Facts In Action

The cost of child care in the United States is a burden that falls mainly on the shoulders of families. A report by the Children's Defense Fund calculated the average cost of center-based care for a preschool-aged child to be between $4,000 and $6,000 per year, with the average cost of care for infants and toddlers nearly double that amount. Low-income families in particular are hit hard by the high cost of child care. A study published by The Urban Institute in December 2000 reports that, on average, lower-earning families spend 16% of their income on child care, while higher-earning families spend only 6%.

Child care differs from other educational services in that user (i.e. parent) fees represent a very large percentage of a program's revenue. For every dollar spent on child care in the United States, 60 cents comes from families, 39 cents comes from federal, state, and local government, and only one cent comes from the private sector. By contrast, for every dollar spent on higher education in the United States, only 35 cents comes from families, while federal, state, and local government pay about 45 cents, and all other sources (such as private gifts or endowments) pay about 20 cents.

With such a heavy reliance on parent fees to finance the system, child care lacks sufficient resources to deliver quality to children, affordability to parents and adequate compensation to teachers and providers. It is imperative to find alternative financing strategies, increasing the investment from sources other than the families who use child care.

The Ewing Marion Kauffman Foundation recently published Financing Child Care in the United States: An Expanded Catalog of Current Strategies, 2001 Edition, an updated catalog developed to share information on innovative financing strategies that are successfully funding child care in the United States. It includes 78 profiles from around the nation which highlight public, private, and community financing strategies in key areas such as: financial aid for parents; education, professional development, and compensation for teachers and directors; operating support for quality services; and capital for facilities.

Each profile describes a specific financing strategy, when it was initiated, the amount of funding it generates, how funds are distributed, what services are funded, and who is eligible to receive them. The profiles also include participants' opinions and analyses of the strategies, as well as historical, political, and economic factors that contribute to the success of a particular approach.

The catalog divides the financing strategies into four broad categories:

• Generating public revenue for child care - this category includes innovative tax- and fee-based approaches to financing child care, tapping resources like local property taxes, sales and excise taxes, state income taxes, tax credits, deductions and exemptions, lotteries and gaming.

• Allocating public revenues for child care - this financing strategy finds resources from other human service programs, such as health, education, higher education, crime prevention, and justice, acknowledging the impact of child care on welfare-to-work, education, health and crime-prevention goals.

• Financing child care in the private sector - this strategy focuses on business- and labor-initiated programs that improve access to child care as well as its quality and supply.

• Financing child care via public-private partnerships - this approach promotes partnerships in which public and private sector funds are deliberately blended to support child care, such as employer and public sector partnerships, community and public sector partnerships, and capital investment partnerships.

Taking action on the information provided in Financing Child Care, a group of more than sixty advocates and early education and care practitioners in Massachusetts have been meeting since June 2000 to explore a variety of models that might be used to create new financing strategies in the state. The ultimate goal of this group is to bring new revenue to the field to fund salary increases, professional development, and other operating, capital, and quality improvement expenses.

In January 2001, the group - which has named itself Investing in Children - hosted a panel that included State Treasurer Shannon O'Brien, Small Business Administration District Director Elaine Guiney, and Jim Hickey of the Massachusetts Finance Development Agency. In February, Investing in Children focused on financing options for facility construction development, including the Massachusetts Education Finance Administration and the Child Care Capital Investment Fund. Investing in Children will continue to meet monthly through June 2001, to explore additional financing models and develop strategies and recommendations around financing policies.

Source:
Financing Child Care in the United States: An Expanded Catalog of Current Strategies, 2001 Edition, A. Mitchell, L. Stoney, and H. Dichter, 2001.

To order a copy of this catalog:
contact the Ewing and Marion Kauffman Foundation, Fulfillment Center, 1932 Linn Street, North Kansas City, MO, 64116, email fplus@swbell.net, or go on-line at www.emkf.org.Editor's Note: this url is no longer active.

Source:
Child Care Expenses of America's Families, L. Giannarelli and J. Barsimantov, The Urban Institute, December 2000.

For more information:
contact the Urban Institute, 2100 M Street, N.W., Washington, DC, 20037, call (202) 833-7200, email paffairs@ui.urban.org, or go on-line at newfederalism.urban.org/pdf/occa40.pdf. Editor's note: This url has changed: http://www.urban.org/center/anf/index.cfm

Source:
The High Cost of Child Care Puts Quality Care Out of Reach for Many Families, K. Schulman, Children's Defense Fund, 2000.

For more information:
contact the Children's Defense Fund, 25 E Street, N.W., Washington, DC, 20001, call (202) 628-8787, or go on-line at www.childrensdefense.org/pdf/highcost.pdf Editor's note: See also: See: www.childrensdefense.org

Facts in Action, April 2001