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Bobbie Greene's Files
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Child Care Initiative
Spending Options
I.
Subsidy (Child Care and Development Block Grant)
II.
Quality Fund
III.
Targeted Investment for Quality/Availability
A.
Scholarships/Apprenticeships
B.
Consumer Education, Research, and Technology
C.
Enforcement - a means around Standards issie
D.
Early Learning/Head Start
E.
School-Age Care
Dept. of 62d - $ Schools
HHS
-
$
Communities
TABLE 4.2 AFTER-SCHOOL ACTIVITIES CHILD WOULD BENEFIT FROM
(OF PARENTS WHO WOULD WANT AFTER-SCHOOL PROGRAMS N = 295)
Arts, Music
Computer
Supervised
Community
Basic Skills
and Cultural
Technology
Recreational
Service or
Group
Tutoring
Programs
Classes
Activities
Volunteering
All Parents
74
91
95
86
84
School Level
Primary
73
95
96
87
77
Middle
74
87
94
86
89
Urbanicity
Urban
79
91
96
83
82
Suburban
68
92
97
87
85
Rural
75
88
92
89
84
Race/Ethnicity
Non-Black /
Non-Hispanic
68
89
94
85
84
Black
93
98
98
91
80
Hispanic
90
95
100
95
86
Household Income
Less than
$25,000
79
94
96
90
82
$25,000-
$50,000
73
90
96
87
86
$50,000 or more
70
89
94
85
84
Parent's Education
No more than
80
89
95
85
81
grade 12
At least some
69
92
96
87
85
college
-16-
Caring for America's Children
The Clinton Administration and Child Care
October 23. 1997
Over the past decade, the number of American families with working parents has expanded
dramatically. Making high quality child care more affordable and accessible is critical to the
strength of our families and to healthy child development and learning Each of us --from
businesses to religious leaders to policy-makers and elected officials --has a responsibility and
an important stake in making sure that children of all ages have the best possible care
available to them. From infancy through adolescence. in child care settings and after-school
programs. children can learn and thrive with the right care. attention, and education.
-- President Clinton, July 23, 1997
President Clinton is hosting the first-ever White House Conference on Child Care to focus the
nation's attention on the importance of addressing the need for safe. affordable. quality child care.
This Conference underscores and builds upon the President Clinton's commitment to strengthen the
American family by giving parents the tools they need to fulfill their responsibilities and giving
children the ability to reach their full potential.
STRENGTHENING AMERICA'S WORKING FAMILIES
Putting Families First. Throughout his presidency. President Clinton has worked hard to help
America's working families. That is why the President fought for the passage of the Family
and Medical Leave Act (FMLA) to allow workers to take up to 12 weeks unpaid leave to care
for a newborn or adopted child. to attend to their own serious health needs. or to care for a
seriously ill parent. child or spouse. In June 1996. President Clinton proposed expanding
FMLA to allow workers to take up to 24 unpaid hours off each year for school and early
childhood education activities, routine family medical care. and caring for an elderly relative.
The President also has fought for greater health security for America's families. He signed into
law the Health Insurance Portability and Accountability Act which includes important new
protections for an estimated 25 million Americans who move from one job to another, who are
self-employed, or who have pre-existing medical conditions. And in August 1997, President
Clinton signed the Balanced Budget Act which included $24 billion for the Children's Health
Initiative -- the single largest investment in health care for children since 1965 -- to provide
meaningful health care coverage to millions of uninsured children.
Providing Economic Opportunity. In 1993, President Clinton put into place an economic
strategy that invests in people and provides real opportunity. President Clinton has fought for
policies that help working parents fulfill their responsibilities. including winning inclusion of a
$500 per-child tax credit for children under age 17 in the Balanced Budget Act -- helping 27
million families with 45 million children. The new Child Tax Credit is in addition to the
Earned Income Tax Credit and the Child and Dependent Care Tax Credit (tax credits President
Clinton protected during the balanced budget negotiations). President Clinton also expanded
the Earned Income Tax Credit to give 15 million working families tax relief. In 1997. the
average tax credit is $1,450 on family income up to $29,290. And the President proposed
and signed into law an increase in the minimum wage from $4.25 to $5.15. For a full-time.
year-round worker at minimum wage. this 90-cent increase raises yearly income by $1.800 -- as
much as the average family spends on groceries over seven months.
INVESTING IN CHILD CARE
Increasing Child Care Funding. Because of President Clinton's leadership. federal funding
for direct child care subsidies has increased by nearly 70 percent since he took office. providing
child care services for over one million children. The 1996 welfare law increased child care
funding by $4 billion over six years. providing child care assistance to low-income working
families and parents moving from welfare to work.
Increasing Participation in Head Start and Improving Program Quality. For more than
thirty years. Head Start has been one of our nation's best investments ensuring that low-income
children start school ready to learn. President Clinton has made expanding and improving
Head Start a priority of his Administration. Since 1993. funding for the program has increased
by 43 percent -- in fiscal year 1997. Head Start will serve nearly 800.000 low-income children
four years old and younger. The Balanced Budget continues the expansion of Head Start
toward the President's goal of serving one million children in 2002. Over the last three years.
the Clinton Administration has also invested significantly in improving program quality,
providing local programs with the resources they need to attract and retain high quality
teachers, and ensuring the safety of Head Start centers.
Created Early Head Start for 0-3 Year Olds. Initiated by the President in 1994. there are
now 143 Early Head Start programs across the country, expanding the proven benefits of
Head Start to low-income families with children age three and under. The program provides
early. continuous and comprehensive child development and family support services, preparing
children for a lifetime of learning and development. In FY 1997. the program will have served
nearly 25,000 children and their families.
Developed a Full-Day, Full-Year Head Start Initiative. In March 1997. the Administration
announced a new Head Start initiative that will expand Head Start services for children while
also helping parents. including those moving from welfare to work. Under the new initiative,
child care providers will be given priority for Head Start expansion funds to deliver full-day,
full-vear Head Start services in partnership with Head Start. Children will stay in one place all
day rather than attending Head Start for half a day then moving to child care for the remainder
of the day.
Expanding Child Care in Rural America. Under the Clinton Administration. the Agriculture
Department's Rural Housing Service's Community Facilities program is directing its efforts
towards meeting the need for quality child care in rural areas. As a part of this effort. 31 child
care centers were created in FY 1997 and the program will expand in FY 1998. In addition, the
Rural Housing Service has been forming partnerships with other federal programs (including
Head Start) and the private sector to help provide child care in rural America.
Providing Child Care in Urban Communities. Under the Clinton Administration, the
Department of Housing and Urban Development is supporting working families and those
moving to work by providing both quality child care for their children and opportunities for
parents to become self sufficient. Community Development Block Grants fund initiatives
that include education/training opportunities, on-site after-school child care and construction
of child care and youth centers. The Ounce of Prevention Program enhances efforts already
underway in Empowerment Zones/Enterprise Communities with summer and after-school
education/recreation activities and mentoring and tutoring programs. In 1997, the
Department awarded $550 million in urban revitalization (HOPE VI) funds which will be
used to physically revitalize communities and fund initiatives such as on-site day care centers
and transportation services that provide access to employment centers and health care
facilities. In 1997, the Administration funded $42 million for the Family Economic
Development and Supportive Services (EDSS) program that will include child care services,
youth leadership and mentoring skills and family/parental development counseling.
Serving Children with Special Needs. Under the Clinton Administration. the Department of
Justice has worked hard to make sure that children with*disabilities have access to child care
along with non-disabled children. For instance. the Justice Department has entered into
agreements regarding children with disabilities with the two largest child care companies in the
country -- KinderCare has agreed to do "finger-prick" tests as requested by doctors and parents
for children with diabetes and. in another agreement with KinderCare, the company has agreed
to develop a model policy to enable a child with mental retardation to attend one of its centers
with a state-funded personal care attendant. In addition. La Petite Academy has agreed to do the
same "finger-prick" tests. to keep epinephrine on hand for severe and possibly-life-threatening
allergy attacks. and to make changes to some of its programs so that children with cerebral
palsy can participate. The Justice Department also provides information through its ADA
information hotline (1-800-514-0301. 1-800-514-0383 TDD) and produces Commonly Asked
Questions about Child Care Centers and the ADA for distribution. Additionally. the HHS
Child Care Bureau has launched a special initiative to assist ten states to develop and
implement effective plans aimed at improving and expanding their child care service delivery
system. The project. "Map to Inclusive Child Care," will expand to other states over the next
three years.
Easing the Commuting Dilemma for Families. The President is fighting for welfare-to-work
transportation grants to assist states and local communities in moving individuals from welfare-
to-work -- including helping parents with small children obtain transportation to their jobs and
to child care. Proposed legislation is included in the transportation authorization bills currently
before Congress. In addition. as a part of the Transportation Department's Livable
Communities Initiative. the Federal Transit Administration (FTA) has provided opportunities
3.
for on-site community services Head Start facilities. a health clinic. and child care centers --
at transit facilities across the country to help parents obtain child care for their children on their
commuting routes to work or training.
ENSURING HEALTH AND NUTRITION IN CHILD CARE
Improving Health and Safety with Healthy Child Care America. In an effort to improve the
health and safety of child care programs and to provide child health education to child care
providers and parents. in 1995. the Clinton Administration launched the Healthy Child Care
America initiative. This effort has established partnerships between child care providers and
health care services in 46 states. helping to ensure that children in child care are in safe and
healthy environments.
Ensuring that Children in Child Care Settings Are Properly Immunized. In July 1997.
President Clinton proposed new child care regulations to ensure that children in child care
receive the immunizations they need on time. The proposed rule would require that all children
in federally subsidized child care be immunized according to state public health agency
standards. This proposed regulation will particularly affect those children in child care
arrangements that are legal but exempt from state licensing requirements.
Providing Quality Nutrition to Children in Child Care. President Clinton has maintained
the commitment to providing quality nutrition in the Child and Adult Care Food Program
(CACFP), a federal program that provides healthy meals and snacks in child and adult day care
facilities. In 1997, the program provided meals to about 2.5 million children and almost
50,000 adults in approximately 35,000 child care centers (including after-school centers),
195,000 family and group day care homes. and 1,500 adult day care centers. Child care
providers in the CACFP must serve meals that meet federal nutrition guidelines. and must offer
free or reduced-price meals to those eligible. The General Accounting Office identified
CACFP as one of the most effective vehicles for reaching family child care providers and
enhancing the care they provide because of its unique combination of resources. training.
oversight and peer support. Notably. 87 percent of family child care homes that are considered
to be providing good quality child care are participating in the Child and Adult Care Food
Program. according to the Families and Work Institute's Study of Children in Family Child
Care and Relative Care.
CARING FOR SCHOOL-AGE CHILDREN
Convened the 1997 School-Age Child Care Forums. The Child Care Bureau at the
Department of Health and Human Services convened ten regional conferences to share
promising initiatives for school-age children among child care. education. and community
based organizations from nearly every state. These conferences spurred additional dialogue
among participants and stimulated planning to address "out of school time" in states and
communities across the country.
4.
Keeping Schools Open as Community Learning Centers -- A Guide. In May 1997. First
Lady Hillary Rodham Clinton released Keeping Schools Open as Community Learning
Centers: Extending Learning in u Safe. Drug-Free Environment Before and After School. The
Department of Education. along with the National Community Education Association, Policy
Studies Associates. and the American Bar Association. wrote the step-by-step guidebook on
how school facilities can be used for after-school programs.
Providing After-School Activities Through 21st Century Learning Centers and Title I.
The Clinton Administration's Improving America's Schools Act of 1994 reauthorized the
Elementary and Secondary Education Act. This law included a new statutory requirement that
encourages schools receiving funding to enhance their instruction with such programs as
extended school years. before- and after-school programs. and summer programs -- effectively
giving "teeth" to after-school options. For instance. Title I -- which is funded by the
Improving America's Schools Act and provides extra help with basic and advanced skills to
disadvantaged students in elementary and secondary schools -- has been successful in helping
Title I funded schools provide after-school programs. In addition. under this law, the 21st
Century Community Learning Center program has been developed -- a program that once fully
implemented will benefit urban and rural schools and their communities. allowing schools to
stay open beyond the normal hours. offering expanded learning opportunities to children after-
school. The President's current budget request includes $50 million to fund 350 21st Century
Community Learning Center programs in FY 1998.
Supporting Positive After-School Choices with the Safe and Drug-Free Schools
Communities Act. Because children unsupervised after school are more likely to engage in
risky behaviors like substance use, the Safe and Drug-Free Schools and Communities Act funds
before and after-school programs. In the 1994-95 school year. over 2,700 school districts used
these funds to support before- and after-school activities.
Staying Safe After School with Community Schools. In the Anti-Gang and Youth Violence
Initiative, the President has called for 1.000 new after-school initiatives across the country.
Schools that stay open longer and are open on weekends and during the summer can provide
students, parents and communities with access to valuable resources. Turning schools into
after-hour safe havens can help to prevent violent crime and violent behavior while boosting
our children's academic achievement.
Helping Children Through Service. As co-chair of the Presidents' Summit for America's
Future, President Clinton helped bring businesses. nonprofits. states and communities. and
volunteer groups to Philadelphia in April 1997 to focus on service and to ensure that every
child in America has five key resources -- a caring adult. a safe place. a healthy start. a
marketable skill, and a chance to serve. Many of the hundreds of corporations and nonprofits
that made commitments at the summit pledged to become involved in after-school and
mentoring programs. America's Promise. the nonprofit organization founded to follow up on
the summit promises. is now working with these organizations to ensure that they do so.
5.
Enhancing Child Care and After-School Care with the Corporation for National Service.
Established by President Clinton in 1993, the Corporation for National Service. through
AmeriCorps, Learn and Serve America and the National Senior Service Corps, is addressing the
needs of children through service activities. Approximately two-thirds of the national service
programs work to address the needs of children and youth often in child care and after-school
settings. AmeriCorps members, college students. and senior volunteers. working alongside
child care providers, are serving as tutors and mentors, health and nutrition educators, in both
child care and after-school programs across the country.
Aiding the Boys and Girls Clubs of America. The Clinton Administration is providing
resources to the Boys and Girls Clubs of America to establish and enhance more clubs
throughout the United States. These Clubs are situated in at-risk communities and reach
thousands of kids through violence prevention and reduction. educational health programs and
youth leadership development. For instance. the Boys and Girls Clubs of America was
awarded an AmeriCorps grant to provide education awards to 100 full-time and 800 part-time
AmeriCorps members in up to 100 clubs early next year. The AmeriCorps members will be
either older (17 and 18 year-olds) Boys or Girls Clubs members or club member alumni who
will serve as tutors, mentors, and recreation activity coordinators in after-school programs.
PROVIDING INFORMATION AND TECHNICAL ASSISTANCE
Providing Child Care Information. In 1995. the Clinton Administration established the
Child Care Bureau at the Department of Health and Human Services (HHS) to streamline child
care program operations and improve the quality and efficiency of service. In addition, HHS
launched the National Child Care Information Center to disseminate child care information,
publications and resources to help providers start up child care centers, parents locate child care
in their communities, and researchers and policy makers attain access to policy information.
Through the Technical Assistance Project, HHS has brought states together to share promising
practices and has held special forums on school-age care. consumer education. Tribal child care
programs. and a range of other topics.
Promoting Public/Private Partnerships. The Child Care Bureau has launched a nationwide
effort to promote public/private partnerships in child care by providing technical assistance to
states on promising initiatives going on across the country
Providing a Resource and Referral Clearinghouse for Working Families. The Department
of Labor Women's Bureau recently published a report entitled: What Works! The Working
Women Count Honor Roll Final Report which highlights employers who have made real
change in the areas that working women and their families care about most -- pay and benefits,
family friendly workplaces (including child care) and respect and fair treatment on the job.
Hundreds of employers accepted this challenge to deliver real change -- especially in child care.
This guide was a result of the Working Women Count national questionnaire which surveyed
250.000 working women the largest questionnaire of working women ever. Notably, child
care was identified as a top issue for working women. In addition to this guide. the Labor
Department has expanded its resource and referral clearinghouse for employers and working
6.
families. The agency has established a toll-free number (1-800-827-5335) and provides
materials like the Work and Family Resource Kit and Care Around the Clock: Developing
Child Care Before 9 and after 5.
Training Caregivers -- a Nationally Acclaimed Program. The Education Department's
Office of Educational Research and Improvement supports the regional laboratory in San
Francisco, California called WestEd. WestEd has developed a nationally acclaimed
Infant/Toddler Caregiver Training Program which teaches caregivers how to provide nurturing
and stimulating environments to promote quality child care. Research-based videos and printed
materials are available in Spanish. Chinese. and English. Eight thousand caregivers have been
trained in California and the program has been expanded across the nation.
LEARNING LESSONS FROM THE MILITARY CHILD DEVELOPMENT PROGRAMS
Providing High Quality Child Care -- The Military Model. Under the Clinton
Administration, the Department of Defense (DoD) has made important strides to improve the
quality of child care for the children of the men and women who serve our country. The DoD
Child Care System serves over 200,000 children (age zero to 12) daily making the U.S. military
system the largest employer-sponsored child care program in the nation. The DoD Child Care
System. known as the Child Development Program. includes Child Development Centers,
Family Child Care homes. School Age Care programs, and Resource and Referral services.
Through this system. the military offers full-day, part-day. and hourly child care, part-day
preschools. before- and after-school programs for school age children. and extended hour care
which includes nights and weekends to accommodate shift workers. Because of the
Department of Defense's commitment to excellence in child care, since 1992, the number of
military child care facilities that are accredited by the independent National Association for the
Education of Young Children has risen from 55 to 353. Currently, over 75 percent of military
child care programs are accredited. as compared to only 7 percent of other child care facilities
nationwide. Since the early 1990s, the DoD has focused on improving the quality. availability,
and cost of child care for military families.
Sharing the Military's Expertise. Because of the DoD's high quality, comprehensive child
care programs. in April 1997, President Clinton directed the Secretary of Defense to share the
expertise and lessons learned from the Military Child Development Programs with Federal.
State, tribal. and local agencies, as well as with private and nonprofit groups. that are
responsible for providing child care. In his Directive the President stated. "The Military Child
Development Programs have attained a reputation for an abiding commitment to quality in the
delivery of child care. The Department of Defense's dedication to adequate funding, strict
oversight. improved training and wage packages, strong family child care networks. and
commitment to meeting national accreditation standards is laudatory. I believe that the military
has important lessons to share with the rest of the Nation on how to improve the quality of child
care for all of our Nation's children." In response to the President's directive. the Pentagon is
implementing a plan to reach out to states and civilian child care centers to share its expertise.
7.
SUPPORTING A FAMILY-FRIENDLY FEDERAL WORKPLACE
Promoting Family-Friendly Initiatives. Under President Clinton's leadership, the federal
government, striving to be a model employer for other private and public employers. has
implemented family-friendly leave initiatives that enhance the ability of employees to balance
family and employment obligations. In addition to leave initiatives, the federal government
offers compressed or flexible work schedules to many workers so that they may spend more
time with their families.
Providing Child Care for Federal Workers. In addition to the Department of Defense's
model child care program. there are more than 230 child care centers for civilian government
employees in federal buildings in as many as 36 states. The General Services Administration
(GSA) oversees 108 of these centers, making GSA the largest civilian sponsor of work-site
child care in the nation. Under this Administration. the emphasis on quality has continued --
with 73 percent of GSA sponsored centers accredited by the independent National Association
for Education of Young Children. and with a goal of reaching 100 percent accreditation within
two years. Striving to meet the needs of parent workers, 89 percent of GSA centers have infant
care. 74 percent have drop-in/emergency care, and 42 percent provide summer programs for
school aged children. In addition. more than 80 percent of centers are open 11 or more hours
per day. Nearly 70 percent of the child care center directors have ten or more years of
experience in early childhood education.
8.
Child Care for Young Children: Quality
"Recent brain research suggests that warm, responsive child care is not only comforting for an infant;
it is critical to healthy development. "
. Rethinking the Brain: New Insights into Early Development
Families and Work Institute (1997)
Higher quality child care for very young children (0 to 3) was consistently related to high levels of cognitive and
language development. "Mother-Child Interaction and Cognitive Outcomes Associated with Early Child Care", NICHD Early Child Care Research
Network (1997)
Studies have raised concerns about the quality of care:
A four-state study of quality in child care centers found only one in seven (14%) were rated as good quality. Cost,
Quality and Child Outcomes in Child Care Centers, (Executive Summary) University of Colorado at Denver (1995)
Thirteen percent of regulated and 50 percent of nonregulated family child care providers offer care that is
inadequate. The Study of Children in Family Child Care and Relative Care, Families and Work Institute (1994)
"The quality of services provided by most centers was rated as barely adequate." The National Child Care Staffing
Study (Executive Summary), National Center for the Early Childhood Workforce (1989)
"[M]any children living in poverty receive child care that, at best, does not support their optimal development and,
at worst, may compromise their health and safety." New Findings on Children, Families, and Economic Self-Sufficiency, National Research
Council, Institute of Medicine (1995)
What Works to Improve the Quality of Child Care
Children who receive warm and sensitive caregiving are more likely to trust caregivers, to enter school ready and
eager to learn, and to get along well with other children To ensure that child care settings nurture children, protect their
health and safety, and prepare them for later school success, better qualified staff are essential." Starting Points: Meeting the Needs
of Our Youngest Children, Carnegie Task Force on Meeting the Needs of Young Children (1994)
"[S]maller group sizes, higher teacher/child ratios and higher staff wages result in quality child care. Outcomes for
children are also better when they attend programs that include a curriculum geared to young children, well prepared staff and
where parents are involved in programming." Early Childhood Care and Education: An Investment That Works, National Conference of State
Legislatures (1997)
Any child care setting will benefit from a health consultant.
to advise on potential infectious diseases, explain
symptoms and treatments to families, plan health alert procedures when infectious disease occurs, and assist with public health
reporting requirements. Caring for Infants and Toddlers in Groups, Zero to Three: National Center for Infants, Toddlers and Families (1995)
States with stronger licensing requirements had a greater number of good-quality centers according to recent
research. Cost, Quality and Child Outcomes in Child Care Centers, University of Colorado at Denver (1995)
Voluntary conformity to higher standards through professional center accreditation or through meeting another
set of quality standards also increased the likelihood of higher classroom quality. Cost, Quality and Child Outcomes in Child
Care Centers, University of Colorado at Denver (1995)
For additional information, contact the National Child Care Information Center at (800) 616-2242 or visit the Web site at
http://ericps.crc.uiuc.edu/nccic/nccichome.html
A Profile of the Child Care Work Force
Approximately three million child care teachers, assistants,
Only 18 percent of child care centers offer fully paid health
and family child care providers in the U.S. care for 10 million
coverage to teaching staff.
children each day.
Although they earn lower wages, child care teachers are
Who are the child care teaching staff?
better educated than the general population.
97% are female
One-third of all child care teachers leave their centers each
41% have children
year.
10% are single parents
Family child care providers who care for and educate
Child care teaching staff eam an average of $6.89 per hour
young children in their homes also have very low earnings.
or $12,058 per year (based on 35 hours per week and 50
Providers earn $9,528 annually after expenses (data from
weeks per year) (data from Cost, Quality and Child
The Economics of Family Child Care Study, a forthcoming
Outcomes in Child Care Centers, Technical Report 1995,
publication from Wheelock College, earnings in 1996 dollars).
salary data are in 1993 dollars).
Unregulated providers, who care for fewer children and are
offered fewer supports; earned just $5,132 after expenses.
Education of Child Care Teaching Staff Versus All Workers**
50
40
"
32
32:
31
30
27
23
21
20
10
10
0
Less than High School
High School Diploma
Some College
BA/BS or More
Child Care Teachers*
Female Workers**
Male Workers**
*National Child Care Staffing Study **Current Population Surveys, 1995. Bureau of Labor Statistics, U.S. Department of Labor
Annual Wages of Child Care Teaching Staff Versus All Workers***
$58,582
$60,000
$50,000
$31,278
$40,000
$26,820
$30,344
$26,747
$30,000
$19,168
$20,000
$14,506
$10,151
$11,617
$10,000
$0
High School Diploma
Some College
BA/BS or More
Civilian Labor Force, Men**
Civilian Labor Force, Women**
TeachingStaff, 1994*
"National Child Care Staffing Study, wages in 1996 dollars **Current Population Surveys, 1996. Bureau of Labor Statistics, U.S. Department of Labor
***These charts only provide information on center-based teaching staff.
This fact sheet is primarily excerpted from materials developed by the National Center for the Early Childhood Work Force
(NCECW), (phone: 202-737-7700; E-mail: [email protected]).
Child Care for Young Children: Demographics
According to the National Center for Education Statistics,
While use of center-based care increased from 1988 to
in 1995 there were approximately 21 million infants, toddlers,
1993, most young children are still in a home-based setting,
and preschool children under the age of six in the U.S., more
including family child care.** **
than 12.9 million of these children were in child care.'
Forty-five percent of children under age one were in child
care on a regular basis.'
Primary Child Care Arrangements Used by Families
with Employed Mothers for Preschoolers: 1993
(Percent of preschoolers of working mothers In selected arrangements)
Mother*
Centers
6%
30%
Father
16%
Other
1%
Grandparents
Family Child Care (Nonrelatives)
17%
21%
Other relatives
9%
. Includes mothers working at home or away from home. Source: Casper, L.M. Who's Minding Our Preschoolers?
U.S. Bureau of the Census, Current Population Reports, P-70, no. 53, Washington, DC 1996
Changes in Selected Child Care Arrangements: 1988 to 1993
(Percent of preschoolers of working mothers in selected arrangements)
30
Centers
23
26
17
Family day care
1993
18
24
1991
1988
16
Care by fathers
20
15
0
5
10
15
20
25
30
Source: Casper, L.M. Who's Minding Our Preschoolers? U.S. Bureau of the Census, Current Population Reports. P-70, no. 53, Washington, DC 1996
This profile of child care demographics has been excerpted from information provided by the : National Center for Education Statistics, U.S. Department
of Education and the **U.S. Bureau of the Census.
For additional information, contact the National Child Care Information Center at (800) 616-2242 or visit the Web site at
http://ericps.crc.uiuc.edu/nccic/nccichome.html
Out-of-School Time
School-Age Care
According to the Bureau of the Census, in 1997 there were 38.8 million children between the ages of 5 and 14 years living
in the U.S. There are approximately 24 million school-age children with parents in the workforce or pursuing education
(based on 1993 SIPP data from the Bureau of the Census).
Care Arrangements of School-Age Children
Experts estimate that nearly 5 million school-age
School-age children are likely to spend time in many
children spend time as latchkey kids without adult
different care arrangements. According to the National Child
supervision during a typical week.
Care Survey (1990), 76 percent of school-age children with
an employed mother spend time in at least two child care
Approximately 1.7 million children in kindergarten
arrangements during a typical week, in addition to their
through grade 8 were enrolled in 49,500 formal before-
time in school.
and/or after-school programs in 1991, according to the
National Study of Before and After School Programs.
According to the National Child Care Survey, children aged
5 to 12 with employed mothers use the following types of
In 1993-94, according to the National Center for Education
supplemental care: 7% are in family day care; 14% are in
Statistics, there were 18,111 before- or after-school programs
centers, 3% are cared for by in-home providers, 25% are
in public schools-70% of public schools did not offer extended
cared for by relatives and 44% do not use supplemental care.
learning programs.
Use of Supplemental Care,
Children 5 to 12 with Employed Mothers
Center
In-home
14%
3%
Family Day Care
Relative
7%
25%
Other
7%
None
44%
The Effects of Out-of-School Time on Children
Children under adult supervision in a formal program during after-school hours have demonstrated improved academic
achievement and better attitudes toward school than their peers in self- or sibling care. Miller and Marx, 1990 in Supplement o the
National Assessment of Chapter 1
Youth are at greatest risk of violence after the regular school day. Youth between the ages of 12 and 17 are most at-risk
of committing violent acts or being victims between 2:00 pm and 6:00 pm-a time when they are not in school. Fight Crime: Invest
in Kids, 1997
The most frequently mentioned barrier to participation is the parents' inability to pay the tuition and fees charged by
programs. Other barriers include availability, quality of activities, inadequate facilities, transportation, high staff turnover, hours
of the program and lack of resources.
Components of Successful Before- and After-School Programs include: linkages between after-school and regular school
programs, children's participation in age appropriate learning activities, hiring of qualified staff, low student-staff ratio,
involvement of parents, program evaluation and coordination with the schools and other community organizations.
For information on what states and communities are doing to meet the need for school-age care, contact the National
Institute on Out of School Time (formerly the School-Age Child Care Project), Center for Research on Women,
Wellesley College at (617) 283-2547 or visit the World Wide Web site at: http://www.wellesley.edu/WCW/CRW/SAC.
For additional information on extended learning in after-school programs in schools, contact the U.S. Department of
Education, please call (800) USA-LEARN or visit the World Wide Web site at: http://www.ed.gov/PFIE.
Economics of Child Care
In 1994, 62% of married mothers with a child under age six
In 1990, 7.2 million mothers with 11.7 million children under
were in the workforce, compared with 30% in 1970.'
age 15 worked full or part time during nonstandard hours.**
The increased employment of mothers outside the home has
In 1993, the average family with an employed mother and a
led to a sharp increase in the use of child care over the past
child under age five spent about $74 per week for child care for
several decades. Eight of 10 employed mothers with children
all preschoolers in the family.*
under six are likely to use some form of nonparental child care
arrangement.'
Families with annual incomes under $14,400 that paid for care
for children under five spent 25% of their income on child care.
compared with 6% for families with incomes of $54,000 or
more.*
Percent of Monthly Family Income Spent on Child Care by Family Income*
.
$4,500 or more
6%
$3,000 to $4,499
8%
$1,200 to $2,999
12%
Less than $1,200
25%
0%
5%
10%
15%
20%
25%
30%
*
Limited to families with a preschooler, 1993 data. Source: Casper, L.M. What Does It Cost to Mind Our Preschoolers? U.S. Bureau
of the Census, Current Population Reports, P-70. no. 52. Washington, D.C., 1995
Weekly Payment for Child Care by Monthly Family Income*
$110.00
$100.00
$91.93
$90.00
$80.00
$73.10
$70.00
$60.16
$60.00
$50.00
$47.29
$40.00
$30.00
Less than $1,200
$1,200 to $2,999
$3,000 to $4,499
$4,500 or more
"Limited to families paying for child care for preschoolers, 1993 data Source: Casper, L.M. What Does It Cost to Mind
Our Preschoolers? U.S. Bureau of the Census. Current Population Reports, P-70, no. 52. Washington, D.C., 1995
Information in this fact sheet is excerpted from 1 Sandra L. Hofferth, "Child Care in the United States," The Future of Children, vol. 6, no. 2 Summer/Fall 1996,
with additional information from: National Center for Education Statistics. U.S. Department of Education: "U.S. Bureau of Census; **Women's Bureau, U.S.
Department of Labor.
For additional information, contact the National Child Care Information Center at (800) 616-2242 or visit the Web site at
http://ericps.crc.uiuc.edu/nccic/nccichome.html
November 18, 1997
MEMORANDUM FOR DISTRIBUTION
FROM:
ELENA KAGAN
DEPUTY ASSISTANT TO THE PRESIDENT
FOR DOMESTIC POLICY
RE:
DEPUTIES MEETING ON CHILD CARE INITIATIVE
As you know, the President announced that he will unveil a child care initiative in his
1998 State of the Union Address. The Domestic Policy Council has been leading a policy
development process, with significant input from various federal agencies and White House
offices, to develop policy options on child care for the President's consideration.
The purpose of today's Deputies-level meeting is to discuss various policy options for the
child care initiative that have been developed over the past months. At the meeting,
representatives from the Departments of the Treasury, Health and Human Services, and
Education will make brief presentations of several proposals, with the balance of the meeting
reserved for discussion.
Attached for your review please find several documents: 1) an overview paper which
outlines current federal investment in child care, proposes goals for a new child care initiative,
and summarizes the policy options for discussion at the Deputies meeting, and 2) the policy
proposals developed by various agencies (which are summarized in the overview paper).
DISTRIBUTION:
Rebecca Blank, CEA
Carolyn Becraft, Defense
Bobbie Greene, OFL
Eric Holder, Justice
Gene Sperling, NEC
Jack Lew, OMB
Kevin Thurm, HHS
Kitty Higgins, Labor
Olivia Golden, HHS
Terry Peterson, Education
Yvette Jackson, Agriculture
Amy Finkelstein, CEA
Anne Lewis, NEC
Barry White, OMB
Bob Litt, Justice
Cheryl Dorsey, Labor
Emil Parker, NEC
Janet Holtzblatt, Treasury
Joan Lombardi, HHS
Jon Schnur, Vice President's Office
Jonathan Gruber, Treasury
Karl Scholz, Treasury
Mary Bourdette, HHS
Paul Leonard, HUD
Pauline Abernathy, Education
Robin Leeds, OPL
Susan Wilhelm, Education
CHILD CARE INITIATIVE
Overview of Current Federal Investment in Child Care
The Federal government invests in child care in a variety of ways. The two principal
mechanisms designed to help parents pay for child care are the Child and Dependent Care Tax
Credit (CDCTC) and the Child Care and Development Block Grant (CCDBG):
Child and Dependent Care Tax Credit (CDCTC). The CDCTC provides tax relief to
taxpayers who pay for the care of a child under 13 or a disabled dependent or spouse in
order to work. The non-refundable credit is equal to a percentage of the taxpayer's
employment-related expenditures for child or dependent care, with the amount of the
credit rate depending on the taxpayer's adjusted gross income. The Federal government
spent approximately $2.6 billion on the CDCTC in 1997.
Child Care and Development Block Grant (CCDBG). The CCDBG is the primary
Federal subsidy program devoted to child care, enabling low-income parents and parents
receiving Temporary Assistance for Needy Families (TANF) to work or participate in the
educational or training programs they need in order to work. Welfare reform increased
federal funding for child care by approximately $4 billion over five years (FY 1997 - FY
2002), and it consolidated four child care subsidy programs into the CCDBG. The funds
are distributed primarily by formula to the States to operate direct child care subsidy
programs and improve the quality and availability of care. The Federal government spent
$2.9 billion in direct child care subsidies in FY 1997, serving a little more than one
million children.
In addition, the $500 per-child tax credit in the Balanced Budget Act can provide significant
additional support to help parents meet child care costs.
In addition to these programs, the federal government runs a food program for child and adult
day care centers through the USDA and invests in after-school programs for school-age children.
The Child and Adult Care Food Program (CACFP) provided meals to approximately 2.5 million
children in approximately 35,000 child care centers (including after-school centers) in 1997. The
General Accounting Office identified the CACFP as one of the most effective vehicles for
reaching family child care providers and enhancing care in home-based settings. After-school
programs are supported through a variety of initiatives, including the Department of Education's
21st Century Learning Centers, funded at $40 million for FY 1998, which will provide after-
school program opportunities in public schools for a million children.
Goals of New Child Care Initiative
The goals for the Child Care Initiative will drive decisions on how to invest limited additional
resources. Agency representatives generally have argued for a child care initiative addressing
each of the following goals:
1.
Helping more parents afford child care
2.
Assuring safety and quality in child care
3.
Making child care more available
These goals and their prioritization of course remain open for discussion and debate. A child
care initiative could decide to focus on one or two of these goals, rather than all three.
Policy Options
The remainder of this memo outlines policy options relating to the goals of affordability, safety
and quality, and availability. Some of the options address more than one of these goals, but are
placed in a single category for organizational purposes.
I.
AFFORDABILITY
In order to help more parents afford child care, the Administration could: 1) expand the Child
Care and Development Block Grant and/or 2) modify the Child and Dependent Care Tax Credit.
The pros and cons of building on one or both of these mechanisms are discussed in the attached
papers prepared by the Departments of the Treasury and HHS. Information on the way the two
mechanisms assist low-income families appears below, followed by policy options relating to
each.
CCDBG
CDCTC
Current Federal funding level
$2.9 billion (FY 1997)
$2.6 billion (FY 1998)
Eligibility criteria
Families (TANF and non-
Taxpayers who pay for at
TANF) with children under
least 50% of the care of a
13 who need child care and
child under 13 and/or a
earn less than 85% of state
disabled dependent or spouse
median income
in order to work.
% of overall dollars in
100%
19%
program going to families
with AGI below 200% of
poverty
2
CCDBG
CDCTC
% of families with AGI
12% (of potentially eligible
13%
below 200% of poverty and
families)
children under 13 who
receive assistance under
program
Amount of federal assistance
$2,200 (average, annual
$494 (average tax relief per
federal subsidy per-child)
family with AGI below 200%
of poverty)
1.
Increase Federal Investment in the Child Care and Development Block Grant
There are three options for additional investment in the Child Care and Development Block
Grant:
OPTION ONE: Increasing CCDBG funding based on current formula.
OPTION TWO: Increasing CCDBG funding and working with states to set specified
benchmarks or performance standards for use of additional funding (e.g. to expand eligibility,
make co-payments more affordable, improve reimbursement rates).
OPTION THREE: Increasing CCDBG funding and requiring that funds are targeted to reach
families of a specified income Nevel or to pay child care costs for children of a specified age
level.
For each of these options, using HHS estimates, for every $100 million of annual additional
investment in the CCDBG, the child care costs of at least an additional 35,000 children from
families with incomes below 200% of poverty will be subsidized:
Increased Investment in
Number of Additional
CCDBG
Children Reached
$100 million/year or more
Approximately 35,000/year
than $500 million/5 years
$300 million/year or more
Approximately 105,000/year
than $1.5 billion/5 years
$500 million/year or more
Approximately 175,000/year
than $2.5 billion/5 years
3
Increased Investment in
Number of Additional
CCDBG
Children Reached
$700 million/year or more
Approximately 250,000/year
than $3.5 billion/5 years
$1 billion/year or more than
Approximately 350,000/year
$5 billion/5 years
2.
Modify the Child and Dependent Care Tax Credit
The Child and Dependent Care Tax Credit is currently a non-refundable credit that may be
claimed by taxpayers who pay for the care of a qualifying individual (children under 13 years old
and/or disabled dependents or spouses) in order to work. The credit is equal to a percentage of
the taxpayer's employment-related expenditures for child or dependent care. The amount of the
credit rate depends on the taxpayer's adjusted gross income (AGI). The credit rate is phased
down from 30% (for taxpayers with AGI of $10,000 or less) to 20% (for taxpayers with adjusted
gross income above $28,000). The maximum amounts of qualifying expenses for which credits
may be claimed are $2,400 for one qualifying individual and $4,800 for two or more qualifying
individuals. Thus, the maximum credit ranges from $480 to $720 for a taxpayer with one
qualifying individual and $960 to $1,440 for a taxpayer with two or more qualifying individuals.
Four options are proposed for discussion:
OPTION ONE: Beginning in 1999, taxpayers would become eligible for the 30 percent credit
rate if their income is $18,000 or less. The credit rate would be phased down from 30% to 20%
for AGI between $18,000 and $45,000. In subsequent years, the starting point for the phase
down range would be indexed for inflation, as would the maximum amounts of qualifying child
and dependent care expenses that could be claimed.
IMPACT AND COST: The Department of the Treasury estimates that this option would
affect 2.1 million taxpayers with AGI below $45,000, providing an average tax cut
increase of $74. It would cost approximately $2.4 billion over five years (see Treasury
paper for fuller discussion).
OPTION TWO: Beginning in 1999, taxpayers would become eligible for a 50% credit rate if
their income is $18,000 or less. The credit rate would be phased-down from 50% to 20% for
AGI between $18,000 and $47,000. In subsequent years, the starting point for the phase down
range would be indexed for inflation, as would the maximum amounts of qualifying child and
dependent care expenses that can be claimed.
4
IMPACT AND COST: The Department of the Treasury estimates that this option would
affect 2.2 million taxpayers with AGI below $47,000, providing an average tax cut
increase of $233. It would cost approximately $4.6 billion over five years (see Treasury
paper for fuller discussion). $ 6.9billion we loys.
OPTION THREE: The CDCTC would be made refundable in 1999, thus allowing individuals
who do not have an income tax liability to claim the credit.
IMPACT AND COST: The Department of the Treasury estimates that this option
would affect 1.3 million families, mostly with AGI between 160-200% of poverty,
providing an annual tax cut increase or refund of $407. It would cost approximately $6.9
billion over five years (see Treasury paper for fuller discussion).
OPTION FOUR: In addition to making the CDCTC refundable, the phase-down would be
adjusted as described in Option One.
IMPACT AND COST: The Department of the Treasury estimates that this option
would affect 3.4 million families, providing an average tax cut increase or refund of
$347. It would cost would cost approximately $11 billion over five years (see Treasury
paper for fuller discussion).
II.
SAFETY AND QUALITY
Four proposals to ensure safety and quality in child care will be presented for discussion:
increasing federal funds targeted to quality improvements, either by increasing funding for the
CCDBG (with its set-aside for quality improvements) or by establishing a separate quality fund;
increasing federal investment in education and training for child care providers; and establishing
a new fund for activities related to consumer education, technology development and utilization,
and data and research.
1.
Increase Federal Funds Targeted to Quality Improvements
OPTION ONE: Increase federal funding in the CCDBG and thereby increase required 4% set-
aside for quality improvements.
IMPACT AND COST: For every $100 million of annual, additional investment in the
CCDBG, States would receive an additional $4 million in flexible funding, for quality
improvements:
5
Additional Annual
Increase in Quality Set-Aside
Investment in CCDBG
Per Year
(4% of increase)
$100 million
$4 million
$300 million
$12 million
$500 million
$20 million
$700 million
$28 million
$1 billion
$40 million
OPTION TWO: Establish a fund distributed to the States according to the CCDBG formula to
provide grants to communities to improve safety, quality, and learning for young children in
child care (see HHS paper for fuller discussion). This fund would differ from the 4% set-aside
for quality in the CCDBG because it would be designated for use by communities, rather than by
States, and because it would be targeted for to infants and toddlers.
IMPACT AND COST: This fund would build on the North Carolina model of
community grants known as "Smart Start." HHS recommends a funding level of $800
million per year or $4 billion over 5 years to reach 1,000 communities; still needed is a
range of cost options and further impact analyses.
2.
Increase Federal Investment in Provider Education and Training
OPTION: Build on the Child Care Provider Scholarship Fund announced by the President at the
White House Conference on Child Care, in which states provide scholarship funds to students
working toward a state or national credential, certificate or Associate, B.A. or B.S. degree. Child
care workers, who must commit to-remaining in the field for at least one year for each year of
assistance received, will earn increased compensation or bonuses when they complete their
course work, provided by some combination of the scholarship fund and the worker's employer.
IMPACT AND COST: For every $50 million of annual federal investment in the Child
Care Provider Scholarship Fund (matched with one State or Community dollar for every
four federal dollars), up to 50,000 child care providers will receive scholarship assistance.
6
Federal Investment in Child
Number of Scholarships
Care Provider Fund
Available
$50 million/year or
50,000/year
$250 million/5 years
$100 million/year or
100,000/year
$500 million/5 years
$150 million/year or
150,000/year
$750 million/5 years
$200 million/year or
200,000/year
$1 billion/5 years
3.
Increase Federal Investment in Consumer Education, Research, and Technology
The CCDBG currently contains a 4% set-aside for quality activities, under which consumer
education is an allowable, but not a required expense. HHS reports that although some States are
investing some of their quality set-aside in consumer education efforts, these efforts are limited
and scattershot. Further, HHS reports that no funds are presently targeted to child care data and
research.
OPTION: Establish a new fund for activities related to consumer education, technology
development and utilization, and data and research. Funds would support research and
demonstration projects, a National Center on Child Care Statistics, a national child care hotline,
and a consumer education campaign to help parents select safe and healthy care for their children
(see HHS paper for fuller discussion).
IMPACT AND COST: HHS recommends federal investment of $50 million per year;
still needed is a range of cost options and further impact analyses.
III.
AVAILABILITY
Two options to make child care more available will be presented for consideration: 1) investing
in school-age care opportunities, and 2) providing incentives to businesses to create and/or run
child care programs.
1.
Invest in School-Age Care Opportunities
Three options will be presented for consideration:
OPTION ONE: Expand the existing 21st Century Community Learning Centers program to
provide start-up funds to school-community partnerships to establish before- and after-school
7
programs for school-age children at public schools. This expanded program would target
additional funding to high-need communities (using eligibility requirements for the President's
Title V Teacher Recruitment proposal), further concentrate on providing enriching after-school
programming for children, and require an increased local match to ensure that programs. become
self-sustaining after receiving start-up funding (see Department of Education paper for fuller
discussion).
IMPACT AND COST: The Department of Education recommends annual federal
funding of up to $400 million. Using the Department of Education assumption of a one-
to-one local match and an average per-child cost of an after-school program as $800/year,
the Department estimates that this level of funding would enable the program to serve up
to 1 million children. Using these estimates, other levels of federal investment would
yield:
Federal Investment
Approximate Number of
Children Served
$100 million
250,000
$400 million
1 million
$680 million
1.7 million (which would
double the current level of
participation in after-school
programs)
$800 million
2 million
OPTION TWO: Establish a fund to support after-school program opportunities to be distributed
to the States according to the CCDBG formula, with matching and benchmark-setting
requirements. Funds would go through States directly to communities, with 50% targeted to
areas with high concentrations of poverty. These funds would enable communities to create new
programs and link already-existing community resources such as schools, libraries, parks, and
recreation centers to build the supply of school-age care and improve quality. The proposal is
modeled after the Making the Most of Out of School Time (MOST) projects (see HHS paper for
fuller discussion).
IMPACT AND COST: HHS recommends an annual investment of $300 million; still
needed is per-child cost and a range of investment options and further impact analyses.
OPTION THREE: Increase federal funding in the CCDBG and thereby increase CCDBG
dollars targeted to support after-school opportunities. HHS estimates that approximately one-
third of children currently served by the CCDBG are school-age.
8
IMPACT AND COST: HHS estimates a general increase in the CCDBG will
proportionately increase school-age slots by approximately 30%.
2.
Provide Tax Incentive to Businesses
OPTION: Senator Kohl has introduced legislation to provide a tax credit to businesses that
incur costs related to providing child care services to their employees. Qualifying expenses
would include those a business incurs to build or expand a child care facility, operate an existing
facility, train child care workers, reserve slots at a child care facility for employees, or provide
child care resource and referral services to employees. The credit would cover 50% of qualified
costs incurred, but could not exceed $150,000 per year.
IMPACT AND COST: The Department of the Treasury advises that low-wage workers
are generally less likely to receive employer-provided fringe benefits than middle- and
higher-wage workers and that the proposed credit is therefore likely to benefit
disproportionately middle- and higher-wage workers. The Joint Committee on Taxation
has estimated the Kohl proposal to cost $2.6 billion over five years.
9
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HHS submission
Affordability
Federal child care assistance in FY 1997 provides $2.9 billion in direct subsidies, serving a
little more than one million children. However, even with this substantial investment, only
10% of eligible children receive assistance. Due to the high demand for assistance, States
often set eligibility levels below the allowable income level established in the Federal statute.
For example, although a State can allow families up to 85% of State Median Income to
receive assistance, many States cut off eligibility at 130% of the Federal poverty level.
Therefore, many working families are not eligible for direct assistance and are also unable to
take advantage of the Dependent Care Tax Credit.
OPTION 1: Increase CCDBG funding without benchmarking or targeting.
Interaction with Current Program: The proposal is simply an increase in the CCDBG.
Cost Estimate: The Secretary has recommended a $700 million increase in the CCDBG to
expand the number of children served with subsidies. These funds would be matched at the
FMAP (which averages around 56%).
Impact Analysis: An increase of $700 million in CCDBG would provide at least 250,000
child care slots in FY 99.
Pros:
Gives States the flexibility to spend the funds as best fits its needs.
Enables the States to serve more working families with subsidy through the CCDBG.
Cons:
May not be targeted enough to reach the working poor population in need of child
care assistance.
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OPTION 2: Increase the Child Care and Development Block Grant (CCDBG) funding
and require States to set benchmarks to make care more affordable and accessible for
low-income working families.
Interaction with Current Program: New funding will be provided through the CCDBG,
although in order to access additional dollars, each State would have to set benchmarks,
based on the State's individual situation. The benchmarks would describe how States will
expand eligibility to serve more working families, make copayments more affordable, and
improve reimbursement rates. For instance, if a State currently sets eligibility at 130% of
the Federal poverty level, they may expand eligibility to 135% of poverty.
Cost Estimate: See Option 1 above.
Impact Analysis: An increase of $700 million in CCDBG would provide at least 250,000
child care slots in FY 99. Requiring States to set benchmarks will ensure that funds are
targeted to low-income working families.
Pros:
Retains State flexibility to use funds for the particular child care needs of their
Targets populations. low-income working families without adding regulatory or administrative
burden on the States.
Focuses on results by requiring States to set and report on benchmarks.
Cons:
May have to provide technical assistance to States in order for them to set appropriate
and enforceable benchmarks.
May not be sufficiently targeted to assure that funds reach specific age groups or
specified income levels. However, all funds would still reach low income families
that are eligible for CCDBG.
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OPTION 3: Increase CCDBG funding, but require that the funds be targeted.
OPTION 3A: Target the CCDBG increase to reach families of a certain income level.
Interaction with current program: Funding would be provided through the CCDBG. Every
State would be required; regardless of its individual situation, to assure that the additional
money goes to families at a specified income level.
Cost Estimate: See Option 1 above.
Impact Analysis: This option would assure that additional funds are targeted to working
poor families, rather than those families who are moving from welfare to work.
Pros:
Provides a mechanism to target funds to more working poor families.
Cons:
Limits the flexibility that States have under CCDBG to assess their own needs and
allocate funds accordingly.
Restricts States' ability to use the funds to move families from welfare to work.
Recreates the type of administrative complications that the reforms in the Personal
Responsibility Act were designed to eliminate.
May not achieve its goal due to a substitution effect. For example, States may move
the working families whom they already serve under this targeted funding and use the
existing funding on other families, leading to no net increase in the number of
working families served.
OPTION 3B: Target the CCDBG increase to reach children of a certain age.
Interaction with Current Program: Funding would be provided through the CCDBG.
Every State would be required, regardless of its individual situation, to assure that the
additional money goes to children in a specified age group.
Cost Estimate: See Option 1 above.
Impact Analysis: This option provides a mechanism to reach a specific targeted population
based on the age of the children in the family. For instance, only a third of the children
currently served are school age. Therefore, a general increase in CCDBG will
proportionately only increase school age slots by over 30%. Targeting could increase the
number and proportion of school age children affected.
Pros:
Provides a mechanism to attempt to target funds to children in a certain age group.
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Cons:
May not achieve its goal due to a substitution effect. For example, States may move
the children of a targeted age whom they already serve under this targeted funding
and use the existing funding on other children, leading to no net increase in the
number of children served from the specified age group.
May restrict States' ability to serve all children in families with children of different
ages (one child may be eligible while a "non-target" age child may not be eligible for
the subsidy).
Takes away the flexibility that States have under CCDBG to assess their own needs
and allocate funds accordingly.
Restricts States' ability to use the funds to move families from welfare to work, by
constraining States' priorities.
Recreates the type of administrative complications that the reforms in the Personal
:
Responsibility Act were designed to eliminate.
11/11/97 13:37
202 6220605
TAX POLICY
002
Treasury Submission
Modifying the Child and Dependent Care Tax Credit
Current Law
A taxpayer may be eligible for a nonrefundable tax credit if he or she pays for the care of
a qualifying individual in order to work. Qualifying individuals include children under the age
of 13 and disabled dependents or spouses. The credit is equal 10 a percentage of the taxpayer's
employment-related expenditures for child or dependent care.
The amount of the credit rate depends on the taxpayer's adjusted gross income. The credit
rate is phased-down from 30 percent (for taxpayers with adjusted gross income of $10,000 or
less) to 20 percent (for taxpayers with adjusted gross income above $28,000). The maximum
amounts of qualifying expenses for which credits can be claimed are limited to $2,400 for one
qualifying individual and $4,800 for two or more qualifying individuals. Thus, the maximum
credit ranges from $480 to $720 for a taxpayer with one qualifying individual and $960 to
$1,440 for a taxpayer with two or more qualifying individuals.
Employees may exclude from their taxable income (and their earnings for social security
tax purposes) amounts their employers provide as child and dependent care benefits, including
cafeteria plan contributions. The exclusion is limited to $5,000 of child care expenses per year
and does not vary with the number of qualifying dependents. The amount of the expenses
eligible for the child and dependent care credit is reduced dollar for dollar by the amount of
excludable expenses.
Options to Increase the Credit Amounts and/or to Extend Eligibility
Option 1: Beginning in 1999, taxpayers would become eligible for the 30 percent credit
rate if their income is $18,000 or less. The credit rate would be phased-down from 30 percent
to 20 percent for AGI between $18,000 and $45,000. In subsequent years, the starting point
for the phase-down range is indexed for inflation, as are the maximum amounts of qualifying
child and dependent care expenses that can be claimed for the credit or the employer
exclusion.
Option 2: Beginning in 1999, taxpayers would become eligible for a 50 percent credit
rate if their income is $18,000 or less. The credit rate would be phased-down from S0 percent
to 20 percent for AGI between $18,000 and $47,000. In subsequent years, the starting point
for the phase-down range is indexed for inflation, as are the maximum amounts of qualifying
child and dependent care expenses that can be claimed for the credit or the employer
exclusion.
Option 3: The child and dependent care tax credit would be made refundable in 1999,
thus allowing individuals who do not have an income tax liability to claim the credit.
Option 4: In addition to making the child and dependent care tax credit refundable, the
phase-down range would be adjusted as described under option 1.
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2
Impact Analysis and Cost
Cost and Number of Families Affected by Various Options
Cost in Fiscal Year (millions)
Number of
Average
Taxpayers
Tax Cut
1999
2000
2001
2002
2003
1999-
1999-
with Cut
(1999)
2003
2007
(1999)
Option 1
39
192
204
239
238
673
2,446
2.1 million
$74
Option 2
132
613
543
550
555
1,838
4,638
2.2 million
$223
Option 3
150
698
636
683
747
2,167
6,880
1.3 million
$409
Option 4
215
1,014
965
1,068
1,205
3,261
11,078
3.4 million
$234
Options 1 and 2: Increase Amount of Child and Dependent Care Tax Credit
Pros
The child and dependent care tax credit parameters have not been adjusted for inflation
since 1982. Options 1 and 2 essentially adjust the child and dependent care credit for
inflation since 1982.
-- In 1982, nearly 6 percent of taxpayers who benefited from the child and dependent
care tax credit were eligible for the maximum credit rate of 30 percent.
-- But in 1999, very few taxpayers will qualify for the 30 percent rate because the
income threshold ($10,000) has not been increased since 1982 Options 1 and 2
increase the threshold from $10,000 to $18,000, the level it would be in 1999 if the
parameters had been indexed in 1982.
Through the tax system, assistance can be provided directly to parents for their child care
needs with low administrative costs.
Working parents can receive the credit by filing a tax return and avoid the hassles and
stigma associated with applying for assistance through welfare offices.
Cons
The child and dependent care tax credit is not well targeted to those with low income.
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3
Under current law, about 1 percent of the child and dependent care tax credit is
received by families with money income in the bottom quintile and children under 13.
About 32 percent of the credit is received by those with income in the top quintile.
-- Taxpayers, who also claim the $500 child credit, will not benefit from an increase in
the child and dependent care tax credit unless their income is at least bctween 130 and
160 percent of poverty.
The IRS cannot easily verify child care expenditures. In 1988, about one-third of the
child and dependent care tax credit amounts were overclaimed on tax returns. While
compliance efforts since 1988 may have reduced this error rate, these initiatives have not
significantly improved IRS's ability to verify expenditures.
Options 3 and 4: Expand Eligibility for the Credit by Making it Refundable
Pros
Low-income taxpayers will not benefit from an expansion of the child and dependent care
tax credit unless the credit is made refundable.
Cous
Many beneficiaries of a refundable child and dependent care tax credit already are able to
use the EITC to fully offset their income and payroll taxes. Hence, critics of
refundability will be quick to label a new refundable child and dependent care tax credit as
"welfare" and vigorously fight the proposal.
In the past, efforts to create new refundable credits (including recent experience with the
child credit) have led to increased scrutiny of the EITC and its compliance problems.
Unfortunately. the EITC will remain vulncrable to such attacks until the most recent set of
compliance initiatives can be fully implemented, and studies show an improvement in
compliance.
The child and dependent care tax credit will generally not be available to most taxpayers
until the end of the year. But low-income parents, particularly those who are just entering
the workforce, need assistance in "real-time."
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1008
HHS Submission
The Supply and Quality of Care for Young Children
Currently, activities to improve safety, health, and learning in
child care are funded by States under the required 4 percent
minimum set-aside for such activities in the Child Care and
Development Block Grant (CCDBG). States fund a variety of
quality activities including training, licensing improvements,
and resource and referral services. Since there is a tremendous
need for direct assistance, most States spend only the minimum
set-aside on quality activities.
OPTION 1: Increase CCDBG funding thereby increasing the amount of
money that is allocated to quality via the 4% minimum set-aside.
Interaction with the Current Program: This proposal is simply an
increase in the CCDBG.
Cost Estimate:
The funds for quality activities would increase by 4% of the
total CCDBG increase. The Secretary proposes a $700 million
subsidy increase.
Impact Analysis: A CCDBG increase would result in the States
having more money to direct toward quality activities. The
Secretary's proposal would result in $28 million more for
quality. However, the net increase in quality funds would be
offset by the fact that the increased subsidies would result in
more children in child care in need of quality enhancements.
Pros:
Improves affordability
Potentially increases supply
Devotes more funding to State-identified quality and supply
issues.
Cons:
Is not primarily a quality strategy; 96% of the new funds do
not target quality at all, but 100% of the funds are applied
to one of the three goals of quality, affordability, and
supply.
Does not target young children, especially infants and
toddlers, who have the most critical health and safety
concerns in child care.
Does not allow the Administration to use its funds to
leverage additional public and private resources to increase
the total investments in quality.
Does not pomote decision making at the community level.
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OPTION 2: Establish a fund distributed to the States according
to the Child Care and Development Block Grant formula to provide
grants to communities to improve safety, health, and learning for
young children in child care. The funds would specifically target
young children, with a focus on infants and toddlers who are the
most vulnerable children in care. States would be required to
match the Federal money and would have to set benchmarks to
measure their outcomes. At least 85% of funds would go directly
to communities and 50% would be targeted to areas with high
concentrations of poverty. This model is based on the Smart
Start program in North Carolina which has allowed many counties
to improve the supply and quality of care for young children.
With these funds communities might choose to establish family
child care networks, promote accreditation, help providers meet
health and safety standards, and promote health and parent
education in child care.
Interaction with the Current Program: The vast majority of the
CCDBG funding currently goes toward affordability, most often in
the form of vouchers. The quality money is extremely limited and
typically goes to general activities funded by the States.
Little or no money is administered for these purposes directly by
communities. The new funding would not replace the quality set-
aside, but would give communities a role in building local
supply.
Cost Estimate:
The Secretary has recommended a $800 million dollar increase in
the CCDBG to increase the health, safety and learning environment
of child care programs.
Impact Analysis:
The proposal recognizes that the real issue in child care is
whether each community has an adequate supply of quality care.
These funds would improve the safety, health and learning of
young children in child care by allowing up to 1000 communities
to craft solutions that meet their specific needs.
North Carolina's Smart Start program demonstrates the impact that
the community grants would have. One Smart Start county has
expanded supply by 3,578 spaces in licensed programs. In
another, every child care center and 50 percent of the family
child care programs are participating Smart Start programs to
improve the quality of care, which affects 1,234 young children
in the county. In North Carolina's most populous county, 7000
children were enrolled in programs that received enhancements
through the county's Smart Start grant. In other North Carolina
communities, 1400 children received health and developmental
screenings as a result of the Smart Start grants.
Pros:
Gives flexibility to communities to tailor funds to their
specific needs.
Focuses on results by requiring communities to meet
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benchmarks and report on outcomes.
Targets young children, especially infants and toddlers, who
are the most vulnerable children in care.
Allows communities to build supply and fill gaps in their
system of care.
Meets the President's challenge to find a way to replicate
successful child care models across the country.
Uses Federal money to leverage State and local public and
private sector funds.
Cons:
Limits State flexibility to determine the use of funds.
Targets only one age group.
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011
HHS Submission
Child Care Provider Education and Training
Child care provider training is one of a number of allowable
activities under the Child Care and Development Block Grant set-
aside for quality activities, but only a small portion of the
set-aside is spent for that purpose. The funds that do go to
training are often spread very thin and cover only basic
workshops which don't lead to credentials or degrees.
OPTION 1: Establish the Child Care Provider Scholarship Fund
announced by the President at the White House Conference. States
will administer scholarship funds to providers for either pre-
service on in-service coursework as part of a degree or
credential program. The provider and the sponsoring child care
program must also bear a portion of the cost. The provider, who
will receive increased compensation after the coursework is
complete, must commit to remaining in the field for at least one
year for each year of assistance received.
Interaction with the Current Program: These funds are targeted
specifically to providers who are enrolled in a degree or
certificate program, unlike current expenditures for training. In
addition, these scholarships are tied to an increase in
compensation.
Cost Estimate:
The Secretary's proposal recommends an investment of $150 million
in scholarship funds to provide training and support.
Impact Analysis:
The scholarships will reach approximately 150,000 providers and
increase the quality and supply of child care for about 1.5
million children.
Pros:
Targets training of providers, which is a proven effective
approach to build warm and responsive interactions between
the provider and the child. These interactions, while often
the most difficult aspect of quality to measure, have been
found in recent studies to be one of the most powerful
predictors of children's healthy development in child care.
Requires an investment from several stakeholders including
the provider and the sponsoring child care program.
Impacts potentially scores of children with each
scholarship, because each provider reaches many children.
Cons:
Cannot guarantee that the recipient will stay in the field
beyond the one year commitment. However, child care workers
have an average turnover of over 30%, but programs like
T.E.A.C.H. in North Carolina have shown that education
reduces turnover. In North Carolina, staff turnover is only
10% for people who participate in the program, compared to
42% overall.
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012
HHS Submission
National Leadership for Consumer Education, Research, and
Technology
The Child Care and Development Block Grant (CCDBG) currently
contains a 4% set-aside for quality activities, under which
consumer education is an allowable cost. However, quality set-
aside funds only meet a small portion of the need for consumer
education. In addition, the law provides a small set-aside for
technical assistance, which amounts to about $8 million per year.
OPTION 1: Establish a new fund for activities related to consumer
education, technology development and utilization, and data and
research to help redefine the future of child care in America.
The fund would support a national child care hotline and a
consumer education campaign to help parents select safe and
healthy care for their children, a project to increase the use of
distance learning technologies for rural and home-based
providers, and a National Center on Child Care Statistics, along
with research and demonstration projects.
Interaction with the Current Program: These funds will go to
initiatives which will lead the field of child care into the
twenty first century. Although some States are investing some of
their quality set-aside in consumer education, these limited
efforts are scattered around the country and provide inadequate
coverage even within States. No funds are targeted to child care
data and research on a national level. A few States and academic
institutions are undertaking research, which primarily consists
of studies with small sample sizes. Currently there is no
framework to provide leadership to coordinate consumer education,
technology development and utilization, and research of a
national scope. The fund for consumer education, research and
technology will fill that gap.
Cost Estimate: The various components of this effort total $50
million.
Impact Analysis: The Secretary's proposal provides sufficient
funds for a consumer education initiative, which will reach
millions of households with information for parents on how to
find and select safe, healthy care. The quality of care for
thousands of children, particularly rural children, will be
enhanced by the training of providers, made possible by distance
learning technologies. The National Center for Child Care
Statistics and competitive research and demonstration projects
will help policymakers, community leaders, and program developers
find solutions to the lack of safe, healthy, affordable, and
accessible care.
Pros:
Targets funds directly to consumer education to assist
parents in choosing care that will protect the health and
safety of their children.
Will potentially build the supply of quality care by
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013
creating demand for quality care
Provides funds specifically for data and research to help
policy makers and community leaders better understand how to
build the supply of affordable, quality care.
Cons:
Does not directly increase the supply of care
Does not directly make care more affordable
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Education Submission
Expanding School-Age Care Through 21st Century Community Learning Centers
Description of Policy Option
The Department of Education proposes to expand the existing 21st Century Community Learning
Centers program to provide start-up funds to school-community partnerships to establish before-
and after-school programs for school-age children at public schools. The proposal responds to
surveys showing strong parental support for keeping schools open during non-school hours and
complements existing and proposed funding from HHS by enabling communities with under-
utilized school facilities to apply for 21st Century funding and enabling other communities to
apply for funding from HHS. The expanded 21st Century funding would provide up to 1 million
school children per year with safe, drug-free, low-cost, and accessible programming combining
learning, enrichment and recreational activities.
Description of Current Programs and Interaction of Proposal with Current Programs
This proposal would expand the existing 21st Century Community Learning Centers program that
was sponsored by Senator Jeffords in 1994. The program has won strong bipartisan support in
Congress, which increased its funding from $1 million in FY97 to $40 million in FY98 with
particularly strong support from Rep. Nita Lowey. The program was designed to expand the use
of school facilities during non-school hours.
In expanding the current program, the Department proposes to better target funding to high-need
communities, further focus it on enriching after-school programming for children, and require an
increasing local match to make sure programs become self-sustaining after receiving start-up
funding. As now, schools would be required to partner with community, business, or educational
organizations and programming could be provided by these partners in the schools.
Schools can currently use Title 1, Safe and Drug-Free Schools and other federal funding for after-
school programming. but these dollars are already committed and stretched thin. An expanded
21st Century Schools program would enable high-need schools to start before- and after-school
programs linked to other federally funded activities, further benefit from federal school-based
nutrition programs, and provide a catalyst for the schools to partner with community
organizations and businesses.
The Education Department has also generated interest from a private foundation to supplement
the 21st Century Community Learning Centers by developing training, technical assistance and
networking capacity among participating sites. This private funding would further help the
education and child care communities work effectively together in providing after-school care.
Impact Analysis
A $400 million per year 21st Century program would reach up to 1 million school children per
year. While the current law limits eligibility to "inner city and rural" schools. the Department
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NOV 14 '97 11:01AM OFFICE OF DEPUTY SEC
P.3/3
proposes to retarget the program to high-need urban, rural, and suburban communities using the
same eligibility as used for the President's Title V Teacher Recruitment proposal. Thus, 4,300
high-need communities serving approximately a third of the nation's school children and 60
percent of the nation's poor children would be eligible for funding.
Pros of Expanding 21st Century Community Learning Centers
Increases the supply of after-school programs in a cost-effective manner by establishing or
expanding programs at underutilized school buildings.
Compliments HHS funding by allowing communities to choose between school-based and
non-school based options.
Responds to surveys showing strong parental and educator support for school-based after-
school programs. Parents often prefer school-based programs because they do not require
transportation from school to the after-school program and they trust their school officials
to care for their children and provide appropriate activities.
Enables linkages between after-school activities and school-day activities and learning.
Provides start-up funding not requiring on-going funding after five years.
21st Century Schools has a proven record of support in this Congress.
Does not require the creation of a new federal program.
Cons of Expanding 21st Century Community Learning Centers
Some schools operate in an isolated manner and do not broadly engage parents or
community organizations in their programs. However. schools are increasingly interested
in partnering with community organizations and this funding would provide a catalyst for
them to do so. Schools would be required to partner with outside organizations.
Some are concerned that any school-based after-school program could lead to a divisive
debate over vouchers. However, 21st Century Schools has won bipartisan support in this
Congress and did not engender a debate over vouchers because it is premised on taking
advantage of underutilized school facilities.
Cost of Proposal
The Department of Education proposes to expand 21st Century funding from $40 million to $400
million per year, serving up to I million children per year, assuming a one-to-one local match and
an average cost of $800 per child. Each program would set its hours to meet the community's
needs but would operate for the equivalent of 3-4 hours each school day.
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006
HHS submission
The Supply and Quality of School-Age Care
Experts estimate that nearly 5 million school-age children spend
time without adult supervision during a typical week. However,
only about 1.7 million children in kindergarten through grade 8
were enrolled in formal before- and after-school 49,500 programs
in 1991, according to the National Study of Before and After
School Programs. School-age children are currently served by the
Child Care and Development Block Grant (CCDBG) subsidy program.
Approximately one-third of the subsidies go to school-age
children (i.e. approximately $1 billion).
OPTION 1: Establish a fund distributed to the States according to
the CCDBG formula to provide grants to increase the supply and
quality of school-age care. States would be required to match the
Federal money and to set benchmarks to measure their progress.
At least 85% of funds would go directly to communities, with 50%
targeted to areas with high concentrations of poverty. The new
money would allow communities to create new programs and link
already-existing community resources such as schools, libraries,
parks, and recreation centers to build the supply of school-age
care and improve quality.
Interaction with the Current Program: Money would be targeted to
school-age children, unlike the CCDBG funds. Rather than funding
slots through the subsidy program, the new money would build
supply and quality through partnerships in communities. Decisions
would be made at the community level, rather than the State
level, to allow communities to fill their own local needs.
Cost Estimate: The Secretary has recommended a $300 million
dollar increase in the CCDBG to improve the supply and quality of
care school-age children.
Impact Analysis:
An increase in funding for this program would affect school-age
children from a variety of economic backgrounds by allowing them
to have safe and productive ways to spend their before and after-
school time. The funds would provide up to 500 community grants
to expand current promising programs and create new,
comprehensive services. The proposal is modeled after the Making
the Most of Out of School Time (M.O.S.T.) projects, underway in
three American cities. The following are examples of what the
Seattle M.O.S.T. project accomplished in its first two years:
provided training for 560 school-age caregivers, served 250 low-
income children in free summer programs, served an additional 500
low-income children by establishing three new programs and
expanding seven existing ones, and created a database of school-
age programs that was used by 2000 families in a nine-month
period.
Pros:
Targets school-age care, which is lacking in many
communities.
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Builds on existing community resources to maximize the
impact of the investment.
Prevents children's exposure to violence and substance abuse
during the hours that studies show they are most likely to
experience those risks.
Enhances academic performance through academic enrichment
and homework supervision and support.
Allows communities to fill the gaps that they identify in
their school-age care systems.
Uses a community approach to reach a broader range of
families than CCDBG subsidy.
Meets the President's challenge to find a way to replicate
successful child care models across the country.
Cons:
Limits State flexibility.
Targets only one age group.
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007
Treasury Submission
Child Care Infrastructure Act of 1997 (S.82)
Description of Proposal
Senator Kohl has introduced a bill (S. 82) that would provide a tax credit to businesses that incur
COSIS related to providing child care services to their employees. Qualifying expenses would include
those a business incurs to build or expand a child care facility, operate an existing facility, train child
care workers, reserve slots at a child care facility for employees, or provide child care resource and
referral services to employees. The credit would be for 50 percent of qualified costs incurred, but not
to exceed $150.000 per year.
Current Law and Interaction
The costs of child and dependent care services provided by an employer are currently deductible
compensation. An employer that builds a structure for use as a child care facility would normally
depreciate the associated capital costs. Under the proposal, many taxpayers will see it to their
advantage to take the tax credit for expenses that they would otherwise have deducted or depreciated.
Impact Analysis
In general, low-wage workers are less likely to receive employer-provided fringe benefits than
middle- and higher-wage workers. Therefore, the proposed credit is likely to disproportionately
benefit middle- and higher-wage workers.
Pros
The proposal could increase the availability of child care services by giving businesses an incentive
to provide those services to their employees.
The proposal addresses concems about the quality of child care by requiring that qualifying
expenditures be taken with regard to a licensed child care facility and by allowing training and
continuing education costs for child care employees to qualify for the proposed credit.
Cons
The proposal will not necessarily increase the number of quality child care placements or improve
the quality of existing facilities. Instead, it will provide a subsidy to businesses that take the credit
for expenses that they would have made and deducted or depreciated in the absence of the
credit.
Because the proposed credit is likely to disproportionately benefit middle- and higher-wage
workers, it is not the most efficient use of scarce Federal resources to support child care.
A tax credit for employers will not benefit the nearly 30 percent of the labor force whose
employers are non-taxable (govemments, non-profit organizations. etc.).
Cost of Proposal
JCT has estimated the proposal to cost $2.6 billion over five years.