Facts In Action

This year, Congress is reauthorizing both the Child Care and Development Fund (CCDF, also called the Child Care and Development Block Grant, or CCDBG) and Temporary Assistance for Needy Families (TANF) - the two major federal sources of child care funding. Both funding sources were created through the 1996 Personal Responsibility and Work Opportunity Reconciliation Act, which turned a wide range of programs for low-income families (including child care) into block grants to states, and gave the states more flexibility in administering the programs. The upcoming reauthorization will include a review of funding for child care subsidies for low-income families. Recently, many states have been using TANF funds for child care subsidies in addition to their CCDF funding. In Massachusetts, 68% of state child care dollars come from CCDF and TANF. This may be problematic if TANF funds are reduced, or if welfare rolls continue to increase.

Historically, the main source of federal funding for low-income child care has been the CCDBG and other programs now part of the CCDF. However, since the passage of the 1996 welfare reform, states can also transfer or directly spend federal welfare money to fund child care subsidy programs and to assist low-income families with their child care needs. Since 1996, employment has increased among low-income mothers, and at the same time the number of families receiving welfare benefits declined by over 50% nationally. As direct assistance spending declined, states redirected surplus TANF dollars to child care. Accordingly, TANF funds currently make up a substantial portion of many state's child care resources.

The Center for Law and Social Policy (CLASP) recently completed an analysis of state TANF utilization for child care in FY2000. This analysis shows that the total amount of TANF dollars redirected to child care was greater than the federal dollars allocated for the CCDF. For fifteen states, federal TANF funds represented at least as much of the state's child care budget as federal CCDF funds. Additionally, eighteen states transferred at least 20% of their TANF funds to CCDF, and sixteen states committed more than 25% of TANF funds transferred or expended during the year to child care.

In another recent study, CLASP examined the experiences of low-income families, child care providers, and state child care systems in five states since the 1996 welfare reform. The study found that:

• Funding for child care has increased, but the future remains uncertain. Between FY1997 and FY2000, spending on child care doubled. The majority of this increase is from federal dollars, with the federal portion growing from two-thirds to three-quarters of total child care spending. TANF dollars account for much of this increase, but these funds may become less available if TANF caseloads increase.

• There is an unmet need for child care subsidies. The number of children receiving subsidies is increasing, but so is the number of families in need of such assistance. As a result, most eligible children are still not receiving subsidies due to limited resources in child care systems and limits on eligibility, co-payments, and reimbursements.

• The challenge still exists to assure families access to a broad range of child care options. Low subsidy payment rates and the lack of supply of high-quality child care limits the ability of eligible families to access a broad range of child care options. Additionally, care for children with special needs, as well as other non-traditional care needs, remains limited for low-income families.

• There is still not enough quality child care. Even though most subsidized children are cared for in licensed settings, there is a lack of data about the quality of these settings, and an even greater lack of information about the quality of license-exempt and informal settings.

Recommendations

The authors of the second CLASP report provide several specific recommendations for policymakers regarding the funding of child care for low-income families, as well as other findings about the quality of and access to child care for low-income families.

• Expand funding for low-income families with the ultimate goal of funding for all eligible children: significantly increase the CCDF's mandatory funding, increase the TANF block grant to account for inflation, maintain current levels of access to TANF funding for child care, and eliminate federal rules that restrict the use of TANF for child care.

• Improve the quality of care for low-income families: increase the percentage of CCDF funding for quality measures, launch efforts such as training and compensation initiatives to improve the quality of existing child care, and provide funding to states to develop strategic plans for promoting universal access to early care and education.

• Provide access to a broad array of care: require state child care payments to be based on a current market rate survey and set rates high enough to allow access to a range of high-quality care, with enhanced or tiered rates for children with special needs, and for children whose parents work non-traditional hours.

In the near future, states will have to make tough choices and trade-offs in the areas of affordability, accessibility, quality, and funding of child care for low-income families. States have been using CCDF and TANF funds to make improvements to their child care programs' capacity, quality, and access for low-income families, but the future of these funds is uncertain as reauthorization moves forward.

Action Steps

Congress is reauthorizing TANF and CCDF this spring! Contact your U.S. Representative and Senator to voice your support for these federal funding streams. To find out who represents you in Congress, contact Project Vote Smart at (888) VOTE-SMART, or online at www.vote-smart.org.

Source:
TANF Child Care Bigger Than CCDF, J. Levin-Epstein (ed.).

Source:
CLASP Update: A CLASP Report on Welfare Developments, October 2001.

Source:
Unfinished Agenda: Child Care for Low-Income Families Since 1996. J. Mezey, R. Schumacher, M. Greenberg, J. Lombardi, and J. Hutchins, CLASP, 2002.

For more information:
contact: Center for Law and Social Policy, 1015 15th Street, NW, Suite 400, Washington DC, 20005, or call (202) 906-8000. Both reports are available online at www.clasp.org.

Facts in Action, April 2002