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Clinton Presidential Records
Digital Records Marker
This is not a presidential record. This is used as an administrative
marker by the William J. Clinton Presidential Library Staff.
This marker identifies the place of a publication.
Publications have not been scanned in their entirety for the purpose
of digitization. To see the full publication please search online or
visit the Clinton Presidential Library's Research Room.
child
ADP
GO
Care
Primer
FOR PARENTS
Ai
LB
Child Care Action Campaign
330 Seventh Avenue, 17th Floor New York, NY 10001-5010 . (212) 239-0138
file
THE WHITE HOUSE
WASHINGTON
December 4, 1997
MEMORANDUM FOR DISTRIBUTION
FROM:
BRUCE REED
RE:
CHILD CARE MEETING
Attached please find a discussion paper for tomorrow's 1 am meeting on child care.
DISTRIBUTION:
The First Lady
Frank Raines, OMB
Janet Yellen, CEA
Gene Sperling, NEC
Rahm Emanuel
Ron Klain, OVP
Communications
John Maria Ann Mickey Melanne Lewis, Hilley, Echaveste, Ibarra, Verveer, Leg. IGA OPL OFL
Affairs
Michael Waldman, Speechwriting
Elena Kagan, DPC
Emily Bromberg, IGA
Secretary of the Treasury Bob Rubin
Jonathan Gruber, Treasury
Karl Scholz, Treasury
Attorney General Reno
Kent Markus, Justice
Deputy Secretary of Education Mike Smith
Shirley Watkins, USDA
Deputy Secretary of Labor Kitty Higgins
Deputy Secretary of Health and Human Services Kevin Thurm
Olivia Golden, HHS
Joan Lombardi, HHS
Mary Bourdette, HHS
Paul Leonard, HUD
Carolyn Becraft, DOD
Linda Smith. DOD
Domestic Policy Council Principals Meeting
December 5, 1997
PRELIMINARY OPTIONS FOR CHILD CARE INITIATIVE
I.
TAX SYSTEM. Options for investing in child care through the tax system include:
A.
Child and Dependent Care Tax Credit. Modify the Child and Dependent Care Tax Credit
(CDCTC) by raising the top rate and moving the phase-out range. One option considered would
raise the top rate from 30 percent (current law) to 50 percent and move the phase-out range from
$10,000-$28,000 (current law) to $30,000-$59,000, indexed for inflation thereafter. Presently, the
CDCTC phases down from a high of 30 percent at $10,000 or less of income to 20 percent at more
than $28,000 of income (a phase-out rate of one percentage point per $2,000 of income). Under this
option, the credit would phase-out at a rate of one percentage point per $1,000 of income, from a
high of 50 percent at $30,000 or less of income to 20 percent at more than $59,000. The
Department of the Treasury estimates that this option would affect 2.2 million taxpayers with
adjusted gross incomes below $59,000, providing an average tax credit of $233 and eliminating tax
liability for most families with incomes below 200% of poverty. This option would cost $5.2
billion through the year 2003; less expensive options, using different rates and phase-out ranges, are
also available. The credit could also be made refundable.
Pros:
The CDCTC parameters have not been adjusted for inflation since 1982.
Through the tax system, assistance can be provided directly to parents for their child care
needs with low administrative costs.
Cons:
The CDCTC is not well targeted to those with low incomes.
-- Under current law, about 1 percent of the CDCTC is received by families with money
income in the bottom quintile. 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
CDCTC unless their income is between 130 and 160 percent of poverty.
The IRS cannot easily verify child care expenditures. In 1988, about one-third of the
CDCTC amounts claimed were false or overstated. Compliance efforts since 1988 may
7
have reduced this error rate somewhat, but the IRS continues to have difficulty verifying
expenses.
1
B.
Tax Credits to Corporate Sector. Provide a tax credit to businesses that incur costs related to
providing child care services to their employees. Qualifying expenses could 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. Under one option considered (proposed by Senator Kohl), the credit
could cover 50% of qualified costs incurred, but could not exceed $150,000 per year. This option
has been estimated by the Joint Committee on Taxation to cost $2.6 billion over five years. The
option could also be scaled back, for example, to cover a smaller percentage of qualified costs or to
limit the types of qualified costs to which the credit could apply.
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 concerns about the quality of child care by requiring that businesses
take the credit only for expenses incurred in licensed child care facilities.
Cons:
This may give businesses a tax credit for expenses they would have otherwise incurred --
and deducted or depreciated -- in the absence of the credit.
The proposed credit is likely to disproportionately benefit middle- and higher- wage
workers.
A tax credit for employers will not benefit the nearly 30 percent of the labor force whose
employers are non-taxable (governments, non-profit organizations).
II.
CHILD CARE AND DEVELOPMENT BLOCK GRANT. Increasing federal investment
in the Child Care and Development Block Grant (CCDBG) will enable states to provide child care
subsidies to additional low-income working families with children under age 13. According to
HHS estimates, for every $100 million of annual additional federal investment in the CCDBG, at
least an additional 35,000 children from families with incomes below 200% of poverty will receive
subsidized child care. A possible recommendation is to increase the investment by $4 billion over
five years, which would provide subsidies for approximately 280,000 children per year. Less
money would mean proportionately fewer additional children subsidized.
Pros:
CCDBG provides significant relief to low-income working families for child care costs.
Average child care costs are $74 per week, and the average subsidy is $66 per week.
States currently target their CCDBG dollars to the lowest-income working families who are
transitioning off or at risk of returning to TANF; additional resources will enable states to
reach working families with slightly higher incomes.
2
-- Early data from HHS demonstrates that states have obligated nearly all of their FY 1997
CCDBG dollars. Although states are allowed to subsidize child care costs for families
below 85 percent of State Median Income (roughly 200 percent of the federal poverty level),
the majority of states serve only families with incomes below 130 percent of poverty.
Increasing federal investment in the block grant leaves states with flexibility to use the funds
for the particular child care needs of their low-income populations.
Cons:
The federal government has little control over the income levels of the families reached (as
long as they are below the statutory limit of 85 percent of state median income).
III.
QUALITY/EARLY LEARNING. Options for increasing federal investment in the quality:
of child care and early learning include:
A.
Child Care Provider Training. Increase federal investment in the training of child care
providers. Options include:
1. Child Care Provider Scholarship Fund. Announced by the President at the White House
Conference on Child Care, the Child Care Provider Scholarship Fund will enable states to provide
scholarship funds to students working toward a child care credential. Eligible child care workers
must commit to remaining in the field for at least one year for each year of assistance received and
will earn increased compensation or bonuses when they complete their course work. The President
announced an investment of $250 million over five years.
2. Child Care Apprenticeship Training Program. Expand the Child Care Apprenticeship
Program to fund the training of child care providers working toward a degree equivalent to the
Child Development Associate degree, with on the job observation and practice. The Department of
Labor has asked for an appropriation of $10 million for FY 1999.
Pros:
Child care experts agree that well trained child care providers are a key element of child care
quality.
Cons:
The scholarship fund will not guarantee that the recipient will remain in the child care field
beyond the one year commitment. However, results from the North Carolina T.E.A.C.H.
program (on which the fund is modeled) indicate that annual staff turnover is only 10% for
T.E.A.C.H. participants, as compared to 42% statewide.
B.
Research and Evaluation. Establish a new fund to support data and research and technology
development and utilization. Uses for the new funding would include research and demonstration
projects, a National Center on Child Care Statistics, and a national child care hotline.
3
Pros:
Currently, no funds are targeted to child care data and research on a national level.
Research is needed to assist policy-makers and community leaders to better understand how
to build the supply of affordable quality care.
Cons:
Research will not directly increase the supply of child care, and does not directly make care
more affordable.
C.
Standards Enforcement. Establish a fund for states to improve licensing and enforce state
child care health and safety standards. Activities supported would include providing additional staff
and resources to license child care settings and increasing unannounced inspections of licensed child
care centers and family day care homes.
Pros:
Child care experts report that almost all states under enforce child care standards.
Research and experience in the military child care program indicate that diligent
enforcement of standards -- particularly frequent unannounced inspections -- improves
quality.
Cons:
Where state child care standards are inadequate, the fund may result in only marginal
improvements.
D.
Early Childhood Development and Quality
1.
Early Learning and Quality Fund. Increase federal investment in activities to improve early
childhood education and the quality and safety of child care for young children (ages 0-5). The
program would have three goals: (1) to improve early learning and development for our youngest
children; (2) to ensure health and safety in child care; and (3) to increase parental involvement. In
order to accomplish these goals, funds could be used for the following activities: (1) providing basic
training to child care providers (including first aid and CPR, and training in child development); (2)
creating and supporting family day care networks (e.g, connecting individual child care providers to
centers for education and support); (3) assisting providers in meeting accreditation and licensing
requirements; (4) linking child care providers with health professionals; and (5) providing home
visits, parent education, and consumer education about child care. This program would provide
challenge grants to communities (e.g., counties or local public-private partnerships) to support child
care providers and programs.
Pros:
Targets infants and toddlers, who are most vulnerable to health and safety risks in child care.
4
The Administration has made a strong commitment to promoting early childhood
development and learning, which will help ensure school-readiness.
Cons:
With limited resources, additional investments in quality may take money from investments
to make child care more affordable.
2.
Head Start / Early Head Start. Increase the Early Head Start (children 0-3) set-aside (5
percent under current law), while increasing overall funding in Head Start to ensure that boosting
the set-aside does not reduce the resources available for children 3-5. One option would be to
double the set-aside to enable more than 50,000 additional children to receive Early Head Start
services in 2002 (relative to current law).
Possible recommendations for funding the above package of initiatives fall within the range of $1.5
to $4 billion over five years.
IV.
SCHOOL-AGE OPPORTUNITIES
A.
Expansion of the 21st Century Community Learning Center Program. The 21st Century
Community Learning Program provides start-up funds to school-community partnerships to
establish before- and after-school programs for school-age children at public schools. Changes to
the program would be made to increase community involvement, target high-need communities, and
require an increased local match to ensure that programs become self-sustaining after receiving
start-up funding.
Pros:
Responds to the tremendous need for after-school programs. Estimates of the number of
"latch-key" children who are unsupervised during non-school hours ranges from 2 to 15
million.
Increases the supply of after-school programs in a cost-effective manner by establishing or
expanding programs at underutilized public school buildings.
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 and are run by school officials.
The 21st Century Community Learning Center program has a proven record of support in
this Congress (appropriated at $40 million for FY 1998); there is no need to create a new
federal program.
Cons:
It may be difficult to expand a newly funded program to a level that meets the great need for
5
after-school programs.
Some schools operate in an isolated manner and do not broadly engage parents or
community organizations in their programs.
This program funds only after-school programs located in public schools. However,
families can use CCDBG subsidies to pay for care for children under 13 at other institutions.
B.
Coordination of Federal Efforts. Create a multi-agency task force to assist three to five pilot
cities identify, obtain, and make the best use of currently available federal resources --financial and
human-- to provide comprehensive after-school programming for their children. This collaborative
federal effort would work to remove impediments to access to or efficient use of federal funds and
would seek to provide the communities with information from around the country regarding
promising and effective programmatic strategies. In addition to assisting those communities meet
an important need, this initiative is expected to lead to other federal multi-agency collaborative
efforts in other areas.
Possible recommendations for funding the initiatives above fall within the range of $.5 to $2.5
billion over five years.
V.
STAY-AT-HOME PARENTS
A.
Expand the reach of the Family and Medical Leave Act (FMLA). Presently, FMLA covers
employees of businesses with 50 or more employees. Options include expanding coverage to
businesses with 25 or more employees, either all at one time or incrementally. Another option is to
extend the time period from 12 weeks (current law) to 24 weeks.
Pros:
By increasing the number of covered employees, more parents would have the ability to take
time to care for their children. Lowering the employee threshold would cover 10 million
comp your
additional employees or increase by 15% those employees covered by the Act.
No expense to the U.S. Treasury.
Cons:
Lowering the threshold will provoke strong business opposition and increasing the length of
leave may do so as well.
A very small percentage of employees take the maximum amount of leave now, so
expanding the length of leave will help only a small percentage of people. Today, only
100,000 to 400,000 take the maximum leave of 12 weeks, out of the 12 million who take the
leave.
6
These options will not help those people who cannot afford to take leave. According to the
Department of Labor, 65% of those who wanted to take leave to care for their newborn,
foster, or adopted child did not do so for economic reasons.
B.
Provide paid parental leave coverage for a limited amount of time for working parents
below a set income level. For example, a new paid leave plan could provide $200 a week for 6
weeks of paid leave to all new parents who have been in the workforce either part-time or full-time
for one year and whose family income is below $50,000, at a cost of $1 billion per year. This plan
would use the unemployment insurance system to provide the leave payments, but would be paid debate
vs.
for by the federal government. Employers not currently covered by FMLA would not be required to
opening
up
allow their employees to take this leave.
Pros:
Paid leave would allow more parents to spend time with their newborn babies at a crucial
time in their children's development.
This proposal is likely to modify behavior. According to the Department of Labor, 65% of
those who wanted to take leave to care for their newborn, foster, or adopted child did not do
so for economic reasons.
Cons:
There are small substitution effects. Two to three percent of all employees receive paid
leave from their employers, but many of these employees would not meet the income
threshold for this benefit. However, many employees receive paid vacation leave (88% to
97%) and paid sick leave (50 to 65%), and they do use these benefits to take leave for the
birth of a child.
Parents who have not been in the workforce would not receive any benefit.
There may be some business backlash because the cost of hiring will increase as more
people take leave.
C.
Demonstration Project to Support Stay-at-Home Parents. Establish a demonstration project
for innovative approaches by states to enable parents to stay at home during their children's first
years of life.
Pros:
This proposal would target benefits to parents who stay at home during a crucial time in
their children's development.
Cons:
This option is likely to affect a small number of people.
7
D.
Expand the child tax credit for families with children of a certain age. Build on the $500
per child tax credit. For example, families with children 0 to 3 years of age could receive an
additional $250, at a cost of roughly $6.5 billion over 5 years, or families with children 0 to 1 year
of age could receive an additional $500, at a cost of roughly $4.67 billion over 5 years.
Pros:
Provides a benefit to both stay-at-home parents and working parents targeted to the earliest
years of their children's lives, a time at which couples usually have lower incomes.
Cons:
This option will provide small benefits to a large group of people and is unlikely to modify
behavior.
The tax code already favors stay-at-home parents through marriage bonuses, while the
Social Security system favors this group by providing them benefits without requiring that
they work. In addition, the Administration already has supported policies benefiting stay-at-
home parents, such as the per child tax credit and eased access to the home office deduction.
8
APPENDIX: BACKGROUND ON FEDERAL CHILD CARE INVESTMENTS
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. 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 (AGI). Currently, 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.
Child Care and Development Block Grant. 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. By law, states may serve families
below 85% of state median income, and must spend 4% of their funds on efforts to improve child
care quality.
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 least
TANF) with children under 13
50% of the care of a child under
who need child care and earn
13 and/or a disabled dependent
less than 85% of state median
or spouse in order to work.
income
% of overall dollars in program
Approximately 96%
19%
going to families with AGI
below 200% of poverty
% of families with AGI below
12% (of potentially eligible
13%
200% of poverty and children
families)
under 13 who receive assistance
under program
Amount of federal assistance
$2,200 (average, annual federal
$419 (average tax relief per
subsidy per-child)
family with AGI below 200% of
poverty)
9
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.
10
003
Effect of Modifying Child and Dependent Care Tax Credit
Single Head of Household, One Child Under 13, $20,000 of Income, and $1,900 of Child Care Expenses
1999 Dollars
Current Law
Option
Earnings
20,000
20,000
Other Forms of Income
0
D
Child Care Expenses
1,900
1,900
Adjusted Gross Income
20,000
20,000
-- Standard Deduction
-6,400
-6,400
-- Exemptions
-5,600
-5,600
Taxable Income
8,000
8,000
Pre-Credit Income Tax Liability
OFC TAX POLICY
1,200
1,200
-- Child and Dependent Care Credit
-475
-950
-- $500 Child Credit
-500
-500
-- Earned Income Tax Credit
-1,152
-1,152
Post-Credit Income Tax Liability
-927
-1,152
Change in Tax Liability From Current Law
-225
Department of the Treasury
December 4, 1997
Office of Tax Analysis
622 0236
Option: Child and dependent care tax credit rate would be 50% for taxpayers with AGI of $30,000 or less
Credit rate would be reduced by 1 percentage point for each additional $1,000 of AGI.
12/04/97 12:27 6202
Credit rate would be 20% for AGI above $59,000.
004
Effect of Modifying Child and Dependent Care Tax Credit
5.
Single Head of Household, One Child Under 13, $25,000 of Income, and $2,500 of Child Care Expenses
1999 Dollars
Current Law
Option
Earnings
25,000
25,000
Other Forms of Income
0
0
Child Care Expenses
2,500
2,500
Adjusted Gross Income
25,000
25,000
-- Standard Deduction
-6,400
-6,400
- Exemptions
-5,600
-5,600
Taxable Income
13,000
13,000
Pre-Credit Income Tax Liability
1,950
1,950
OFC TAX POLICY
- Child and Dependent Care Credit
-528
-1,200
-- $500 Child Credit
-500
-500
-- Earned Income Tax Credit
-353
-353
Post-Credit Income Tax Liability
569
-103
Change in Tax Liability From Current Law
-672
Department of the Treasury
December 4, 1997
Office of Tax Analysis
12/04/97 12:28 6202 622 0236
Option: Child and dependent care tax credit rate would be 50% for taxpayers with AGI of $30,000 or less
Credit rate would be reduced by 1 percentage paint for each additional $1,000 of AGI.
Credit rate would be 20% for AGI above $59,000.
005
Effect of Modifying to Child and Dependent Care Tax Credit
5.
Married Couple, Two Children Under 13, $35,000 of Income, and $4,050 of Child Care Expenses
1999 Dollars
Current Law
Option
Combined Earnings (Both Employed) 1/
35,000
35,000
Other Forms of Income
0
0
Child Care Expenses
4,050
4,050
Adjusted Gross Income
35,000
35,000
-- Standard Deduction
-7,300
-7,300
-- Exemptions
-11,200
-11,200
Taxable Income
16,500
16,500
OFC TAX POLICY
Pre-Credit Income Tax Liability
2,475
2,475
-- Child and Dependent Care Credit
-810
-1,823
-- $500 Child Credit
-1,000
-1,000
- Earned Income Tax Credit
0
0
Post-Credit Income Tax Liability
665
0
Change in Tax Liability From Current Law
-665
Department of the Treasury
December 4, 1997
Office of Tax Analysis
1/ Earnings of lower earner are greater than child care expenses.
12/04/97 12:28 6202 622 0236
Option: Child and dependent care tax credit rate would be 50% for taxpayers with AGI of $30,000 or less
Credit rate would be reduced by 1 percentage point for each additional $1,000 of AGI.
Credit rate would be 20% for AGI above $59,000.
006
Effect of Modifying Child and Dependent Care Tax Credit
Married Couple, Two Children Under 13, $50,000 of Income, and $4,050 of Child Care Expenses
1999 Dollars
Current Law
Option
Combined Earnings (Both Employed) 1/
50,000
50,000
Other Forms of Income
0
0
Child Care Expenses
4,050
4,050
Adjusted Gross Income
50,000
50,000
-- Standard Deduction
-7,300
-7,300
- Exemptions
-11,200
-11,200
Taxable Income
31,500
31,500
Pre-Credit Income Tax Liability
4,725
4,725
OFC TAX POLICY
-- Child and Dependent Care Credit
-810
-1,215
- $500 Child Credit
-1,000
-1,000
- Earned Income Tax Credit
0
0
Post-Credit Income Tax Liability
2,915
2,510
Change in Tax Liability From Current Law
-405
Department of the Treasury
December 4, 1997
Office of Tax Analysis
1/ Earnings of lower earner are greater than child care expenses.
12/04/97 12:28 6202 622 0236
Option: Child and dependent care tax credit rate would be 50% for taxpayers with AGI of $30,000 or less
Credit rate would be reduced by 1 percentage point for each additional $1,000 of AGI.
Credit rate would be 20% for AGI above $59,000.
free child care
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111 bet we could get a broad consensus dont
being a good parent. If we had a video that
Dan Coats and Ted Konnedy supported, it might be
a vehicle to drag ow sloppy national debate
through its Sear tissue to let US all emprace a
sensible vision.
/ am more and more convinced, that a begger and
better idea is the only thing that pulls US away from
ow rancoros, evidence -free conversations.
Once you signed a Welfare Bill, we stopped the
old dismission and started talking about how to use
what we know to do the nght thing
THE
MIPresident
PRESIDENT HAS SEEN
10-23-97
10:20
Great idea about parents getting the kind I
training she said child Care providers get (the
36 hous.) Even a subset of it would be
a big factor.
I magine a Rob Renev or Ken Bums producing
a "Civil Wav" or "Baseball" - Wke video sever
and giving them out at child Care centers
ov doctors offices or
That'd be a pretty cheap investment. It could
be designed (the vuabnidged version) for teachi,
providen, but shortened for all parents,
DAVE Barra
10-23-97
12:10
The more / think about it, the more / like this.
111 bet we could get a broad consensus about
being a good parent. If we had a video that
Dan Coats and Ted Konnedy supported, it might be
a vehicle to drag ow sloppy national debate
through its Sear tissue to let US all emprace a
sensible vision.
/ am more and more convinced, that a bigger and
better idea is the only thing that pulls US away from
ow rancoros, evidence-free conversations.
Once you signed a Welfare Bill, we stopped the
old dismission and started talking about how to use
What we know to do the nght thing.
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file child care
DATE:
MAR 0 1997
TO:
Melanne Verveer
Office of the First Lady
FROM:
Associate Joan Lombardi Commissioner
SUBJECT:
CHILD CARE: CHALLENGES AND OPPORTUNITIES
During the past four years, the Clinton Administration has
continually recognized the importance of child care in the lives
of working families. During the welfare debate, the
Administration scored important victories by increasing child
care funding and protecting basic health and safety standards. At
the same time, we were able to consolidate federal programs and
bring renewed attention to the child care issue.
Despite these accomplishments, significant challenges remain
if we are to improve and expand child care services for children
and families. Working families face incredible obstacles to
accessing and paying for quality services. Furthermore, children
are too often spending their time in environments that do not
promote school readiness and/or school success.
The start of a new term, and the recent attention to early
childhood education, provide important opportunities for moving
forward with a renewed child care agenda. In response to a
request from your office, this memo summarizes our
accomplishments, describes key issues facing working families and
outlines a range of options that could be considered to advance
the child care agenda. It is important to note that the ideas
presented are early thoughts that would need substantial
discussion within the Administration before action is taken.
A. Accomplishments
In the past few years we have had important accomplishments
in child care. Our primary focus has been to secure funds for
child care as part of welfare reform, to streamline and
coordinate child care assistance, to improve the quality of child
care services through technical assistance and a healthy child
care campaign and to implement the new child care amendments in
PRWORA. The following are some of the major accomplishments in
the first term:
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o Direct funding for child care assistance has increased by
more than one billion dollars in the past four years. In
particular, the administration made important progress in
increasing critical resources for child care in the welfare bill.
Child Care funding has continued to increase over the past four
years. Some $600 million dollars was added to child care
assistance this year, the first installment of the $3.5 billion
in PRWORA.
These increases, however, must be seen in context. PRWORA
will put many more women, particularly women with very young
children, into the labor force. States are currently in the
process of making key decisions about how they will use the new
federal child care dollars. These decisions will affect three
important and interrelated areas of need: child care assistance
for families transitioning off welfare, child care subsidy for
low-income working families who have been receiving such support
in the past and low-income working families waiting for child
care assistance. This is an area HHS intends to carefully
monitor.
o The Child Care Bureau, a focal point for the child care
issue, was established for the first time. In 1995, Secretary
Shalala created the Child Care Bureau, to streamline the
operation of federal child care assistance and provide a focal
point for child care at the federal level. Coming seventy-five
years after the creation of the Women's Bureau, the establishment
of the Child Care Bureau has galvanized the issue and provided
pivotal leadership at a time of renewed interest in child care.
Although child care was found both on the welfare side of HHS and
within child welfare services, establishing a separate unit
within government, with a mission statement that specifically
included child development as well as workforce development for
all families, was an historic step forward. In 1996, with the
signing of PRWORA, the four federal child care program, which
were fragmented and confusing, were consolidated into a single
funding stream, the Child Care and Development Fund.
The bureau has had several other important accomplishments
including:
- The establishment of a National Child Care Information
Center which links a range of resources together for policymakers
and the general public. More than 50,000 people used the web page
last year and thousands more called the hotline.
- Holding a series of national meetings for state child
care administrators on such topics as infant care, school age
care, care for children with disabilities, innovations in
consumer education and family centered care.
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- The launching of the Healthy Child Care Campaign in
conjunction with the Maternal and Child Health Bureau which links
child care and health services. The blueprint for action is being
used in more than 40 states and in many more communities.
Technical assistance is provided through a cooperative agreement
with The American Academy of Pediatrics.
- Creating linkages between child care and other national
initiatives including Empowerment Zones, National Service and
Head Start. The Child Care Bureau also convenes a Federal Child
Care Partners groups on a quarterly basis.
- The establishment of the Child Care Research Partnership
Consortium which brings together state administrative data with
university partners. In addition, the Bureau worked closely with
the National Academy of Sciences which held a series of workshops
that resulted in two key publications on child care for low
income families.
- Helped increase public awareness by working with the
Womens' Bureau Working Women's Count effort to hold three public
events on child care across the country.
o The child care provisions of welfare reform were
implemented. During the initial months of the second term, the
Child Care Bureau has focused on implementation of the Child Care
Amendments in the welfare reform legislation. This has included
four main activities: making sure states received their new funds
in a timely manner, establishing enhanced data collection
systems, outlining a research agenda focused on child care for
low-income families and designing a more expanded technical
assistance system.
The technical assistance effort will include seven coordinated
initiatives:
- The expansion of the National Child Care Information System
- The expansion of the Healthy Child Care Campaign
- The establishment of a Public/Private partnership technical
assistance effort
- The establishment of a special technical assistance effort
to promote inclusion of children with special needs.
- The establishment of a special technical assistance effort
for states to improve data collection and systems
development
- The continuation of national and regional leadership
meetings on emerging child care issues
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- The establishment of a National Tribal Child Care
Information Center
B. Child Care in the U.S. at the Turn of the Century: Key Issues
Child Care is at a crossroads. Over the next century, the
child care system will either flourish and grow, providing
supportive environments for children and families, or it will be
stretched and pulled, placing children in poor quality
environments and increasing the stress on families. There are
almost 10 million children under the age of 5 who are in need of
child care and 21 million school age children. In order to ensure
that families can be both productive workers and good parents, I
believe at least three interrelated issues must be addressed in
some way: public awareness, quality and affordability.
Public awareness. Although child care has moved from a
back page story to front page news, there continues to be a gap
between the overall public perception of the issue and the need
for services. There is something puzzling about the child care
issue. While it is on everyone's mind, there is limited public
will to take bold steps to address it. We know that in every
corner of the country, parents are "leaning across the fence" and
talking about child care, struggling with child care and worrying
about child care. Nothing is more poignant than the conversations
of parents in August, faced with a few more weeks of vacation,
while camps close down and the school house door remains locked
for the summer. While child care emerged as a central issue in
the "working Women Count Survey", and is one of the top issues
raised at our "At The Table" meetings held across the United
States last year, unlike education, child care remains a private
issue and has not made it to the top of the public's agenda.
Quality. Research has documented the importance of quality
early childhood programs to school readiness. Not only are the
first years of life critically important to school success, but
more recent research has indicated that quality school age child
care programs, particularly for children at-risk of school
failure, can have a positive effect on academic achievement.
Despite the link between quality care and a good
education, a number of stories have emerged over the past decade
that raise serious concern about the quality of care. Child care
quality is an issue that cuts across socio-economic lines. From
the "National Child Care Staffing" study released in 1989 to the
more recent "Cost and Quality Study", we know that concerns about
quality have become commonplace. Yet there are limited resources
to help build infrastructure, training and other service
improvements. Although the administration was successful in
maintaining a set aside for quality, only 4 percent of federal
child care dollars are currently targeted for quality activities.
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Affordability. While the average family pays about 7
percent of its income for child care, we know that child care
consumes about a quarter of the income of low-income families who
pay for care. At the same time, waiting lists for child care
assistance for low-income families continue to grow.
Federal child care assistance includes $2.9 billion in
direct subsidies. While we know that this federal assistance
alone is not enough to serve every needy family, estimating exact
need is difficult and depends on how states define eligibility.
For example if we define need by the eligibility criteria in the
federal law- families below 85 percent of median income with
children ages birth to 13, almost 8 million children from working
families would be eligible for federal assistance that now serves
an estimated one and a quarter million children. Being more
conservative, if we define eligibility as 150 percent of poverty,
we estimate that we still would meet only a quarter of the need.
Furthermore, although the Dependent Care Tax Credit provides more
than $2 billion dollars of tax relief for child care expenses,
since it is not refundable, the vast majority of low-income
working families do not have access to such assistance.
C. Options for a Child Care Agenda in the Second Term
There are four key themes that could characterize the
Administration's efforts in child care for the next four years:
Increasing child care support for working families
Improving the quality of care to promote healthy
child development
Reaching out to the private sector
Building public awareness
1. Increasing child care support for working families
Most of our focus during the first term was on child care as
a welfare issue. Although we have always promoted the concept
that states should invest their CCDF funds on both welfare
families and low-income families at risk for welfare dependency,
the future focus could more clearly cast child care as broader
working family issue. Initiatives could include:
O Expansion of the Child Care Tax Credit- During the 1998
budget process, discussions were held within the Administration
regarding the expansion of the Child Care Tax credit. It is
estimated that expanding the credit by making it refundable could
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reach some 2 million families. Although it was not included in
the 98 budget package, such an initiative could be revisited in
the 99 budget process. In estimating the need for such tax
relief, particular attention should be paid to low-income working
families who may not benefit from the direct assistance program.
0 Expansion of the Child Care and Development Fund- The
Administration requested a $144 million increase in child care
assistance in the 1998 budget. Of this increase, $100 million is
part of the capped entitlement included in the welfare law. $44
million would bring us to our full authorization of discretionary
funds. The states' ability to use their full allotments this year
will certainly affect our ability to ask for additional funding
in the next year. While all states requested the new funding, the
lag time caused by welfare planning and state legislative
decisions may slow spending in this first year. We are working
with states to encourage full utilization of 97 dollars. Requests
for increases could be included in the 99 budget.
2. Promoting child development by improving child care quality.
Focusing on quality provides us an opportunity to address an
issue of concern to all families. This is particularly important
as younger and younger children are in care during the critical
first three years of life. Just as Early Head Start has been the
"signature initiative" of the Clinton Administration, promoting
the link between "care and education" could be the hallmark of
the second term activities in child care. The range of activities
could include:
o Promoting an initiative across HHS and DOD to support the
quality of child care. The Department of Defense provides model
child care services to the military community. Unlike the
civilian community, DOD programs include standards and funding
for training and accreditation. Last year, the Senate included
language that encourages DOD to work with HHS to improve the
quality of care for children in the civilian community. Funds
could be set aside in the DOD budget to launch innovations across
the states, particularly for infant and toddler care.
Expanding and more actively promoting the Healthy Child
Care Campaign. Healthy child care efforts have now been funded in
most states. MCH is in the final stages of funding the rest of
the states, of launching a new effort to train health
professionals to work in child care and issuing a new streamlined
set of child care standards that all states and communities
should adopt. Any one of these, or the set together, offer new
opportunities to provide visibility to the campaign. In addition,
the volunteer summit in Philadelphia provides an immediate
opportunity for high level officials to call upon every doctor
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and nurse in the country to "adopt a child care program". We may
be able to interest the American Academy of Pediatrics and the
Pediatric Nurses group to join us in such as effort.
0 Expanding Head start services to eligible children in
child care. The Department, working through the Head Start Bureau
in conjunction with the Child Care Bureau, is about to launch a
major expansion of Head Start to serve 50,000 more children in a
way that meets the needs of working families. By building on
models emerging throughout the country, this year the Head Start
expansion will promote collaboration with child care programs.
This initiative will not only serve more children, but will bring
Head Start comprehensive services to children in child care.
Visits by administration officials to such programs will help
raise visibility, and would be most useful after grants are
awarded this fall.
o Expanding and improving school age care through Department
of Education initiatives. A major part of any school reform
agenda should include expansion and improvement of school age
care, particularly in low-income communities. The vast majority
of the 50,000 formal school age programs in the country are not
found in low-income communities. Furthermore, more than 5 million
children spend their time after school in self-care, watching
hours of television in the afternoon. HHS is holding 10 regional
meetings on school age care over the next 6 months, inviting
school officials, child care administrators and community based
leaders. More than 2000 people will be invited to participate. In
addition, The President's budget includes $50 million for After
School Learning Centers. The administration could target these
funds for programs in low-income communities and make such
funding a top priority. In addition, the administration could
review other ways to include extended learning or school age care
in other Department of Education initiatives, particularly the
"facilities initiative", research and America Reads. For example
the Child Care Bureau has been working with The Corporation for
National Service to ensure that Americorp members are focusing on
literacy issues in school age care.
o Targeting job training funds to the child care workforce.
The most important aspect of quality is the relationship of the
child and the family with the provider. New efforts could be made
to target job training funds to child care, and to provide
increased visibility to child care workforce issues.
3. Promoting Public/Private Partnerships
It is clear that government alone cannot provide all the
funding for child care assistance. The administration's efforts
could include technical assistance, promoting promising
initiatives and supporting new tax incentives.
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O Increasing Technical Assistance. The Child Care Bureau is
launching a new technical assistance effort to promote state
initiatives that reach out to the private sector. The RFP should
go out by the end of March with the project funded in early fall.
Once funded, the administration could make the announcement of
this new project a top priority. In addition, new child care
regulations may include provisions to encourage private sector
dollars as match.
o Promoting promising initiatives. High level officials
could make visiting and talking about examples of private sector
support for child care a priority. This could include a range of
events from visits to state legislatures working on this issue to
small companies that make a commitment to child care.
O Increasing tax incentives. Finally, the administration
could support emerging Congressional proposals to provide tax
relief for businesses that invest in child care. The Treasury
Department, in conjunction with HHS, could review emerging
proposals and consider the inclusion of new provisions in the
budget.
4. Building Public Awareness of Child Care
The administration could consider strategies that provide
parents with opportunities to speak out about child care,
establish a strong child care research agenda and put in place an
expert committee to recommend bold new steps to create a 21st
Century Child Care system. Possible activities to be considered
include:
o Holding town hall meetings with parents. A series of
"town hall or village green" meetings could be planned for
parents to talk about their child care issues and how to improve
services. Leaders from the community, including the private
sector and local government, could be invited to attend and
encouraged to launch new initiatives. Stories and recommendations
could feed into a report to the President or a National Task
Force.
o Designing a coordinated research agenda. HHS is in the
process of developing a research agenda that will include child
care issues in the welfare research projects and will focus
"first time" attention on what we are "buying" with the $20
billion investment in subsidies over the next 6 years. Efforts
are also underway to integrate child care in ongoing research on
child development and to make linkages with large national
surveys. The administration could make a request to all federal
agencies with relevant research capability to include a focus on
child care over the next few years. In addition, since there are
no specific funds targeted to child care research at the federal
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or state level, a special request should be made for child care
research dollars, perhaps even to establish a National Center on
Child Care Statistics modeled after the National Center for
Education Statistics.
O Convening a National Task Force on the Future of Child
Care The last major national report on child care was released by
the National Academy of Science in 1990- Who Cares for America's
Children? Child Care Policy for the 1990s. Many of the
recommendations in this report are yet to be addressed. Just as
we did for Head Start in 1994, we must develop a bipartisan
blueprint for a 21st century child care system that provides
recommendations for federal, state and local government, the
private sector and communities and parents. The administration
could convene a group of child care experts from across the
country to consider these and other proposals to move child care
beyond the crossroads.
9