find quality\ncare\nSupports for Family Child Care Providers:\nTraining opportunities\nBack-up care to cover provider's illness and emergencies\n-12-\n/\nEquipment and resource lending\nNetworks of family child care homes to provide support\nservices\nLower Staff Turnover through Increased Training and Compensation\nPromote the Inclusion of Children with Special Needs\nSpecialized child care resource and referral for parents\nProvider training on including children with special needs\nScreen Providers\nCriminal record and child abuse background checks\nPRESIDENT CLINTON'S FY 1999 CHILD CARE PROPOSAL\nAs part of his FY 1999 budget, President Clinton has proposed a child care\ninitiative. The proposal is a direct response to the White House conference on child\ncare held in the Fall and is a combination of direct grants and tax credits.\nThe total package costs $21.3 billion over 5 years. The President has indicated\nhis desire to use part of the Federal share of Medicaid money resulting from the\ntobacco settlement to fund a third of the package. The remainder is accommodated\nwithin the Administration's overall budget. Specific \"pay fors\" have not been identified.\nThere are four elements to the President's proposal: expansion of the current\nchild care development block grant, an increase in the child and dependent care credit,\na new tax credit to reward businesses that help employees with child care, and a series\nof initiatives designed to improve the quality of child care.\nChild Care and Development Block Grant\nCurrent law.-- Under current law, entitlement funds totaling $1 billion per year\nare available to States through the Child Care and Development Block Grant (CCDBG),\nthe primary Federal subsidy program to pay for child care. The authorization for this\nprogram was renewed in the 1996 welfare reform law, through 2002.\nProposal.-- The President is proposing to increase funding for CCDBG by\n$7.5 billion over 5 years. This would double the number of children receiving child care\nsubsidies to more than 2 million. States may use the funds to subsidize child care and\nto improve the quality of care.\n-13-\nChild and Dependent Care Tax Credit\nCurrent law.-- There are two provisions of current law that provide benefits to\nindividuals incurring child care expenses necessary for employment, the dependent\ncare credit (section 21) and an exclusion of employer-provided child care assistance\n(section 129).\nThe dependent care credit is a nonrefundable credit equal to a percentage of the\ntaxpayer's child care expenses. The credit percentage starts at 30 percent and is\nphased down to 20 percent between $10,000 and $30,000 of adjusted gross income.\nThe maximum amount of expenses eligible for the credit is $2,400 for one child and\n$4,800 for two or more children. An eligible dependent is a child under 13, or a\ndisabled dependent or spouse.\nCurrent law also permits employees to exclude child care assistance provided by\ntheir employers. The maximum exclusion is $5,000 ($2,500, if married filing separately)\nregardless of the number of children. This provision is more beneficial than the\ndependent care credit for employees with incomes subject to marginal rates above\n20 percent, but is available to employees only if the employer offers this benefit.\nProposal. The Administration proposes to increase the credit percentage\napplicable under the dependent care credit. The proposal would provide a 50-percent\ncredit rate for taxpayers with incomes under $30,000. The credit rate would be phased\ndown to 20 percent between $30,000 and $59,000 of adjusted gross income. The\nproposal would not change the dollar limitation on the amount of expenses that can be\ntaken into account. Thus, the maximum amount of eligible expenses would remain at\n$2,400 for one child and $4,800 for two or more children. The President's proposal\nwould increase the credit for families earning less than $60,000, providing an additional\naverage cut of $358 for these families and eliminating income tax liability for almost all\nfamilies with income below 200 percent of poverty ($35,000 for a family of four) that\ntake the maximum allowable child care expense under the law. It is estimated that the\nproposal would cost $5.2 billion over 5 years.\nThe proposal also would provide a new tax credit to employers providing\ndependent care assistance to their employees by building or expanding child care facil-\nities, operating existing facilities, training child care workers, reserving slots for\nemployees at child care facilities, or providing child care resource and referral services\nto employees. The amount of the credit would be 25 percent of the employer's\nexpenses and may not exceed $150,000 per year. Under current law, employers\nreceive a normal business deduction for those expenses but do not receive any special\ntax benefits. It is estimated that this proposal would cost $500 million over 5 years.\nAnalysis. The actual benefits received under the President's proposal vary\n-14-\n/\nwidely, depending on the number of children and marital status. It will have a far less\ndramatic impact than one might have expected. Because the credit is not refundable, it\nis useless for many families with incomes below $30,000. In addition, the alternative\nminimum tax diminishes the benefit for single taxpayers with incomes of approximately\n$30,000 or more.\nQuality Initiatives\nFinally, President Clinton has proposed a series of initiatives designed to\nimprove the quality of care for children. Included are:\nAn early learning fund.- providing challenge grants to States for distribution\nto communities to improve early learning and child care for children zero to\nfive. A wide range of activities are permitted, designed to improve the\ntraining and education of providers, help in meeting accreditation\nrequirements, establish better linkages to health professionals and permit\nsmaller child-to-staff ratios. A total of $3 billion over 5 years would be made\navailable to the fund.\nAn expansion of Head Start.- investing $3.4 billion over five years to deliver\non the President's commitment to serving one million children by 2002, and to\ndouble the number of infants and toddlers in Early Head Start to 80,000.\nMore detail on this proposal will be available as part of the discussions on\nreauthorizing Head Start, later this year.\nFunds to improve licensing and enforce health and safety standards.--\nfunding State efforts, including increased unannounced inspections of child\ncare settings, and based, in part, on the military's model child care program.\nA total of $500 million over 5 years would be available for this purpose.\nSeparately, the President has already taken steps to facilitate background\nchecks on child care providers.\nScholarships and training for child care providers.- investing $250\nmillion over 5 years to support 50,000 scholarships per year to students\nworking toward a child care credential.\nInvestments in research.- totaling $150 million over 5 years to support data\ncollection, research and evaluation. This includes support for a National\nCenter on Child Care Statistics and a child care hotline that would help\nparents find appropriate quality child care for children.\nBetter after-school care.-- including an $800 million expansion of the 21st\nCentury Community Learning Center Program which provides start-up funds\n-15-\n/\n/\n(with a local match) to school-community partnerships to establish before-\nand after-school care for school-age children.\nParents who Choose to Stay at Home\nThe President's initiative does not include a proposal for parents who choose to\nstay at home, however the Administration has said that they are open to ideas.\nMost options to assist stay at home parents rely heavily on the tax system and\nconsist of either allowing them to take advantage of the Child and Dependent Care\nCredit or expanding the Child Tax Credit for all families. Initial analyses of these\noptions show that they are expensive options on a national level and provide only\nmarginal benefits to individual families. While an additional benefit would be helpful for\nsingle-earner families, the proposals that have been advanced thus far will not provide\nenough money per family to allow or encourage many more parents to stay home.\nJ:\\Srudisilwp\\Final child care background memo.wpd"
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