[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]
FEDERAL RESOURCES AVAILABLE FOR CHILD CARE
=======================================================================
HEARING
before the
SUBCOMMITTEE ON HUMAN RESOURCES
of the
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
__________
MARCH 16, 1999
__________
Serial 106-34
__________
Printed for the use of the Committee on Ways and Means
U.S. GOVERNMENT PRINTING OFFICE
65-629 CC WASHINGTON : 2000
_______________________________________________________________________
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC
20402
COMMITTEE ON WAYS AND MEANS
BILL ARCHER, Texas, Chairman
PHILIP M. CRANE, Illinois CHARLES B. RANGEL, New York
BILL THOMAS, California FORTNEY PETE STARK, California
E. CLAY SHAW, Jr., Florida ROBERT T. MATSUI, California
NANCY L. JOHNSON, Connecticut WILLIAM J. COYNE, Pennsylvania
AMO HOUGHTON, New York SANDER M. LEVIN, Michigan
WALLY HERGER, California BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana JIM McDERMOTT, Washington
DAVE CAMP, Michigan GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota JOHN LEWIS, Georgia
JIM NUSSLE, Iowa RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio XAVIER BECERRA, California
PHILIP S. ENGLISH, Pennsylvania KAREN L. THURMAN, Florida
WES WATKINS, Oklahoma LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
A.L. Singleton, Chief of Staff
Janice Mays, Minority Chief Counsel
------
Subcommittee on Human Resources
NANCY L. JOHNSON, Connecticut, Chairman
PHILIP S. ENGLISH, Pennsylvania BENJAMIN L. CARDIN, Maryland
WES WATKINS, Oklahoma FORTNEY PETE STARK, California
RON LEWIS, Kentucky ROBERT T. MATSUI, California
MARK FOLEY, Florida WILLIAM J. COYNE, Pennsylvania
SCOTT McINNIS, Colorado WILLIAM J. JEFFERSON, Louisiana
JIM McCRERY, Louisiana
DAVE CAMP, Michigan
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Ways and Means are also published
in electronic form. The printed hearing record remains the official
version. Because electronic submissions are used to prepare both
printed and electronic versions of the hearing record, the process of
converting between various electronic formats may introduce
unintentional errors or omissions. Such occurrences are inherent in the
current publication process and should diminish as the process is
further refined.
C O N T E N T S
----------
Page
Advisory of March 9, 1999 announcing the hearing................. 2
WITNESSES
U.S. Department of Health and Human Services, Hon. Olivia A.
Golden, Assistant Secretary, Administration for Children and
Families....................................................... 30
Congressional Research Service, Library of Congress, Gene Falk,
Specialist in Social Legislation, Domestic Social Policy
Division....................................................... 47
Congressional Budget Office, Paul Cullinan, Unit Chief, Human
Resources Cost Estimates Unit, Budget Analysis Division........ 54
------
Children's Defense Fund, Helen Blank............................. 67
Long, Sharon K., Urban Institute................................. 63
Maloney, Hon. Carolyn B., a Representative in Congress from the
State of New York.............................................. 19
Tauscher, Hon. Ellen O., a Representative in Congress from the
State of California............................................ 15
Virginia Department of Social Services, Clarence H. Carter....... 78
SUBMISSIONS FOR THE RECORD
American Fathers Alliance, Bill Harrington, statement and
attachments.................................................... 95
Men's Health Network, Cory J. Jensen, statement.................. 95
National Women's Law Center, Cristina S. Firvida, statement...... 97
NOW Legal Defense and Education Fund, New York, NY, Kathryn J.
Rodgers, statement............................................. 104
Zero to Three: National Center for Infants, Toddlers, and
Families, Matthew E. Melmed, statement......................... 111
FEDERAL RESOURCES AVAILABLE FOR CHILD CARE
----------
TUESDAY, MARCH 16, 1999
House of Representatives,
Committee on Ways and Means,
Subcommittee on Human Resources,
Washington, DC.
The Subcommittee met, pursuant to notice, at 1:05 p.m., in
room B-318, Rayburn House Office Building, Hon. Nancy L.
Johnson (Chairman of the Subcommittee), presiding.
[The advisory announcing the hearing follows:]
ADVISORY
FROM THE
COMMITTEE
ON WAYS
AND
MEANS
SUBCOMMITTEE ON HUMAN RESOURCES
CONTACT: (202) 225-1025
FOR IMMEDIATE RELEASE
March 9, 1999
No. HR-3
Johnson Announces Hearing on
Federal Resources Available for Child Care
Congresswoman Nancy L. Johnson (R-CT), Chairman, Subcommittee on
Human Resources of the Committee on Ways and Means, today announced
that the Subcommittee will hold a hearing on Federal resources
available for child care. The hearing will take place on Tuesday, March
16, 1999, in room B-318 Rayburn House Office Building, beginning at
1:00 p.m.
In view of the limited time available to hear witnesses, oral
testimony at this hearing will be from invited witnesses only.
Witnesses will include a representative from the Administration,
researchers, State policymakers, and child care administrators.
However, any individual or organization not scheduled for an oral
appearance may submit a written statement for consideration by the
Committee and for inclusion in the printed record of the hearing.
BACKGROUND:
The 1996 welfare reform law (P.L. 104-193) consolidated several
overlapping child care programs, created a unified child care block
grant, and provided an additional $4 billion for child care for poor
and low-income working families. Since enactment of welfare reform,
about 1.5 million families have left welfare. In every State, adults
who leave welfare for work are provided with some child care
assistance, often for a year or more. In addition, most States provide
child care subsidies for low-income working families who have not been
on welfare, although few States provide subsidies to all eligible
families. States have had nearly two years of experience with the child
care block grant and are now in a position to inform Congress about
whether the block grant permits adequate flexibility in the use of
Federal child care dollars, the extent to which families leaving
welfare use child care, and whether barriers exist to funding a
sufficiently broad array of services (off-hour care, family day care,
and the use of vouchers) to meet the unique needs of families.
States currently have about $3 billion in obligated and $3 billion
in unobligated funds remaining in the Temporary Assistance for Needy
Families (TANF) block grant. These funds could be used to purchase
additional child care. In addition, the Congressional Budget Office is
projecting that states will have an additional $15 billion in unspent
TANF funds over the next five years. And yet, the President's budget
included a request for $10.5 billion in additional spending for child
care programs.
In announcing the hearing, Chairman Johnson stated: ``The President
wants to spend additional subsidies to provide child care over the next
five years. But States already have significant funds built-up from
existing welfare block grants. While we must address child care needs
to help people move from welfare to work, those of us responsible for
maintaining budget targets are trying to understand why the President
wants to increase Federal spending even more when the States already
have big block grant surpluses available for child care.''
FOCUS OF THE HEARING:
The hearing will focus on two issues. First, the Subcommittee will
examine the President's request for additional spending for child care
programs, and seek to determine whether the substantial surplus TANF
funds already available to States are adequate to meet the Federal
responsibility for helping poor and low-income working families pay for
child care. Second, the Subcommittee will examine how the substantial
reforms in Federal child care programs enacted in 1996 are working at
the State and local level.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
Any person or organization wishing to submit a written statement
for the printed record of the hearing should submit at least six (6)
single-spaced copies of their statement, along with an IBM compatible
3.5-inch diskette in WordPerfect 5.1 format, with their name, address,
and hearing date noted on a label, by the close of business, Tuesday,
March 30, 1999, to A.L. Singleton, Chief of Staff, Committee on Ways
and Means, U.S. House of Representatives, 1102 Longworth House Office
Building, Washington, D.C. 20515. If those filing written statements
wish to have their statements distributed to the press and interested
public at the hearing, they may deliver 200 additional copies for this
purpose to the Subcommittee on Human Resources office, room B-317
Rayburn House Office Building, by the close of business the day before
the hearing.
FORMATTING REQUIREMENTS:
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witness, any written statement or exhibit submitted for the printed
record or any written comments in response to a request for written
comments must conform to the guidelines listed below. Any statement or
exhibit not in compliance with these guidelines will not be printed,
but will be maintained in the Committee files for review and use by the
Committee.
1. All statements and any accompanying exhibits for printing must
be submitted on an IBM compatible 3.5-inch diskette in WordPerfect 5.1
format, typed in single space and may not exceed a total of 10 pages
including attachments. Witnesses are advised that the Committee will
rely on electronic submissions for printing the official hearing
record.
2. Copies of whole documents submitted as exhibit material will not
be accepted for printing. Instead, exhibit material should be
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3. A witness appearing at a public hearing, or submitting a
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The above restrictions and limitations apply only to material
being submitted for printing. Statements and exhibits or supplementary
material submitted solely for distribution to the Members, the press
and the public during the course of a public hearing may be submitted
in other forms.
Note: All Committee advisories and news releases are available on
the World Wide Web at `HTTP://WWW.HOUSE.GOV/WAYS__MEANS/'.
The Committee seeks to make its facilities accessible to persons
with disabilities. If you are in need of special accommodations, please
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four
business days notice is requested). Questions with regard to special
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materials in alternative formats) may be directed to the Committee as
noted above.
Chairman Johnson of Connecticut. The hearing will come to
order. Good afternoon, everyone. The purpose of today's hearing
is to examine the Clinton administration's request for about
$17 billion additional spending on child care, $7.5 billion of
which is funding for the Child Care and Development Block
Grant.
Assuring sufficient funding for child care is absolutely
crucial to the success of welfare reform. Both the Federal and
State governments have a role to play in child care. The
Federal role is to provide the broad framework for supporting
child care, to provide part of the money to pay for child care,
especially for low-income working families, and to provide for
program accountability. The State role is to establish and
conduct the actual subsidy programs, to pay for part of the
costs, and to regulate child care. Government shares two of
these roles with parents: Paying for care and ensuring
accountability and quality.
In the 1996 Welfare Reform bill, Congress made a huge and
unprecedented commitment to child care. We created a block
grant that gave States great flexibility in designing and
coordinating their day-care programs and in addition we
increased Federal subsidies for child care for low-income
families by $4.5 billion over 6 years.
I am pleased that according to testimony from today's
witnesses, including Helen Blank of the Children's Defense Fund
and Clarence Carter, who is commissioner of Social Services in
Virginia, the block grant created by Congress in the 1996
welfare reform law is an innovation that has worked well. We
can take good credit for providing States with many fewer
Federal rules, much greater flexibility in their use of Federal
dollars, and very significant new resources.
As we expected, States have done a fine job of developing
and coordinating their programs and using their child care
dollars wisely. But problems remain as women move into
unconventional jobs.
In 1996, we also provided States with a substantial sum of
money, $16.5 billion per year, through the Temporary Assistance
for Needy Families Block Grant to help needy families avoid
dependency and for other purposes. This money can be spent
directly on child care or up to 30 percent of it can be
transferred to the child care block grant. Thus, we have
already given States a number of tools to use in helping low-
income families purchase child care. In addition, Federal funds
to support child care are provided through the Child Care Food
Program, Head Start, title XX, the Welfare-to-Work Grant, and
the Tax Code. In total, the Federal Government will spend this
year about $13 billion on child care.
Clearly, the States already have far more Federal dollars
for child care than ever before. In addition, they have
substantial sums at their disposal that could be used to pay
for child care. The Congressional Research Service will testify
in a few minutes that States already have $6.2 billion in
unspent funds from 1997 and 1998 in the TANF block grant. In
addition, the Congressional Budget Office will testify that
they project surplus TANF funds of more than $17 billion over
the next 5 years. Thus States already have or are projected to
have as much as much as $24 billion in surplus Federal funds to
pay for child care over the next 5 years.
Why aren't States using this money? Why aren't solutions
for women employed at night or on weekends being developed? How
could Congress justify cutting other programs or increasing
taxes to give States yet more money when so much is going
unused? I am very concerned that as we begin to work with
mothers who have been on welfare for a long time, there is such
clear evidence that we are not using all available resources to
help them gain their independence.
I want Members of this Subcommittee and our guests at this
hearing to know that I have sent a letter to all the Governors
urging them to use their TANF resources to help both people
working their way off welfare as well as the working poor with
work-related issues including day-care. Members will find a
copy of this letter in their folders. And without objection, I
would like to put a copy in the official record of this
hearing.
[The opening statement follows:]
Statement of Hon. Nancy L. Johnson, Chairman, a Representative in
Congress from the State of Connecticut
The purpose of today's hearing is to examine the Clinton
Administration's request for around $17 billion in additional
spending on child care, $7.5 billion of which is funding for
the Child Care and Development Block Grant.
Assuring sufficient funding for day care is crucial for the
success of welfare reform. Both the federal and state
governments have a role to play in child care. The federal role
is to provide the broad framework for supporting child care, to
provide part of the money to pay for child care, especially for
low-income working families, and to provide for program
accountability. The state role is to establish and conduct the
actual subsidy programs, to pay for part of the costs, and to
regulate child care. Government shares two of these roles with
parents--paying for care and ensuring accountability and
quality.
In the 1996 welfare reform bill, Congress made a huge and
unprecedented commitment to child care. We created a block
grant that gave states great flexibility in designing and
coordinating their day care programs. In addition, we increased
federal subsidies for child care for low-income families by
$4.5 billion over 6 years.
I am pleased that according to testimony from today's
witnesses, including Helen Blank from the Children's Defense
Fund and Clarence Carter who is Commissioner of Social Services
in Virginia, the block grant created by Congress in the 1996
welfare reform law is an innovation that has worked very well.
We can all take credit for providing states with many fewer
federal rules, much greater flexibility in their use of federal
dollars, and significant new resources. As we expected, states
have done an exemplary job of developing and coordinating their
programs and using their child care dollars wisely--though
problems remain as women move into unconventional jobs.
In 1996 we also provided states with a substantial sum of
money--$16.5 billion per year--through the Temporary Assistance
for Needy Families Block Grant to help needy families avoid
dependency and for other purposes. This money can be spent
directly on child care or up to 30 percent of it can be
transferred to the child care block grant. Thus, we have
already given states a number of tools to use in helping low-
income families purchase child care. In addition, federal funds
to support child care are provided through the Child Care Food
Program, Head Start, Title XX, the Welfare-to-Work grant, and
the tax code. In total, the federal government will spend
around $13 billion this year on child care.
Clearly, states already have far more federal dollars for
child care than ever before. In addition, they have substantial
sums at their disposal that could be used to pay for child
care. The Congressional Research Service will testify in a few
moments that states already have $6.2 billion in unspent funds
from 1997 and 1998 in the TANF block grant. In addition, the
Congressional Budget Office will testify that they project
surplus TANF funds of more than $17 billion over the next 5
years. Thus, states already have or are projected to have as
much as $24 billion in surplus federal funds to pay for child
care over the next 5 years. Why aren't states using this money?
Why aren't solutions for women employed at night or on weekends
being developed? How could Congress justify cutting other
programs or increasing taxes to give states yet more money when
so much money is going unused?
I am very concerned that as we begin to work with mothers
who have been on welfare a long time, there is such clear
evidence that we are not using all available resources to help
them gain independence. I want members of the Subcommittee and
our guests at this hearing to know that I have sent a letter to
all the governors urging them to use their TANF resources to
help both people working their way off welfare as well as the
working poor with work-related issues including day care.
Members will find a copy of the letter in their folder. Without
objection, I order that a copy of the letter be included in the
official record of this hearing.
The major purpose of today's hearing is to provide
witnesses with an opportunity to offer their perspective on the
efforts states are making to meet the day care requirements of
TANF and other low-income working families. With so much
accomplished already, we must not fail in our oversight
responsibility to assure that welfare reform succeeds for all.
Furthermore, any new spending must be funded so I hope that
those advocating new spending will be specific on how they
recommend we fund it.
Example of letter individually sent to all 50 Governors:
Committee on Ways and Means
Washington, DC, March 17, 1999
The Honorable John G. Rowland,
Governor of Connecticut,
Hartford, CT.
Dear John:
Most states have not been spending all the federal dollars that
have been allocated to them under the Temporary Assistance for Needy
Families (TANF) block grant. According to our budget analysts, states
have about $6 billion in unspent funds left over from fiscal years 1997
and 1998. My colleagues and I on the Committee on Ways and Means are
fighting to save this money from those who would like to spend it on
other priorities, but I want you and all the other governors to
understand that unless states begin spending more of this money, we
will eventually lose the battle to protect it here in Washington.
The most surprising thing about the growing TANF reserves is that
there are so many fruitful ways states should be spending this money.
Based on the hearings we have conducted in our Committee, as well as on
numerous research studies, many of which have been conducted by states
themselves, it is becoming clear that many states are now working with
the clients who will have a more difficult time achieving independence
from welfare. Many of the adults remaining on the welfare rolls seem to
have lower levels of education, less work experience, or more difficult
transportation problems than those who have already left the rolls;
further, many have mental health problems or addictions. In short,
those remaining on the rolls need more services and more assistance to
enter employment and succeed than those who have been placed thus far.
States should be doing everything possible to be certain these more
disadvantaged parents get the help they need to achieve independence.
Another issue that has repeatedly come to our attention is that
some lower-
income families, especially those who have never been on welfare, need
child care subsidies if they are to escape or avoid welfare. Apparently
some states, by focusing their child care resources on families leaving
welfare, are putting other low-income, working families at a
disadvantage by not helping them pay for child care. This policy could
place low-income families without child care assistance at risk of
falling into welfare. When Congress created the TANF block grant and
revamped the Child Care and Development Block Grant in the 1996 welfare
reform legislation, we allowed states to transfer up to 30 percent of
their TANF funds into their child care block grant. Thus, states have
lots of flexibility in employing their TANF dollars to subsidize child
care--including child care for low-income families who have not been on
welfare. States should rise to the challenge and use their TANF money
to help as many of these families as possible.
Integration of employment and training programs is another
productive use of TANF dollars. For several years now, Congress has
been working toward a vision of national employment policy that calls
for the integration of TANF, the U.S. Employment Service, and the block
grants under the Workforce Investment Act. This policy is embodied in
the concept of one-stop career centers in which all these programs are
co-located and work together to share resources while serving a wide
range of young people and adults who need jobs or job training or both.
Given the greater flexibility of TANF dollars than those of the
Workforce Investment Act, TANF could play a particularly central and
vital role in creating and operating one-stop facilities.
Yet another issue is that the success of welfare reform with
mothers previously dependent on welfare has served to underline the
relative lack of programs for poor fathers. Research shows that
children need the active support of two parents if they are to develop
properly. Because many fathers in poor communities are uninvolved in
their children's life, and because many of these fathers have
difficulty meeting their financial obligations to their family, state
and local government, working cooperatively with the private sector,
must lead the way in developing programs that help poor fathers both
play their vital role in family life and achieve the economic potential
that is so central to their parenting role.
Finally, some states are setting aside TANF funds to handle future
caseload increases that may be caused by an economic downturn. Although
the substantial decline in the TANF caseloads, which has now reached
more than 40 percent in the average state, means that states have what
amounts to an annual built-in savings account in the block grant, the
idea of setting aside a specific amount for a rainy day is wise policy.
We are trying to produce an estimate of how much of the annual TANF
surplus is actually money that has been set aside in a rainy day
account because this information will help us explain at least part of
the surplus amounts now building up in state accounts. However, unless
states take formal legislative action, we will not be able to
accurately estimate the money set aside in rainy day accounts.
These suggestions are certainly not exhaustive. But they provide
some concrete ways that TANF money can be used productively to move
welfare reform to a new level of accomplishment.
In closing, let me assure you that Congress is deeply grateful for
the superb job states have done in directing welfare reform. As shown
by the enclosed study of 12 states, nothing even remotely like the
present ferment and accomplishment has occurred in the history of the
federal-state welfare partnership. To continue this achievement,
however, we must protect the resources states now control. The time is
rapidly approaching when it will not be possible to protect these funds
unless states begin to demonstrate that all the funds can be
productively employed. Spend the money.
Sincerely,
Nancy L. Johnson
Chairman
Chairman Johnson of Connecticut. The major purpose of
today's hearing is to provide witnesses with an opportunity to
offer their perspective on the efforts States are making to
meet the day-care requirements of TANF and other low-income
working families. With so much accomplished already, we must
not fail in our oversight responsibility to assure that welfare
reform succeeds for all. Furthermore, any new spending must be
funded. So I hope that those advocating new dollars will be
specific as to how they recommend we raise them.
Mr. Cardin, would you like to make an opening statement?
Mr. Cardin. Thank you, Madam Chair. And let me thank you
first for your leadership on this issue during your
congressional career. You have made a priority dealing with
affordable, quality day-care and I applaud you for that effort.
And I also want to thank you for holding a very early hearing
in this Congress on the issue of child care. It's a very
important subject and in your opening statement, you've raised
many challenges that I hope that this hearing will help us
start to answer so that we can move forward in a bipartisan way
to deal with the issue of affordable, quality day-care for our
communities.
There's no doubt that in welfare reform, without day-care
you can't succeed. We're asking parents to go to work and get
off of cash assistance. And, obviously, that becomes academic,
becomes problematic if you don't have affordable day-care for
the parent to be able to utilize. And that's been part of our
efforts on welfare reform. But the success of welfare reform is
only part of the reason why we should be re-evaluating our
commitment to child care. Just as important it is in the daily
struggle to find affordable, quality day-care that confronts
millions of low- and moderate-income working families that have
never been on welfare. And, Madam Chair, they're caught in a
real hard place. They're caught between a rock and a hard place
as to being able to get any assistance. Normally, their income
is too high too qualify for the State programs. And, yet, their
tax liability is low and they don't get any benefit from the
Dependent Care Credit. So they're basically being asked to take
on the burdens of day-care through their own resources.
Let me just give you the example from my State of Maryland
where currently we are only able to assist those families below
36 percent of the State median income or about $18,000 a year.
When you consider that the average cost of placing a 4-year-old
child in day-care in Baltimore is more than $4,500 a year and
is double that for an infant, you quickly understand the
precarious position that a moderate-income family just above
the State subsidy level must confront.
I think the question is very simple for us. And that is are
we going to help these families meet their dual challenges of
going to work and raising a family? I believe the answer should
be yes. And I, therefore, introduce today the legislation
proposed by President Clinton to provide increased child care
subsidies for low-income parents and expanded child care tax
cuts for middle-income parents. The bill also includes tax
credits for parents who stay at home to care for a young child
and new resources to improve child care quality.
And I hope we will have a substantive debate on these
issues. Madam Chair, before I conclude, I do want to respond to
the point that you made about States having plenty of resources
because of unspent TANF funds. Today, in the Baltimore Sun
there's an article about the ``GOP Asks Why Clinton Wants to
Raise Spending if the Money Isn't Used?'' And, quite frankly, I
think it's--we're responding to that. Mr. Kasich has indicated
that he will propose cutting welfare money because caseloads
have dropped so fast. And I just really want to take issue with
those statements. I think we made a commitment to the States
when we passed welfare reform that we give them maximum
flexibility to meet the challenges of getting people off of
welfare. Some States think that they should preserve a little
bit of money for a rainy day fund. That's not a bad idea. Some
States believe it's going to be more difficult to deal with the
current individuals that are on cash assistance and those that
have been able to successfully leave welfare, that we have the
more difficult cases yet to be confronted. And they want to
make sure that they have the resources to deal with that. I
don't think that that is such a bad judgment by the States to
reserve some of these funds for either rainy days or for the
difficult times ahead. And it's worth remembering that the
current unobligated TANF surplus is sufficient to pay only 1.5
months of cash benefits during a recession.
States have actually obligated 90 percent of their 1997 to
1998 TANF funds. And 19 States have obligated all of their
funds. I don't quarrel with those States. One happens to be the
State of Connecticut. They may be doing a very good job using
those funds, but they certainly don't have the resources to
expand opportunities for child care. And that's what this
hearing is about.
So I don't think it's fair to tell the States since you've
been having a successful time getting people off welfare since
the economy is doing so well, you handle this problem on your
own. It should be a partnership with the Federal Government,
and we should be finding ways in order to expand opportunities,
particularly now that we have the budget resources to do that.
So, Madam Chair, I applaud you for this hearing where we
can start the debate and figure out how we can move together in
a bipartisan way to advance our common goal of affordable day-
care. And I'm very pleased that two of my colleagues,
Congresswomen Tauscher and Maloney are here today. Both have
been leaders in this area for many years in the Congress of the
United States. I look forward to their testimony and working
with the other Members of Congress on a successful way to deal
with this issue.
Chairman Johnson of Connecticut. Thank you.
Mr. Stark. Madam Chair.
Chairman Johnson of Connecticut. Yes?
Mr. Cardin. I yield whatever time I have remaining to Mr.
Stark.
[The opening statement follows:]
Statement of Hon. Benjamin Cardin, a Representative in Congress from
the State of Maryland
Madame Chair, I want to thank you for calling this hearing
on child care. There certainly should be little doubt that
welfare reform will not succeed without adequate resources for
day care. We are, after all, attempting to move mothers with
young children into the workforce--meaning someone has to care
for their children.
But the success of welfare reform is only part of the
reason we should evaluate our commitment to child care. Just as
important is the daily struggle to find affordable, quality day
care that confronts millions of low- and moderate-income
working families who have never been on welfare. These families
are caught between a rock and a hard place. They often don't
receive direct subsidies because States are focusing their
child care funding on the welfare population, and they don't
benefit from the Dependent Care Tax Credit because they do not
have enough tax liability.
For example, in my home State of Maryland, day care
subsidies are available to only those families below 36 percent
of the State Median income, or about $18,000 a year. When you
consider the average cost of placing a four-year-old child in
day care in Baltimore is more than $4,500 a year (and almost
double that for an infant), you quickly understand the
precarious position of those moderate-income families just
above the State subsidy level.
The question before us is very simple--are we going to help
these families meet the dual challenges of going to work and
raising a family?
I believe the answer should be YES, and I therefore today
introduced legislation proposed by President Clinton to provide
increased child care subsidies for low-income parents and
expanded child care tax cuts for middle-income parents. The
bill also includes tax credits for parents who stay at home to
care for a young child and new resources to improve child care
quality. I look forward to having a substantive debate on this
legislation and other approaches to improving access to day
care.
Before I conclude, I would like to address one final
issue--the contention that States now have plenty of resources
to address all of their citizens' child care needs. This
premise rests on the fact that States have not spent all of
their TANF welfare funding, some of which is allowed to be
transferred to child care.
I have three quick responses. First, the magnitude of our
Nation's welfare caseload decline--35% over the last 2 years--
has exceeded many States' expectations. This created TANF
surpluses for some States, which may now be considering how
best to utilize those funds.
Second, States may feel it necessary to reserve some of
their TANF allocation in so-called ``rainy day funds'' to
prepare for a future economic downturn, when the number of
welfare recipients will go up, but Federal funding under the
TANF block grant will remain flat. It is worth remembering that
the current unobligated TANF surplus is sufficient to pay only
1\1/2\ months of cash benefits during a recession (according to
the Congressional Research Service).
And third, States have actually obligated 90% of their 1997
and 1998 TANF funding, and 19 States have obligated all of
their TANF funds. Therefore, while I agree with those who would
like to see States do more to increase the availability of day
care, I don't think it is accurate to suggest the current
status of TANF funding indicates no Congressional action is
needed on child care.
Madame Chair, let me once again thank you for holding this
hearing. I look forward to hearing the testimony of our
witnesses. Thank you.
Mr. Stark. Could I take a long and eloquent statement and
ask that it be placed in the record?
Chairman Johnson of Connecticut. Of course.
Mr. Stark. And be given 30 seconds or so to summarize it?
Chairman Johnson of Connecticut. You certainly may.
Mr. Stark. Because I, too, want to thank you for holding
this hearing. I will during it, as you and perhaps your staff
and others know, talk about the quality issue not in terms, and
I recognize the nervousness that people have about setting
regulations and standards, but by the same token, I know that
you and Congresswoman Maloney, and Congresswomen Tauscher and
Morella and Norton all sent a letter to Speaker Gingrich some
time ago. And in your Women's Caucus statement, the third item
in supporting or promoting child care was a very strong
paragraph on promoting quality child care. And I would like to
insert that letter by the six of you in the record because
that's my little hope that we can, in addition to the fund
question and whatever you decide to do with the funds and
however you decide to use them, I think we make an oversight if
we do not keep the pressure on even if it isn't regulation.
Perhaps you are just demanding from the administration that
they report back. If they're going to give money for quality,
then I know because I know you're doing it in Head Start now,
we've sat and heard Congressman Goodling say, ``How can you
prove that Head Start is any good?'' Well, I hate to tell you
but I know that the gentleman from Louisiana is going to be at
me in about 3 or 4 years saying, ``How do we know this is doing
any good?'' So I want 3 or 4 years from now, unless he's
Senator from Louisiana----
Mr. Camp. Governor.
Mr. Stark. Governor. All right. But I want to be able to
answer that question. So I would like to put these in the
record, if you will?
Chairman Johnson of Connecticut. You certainly may.
Mr. Stark. And I look forward to the rest of the hearing.
Thank you for indulging me.
[GRAPHIC] [TIFF OMITTED] T5629.001
[GRAPHIC] [TIFF OMITTED] T5629.002
[The opening statement follows:]
Statement of Hon. Fortney Pete Stark, a Representative in Congress from
the State of California
Madam Chairwoman, thank you for calling this hearing to
address the problem of funding for child care services in our
country. I also thank the Administration for proposing what I
believe is the first step toward making child care services
accessible to poor and low-income families. I am particularly
aware of the work of the First Lady on the issue of child care,
and I commend the Administration and Ranking Member Ben Cardin
for their proposal, which I have co-sponsored.
As more and more families with infants and young children
are forced to send both parents to work, the need for child
care--especially infant care and care at non-traditional
hours--continues to expand. As the need for care grows however,
startling findings in a study on the cost and quality of child
care by the University of Colorado at Denver's Department of
Economics report that more than 80% of child care services in
the U.S. is thought to be of poor or average quality (summary
of study attached).
I want to make sure we're not missing the mark. Although it
is true that child care is in short supply and is too expensive
for many families to afford, we must not allow the demand for
child care services to override the need for quality. It is
critical that children receive care that promotes their healthy
growth and development. We cannot allow them to be placed in
substandard conditions.
I will reintroduce the Child Care Quality Improvement Act
of 1999, to help states increase and meet their child care
quality goals. My bill would provide funding for Quality
Improvement Grants to be transferred to local child care
collaboratives under the Child Care Development Block Grant
(CCDBG).
Grants would be made to states which have established goals
for child care quality improvements in six areas: increased
training for staff, enhanced licensing standards, reduced
numbers of unlicensed facilities, increased monitoring and
enforcement, reduced caregiver turnover, and higher levels of
accreditation.
My bill takes a benchmarking approach that helps states
define quality targets and measures the states' progress toward
meeting their long-term quality goals. States would be required
to report to the U.S. Department of Health and Human Services
on their progress in meeting their quality goals in order to
remain eligible for future funding.
Congress has wrongly refused to require significant quality
standards for the child care dollars we allocate each year. The
federal government should give states the resources to raise
state quality standards and improve child care quality at the
local level, but only through a system of measurable indicators
of desired outcomes. We must allocate these funds with the
guarantee that incentive grants will continue to raise
standards and improve the quality of care.
As the father of a young son, I know the difficulty
families face when choosing a caregiver for their children. My
bill gives families peace of mind by encouraging the states and
local facilities across the country to provide the high quality
of care every child deserves.
I look forward to working with the members of this
Subcommittee and with the Administration to ensure that quality
improvement remains a priority in this and any future child
care initiative.
[GRAPHIC] [TIFF OMITTED] T5629.009
Chairman Johnson of Connecticut. Though we don't normally
have opening statements for everyone on the Committee, since
Mr. Stark has made an opening statement, would either of the
other gentlemen like to make an opening statement?
Mr. McCrery. Well, Madam Chair, I appreciate the
opportunity. I just say to my good friend from California if
the Federal Government continues to give the States so much
money to spend, then I might be inclined to run for Governor.
[Laughter.]
Chairman Johnson of Connecticut. Mr. Camp.
Mr. Camp. Thank you, Madam Chairman. As delightful as it is
to discuss this among ourselves, I would like to hear from our
distinguished Members of Congress on this issue.
Chairman Johnson of Connecticut. Thank you.
Mr. Camp. So I'll forego an opening statement. Thank you.
Chairman Johnson of Connecticut. Thank you. And it is a
great pleasure to me personally to have with us today two of
the women Members of Congress who have been particularly
interested in this subject and done a lot of good work on it.
Congresswoman Maloney, you are listed here first but you don't
appear to be prepared to go first. Congresswoman Tauscher.
STATEMENT OF HON. ELLEN O. TAUSCHER, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mrs. Tauscher. Thank you. Thank you, Mrs. Johnson. I want
to thank you, as the Chair of the Subcommittee for your
leadership and your continued leadership. I just want to remind
everyone that in 1998 as the Chair of the House Women's Caucus,
you actually had the first Women's Caucus hearing and it was on
child care and it was enormously successful. And I want to
thank you for your continued leadership. And, Ranking Member
Cardin, thank you for your leadership. And my colleague from
California, Mr. Stark, good afternoon. How are you?
Gentlemen, good day and I'm happy to be here. And I would
like to thank you all for this opportunity. I have a longer
statement that I will submit for the record. I just want to
summarize why it is so important for us to discuss the
importance of quality child care for the American working
family.
Since coming to Congress, I have repeatedly heard from my
constituents that finding affordable high-quality child care is
virtually impossible. Parents can find either affordable child
care or they can find high-quality child care. But for many of
them, they have a hard time finding a combination of both in
one provider or one center and an opening for their child when
they need it. The fact is that 77 percent of American families
have made the decision that both parents will work at least
part time. Many times these families have no other option.
Single parents must work to provide for their families and low-
income families must have two parents working just to keep one
step ahead of poverty. Ultimately, the transition to full-time
work at a livable wage happens only if parents know that their
children are in a safe and quality child care environment.
Many argue that States are not taking advantage of the fact
that they can move Temporary Assistance to Needy Families, TANF
funds, to the Child Care Development Block Grant to provide
child care to low-income working families. In fact, some States
are doing this but there is still substantial need. My home
State of California, for example, has already committed 100
percent of its TANF funds and has no means of providing child
care assistance for additional low-income working families.
When families cannot afford quality child care, their
children suffer. They suffer not only physical health risks
because of unsafe environments, but their cognitive development
can also suffer.
Numerous studies show us that high-quality child care
predicts better school readiness and higher language scores.
Unfortunately, high-quality child care is the exception rather
than the rule.
Today, I will introduce the Affordable Child Care Education
Security and Safety Act, known as the ACCESS Act on behalf of
the Democratic Caucus. I would like to thank the Ranking
Minority Member of the Human Resources Subcommittee, Mr.
Cardin, for introducing the sections of the bill that fall
under the jurisdiction of the Ways and Means Committee.
The ACCESS Act is a comprehensive bill which makes
significant investments to improve the affordability,
availability, and quality of child care. ACCESS provides an
additional $1.5 billion per year in mandatory CCDBG funds which
can be used to help low-income families after States have used
their existing CCDBG funds. ACCESS also provides tax relief to
millions of working parents and stay-at-home parents through
the expansion of the Dependent Care Tax Credit. The ACCESS bill
would provide a tax credit to businesses who build or expand
their existing child care facilities or for 25 percent of their
qualified costs. Small businesses which often cannot afford to
provide child care on their own can form consortia with other
small businesses to start quality child care centers and
receive Federal and State matching funds.
In addition to business partnerships, we need to use
existing infrastructure such as schools. The ACCESS bill
increases funding for the highly successful 21st century
Community Learning Center program that helps schools develop or
expand after school programs that improve academic performance
and reduce the incidence of juvenile crime.
While we need to make financial investments in increasing
the affordability of child care, we also need to specifically
target the issue of quality, as Mr. Stark has brought up. The
access bill establishes a Model States Early Learning Fund,
which would provide challenge grants to States that are
interested in specifically improving their quality of child
care.
American families do not need one-size-fits-all child care.
Every family is unique in make-up and circumstance and we need
to address the issues that every one of them faces. The ACCESS
bill represents a variety of common sense proposals that ensure
that parents do not have to make the choice between food and
quality child care, that school-age children do not have to
come home to an empty home, and that all American families get
financial support for the costs of child-rearing.
The ACCESS bill puts children and families first. I would
like to thank the Committee on Ways and Means for recognizing
the importance of child care and holding this hearing on this
very important issue. I'm happy to answer whatever questions
you may have. And I look for support from both sides of the
aisle on this bill.
Thank you, Mrs. Johnson.
[The prepared statement follows:]
Statement of Hon. Ellen O. Tauscher, a Representative in Congress from
the State of California
I would like to thank the committee for this opportunity to
discuss the importance of quality child care to the American
working family. Since coming to Congress, I have repeatedly
heard from my constituents that finding affordable, high-
quality child care is virtually impossible. Parents can find
either affordable child care or they can find high-quality
child care; but they have a hard time finding a combination of
both in one provider. This problem is not only evident to me as
a Member of Congress, but as a parent. Before I came to
Congress, I founded a company that provides comprehensive
background checks on potential child care workers because I
realized that it was almost impossible to verify that the
person that I was entrusting my child to, was actually
qualified. I realized that other parents were facing the same
difficulties I was. So I wrote a book which explained how
parents should go about finding quality child care providers
and settings. My degree in Early Childhood Education and my
prior profession where I dealt with numerous child care
workers, made me aware of the child care problem. Millions of
families deal with a child care crisis on almost a daily basis
and struggle to cope. Our job as legislators should be to make
the lives of American working families just a little bit
easier. While it is not our duty to make decisions for these
families, we can help them implement the decisions they have
made for themselves.
The fact is that 77% of American families have made a
decision that both parents will work at least part-time. Many
times, these families have no other option. Single parents must
work to provide for their families and low-income families must
have two parents working just to keep one step ahead of
poverty. While we can hope that families will have the
financial means that allow one parent to stay home with young
children, we, as legislators, should never take the position of
criticizing families for making the choices they do. The fact
is that, for whatever reason, only 23% of all families with
children younger than 6 have one parent who stays at home.
Parents need help dealing with the financial burden that child
care poses.
Child care expenses range, on the average, from $4,000 to
$10,000 per year. Infant care costs are $1,000 higher, on
average. Parents can easily spend more on child care than they
do on a year of tuition at a public university. The often
insurmountable cost of care, unfortunately, often forces
parents to choose between quality day care now or saving for a
college education later. This is a terrible choice for parents
to have to make. Low-income families are faced with a more
stark picture--the choice between quality child care or
clothes, shelter, and food. For these parents, low-quality
care, where they continually risk their children's health and
safety, is a fact of life.
The Federal Government's commitment to child care, in a
sense, indicates its commitment to promoting work and a strong
economy. The TANF program requires able-bodied recipients to be
engaged in work or a work-related activity; yet these parents
cannot become reliable, productive, full-time workers if they
are constantly worried about their child care situation.
Ultimately, the transition to full-time work at a livable wage
happens only if parents know that their children are in a safe
and quality child care environment.
States, for the most part, have focused their CCDBG funding
on helping TANF families who are the poorest of the poor. Left
neglected are the low-income working families who make too much
to be eligible for TANF and are left to contend with the high
cost of child care on their own. Continually underfunding the
CCDBG will turn low-income working families into TANF families.
The CCDBG allows states to help families with incomes up to 85
percent of the state median income, but 44 states disqualify
families before they even reach this level! In many states,
there aren't even funds for families who do qualify for a child
care subsidy--in California, 200,000 eligible children are on
the waiting list and have been there for two years. Two years
is a lifetime for young children. Two years of unsafe, low-
quality care can produce a lifetime of problems. Quality child
care stimulates brain activity, promotes reading and math
skills, and prepares children for success in school. An
investment in quality child care produces a lifetime of
benefits for a child.
Many argue that states are not taking advantage of the fact
that they can move TANF funds to the CCDBG to provide child
care to low-income working families. In fact, some states are
doing this, but there is still substantial need. Florida, for
example, has transferred $117 million to CCDBG, yet families at
200 percent of poverty must pay about 28% of their gross income
to provide child care for two children. According the Florida
Department of Children and Families, providing child care for
children from birth to age five for working families at 200% of
poverty and providing child care for the school-age population
would cost an additional $293 million. My home state of
California has already committed 100% of its TANF funds and has
no means of providing child care assistance for additional low-
income working families.
When families cannot afford quality child care, their
children suffer. They suffer not only physical health risks
because of unsafe environments, but their cognitive development
can suffer as well. Numerous studies show us that high quality
child care predicts better school readiness and higher language
scores. Unfortunately, high quality child care is the exception
rather than the rule. Studies indicate that 35% of family-based
and 40% of center-based infant and toddler care is inadequate
or even potentially harmful to children's safety and
development. This unacceptably low standard of care results
from numerous factors such as high child/staff ratios,
inadequate training for staff, and a lack of health protection
and promotion guidelines.
We cannot continue to place our children at the bottom of
the priorities list. An investment in child care is an
investment in our children's future and an investment in
American families. Today I will introduce the Affordable Child
Care, Education, Security, and Safety or ACCESS Act on behalf
of the Democratic Caucus. I would like to thank the ranking
minority member of the Human Resources subcommittee, Mr.
Cardin, for introducing the sections of the bill that fall
under the jurisdiction of the Ways and Means committee. I would
like to thank a number of my colleagues for their efforts in
the creation of this bill. Representatives Cardin, DeLauro,
Maloney, Lofgren, Slaughter, Tom Allen, Woolsey, Moran, and
Weygand along with many others have been invaluable in the
crafting of the ACCESS bill. This bill has 81 co-sponsors and
has the support of the Administration. The ACCESS bill makes
significant investments in child care to benefit all parents,
regardless of income or family structure. Every family deserves
access to quality child care and our bill ensures that no
family needs to shortchange their children.
The ACCESS act is a comprehensive bill which makes
significant investments to improve the affordability,
availability, and quality of child care. ACCESS provides an
additional $1.5 billion per year in mandatory CCDBG funding
which can be used after states have used existing CCDBG funds.
Seventy percent of the funds must be used to help low-income
working families so that they can stay off welfare for good.
ACCESS also provides tax relief to millions of Americans
through expansion of the Dependent Care Tax Credit, providing
an annual tax cut of $345 to 3 million families. Stay-at home
parents, who often sacrifice a second income for the sake of
their children, can also get relief because of the ACCESS bill
which would allow parents with children under the age of 1 to
claim at least $1500 in child care expenses under the DCTC.
In addition to government funding, we must also encourage
public private partnerships in developing innovative child care
solutions. The ACCESS bill would do just that by providing a
tax credit to businesses who build or expand their child care
facilities, for 25% of their qualified costs. Small businesses,
which often cannot afford to provide child care on their own,
can form consortias with other small businesses to start
quality child care centers, and receive federal and state
matching funds under the ACCESS bill. In addition to business
partnerships, we need to use existing infrastructure such as
schools. School buildings often stand empty from 3 pm, when the
last bell rings, until the next morning. The ACCESS bill
increases funding for the highly successful 21st Century
Community Learning Center Program that helps schools develop or
expand after school programs. Under the ACCESS bill, an
additional half a million children would be able to participate
in quality, after-school programs that could improve academic
perfomance and reduce the incidence of juvenile crime. The
ACCESS bill also allows the Secretary of Housing and Urban
Development to insure mortgages to build new child care
facilities or renovate existing facilities.
While we need to make financial investments in increasing
the affordability of child care, we also need to specifically
target the issue of quality. The ACCESS bill establishes a
Model States Early Learning Fund which would provide challenge
grants to states that are interested in specifically improving
their quality of child care. Quality is directly related to
staff and teacher training and the ACCESS bill provides
scholarships to students who make a demonstrated commitment to
working in a licenced child care facility upon completion of
their education. Children require continuity and the ACCESS
bill would ensure that they are cared for by a trained and
familiar adult.
American families do not need one-size-fits-all child care.
Every family is unique in make-up and circumstance and we need
to address the issues that every one of them faces. The ACCESS
bill represents a variety of common sense proposals that ensure
that parents do not have to make the choice between food and
quality child care, that school-age children do not have to
come home to empty houses, and that all American families get
financial support for the costs of child rearing. Raising
children is an individual, family, and community effort, and
our society as a whole benefits when our children are cared for
in a safe and nurturing environment. The ACCESS bill puts
children and families first. I would like to thank the
Committee on Ways and Means for recognizing the importance of
child care and holding a hearing on this very important issue.
Thank you.
Chairman Johnson of Connecticut. Thank you.
Congresswoman Maloney.
STATEMENT OF HON. CAROLYN B. MALONEY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEW YORK
Mrs. Maloney. Thank you very much, Madam Chairman. And I
join my colleague in wanting to be associated with the remarks
with Congressman Stark and Mr. Cardin. And I compliment you on
your strong leadership on affordable and available child care
and the Quality Child Care Statement that was part of the
Women's Caucus agenda under your chairmanship.
When we talk about the need for child care, and we talk
about moving welfare recipients to work, and we talk about
helping working families, men and women, it is really simply
words unless we put behind it a comprehensive child care
national child care strategy to turn our words into the reality
of affordable and available quality child care.
I would like to have my remarks put in the record. And
would just like to summarize two proposals, one of which is
before the Banking Committee, which I co-authored with my
Republican colleague. And I compliment Ellen Tauscher, the
President's program and proposal, and am totally supportive of
it. But I would like to just focus on these two bills.
The first one is the Child Care Infrastructure Act, H.R.
389. It is a bipartisan bill introduced by Ileana Ros-Lehtinen
and myself and it is in the President's budget. This bill would
give a 25 percent tax credit to employers who provide on-site
child care and/or provide the building, build it, and/or
subsidize it. And it also is flexible in that it would allow
smaller businesses to come together as a unit and pool their
resources, not only to get the tax credit but to provide the
day-care.
I might add that this is not in the bill, but from the
great city of New York that I represent a report was just
issued by our State comptroller that in our city there is a
waiting list of 61,000 families trying to get into child care.
And I would add to it that residential buildings, large
residential buildings could also use this for on-site or
subsidized child care if they're willing to do it for the
people who live there.
As I said, it has bipartisan support. Deborah Pryce does
not believe that our bill goes far enough, and she has
introduced a bill that would provide a 50 percent tax credit.
The second bill that I just absolutely like a great deal is
called Kiddie Mac and this was authored with Representative
Richard Baker, who is the chairman of the Capital Markets
Subcommittee on Banking and myself and Sue Kelly, also on
Banking. Kiddie Mac the Children's Development Commission Act,
is modeled after Fannie Mae and Freddie Mac. Fannie Mae and
Freddie Mac have made affordable housing a reality for 70
percent of American families. Why can't we do the same thing
for day-care? Why can't we take the same innovative approach
that was cost-effective, leveraging the private markets, to
build day-care facilities? Granted it's only one of many blocks
that you need to solve the problem, but it's an important
block. The most important block. You can't have child care
unless you have the infrastructure, the site. This takes care
of that first stumbling block, the infrastructure.
It is flexible in that the loans could be given to say a
welfare mother who has family day-care network, who wants to
open up her home for her neighbors and have day-care in her
home. She needs money to get it up to code, to start. This
could help a family day-care network site or a large business
that is providing it on-site or a site in a Public Housing
Authority or in a church or in a synagogue.
So it is very, very flexible. It would provide a
government-backed guarantee loan for loans going into child
care facilities certified by State standards. The premiums and
the interests on the loan would go into a pool much like Fannie
Mae and Freddie Mac. It would become self-sustaining, would not
cost any money. Actually, Fannie Mae and Freddie Mac make
money, but our bill says any money that is made goes into child
care research and into really studying better ways we can take
care of our children.
So I would just like to add these two initiatives, one from
the Banking Committee, in a bipartisan effort to the total
ACCESS proposal that the Democratic party has put forward. And,
hopefully, your members will consider it. It is cost-effective
and it is creative and a sure fire winner.
So I see our time is up and thank you for this opportunity.
[The prepared statement follows:]
Statement of Hon. Carolyn B. Maloney, a Representative in Congress from
the State of New York
Chairman Johnson, Ranking Member Cardin and the rest of the
Committee members, thank you for allowing me to testify before
you. Today we are discussing the role of the government in the
area of child care, an issue I have been working on all of my
political life.
Before I came to Congress, I was a member of the New York
City Council. A little over ten years ago, one hour after a
Council meeting, I gave birth to my youngest daughter. I
quickly understood the problems a working mother with a young
child has.
Finding quality care for my child while both myself and my
husband pursued our careers was difficult--and I am sure that
for many parents it is daunting. With this first hand knowledge
I introduced a series of child care bills before the City
Council which I called the ``Virginia Plan,'' after my young
daughter.
Ten years later, the collective child care problems of
America's families are turning into a national dilemma.
In 1970 the Department of Labor found that 30 percent of
married mothers were in the workforce . . . by 1994 that number
was 62 percent--and it is expected to continue to rise.
Whether we are discussing two-earner families or single
mothers, their young children deserve a safe, stimulating
environment while their parents are working. Welfare reform has
also greatly affected the care of many of our nation's
children. With each state determining how best to implement
welfare reform, often children are forgotten in the equation.
The New York State Comptroller, Carl McCall, completed a
study which reported that due to welfare reform 60,000 children
in New York City would be in need of child care by the year
2001. But the city will only have places for about half of
them. This is a pattern which I am sure is repeated across the
country.
So with these realities, what should the government do?
I believe that the issues and problems surrounding child
care are diverse, and that there is not one, single solution.
What is needed is a comprehensive strategy which can tackle
different parts of the problem in different ways:
We need to address the single parent on welfare who faces
the dilemma of losing their check by staying home with their
children, or leaving their children in substandard care, or
worse, home alone.
We need to address a child's need for a safe, stimulating
environment which is most crucial in the early years of
development. We need to address nutrition, after-school care
and the quality of care workers.
As you see, there are many issues and no one solution--or
even two solutions--will solve them all.
There are many interesting proposals which have been
submitted on both sides of the aisle, and I have a few of my
own.
The Child Care Infrastructure Act, H.R. 389, a bipartisan
bill I introduced with Rep. Ros-Lehtinen, is in the President's
budget. This bill would give a 25% tax credit to employers who
engage in activities such as: Building and subsidizing an
entire child care facility on or near the site of the company;
Participating with other businesses in setting up and jointly
running a child care center; contracting with a child care
facility to provide a set number of places for employers--
giving centers the steady cash flow they need to survive.
This bill gives employers may options, but in the end both
the employers and employees are winners. The employees know
that their children are in good care. Employers have discovered
that these employees are more productive, have less absenteeism
and are more loyal to the company.
In a related issue, today I will be introducing the
Breastfeeding Promotion and Employers' Tax Incentive Act. This
bill will encourage employers to set up a safe, private, and
sanitary environment for women to pump breast milk through a
tax credit. This is a cutting-edge issue--and many companies
are beginning to understand the importance of allowing their
mothers to pump milk.
--For example, Mr. Cardin, in your district RWD
Technologies, an information and technology company of 1,000
people in Columbia, Maryland has a lactation room for its
employee-mothers. Not surprising is that many insurance
companies, Aetna, CIGNA, etc, have lactation rooms because they
recognize the potential in savings for health care costs from
having healthier children.
The last piece of children's legislation is ``Kiddie
Mac''--the Children's Development Commission Act, which I will
also be reintroducing later today.
While market forces should respond to demand, the obvious
need for quality, affordable child care is not being fully met.
This bill would make it easier for child care providers to
get the financing they need in order to build or rehabilitate a
child care facility.
This is how it works: The Children's Development
Commission, or ``Kiddie Mac,'' would receive a loan application
from a bank for a child care facility. The Commission would
then certify the loan, allowing HUD to issue a guarantee to the
bank. With the guarantee, the bank will be more willing to
provide a loan--and it should also result in more favorable
financing terms which means better cash flow for the facility.
The Commission will also provide smaller, special purpose
loans for bringing existing facilities up to local licensing
standards. It will also provide access to fire and liability
insurance and create a foundation to do research into child
care.
After a one-time appropriation, the Commission would pay
for itself through the premiums paid by the banks for the
guarantees.
Thank you for listening to my views and my proposals, and I
thank the Committee for recognizing the need to focus on child
care.
[GRAPHIC] [TIFF OMITTED] T5629.003
Chairman Johnson of Connecticut. Thank you. It's a pleasure
to have you both here and it's a pleasure to have you bring
forward so many ideas. I would just point out to my friend,
Mrs. Tauscher, Congresswoman Tauscher from California that
actually your State is a good example of the problems in this
area because they have basically $1.5 billion that they have
not used this year. They have obligated it for next year, but
they did not use it this year. So next year, they will get
their $3.7 billion again plus the $1.5 billion for a total of
$5.7 billion. What I don't understand is why aren't they using
it this year? Why didn't they obligate it this year?
When I look at the problems of women who get jobs that are
on weekends or at night and the lack of day-care available in
those areas and the lack of infant day-care that's available
and the lack of accountability in the States for the kinship
care programs that they've developed, I mean there are so many
ways to have spent that money constructively, both to expand
options and slots and to do better oversight that it is
distressing to me.
Mrs. Tauscher. I agree with you.
Chairman Johnson of Connecticut. Thank you for the ideas
that you've all brought forward. In Connecticut, frankly, we
really have spent all our money. We have zeros in both columns.
Mrs. Tauscher. Well, if I could just respond. I think----
Chairman Johnson of Connecticut. We are a smaller State
with a much more integrated system.
Mrs. Tauscher. One of the reasons why we're happy to have a
new Governor is that we had some very significant shortfalls in
planning for our child care problems and programs in the State
of California. For example, one of the first things that was
cut when Governor Wilson arrived 8 years ago in Sacramento was
the money to go inspect day-care centers throughout the State
of California. And if you care at all about peace of mind and a
parent believing that we have State laws that say that we're
meant to be visiting day-care centers and we're supposed to be
checking not only the safety and quality issues but ratios and
cleanliness, those inspections--that budget was drastically
cut.
And I think that you're right. We need to make sure that
the States are accountable. I believe that we should not create
any kind of Federal bureaucracy for this, but that is why the
Model States portion of this bill is important. It takes 17 of
the 50 States and says, ``You've got good programs. You seem to
be spending your money wisely. You seem to be accountable.''
Let's give flexibility and grants both through the CCDBG and
other opportunities to States so that they can rise themselves
up and make choices, spend their money better, be more
accountable and deliver the things to their constituents.
Chairman Johnson of Connecticut. And do you make those 14
States----
Mrs. Tauscher. Seventeen.
Chairman Johnson of Connecticut. Do you make those 17
States the measure for others?
Mrs. Tauscher. Right. They're model States.
Chairman Johnson of Connecticut. By ``model,'' that's
generally a flexible term? That they are models and the States
can use this money?
Mrs. Tauscher. Right.
Chairman Johnson of Connecticut. If they have a better idea
for quality, I suppose they're free to use the money that way?
Mrs. Tauscher. Exactly. I mean I think this clearly is
about having people do what they're meant to be doing,
enforcing the laws they have on the books, spending money in an
accountable way and in a good investment way, and delivering
the services to the constituents. I believe that it is
important for us in the Federal Government to recognize this is
a problem, to lay out the opportunities, to provide matching
funds, but to do it in a way that is once again in the context
of a balanced budget.
Chairman Johnson of Connecticut. I think the goal of this
hearing really is to try to find what the problem is. How
serious is the problem? And where are the barriers? In visiting
not only providers but job training programs and so on in my
district, the answers we're getting are surprising and totally
contradictory.
Mr. Cardin.
Mr. Cardin. Thank you, Madam Chair. And I really do think
both of my colleagues for their leadership in this area, but
also coming forward with some workable recommendations, some
changes in Federal policy to deal with the problems that we are
confronting in a changing community. Our work force is
changing. Our families are changing. And the programs need to
be modernized in order to deal with the realities of the
current frustrations and difficulties that are faced by
American families.
I just really want to throw out and if you have comments,
I'll be glad to listen, I'm not so sure we should be looking at
a State and saying just because they have a positive balance on
their TANF funds, they haven't done everything they should be
doing. I would be curious as to compare those States that have
a balance of funds with those that do not as to how well
they're meeting the child care needs. I don't think they'll be
a direct relationship. And the reason, quite frankly, is that
we've had Federal programs to help the States on child care and
States are using those funds, some more efficiently than
others, using the program and are meeting with some success.
But there is need for greater resources.
TANF was always meant to be flexible to the States, this
new concept, but wasn't meant to be the bank for day-care
expenses. It had a broader objective to deal with getting
people off of welfare to work. We have lots of people who
aren't on welfare that aren't able to meet their day-care
needs, their child care needs, and if we start taking TANF
money in order to deal with those problems, what happens when
we start really coming up against the more difficult clientele
that are currently on cash assistance or if the economy starts
to slow down a little bit, it becomes more difficult. So just
because a State has reserved 1.5 months on the average benefits
or TANF, I'm not sure that that's a sign that the State hasn't
used all of its resources to deal with this problem.
Mrs. Maloney. I think the gentleman is absolutely correct.
The TANF funds should stay where they are because the 5-year
limit has not been met yet and when it is met, there will be
more and more women who will have to go to work or be out on
the street basically and we will need those funds for that.
And also child care is a problem not just for welfare
recipients, but for everyone. It's a problem for me. It's a
problem for absolutely every working man and woman to find
affordable, available, quality child care. And instead of
looking at how we can scale back a national commitment, when
you look and compare the efforts of the United States, we're a
disgrace compared to all western industrialized countries. Most
of them have a national standard and
nationally-backed child care. And I can't tell you how many of
my friends and people I know, I can't tell you how many days
myself, I face the crunch of not having a drop off center or
some place I can take my child without taking her to work with
me. Fortunately, I can take my child to work. Most women
cannot. If their provider is not there or if there's something
not there, they could lose their jobs because there's no place
to take that child. So we need many options: drop off centers,
more spaces.
In New York City, we're not even talking about welfare
recipients. We're talking about working, moderate-, low-income
women and men and there are 61,000 families looking for the
slot to pay their money to provide the child care for their
child.
And so I certainly join Mr. Cardin's comments in that this
is not a time to be retreating, but looking at new ways that we
can be more supportive and put more reality behind our rhetoric
in support of working men and women.
Chairman Johnson of Connecticut. I would like to just
comment to the rest of the Committee that we do have quite a
few witnesses that have quite substantial testimony. And since
we do get time to talk to our colleagues at other times, I
would urge----
Mr. Cardin. I'll yield back the balance of my time.
Chairman Johnson of Connecticut [continuing]. You to keep
your questions short. And possibly defer them to other times.
Mr. Watkins?
Mr. Watkins. Thank you, Madam Chair. I've about lost my
voice. I have three grandchildren and we had a big snow in
Oklahoma. And Papa was out helping build a snowman, so I'll be
very short in my comments.
You said 15 States or something like that----
Mrs. Tauscher. Seventeen.
Mr. Watkins [continuing]. A while ago. How many States are
giving tax cuts? They have surpluses in their TANF, but they're
giving tax cuts and not using them where they have some
responsibility? I think they have responsibility of providing a
lot of the State care, not just the Federal Government. And I
see some of them are giving tremendous tax cuts. I know a
number of States don't exactly follow what Oklahoma has done,
but have transferred some money into child care. I know there
are other needs along the way also. And that's one of the
beautiful things about a lot of the things helping some of the
programs or working some--a great benefit that should give us
some flexibility.
And I'll be moving to try to do some things to provide
greater flexibility to the States, it's not just necessary for
them to be giving tax cuts back. Many of us do a lot up here to
try to help out back home with those States and I think our
State Governors need to be looking at how to utilize that money
as wisely as they can and the savings they have as wisely as
they can. So I will be working on trying to with that surplus
money be able to provide greater opportunities. The child
care--I have a lot of working mothers that need additional
help, not just with child care but the Displaced Homemakers
Program is not being funded by this administration. I think
Displaced Homemakers is very much of a place--it should fit
somewhere here to help the mothers be trained in something that
would allow them to have a job.
I have to say I try to understand New York, but I grew up
in a little town of less than 200 people. Everyone in town knew
everyone else and everyone took care of everybody else. And
that's a way of life that I think that a lot of people have
never experienced. And I think we did a disservice after World
War II, everybody going into the big cities. But it's a way of
life that I think we find out there, that our mothers and
fathers are able to have jobs and stay there and work, that is
one of the greatest things we have, those jobs.
So I appreciate listening and hearing what you're saying.
So, Madam Chair, I don't have an additional question at this
time at all.
Chairman Johnson of Connecticut. Thank you.
Mr. Watkins. Just know we've got to do some things a little
different.
Chairman Johnson of Connecticut. Thank you. Mr. Foley.
Mr. Foley. Yes, I don't want to get into a ``My Governor is
better than yours,'' or ``Thank God we got a good Governor,''
Congresswoman Tauscher. But I will tell you Florida had a great
Governor, Lawton Chiles, and his advocacy was for children, for
day-care and other things. And Florida has an unobligated
balance of $252.9 million. CBO estimates by the year 2003, we
will have $24.4 billion of unspent dollars in these programs.
Mrs. Tauscher. In TANF.
Mr. Foley. But we gave the flexibility to the States
through TANF to use money for child care. So I'm not so certain
we all should be sitting up here trying to demand more
resources. We should get the States to pay some attention to
the funding formulas and implement the policies. I don't think
the Federal Government can sit here throwing money in the wind
and praying somehow that some day these Governors wake up
because our examples in Florida would contradict yours, if you
will, negative perception of Pete Wilson.
Mrs. Tauscher. Well, this shouldn't be about Pete Wilson,
Lawton Chiles, or Jeb Bush. This should be about the fact that
working American families shouldn't have to choose between
their two most precious values: Work and family. And you cannot
dispute the fact that we have a major supply and demand problem
in child care. Once you get pass the supply and demand problem,
you have an affordability, availability, and a quality problem.
So these are the problems.
Now if there are resources in TANF in States around and
people have surpluses, that's just great. I think that we
should do as much as we can to work cooperatively with the
States to have them be accountable and responsible. But at the
same time, we cannot turn our backs on American working
families and say not us, put it off to them because we have as
much of a responsibility to make sure that there are quality
programs, and that money is spent, and that we use the bully
pulpit of the Federal Government to talk about what is
necessary for American working families to be successful. There
are a lot of programs, Mr. Watkins, in your communities like
there are in my communities. I grew up in a small town too, but
that was 47 years ago with all due respect. And I can't go
back. I can't go back.
Chairman Johnson of Connecticut. Thank you.
Mrs. Tauscher. And I don't want to go back.
Chairman Johnson of Connecticut. Thank you. We do want to
move on to Mr. Stark, please?
Mr. Stark. Well, just to follow-up to Mr. Foley's
observation and to make note of the Chair's comment about
California. The California money is, that billion and a half is
all obligated. We devolve or ``devolute,'' or whatever the hell
you call it, the money from the State on to the counties. And
so technically when the State turns the money on down the
pipeline to the counties who run in our State, the social
welfare programs. That money is obligated. And the unobligated
or the unspent, there's an awful lot of checks. It's like the
old House bank. You don't remember that, but where our checks
don't always catch up with our paycheck as quickly as they
might have. So I think a lot of the States have committed this
money beyond what the numbers would show.
But, second, I do agree and it's the one thing that you
will hear me suggest, for just the reasons you raise, to our
administration, you're going to have to reauthorize this in
2002, that's 3 years. And if we don't know, and I think both
Ellen and Carolyn would agree with me, if New York and
California and Florida can't come back and show us what they've
done with this money, you go right ahead and don't give it back
to California. But in seeing that, we then have to tell the
States or ask the States to tell us, either way, what are you
going to do? Give us something to measure your results by. I'm
not suggesting--Florida may want to do something different from
California, from New York, that's OK. But I think then we ought
to have something so that you and I and Wes, the chairwoman,
can sit down and say, ``Wait a minute.'' And I hate to keep
this bringing this up again. We're right up against that now in
Head Start. And I'm not so sure that Goodling doesn't have the
better side of the argument. I don't agree with him, but he's
saying, ``Prove to me what Head Start has done?''
Mr. Foley. Would the gentleman yield?
Chairman Johnson of Connecticut. I really appreciate----
Mr. Stark. So I'm done. I mean that's my point.
Chairman Johnson of Connecticut. I appreciate the concern
of the gentleman from California about quality, but I do urge
you----
Mr. Stark. No, I'm just saying results, even ACCESS, Madam
Chairman.
Chairman Johnson of Connecticut. Please question those
before us so that we can move on because we have so many others
to speak. Let's see now I've got----
Mr. Stark. That would go for ACCESS as well.
Chairman Johnson of Connecticut. Thank you. Yes, fine. Mr.
McCrery.
Mr. McCrery. Ms. Tauscher, in your bill, would you
enumerate for us the provisions that get to the supply side of
the problem? You said there's a demand and supply problem?
Mrs. Tauscher. Sure.
Mr. McCrery. What provisions get to the supply problem?
Mrs. Tauscher. Tax incentives specifically for businesses
to--there are both tax incentives and flexible matching grants
to create for small business, for example, consortia of no less
than five businesses to buy slots in day-care centers, to build
a day-care center, to be partners in a day-care center, to go
to the local AME church and acquire part of their program so
that they could offer that as incentives to the employees that
they're attempting to hire.
As you so well know, small business have a very, very
difficult time recruiting and retaining employees. In
California, the big game is to give stock options, but they're
only worth the paper that they're printed on. And it's very
difficult to compete against large companies that are offering
their own beautiful day-care center or slot. So this would be a
way to do that. It also provides the opportunity to work with
Kiddie Mac as part of it to create the opportunity to build.
So this is a very comprehensive bill. What it attempts to
do is be flexible and creative, to use existing State and local
community, public and private partnerships, to leverage on what
already exists, not to create a big Federal bureaucracy, not to
create new programs specifically, but to make investments for
things that are working, that have quality and affordability.
Chairman Johnson of Connecticut. Thank you. Mr. Coyne.
Excuse me, Mr. McCrery.
Mr. McCrery. I beg your pardon?
Chairman Johnson of Connecticut. Excuse me, sorry.
Mr. McCrery. Ms. Maloney, do you have a cost estimate for
the Kiddie Mac proposal?
Mrs. Maloney. Yes, I do and I would like to put an article
that was in The Washington Post about Kiddie Mac into the
record. The original startup cost is $20 million. But that is
your only cost. Much as we had startup costs for Fannie Mae and
Freddie Mac. After that, the premiums go in, the interest goes
in and it's a self-revolving loan and it's one central place
where if you are welfare mother who wants to open up a day-care
center in your home or say you're some captain of industry who
says, ``Gee, I would like to do this but I really don't know
how to do it, and I don't want to get in trouble in any way,''
it's a unit you can go to that would help put the thing
together and help you meet your State standards.
Mr. McCrery. So over 5 years, you think the total costs are
less than $100 million?
Mrs. Maloney. There would be no other taxpayer moneys going
in.
Mr. McCrery. So it would be less than $50 million?
Mrs. Maloney. Just the $20 million.
Mr. McCrery. OK, good.
Mrs. Maloney. It's $20 million period. That's it.
Mr. McCrery. OK.
Mrs. Maloney. Twenty million dollars period.
Mr. McCrery. Great. Ms. Tauscher, in California have the
welfare rolls been reduced since 1994?
Mrs. Tauscher. Yes.
Mr. McCrery. Do you know by how much?
Mrs. Tauscher. No, I can tell you in my county and in Mr.
Stark's county, they have been significantly reduced in Contra
Costa County.
Mr. McCrery. The average per State is 43 percent since
1994. And you also may recall that we gave the States the
option to choose the most favorable formula for funding. They
could choose 1994, 1995, or the average of their rolls between
1992 and 1994.
Mrs. Tauscher. Right.
Mr. McCrery. So I think it's safe to say that each State
probably chose the formula that was most advantageous.
Mrs. Tauscher. Right.
Mr. McCrery. Giving them probably more money than they
needed to satisfy their rolls when welfare reform was passed.
We also gave them the flexibility to use that money, 30 percent
of the total, to use for child care or a number of other needs,
State by State. So while I agree with you that there is
probably a supply problem, and I commend you for trying to give
us some innovative ways to get at that problem, I really
question the need for the Federal Government at this time to
plow in $20 billion more over 5 years to get at something that
I think the States have the wherewithal under the existing TANF
block grant to do.
So I appreciate you both bringing your concerns and your
solutions to our Committee and I promise you we'll take a look
at them, but I have to say I have my doubts as to the need for
the money.
Mrs. Tauscher. Well, let me just remind you. This is not
about TANF. And this is not about Welfare to Work. This is
about low-income working families and middle-income working
families. We essentially have done as best we can to provide
through the Welfare to Work 1996 bill, and to work with the
States to attack the problem of Welfare to Work. We have a
great problem with low-income families and middle-income
families.
Mr. McCrery. Well, perhaps we should give the States even
more flexibility to use those moneys?
Mrs. Tauscher. That's what this bill attempts to do.
Mr. McCrery. Well, you add a big cost though.
Chairman Johnson of Connecticut. For the record, let me
just clarify that under TANF, the States do have the right to
transfer up to 30 percent of their TANF day-care dollars into
the Child Care and Development Block G which has the right to
provide vouchers for low-income families. They have so far
chosen to transfer only 4 percent. They are also using only 2
percent of their TANF dollars for direct day-care spending and
while they could have transferred 10 percent to the Social
Services Block Grant, which is the other day-care option,
they've only transferred 7 percent. So I think it is important
to try to look at the facts here of what the States' needs are
and what their resources are.
And I do want to put squarely on the record because my
colleague from New York used the term ``scaled back,'' there is
absolutely no intent to scale back the resources. In this
Committee, I and several from this Committee have signed
letters to the leadership, have long ago written, including
Clay Shaw, who formerly chaired this Committee, how strongly we
oppose any reduction by the Senate or the House in TANF
funding. The real issue is having to put more money out there
for day-care and family support programs than we have ever put
in this Nation's history and with pretty clear evidence that
it's not all being used, we need to ask are the needs of people
coming off welfare and low-income families being met? And what
are the real barriers? And if more money is needed, where is it
to come from and how is it to be funded?
Mr. Coyne.
OK. Thank you very much. We appreciate your being with us
and all your ideas.
Mrs. Tauscher. Thank you.
Mrs. Maloney. Thank you.
Chairman Johnson of Connecticut. And now I would like to
call forward Hon. Olivia Golden, Assistant Secretary for the
administration for Children and Families in the Department of
Health and Human Services. Welcome, Secretary Golden. You may
proceed? Your entire statement will be inserted in the record,
and you may make any remarks that you care to make and then
we'll proceed to questions.
STATEMENT OF HON. OLIVIA A. GOLDEN, ASSISTANT SECRETARY,
ADMINISTRATION FOR CHILDREN AND FAMILIES, U.S. DEPARTMENT OF
HEALTH AND HUMAN SERVICES
Ms. Golden. Thank you. Madam Chairman and Members of the
Subcommittee, I'm delighted to appear before you today to talk
about one of the administration's highest priorities: Child
care. In particular, as many of you have said, we believe it is
time to focus on the child care needs of low-income working
families who are struggling to hold on to their jobs and care
for their children. Parents tell us, as in the words of one
working mother from Rhode Island:
It is becoming almost impossible for me to hold down a
full-time job and pay my child care on my small salary, but I
don't want to stop working. I need to take care of my family
and show my children the importance of work.
In my oral testimony, I would like to focus on the huge
need for affordable care for working families, with a brief
summary of the administration's proposal. My written testimony
provides more detail on the importance of care that is healthy,
safe, and of high-quality, as Mr. Stark has emphasized, and on
the President's initiative to provide affordable child care for
working families.
An enormous and growing number of children spend time every
day in child care. This fact is not surprising when you
consider the high, and growing labor force participation of
parents. In 1996, 96 percent of fathers and 63 percent of
mothers with children under the age of six worked. For many of
these working families the cost of child care is a crushing
burden. A family earning less than $14,000 a year and paying
for the care of a child under age five without State or Federal
assistance typically spends 25 percent of its income on child
care.
Today, the primary source of help for low-income families
who cannot afford child care is the Child Care and Development
Block G or CCDBG. However, it is reaching far too few families.
Nationally, there are approximately 10 million children
eligible for assistance under CCDBG, but only about one and a
quarter million of these children received help from these
funds in 1997.
Low-income families miss out on CCDBG assistance for two
main reasons. Forced into a tradeoff between scarce dollars and
enormous need, many States have chosen to focus on families on
welfare, families leaving welfare, and families at the very
lowest income levels--leaving out parents who are struggling to
hold on to a modest job without turning to welfare for help.
State child care plans show that in 12 States a family of three
with an income of just $20,000 a year is not eligible for any
help with child care. Only 16 States provide assistance to
working families of three earning over $27,000. Second, even
with these eligibility restrictions, States are unable to meet
the enormous demand for child care. States across the country
report extensive waiting lists and unmet needs. In California,
for example, waiting lists are estimated to total between
100,000 and 200,000 slots.
States cannot meet this huge demand for child care without
a major Federal investment, one that is large enough to make a
dent in meeting the needs of working families by being
dedicated to child care and reliably available over time.
Currently, States have obligated fully 100 percent of the funds
available to them through the CCDBG, including the
appropriation of $1.6 billion in State money, maintenance of
effort, and matching funds.
While States have the authority to transfer Temporary
Assistance for Needy Families funds to CCDBG as well, as has
been discussed here, and about 28 States did so in 1998, States
are not in a position to solve the child care needs of the
working poor by trading off dollars that may well be critical
to meeting the intensive needs of families remaining on
welfare. In fact, 17 States have already committed every penny
of their TANF dollars for fiscal year 1997 and 1998, while
others are reserving some of their TANF resources for rainy day
funds to protect themselves from possible future downturns.
Given the importance of stable child care, it doesn't make
sense to ask States to use potentially unstable funding sources
to provide for child care.
The President's child care initiative addresses these
issues by providing subsidies to low-income families and by
expanding the Child and Dependent Care Tax Credit to help
families with moderate incomes afford the high cost of safe and
healthy care. It improves the safety and quality of care and
promotes early learning by enabling States and communities to
invest in staff training and recruitment, and improves linkages
to health care, and other proven approaches to make sure that
our youngest and most vulnerable children are healthy and safe,
while offering them the opportunity to learn and develop.
The President's initiative expands after school programs so
that over one million children can be safe and supervised after
school hours and their parents can have peace of mind on the
job. And, because the President believes that parents should be
supported in whatever choice they make for care of their
children, his initiative also provides new tax relief for
parents who stay home with children under age one.
In closing, I would like to express my gratitude to this
Committee, to you, Mrs. Johnson, to Mr. Cardin and others here,
for your leadership on this critical issue. I am convinced that
with our mutual commitment, we can make a difference to the
millions of families who are struggling to find and pay for
decent care for their children and hold on to their jobs. We
cannot ignore child care as both a support to the current work
force and a crucial component in the development of a school
ready, work ready new generation. The President's initiative
makes an investment for the future, an investment which
supports the economy, families, and most important, our
children.
Thank you, and I would be happy to answer questions.
[The prepared statement follows:]
Statement of Hon. Olivia A. Golden, Assistant Secretary, Administration
for Children and Families, U.S. Department of Health and Human Services
Madam Chairman and members of the Subcommittee, I am
pleased to appear before you today to talk about one of the
Administration's highest priorities, child care. Child care is
extremely important to the wellbeing of our Nation's children
and to their parents' ability to work and maintain employment.
For this reason, I welcome the opportunity to outline President
Clinton's historic child care initiative. First, I would like
to express my gratitude for your leadership on this issue--
demonstrated both by the hearing today and by the important
legislation introduced by Chairman Johnson in the last
Congress, as well as bills that have been sponsored by Mr.
Cardin, Mrs. Tauscher and others this year. I am convinced that
with our mutual commitment to this issue, we can make a
difference to the millions of working families who are
struggling to find and pay for decent care for their children.
The Clinton Administration is dedicated to providing
support and resources to ensure healthy, safe, affordable child
care settings that are so desperately needed to help families
work and help children grow strong and become ready for school.
In particular, we believe it is time to focus on the child care
needs of low-income working families who are struggling to hold
onto their jobs and care for their children. We need to focus
on their struggles to find safe and affordable care for three
reasons: for the sake of our economy, our parents, and our
children. Employers tell us over and over that the struggle to
find affordable child care is a major obstacle to recruiting
and retaining a stable workforce. Parents tell us, in the words
of one working mother from Rhode Island: ``It is becoming
almost impossible for me to hold down a full-time job and pay
my child care on my small salary, but I don't want to stop
working. I need to take care of my family and show my children
the importance of work.'' And from the perspective of children,
as President Clinton said in his State of the Union address
last year, ``Not a single American family should ever have to
choose between the job they need, and the child they love.''
The President's child care initiative makes a commitment to
America's families that they do not have to make this choice.
It helps working families pay for child care that they trust--
whether with a neighbor, in a family child care home, or in a
child care center--by providing subsidies to low-income
families and by expanding the Child and Dependent Care Tax
Credit to help families with moderate incomes afford the high
cost of safe and healthy care. It improves the safety and
quality of care and promotes early learning by enabling States
and communities to invest in staff training and recruitment and
improves linkages to health care, enforcement of standards, and
other proven approaches to make sure that our youngest and most
vulnerable children are in homes and centers that are healthy
and safe, and offer them the opportunity to learn and develop.
It expands after-school programs, so that over one million
children can be safe and supervised after school hours and
their parents can have peace of mind on the job. And, because
the President believes that parents should be supported in
whatever choice they make for care of their children, it also
provides new tax relief for parents who stay home with children
under age one.
In the past several years, we have worked with Congress in
a bipartisan manner to build a solid foundation for child care.
In enacting welfare reform, Congress and the Administration
made a commitment to help families on welfare move to work by
increasing the resources for child care subsidies so parents on
welfare and leaving welfare could find, afford, and keep child
care. It is now time to provide the same commitment to working
families who are struggling to hold onto their jobs and afford
child care. Last year, the Administration and the Congress made
a modest down-payment on this commitment, including an
investment in research and evaluation and increased funding for
child care quality activities. This year, it is time to build
on that down-payment to enact the President's initiative, so
that millions of low- and moderate-income working families can
find child care, afford child care, and trust child care,
without going on welfare to get the help they need.
In the remainder of my testimony, I would like to address
the huge need for affordable care for working families; the
importance of care that is healthy, safe, and of high quality;
and the way the President's initiative responds to these
critical needs.
Affordable Child Care for Working Families: The Critical Need
An enormous and growing number of children spend time every
day in child care--whether with a neighbor, in a family child
care home, in a child care center, or in an after-school
program. Since the cost of child care, particularly care of a
quality parents can trust, is so high, parents who work for
modest wages face unacceptable choices--sometimes having to
choose between makeshift arrangements for their children at the
cost of their own peace of mind or to stop working.
According to the National Center for Education Statistics
(NCES), in 1995 more than half of the approximately 21 million
infants, toddlers and preschool children under the age of six
in the U.S., or 12.9 million children, were in care. Forty-five
percent of infants under age one were in child care on a
regular basis. And according to a recent report on the National
Institute of Child Health and Human Development (NICHD) study
of child care, only about 14 percent of children were home
full-time with their mothers throughout their first three
years. These very young children are the most vulnerable to
care that is not high quality, yet high quality care for them
can be especially costly, creating difficult dilemmas for
parents with modest incomes.
Second, these statistics are not surprising when you
consider the high, and growing, labor force participation of
parents. In 1996, 96 percent of fathers and 63 percent of
mothers with children under the age of six worked. And during
this same time, nearly 74 percent of mothers with children
between the ages of six and 17 were in the paid labor force.
Mother's participation in the work force has increased
dramatically in recent years. For single mothers with incomes
under 200 percent of poverty, the percent employed as of the
Census Bureau's March current population survey rose from 44
percent in 1992 to 54 percent in 1997, driven by the culture
change of welfare reform, and the consistently strong and
growing economy.
Looking ahead, the continued strength of the economy, along
with the continued effectiveness of welfare reform and the
increases in work participation required under the welfare
reform legislation, suggests continued increases in parents'
work participation and the need for child care. To take just
one example, Michigan has identified the growth in the need for
child care as the principal issue it expects to face in the
near future. The increased number of TANF families who are
working and the increased hours of work have resulted in a much
greater demand for child care services. At the same time, the
availability of child care for working families is critical to
allowing them to retain their jobs and avoid having to seek
cash assistance.
Third, for many of these working families, the cost of
child care is an enormous burden. A family earning less than
$14,000 a year, and paying for the care of a child under age
five, without State or Federal assistance, typically spends 25
percent of its income on child care. But even families earning
twice the minimum wage, with modest wages of $20,000 to $30,000
a year, face incredible challenges in paying for care,
particularly if they have more than one child. In California,
the average cost of full-time care for a child under two years
in a licensed center is $7,020--68 percent of minimum wage
earnings, and almost one quarter of the annual gross income for
a family earning $30,000 a year. In Boston, the average annual
child care costs for one 4-year old is $7,900 and in Seattle
$6,140. The National Women's Law Center reports that the cost
of child care can range from $4,000 to $10,000 annually.
Disproportionately high child care costs can force families
to make difficult choices essentially, whether to put together
makeshift child care arrangements that risk compromising the
quality and safety of their children's care, to skimp on
fundamental living expenses such as food, clothing, shelter and
health insurance, or to stop working entirely. At the White
House Conference on Child Care in October 1997, a child care
provider spoke eloquently about a mother who made the first
choice: she was leaving her 6-year-old alone on the school
playground after school because she was afraid that she would
lose her new job if she asked her employer for a more flexible
schedule and her earnings left her unable to come up with an
alternative. When the school principal realized what was
happening and told her he would have to report her for child
neglect if she did not come up with an alternative, she was
referred to a child care provider who was eventually able to
come up with an emergency scholarship slot for her--but who
said emphatically that not every story has such a happy ending.
The second and third choices, to skimp on basic necessities
like food or clothing or to leave work entirely, also are made
far too frequently, as the mother from Rhode Island I quoted
earlier said so eloquently. Employers as well as parents report
on the unacceptable choices facing families. At a recent child
care resource and referral leadership forum, a Massachusetts
employer told the story of a single mother employed by her
medical clinic, who came to her when her family day care
provider gave two weeks notice that she could no longer care
for the woman's child. The woman needed affordable child care
in order to work and would have to quit her job if care could
not be found. The employer's Work and Family office worked in
partnership with her and frantically searched for another
provider but on the last day of the first provider's notice,
had come up with no prospects.
A recent GAO study demonstrates the pervasiveness of these
issues by analyzing the trade-offs low-income mothers face when
they want to work, but face high child care costs. According to
the study, child care subsidies are often a strong factor in a
parent's ability to work, and reducing child care costs of a
family increases the likelihood that poor and near-poor mothers
would be able to work. GAO observed that affordable child care
is a decisive factor that encourages low-income mothers to seek
and maintain employment.
What Help Is Out There for Working Families: Far Too Little
Today, the primary source of help for low-income families
who cannot afford child care is the Child Care and Development
Block Grant (CCDBG). CCDBG funds flow to the states, who
provide help for parents by subsidizing care of the parent's
choice--with a family member, neighbor, family child care home,
child care center, or after-school program. The key strength of
CCDBG is that the flexibility of providing subsidies directly
to parents supports parents' ability to choose the care that is
best for their child.
However, while CCDBG is a flexible and effective way of
getting critically needed help to parents, it is reaching far
too few families. Nationally, there are approximately 10
million children who are income eligible for assistance under
the Child Care and Development Block Grant. Even with increased
funding provided for child care program under the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996,
our data show that only about 1.25 million of these children
received help from the Block Grant's fund in 1997. In reaching
only a little over 10 percent of the eligible families, the
Child Care and Development Block Grant offers many low-income
families scant hope of access to good, affordable child care
arrangements.
Low-income working families miss out on CCDBG assistance
for two main reasons. First, forced into a trade-off between
scarce dollars and enormous need for child care, many states
have made policy and eligibility choices that focus assistance
on families on welfare, families leaving welfare, and families
at the very lowest income levels--leaving out parents who are
struggling to hold onto a modest job without turning to welfare
for help. While the CCDBG Act allows States to serve families
with incomes up to 85 percent of the State median, only nine
States actually set their eligibility levels that high. Due to
the high demand for child care assistance and limited funding,
State child care plans currently show that in 12 States, a
family of three with an income of just $20,000 a year is not
eligible for any help with child care. Only one-third (16) of
the States can afford to assist the child care needs of working
families earning 200 percent of the poverty level--that's only
$27,300 for a family of three. In Maryland CCDBG eligibility is
limited to families making less than $22,440. Further, a report
issued by the Department's Office of the Inspector General
found that in order to maximize dollars, States often set high
family co-payment rates, which limit parental choice of type of
child care.
Second, in practice, states are unable to meet the enormous
demand for child care even given the low eligibility levels
that they have adopted. As a result, states across the country
report extensive waiting lists and unmet need. Iowa has
subsidized child care slots for almost 75,000 children from
birth to age 5--less than half of the reported need. In
California, waiting lists are estimated to total between
100,000 and 200,000 slots. And in Florida, there were 25,000
children on waiting lists in September 1997 and the State froze
intake except for families on welfare or for children at risk
of abuse or neglect. Similarly, in December 1997, Massachusetts
reported 12,500 children--including 600 in the child protective
system--on waiting lists. A recent article in a Texas newspaper
reported that ``on an average day, the Texas Workforce
Commission, using federal and State funds, pays for about
81,000 day-care slots for low-income families and will have up
to 40,000 names on a waiting list for such help.'' The article
goes on to report that program officials say this is only the
tip of the iceberg of unmet need among low-income families.
Finally, even though states have access to several funding
sources to meet child care needs, there is no way for them to
meet these demands without a major Federal investment. This
investment must be large enough to make a dent in meeting the
needs of working families by being dedicated to child care and
reliably available over time so that families can depend on
receiving the modest assistance they need to get and keep
steady work. Currently, the states have obligated 100 percent
of the funds available to them through the Child Care and
Development Block Grant, including the matching funds which
require them to appropriate their own money to draw them down.
To draw down the full amount of funds in FY 98, states
appropriated $1.6 billion in maintenance of effort and matching
funds, and a number of states report additional appropriations
of state resources.
While States have the authority to transfer Temporary
Assistance for Needy Families' funds to CCDBG as well, and
about 28 states did so in 1998, states are not in a position to
solve the huge unmet child care needs of the working poor by
trading off dollars that may well be critical to meeting the
intensive needs of the families who still remain on welfare
caseloads as they continue to make their transition to work. In
fact, 17 states have already committed every penny of their
TANF dollars for FY97 and FY98 and have no additional resources
available for transfers to child care. States are making the
understandable choice of reserving some of their TANF resources
for -rainy day funds--which show up in the expenditure data as
if they were uncommitted--thus using the option that Congress
provided for states to protect themselves from possible future
economic downturns. Given how important stable child care
arrangements are to working families who are seeking to
maintain their employment, it doesn't make sense to ask States
to use a potentially unstable source of funds to expand the
available child care for these families. By, for example,
risking rainy day funds for child care, States risk a major
upset in the lives of families if economic difficulties down
the road were to force dollars to be shifted back from child
care to cash assistance.
Besides the Child Care and Development Block Grant, the
other major source of help for families in paying for child
care costs is the Child and Dependent Care Tax Credit.
Unfortunately, many low and moderate working families fall into
a gap, with incomes not low enough to be eligible for a
subsidy, yet too low to get an appreciable amount of help from
the tax credit. As I indicated earlier, due to the pressing
need for child care assistance, only nine States provide child
care assistance at the maximum income level set by Congress in
the CCDBG Act, so that families with incomes as low as $20,000
or $25,000 are not eligible for assistance in many states and
in many other states, they may be eligible but at the end of a
long list of families waiting for help. At these income levels,
families are often caught in a gap, with no help from the
subsidy and little or no help from the tax credit. Such working
families, that cannot benefit from subsidies or tax credits,
have needs that are not being addressed under current law.
The Administration's proposal addresses these needs through
an expanded subsidy and a strengthened tax credit. But before I
go on to discuss the proposal in detail, I would like to
address the other critical aspect of child care need: the
importance of care that is safe, healthy, and of high quality.
Quality
We know that quality matters to children's healthy and safe
development and that the lack of affordable child care options
for many families greatly reduces their ability to find quality
care they can trust. There are serious concerns, supported by
an extensive body of research, about the quality of care many
children receive. Recently, even the basic health and safety of
children in child care has become a national concern.
Fortunately, as I will discuss later, we also know what to do
to improve quality so that children can grow, thrive and enter
school ready to learn.
We are concerned that far too many children receive care
that is unsafe, unhealthy, and potentially damaging to their
development. For example, a four-State study by the University
of Colorado found that only one in seven centers was rated as
good quality. The Families and Work Institute also reported
that 13 percent of regulated and 50 percent of unregulated
family care providers offer care that is inadequate.
Just as the national school lunch and child health programs
were enacted to help develop strong bodies for low-income
children, recent advances in knowledge about brain development
in very young children argue for improving our country's
ability to build strong minds. With more and more very young
children in child care regularly at an early age--often for
long hours, child care is a crucial linkage for comprehensive,
healthy child development to prepare children to be successful
in school.
Research shows that when children are in quality child care
programs, they develop stronger language, pre-mathematics, and
social skills. Quality child care also promotes school
readiness by enhancing nurturing relationships between children
and their care givers, thus strengthening the child's self-
esteem. The NICHD recently reported that higher caliber child
care for young children was consistently related to high levels
of cognitive and language development. Such programs ensure
that children are safer, healthier, and intellectually
stimulated. Quality programs provide responsive care by
consistent, knowledgeable, and experienced care givers.
I'd like to now turn to our initiative and explain how we
believe it provides the best solution to these issues.
Our Solution--The President's Historic Initiative
The President's initiative responds to these issues by
helping people pay for care in two ways: subsidies for the
lower income working families through the CCDBG and tax credits
for families at a moderate income level. The time is ripe for
using dedicated child care funds to improve both the quality
and availability of care for young children through age 5 and
the affordability of child care for all eligible children.
Support for Working Families
As I've already stated today, the financial impact that
child care costs have on low-income working families is great
and we believe that additional subsidy funds are needed. Our
proposal includes an expansion of the Child Care and
Development Block Grant of $7.5 billion over five years for
increased support for working families. This support, when
combined with funds provided in PRWORA will enable the program
to make child care more affordable for an additional 1.15
million children by 2004, for a total of 2.4 million children
in low-income working families. These 1.15 million children and
their families deserve a chance to have the means to purchase
care without sacrificing life's other basic needs. This funding
will make a significant difference to the hundreds of thousands
of families currently on waiting lists.
In addition to the new CCDBG funds, the President has
proposed a tax initiative that will help bolster both the
affordability and availability of care. The proposal would
increase the Child and Dependent Care Tax Credit for families
earning under $59,000, providing an additional average tax cut
of $345 for these families. The President's budget includes $5
billion over five years to expand this tax credit for 3.3
million working families paying for child care.
Early Learning Fund
Because child care is becoming routine for so many very
young children, we must ensure that the quality and educational
nature of that early care is such that parents are comfortable
with their choice and that the care enables children to be
ready to learn when they arrive at school. To this end, we are
also proposing to expand the CCDBG by $3 billion over five
years to support an Early Learning Fund. The Early Learning
Fund will, for the first time, specifically devote funding to
communities to enhance the quality of care, with a focus on
promoting school readiness for children through age five.
Services under the Fund will be delivered at the community
level to enable communities and parents to take action based on
their assessment of what's needed and what will work best.
Importantly, the proposal would require that a significant part
of the funds be used to serve low-income communities, where the
need for, and the impact of, improvements would be greatest. In
addition, the proposal requires that performance measures be
established to assess progress towards meeting goals
established by the community.
The Early Learning Fund would directly support activities
to improve quality outcomes. For example, provider training,
licensing/accreditation assistance and salary/benefit
enhancements allowed under the Fund would increase the number
of qualified and experienced staff caring for our children.
Standards enforcement and the linking of providers to health
professionals and services would lead to safe, clean and
stimulating child care environments. The Early Learning Fund
would also be used to improve staff ratios and reduce group
size--long recognized as important indicators of quality and
enhancements to a learning environment.
The end result of this investment will be young children
who are healthy, safe and eager to learn, and arrive at school
better prepared for the challenges ahead.
Support for Parents at Home, Employers, and After School Care
In addition to assisting working families, we recognize
that parents should be supported in whatever choice they make
for care of their children. Thus, the President's initiative
also provides tax relief for with children under the age of
one. Under the initiative, parents who choose to stay at home
with their infants would be eligible, for the first time to the
Child and Dependent Care Tax Credit. The President's proposal
will benefit 1.7 million families and will provide an average
tax credit of $178 at a cost of $1.3 billion over five years.
Second, the initiative also includes a new tax credit for
businesses that provide child care services for their employees
by building or expanding child care facilities, operating
existing facilities, training child care workers, or providing
child care resource and referral services. The President's
budget includes approximately $500 million over five years for
these tax credits that will be of much help in expanding the
availability of quality care.
Finally, we also propose to expand after-school
opportunities for over one million children. Experts agree that
school-age children who are left unsupervised at home after
school are far more likely to use alcohol, drugs, and tobacco;
commit crimes; receive poor grades; and, drop out of school
than those who are involved in supervised, constructive
activities. That is why President Clinton is committed to
tripling funding for the 21st Century Community Learning
Centers Program, which supports the creation and expansion of
after-school and summer school programs throughout the country.
The program increases the supply of after-school care in a cost
effective manner, primarily by funding programs that use public
school facilities and existing resources. The program will
target funds toward school districts that have programs in
place to end social promotion. The President's budget includes
$600 million in FY 2000 to help roughly 1.1 million children
each year participate in after-school and summer school
programs.
Conclusion
As we move into the 21st century with our new knowledge
about active brain development in very young children, and as
our economy moves deeper into the technology age, we cannot
ignore child care as both a support to the current workforce
and a crucial component in the development of a school-ready,
work-ready new generation. The Early Learning Fund will support
quality at the community level in a way that ensures
accountability for good performance. Expanding the Child Care
and Development Block Grant by adding to the dedicated child
care funds is a good investment for the future--an investment
which supports the economy, families, and, most importantly,
our children. The additional matching funds will allow States
to help many more working families.
We look forward to working with you to enact legislation to
make quality child care more affordable and available for
working families.
Thank you. I would be happy to answer your questions.
Chairman Johnson of Connecticut. Thank you. It seems to me,
Ms. Golden, that the President's initiative focuses mostly on
low-income working families, is that correct?
Ms. Golden. It focuses on low and moderate working families
primarily. The subsidy portion of the proposal would be most
useful to families, for example, earning in the teens and
$20,000 range, the tax credit for moderate income working
families earning a bit more than that, and with the Early
Learning Fund, communities will be able to use resources to
improve the quality of care, sort of like North Carolina Smart
Start, a focus on low-income communities, but it will make a
difference more broadly.
Chairman Johnson of Connecticut. Is there any impediment to
States using Child Care Block Grant funds now to encourage
after school care programs?
Ms. Golden. The basic impediment right now is the enormous
demand and the scarce resources. Seventeen States including
Connecticut, California, and Texas, have committed every penny
of their TANF dollars and every State has committed 100 percent
of their child care dollars, and still, States have large
waiting lists. Also, parents and employers are still telling us
about the unacceptable choices. So, the biggest impediment
right now is the scarcity of resources.
Chairman Johnson of Connecticut. And what about in the
other States, the majority of the States that haven't spent all
their TANF dollars, do you see them transferring their money to
the Block Grant which is very flexible in terms of supporting
working families?
Ms. Golden. About 28 States in total have transferred
dollars and, as I noted, all the States have spent all their
child care dollars.
Chairman Johnson of Connecticut. But they have not
transferred the maximum dollars that they could have
transferred from TANF to----
Ms. Golden. States are facing enormous tradeoffs and they
can't meet the huge needs of working families for stable child
care at the expense of the success of welfare reform. And I
think there are two particularly big issues here, one is the
issue which I think several people on the panel mentioned,
which, is that when Congress developed the welfare reform
legislation, one of the things that legislation did was enable
States to hold on to dollars for a rainy day, since, the Block
Grant wouldn't go up if the economy changed. And many States
are making the choice that it would be prudent to reserve some
resources. The other issue is I think, that forcing those
States to try to pay for child care for working families in a
situation where if something went bad, you might have to pull
those dollars back and a family would lose the child care.
Chairman Johnson of Connecticut. I certainly appreciate
that argument, but it really avoids the fact that the majority
of the States have not drawn down all their money nor have they
set it aside for a rainy day. So there is a lot of money out
there. And I think we really have to understand not only is the
money out there, but it legally can be moved into the very
vehicles that can reach the working families. Now I'm concerned
as you are, but when I go back into the neighborhoods, I am
finding an odd decrease in the demand for day-care subsidies in
certain areas. People are choosing neighbors. The way we've
structured this grant, you can only get the subsidy if you have
a licensed provider. Well, that's the way it's boiling out in
some States.
Ms. Golden. In Connecticut, really?
Chairman Johnson of Connecticut. And so this is the kind of
thing I want to get at. I hear your generic argument. The facts
simply, as CBO will spell them out, raise a lot of concern
about whether money is the problem or other barriers are
preventing it from getting out to the people who need the day-
care subsidies.
But I do want to ask you specifically that apparently in
your proposal there are three new set asides in the Child Care
Development Block Grant. And we will hear later from the
commissioner of the Virginia Department of Social Services that
this kind of set aside hinders his flexibility and will
actually make it harder for him, not easier for him, to address
the needs that he sees in his State. Do you have a comment on
that?
Ms. Golden. Yes, let me talk a little bit about the
flexibility of our approach which, as you know, builds on the
Child Care and Development Block G, which is I think a proud
bipartisan achievement in part because of its flexibility, as
well as building on the accomplishment in the welfare
legislation. I think, Madam Chair, as you noted in your opening
statement, consolidating multiple funding streams into one was
a very important accomplishment of the welfare reform
legislation. And what the administration is proposing here is
to invest additional dollars into that funding stream, in part
because it offers flexibility to parents as well in the way you
noted, they can use those dollars to subsidize care with a
neighbor or in a center.
Chairman Johnson of Connecticut. But what are the three new
set asides?
Ms. Golden. I would guess you are probably referring to the
Early Learning Fund, which are resources to support quality for
young children. Beyond that, it's possible that it could refer
to the provisions already made by the Congress. But the new
part of the proposal is for the Block Grant and then for the
Early Learning Fund.
[The following questions submitted by Chairman Johnson, and
Hon. Olivia A. Golden responses are as follows:]
When legislation is passed by our Subcommittee and by the
Full Committee, we must have an offset for any spending
increases. Thus, I would like to ask you and your colleagues in
the Administration how would you propose to finance the
Administration's child care proposal?
Effects of Proposed Legislation
The President's budget does not include an appropriations
request for FY2000. AFDC expenditure claims for the period
prior to States transition to TANF have been lower than
anticipated. As a result, unobligated balances remain, which
are sufficient to cover expected States needs for activities
through fiscal year 2000. The expected obligations of
$3,216,800,000 reflects current law of $3,290,800,000 adjusted
by -$74,000,000 assuming Congressional action on proposed
legislation as follows:
Impact of legislative changes:
Current law obligations: $3,290,800,000
State Child Support administrative cost savings
from reducing laboratory match rate: -$9,000,000
Description: Conforming match rate for laboratory costs
associated with paternity establishment with the basic match
rate, (lower obligations in President's budget in FY2000 by $9
million). This change simplifies the child support funding
structure, increases incentives to control costs, and still
provides sufficient funds for States to achieve their goals in
paternity establishment.
Offsetting collections reduction from the
elimination of hold harmless provision: -$65,000,000
Description: Eliminating the provision in statute which
holds States harmless from receiving less than the FY 1995
State share of collections (increases total child support
collections retained by the Federal government). Assuming
Congressional action on this proposal lowers spending authority
from $419,000,000 to $345,000,000.
Reinstatement of mandatory review of orders: $0
Description: Reinstating, beginning in FY2001, the pre-
welfare reform policy of mandatory review and adjustment of
child support orders for families receiving cash assistance.
Under welfare reform, periodic review of child support orders
are no longer required. This change will likely help families
and/or reduce reliance on food stamps, medical, emergency or
other public benefits. In order to eliminate conflicts with
problems related to Year 2000 computer compliance, this
proposal will start in FY2001, and the five year savings will
be approximately $160 million.
Proposed Law Obligations: $3,216,800,000
The budget will seek legislation to require the Department
of Health and Human Services to match data from the National
Directory of New Hires against the Department of Education's
delinquent debtor database. Education would be required to use
this information to improve debt collection from delinquent
borrowers in default on Federal student loans. Education would
fully reimburse HHS costs.
B-15
Effects of Legislation
The President's Budget for FY2000 includes current law
levels adjusted by -$83,440,000 assuming Congressional action
on proposed legislation as follows:
Current law: $17,087,335,000
The budget proposes to freeze the Supplemental
Grants for Population Increases at the FY 1999 level. In FY
2000, seventeen States are eligible for this grant based on
population growth and/or State welfare spending per low-income
person.
Adjustment: -$83,440,000
Under current law, in FY 2000, States may transfer
up to 10 percent of TANF Funds to the SSBG program, and in FY
2001, the transfer cap is reduced to 4.25 percent. The budget
proposes to reduce the transfer cap amount to 4.25 percent
beginning in FY 2000, rather than FY 2001.
Total, appropriation request in President's budget:
$17,003,895,000
Continency Fund for State Welfare Programs--Justification
[Obligations]
----------------------------------------------------------------------------------------------------------------
FY 1999 FY 2000 Increase Or
FY 1998 Actual Appropriations Estimate Decrease
----------------------------------------------------------------------------------------------------------------
$2,102,000...................................................... $0 $11,000,000 +$11,000,000
----------------------------------------------------------------------------------------------------------------
General Statement
Title I of P.L. 104-193, the Personal Responsibility and
Work Opportunity Reconciliation Act of 1996 (PRWORA)
establishes a ``Contingency Fund for State Welfare Programs''
to assist those states which, due to economic hardships, need
additional funds above their basic TANF grant to allow them to
provide assistance to all needy families in the state. For FYs
1997-2001 the total appropriation for this account cannot
exceed $1,960,000,000.
Effects of Legislation
The President's Budget proposes legislation to replace the
current Contingency Fund authority contained in Sec. 403(b) of
PRWORA with a new uncapped fund that could more effectively
respond to State needs.
Current law, unobligated balance, start of year:
$1,957,898,000
Proposed law, unobligated balance rescinded:
-$1,643,898,000
Expected obligations to meet state needs, FY 2000-2004:
$314,000,000
Chairman Johnson of Connecticut. Well, I think it is
important that your proposal is perceived as reducing the
flexibility of States rather than maintaining the flexibility.
And that would be a point of real concern to us.
Let me just inquire, are we voting? Mr. Watkins, how much
time do we have? About 8 minutes. Well, then why don't you
proceed, Mr. Watkins and Mr. Coyne.
Mr. Watkins. I've just got a quick observation, comment. A
while ago, a couple of my colleagues were here and they kind of
missed the point I was trying to make. I represent a rural
area. Most of the people have to travel quite a distance to
work. However, that doesn't mean there's any less need in a
rural area. And I would like to see if I can get a breakdown on
percentage of dollars being utilized in the rural areas
compared to the urban?
One of the things that Chairman Johnson and I have a keen
interest in, are enterprise communities. I would like to look
at the transferring of money to enterprise communities that are
in desperate need because they are a priority as far as the
economic conditions. And I would like to see what we could do
about trying to get some of that TANF money moved into either
child care or maybe moved on into the enterprise communities
also?
Ms. Golden. Let me just note, Mr. Watkins, that both of
those issues I think are related to what Mrs. Johnson and
others have talked about in terms of the need States have for
their TANF funds. I agree with you completely that
transportation is an enormous need. And a number of the States
that are showing uncommitted dollars are telling us that their
State legislatures right now are deliberating over putting
those dollars into transportation for just the reason you cite.
Mr. Watkins. I'm not just saying transportation needs, I'm
talking about there is a time period from going from a small
rural community to an urban area, to work and then coming back,
there's a time period there even of taking care of children in
those rural areas while the parents are off working. It's not
just transportation.
Ms. Golden. No, I think that's absolutely right. At least
the way I think about that in terms of what I hear when I
travel to States is that those rural communities both are going
to need more TANF funds and their child care needs are
particularly acute. So they're caught in this pinch that to
meet child care needs of low-income working families, you would
have to trade them off against these really urgent TANF needs.
And I have the sense when I travel to rural areas that those
needs are very real and very urgent for the reasons that you
describe.
Mr. Watkins. I yield back my time, Madam Chairman.
Chairman Johnson of Connecticut. OK. Mr. Coyne.
Mr. Coyne. Thank you, Madam Chairman. I wonder if you would
describe how the Administration's proposal improves the quality
of child care?
Ms. Golden. That is a really important issue and I really
appreciate your raising it since, as my written testimony lays
out in more detail, we know that quality matters enormously,
especially for young children in terms of their ability to be
healthy and safe and to reach school ready to learn.
The administration's proposal commits $3 billion over 5
years to an Early Learning Fund, which would be resources that
would go to States and they would pass them on to communities.
It would be built on some of the kinds of approaches that some
of the States have been able to do in a modest experimental
way. Those dollars could go into proven approaches to making
sure that care for very young children is healthy and safe and
good for them. For example, a State might work with people who
care for children in their homes to make sure they have books
and the children aren't watching TV all day, to make sure they
have training, to make sure they have safe equipment.
They might put dollars into training providers. Florida has
a wonderful study showing that when you put the commitment into
training providers and having better ratios, you can see the
improvements in children's cognitive abilities and their
readiness for school. So that's the kind of thing that those
dollars would do.
Mr. Coyne. Is there any part of the proposal that addresses
itself to safer child care?
Ms. Golden. Well, the Early Learning Fund does in part
because among the ways that communities could use the resources
would be for health and safety. Just one example that comes to
mind is that sometimes people who care for children in their
homes don't have safe highchairs and other kinds of basic
equipment and you need to fix those problems.
There are other ways of focusing on safety as well. The
Administration proposed, and I believe it passed last year,
legislation that will enable States to go to the FBI to do
better checks of criminal records of providers. So that's an
available tool for States as well. But I think the most
important thing is investing in the training, in the quality of
providers, and in the equipment and books, and so forth.
Mr. Coyne. Thank you.
Ms. Golden. Thank you.
Mr. McCrery [presiding]. Secretary Golden, I've looked at
the Administration proposal. I've added up the numbers. Is it
about $22 billion or so that the Administration proposes to
spend over the next 5 years?
Ms. Golden. Over 5 years.
Mr. McCrery. And could you share with us the details of how
you pay for that?
Ms. Golden. The whole administration budget is paid for so
this is in the context of a balanced budget. We didn't identify
specific offsets that paid for specific pieces of the budget.
Mr. McCrery. Well, in your whole budget, do you utilize
some of the payroll tax receipts for Social Security over the
next year to pay for this and other new spending items?
Ms. Golden. I don't think I can be specific about the
entire array of saving steps that are in the Administration's
budget proposal, but it's a range of saving steps of all kinds,
so that the budget is paid for without entering into the
surplus.
Mr. McCrery. Are there some tax increases that would help
pay for these provisions?
Ms. Golden. Well, I do have someone with me from Treasury
if you need specific discussion of the tax provisions in the
proposal.
Mr. McCrery. I think you were here when I questioned our
two colleagues earlier, and I have not yet heard anything from
you in your testimony or responses to questions that convinces
me that in light of the $24 billion that CBO estimates States
will have in excess for their welfare needs over the next 5
years that we need to put on top of that any more money. Why
shouldn't we expect the States to utilize that money for child
care and other needs of getting their low-income people the
tools they need to stay in the workplace?
Ms. Golden. Let me say a little bit both about that number
and what our concerns about the number are, but also why I
don't think it makes sense to ask States to meet the enormous
needs of working families by trading off dollars that are
needed for welfare families.
Mr. McCrery. What do you mean by--if they're not using the
money now for welfare families, what's the tradeoff?
Ms. Golden. I think the tradeoffs are several. First of
all, in many of those cases, States are reserving dollars for
rainy day funds and those show up as unobligated dollars.
States have committed about 90 percent of the dollars that
they've had so far, about 10 percent total across the country
are being reserved, and 17 States have committed every penny of
their dollars.
Mr. McCrery. But they have committed those dollars, but do
we know how much of those dollars that they have committed to
child care and other needs? There's been no testimony here
today as to the percentage of their funds that those States who
have obligated all of their funds, not spent them, just
obligated them, have set aside for child care, for example.
Ms. Golden. States have committed those dollars for cash
benefits, for employment and training, for intensive services
for families, for child care and for transportation. There's a
wide array of commitments that they're making. Some of the
money that they haven't yet committed, is for rainy day funds.
Because that shows up as not yet committed; you can't tell it
from the other unobligated. In addition, I expect increased
commitments over the coming months and years because as we get
closer to the 5-year time limit, those families now on the
caseload are the ones with more intensive needs. So States
around the country are looking at substance abuse treatment
needs, and at transportation.
Mr. McCrery. Excuse me?
Ms. Golden. Sure?
Mr. McCrery. I've got to go vote and if I could, let me
just recess very quickly. And one of us will be back in just a
moment. And if I get back in time, I would love to pursue this
questioning a little bit more. Thank you.
Ms. Golden. Thanks.
Mr. McCrery. The Committee stands in recess.
[Recess.]
Chairman Johnson of Connecticut [presiding]. There is
another vote, but there are 15 minutes in between the votes. So
Jim and I came back and I'm going to recognize Mr. McCrery to
continue his questioning?
Mr. McCrery. Thank you, Madam Chair. Secretary Golden, we
were talking about the costs of your proposals over the next 5
years and how they're paid for and didn't get too many details
on how they're paid for. And then I expressed concern that
we're throwing new dollars at a perceived problem when there
are existing dollars that could be used to solve those problems
if and to the extent that they do exist. The States have had on
average a 43-percent reduction in their welfare rolls since
1994. As you know, the funding formula for 5 years for each
State was based on the most favorable formula, giving three
options to the States. So just thinking about it in common-
sense terms, doesn't it seem to you that the States have a lot
of money, a lot of extra money that they could use for
innovative approaches to transportation, to get people to work
and back, for child care, a number of things that we perhaps
didn't traditionally do in trying to get people from welfare to
work and keep them at work? Just intuitively, doesn't it just
make sense that the States have a lot of money there to use for
these purposes?
Ms. Golden. I believe that if States commit all the TANF
money they've got, which 17 of them have, and a whole set of
others are in the process of working on this legislative
session, then they have enough dollars to make welfare reform
succeed. What they don't have is the dollars to meet the needs
of the working poor families on child care.
Mr. McCrery. So that's part of the problem. That's part of
the problem, Madam Secretary, part of the problem. Welfare
reform was intended to look at not just those currently on
welfare, but those leaving welfare and going to work, those who
were likely to leave work and go to welfare. It was a way to
get the States the means by which they could use innovative
approaches to solving the welfare problem in toto, not just the
current rolls but certainly a 43-percent reduction in the rolls
indicates that they got a lot of money left over to use for
low-income families that were not on welfare at the time and we
hope will not return to welfare, if they were ever on welfare.
I just challenge you to show me that there's insufficient
funds coming from the Federal Government right now and over the
next 5 years to address this problem, if there is a problem.
And I've heard no data yet today except the anecdotal evidence
from New York about the waiting list to say that there is a
problem. We're going to hear from the Urban Institute later and
they did a study back in 1990, which was a long time ago, and I
hope maybe they've got some updated information, but that study
indicated that 96 percent of those surveyed, parents that were
surveyed across the Nation, were satisfied with their day-care.
I hope in this hearing we can finally get some hard data to
prove that there is a problem, what the extent of the problem
is, how much it costs, and why there's this necessity for this
huge infusion of new money when we thought, when we passed
welfare reform and agreed to give the Governors such a generous
funding formulas, that these things were going to be solved?
Ms. Golden. My written testimony is full of that data. Let
me summarize as much as I can of it really quickly now. We're
serving about 1 in 10 of the eligible families under the Child
Care and Development Block G. States all over the country have
enormous waiting lists. We've talked about 200,000 in
California.
Mr. McCrery. But that doesn't mean they don't have day-
care.
Ms. Golden. Yes, it means that sometimes parents have had
to leave a job because they don't have child care. Sometimes
they've left a child alone. Sometimes they've taken an older
child out of school to care for an infant.
The CBO dollars we think are not the right ones to use to
look at available dollars. They're about money actually spent,
not about dollars committed. So the commitments that States
have made in order to do TANF, they can't pull away in order to
meet child care needs. In addition, we expect much greater
State spending than CBO has estimated because we think that
States want welfare reform to succeed. As they get closer to
the 5-year time limit, they're going to be making those
investments in transportation, in substance abuse, in
employment and training.
The aim of welfare reform was to meet the needs of welfare
families. There's an enormous separate continuing need that
working families have for child care which enables them to keep
their jobs. We can't put States in the position of having to
undercut the success of welfare reform or undercut prudent
rainy day funds, pull dollars away to meet the child care needs
of working families and then find themselves having to pull
back those dollars if in a few months they need them over on
the welfare side. There's a lot of other State-by-State data,
again, not only on waiting lists, but on the choices States
have had to make about what income levels to support. In many
cases, a family making as little as $20,000 or $22,000 a year,
facing costs of $4,000 or $6,000 or $8,000 a year for child
care, doesn't have any access to support those costs.
Mr. McCrery. Well, Madam Secretary, I'm anxious to look at
all the data that's in your testimony. But the waiting lists
are a very poor indicator of the need. I have two children. We
were on a couple of waiting lists because we preferred another
provider. But that doesn't mean we were without day-care. We
had our children in a day-care center. We were satisfied but we
thought the other one was closer to home and it was more
convenient so we would rather be in that one. Waiting lists are
a very poor indicator of the need that is out there. I don't
think you can translate----
Ms. Golden. Based on what we hear from the States, the
waiting lists for State subsidies tend, if anything, to often
understate need because families get scared or just believe
it's impossible. They hear 2 years. I heard that the last time
I was in Georgia.
Mr. McCrery. So you are defending that those waiting list
numbers are not only illustrative of the problem but they
understate the problem?
Ms. Golden. Yes, we're only serving a million and a quarter
of 10 million children who are eligible. So we have enormous
needs.
Mr. McCrery. But then you conclude from that that all those
children are not getting any day-care?
Ms. Golden. No, some of them are in care that's risky to
their safety or health. Sometimes they're in settings where
parents are choosing to tradeoff food or rent or health care in
order to afford child care. There's a lot of different choices
that low-income working parents have to make and sometimes it's
without child care, sometimes it's child care that just makes
them nervous because it's not good enough, and sometimes it's
trading off other expenses. Sometimes it's having to leave a
job. I hear a lot from employers, as I've been traveling around
the country, who say to me that in today's job market, child
care and stable child care is critical because their entry
level employees often find themselves forced to leave.
Mr. McCrery. Thank you. Thank you, Madam Chair.
Chairman Johnson of Connecticut. Thank you. Secretary
Golden, if other members have questions, I will encourage them
to submit them in writing so that you don't have to wait
through yet another vote. Thank you very much for being with
us.
Ms. Golden. Thank you. And thank you for the opportunity.
Chairman Johnson of Connecticut. I have one more question.
Ms. Golden. Oh, OK.
Chairman Johnson of Connecticut. I think that the kind of
discussion that you were having with Mr. McCrery is a very
important one. It is very hard to see that the statistics
indicate that money is the problem right now. I hear what
you're saying. I don't think that your data yet really deals
with the rest of the data. And my own anecdotal evidence
indicates to me that there are some barriers down there that
we're not dealing with. The one you mentioned about State
eligibility requirements is a serious one. I don't know what
the history of those things is.
I would have to say two things. First of all, I do have
concerns with the President's proposal getting into what are
clearly educational issues. As a State Senator, I worked
through many a controversy at the State level about who
regulates, when does day-care become education? And, generally,
the Education Committee has done the after school care and the
preschool education, including Head Start. So I think
jurisdictionally that's something of a problem for us. But I
just wondered whether in your budget, in the whole HHS budget,
are you aware of any program that's being funded at a lower
level next year than this year?
Ms. Golden. In the President's budget proposal, yes, I
think there are a variety of proposals, a variety of programs.
Chairman Johnson of Connecticut. In HHS?
Ms. Golden. In HHS.
Chairman Johnson of Connecticut. I would be interested in
your getting back to me about whether or not they offset the
spending in this particular program?
Ms. Golden. In other words, the approach that the
Administration took was to offset within the entire budget
rather than necessarily within each department.
Chairman Johnson of Connecticut. I want to look more
narrowly because--
Ms. Golden. OK.
Chairman Johnson of Connecticut [continuing]. Generically,
the way the President's new spending is offset is with $80
billion in new taxes and new fees. And it would be very hard
for me to go home at a time of surplus and justify $80 billion
in new taxes and new fees. I think it's actually $82 billion.
So I'm much more interested in--I know there always are lots
and lots of micro-changes in a budget, and I'm very interested
in whether or not he did recommend some changes in the Health
and Human Services budget that would fund an increase in day-
care spending. So if you would respond to that, have one of
your experts look at that?
Ms. Golden. Sure.
Chairman Johnson of Connecticut. I would appreciate that.
Ms. Golden. I would note two things I think overall in
response to those and then I will get you the specific
information. I really believe that the reason that the
President focused so intensely on child care as a proposal in
the context of a balanced budget even though it was hard to do
is really the same reasons that I think you've highlighted in
your opening statement and throughout your career, which is
that child care is so central because it matters both to the
economy, to work and to children's well-being. And so I really
believe that that's why it was so central.
Chairman Johnson of Connecticut. Well, I certainly do
appreciate that. And there are many, many things that HHS does
that are not nearly so central. There are some things that
every government agency does that are downright unsuccessful.
And so I'm just interested in as they went through, they
weren't going through with the intent of funding this, I just
want to see if you can give me some help on what cuts they did
choose to make in that budget because the way our process
works, you have to do these things within a budget envelope.
And if we were to put more money into day-care, we're going to
have to get it from somewhere, and I can tell you there are not
a lot of members that are interested on either side of the
aisle in going back and espousing $80 billion in tax increases.
And you may remember, actually most of the people in this
room, I don't know whether they know or not, but staying within
the budget agreement which the President supports would mean
freezing spending and cutting $15 billion in addition. So the
budget caps are extremely difficult to adhere to and not having
been one who really frankly believes we should adhere to them,
since both sides have decided to do that, including the
Administration, I would have to say that I don't see any
support on either side of the aisle for $80 billion in new
taxes.
Ms. Golden. We'll do that.
Chairman Johnson of Connecticut. So I'm more interested in
the practicality of what changes in spending did they find
within the HHS budget because that may give me some leeway?
Ms. Golden. Thank you.
Chairman Johnson of Connecticut. Thank you.
After we return from this vote, we'll continue with the
next panel so that you don't need to hang around. This is a 5-
minute vote. So I would assume that we will reconvene in 8 to
10 minutes.
Ms. Golden. Thank you.
[Recess.]
Chairman Johnson of Connecticut. Mr. Falk and Mr. Cullinan
will join us. Thank you, gentlemen. Sorry there have been so
many delays, but here we are and we should have no more delays
this afternoon.
Mr. Falk, I would like you to go first. Mr. Falk is a
specialist on Social Legislation, Domestic Policy Division of
the Congressional Research Service. Mr. Falk.
STATEMENT OF GENE FALK, SPECIALIST IN SOCIAL LEGISLATION,
DOMESTIC SOCIAL POLICY DIVISION, CONGRESSIONAL RESEARCH
SERVICE, LIBRARY OF CONGRESS
Mr. Falk. Thank you, Madam Chairman, Members of the
Subcommittee. It is an honor to appear here this afternoon to
discuss the finances of the Child Care and Development Fund,
the Temporary Assistance for Needy Families, or TANF program
and the Welfare to Work program.
Though the Child Care and Development Fund specifically
provides Federal funds for child care, States may also fund
child care services using TANF and, to a limited degree,
Welfare to Work funds. States also have the option to transfer
up to 30 percent of the TANF block grant to the Child Care and
Development Fund.
TANF and the Child Care and Development Fund are new
programs, therefore, the available information that we have
shows only early trends. To quickly summarize two points that
are shown on the charts and tables that are contained in your
handout, Chart 1 shows spending for the Child Care and
Development Fund and TANF and compares them to their
predecessor programs. Child Care and Development Fund spending
has increased; most notably a 35-percent increase in outlays
between fiscal year 1997 and fiscal year 1998. In contrast,
expenditures in the TANF program have declined. Table 1 on the
next page shows that States have used only a small part of
their authority to fund child care from TANF. Direct Federal
TANF expenditures were 1\1/2\ percent of the fiscal year 1998
block grant. Transfers to the Child Care and Development Fund
were about 4 percent of the block grant.
I will focus the remainder of my discussion on the funds
that remain in the TANF program and the Child Care and
Development Fund programs that are unspent. Both programs make
available fixed grants to States. However, a grant is not a
transfer of cash to the States. What a grant does is permit a
State to draw cash from the Federal Treasury when it is needed
to pay the State for actual expenditures in its program.
Essentially, a grant award is like a line of credit to the
State. It establishes an amount that the State may draw from
the Federal Government, but actual cash is drawn only when
needed.
Table 2 summarizes TANF, Child Care and Development Fund
and Welfare to Work program grants and expenditures. All three
programs had unspent funds as of September 30, 1998. Unexpended
TANF funds totaled over $6 billion. Almost all Welfare to Work
funds remained unspent. The child care program also had some
unexpended funds. However, it should be noted that having
unspent grants at the end of a fiscal year is not, in itself,
unusual. Each program has a different deadline for the
expenditure of funds. The Child Care and Development Fund has
different deadlines for the expenditure of discretionary,
mandatory and matching grants. The Welfare to Work program
allows 3 years for the expenditure for funds, and TANF has no
deadline for the expenditure of grants.
States have obligated some of the grants that have yet to
be spent. Generally, a State obligation is a commitment to
spend. The definition of obligation varies from program to
program. Further, what constitutes an obligation may vary from
State to State. States have obligated all of their fiscal year
1998 mandatory Child Care and Development Funds. Additionally,
States have obligated more than one-half of all unexpended TANF
funds. Thus, the amount of TANF grants that are unexpended and
unobligated total $3 billion.
In conclusion, there are three points I would like to make
about unspent TANF funds. First, in passing TANF, Congress gave
the States the flexibility to reserve TANF grants and accrue
balances without a fiscal year limit. Congress also permitted
States to use TANF directly for child care, or to transfer
funds to the Child Care and Development Fund or to the Social
Services block grant. States were thus given choices and faced
tradeoffs between making current TANF expenditures, hedging
against unexpected increases in TANF expenditures, or using
TANF funds for other purposes such as child care or transfers
to the Social Services block grant.
Second, there is a great deal of variation in the amount of
TANF funds remaining unspent by States. Some States such as
Connecticut, Illinois and Maine have spent all, or nearly all,
of their TANF funds. Other States have considerable balances of
unspent funds. This variation is shown in Table 3.
Third, $6 billion or $3 billion is a lot of money, but TANF
is also a relatively large Federal program. In fiscal year
1998, TANF Federal expenditures were made at a rate of just
under $1 billion a month. Therefore, as shown on Table 4, the
total unexpended balance represents about one-half year's of
Federal expenditures at the fiscal year 1998 rate. The
obligated balance and the unobligated balance each represent
about one-quarter year's of expenditures. Moreover, if one
examines a worse-case scenario, where TANF cash benefits
returned to their historic peak levels of fiscal year 1994, the
unobligated balance represents only 1\1/2\ months of cash
benefits.
Thank you for the opportunity to appear before the
Subcommittee and I would be happy to answer any of your
questions.
[The prepared statement follows:]
Statement of Gene Falk, Specialist in Social Legislation, Domestic
Social Policy Division, Congressional Research Service, Library of
Congress
It is an honor to be asked to appear before this
subcommittee to discuss the finances of the block grant program
of Temporary Assistance for Needy Families, (TANF), the Child
Care and Development Fund (CCDF), and the Welfare-to-Work grant
program. Though the CCDF specifically provides federal funds
for child care, states and localities may also fund child care
services directly from the TANF and welfare-to-work programs.
Additionally, states have the option to transfer up to 30% of
the TANF block grant to the CCDF.
TANF and CCDF are relatively new programs, created in the
1996 welfare reform law, and the information we have is based
on only their first 2 years. The Welfare-to-Work grant program
was added to TANF in the Balanced Budget Act of 1997.
Therefore, the available information shows early trends in
these programs.
CCDF and TANF Spending Trends
Chart 1 shows the trends in federal spending for CCDF and
TANF, and compares them with spending in their predecessor
programs in FY1995 and FY1996. The 1996 welfare reform law
significantly increased federal funding for the programs
consolidated into the CCDF. Federal outlays for CCDF did not
rise significantly in FY1997 from the FY1996 level. However, in
FY1998, CCDF outlays did rise, a full 35% from FY1997 levels,
from $2.3 billion to $3.1 billion.
The 1996 law fixed TANF's basic block grant at $16.5
billion, an amount based on historically high expenditures made
under Aid to Families with Dependent Children (AFDC) between
FY1992 and FY1995. Since the spring of 1994, the welfare
caseload has declined by 43%. Generally, expenditures have
declined with the fall in the caseload. FY1998 federal TANF
expenditures totaled $11 billion--down from $16 billion in its
predecessor AFDC and related programs (excluding child care) in
FY1995.
Fiscal year 1998 was the first year of the Welfare-to-Work
program, added to TANF by the Balanced Budget Act of 1997.
Total outlays in the welfare-to-work programs were $16 million
in FY1998.
Use of TANF for Child Care
TANF allows states to use its block grant funds for child
care in two primary ways:
Up to 30% of the TANF block grant may be
transferred to the CCDF. This amount is reduced by any amounts
transferred to the Social Services Block Grant (SSBG). Up to
10% of TANF may be transferred to the SSBG, a percentage that
is scheduled to be reduced to 4.25% in FY2001.
Child care is an allowable activity that may be
funded directly by the TANF block grant.
Table 1 shows how much of the TANF block grant was used for
child care in FY1998. States used only 1.5% of the FY1998 TANF
block grant to directly fund child care expenditures. States
also transferred only 4% of the FY1998 TANF block grant to the
CCDF.
There are two additional ways that TANF can help finance
child care. First, some states have continued a practice from
the AFDC program that allows recipients with earnings to deduct
out-of-pocket child care expenses from their earned income when
computing benefits. This often increases the cash benefit paid
to the family. Second, proposed regulations allow states to
count toward their TANF maintenance of effort requirement
state-funded child care expenditures made in excess of those
required to receive the maximum amount of CCDF matching funds.
In FY1998, states reported at least $140 million of such
``excess'' child care expenditures. Since states must make
progress toward meeting their TANF maintenance of effort
requirement to draw down block grant funds, the ability to
count these ``excess'' child care expenditures can help states
access their TANF block grant funds.
Welfare-to-Work and Child Care
Funds from the welfare-to-work grant program may also be
used for child care, but in limited circumstances. Child care
may be funded as a job retention and support service only once
a participant has been placed in a job readiness or employment
activity and only if child care is not otherwise available. The
welfare-to-work program is also targeted to long-term TANF
recipients with additional barriers to employment. Moreover, it
should be noted that most welfare-to-work funds are not
controlled by the states, but by localities. The Department of
Labor is not collecting data on child care expenditures
separately from data on overall expenditures for job retention
and post-employment services.
Grants and Spending
TANF, CCDF, and the welfare-to-work grant program make
quarterly grants to the states. However, a grant is not a
transfer of cash to the states. A grant permits a state to draw
cash from the federal treasury when it is needed to pay the
state for actual expenditures in its program. Essentially, a
grant award is like a line of credit to the state. It
establishes an amount that the state may draw from the federal
government, but actual cash is drawn only when needed.
Table 2 summarizes TANF, CCDF, and welfare-to-work program
grants and expenditures. TANF and CCDF grants represent the sum
of FY1997 and FY1998 grants; the welfare-to-work program made
grants beginning in FY1998.
As of September 30, 1998, all three programs had some
unexpended funds. Almost all welfare-to-work funds were
unspent. However, it should be noted that having unspent grants
at the end of a fiscal year is not unusual. In federal grants-
to-state programs, the time when grants are converted into
actual spending is determined by both federal deadlines for
states to obligate and expend grant funds, and by state
decisions about obligating and expending funds. Each of the
three programs has different rules setting deadlines for
obligating and expending grant funds. The CCDF has different
deadlines for the obligation and expenditure of discretionary,
mandatory, and matching funds. The welfare-to-work program
allows 3 years for the expenditure of mandatory grant funds.
There is no deadline for the expenditure of TANF funds.
Additionally, TANF and the welfare-to-work grant program
require states to expend some of their own funds in order to
draw cash from federal grants. Though TANF is a block grant,
states must make progress toward meeting the program's
maintenance of effort (MOE) requirement to draw federal funds.
The welfare-to-work grant program is a matching grant program.
CCDF also requires states to expend their own funds in order to
draw matching grants. In FY1997 and FY1998, all states
participated in the CCDF matching grant program.
States have ``obligated'' some of the grants that have yet
to be spent. Generally, a state obligation is a commitment to
spend. The definition of obligation varies from program to
program. The types of commitments that constitute an obligation
may also vary from state to state. According to the Department
of Health and Human Services (HHS), states obligated all of
their FY1998 mandatory CCDF funds. Additionally, states have
obligated more than half of all unexpended TANF funds.
TANF Balances
The presence of billions of dollars in ``unused'' TANF
funds has aroused interest. However, the TANF program is new,
so there is little history available to assess the magnitude of
the balances. There also are no norms to help indicate whether
the TANF balances are abnormally large.
The obligated balance will finance future expenditures that
are anticipated and reflects commitments already made by the
states. Since federal law imposes no time deadline for states
to draw cash from their TANF grants, obligations can represent
long-term contracts or commitments that will provide benefits
and services to TANF families for several years into the
future.
In TANF, about $3 billion remained at the end of FY1998
that was both unexpended and unobligated. These are funds
states have available from FY1997 and FY1998 grants for new
commitments, new TANF spending, or additional transfers to CCDF
or SSBG. These are also the balances available to help finance
future unanticipated expenditures, such as increased benefits
paid if the caseload rises in response to a recession. There
are three points I would like to make about the TANF balances:
First, in passing TANF, Congress anticipated that
TANF grants might be insufficient in a given fiscal year to
meet program costs and provided several sources of federal
funding to meet extra costs. One such source is the flexibility
provided to ``reserve'' TANF grants from previous fiscal years
and accrue balances without fiscal year limit, by setting no
deadline on the obligation and expenditure of TANF grants. (The
other sources are the TANF loan and contingency funds.) Also in
passing TANF, Congress permitted states to use TANF directly
for child care or to transfer funds to CCDF or the SSBG. States
were thus given choices, and implicitly asked to make tradeoffs
between making current TANF expenditures, planning for future
TANF expenditures, hedging against unexpected increases in
future TANF expenditures, or using TANF funds for other
purposes, such as child care.
Second, there is a great deal of variation in the
amount of TANF funds remaining unexpended by state. Some
states, such as Connecticut, Illinois, and Maine, have spent
all or nearly all of their TANF funds and have no unspent
balances. Other states have considerable balances of unspent
funds. Table 3 shows the state-by-state variation in TANF
balances.
Third, the TANF program is a relatively large
program. Federally-financed TANF expenditures were made at a
rate of just under $1 billion per month in FY1998. Therefore,
it might be illustrative to compare these balances with
spending in the program.
Table 4 addresses the question: How many months of
expenditures could these balances finance? This is done by
dividing the TANF balance (as of September 30, 1998) by average
monthly expenditures. The table looks at different categories
of expenditures and expenditures at different rates to put the
$6.3 billion in perspective.
The table first shows the unexpended balances divided by
average monthly federal expenditures during FY1998. The total
unexpended balance represents about one-half year (6.7 months)
of federally-financed expenditures. The obligated balance and
unobligated balances each represent approximately one-quarter
year of expenditures.
The unobligated balance can be used to help defray
unexpected increases in expenditures that might exceed both
federal and state funding for a given fiscal year. An
unexpected caseload increase (for example, during a recession)
would likely directly increase expenditures on cash benefits.
Therefore, the table relates the unobligated balance to total
cash benefit payments. Two measures are shown to provide a
range of how long the unobligated balance would last in the
event of an unexpected increase in expenditures. The
unobligated balance is related to cash benefits paid at the
FY1998 rate, showing that 2\1/2\ months of cash benefits at the
FY1998 expenditure rate could be paid using the unobligated
balance. An additional measure showing the balance related to
cash benefits paid at a ``recessionary rate'' of their
historical peak (FY1994) is also shown. The unobligated balance
represents about 1\1/2\ months of cash assistance paid at the
historical peak rate of benefit payments.
A Congressional Research Service report Welfare Reform:
Unspent TANF Funds (Report Number RL30082) goes into greater
detail about TANF balances. Thank you for the opportunity to
appear before this committee. I would be happy to answer your
questions.
[GRAPHIC] [TIFF OMITTED] T5629.004
Table 1.--Use of Federal TANF Grants: Expenditures for Child Care and
Transfers: Fiscal Year 1998
[$ in millions, through September 30, 1998]
------------------------------------------------------------------------
Percent of
Dollars total TANF
grants
------------------------------------------------------------------------
Total Grants.................................. $16,562 100.0%
TANF federally-funded child care 247 1.5%
expenditures...............................
Transfers:
Child Care Delvelopment Fund................ 652 3.9%
Social Services Block Grant................. 1,079 6.5%
------------------------------------------------------------------------
Source: Table prepared by the Congressional Research Service (CRS) based
on data from the Department of Health and Human Services (HHS).
Table 2.--Welfare Reform Block Grant Programs: Cumulative Grants, Expenditures, and Unexpended Balances through
September 30, 1998
[$ in millions]
----------------------------------------------------------------------------------------------------------------
Grants Transfers Expenditures Unexpended
----------------------------------------------------------------------------------------------------------------
CCDF (combined FY1997 & FY1998).................................. 4,938 - 4,131 807
TANF (combined FY1997 & FY1998).................................. 29,942 2,392 21,200 6,276
Welfare-to-Work (FY1998)......................................... 1,240 - 16 1,224
----------------------------------------------------------------------------------------------------------------
Source: Table prepared by the Congressional Research Service (CRS) based on data from HHS and Federal budget
documents.
Table 3.--TANF Obligated and Unobligated Balances by State: September
30, 1998
[$ in millions]
------------------------------------------------------------------------
Unexpended balance
--------------------------------------
State Obligated Unobligated
Total balance balance
------------------------------------------------------------------------
Alabama.......................... 37.4 - 37.4
Alaska........................... 16.7 16.7 -
Arizona.......................... 79.6 31.7 47.9
Arkansas......................... 29.3 29.3 -
California....................... 1,472.9 1,472.9 -
Colorado......................... 81.2 - 81.2
Connecticut...................... - - -
Delaware......................... 1.0 1.0 -
District of Columbia............. 42.6 7.5 35.1
Florida.......................... 395.8 142.9 252.9
Georgia.......................... 68.8 17.1 51.7
Hawaii........................... 8.1 1.1 6.9
Idaho............................ 31.1 - 31.1
Illinois......................... - - -
Indiana.......................... 195.3 195.3 -
Iowa............................. 35.3 6.4 28.9
Kansas........................... 21.6 - 21.6
Kentucky......................... 44.9 - 44.9
Louisiana........................ 129.8 - 129.8
Maine............................ - - -
Maryland......................... 146.9 - 146.9
Massachusetts.................... 28.3 28.3 -
Michigan......................... 103.4 14.1 89.3
Minnesota........................ 136.9 - 136.9
Mississippi...................... 33.2 33.2 -
Missouri......................... 63.2 63.2 -
Montana.......................... 30.0 30.0 -
Nebraska......................... 36.7 - 36.7
Nevada........................... 14.8 8.0 6.8
New Hampshire.................... 6.0 - 6.0
New Jersey....................... 223.1 - 223.1
New Mexico....................... 60.1 4.9 55.2
New York......................... 689.1 - 689.1
North Carolina................... 93.1 - 93.1
North Dakota..................... 8.1 5.8 2.3
Ohio............................. 554.9 544.9 -
Oklahoma......................... 110.2 - 110.2
Oregon........................... 51.7 51.7 -
Pennsylvania..................... 282.9 37.9 245.0
Rhode Island..................... 15.7 - 15.7
South Carolina................... 34.7 - 34.7
South Dakota..................... 11.3 3.4 8.0
Tennessee........................ 91.5 14.5 77.0
Texas............................ 211.4 211.4 -
Utah............................. 13.6 - 13.6
Vermont.......................... 11.1 - 11.1
Virginia......................... 32.3 32.3 -
Washington....................... 142.4 0.9 141.5
West Virginia.................... 80.7 - 80.7
Wisconsin........................ 240.5 191.5 49.0
Wyoming.......................... 37.0 37.0 -
Total.......................... 6,276.4 3,235.2 3,041.3
------------------------------------------------------------------------
Source: Table prepared by the Congressional Research Service (CRS) based
on data from HHS.
Table 4.--TANF Balances Related to Expenditures: FY1998 Expenditures and
Balances Through September 30, 1998
[$ in millions]
------------------------------------------------------------------------
Potential
Average months of
Ratio Balance monthly expenditures
expenditures from the
balance
------------------------------------------------------------------------
Total balance to federally- $6,276 $941 6.7
financed expenditures............
Obligated balance to federally- 3,235 941 3.4
financed expenditures............
Unobligated balanced to federally- 3,041 941 3.2
financed expenditures............
Unobligated balance to total 3,041 1,218 2.5
(federal and state) cash
benefits, FY1998.................
Unobligated balance to total 3,041 1,892 1.6
(federal and state) cash
benefits, peak year, FY1994......
------------------------------------------------------------------------
Source: Table prepared by the Congressional Research Service (CRS) based
on data from (HHS).
Chairman Johnson of Connecticut. Thank you very much. Mr.
Cullinan.
STATEMENT OF PAUL CULLINAN, UNIT CHIEF, HUMAN RESOURCES COST
ESTIMATES UNIT, BUDGET ANALYSIS DIVISION, CONGRESSIONAL BUDGET
OFFICE
Mr. Cullinan. Thank you, Madam Chair. Madam Chair and
Members of the Subcommittee, given the interest of time here, I
will skip over most of my written statement and ask that it be
submitted in full in the record.
Chairman Johnson of Connecticut. Absolutely. I should have
mentioned that you are the head of the Human Resources Cost
Estimate Unit of the Congressional Budget Office.
Mr. Cullinan. Thank you. As has been stated before, the
block grants of the states have been largely above what state
needs have been in recent years, with substantial declines in
caseloads resulting in the buildup of unspent balances. The
amount of those balances varies widely among states.
The Congressional Budget Office (CBO) basically projects
that spending for the Temporary Assistance for Needy Families
(TANF) program over the next few years will be flat, at about
$12.5 billion, and rise somewhat slowly thereafter, reaching
$14.2 billion in 2002, and $19.4 billion in 2009. TANF
spending, in our projections, does not exceed the level of the
block grant until 2006. According to the Administration's
numbers, that year would be 2003. So they are projecting a
spending rate that is somewhat faster than CBO is projecting.
As a result, surpluses or unspent balances will accumulate
further over the next several years, peaking in 2005, according
to our forecasts. Of course, any projection of spending in
these and other federal programs are subject to considerable
uncertainty. There was a very rapid and unexpected rise in
spending for means-tested programs in the early 1990s and a
very rapid decrease from 1994 to 1998. The factors that caused
the rapid rise and decline in spending are not yet fully
understood. So there is a lot of uncertainty involved in the
projections.
If caseloads begin to rise as a result of economic factors
or other conditions, much of the spending will, in essence, be
federal spending because many of the states have surpluses that
they will use before they start digging further into their own
pockets. So we could see very substantial fluctuations in
federal spending if economic conditions or attitudes toward the
programs changed.
Child care spending was a major focus in 1995 and 1996 as
the Personal Responsibility and Work Opportunity Act (PRWORA)
was being considered. A total of $4.5 billion was basically
added to the program over the 1997-2002 period. The spending of
those funds started off a little more slowly than we had
expected but went very quickly once the second-year moneys were
available. States had basically spent their entire amount for
that year. CBO therefore projects that the moneys specifically
dedicated for child care will be expended over the next few
years. There is no significant surplus in that source of funds.
In addition to the mandatory moneys that are funded under
TANF and the child care entitlement to states, about a billion
dollars in discretionary funds is being provided annually for
the Child Care and Development Block Grant.
CBO projects that under current law, states will continue
to accumulate sizable surpluses under the TANF program,
overall. Meanwhile, the states will exhaust federal funds
provided exclusively for child care services. Although States
have great latitude in directing TANF surpluses toward child
care, so far they are not doing so on a wide scale. Whether
states' priorities concerning TANF funds will change now that
the federal child care funding has been fully tapped is not
known.
[The prepared statement follows:]
Statement of Paul Cullinan, Unit Chief, Human Resources Cost Estimates
Unit, Budget Analysis Division, Congressional Budget Office
Madame Chairman and Members of the Subcommittee, thank you
for the opportunity to discuss the Congressional Budget
Office's (CBO's) spending projections for the Temporary
Assistance for Needy Families (TANF) program and for the
federal child care programs. The projections, which have been
revised slightly since the release of CBO's budget outlook in
January, will be published in a forthcoming report on CBO's
reestimate of the President's fiscal year 2000 budget.
Projected Spending For TANF
As you know, TANF funding was established as a block grant
to states under the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (PRWORA), replacing the
open-ended funding for Aid to Families with Dependent Children
(AFDC). The basic block grant totaled $16.5 billion annually
through 2002, with the amount allocated to each state based on
the state's spending history. The grant provided additional
funding for several other purposes such as bonuses for good
performance and reduced illegitimacy, grants to the territories
and Indian tribes, supplemental grants, and a contingency
reserve. Funds allocated to states remain available to the
states until spent.
The block grant amounts for most states have proved to be
more than the states could spend in the near term as AFDC and
TANF caseloads dropped by 40 percent from 1994 to 1998.
Consequently, many states have accumulated sizable unspent
balances that are expected to grow in the next several years,
although more slowly than in the past. As of the end of 1998,
states had not spent about 25 percent of the overall TANF
grants. States' unspent balances varied widely. For example,
Illinois, Connecticut, and Maine had spent all or almost all of
their TANF funds, but Wyoming and Idaho had spent less than 20
percent of theirs.
PRWORA gave states much flexibility in determining how to
use the block grant funds. In addition to funding traditional
cash welfare benefits, states received the authority to
transfer up to 10 percent of their TANF grant to the Social
Services Block Grant and up to 30 percent for child care
programs (no more than 30 percent of the total for both
programs can be transferred). In addition, states could use
TANF funds for providing child care services under the TANF
program activities.
According to preliminary reports from the Department of
Health and Human Services, in 1998 states transferred 4 percent
of their TANF grant to the Child Care and Development Block
Grant and 7 percent to their Social Services Block Grant. In
addition, states spent 1.5 percent of overall TANF funding
directly on child care, with individual states spending between
0 and 30 percent of their 1998 TANF grant on child care.
CBO projects that TANF outlays will total $12.6 billion in
fiscal years 1999 and 2000, grow to $14.2 billion by 2002, and
reach $19.4 billion by 2009. As indicated in Table 1, annual
federal outlays for TANF are not expected to exceed annual
funding until 2006, at which time the states as a whole will
begin to spend portions of their balances accumulated from 1997
to 2005. CBO estimates that total unspent balances will grow
from $7.1 billion at the end of 1998 to $25.4 billion at the
end of 2005.
Of course, any spending projection involves considerable
uncertainty. CBO and other forecasters did not anticipate the
rapid escalation of spending in programs such as AFDC, Food
Stamps, and Medicaid from 1989 to 1992 nor the speed at which
spending in those programs (or their successors) would
decelerate or even decline from 1994 to 1998. Given that
history, policymakers should weigh any particular forecast
cautiously before acting. Sharp changes in economic conditions
like those of the early 1980s and 1990s can quickly render any
spending projections obsolete because unemployment can increase
application rates for such programs and the rate at which
recipients leave the programs. Most states have large unspent
TANF balances; therefore, a sharp turnaround in the number of
caseloads would, in all likelihood, initially show up almost
entirely as additional federal spending.
Table 1.--Temporary Assistance for Needy Families, CBO March 1999
Baseline
[By fiscal year, in billions of dollars]
------------------------------------------------------------------------
Annual
Year Budget Outlays Unspent Cumulative
Authority Balance Unspent Balance
------------------------------------------------------------------------
1997a 13.4 9.7 3.7 3.7
1998a 16.7 13.3 3.4 7.1
1999 17.1 12.6 4.5 11.6
2000 17.1 12.6 4.5 16.1
2001 17.2 13.2 4.0 20.1
2002 16.8 14.2 2.7 22.8
2003 16.8 15.3 1.6 24.3
2004 16.8 16.0 0.9 25.2
2005 16.8 16.6 0.2 25.4
2006 16.8 17.3 -0.4 25.0
2007 16.8 18.0 -1.1 23.9
2008 16.8 18.7 -1.8 22.1
2009 16.8 19.4 -2.6 19.5
------------------------------------------------------------------------
Source: Congressional Budget Office.
a Actual.
Projected Spending for Child Care Programs
Deliberations about welfare reform in 1995 and 1996 raised
concern about the adequacy of funding for the child care
services required by welfare recipients and other low-income
families as welfare programs focused increasingly on work
activities. Consequently, PRWORA included a substantial
increase--$4.5 billion--in mandatory funding for child care
services during the 1997-2002 period. Although child care
outlays in 1997 fell $237 million short of CBO's original
estimates, spending in 1998 slightly exceeded the PRWORA
estimates. CBO now projects that the states will fully absorb
all of the budgetary resources provided explicitly for child
care services beginning in 1999 (see Table 2).
In addition to the Child Care Entitlement to States
program, the federal government annually provides states with
$1 billion in discretionary child care funding through the
Child Care and Development Block Grant. The block grant funds,
originally authorized in 1990, are directed toward providing
services to low-income families and supporting quality child
care activities. Although spending under the block grant grew
slowly in the early 1990s, in more recent years the states have
essentially drawn the entire amount of the block grant--a
pattern that CBO expects will continue.
Table 2.--Child Care Entitlement to States, CBO March 1999 Baseline
[By fiscal year, in billions of dollars)
------------------------------------------------------------------------
Year Budget Authority Outlays
------------------------------------------------------------------------
1999 2.2 2.4
2000 2.4 2.4
2001 2.6 2.5
2002 2.7 2.7
2003 2.7 2.7
2004 2.7 2.7
2005 2.7 2.7
2006 2.7 2.7
2007 2.7 2.7
2008 2.7 2.7
2009 2.7 2.7
------------------------------------------------------------------------
Source: Congressional Budget Office.
The President's fiscal year 2000 budget includes several
proposals to expand child care funding. One proposal would
provide supplemental matching funds under the Child Care
Entitlement to States program, allowing states to offer
additional child care subsidies and activities to improve the
quality of child care. Another proposal would create an early-
learning fund that would provide grants to communities for
activities aimed at improving the quality of child care for
children under age 6. Assuming that the states would have to
contribute 20 percent of the total funding for each program,
CBO estimates that outlays would be $1.0 billion in 2000 and
$9.4 billion from 2000 to 2004.
Concluding Remarks
CBO projects that under current law, states will continue
to accumulate sizable surpluses under the TANF program overall.
Meanwhile, the states will exhaust federal funds provided
exclusively for child care services. Although states have great
latitude in directing TANF surpluses toward child care, so far
they are not doing so on a wide scale. Whether state priorities
concerning TANF funds will change now that the federal child
care funding has been fully tapped is unknown.
Chairman Johnson of Connecticut. Thank you very much. I
appreciate your full statements. I appreciate your testimony. I
want to get this a little clearer. Mr. Falk, you said that the
States have obligated more than half of the TANF funds.
Mr. Falk. Of what is unspent--unspent TANF funds. Of the $6
billion, States have obligated a little more than $3 billion.
Chairman Johnson of Connecticut. I see, of the unspent TANF
funds. So there is $3 billion that is not obligated or spent?
Mr. Falk. Correct.
Chairman Johnson of Connecticut. Does your work bring you
into any contact as to why that might be?
Mr. Falk. Why that may be? First of all, Congress did give
States the choice to reserve TANF grants. I think we have to
think that some of these unspent balances result from the
States taking that choice, and choosing to reserve some TANF
grants for the future.
Chairman Johnson of Connecticut. Is there any requirement
that they notify you if they are doing that? Or do we have any
way of knowing that that's what they are thinking?
Mr. Falk. No. Actually, in terms of explicit rainy-day
funds, the information is somewhat sketchy. We did have
something from the National Governors' Association, last year,
that talked about a few States committing some funds explicitly
to a rainy-day fund; but as I said, the information there was
quite sketchy. They don't have to report it, nor do they have
to explicitly do it. They could just leave it as unobligated if
they wish and that becomes implicitly a rainy-day fund.
Chairman Johnson of Connecticut. Are there other instances
in other departments or other programs where they can
explicitly, in a sense, obligate funds for a rainy-day fund?
Mr. Falk. I don't know whether even in TANF, given the
definition of obligation, putting money aside or earmarking
money for a rainy-day fund would constitute an obligated fund.
Chairman Johnson of Connecticut. I don't think it does now.
I think that would be an improvement in our law, if we have a
chance to make it. Are there other programs you know about that
allow states to count money saved for a rainy day as obligated?
Mr. Falk. To my knowledge, I don't know of any.
Chairman Johnson of Connecticut. So we don't know how much
of the $3 billion that is unobligated and unspent has been
identified by State bodies as being reserved.
Mr. Falk. Earmarked specifically for rainy-day funds? No.
Chairman Johnson of Connecticut. OK. Thank you. Mr.
Cullinan, I think, the way I understand your testimony, you are
saying that the States are spending all of their specifically
child care funds under TANF.
Mr. Cullinan. Yes. That is correct.
Chairman Johnson of Connecticut. I want to get the names of
the funds right. You believe that the States will exhaust the
TANF child care funds, regularly, in the years ahead?
Mr. Cullinan. As they are explicitly specified, not
considering any transfer authority.
Chairman Johnson of Connecticut. Just the explicitly child
care funds. Then they have the right to transfer up to 30
percent, but they have only transferred on average 4 percent or
a total of 4 percent?
Mr. Cullinan. A total of 4 percent.
Chairman Johnson of Connecticut. Have some States
transferred a lot more and some States transferred none?
Mr. Cullinan. Yes. That is correct.
Chairman Johnson of Connecticut. What is the most any State
has transferred from their TANF funds into child care funds? I
mean, you would think a State like Wisconsin that has dropped
its welfare rolls so dramatically would have an equally
dramatic demand for day care subsidies for low-income working
families and, therefore, would have been motivated to transfer
the 30 percent.
Mr. Cullinan. Several states have transferred quite a bit.
Michigan is one state that has transferred, I believe, 15
percent.
Mr. Falk. Nineteen.
Mr. Cullinan. No, it was 19 percent in 1998 to child care,
and basically very close to the rest of their 30 percent limit
to the Social Services Block Grant (SSBG).
Chairman Johnson of Connecticut. So no State has
transferred the 30 percent?
Mr. Falk. Michigan came close, 29-percent.
Chairman Johnson of Connecticut. What is the relationship
between the 29-point-something percent and the 19 percent that
we just talked about in Michigan?
Mr. Falk. Nineteen and ten percent.
Mr. Cullinan. Right. It was the distinction between the
transfer for child care and the transfer for the SSBG program.
Michigan came very close to transferring the entire 30 percent,
but two-thirds of that was for child care and a third was for
SSBG.
Chairman Johnson of Connecticut. I see. Mr. Cardin.
Mr. Cardin. Thank you, Madam Chair. First, let me thank
both of you for your testimony. I think it is very, very
helpful. It seems to me what you are saying is that in regards
to the direct Federal programs for day care, the States are
utilizing 100 percent of those funds, basically. As it relates
to TANF, we have unobligated funds of about $3 billion that
have not been spent, which would be equivalent to somewhere
between 1\1/2\ to 2\1/2\ months of cash assistance, depending
on where we are in the economy.
Mr. Falk. Right.
Mr. Cardin. I think it is very useful. Why don't we go back
to when we created this program. When we passed this program
we, for some reason, wanted to allow States to carry from one
fiscal year to another--to have the flexibility. That is not
unusual for a Federal Program. We wanted to give the States
maximum flexibility in handling this program to plan from one
year to the other.
Looking at the CBO projections, when we passed this bill,
did you project that we were going to have this of declining
welfare on cash assistance by now?
Mr. Cullinan. No, we didn't. That is absolutely correct. At
the time of the legislation, we expected that the states would
come very close to spending the entire block grant each year.
Mr. Cardin. The major reason is that we have had much more
success in getting people off of cash assistance. Do we know
where we are going to be 2 years from now? I know you have a
projection where we are going to be 2 years from now. But isn't
it very possible that we could be off again by a significant
number?
Mr. Cullinan. Absolutely.
Mr. Cardin. Now if you are a State administrator trying to
plan programs for the next 2 years, would it be prudent to
spend every dollar?
Mr. Cullinan. I am not sure whether I would make a
judgment.
Mr. Cardin. I understand. Your hesitation is all I really
needed.
[Laughter.]
We have put the burden on the States. We have given them
flexibility. Now we are starting to say, ``Well, gee, we've
done better than we thought we would on cash assistance, so
let's use that money for other purposes or to deny other
program advancements because there are cash surpluses
available.'' You have a real dilemma. Suppose, as a State
administrator, you used this money--transferred it, or
whatever--to help provide more child care and then you have a
turn in the economy. What do you do? Do you all of a sudden
take the money away from child care and put it back into this
program, affecting people who are already trying to make it in
the workplace? What do you do?
These are some rhetorical questions. If you have good
advice, please let me know. I think the program is working, the
way we anticipated, with the States. I don't find the
surpluses--the unencumbered balances--to be that large,
considering the magnitude of the assignment that the States
have to deal with. Am I seeing something I don't see?
Mr. Falk. Mr. Cardin, the reserved funds or the unobligated
balances are one of three sources that States could turn to in
the event that they have unexpected increases in TANF
expenditures. The two other are the contingency fund and the
loan fund. This is one of three routes that States can go.
Mr. Cardin. One of the things I found--well, let me ask you
this question. If you were setting up a reserve fund, how many
months would you like to have available in a reserve fund? Does
1\1/2\ or 2\1/2\ months seem reasonable for a reserve fund?
Would either one of you like to venture an opinion on that?
Mr. Falk. We don't make policy recommendations to Congress.
Mr. Cardin. I understand. But you are giving us analysis as
to what the current status is. You know the numbers better than
we know numbers. You know the historical fluctuations of people
needing cash assistance. If you are a State administrator,
would it be reasonable for you to reserve 1\1/2\ to 2\1/2\
months of cash benefits for a change in the economy, from the
TANF money, when the economy is booming and your employment
rates are at historically high levels and your cash assistance
and people on welfare are at a historically low level?
Mr. Cullinan. That would certainly be one way to approach
it. There are other programs that have, in essence, built up
far greater reserves than you described. The unemployment
compensation program would be one.
Mr. Cardin. Unemployment compensation helps people who are
working. It's interesting. I understand your point. Even though
the welfare rolls will go back up, it is amazing that many of
these people are not going to be qualified for unemployment. Or
they will exhaust their unemployment and have to come back on
welfare. We have seen it happen over and over again with
unemployment being an unacceptable substitute.
You need unemployment compensation to keep people off of
welfare, but it is not going to be a substitute for the rolls
going back up in bad times. The last point I would just like to
make. I understand the flexibility in the programs and that you
can transfer the funds. But if the States were to develop day
care programs within TANF and then provide assistance directly
within TANF it would count toward the 5-year limits, would it
not? Which is a dangerous position to put the States in if they
wanted to use the money directly within the TANF program.
Mr. Falk. The Department has proposed regulations and child
care would count as assistance, under those proposed
regulations. We do not have final regulations, yet.
Mr. Cardin. Well, I don't agree with those regulations, but
if we have to live by them, it is another danger the States
have in trying to deal with this problem directly within TANF.
Thank you, Madam Chair.
Chairman Johnson of Connecticut. Just for the record, in
your experience with these programs--looking back--have you
ever seen a period of 1, 2 or 3 years in which there has been a
43-percent decrease in the caseload?
Mr. Cullinan. I would have to go back and look at the
record on that. Certainly in the 1989-1993 period, we had a
substantial increase, but it was not as large as the subsequent
decrease we have seen since then.
Chairman Johnson of Connecticut. Was it 43 percent a year?
Mr. Cullinan. No. Absolutely not.
Chairman Johnson of Connecticut. One other point I think it
is important to make is that the States are getting the same
money they had when they had a 43 percent, on average, higher
caseload. So every year we are giving them 43 percent more than
they need, in a sense, to make cash payments. Now we did it on
purpose and we need to do it. We need to keep doing it because
of all the service needs people have.
But if people move from a working situation where they need
more services back onto welfare, in a sense the money is still
being paid as if they needed that grant. Isn't that true?
Mr. Cullinan. Yes.
Chairman Johnson of Connecticut. So I think we have to be
very careful about how we define things as we move through
this. I think having $3 billion of unobligated and unspent
dollars is very much more significant when in a sense the
dollars are there. Should the whole caseload come back on, then
we would do what we used to do. We would pay benefits. That is
what we used to do with this money. We are figuring out how not
to pay benefits, how to pay services instead. That is better.
So I think it is particularly telling. I mean the thing
that impresses me the most about your testimony is that this
whole issue of flexibility, with a 43-percent decline on
average, and it is only on average. There are some States that
are 15 and 20 percent, and some that are much deeper. But that
the States have elected to transfer so little of their TANF
money into the very child care block grant you would think they
would need to pump up. As the numbers go down, then of course
they don't need as much daycare for their own TANF population,
but they need a lot more for the working poor.
I find it really quite buffaloing why that money hasn't
expanded. But personally, I think it is very, very important
for the States to get credit for putting money into a rainy day
fund, and if we have a chance, to clarify the law to
acknowledge that kind of reserve. If action is taken by a State
legislature to reserve some of their unobligated money, to
count that as obligated and sort of off of our table. So I
think that would go a long way to at least stabilize the
resources of the States. But this is a very difficult problem.
Mr. English.
Mr. English. Thank you, Madam Chair.
Mr. Cullinan, in going over your table 1, I would like to
seek one point of clarity. In your fourth column, you have the
annual unspent balance. Do I understand through 2003, at a time
when the Administration has proposed to add an extra $20
billion to child care, the unspent balance by the States would
be in the range of $24.4 billion, based on your current
projections?
Mr. Cullinan. That is correct. Or, alternatively, they
would add $17.2 billion over the next 5 years on top of what
they currently have not spent.
Mr. English. Historically, have the States ever had more
Federal dollars available for child care than at this time?
Mr. Cullinan. I'm not absolutely certain about that, but
the level of Federal dollars has probably never been higher, at
least in nominal terms.
Mr. English. Is that your impression?
Mr. Falk. That is my impression as well, yes.
Mr. English. I am curious, Mr. Falk, what were the
assumptions that you made to determine that the TANF balance
represents less than 3 months of cash benefits at the 1998
expenditure rate?
Mr. Falk. Basically what I did was I divided the
unobligated balance, the $3 billion, by total cash benefits
that were paid in fiscal year 1998.
Mr. English. Are you assuming then that the program is
guaranteed another $16.5 billion each year?
Mr. Falk. No. That is just the balances. That is what is in
reserve, and the States would receive their next year's grant
as well. This is from just past grants.
Mr. English. Madam Chairman, I know you probably have some
more questions. I want to thank these gentlemen for their
excellent analysis. This is a very helpful addition to our
deliberations. I yield back the balance of my time.
Chairman Johnson of Connecticut. Thank you, Mr. English.
Thank you both for your analysis. It really is helpful to
be able to get very specific information about what has been
spent and what hasn't been spent, because this is a very
important time for us to assure that the States have the money
and the flexibility to meet the needs of the people moving off
welfare, and of those low-income working families who never
became dependent, but are in the same income category. Thank
you very much for your help.
Again, if other Members of the Committee have questions,
they will submit them in writing. Thank you.
Now I welcome Sharon Long, the senior research associate
for the Health Policy Center of the Urban Institute; Helen
Blank, the director of Child Care and Development of the
Children's Defense Fund, and Clarence Carter, the commissioner
of the Department of Social Services, from Richmond, VA.
Thank you all three for being here. Thank you for your
patience. I always regret it when people have to wait during
the voting process, but after all, that is our primary
responsibility.
Ms. Long, would you like to start?
STATEMENT OF SHARON K. LONG, SENIOR RESEARCH ASSOCIATE, URBAN
INSTITUTE
Ms. Long. Thank you for the opportunity to appear here
today. My comments are drawn from an Institute project that
analyzes the shift of responsibility for social programs from
the Federal Government to the States. I will address two
issues. First, State responses to the increased opportunity for
innovation under welfare reform, and second, the adequacy of
child care funding to meet the needs of low-income working
families.
The 1996 welfare reform legislation gave States increased
flexibility for designing and targeting their child care
assistance programs. The changes I am reporting on today are
early responses by the States. We should expect to see further
changes over time as States gain more experience both with TANF
and the child care block grants. Nevertheless, a number of
States have already taken the opportunity under welfare reform
to improve the administration of their child care systems.
Before welfare reform, child care assistance was a complex
system that was difficult for States to administer, and
difficult for families to access. Many States sought to develop
an integrated or seamless system of care to try to minimize
those problems. A key first step in developing a seamless
system is to consolidate the administration of child care
within a single State agency. With the increased flexibility in
program design under welfare reform, several States that have
not achieved a seamless system before welfare reform, have been
able to move in that direction. For example, California,
Massachusetts, New Jersey, and Washington, have all moved to
consolidate child care assistance within a single State agency.
As part of the Institute's study, we will look to see what the
impacts of that consolidation are on families over time.
For States that had made more progress toward achieving a
seamless system prior to welfare reform, welfare reform
provides an opportunity to further streamline child care
assistance. For example, Florida is making an effort to
establish a single point of entry for all child care and child
development programs.
In addition to the opportunity to simplify the
administration of child care, welfare reform has given States
more flexibility in program design. However, States have
generally made only very narrow changes in the designs of their
child care programs. Program administrators report that they
expect that welfare reform will over time increase the demand
for child care assistance among current and former welfare
recipients, and concerns about the costs for that potential
increase in demand, along with concerns about what happens in a
financial downturn have made some States hesitant to expand
child care much beyond the welfare population.
Wisconsin is one State in our study that did undertake a
more radical change in its child care system. They are
providing help to all eligible families, without regard to
their welfare status. However, to accomplish that goal,
Wisconsin had to do two key things. First, they increased State
funding for child care, and transferred TANF funds to child
care. Second, they reduced the income standards for eligibility
to reduce the number of families who would be eligible for
assistance.
I would like now to turn to the adequacy of funding for
child care assistance. In many working families, child care
ranks as the single largest expense after housing and food. The
increased funds for child care assistance under welfare reform
have increased the number of families who are receiving help.
However, there are still gaps among the low-income working
families.
In Minnesota, for example, State officials report that
working poor families who had been served before welfare
reform, are now losing out to welfare families, despite an
increase in State funding for child care. Both Florida and
Wisconsin have provided additional funding targeted
specifically to the low-income working poor, in an effort to
reduce this crowding out. Massachusetts and New York
transferred TANF funds to child care. Yet both States still
report long waiting lists for families seeking subsidies.
In an early analysis of the adequacy for funding under
welfare reform, we estimated that the increased funds for child
care would serve at a maximum less than half of the low-income
children with working parents who were in need of assistance.
It is important to recognize that this is an upper bound on the
share of children who could be served, since we did not
incorporate family responses in our estimates. We would expect
that the availability of assistance would induce some parents
who are not working to go to work, and induce some parents to
go from part-time to full-time work, and allow some families
with children who are home alone or in unpaid care to move
their children to other child care arrangements that they could
not afford on their own.
While there is little research on the size of these family
responses, we do know that they would all lead to higher levels
of demand for child care assistance, and therefore, to a
smaller share of families being served with the available
funds. The share of children who could be served would also be
lower if we used a different level of eligibility. In our
tabulations, we used 150 percent of poverty. Eleven of the 13
States in our study have established eligibility levels that
are above that. Those children would not be captured in our
estimates.
We know that the working poor are less likely than the non-
working poor to receive child care subsidies. We also know that
they are less likely than higher-income families to receive a
tax credit for child care. Basic equity would suggest that low-
income working families should not be penalized because they
have not relied on the welfare program. Basic equity would also
suggest that we not subsidize child care for higher-income
working families, when we do not provide child care support for
low-income working families.
Thank you for the opportunity to appear here today. I would
be happy to answer questions.
[The prepared statement follows:]
Statement of Sharon K. Long, Senior Research Associate, Urban Institute
The views expressed are the authors and do not necessarily
reflect those of the Urban Institute, its trustees, or its
funders.
My name is Sharon Long. I am a senior research associate at
the Urban Institute, a nonpartisan public policy research
institution in Washington, D.C. I would like to address two
issues related to the recent changes in child care assistance
programs: (1) state responses to the increased opportunity for
innovation under welfare reform and (2) the adequacy of child
care funding to meet the needs of low-income working families.
My comments are drawn from a multi-year Urban Institute
project analyzing the shift of responsibility for social
programs from the federal government to the states. That
project--Assessing the New Federalism--aims to inform public
debate and to help state and local decision makers carry out
their responsibilities more effectively.\1\ The project focuses
on 13 states, home to half of the nation's population. The
states are Alabama, California, Colorado, Florida,
Massachusetts, Michigan, Minnesota, Mississippi, New Jersey,
New York, Texas, Washington, and Wisconsin.
---------------------------------------------------------------------------
\1\ Funding for the Assessing the New Federalism project is
provided by the Annie E. Casey Foundation, the Henry J. Kaiser Family
Foundation, the W. K. Kellogg Foundation, the Robert Wood Johnson
Foundation, the Ford Foundation, the John D. and Catherine T. MacArthur
Foundation, the Charles Stewart Mott Foundation, the David and Lucile
Packard Foundation, the Commonwealth Fund, the Stuart Foundation, the
Weingart Foundation, the McKnight Foundation, the Fund for New Jersey,
the Rockefeller Foundation, and the Joyce Foundation and the Lynde and
Harry Bradley Foundation.
---------------------------------------------------------------------------
The 1996 welfare reform legislation made significant
changes in the federal child care assistance programs for low-
income families. It eliminated federal child care entitlements
to families and consolidated the major sources of federal child
care subsidies for low-income children into a single block
grant to states. At the same time, welfare reform transformed
the Aid to Families with Dependent Children (AFDC) program into
a block grant and expanded its work participation requirements,
thereby increasing the need for child care among families newly
entering the workforce.
In this new world, states gain increased flexibility for
designing and targeting their child care assistance programs.
They also assume additional responsibilities for addressing the
need for child care assistance. Child care administrators in
many states reported that they do intend to make changes in
their child care systems but, thus far, their first priority
has been to get the Temporary Assistance for Needy Families
(TANF) program up and running. The changes that I'm reporting
on today are early responses by the states. We should expect to
see further changes in state child care programs over time.
States Are Developing Seamless Child Care Assistance Systems
Already a number of states have taken advantage of the
opportunities under welfare reform to improve the
administration of child care assistance, making significant
progress toward establishing seamless systems of care. Before
welfare reform, federal child care programs were frequently
criticized for the plethora of laws, rules, regulations, and
accounting practices across the different funding streams.
These resulted in a complex system that was difficult to
administer and difficult for families to access. All too often,
families needed to apply for assistance with multiple agencies
or providers, perhaps completing multiple applications and
placing their names on multiple waiting lists. Many states
sought to develop a system of child care that integrated the
different funding streams to minimize these problems. Despite
these efforts, state administrators reported that the
complexity of the pre-welfare reform child care system
interfered with their ability to meet the needs of children and
their families.
A key first step in developing a seamless child care system
is to consolidate the administration of child care funding
streams within a single state agency. Other elements of
seamlessness that often follow include a single point of entry
for families seeking assistance; standardized applications,
policies, and procedures across different programs; and a
single waiting list for low-income families needing assistance.
These characteristics all serve to make the child care system
more efficient and more accessible for families.
With the increased flexibility in program design under
welfare reform, several states that had not achieved a seamless
child care system before welfare reform are making significant
strides in that direction. For example, California,
Massachusetts, New Jersey, and Washington have all moved to
consolidate child care assistance within a single state agency.
In California, the administration of child care funding was
split between the Department of Education and the Department of
Social Services before welfare reform. Under welfare reform,
the state has combined all child care funds in a single state
agency--the Department of Education. In Massachusetts, where
interactions between multiple child care agencies were often
contentious before welfare reform, consolidation within a
single state agency has simplified child care assistance in the
state.
For states that had already established substantially
seamless child care systems, the greater flexibility in design
under welfare reform provides the opportunity to address gaps
that remain in the system. For example, Florida's goal is to
establish a single point of entry for all child care and early
childhood education programs and to unify the waiting lists for
all child care assistance.
States Have Made Few Changes in the Design of Their Child Care Programs
Although welfare reform has given states much more
flexibility in program design, it has also created strong
incentives for states to focus on serving the welfare
population. As a result, most states have made relatively
narrow changes in their child care programs (e.g., limited
changes in eligibility rules, benefit levels, and priority
groups). The entitlement for child care assistance that existed
before welfare reform has been replaced by a de facto guarantee
of assistance for welfare families.
By eliminating the entitlement to child care assistance to
families, welfare reform gave states greater flexibility in
allocating child care funds across both the welfare and non-
welfare populations. However, many of our study states have
been reluctant to take advantage of that flexibility. Program
administrators reported that they expect that, over time,
welfare reform will increase the demand for child care
assistance among current and former welfare families,
particularly among families with very young children (for whom
child care is quite expensive). Concerns about the potential
costs of that increased level of demand, along with concerns
about the implications of future economic downturns, have made
some states hesitant to expand their child care programs much
beyond the welfare population.
One state in our study that has undertaken a more radical
change in its child care system is Wisconsin. Wisconsin has
established a child care program that assists all eligible
families. To accomplish its goal of supporting families without
regard to their welfare status, Wisconsin made two key changes
in its child care program. First, it increased state funding
for child care significantly and has transferred TANF funds to
child care. Second, it reduced the pool of eligible families by
lowering the maximum income level for eligibility.
Funding for Child Care Assistance Eludes Low-Income Working Families
In many working families, child care ranks as the single
largest expense after housing and food. The increased funds for
child care assistance under welfare reform, combined with many
states' investment of their own funds, have increased the
number of families who are receiving help with child care.
However, there are still large gaps in coverage among the low-
income working families.
The federal government provides substantial support for
child care through a variety of avenues. Middle-and upper-
income families receive support through the non-refundable
Dependent Care Tax Credit. Of more relevance to low-income
families is the funding available under TANF and the child care
block grant. However, as noted earlier, the vast majority of
that funding appears to be targeted to welfare families and
former welfare families, raising concerns about the equity of
the child care system for non-welfare families and the perverse
incentives of the welfare system.
In Minnesota, for example, state officials report that
working poor families who would have been served before welfare
reform are now losing out to welfare families, despite an
increase in state funding for child care. Both Florida and
Washington have provided additional child care funding targeted
specifically to the non-welfare low-income population to reduce
such crowding out. Massachusetts provided both additional state
funds and transferred TANF funds to child care, yet still has a
waiting list for low-income families. New York also transferred
TANF funds to child care, yet still has long waiting lists for
low-income families.
In an early analysis of the adequacy of funding for child
care under welfare reform, we estimated that, if states drew
down all the federal dollars available under the block grant,
the share of low-income children with working parents who could
be served would increase significantly. We also estimated that
those increased funds would serve at a maximum less than half
of the low-income children in need of child care assistance in
1997.
It is important to recognize that this estimate represents
an upper bound on the share of children who could be served
since the estimate does not incorporate family responses to the
availability of child care assistance. In particular, the
availability of assistance will induce some parents who are not
working to go to work, induce some parents to go from part-time
to full-time work, and allow some families with children who
are home alone or in unpaid child care arrangements to place
their children in arrangements that they could not afford on
their own. While there is little research to support estimates
of the size of those family responses, we do know that they
will lead to higher levels of demand for child care assistance
and, therefore, to a smaller share of low-income children being
served with the available funds.
The share of children who could be served would also be
lower if the definition of low-income children was expanded
from the measure that we used--children in families with income
below 150 percent of the poverty level. Eleven of the 13 states
in our study have established income eligibility levels for
child care assistance under the child care block grant that are
above 150 percent of poverty. Our estimates do not capture the
child care needs of those children.
We know that the working poor are less likely than the
nonworking poor to receive child care subsidies and less likely
than higher income families to receive a tax credit for child
care expenses. Basic equity would suggest that low-income
working families should not be penalized because they have not
relied on the welfare system. Basic equity would also suggest
that we should not subsidize child care for higher income
working families, when we do not provide that same support for
low-income working families.
With falling caseloads and increased funds available under
welfare reform, the states have more than adequate funds to
provide child care assistance to their welfare populations.
However, the funds are not adequate to serve the non-welfare
low-income working families seeking help paying for child care.
The challenge remains to provide enough child care assistance
to meet the demands of welfare reform without abandoning non-
welfare working poor families.
Thank you for the opportunity to appear before this
subcommittee. I would be happy to answer any questions.
Chairman Johnson of Connecticut. Thank you. That was very
helpful.
Ms. Blank, it is a pleasure to have you.
STATEMENT OF HELEN BLANK, DIRECTOR, CHILD CARE AND DEVELOPMENT,
CHILDREN'S DEFENSE FUND
Ms. Blank. We are delighted to be here today. We deeply
appreciate the leadership role that this Committee has played
for the last decade on child care, especially the role that
you, Mrs. Johnson, have played on behalf of children and
families needing child care.
From families, children, and child care workers'
perspective, child care resources are just not doing it. Child
care costs can be a staggering burden for parents. The average
annual cost of child care in an urban child care center exceeds
the average annual cost of public college tuition in almost
every State. But one out of three families with young children
earn less than $25,000 a year. They are making extraordinary
choices.
We can't lower the cost of child care, because the largest
portion is devoted to salaries. The lowest-paid level teachers
earn on average $13,000 a year, which is lower than the poverty
level. More than one in four teachers left their jobs over the
course of the year. This creates an untenable situation for
programs, which all across the country can't find teachers to
fill their jobs. It is also untenable for young children, who
need stable relationships, especially low-
income children who face tremendous instability in their lives.
Yes, we have seen tremendous progress over the last 10 years,
thanks to increased Federal and State investments in child
care. The new funds that were put in the welfare bill
definitely made a difference. But every day in this country,
too many low-income families are still left making painful
choices between working and the safety of their children. These
parents can't wait.
To make welfare reform succeed, we have to ensure that
families don't fall back on welfare, and that families already
on welfare can stay off. Low-income families live precariously.
Any mishap can cause them to lose their fragile balance. An
unstable child care arrangement that falls through can easily
catapult into a lost job.
The number of working poor families continues to grow.
There are 9.6 million in 1998. Families leaving welfare don't
become doctors and lawyers. I wish they did. Most remain in
low-wage jobs, and they are likely to stay in these low-wage
jobs. They can't make it without child care help.
Unfortunately, only a handful of States have joined
Wisconsin, like Illinois and Rhode Island, to ensure the child
care help is equally available to both families on welfare, and
low-income working families. In many other States, child care
dollars are focused mainly on welfare dollars. State also have
income cutoffs that limit eligibility for many low-income
families.
Parents on the waiting lists are poor families. They are
making enormous financial sacrifice or they are placing the
health and safety of their children in jeopardy. They are not
simply finding another child care slot. A recent study of
parents on the waiting lists in Santa Clara County, CA, found
that over one-third of parents were earning $10,000 a year and
spending on average $300 a month on child care. They were
putting their jobs at risk in order to just make it. Where are
the children? In Florida, a mother on the waiting list had her
three children with a provider who spoke no English, in her
barren apartment, with no toys or books, just a television set
all day long. How is education reform going to succeed if that
is where our youngest children are?
In Minnesota, they did a similar study of families on the
waiting list. One mother talked about her 6-month old being in
three horrible day cares in the course of 6 months. Over 70
percent of Minnesota families on the waiting list had gone
bankrupt or experienced severe financial difficulty.
The waiting lists aren't the only reflection of the demand.
Forty three States told CDF that if all eligible families knew
they were eligible for assistance, they couldn't help them.
Child care is a well-kept secret because States are very
concerned about the huge demand. In Iowa, there are 11,000
children receiving child care assistance, and 90,000 are
eligible for help. Florida just transferred $117 million to
CCDBG. They have 11,000 children under five eligible for child
care help, and 95,000 school-age children who will not be able
to get it, even with this transfer. Their eligibility cutoff is
only 150 percent of the poverty level.
It is not just a matter of who gets help. It is that States
make painful choices between who gets help and how much
providers make. Only 18 States set rates for child care
providers based on current market rate surveys. Connecticut and
Maine, two States which have obligated all their TANF funds,
use market rate surveys that are 5 to 7 years old. That means
if low-income communities have to serve low-income families, it
is a terrible sacrifice for providers.
High co-payments are also an issue. In Virginia, families
making $10,000 a year have to pay 10 percent of their income
for child care, that is 70 percent of the poverty level.
Pennsylvania just raised their co-payments to 14.5 percent of
income.
We don't think that that current usage reflects demand.
Administrative barriers are also keeping families from child
care assistance. In Maryland, child care eligibility workers
were sent a State memo telling them to encourage use of cheaper
informal care. This is happening in other States as well.
I wish transferring funds to CCDBG would fill the gap.
Arizona, which reports that it is close to its 30 percent
limit, still has huge gaps. It raised its eligibility this
year. It is still limited to $22,000 for a family of three.
They improved their rates making their rates go from the 75th
percentile of the 1989 market rate, to the 50th percentile of
the 1996 market rate. Parents still can't afford half the
providers in their community. California and Texas have
obligated all their TANF funds. Two hundred thousand on the
waiting list in California, 36,000 in Texas.
Will the DCTC expansion help working families? Many
families will be left at the gate if Congress only looks at tax
strategies. A single head of household with two children
earning just over $25,000, would receive no actual benefit from
the President's DCTC tax proposals. Even if the DCTC were
refundable, it would be difficult for families to manage
because they wouldn't receive their refunds until the end of
the year, and they have to pay weekly or biweekly child care
bills.
The question we have to ask as a country is how are we
going to ensure that families can work and support their
children, and avoid dependence on TANF, keep their children
safe, and help them go to school ready to read. In 1996, this
Committee took important steps to help families move off TANF.
In 1990, the Nation made a commitment to working poor families
when President Bush signed the Child Care and Development Block
G. Increasing the CCDBG by $7.5 billion over 5 years is the
next step to take.
If we are to increase child care options, we can not hold
working families hostage to the TANF surplus. We can't depend
on a patchwork approach, transferring funds from one block
grant designed to help our very neediest families to another
with similar goals. We need a stable base in this country to
ensure that every parent who needs it have the child care
choices that they need to start to work and to stay working,
and their children have the quality of child care they need to
succeed in school.
[The prepared statement follows:]
Statement of Helen Blank, Director, Child Care and Development,
Children's Defense Fund
I am Helen Blank, Director of Child Care and Development at
the Children's Defense Fund. The Children's Defense Fund
welcomes the opportunity to testify today on child care. CDF is
a privately funded public charity dedicated to providing a
strong and effective voice for America's children, especially
poor and minority children.
Child care is an important issue affecting working parents
and their children. Everyday, American parents go to work to
support their families and must trust their children to the
care of others. An estimated 13 million children younger than
age six are regularly in child care and millions of school-age
children are in after-school activities while their parents
work. Every working parent wants to be sure that his or her
children are nurtured and safe.
Quality child care is also critical to helping children
enter school ready to succeed. Child care matters not just for
parents but also for their children. The nation cannot proceed
successfully on its track towards improving educational
outcomes unless it focuses on the developmental needs of young
children. Research is clear about the importance of the first
three years of life to brain development. The process of
learning to read begins well before a child enters elementary
school. Early childhood experiences that include exposure to
language-rich environments are building blocks for school
success. A new report, ``Preventing Reading Difficulties in
Young Children,'' released by the National Research Council in
1998, also notes that the majority of reading problems faced by
today's adolescents and adults could be avoided or resolved in
the early years of childhood. Children must arrive in the first
grade with a strong basis in language and cognitive skills and
be motivated to learn in order to benefit from classroom
instruction.
While every working parent wants the best environment and
outcome for his or her children, child care costs can be a
staggering burden for many low-income working parents; costs
consuming over a quarter of their income.
High Cost of Child Care
The average annual cost of care for a four-year-old in an
urban child care center exceeds the average annual cost of
public college tuition in almost every state. But one out of
three families with young children earn less than $25,000. One
out of three children of working mothers either is poor despite
the fact that their mothers work, or would be poor if their
mothers did not work. Their parents constantly must choose
between paying the rent or mortgage, buying food, and being
able to afford the quality care their children need.
Unfortunately, the cost problem cannot be remedied by
asking child care providers to lower their price. Most
providers already operate on exceptionally tight budgets. The
largest portion of a family child care home or a child care
center budget is dedicated to staff salaries, which are already
unacceptably low. The lowest paid level teachers earn on
average $13,125 a year while teaching assistants earn an
average of $10,500 annually. As a result, more than one in four
child care teachers and 39 percent of assistants left their
jobs over the course of a year. Child care programs across the
country report that they have had great difficulty replacing
staff and finding qualified staff.
Providers who want to stay in the field do it at enormous
sacrifice:
Lori, a 29-year-old mother and child care provider from
Philadelphia writes of her reasons for leaving the child care
field: ``I will soon be leaving my job as a child care
provider. I enjoy the center I work with, the children, and the
intelligent, caring people I work with. I am leaving because I
am making $5.15 an hour to do a job worth at least $10.00 an
hour. Of course you can't put a worthy price on caring for our
nation's greatest resource, its children, but at least a fair
working wage would be justice. I fear for the next generation.
They deserve quality care, security, and to have their young
minds stimulated. But that's just not going to happen at this
rate. You can't expect hard working decent women to keep
plugging away with endless energy, when they are insulted every
week at the sight of their paychecks.''
Families Face Locked Doors
Our existing child care investments fall far short of
meeting the needs of parents or their children, despite
increases in the Child Care and Development Block Grant (CCDBG)
included in the Personal Responsibility Act. Inadequate federal
and state funding prevents millions of children from low-income
working families from being able to get the help they need.
These families face a series of locked doors. Many hard working
low-income families are not even eligible for help due to low
state eligibility cutoffs for child care assistance. Many who
are eligible cannot get it -either because they are put on
waiting lists or are turned away due to inadequate funds or
because no effort has been made to let them know they are
eligible to get the help they need to succeed. Those fortunate
enough to actually qualify for child care assistance face
additional locked doors. In some cases, the amount the state
will pay for care is so low that parents cannot find quality
providers who can afford to serve their children, and in other
cases parents have to pay so much in parent fees or copayments
that child care expenses still are a staggering financial
burden.
New federal child care funds have enabled most states, at
least temporarily, to meet the increased child care needs of
families on welfare generated by the initial stages of the
implementation of the new welfare law. They have also allowed a
number of states to help more nonwelfare, low-income working
parents with their child care expenses. In addition, they have
given some states the opportunity to raise the amount they
reimburse providers so that more providers are willing to
accept children receiving CCDBG subsidies.
Low-Income Working Families Need a Boost
Yet, enormous gaps still remain in our efforts to help low-
income parents work and take care of their children. Much more
needs to be done to ensure that families on welfare have the
child care assistance they need to get and keep jobs, without
sacrificing low-income working families who are struggling to
keep their jobs and stay off welfare.
If our country is serious about promoting work, than it
must address the real needs of low-income working families who
are often one unreliable child care arrangement away from
welfare. Low-income families live precariously, balancing
competing basic needs with very limited resources. Any mishap
can cause these families to lose their fragile balance. For
example, unstable child care arrangements that fall through can
easily catapult into a lost job.
The number of poor children in working families has
escalated since 1989 from 7.5 million to almost 9.6 million in
1998. As welfare reform proceeds, this trend can be expected to
continue. Families leaving welfare will likely remain in low-
wage jobs and need child care assistance beyond a limited
transitional period of one or two years. Wage growth is very
slow. For example, median wages for families who exited welfare
grew by only 9 cents an hour in their first five years
according to a study by Meyer and Concian concerning women's
work efforts in the five years after leaving welfare.
Additional investments in child care are critical if the
country is to promote both work and family--not only by helping
welfare parents leave welfare but also by ensuring that low-
income, working parents have the child care assistance they
need to stay employed and to help their children thrive. Some
states such as Rhode Island, Illinois, and Wisconsin understand
that welfare reform will have a better chance of succeeding if
child care assistance is readily available to both families on
welfare and low-income working families. These states have
focused significant new child care resources on working
families. However, too many other states continue to focus a
large portion of their new child care funds on TANF families,
neglecting the needs of low-income working families.
State child care subsidy programs are so underfunded that
they cut off eligibility at family income levels far below what
is allowed by federal law and what is needed by families--with
the result that families earning as little as $20,000 a year
for a family of three are not eligible for help in many states.
The CCDBG allows states to help families with incomes up to 85
percent of state median income (``state median income''--or
SMI--is the income level in each state below which half of all
families fall). However, across the country all but five states
disqualify families for help before they reach this level. In
some states, the income eligibility cutoffs are so low that
only the poorest of the working poor can qualify. West
Virginia, for example, cuts off income eligibility at $15,000
per year for a family of three (barely above the 1997 federal
poverty level of $13,330), whereas South Carolina cuts off
eligibility at $16,700. As of January 1998, three out of five
states would not have provided any help to a family of three
earning $25,000 (slightly over 185 percent of federal poverty)
who applied for child care assistance.
Even those low-income working families who do meet state
income guidelines frequently cannot get help they need. Low
state income cutoffs keep demand for state child care subsidy
help artificially low. Yet even with low income cutoffs, many
states face demand they simply cannot meet. These states are
turning away eligible low-income working families or putting
them on waiting lists for help.
Texas has 36,000 children on a waiting list
California has over 200,000 children on a waiting
list
Massachusetts has 17,200 children on a waiting
list
Pennsylvania has 12,600 children on a waiting list
Alabama has close to 19,000 children on a waiting
list and
Georgia has 44,500 children on a waiting list
In many counties in California, the wait for child care
assistance is over two years for low-income working families.
These waiting list numbers often underrepresent the real need
because many families do not put themselves on the list because
they feel that it is futile. In addition, many states do not
keep lists; they simply turn families away. Parents without
help in paying for child care face many hardships. A mother
from Pensacola, Florida says:
I have two children and their child care costs are $120 a
week. I work a full-time job, but after I pay taxes and
insurance I bring home $230 a week. That leaves me $110 a week
to take care of my children. It is almost impossible for me to
survive. I make too much money to receive food stamps so my
children have to go hungry for us to get by. If I had some help
with child care, I would have more money to buy food for my
children. I have worked at my job for seven and a half years,
but I almost had to go back to part-time because I could not
afford care. If I went part-time, my pay would be reduced and I
would lose all my benefits.
Studies of low-income working families on waiting lists for
child care assistance clearly paint a picture of the
difficulties these families face without the child care help
they need. The Day Care Services Association of North Carolina
surveyed families on the state's waiting list for child care
help and found that 78 percent experienced financial problems.
For those families fortunate enough to eventually receive help,
it made a significant difference. Eighty-three percent of
respondents who did receive a child care subsidy said that the
subsidy improved either the quality or reliability of their
children's care.
A similar study of parents waiting for child care
assistance in Santa Clara County by the Policy Analysis for
California Education found that a large number of families on
the waiting list are living at or below the poverty level but
paying high amounts for child care. Over one-third of parents
interviewed earn less than $10,000 annually. Yet, employed
parents were on average spending about $300 a month for care.
While waiting for help, parents were forced to make significant
adjustments in their lives. About 40 percent reported that they
gave up looking for work because they could not find affordable
care.
Most families never get to the waiting list or to the point
of applying for child care help because they do not even know
child care assistance is available. Few states have made
serious efforts to reach out to these families. In 1998, 43
states told the Children's Defense Fund that if all eligible
families sought services, the states were not confident they
would have the resources to serve these families. Only eight
states reported that they would be able to serve all eligible
families if they knew they were eligible, and most of these
eight states had severely restricted the number of eligible
families by setting very low-income cutoffs. Many potentially
eligible families never apply for help because states do not
publicize the availability of child care assistance as they
know they cannot meet even the existing demand.
Texas estimated that it is only serving 4 to 5
percent of all families who are eligible under the income
guidelines, which restrict eligibility to families earning only
about $20,000 a year or less for a family of three.
Vermont is currently serving 7,000 children. Their
state child care administrator estimates that there are about a
third to a half again as many eligible families who need child
care who are not being served.
Florida, which recently transferred more than $100
million in TANF to the CCDBG, still has an estimated 11,000
children from birth to age 5 eligible for child care assistance
as well as 95,000 school-age children in working families with
incomes below 150 percent of the federal poverty level who need
child care help.
In Iowa, only about 11,000 children have families
who have applied for child care assistance but 90,000 children
are eligible for help.
Low Rates and High Fees Limit Parent Choice
State child care resources are stretched so thin that even
parents fortunate enough to get help do not get the relief they
need. Low subsidy rates for child care may mean that good
quality, affordable child care that helps children learn is
beyond parents' reach even with a child care subsidy. In many
states, child care subsidy rates are so low that many providers
are unwilling to accept children who have subsidies or limit
the number of children with subsidies they are willing to
accept. Some providers may take subsidies, but only if parents
pay them the difference between what the subsidy rate will
cover and the provider's actual rate (in addition to the
copayment the parent is already required to pay). The effect of
these practices is that parents often have little choice of
caregivers. They are driven to choose the lowest-cost, often
lower-quality care, since that is what the state subsidy rate
will pay for. Or parents have to pay providers the difference,
spending extra money on child care that their very eligibility
for a child care subsidy indicates they cannot afford. A
February 1998 report by the Inspector General of the Department
of Health and Human Services emphasized that both low provider
payment rates and high copayments restrict parents' access to
care and limit their ability to choose the child care they want
for their children.
Providers that serve a high concentration of children with
subsidies may be unable to continue if rates fall below the
real cost of providing care. In Des Moines, Iowa, for example,
three inner-city child care centers closed in 1997 because they
could not make ends meet under the state's reimbursement rates.
Keeping rates low and failing to update them directly affects
what kind of care children get and whether their parents can
even find care in their neighborhoods.
In 1998, only 18 states set rates that were based on a
recent survey of local market costs and that would enable
parents to afford the rates charged by three-quarters of local
providers.
Connecticut and Maine use market surveys that are
five to seven years old and have not increased their rates to
reflect that their information is outdated.
While Arizona raised rates in 1998, it was only
from the 75th percentile of the 1989 market rate to the 50th
percentile of the 1996 market rate--still far below the level
needed to guarantee parents adequate choice, as they won't be
able to afford half the providers in their community.
Child care subsidy programs also close doors to families
when they ask parents to pay such high parent fees that child
care remains unaffordable. In a number of states, low-income
working families who do manage to get child care help are
facing such high copayment levels that their child care costs
remain prohibitive. For example, although experts recommend
that low-income families above poverty pay no more than 10
percent of their income as parent fees, some states require
three-person families at $20,000 a year (150 percent of
poverty) to pay child care fees as high as 20 to 30 percent of
their income:
In South Dakota, the parent fee would be $500 per
month, or 30 percent of the family's income of $1670 per month.
In Oregon, a family at 150 percent of poverty
would be required to pay $365 in parent fees--22 percent of
family income.
Nevada charges such parents about 18 percent of
income in parent fees; Utah requires parents to pay 13 percent,
Iowa, Maryland, and North Dakota require parents to pay 12
percent.
Program Administration Can Be a Barrier to Getting Child Care Help
Fear of being overwhelmed by requests for child care help
also encourages administrators to set up administrative
barriers that deter both TANF and low-income working families
from taking advantage of child care subsidies. For example:
A study in Washington State found that 23 percent
of former TANF families did not use a child care subsidy
because they feared using up their five-year limit on
assistance.
In Utah, families are told they must seek free
care before being offered a subsidy.
In Maryland, child care eligibility workers were
sent a state memo telling them to encourage use of cheaper,
informal care. This policy was rescinded, but workers were
never told.
In Milwaukee, Wisconsin up to 60 percent of child
care placements begun by one agency were canceled by a second
agency due to bureaucratic snafus.
Caseworkers may give families confusing information. A
study done of the application process by Child Care Inc in New
York reports that caseworkers receive limited training on
providing child care assistance, and the information they are
given as guidelines are often incomplete and outdated.
Caseworkers are usually a parent's first, and in many cases,
only source for obtaining information about child care. Because
parents receive limited information on their child care
choices, they believe that they have limited options and may be
forced to use informal care. Caseworkers, anxious to move
parents into a work activity, advise them to continue to use
the person who is caring for children at the time of the
appointment as an ongoing care giver, not taking into
consideration that this may be a temporary situation. The
parent may prefer a different arrangement in the long-term or
the provider may be unable to offer a permanent arrangement.
TANF Funds Cannot Fill the Child Care Gap
Many states are moving forward to fill their child care and
early education gaps. They are taking advantage of TANF funds
and transferring substantial amounts to CCDBG. Some of this
activity is not yet reported in FY 1998 data from the
Department of Health and Human Services concerning unspent
funds. For example, a recent CDF survey found that a number of
states transferred or plan to transfer significant funds from
TANF to CCDBG, including $66 million in North Carolina, $56
million in Indiana, $38.2 million in Arizona, and $117 million
in Florida. Yet, these states and others continue to face large
unmet child care needs. For example, across Florida, families
with incomes of $32,900 (200 percent of poverty for a family of
four) who do not receive child care help must pay about 28
percent of their gross income for two children in care. To
serve children birth to age 5 from working families earning up
to 200 percent of poverty would require an additional $77
million and providing child care to the school-age population
would require an additional $216 million according to the
Florida Department of Children and Families.
Indiana continues to limit eligibility to families earning
150 percent of the poverty level or less while Arizona cuts off
assistance at 165 percent of the poverty level. States such as
California, Texas, and Maine that have obligated all of their
TANF funds, also show little evidence of being able to meet the
child care needs of working families. Both Texas and California
have long waiting lists for child care assistance. While Maine
uses a 1993 market rate survey to determine their payment rates
to providers. States cannot fill all their child care gaps with
TANF dollars. They also have other important uses for these
funds. They may justifiably be concerned about the impact that
an economic downturn will have on their TANF caseloads and be
anxious to conserve funds to preserve a safety net for
families. Despite declining caseloads, states are also facing a
challenge as they try to help the families who remain on
welfare, since it is these families who face the most
significant barriers to work, such as substance abuse, domestic
violence, disability, and mental health problems, to employment
and self-sufficiency. Research also indicates that children in
families having the most trouble entering the workforce also
have more acute physical or emotional problems and need more
enriched child care settings.
If we are to increase child care options that meet the
needs of parents and children, we cannot continue to depend on
a patchwork approach. Transferring funds from one block grant
designed to help needy families to another with similar goals
will not assure the stable base needed to ensure that parents
have the child care choices they need to work and their
children need to enter school ready to succeed.
Improved Tax Credits Must Be Paired With Expanded CCDBG Funds
How do we provide more relief to these millions of
families? Expanding the Dependent Care Tax Credit would
definitely provide more help to some configuration of lower-
middle and middle-income families who struggle to pay for child
care out of very tight budgets. However, there are large groups
of low and lower-middle income families that an expanded DCTC,
unless it is made refundable, simply will not benefit. For
these families, it is essential that more help be made
available through the Child Care and Development Block Grant.
For example, a single head of household with two children
earning $25,252 (185 percent of the federal poverty level)
would receive no actual tax benefit from the President's
proposal to expand the DCTC, after applying the per child tax
credit and the Earned Income Tax Credit. In fact, families of
this configuration (single head of household, two children)
would realize a net tax benefit under this proposed DCTC
expansion only at incomes of $27,000 and higher. Similarly, a
married couple family with two children at 185 percent of the
poverty level -earning just over $30,000 a year--would receive
only a very small net benefit, about $55, from the proposed
changes; larger net benefits would be realized only at incomes
above that level. A single head of household with two children
earning $27,000 (approximately 200 percent of the poverty
level) would receive a net gain of only about $89 from the
proposal, with larger gains at incomes above that level.
Increase Funds For the Child Care and Development Block Grant
Without child care assistance, it is difficult to
comprehend how low-income families manage. The Department of
Labor's report on Consumer Expenditures in 1997 found that a
family with one parent and at least one child under age 18
spends $21,303 on housing, food, apparel, transportation, and
personal insurance and pensions alone. On average, they make
$24,185 a year according to the same survey, leaving $2,882 for
everything else they must buy, including health insurance and
child care. Although for technical reasons these numbers should
be taken as a rough guide rather than as precise figures, they
do make it easier to see why so many American families are
going into debt. A mother from Manchester, Connecticut earning
approximately $24,000 a year talks about how difficult it is to
work, raise her family, and ensure that her children are in a
safe and supportive environment:
I would like to see affordable, quality child care. I have an
infant and a 3-year-old, and currently pay over $1,000/month in
child care. This is 50 percent of my salary. There must be a
better way for us to work and still feel safe about where our
children are during the day without paying out half of our
salary every month.
In 1996, this committee took important steps to help
families move off TANF. It is equally important in 1999 to take
further steps forward to ensure that low-income working
families have the means to access the stable child care
arrangements they need to continue working and moving towards
independence. Increasing the Child Care and Development Block
Grant by $7.5 billion over five years is the next step to take.
This would not only provide essential help to these families,
but would also provide new resources to strengthen the quality
of child care. Moving on to improve the Dependent Care Tax
Credit would give lower-middle and middle-income families the
resources they need to expand their child care choices.
However, it is essential that any DCTC expansion be paired with
a substantial increase in the Child Care and Development Block
Grant to help ensure the success of welfare reform, not just
for this generation of workers but also for the next.
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Chairman Johnson of Connecticut. Thank you, Helen. That was
a lot of information to go through. I appreciate your
presentation.
Mr. Carter.
STATEMENT OF CLARENCE H. CARTER, COMMISSIONER, DEPARTMENT OF
SOCIAL SERVICES, RICHMOND, VIRGINIA
Mr. Carter. Madam Chair, as I look at your agenda, it seems
that I am the last presenter this afternoon. So I will adhere
to the three B's of public presentation, be brief, be
insightful, and be gone.
Chairman Johnson of Connecticut. Well, we do keep these
hearings short so that we can hear everybody. So please don't
be intimidated by being the last person, because you are also
the most hands-on person that will have testified today.
Mr. Carter. Thank you. I am pleased to have this
opportunity to represent the Commonwealth of Virginia and my
human services colleagues across the Nation, and sharing with
you some of our concerns about the provision of child care
services in this era of welfare reform.
There are three points I would like to bring to your
attention today. The first is State flexibility. The Personal
Responsibility and Work Opportunity Reconciliation Act of 1996
ushered in an era of innovation and creativity with regard to
public assistance programs. The Child Care and Development Fund
was an important augment to PRWORA as it streamlined funding
sources for child daycare, enabling States to combine the
provision of daycare services with its work-based self-
sufficiency focus cash assistance programs. States have enjoyed
this new-found flexibility, and continue to use it to create
impressive results. However, there are some ominous clouds on
the horizon.
Since the enactment of PRWORA, Congress has created three
new set-asides in the Child Care Block Grant, a $19 million
fund for resource and referral and school-age child care, a $50
million infant and toddler care fund, and a new $172 million
fund for quality enhancements. These categorical set-asides
hinder the flexibility of States to address the child care
needs.
The quality enhancement dollars provide a particularly
instructive example. Currently, the Child Care and Development
Fund require States to set aside up to 4 percent of their grant
for quality enhancements. The $172 million is an additional
quality enhancement set-aside. In Virginia, we have made the
determination to put as many dollars in the hands of parents as
possible. The set-aside dictates that Virginia must dedicate a
particular percentage of its grant to quality enhancements.
Thus, limiting our flexibility to put more dollars into direct
purchase of services.
We happen to subscribe to the theory that if parents are
armed with all the relevant information to make an informed
decision on the child care option that best suits that family,
the dollars they will use to purchase services will set the
standard for quality. Clearly, every State will not make that
determination, but if flexibility is maintained by limiting
set-asides, States can make whatever determination is in the
best interest of its residents.
Additionally, in the past few years, Congress has funded an
expanded Head Start, Early Head Start, and 21st century
Learning Centers. Each of these initiatives are separate
Federal funding streams, with no requirement for coordination
with the Child Care Development Fund. These programs serve the
same children, yet the resources are fragmented by separating
funding streams that could achieve far more if they were
effectively leveraged together.
As I move across the Commonwealth of Virginia talking about
the future of human service programs into the next century, I
talk about an organization that operates under one
comprehensive vision for healthy families and healthy
communities, an organization that manages multiple programs and
funding streams directed toward one common vision. Each new
categorical human services spending initiative makes it more
difficult to realize that vision. We urge Congress to require
that future funding for these and any other contemplated child
care initiatives to be coordinated with the Child Care and
Development Fund.
One final point on flexibility has to do with the Federal
regulations for the CCDF. The final Federal regulations on the
CCDF reversed the actions taken by Congress to repeal onerous
and outdated restrictions on State child care administration.
For example, in PRWORA, Congress specifically repealed the
requirements on States to conduct market-rate surveys to set
child care rates, as well as the use of the 75th percentile
standard to guarantee access to child care. Despite the repeal
in PRWORA, HHS wrote those very requirements back in the final
regulations for the implementation of the CCDF.
I would commend to your attention a full description of the
State's concerns over the Federal child care regulations
compiled by the American Public Human Services Association,
attached to my written testimony.
Next, I would like to talk briefly about principles of the
provision of child daycare. As the Nation struggled to settle
on foundation principles for welfare reform, in Virginia, we
struggled with setting the guiding principles for the provision
of child care services. The debate in Virginia has been between
two schools of thought. On the one hand, there is a belief that
with our emerging knowledge of brain development in the early
years of life, it is incumbent upon us as a society to develop
a highly regulated, prescriptive child care structure. This
structure would include basic health and safety provisions,
while ensuring that children and parents are introduced to a
universal set of child development standards that government
has deemed appropriate.
On the other hand, there is a belief that it is the role of
government to maintain rigorous health and safety standards
while fostering a free-market environment conducive to the
creation of multiple options for the provision of child care
services. The thought continues that arming parents with the
information to make informed decisions about the options for
child care and providing public dollars were economically
necessary to assist in their purchase of services is the best
public policy option.
The difference, quite frankly, is simple. On the one hand,
we trust parents to make decisions in the best interests of
their children. On the other hand, we believe the Government
knows what is in the best interest of children and families. I
am pleased to report that under the leadership of Governor Jim
Gilmore and former Governor George Allen, the Commonwealth of
Virginia has chosen the side of parents. From that perspective,
I would implore Congress to aggressively oppose any legislative
initiatives that would encumber the ability of parents to
choose the child care option that they believe is in the best
interests of their children or limit dollars for direct
purchase of services.
If the State flexibility, we spoke to earlier, is
maintained and maximized, Virginia can continue to pursue its
vision for the provision of child care, while our colleagues in
other States be free to pursue their own.
The final point I would like to leave you with speaks to
the financial foundation of our child care system. Child care
expenditures over the past 5 years have grown geometrically. I
have provided for you a chart which shows the increase in
expenditures. Since 1995, Virginia has increased daycare
spending by more than $63 million or 112 percent. It is far and
away the fastest growing program the department administers. We
would, however, encourage Congress to pay close attention to
the financial foundation of this burgeoning program. States
have done exceedingly well, and should be commended for their
ability to expand their child care capacity to make full use of
the dollars allocated. According to the most recent data
available, States expended 100 percent of Federal mandatory
funds, 99 percent of Federal matching funds, 90 percent of
discretionary funds, and achieved 100 percent maintenance of
effort. Thirty-three States spent $630 million in State
maintenance of effort funds for child care, and $190 million
was transferred from TANF to the Child Care and Development
Fund, with even more States using TANF funds for child care.
[GRAPHIC] [TIFF OMITTED] T5629.007
The TANF block grant allows for a transfer of up to 30
percent to child care expenditures. In Virginia, we use a
portion of our TANF transfer to child care to fund our low-
income subsidized daycare system. This program provides dollars
to families after their public assistance eligibility and for
those that have never been on public assistance, but whose
income still requires some financial assistance for daycare.
Just 2 years ago, we had a waiting list of more than 10,000
families to receive the daycare subsidy. We have used a
combination of the Child Care and Development Fund and TANF
transfer to reduce that waiting list to 2,300 families. While
we continue to have an unmet child care subsidy system need, we
have transferred only 15 percent of the allowable 30 percent
from TANF to child care. I am hesitant to recommend to the
Governor transferring a greater portion of the TANF block grant
due to the uncertainty of TANF funding.
The Senate has proposed a $350 million cut in the TANF
block grant. I would like to commend the chairperson and some
of her colleagues in the House who have sent a letter to the
Senate rejecting that proposed cut. If States expand their
child care services using the TANF block grant, and the dollars
are reduced, we will have thousands of families all dressed up
with no place to go, with regard to child care. The same
scenario exists if an economic downturn would increase the TANF
caseload.
Last year in the appropriations process, the title XX
social services block grant was reduced from $2.38 billion to
$1.9 billion for the current Federal fiscal year 1999. Then
during the last quarter of 1998, the future funding for title
XX was reduced to $1.7 billion in fiscal year 2001 and beyond,
and transfer of TANF funds would be reduced from the current 10
percent to 4.25 percent. Title XX funds critical working poor
child care services, and this cut has presented some
significant challenges to States. Furthermore, President
Clinton proposes to reduce States' ability to transfer TANF
funds to title XX from 10 percent to 4.25 percent in fiscal
year 2000.
All of these actions threaten to weaken the financial
foundation of child care. The Nation has rightly deemed that
work-based self-sufficiency directed public assistance is
compassionate public policy. To help public assistance
recipients transition from welfare to work, and to assist
working poor families to continue to work, child care is
essential. We urge Congress to reject any cuts or so-called
deferrals in the TANF block grant, any cuts to the title XX
social services block grant, or reductions in the percentage of
TANF funds that States can transfer to the Child Care and
Development Fund or title XX.
In closing, the States have made remarkable strides in
reconstituting the social safety net. The work-first, self-
sufficiency model has returned that safety net to its original
intended purpose of being a trampoline instead of a hammock.
While we are encouraged by our collective success, it is not
time to declare victory and go home. Congress has some tough
decisions ahead to protect funding and State flexibility. We
have proven we are up to the task. We need your help to ensure
the necessary resources are available.
Thank you for this opportunity to share my thoughts with
you on this topic.
[The prepared statement follows:]
Statement of Clarence H. Carter, Commissioner, Virginia Department of
Social Services, Richmond, Virginia
Madam Chairperson and members of the Subcommittee my name
is Clarence H. Carter, I am the Commissioner of the Department
of Social Services for the Commonwealth of Virginia. I am
pleased to have this opportunity to represent the Commonwealth
and my human service colleagues across the nation in sharing
with you some of our concerns about the provision of child care
services in this era of welfare reform.
There are three points I would like to bring to your
attention today.
State Flexibility
The Personal Responsibility and Work Opportunity
Reconciliation Act (PRWORA) of 1996, ushered in an era of
innovation and creativity with regard to public assistance
programs. The Child Care and Development Fund (CCDF) was an
important augment to PRWORA as it streamlined funding sources
for child day care enabling states to combine the provision of
day care services with its work-based, self-sufficiency
focused, cash assistance programs. States have enjoyed this
newfound flexibility and continue to use it to create
impressive results. However, there are some ominous clouds on
the horizon.
Since the enactment of PRWORA, Congress has created three
new set-asides in the child care block grant: a $19 million
fund for resources and referral and school age child care; a
$50 million infant and toddler care fund; and a new $172
million fund for quality enhancements. These categorical set-
asides hinder the flexibility of states to address the child
care needs.
The quality enhancement dollars provide a particularly
instructive example. Currently the CCDF requires states to set-
aside up to 4% of their grant for quality enhancements. The
$172 million is an additional quality enhancement set-aside.
In Virginia, we have made the determination to put as many
dollars in the hands of parents as possible. The set-aside
dictates that Virginia must dedicate a particular percentage of
its grant to `quality enhancements', thus limiting our
flexibility to put more dollars into direct purchase of
service. We happen to subscribe to the theory that if parents
are armed with all of the relevant information to make an
informed decision on the child care option that best suits that
family, the dollars they will use to purchase services will set
the standard for quality. Clearly every state will not make
that determination, but if flexibility is maintained by
limiting set-asides, states can make whatever determination is
in the best interest of its residents.
Additionally, in the past few years Congress has funded and
expanded Head Start, Early Head Start and 21st Century Learning
Centers. Each of these initiatives are separate federal funding
streams with no requirement for coordination with the CCDF.
These programs serve the same children, yet the resources are
fragmented by separating funding streams that could achieve far
more if they were effectively leveraged together.
As I move about the Commonwealth talking about the future
of human service programs into the next century, I talk about
an organization that operates under one comprehensive vision
for healthy families and healthy communities; an organization
that manages multiple programs and funding streams directed
towards one common vision. Each new categorical human services
spending initiative makes it more difficult to realize that
vision. We urge Congress to require that future funding for
these and any other contemplated child care initiatives to be
coordinated with CCDF.
One final point on flexibility has to do with the federal
regulations for the CCDF. The final federal regulations on the
CCDF reversed the actions taken by Congress to repeal onerous
and outdated restrictions on state child care administration.
For example, in PRWORA Congress specifically repealed the
requirements on states to conduct market rate surveys to set
child care rates as well as the use of the 75th percentile
standard to guarantee access to child care. Yet despite the
repeal in PRWORA, HHS wrote those very requirements back into
their final regulations for the implementation of the CCDF. I
would commend to your attention to a full description of the
state's concerns over the federal child care regulations
compiled by the American Public Human Services Association
attached to the written test of my testimony.
Principals of the Provision of Child Day Care Services
As the nation struggled to settle on the foundation
principals of welfare reform, in Virginia we struggled with
setting the guiding principals for the provision of child care
services.
The debate in Virginia has been between two schools of
thought. On one hand, there is a belief that with our emerging
knowledge of brain development in the early years of life, it
is incumbent upon us (as a society) to develop a highly
regulated, proscriptive child care structure. This structure
would include basic health and safety provisions while ensuring
that children and parents are introduced to a universal set of
child development standards that government has deemed
appropriate. On the other hand, there is the belief that it is
the role of government to maintain rigorous health and safety
standards while fostering a free market environment conducive
to the creation of multiple options for the provision of child
care services. The thought continues that arming parents with
the information to make informed decisions about the options
for child care and providing public dollars where economically
necessary to assist in their purchase of services, is the best
public policy option.
The difference quite frankly is simple. On one hand, we
trust parents to make decisions in the best interest of their
children. On the other, we believe that government knows what
is in the best interest of children and families. I am pleased
to report that under the leadership of Governor Jim Gilmore and
former Governor George Allen, the Commonwealth of Virginia has
chosen the side of parents. And from that perspective, I would
implore Congress to aggressively oppose any legislative
initiatives that would encumber the ability of parents to
choose the child care option that they believe is in the best
interest of their children or limit dollars for direct purchase
of services. If the state flexibility we spoke to earlier is
maintained and maximized, Virginia can continue to pursue its
vision for the provision of child care while our colleagues in
other states would be free to pursue their own.
The final point I would like to leave you with speaks to
the financial foundation of our child care system.
Building Child Care Services on a Strong Foundation
Child care expenditures over the past five years have grown
geometrically. Since 1995, Virginia has increased day care
spending by more than $63 million or 112%. It is far and away
the fastest growing program the Department administers. We
would however, encourage Congress to pay close attention to
financial foundation of this burgeoning program.
States have done exceedingly well and should be commended
for their ability to expand their child care capacity to make
full use of the dollars allocated. According to the most recent
data available, states expended 100% of federal mandatory
funds, 99% of federal matching funds, 90% of discretionary
funds, and achieved 100% maintenance of effort (MOE) level. 33
states spent $630 million in state MOE funds for child care and
$190 million was transferred from TANF to CCDF with even more
states are using TANF funds for child care.
The TANF block grant allows for the transfer of up to 30%
to child care expenditures. In Virginia, we use a portion of
our TANF transfer to child care to fund our low-income
subsidized day care system. This program provides dollars to
families after their public assistance eligibility and for
those that have never been on public assistance, but whose
income still requires some financial assistance with day care.
Just two years ago, we had a waiting list of more than 10,000
families to receive the subsidy day care service.
We used a combination of the CCDF and TANF transfer to
reduce that waiting list to 2300 families. While we continue to
have an unmet child care subsidy system need, we have
transferred only 15 of the allowable 30% from TANF to child
care. I am hesitant to recommend to the Governor transferring a
greater portion of the TANF block grant due to the uncertainty
of TANF funding. The Senate has proposed a $350 million cut in
the TANF block grant. If states expand their child care
services using the TANF block grant and the dollars are
reduced, we will have thousands of families ``all dressed up
with no place to go'' with regard to child care. The same
scenario exists if an economic downturn would increase TANF
caseloads.
Last year in the appropriations process, the Title XX
Social Services block grant was reduced from $2.38 billion to
$1.9 billion for the current federal fiscal year 1999. Then,
during the last quarter of '98, the future funding for Title XX
was reduced to $1.7 billion in fiscal 2001 and beyond and
transfer of TANF funds would be reduced from the current 10
percent to 4.25 percent. Title XX funds critical working poor
child care services and this cut has presented some significant
challenges to states. Furthermore, President Clinton proposes
to reduce state's ability to transfer TANF funds to Title XX
from 10 percent to 4.25 percent in FY 2000.
All of these actions threaten to weaken the financial
foundation of child care. The nation has rightly determined
that work-based, self-sufficiency directed public assistance is
compassionate public policy. To help public assistance
recipients transition from welfare to work and to assist
working poor families continue to work--child care is
essential. We urge Congress to reject any cuts or so-called
deferrals on the TANF block grant, any cuts to the Title XX
Social Services block grant or reductions in the percentage of
TANF funds that states can transfer to the Child Care
Development Fund or Title XX.
In closing, the states have made remarkable strides in
reconstituting the social safety net. The work-first, self-
sufficiency model has returned that safety net to its original
intended purpose of being a trampoline instead of a hammock.
While we are encouraged by our collective success, it's not
time to declare victory and go home. Congress has some tough
decisions ahead to protect funding and state flexibility.
We have proven we are up to the task. We need your help to
ensure the necessary resources are available.
Thank you for this opportunity to share my thoughts with
you on this important topic.
[The attached article, ``Formal Comments on Child Care
Regulations,'' published by the American Public Welfare
Association,'' will be retained in the committee files.]
Chairman Johnson of Connecticut. Thank you. Mr. Carter, it
is very interesting to me that Virginia did actually use the
transfer mechanism to address the growing backlog of low-income
families needing daycare. That that group should grow is
absolutely perfectly logical. If it doesn't grow, we are not
succeeding in supporting people as they move off welfare.
Why is it, in talking with your colleagues throughout the
country, why is it more States aren't doing that? Or are States
doing this? Are the other States moving TANF funds off into
daycare and we are just not seeing it?
Mr. Carter. I think, Madam Chairman, what we have seen, we
are in the--if my math is right, the seventh quarter with
regard to implementation of the Personal Responsibility and
Work Opportunity Reconciliation Act. States have done a
tremendous amount of work in putting the infrastructure in
place to manage those programs. I think, quite frankly, while
in congressional terms it may seem like a lifetime, we have
simply been operating--we are in our infancy when it comes to
reconstituting the social safety net.
So I think to suggest that States are not doing everything
in that regard is not quite to understand that we have a
significant challenge to turn this tanker the size of the
Titanic on such short notice. So I think that we are doing
really well in what we have done to this point. As these issues
are raised, my colleagues are showing I think wonderful
innovation in how they address the problem.
Chairman Johnson of Connecticut. So you think actually when
we look at this in a year, that we are going to see a lot more
of the TANF dollars being used to subsidize daycare for working
people?
Mr. Carter. I think what we will see is that States will be
taking other innovative approaches to addressing this issue of
moving folks to self-sufficiency. Yes, ma'am.
Chairman Johnson of Connecticut. I wanted to ask you, if we
had just given you in the Child Care Block Grant the new money,
instead of putting it in three categories, what would you have
done differently? I mean we did put $19 million into resource
and referral, and school-aged child care; $50 million into
infant and toddler. Some of that you would have put into infant
and toddler anyway because there is a big deficit there.
So what is the big deal--as long as we don't begin to
control the money under TANF, this was all add-on money.
Mr. Carter. Well, I mean, quite frankly, I think the big
deal is that we turn this responsibility to the States to allow
States to deal with the issue of child care in the context of
their self-sufficiency programs. So then to restrict how we do
that, I think goes counter to the purpose of the creation of
the block grant.
Chairman Johnson of Connecticut. Well, I agree with you
philosophically. I am wondering if you can give me examples of
where--for instance, does this cause you to set up bookkeeping
mechanisms and bureaucracies that you wouldn't have to? Are
there variations across your State in what the sort of holes in
the child care system are?
Mr. Carter. Well, it certainly causes us to have to track
administratively, to track along those three set-asides. It
takes infrastructure in order to do that tracking. Quite
frankly, in Virginia, we have made the determination to put as
many dollars as possible into the direct purchase of service.
We find if we put the dollars in mom and dad's hands, and give
mom and dad the information that they need to make an informed
decision, they will certainly make the best determination for
their family.
So we want to put every possible dollar into direct
purchase of services. What we would have to do here along these
three set-asides, is to track those. So we would need some
dollars in order to administratively track those three set-
asides. Again, those dollars would come away from direct
purchases of services.
Chairman Johnson of Connecticut. Ms. Long, you mentioned
Wisconsin, that they have increased State funding significantly
and transferred TANF funds to child care, and reduced the pool
of eligible families. Could you talk a little bit more about--
it sounds like what Wisconsin was trying to do was tailor the
pool to the resources, that they did work to expand their
resources. What did they do to tailor the pool?
Ms. Long. What they did primarily to tailor the pool was to
lower the income eligibility levels.
Chairman Johnson of Connecticut. From what to what?
Ms. Blank. They went to 165 percent of poverty. I think
they were at 200, and they eliminated mothers in education and
training. They may have put them back, but they dropped about
3,000 mothers who were in school when they did this.
Chairman Johnson of Connecticut. Did they also go from 200
percent to 165 percent of poverty?
Ms. Long. Yes. They ended up at 165. I don't remember where
they started from, but they cut back to 165 to reduce the
number of families that would be eligible for assistance.
Chairman Johnson of Connecticut. Do they also have more of
a co-payment than other States?
Ms. Long. I don't know the answer to that.
Chairman Johnson of Connecticut. Do you know that, Helen?
Ms. Blank. They raised--well, actually, they had an
original plan that created a huge fury. There are always some
tradeoffs. In their plan, they were going to raise co-payments
significantly. The day the new copayments went into effect, so
many parents wrote the legislature, that they cut back on the
co-payment increases. What they also did that was very
controversial at the time was they made a decision to cut back
on the quality of care. They were a State where providers who
were caring for small numbers of children, I think it was under
four, weren't required to be regulated. Before they made this
change, they required those providers to have 15 hours of
training a year if they receive public money, which I think is
important as it affects the quality of care. They eliminated
that training requirement. Then they paid the providers at the
50 percentile of the market so those providers got less. But
the way they structured the co-payment system, parents were
steered to those providers because parents did better if they
chose cheaper providers. They have remedied some of that.
Wisconsin also is an interesting issue because they
didn't----
Chairman Johnson of Connecticut. Let me just get that clear
though. Did they eliminate the requirement they had earlier put
in place for 15 hours of training?
Ms. Blank. They eliminated the training requirement. What
they did was they also cut the co-payment. They gave those
providers less money, but they set up their co-payment system
so parents would do better if they chose cheaper providers.
But the other interesting thing about Wisconsin is they
didn't tell anybody about expanded child care assistance. They
didn't do any active outreach when they made these changes, so
it did not increase the demand substantially. They also had a
policy in their welfare case manual called Light Touch, which
said that caseworkers should encourage independence. A way of
encouraging independence is not to tell people about benefits.
I think they have since gotten rid of this.
But they were very nervous about what would happen with
this demand, so they neglected to tell families. They have just
begun--they didn't do outreach until a year-and-a-half after
they made these changes.
Chairman Johnson of Connecticut. And what would you say was
the sort of average, and I can't remember who mentioned this in
your testimony, but the average income guidelines for working
poor subsidies?
Ms. Blank. I don't know if they are average. I believe that
there are 10 States that are below 150 percent poverty. Three
out of five States limit eligibility to 185 percent of poverty
or less.
Chairman Johnson of Connecticut. How many do 185 percent?
Ms. Blank. Three out of five.
The other interesting thing about income eligibility is no
matter what it is, that doesn't mean families are getting the
help. Even if families raise their eligibility, that doesn't
mean States have enough resources to serve all the eligible
families. They are hesitant to make child care assistance
widely known. It has never been an entitlement like Medicaid.
States are always going back and forth. You know, Ohio, because
they were so afraid of the demand that welfare would create,
lowered their eligibility. They made it too low. Then nobody
came, so they raised it. But when you keep doing that to
parents, they tend to shy away from the system.
Chairman Johnson of Connecticut. That is very hard. While
the Dependent Care Tax Credit only helps those who have a
taxable income, it does at least go to everybody eligible, you
know, if they claim it, and most of them do know to claim it.
But it doesn't help those below the incomes where it is useful.
Ms. Blank. Well, what is interesting about the DCTC, and I
think you are right, is that it is available to everyone. I
remember the year it got put on the short form. In 1982, this
was before we changed the income tax liability, so there were
more poor families with tax liability. Many low-income families
took advantage of the DCTC.
I found it interesting when we looked in my testimony, to
find so many low and lower-middle income families, because of
the different tax credits that are now in place, who wouldn't
benefit from changes in the DCTC.
Chairman Johnson of Connecticut. Of course that is to a
large extent the fact that we have excluded a tremendous number
of low earners from the tax, from paying taxes at all. So we
don't need to relieve them for this cost. We have relieved them
from any tax liability, as opposed to when we first passed the
Dependent Care Tax Credit. So in recent years we have really
excluded large new groups from paying taxes at all. It still
doesn't help that it's a large expense, but we are better off
not taxing them at all than giving them some relief.
Ms. Blank. I agree. But then we still have the mothers who
can't make it. There is a mother in my testimony in Manchester,
Connecticut, who made $24,000 a year, and is probably one of
the families that wouldn't get much help from the DCTC. She
paid I think 50 percent of her income in child care costs. So
these lower-middle income families are really having a hard
time.
Chairman Johnson of Connecticut. One last question before
I'll turn to Mr. Cardin, and then I'll come back if I want. But
one of the most distressing things I am seeing is that a lot of
people who are leaving welfare and working part-time want to
leave their children with family members or neighbors known to
them. They therefore cannot get the money. It's true. They
cannot get the low-income vouchers. They can if they qualify
for kinship care, but even kinship care you have to go through
a certain process. Many don't want to do that. So at the very
time when they need it the most, they are not getting any
voucher help.
Ms. Blank. You know what is interesting, across the country
people are saying the opposite. I think it depends on where you
regulate family child care. In California, they sense that most
of the money is going to informal care. In Connecticut, you
have to be regulated once you take one child. So if you are
doing family daycare with your voucher, you have to be in a
regulated setting. You are only one of nine states that say
once you take one child, you must be regulated. This is a state
decision. Maryland is another one. But in some states, like in
South Dakota, you can have 12 children and not be regulated. I
don't think this is a good idea, you could go to a neighbor
with 12 children.
The Block Grant is clear that you can use the money for
infant care. Parental choice is paramount. Parents can use the
money for relatives and neighbors and friends, and the certain
relatives do not have to meet standards. Now some states are
choosing to impose some requirements for relative as they are
concerned about liability because they are afraid that they
could be giving money to people who might have a criminal
background or whatever. There have been some horrendous
stories.
But it is very state-specific in terms of what the category
of unregulated care is.
Chairman Johnson of Connecticut. That's interesting. Then
it is more of a State problem, but it is having the effect of
eliminating the underground from any compensation. Where the
underground is just your children with a neighbor, the woman
ends up being deprived of the resources she needs. She is just
struggling along, at least that is the impression that I am
getting right now from workers in the field. They don't know
what to do about it, because they are stuck.
Ms. Blank. It is also interesting because in Connecticut
under AFDC, about 70 percent of the families on AFDC were using
unregulated care, as were 50 percent of the transitional
caseload. But I don't think anything has changed in terms of
the regulations.
Chairman Johnson of Connecticut. The way the money flows
has changed, so they can't pay these providers. So I'll check
further.
Ms. Blank. They may have imposed a requirement for a
background check.
Chairman Johnson of Connecticut. I don't know. I will have
to check on that.
Mr. Cardin.
Mr. Cardin. Well, it is a fascinating discussion. I really
want to follow on a point that Mrs. Johnson made which I agree
with. That is, the emphasis over the last several years has
been to try to help low-wage workers and to get them off the
tax rolls, if at all possible, to keep on raising that level
which a person is responsible for income taxes. In so doing, we
don't provide any help on their daycare expenses, their child
care. They child care expenses don't qualify for a tax credit
because they are not eligible for a tax credit because they are
not paying taxes.
I don't think anyone would argue that a low-wage worker is
in better financial shape than a higher-earner that pays income
taxes that can get the benefits from the Dependent Care Credit.
Certainly the low-wage worker has more difficult financial
straights in order to be able to afford daycare. It seems to
me, and I really would like your observations on this, that the
States are, on their programs, are concentrating on the people
that are on welfare. That they are trying to develop programs
to help people find employment, get off cash assistance, and
give them daycare, because they are going to need it.
So if the States are concentrating on the people coming off
of welfare, if the Federal tax credit program doesn't help low-
wage workers who may have never been on welfare, have only
created a real void in a real need area. I would just
appreciate your comments.
Mr. Carter. Mr. Cardin, if I could, I would just say in
Virginia, and I think in my testimony I talked about how we
have increased spending in our subsidy program, to that part of
our program where people are post-public assistance or have
never been on public assistance. We reduced our----
Mr. Cardin. I saw that. I notice that Virginia has, I
believe, obligated all your 1998 TANF funds?
Mr. Carter. That's correct.
Mr. Cardin. And you have transferred 15 percent of your
funds into the Child Care Block Grant. So can we assume that
you have taken care of all the child care needs in Virginia?
That people aren't hurting and getting child care?
Mr. Carter. I think also in the testimony it says that we
still have a waiting list of 2,300 families.
Mr. Cardin. So you have taken maximum advantage, used all
your funds, have really stretched and taken care of current
needs, with low welfare roll numbers. You still have a large
waiting list. Imagine those people on the waiting list--what
are their income levels?
Mr. Carter. No. 1, we haven't taken maximum. We have
transferred 15 percent of----
Mr. Cardin. But you used all your TANF funds. There's no
more left.
Mr. Carter. But we have also transferred 15 percent.
Mr. Cardin. I know, but you couldn't transfer any more
because you don't have any more to transfer. You might have
been able--you had to give up some other funding programs in
order to do that. Right?
Mr. Carter. That's accurate.
Mr. Cardin. So I assume you are using the money wisely.
Mr. Carter. We would like to think so.
Mr. Cardin. Whether it's child care or not child care.
Mr. Carter. We have got a 48-percent reduction in our
caseload.
Mr. Cardin. But you still have a large waiting list. You
still have a large needs list.
Mr. Carter. We continue to have an unmet need, yes.
Mr. Cardin. I think that answers my question.
Mr. Carter. I think what we have asked, what we have asked
is that where there have been attempts to make additional
dollars available, if those dollars will be unencumbered and
allow the Commonwealth to direct those to where the
Commonwealth chose to direct it to, as opposed to being
mandated where to put those dollars, then it would again allow
us to address that unmet need.
Mr. Cardin. I fully support the flexibility we have given
to the States. I am not here to say Virginia hasn't done the
best job in the Nation. You may have done the best job in the
Nation. But I am also proud of States that have some money in
reserve in the event that things don't go so well. If I were
managing a program, I would want to have a little bit reserved,
realizing that never before in the history of our Nation, never
before in the history of our Nation have we seen the type of
decline of people on the welfare rolls. I hope it is a trend
that will continue. But in my gut, I have a concern that we are
going to reach a time when the States are going to be hard
pressed for resources to deal with people who need cash
assistance. And that if you have taken your money away from
TANF, you may find yourself in a very difficult position to
meet those needs.
Now again, you may have done the very best job. But here
you are, you have maximized the resources in child care. I
congratulate you for that. But you still have a tremendous
unmet need. The people who aren't getting the services are
people who are working. Right?
Mr. Carter. The low-income subsidy system is yes, is for
those low-income working families, yes.
Mr. Cardin. But there are a lot of low-income working
families that aren't getting help.
Mr. Carter. We have reduced that waiting list to 2,300.
Mr. Cardin. Twenty three hundred?
Mr. Carter. Twenty three hundred, yes, sir.
Mr. Cardin. I will be glad to yield.
Chairman Johnson of Connecticut. I don't quite--I want to
get this clear. In your testimony, you say that you have
transferred 15 percent of the allowable 30 percent of TANF
funds, and that you were hesitant to recommend to the Governor
transferring the rest of the TANF funds that you could
transfer.
Mr. Carter. That is correct.
Chairman Johnson of Connecticut. I think Mr. Cardin is
hearing your testimony as that you have spent all your TANF
funds. So you couldn't transfer 15 percent more because you
have already spent them.
Mr. Carter. No, no. I'm sorry, Mr. Cardin. We currently
have about a $56 million TANF reserve at this point.
Mr. Cardin. It's not encumbered?
Mr. Carter. That is not encumbered. That is correct.
Mr. Cardin. How much is that?
Mr. Carter. Fifty six million dollars.
Mr. Cardin. What percentage is that? What are we talking
about? If you were to transfer that, how high a percentage
could you get to?
Mr. Carter. We could get to the 30 percent.
Chairman Johnson of Connecticut. I think what you meant
when you said that you had spent all your TANF funds, you meant
you spent all your daycare TANF funds?
Mr. Carter. Yes.
Chairman Johnson of Connecticut. You transferred 15
percent, and you could transfer another 15 percent, but you are
afraid that we are going to step in and take it?
Mr. Carter. That is accurate.
Chairman Johnson of Connecticut. We are going to fight
that.
Mr. Cardin. For the record, HHS is showing that you have
encumbered all of your funds. Now there is either a mistake in
the information you are presenting or a mistake we have from
HHS.
Mr. Carter. Mr. Cardin, I would, with all due respect, the
information--since I manage the program on a daily basis, I am
pretty comfortable with the information we have provided you
today.
Mr. Cardin. OK. So you are saying that the information
provided by HHS is wrong?
Mr. Carter. I would like to see that.
Chairman Johnson of Connecticut. It appears that way to
him.
Mr. Cardin. If I might just ask one or two more questions.
I particularly appreciate, Ms. Blank, you raising the issue on
quality on low-wage, that people who are in child care are
receiving low wages generally. That has to have an impact on
quality. There comes a time where you are going to get
turnover, you are not going to be able to keep the
professionalism that you need. It has got to have an impact.
Are we seeing any improvement on people who take care of our
children getting a fair wage for the services that they are
performing?
Ms. Blank. No. There are a few pioneers actually in the
State of North Carolina, that created a program that ties
minimal increases in education to increases in wages. They have
also created another program, which actually supplements child
care worker wages in a few counties. But we do find if you do
that, you can reduce turnover. The participants in Teach in
North Carolina in Orange County had a turnover that was reduced
from 44 to 10 percent.
But nationwide, we have a problem because women have to go
to work. If we keep daycare wages low, it is possible for women
to go to work. Every time I travel and I talk to people who are
running child care programs, whether it is Maryland, North
Carolina, Iowa, they all tell me the same thing. Over the last
decade, while we have seen increased Federal and State
investments in child care. Clearly, we have made great
progress. I don't deny that. They think that the environment in
programs for children are getting worse because they can't get
quality staff.
We talk about schoolteachers. Well, if we pay
schoolteachers in the District of Columbia--my youngest is
doing Teach for America, $26,000 a year, and we have trouble
getting them. Why would anyone work for $12,000 or $13,000 a
year?
When you do have turnover, it is very hard for children. I
have been in this business too long, so I remember testifying
maybe 12 years ago, and this little child got up and said to
his mother every Monday morning, ``Who is my teacher going to
be today?'' Because you can be in the same program, but your
teacher can switch. It is very hard to keep a program stable.
It is hard for children, it's hard for people in this business.
We just don't value our children enough. It is a make-shift
system. That is what we believe it will be, until we change our
minds.
Mr. Cardin. Let me just make an observation. It really
started with Mrs. Johnson and Mr. Stark's comments on this a
couple hours ago on quality. I think you are hitting an issue
of quality.
In another role that I had once before, heading the
Maryland Legal Services Corp., and I had some responsibility
for giving out money to Maryland legal service providers, I was
shocked at the low income that people in public interest law
were receiving, and conditioned a lot of new money on raising
salaries. It was somewhat of a surprise, because it worked. We
made a big jump in the salary level for people at legal aid. It
did an incredible, I think, service in attracting and keeping
people to do poverty law.
Now I know that some of my colleagues here would yell and
scream if I tried to put as a condition to this new funds that
there be improvement to the people who are providing these
services. I really would like to do that, but I don't think I
could get that through the Congress of the United States. But
it would be helpful.
Let me just make this comment. It would be helpful for
those that are advocates for additional Federal support, to be
able to come forward and show that one of the byproducts of a
stronger Federal role would be that the people who are
providing the services would receive a fairer wage. We know
that can't be done over night, but there should be some
commitment made to raise the salary levels for those that are
providing incredible service, taking care of our youngsters, at
wages that I agree with you, are just unacceptable.
That is obviously not something that we are going to be
able to deal with directly, or at least I don't think we are
going to be able to. But I would hope that those that can do
something about it would use some of the opportunities if we
are able to move forward with additional help to make progress.
Ms. Blank. Check on benefits, because they also don't--many
of them don't have health care or sick leave, and they are with
young children who get sick all the time. So when you start to
fix that----
Mr. Cardin. It's a quality issue. Thank you, Madam Chair.
Chairman Johnson of Connecticut. Mr. Carter, I just wanted
to ask you a couple of other questions. Does Virginia give most
of the money directly to the parents?
Mr. Carter. That's correct.
Chairman Johnson of Connecticut. How do the parents find
out about the various providers? Do you fund a large
information and referral service or do you find that's not
necessary?
Mr. Carter. We do fund an information and referral service.
We have expanded our outreach in that we are now putting
together a Web site to make child care information available.
We have also produced a registry of child care providers
that is in every library in the Commonwealth. So we really have
tried to in many ways make the information available to
families.
Chairman Johnson of Connecticut. Now did the Federal
Resource and Referral Block Grant free up some money for you
that you were using for resource and referral so that you could
devote it to actual care?
Mr. Carter. No. Quite frankly, we were making that
expenditure, we were making the resource and referral
expenditure prior to.
Chairman Johnson of Connecticut. Yes. So when we gave you
more money, did you just spend more on that or did you displace
that?
Mr. Carter. We had to spend more on that.
Chairman Johnson of Connecticut. You couldn't displace?
Mr. Carter. We were required to spend those dollars, we
were required to spend the set-aside dollars.
Chairman Johnson of Connecticut. So you couldn't reduce
your State effort when we gave you more money?
Mr. Carter. That's correct.
Chairman Johnson of Connecticut. Looking at where you are
now, would you rather have used some of those moneys for
vouchers or was that an appropriate expansion of your resource
and referral?
Mr. Carter. I would rather use every single dime possible
to put into a mother or mother and father's hands to purchase
services.
Chairman Johnson of Connecticut. On this business of the
HHS requirements and the requirements they wrote into the
regulations that we had stricken from the law----
Mr. Carter. Right.
Chairman Johnson of Connecticut. Why do you and the other
administrators oppose those? Would you give us a little bit
more insight into why you oppose the regulations?
Mr. Carter. I mean we certainly don't oppose all the
regulations. I am submitting with my written testimony a number
of concerns that States have with the legislation.
Chairman Johnson of Connecticut. Is that this?
Mr. Carter. Yes. But particularly the issue with the market
rate surveys in the 75th percentile, we have found that those
issues simply don't help us as States get to the provision of
quality child care. We think that was one of the reasons that
Congress wrote those out of the statute. Yet for HHS to turn
around and put it back in the statute, we just don't quite
understand, or put it back in the regulations, we don't
understand.
Chairman Johnson of Connecticut. And how do you try to
direct, affect the issue of quality?
Mr. Carter. Again, as I said in my written testimony, we
think that by providing appropriate information, to allow
parents to make informed decisions, and then putting dollars in
their hands, by what they do with those dollars, that will then
set the bar for quality.
Chairman Johnson of Connecticut. Do you have any idea what
percentage of the cost that your subsidies cover?
Mr. Carter. I'm sorry? The question again?
Chairman Johnson of Connecticut. The percentage of the cost
that your subsidies cover for low-income working families? I
imagine it's a sliding scale.
Mr. Carter. No, Madam Chairman. I'm sorry, I don't.
Chairman Johnson of Connecticut. And what is the maximum
income that your program deals with? What is the maximum income
a parent can earn?
Mr. Carter. We actually have three different categories
based on regions of the Commonwealth, because the economy of
the Commonwealth is so diverse. We go from as high as 185
percent down to a low of 150 percent of the Federal poverty
level.
Chairman Johnson of Connecticut. Thank you very much. If
there are no further questions, we thank you very much for your
testimony.
I would say, Helen, I appreciate all your data. It is a
terrible tension between the potential demand that States face,
and the salaries we are paying people, and then really the data
about what is actually happening now. What is the meaning of
those waiting lists? How many of those kids are really being
served? How many are being served by the economy that we can't
see, you know, family care and unlicensed care in States where
licensure is very strict. But I really appreciate your very
good data.
Thank you all for being here.
[Whereupon, at 4:12 p.m., the hearing was adjourned.]
[Submissions for the record follow:]
Statement of Bill Harrington, American Fathers Alliance
Father love, or members of a fathers extended family,
should be a mandatory option before federally funded childcare
is made available to an applicant for subsidized childcare
services. In an era of limited public resources, reasonable
options should be pursued before limited funding is made
available on an entitlement basis. Our reasonable proposal is
as follows:
Upon receipt of an application for subsidized childcare
services, every applicant should be required to provide the
name and mailing address of the father. The service agent
should mail a one page form to the father indicating whether or
not the father or paternal family member, including aunts or
uncles and grandparents, would be willing to care for the child
during the time for which the mother has filed for subsidized
childcare services. If such a document is returned from the
father and signed, indicating whether he or a family member is
willing to provide direct cost-free care for the child, this
option shall be exercised and the request for subsidized care
disallowed. If such document is not returned within 30 days,
funding should be granted until or unless the father petitions
the agency to request that he or his family members provide
child care services at no cost to the government.
Attached are research documents, the first which shows that
significant numbers of unwed fathers are primary caregivers of
children and they are doing an excellent job. In the second
report, married fathers are the principal source of care for
minor children, more than all paid childcare combined. Taken
together, these reports demonstrate the power and experience of
father love. That being the case, fathers and extended families
can reduce governmental spending and the consumption of tax-
payer dollars.
We learn there is no risk involved in having fathers caring
for their minor children. These loving and caring men and their
family members are available as a cost-free option to paid
childcare, and represent a decision clearly in the best
interest of the children. We urge your consideration of this
option, on behalf of loving fathers and family members from all
over America. Government is not a substitute for a father, but
fathers will always be a replacement for Governmental
assistance.
Statement of Cory J. Jensen, Men's Health Network
The taxpayers should not pay for childcare if a parent or
immediate family member is willing to do it for free. Childcare
assistance is an important element in moving adults from
welfare to work. If a parent or immediate family member is
willing to take care of the children, they should be given
priority in the matter. Studies find that parents and family
members are more able to take care of children and are
preferred by the children.
Before a person can receive subsidies for child care, they must
prove the following criteria:
(1) That the other parent has declined to care for the
child, or is unfit to care for the child. And, if the other
parent has declined or is unfit to care for the child:
(2) That members of the child's immediate family have
declined to care for the child, or are unfit to care for the
child.
In today's world divorced and unwed parents are common. If
the custodial parent works, is in job training or an education
program, the non-custodial parent should become the first
option in childcare. If the non-custodial parent is unwilling
or is unfit to care for the child, the immediate family should
be the next choice. If neither of these options is available,
only then should the government subsidize childcare.
Numerous studies cite the importance of parental
involvement in their children's lives. Whether wed, divorced or
unwed, both parents have a right to participate in the
upbringing of their children. The most obvious of these rights
and responsibilities is to provide for the day-to-day care of
the child. The federal government has acknowledged that
childcare assistance is crucial in moving welfare recipients
into the working world. Thus, if one member of the family is
willing to provide the childcare, not only does this relieve
the burden from the government and taxpayer, but it also
strengthens the bond between parent and child and has a
positive developmental influence on the child.
All too often fathers have been overlooked as willing
caretakers of their children. Not only are many fathers willing
and able to take care of their children, but a 1994 Census
Bureau report (Who's Minding the Kids?, Child Care
Arrangements: Fall 1991, P70-36) found fathers to be the
preferred day care providers. To quote Mary Hawkins, co-author
of the report, ``We are increasingly finding fathers to be the
preferred provider for child care . . . '' (Press Release, May
20, 1994).
Unfortunately, the data collected also appear to highlight
the barriers placed between children and fathers, if the father
has been displaced from the home or has never lived with the
mother. ``Divorce and separation agreements may be responsible
for these lower rates of child care participation. Also,
divorce or separation may result in geographic moves by either
parent that make a father's participation in child care
impossible. In addition, divorce or separation usually create
strained relationships that may not be conducive to frequent
daily contact between former spouses and their children''
(O'Connell, 1993).
A 1993 analysis by the Population Reference Bureau
highlights how many children are being cared for by their
fathers. ``In 1991, there were more children under age 15
living in married-couple families who had fathers as the
primary care providers (3.2 million) than the combined number
of children in child care centers and nursery schools (2.2
million)'' (O'Connell, 1993).
Day care costs were also studied, and the findings will be
of interest to those studying childcare guidelines. This is a
very lengthy and complicated study (61 pages) and we suggest
that the reader obtain a copy for a better understanding of the
definitions and terms used in the report. (U.S. Department of
Commerce, Bureau of the Census, Washington, D.C. 20233).
The involvement of fathers in their children's lives leads
to positive outcomes. Studies from as early as 1975 have
detailed the advantages of father involvement. The Child Study
Journal reported `` . . . significant differences favoring the
academic achievement of both boys and girls from father present
homes . . . '' Whereas ``father absence had a much greater
effect on . . . boys and girls . . . whose I.Q. was above 100''
(Sciara, 1975).
The misconception that fathers are less suited to child
raising than the mother is continuing to be debunked by
researchers. ``Child development is enhanced by more father
involvement . . . there is less sexism in the children.''
Fathers ``are able to meet the emotional and nurturance needs
of children'' (Hanson, 1985).
A 1981 study noted that ``the father plays an active and
unique role in part in his child's development.'' Unfortunately
``fathers participate in child care as much as the mother
allows'' (Jones). This proves to be an argument for allowing
non-custodial fathers to be the first option in childcare for
their children, should the mother choose to move from welfare
to work.
Not only do researchers promote fathers as an essential
component of child development, but it also has been shown that
when a father is absent, children suffer. ``Children whose
relationship with their fathers were disrupted were more
vulnerable to a wide range of problems'' (Beeson, 1984). While
researchers do a wonderful job of interpreting data, the views
of the children should not be overlooked.
Dan age eight: His mother was angrily attempting to prevent
any contact with the boy's father. Dan spoke of ``. . . awful
bad problems I'm having sleeping at night'' (Wallerstein &
Kelly, 1976).
Sonia rushed into her classroom and announced ``. . . with
glee . . .'' that her father had moved out the night before.
Soon thereafter, she began vomiting in her breakfast, and
alternately clung to and angrily shouted to her mother.
Fearfully and repetitively she asked her mother, ``Don't you
love me?'' For Sonia, the separation meant the loss of the
parent that clearly favored her, while she remained in the
custody of a rejecting mother who openly preferred her sibling
(Wallerstein & Kelly, 1976).
Bill: Teacher reported that, since the separation, Bill
seemed frightened and prone to outbursts of crying. At home,
Bill was moody, irritable, and forlorn at the loss of his
father (Wallerstein & Kelly, 1976).
Mary age nine: ``. . . If my father could visit more often, I
probably wouldn't mind so much (Wallerstein & Kelly, 1976).
Four-year-old girl: Reacted to the loss of her father with
nightmares, depression, and withdrawal from peers and
activities. (She had) strong guilt feelings, which pushed her
to a depressive, stage (Rosenthal, 1979).
Jane: Cried on the telephone when speaking with her father,
``I want to see you. I want to see you. I miss you . . . we
only see you once a month. That's not enough'' (Wallerstein &
Kelly, 1976).
Professional studies also document the detrimental effects
of decreased involvement of fathers.
(The) duration of contact with the father was directly
related to the quality of the father-child relationship and,
indirectly, to the child's adjustment. (The) key factors (are:)
insure that the father (has) easy access to his children and
input into his children's lives, both of which are frequently
denied fathers in actual practice (Shanon, 1977).
Additional studies support the concept that the presence of
a father is tied to psychological adjustment of the child.
Findings indicate a statistically significant association
between time lost in the presence of the father and current
adjustment. The more time lost, the higher the maladjustment
score. The direct impact on the child's psyche of reduced
contact with the father is an important factor to be considered
in further research (Jacobson, 1978).
With overwhelming evidence that fathers are important in
their children's lives, why not offer them the opportunity to
provide for childcare? When the mother is working, in job
training or an educational program a willing, non-custodial
father should be the first option in childcare. Along with the
obvious advantage of strengthening the child-parent
relationship, there are the additional benefits of lowered
government costs and involvement. Taxpayers should not be
forced to support a welfare program that circumvents childcare
by non-custodial parents or family members.
Selected References
Beeson, Betty Spillers (1984), Yours, Mine or Ours?:
Childhood Custody Decisions. Childhood Education, Sept/Oct.
Caper, Lynne M., Hawkins, Mary & O'Connell, Martin (1994),
``Who's Minding the Kids? Childcare Arrangements: Fall 1991.''
U.S. Bureau of the Census, Current Population Reports, U.S.
Government Printing Office, Washington, DC.
Hanson, Shirley (1985), Fatherhood: Contextual Variations.
American Behavioral Scientist, 29:1.
Jacobson, Doris (1978), The Impact of Marital Separation/
Divorce on Children I-III, Journal of Divorce, 1 & 2.
Jones, Colete (1981), Father to Infant Attachment: Effects
of Early contact and Characteristics of the Infant. Research in
Nursing and Health, 4.
O'Connell, Martin (1973), Where's Papa! Fathers' Role in
Child Care. Population Trends and Public Policy, No. 20.
Sciara, Frank J. (1975), Effects of Father Absence on the
Educational Achievement of Black Children. Child Study Journal
5:1.
Wallerstein, Judith S. & Kelly, Joan B (1976), The Effects
of Parental Divorce Experiences of the Child in Early Latency.
American Journal of Orthopsychiatry, 46:1.
Wallerstein, Judith S. & Kelly, Joan B (1976), The Effects
of Parental Divorce Experiences of the Child in Early Latency.
American Journal of Orthopsychiatry, 46:2.
Statement of Cristina B. Firvida, National Women's Law Center
Thank you for the opportunity to submit this statement to
the Subcommittee on Human Resources for its hearing on child
care financing. The National Women's Law Center is a non-profit
organization that has been working since 1972 to advance and
protect women's legal rights. The Center focuses on major
policy areas of importance to women and their families, with
special attention given to the concerns of low-income women.
For more than a decade, the Center has been a strong advocate
for federal and state policies that promote the availability,
affordability, and quality of child care in America.
At a time when the overwhelming majority of women with
children work outside the home, a major national investment is
necessary to improve the availability, quality and
affordability of child care, especially for low-income families
struggling to keep their jobs and become more self-sufficient.
As described in greater detail below, a significant new
investment in the Child Care Block Grant of $7.5 billion over
five years is needed as an important first step to increasing
the number of eligible families receiving help. Congress should
also act to increase the amounts of the Dependent Care Tax
Credit for lower and moderate income families and make it
refundable so that families with no or low federal income tax
liability can benefit from it.
The child care needs of American women and their families
have increased dramatically in recent years, as women with
children have entered the paid workforce in unprecedented
numbers. Seven out of ten American women with children under
the age of 18--and nearly three out of four women with school-
age children--work in the paid labor force today, representing
a major societal change since the 1940's when fewer than one in
five women with children worked outside the home. Working
parents know that providing their children with a safe and
nurturing child care environment can make an important
contribution to their children's healthy development. Yet high-
quality child care is too often unaffordable or simply not
available. Generally, the cost of child care today can range
from $4,000 to $10,000 annually; even at the lower end of the
range, child care expenses can consume a very high percentage
of low-income family's income.\1\ Although the federal
government does provide some assistance to low-income families
struggling with these high costs, too many families who are
eligible for this assistance do not receive it. In many cases,
high-quality care is not available at any price; recent studies
have shown that most child care and early education in the
United States fails to provide developmentally appropriate
activities, and in the most egregious cases, fails to maintain
basic safety and sanitary standards. Women and their families
thus have a tremendous stake in public policies that will help
make high-quality child care available and affordable to those
who need it.
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Endnotes follow Statement.
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Women have another interest in effective child care
policies as well: as child care providers. The vast majority of
child care providers in this country--some 98%--are women.
These women are working in a demanding occupation, charged with
providing loving care and a healthy learning environment for
the children entrusted to them. Yet the compensation these
teachers and care-givers receive--between $10,500 and $14,800
per year, on average, often with no benefits--shortchanges not
only the workers but also the children in their care, because
the lack of decent wages and career advancement opportunities
in child care make it difficult to attract and retain trained,
qualified care-givers.
Women thus have a profound and dual interest in the
enactment of effective child care policies. As parents, they
need access to high-quality child care that will help their
children learn and grow. As providers of child care services,
they need compensation, training and advancement opportunities
that will reflect the value of their important work while
enhancing their skills and the quality of the care they provide
to our nation's children.
It is not surprising, then, that child care is high on the
list of working women's concerns.\2\
I. Working Families and the Need for Child Care
A Large Majority of American Women With Children Work Outside
the Home
It is an undeniable fact of American life today that a
large and steadily growing majority of women with children--
married and single, with children of all ages from pre-school
to teens--must look to child care to provide a safe and
nurturing environment for their children during working hours.
In addition, an increasing number of women with children are
seeking a college education, and these women, too, need
affordable, high-quality child care if they are to have access
to the enhanced job prospects and increased earning power that
a college degree can bring them.
Over 70% of American women with children under age 18
(72%), and almost three-quarters with children between the ages
of 6 and 17 (74%), are in the paid labor force.\3\ Even the
majority of mothers with pre-schoolers now work outside the
home--65% of women with children under age 6 are in the paid
labor force, and 58% of mothers with infants (under age 1) are
either in the paid labor force or looking for paid
employment.\4\ A majority of these women work full time--73% of
all employed women with children under age 18, almost 70% of
these women with children under age 6, and over 65% of these
women with children under age 3 are working full time.\5\
These labor force participation rates reflect a steady and
dramatic increase over the last 50 years, as shown in the chart
below. In 1947, at the end of World War II, only 19% of women
with children under age 18 were in the paid labor force. By
1960, that number had jumped to nearly one-third, by 1980 it
was over half, and by 1990 it was over two-thirds.\6\
Similarly, in 1947, only 12% of women with children under age 6
were in the paid labor force; by 1960 that number had climbed
to over 20%, by 1980 it was over 46%, and by 1990 it was over
58%.\7\ And as women have moved into the labor force in greater
numbers, they have increasingly taken jobs that are both full
time and year round, partly due to economic necessity and
partly due to their movement into traditionally male-dominated
occupations that require full-time, year-round work.\8\
[GRAPHIC] [TIFF OMITTED] T5629.008
Mothers working outside the home today include married
women as well as women who are sole heads of their households.
In nearly 70% of married couples with children under age 18,
the mother is in the paid labor force, and 70% of these women
are working full time.\9\ Over 70% of mothers who are sole
heads of households with children under age 18 are in the paid
labor force, and 80% of these women are working full time.\10\
Today, only 23% of married-couple families with children
under age 18, and only 25% of married couples with children
under age 6, fit the traditional model of husband as sole
breadwinner.\11\
In short, it is an undeniable fact of American life today
that a large and steadily growing majority of women with
children--married and single, with children of all ages from
pre-school to teens--must look to child care to provide a safe
and nurturing environment for their children during working
hours. In addition, increasing numbers of women seeking a
college education have children, and these women, too, need
affordable, high-quality child care if they are to have access
to the enhanced job prospects and increased earning power that
a college degree can bring them.
Why Women Work: To Support Their Families
Most women who work outside the home do so as a result of
economic necessity. Some 10 million households with children--
almost 30% of all U.S. households with children--are headed by
women alone (women who are divorced, separated, widowed or
never married).\12\ These women must earn a living in order to
feed, clothe, house and otherwise sustain themselves and their
children. Child support alone does not enable these women to
provide for their children, because so few child support orders
are established or enforced, and when they are, the amount
collected is generally insufficient to contribute significantly
to meeting the demands of raising a child.\13\
Most married women, as well, work because their families
depend in large measure on their income. Surveys of working
women yield similar findings. In a 1997 survey of working
women, more than half of the married women respondents (52%)
reported that they contribute half or more of their household
income.\14\ A mother's income can often mean the difference to
a family between living below the poverty line and living above
it. One in five married women with children who do not work
outside the home live in poverty, while only one in one hundred
married women with children who work full-time live in
poverty.\15\ In addition, some married women work in order to
protect against complete financial dependence on a spouse and
being left with no job skills and inadequate means of support
in the event of divorce--a concern that is well-founded, in
light of the inadequacy of child support awards, as noted
above.
Many Families Need Help Paying for Child Care
Working parents who rely on child care often have a hard
time paying for it. For families with children between the ages
of three and five, at all income levels, child care and early
education is the third greatest expense after housing and
food.\16\ Nationally, child care consumes between 6% and 25% of
a family's income.\17\ However, one study of child care prices
in six cities found that, for a minimum-wage worker, the
average cost of care for an infant in a child care center would
be at least 50% of the family's annual income.\18\
Child care costs vary by the age of the child and the kind
of child care arrangement used. Generally, the cost of child
care today can range from $4,000 to $10,000 annually \19\--for
example, the average annual child care cost for one 4-year old
child in a child care center in Hartford, Connecticut is
$5,710; for a one year-old infant in a child care center in
Baltimore City, Maryland, $7,980.\20\ Yet about half of
families with young children earn less than $40,000 a year,\21\
and single mothers with children earn even less--in 1997, the
median income of families with children headed by a woman was
$17,256, 40% less than the median income of families with
children headed by a man ($28,668) and more than two-thirds
less than the median income of married couples with children
($54,395).\22\
Although the federal government provides some assistance to
low-income families struggling with the costs of child care and
early education, many families who are eligible for the
assistance do not receive it. The Child Care and Development
Block Grant allows states to help pay for child care for
families with incomes up to 85% of state median income.
However, all but four states disqualify families for help
before they reach this federally authorized level.\23\
In some states, the income eligibility cutoffs are so low
that only the poorest of the working poor can qualify. For
example, in West Virginia, the cut-off is at $15,000 per year
for a family of three (barely above the 1997 federal poverty
level of $13,330), while Iowa and South Carolina cut off
eligibility at $16,700.\24\
Even with eligibility cutoffs set so low, many states
cannot meet the demand for child care subsidies. As of January
1998, about half the states had to turn away eligible low-
income working families or put them on a waiting list due to
inadequate funds. In California, over 200,000 families--mostly
non-welfare, low-income workers--are on the child care subsidy
waiting list.\25\ A 1998 Children's Defense Fund study confirms
that inadequate federal and state funding prevents at least
nine out of ten eligible children in low-income working
families from getting the child care assistance they need.\26\
Moreover, even those families who do receive child care
assistance through the Block Grant struggle to meet their child
care expenses because the child care subsidies are often too
low to meet the needs of working families. In some cases, the
amount the state will pay for care is so low that parents
cannot find qualified providers who can afford to serve their
children.\27\ Delaware, for example, pays a maximum child care
subsidy for a four-year-old in a child care center that is $200
per month less than the amount needed to allow parents to
access care from three-quarters of Delaware providers.\28\
In other cases parents have to pay so much in parent fees
or co-payments that child care expenses remain a staggering
financial burden.\29\ In South Dakota, for example, a parent
earning $1,670 per month must contribute $500 per month (30% of
the family's income) in order to get a child care subsidy.\30\
The amount of support provided by the government to
families with child care expenses is in sharp contrast to the
support offered to assist with the cosy of higher education.
Families pay roughly 60% of total annual estimated expenditures
for child care and early education, while families pay only
about 23% of the cost of a public higher education.\31\ The
total government resources for higher education far exceed
those for child care and early education, amounting to about
$4,552 for every postsecondary student compared to $1,395 for
every child under age six in child care.\32\ This disparity in
government support is compounded by the fact that families are
usually better off financially by the time their children enter
college than they are when their children are younger and in
need of child care.\33\
Quality Child Care and Early Education: An Investment in Our
Children's Future
Working parents need access not just to affordable child
care, but to a child care setting that is safe and nurturing
and will contribute to their children's healthy development and
education. Quality child care is a wise investment in our
children's future.
Research on early brain development and school readiness
demonstrates that the experiences children have and the
attachments they form in the first three years of life have a
decisive, long-lasting impact on their later development and
learning.\34\ Recent breakthroughs in neuroscience show that
early interactions directly affect the way the brain is
``wired.'' \35\ Brain development is non-linear: there are
prime times for acquiring different kinds of knowledge and
skills \36\--for example, by age two, a child's brain contains
twice as many synapses and consumes twice as much energy as the
brain of an adult.\37\
For these reasons, the quality of child care has a lasting
impact on children's emotional well-being, social skills and
ability to learn.\38\ Children in poor-quality child care have
been found to be delayed in language and reading skills, and
display more aggression toward other children and adults.\39\
Children in higher-quality preschool classrooms display greater
receptive language ability and pre-math skills, view their
child care and themselves more positively, have warmer
relationships with their teachers, and have more advanced
social skills than those in lower-quality classrooms.\40\ In
addition, higher-quality programs can lead to children's long-
term success, including better school achievement, higher
earnings as adults, and decreased involvement with the criminal
justice system.\41\ Higher-quality programs also pay for
themselves in the long-run; researchers have found that seven
dollars in public expenditures is saved for every dollar spent
for quality child care and early childhood education.\42\
Despite these findings, many young children are being cared
for in settings in which books and toys required for physical
and intellectual growth are missing; warm, supportive
relationships with adults are lacking; and in some cases, basic
sanitary conditions are not met and safety problems are
endangering infants.\43\ It is not only pre-school children and
infants who suffer from a lack of quality care settings. It is
estimated that nearly five million children are left
unsupervised after school each week, and many children are in
settings that do not help them grow and learn because there are
no constructive activities to promote their physical and
intellectual development.\44\ The problem is most acute in low-
income communities, where fewer before- and after-school
programs are offered.\45\
Studies have indicated that school-age children who are
left alone after school are at greater risk of truancy, risk-
taking behavior, substance abuse, poor grades, and stress.\46\
FBI data show that violent juvenile crime triples in the hour
after the school bell rings with nearly half occurring between
2 p.m. and 8 p.m.\47\ In a recent survey, 92% of police chiefs
nationwide identified an increased government investment in
programs like child care and after-school programs as the most
effective anti-crime weapon by a four-to-one margin over trying
more juveniles as adults or even hiring additional police
officers.\48\
II. The Early Childhood Workforce: Women as Child Care Providers
The vast majority of child care providers in this country
are women. The child care workforce is 98% female, and one-
third women of color.\49\ These women--approximately 2.3
million early childhood teachers and teachers' assistants,
family child care providers, and in-home providers \50\--carry
the responsibility of providing a safe, nurturing, and
stimulating setting for the children entrusted to them each
day. The services these women provide can have a critical
impact on the successful development of the children in their
care.
Especially in light of their tremendous responsibility,
child care workers are shockingly under-compensated. The U.S.
Department of Labor reports that, in 1997, the median weekly
salary for a family child care provider was $202 per week,
which is $10,504 annually, based on 52 weeks of wages.\51\ This
is below the poverty threshold for a household that includes
one parent and one child.\52\ For an early childhood teaching
assistant, the median weekly salary was $239 per week, or
$12,428 annually, and for a worker in a child care center it
was $285 per week, or $14,820 annually.\53\ Moreover, many
child care workers receive little if anything in benefits from
their employers. Even among child care centers, the
availability of health care coverage for staff workers remains
woefully inadequate.\54\
Child care workers thus earn far less than the median
earnings for all workers ($26,156 in 1997), and less than the
median earnings for bus drivers ($21,060), janitors ($16,276),
or bartenders ($16,024).\55\
In order to support themselves, many child care workers are
forced to hold second jobs, continue to live with parents, or
forgo health insurance, medical care and savings for
retirement. As a result, many do not stay long in child care:
31% of all teaching staff leave their child care centers each
year.\56\
This high turnover rate is shortchanging not only child
care providers, but the children as well. The compensation of
child care staff is clearly linked to the quality of care and
education children receive. According to one study, ``teachers'
wages, their education and specialized training were the most
important characteristics that distinguish poor, mediocre, and
good-quality centers.'' \57\ Another study identified staff
wages as the most important predictor of the quality of care
children receive: better quality centers paid higher wages,
hired teachers with more education and training, and
experienced lower staff turnover.\58\ Reducing turnover is
critical, because the stability of the relationship between the
child and the care-giver is important to the child's social
development.\59\ For example, the U.S. Department of Defense,
in its Military Child Development System, ties wages and
advancement for its child care workers to training and
education, and in so doing has significantly reduced turnover
and thereby improved the morale and motivation of care givers
and the quality of care.
III. Increasing the Federal Investment in Child Care
A major investment is needed to improve the availability,
quality and affordability of child care, especially for low-
income families struggling to keep their jobs and become more
self-sufficient. Currently, at most one in ten low-income
families who are eligible for assistance through the Child Care
Block Grant are receiving the assistance they need. A new
investment in the Block Grant of $7.5 billion over five years
would be a significant first step in increasing the number of
eligible families receiving help. Some of the additional money
should be used to improve the quality of child care programs,
especially for infants and toddlers and for early learning
programs for pre-school children. Using additional Block Grant
funds to enhance the compensation and training of child care
providers would also result in higher quality care for
children.
It is also critical that Congress act to strengthen and
restore the value of the Dependent Care Tax Credit (``DCTC''),
especially for lower- and moderate-income families. The DCTC
provides valuable assistance to families by allowing taxpayers
to offset a portion of their employment-related dependent care
expenses against their federal income tax liability. Since the
credit was last expanded in 1981, however, its value has
eroded, particularly for low-and moderate-income families. To
restore the value of the DCTC to these families, it should be
made refundable so that families with no or low federal income
tax liability can benefit from it. In addition, a number of
other improvements should be enacted to strengthen the DCTC,
such as raising the percentages of qualifying expenses that may
be taken as a credit to help families cover the cost of more of
their qualifying child care expenses. Improving the DCTC,
however, must be paired with a significant expansion of the
Child Care Block Grant if low-income families are to receive
the level of assistance they truly need to meet their child
care expenses.
Thank you again for this opportunity, and if the Center can
be of assistance to you in your deliberations, please do not
hesitate to call on us.
References
\1\ Child Care Information Exchange, July 1996.
\2\ See, e.g., Ask a Working Woman, a report on the national survey
for the Working Women's Department, AFL-CIO (1997); Women: the New
Providers, Whirlpool Foundation study by Families and Work Institute
(May 1995).
\3\ Tabulations based on Department of Labor, U.S. Bureau of Labor
Statistics, Employment Characteristics of Families, Current Population
Survey, 1997, Summary and Table 3. These percentages understate how
many women raising children are in the paid labor force because they
reflect only women raising their own children, and do not include the
many women who are raising grandchildren, nieces and nephews, or other
related children.
\4\ Id.
\5\ Id, Tables 5 and 6. Of all mothers of children under age 18,
50% work full time; of all mothers of children under age 6, 42% work
full time; and of all mothers of children under age 3, 37% work full
time. Id.
\6\ U.S. House of Representatives Committee on Ways and Means, 1996
Green Book, Table 10-1.
\7\ Id.
\8\ U.S. Department of Labor, Women's Bureau, ``Facts on Working
Women: 20 Facts on Women Workers,'' Sept. 1996.
\9\ Tabulations based on data from Department of Labor, U.S. Bureau
of Labor Statistics, Marital and Family Characteristics of the Labor
Force, Current Population Survey, 1996, Tables 5 and 6. The number of
mothers in the paid labor force includes mothers who are working
outside the home as well as mothers who are seeking work outside the
home.
\10\ Id.
\11\ Tabulation based on data from U.S. Department of Commerce,
Bureau of the Census, Money Income in the United States: 1997, Current
Population Reports, Consumer Income, No. P60-200 (September 1998),
Table 6.
\12\ U.S. Department of Commerce, Bureau of the Census, Household &
Family Characteristics: March 1997, Current Population Reports, (April
1998), p. 6.
\13\ In 1991, the most recent year for which these data are
available, only 38% of custodial mothers actually received any child
support payments, and the payments received on average were
approximately only $148 per month per child. U.S. Department of
Commerce, Bureau of the Census, Child Support for Custodial Mothers and
Fathers: 1991, Current Population Reports, Consumer Income, Series P-
60, No. 187.
\14\ Ask A Working Woman, p. 8.
\15\ U.S. Department Of Commerce, Bureau of the Census, Poverty in
the United States: 1997, Current Population Reports, Consumer Income,
No. P60-201, Table 3.
\16\ U.S. Department Of Commerce, Bureau of the Census, Statistical
Abstract: 1998, Table 732 (1998).
\17\ What Does it Cost to Mind Our Preschoolers?, Table 3.
\18\ Clark and Long, Child Care Prices: A Profile of Six
Communities--Final Report (The Urban Institute 1995).
\19\ Child Care Information Exchange, July 1996.
\20\ Child Care Challenges. (1998). Washington, DC: CDF. Also data
from The California Child Care Portfolio. (1997). San Francisco:
California Child Care Resource and Referral Network. Data collected
from resource and referral agencies in each city.
\21\ Bureau of Census, U.S. Dep't of Commerce, Current Population
Reports, P60-197, Money and Income in the United States: 1997 (1998).
\22\ Bureau of Census, U.S. Dep't of Commerce, Historical Income
Tables-Families, Table F-10 (1998).
\23\ Locked Doors: States Struggling to Meet the Child Care Needs
of Low-Income Working Families. (1998). Washington, DC: CDF.
\24\ Id.
\25\ General Accounting Office, Welfare Reform: States' Efforts to
Expand Child Care Programs, GAO/HEHS-98-27, (Washington, DC: General
Accounting Office, January 1998).
\26\ Locked Doors: States Struggling to Meet the Child Care Needs
of Low-Income Working Families. (1998). Washington, DC: CDF
\27\ Id.
\28\ Id.
\29\ Id.
\30\ Id.
\31\ ``Financing Child Care in the United States: An Illustrative
Catalog of Current Strategies,'' The Ewing Marion Kauffman Foundation &
The Pew Charitable Trusts, 1997, p. 2.
\32\ Teresa Vast, The Postsecondary Financial Aid System: Potential
Strategies for Early Care and Education, Robert R. McCormick Tribune
Foundation and the National Association for the Education of Young
Children, September 1997.
\33\ ``Financing Child Care in the United States: An Illustrative
Catalog of Current Strategies,'' The Ewing Marion Kauffman Foundation &
the Pew Charitable Trusts, 1997, p. 3.
\34\ Shore, Rima. Rethinking the Brain: New Insights into Early
Development, Families and Work Institute, NY, 1997, p. 64.
\35\ Id. at p. 18.
\36\ Id.
\37\ J. Madeleine Nash, Fertile Minds, Time Magazine, February 3,
1997, Vol. 149, No. 5.
\38\ Starting Points: Meeting the Needs of Our Youngest Children.
(1994, Aug.). New York: Carnegie Corporation.
\39\ Facts about Child Care in America (1998). Washington, DC: CDF.
\40\ Helburn et al., Cost, Quality, and Child Outcomes Study,
Economics Department, University of Colorado at Denver, January (1995).
\41\ See, e.g., The Future of Children: Long-Term Outcomes of Early
Childhood Programs, Center for the Future of Children and David and
Lucile Packard Foundation, Vol. 5, No. 3 (Winter 1995).
\42\ Teresa Vast, The Postsecondary Financial Aid System: Potential
Strategies for Early Care and Education, Robert R. McCormick Tribune
Foundation and the National Association for the Education of Young
Children, September 1997.
\43\ Helburn et al., supra. Indeed, one study of four states found
fully 40 percent of the rooms serving infants in child care centers to
be of such poor quality as to jeopardize children's health, safety, or
development. Studies of family child care produced equally troubling
results. The term family child care is used to refer to the care of
unrelated children in the home of the provider.
\44\ School-Age Child Care Project, Fact sheet on school-age
children, Center for Research on Women, Wellesley College, October
1997.
\45\ U.S. Department of Education, The Condition of Education:
1993, National Center for Education Statistics 1993.
\46\ Dwyer et al. Characteristics of Eighth-Grade Students Who
Initiate Self-Care in Elementary and Junior High School, Pediatrics,
86.
\47\ Sickmund, M., Snyder, H.N., Poe-Yamagata, E., ``Juvenile
Offenders and Victims: 1997 Update on Violence,'' National Center for
Juvenile Justice (Washington, DC: Office of Juvenile Justice and
Delinquency Prevention); Fox, J.A. and Newman, S.A., ``After-School
Programs or After-School Crime'' (Washington, DC: Fight Crime: Invest
in Kids, September 1997), p. 1.
\48\ ``Police Chiefs Say More Government Investments in Kids are
Key to Fighting Crime.'' (Washington, DC: Fight Crime: Invest In Kids,
1996), p. 1.
\49\ Making Work Pay in the Child Care Industry, National Center
for the Early Childhood Work Force (1997).
\50\ U.S. Department of Labor, Women's Bureau, ``Facts on Working
Women: Child Care Workers,'' November 1997.
\51\ U.S. Department of Labor, Bureau of Labor Statistics, Current
Population Survey 1997, Household Data, Annual Averages, Table 39.
\52\ U.S. Department Of Commerce, Bureau of the Census, Poverty in
the United States: 1997, Current Population Reports, Consumer Income,
No. P60-201, Table 1.
\53\ U.S. Department of Labor, Bureau of Labor Statistics, Current
Population Survey 1997; Household Data, Table 39.
\54\ Center for the Child Care Workforce, Worthy Work, Unlivable
Wages (Washington D.C., 1998), p. 20.
\55\ Id.
\56\ Worthy Work, Unlivable Wages, supra, p. 19. The turnover rate
is nearly 40% for lower-paid teaching assistants in child care centers.
Id.
\57\ Helburn et al., supra.
\58\ Whitebook, M., et al., Who Cares? Child Care Teachers and the
Quality of Care in America, Final Report, National Child Care Staffing
Study, Child Care Employee Project, 1990.
\59\ Whitebook et al., supra.
Statement of Kathryn J. Rodgers, NOW Legal Defense and Education Fund,
New York, New York
Thank you for the opportunity to submit testimony to the
House Ways and Means Committee on the importance of child care
and early education for American families. NOW Legal Defense
and Education Fund (NOWLDEF) has a 29-year commitment to
women's rights and equality, particularly economic justice for
all women. Access to affordable child care is essential to
achieving this goal. In fact, affordable quality child care and
early education programs are not only vital for women's
economic independence, but are also critical to their
children's development and well-being.
I. Introduction
As women become a larger part of the workforce, child care
has become a national issue. Availability of high quality,
reliable and affordable child care is often the only way that
women with children can fulfill their potential as workers and
support their families. At the same time, research has made it
clear that good quality child care in a child's early years can
make the critical difference in that child's ability to
succeed. How we care for our children is a central issue
affecting America's ability to utilize the full potential of
the nation's workforce. Providing quality care is also
necessary to ensure the country's future.
The critical importance of child care is nowhere more
apparent than in the lives of low income women. Two years into
welfare reform, the welfare rolls have declined dramatically
and many poor single women with children have moved into the
workplace. As this has happened, the inadequacy of our child
care system has become extremely clear. Now is the time for a
federal commitment to our nation's children, to make the
resources available to ensure that while their parents work,
their will have decent quality care. The American people
support increased funding for child care and in particular
support child care assistance for low income families.
According to a national survey sponsored by the W.K. Kellog
Foundation, 86% of Americans believe that child care should be
available to all low income families so that parents can
work.\1\ This cannot happen unless the federal government
targets sufficient resources specifically for child care to
enable the states to provide child care and child care
subsidies for all who need them.
---------------------------------------------------------------------------
\1\ Endnotes follow Statement.
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Our testimony provides a brief history of the federal
commitment in this area. We then outline the need for an
improved child care system, the particular problems facing
women moving from welfare to work, the critical need for child
care for all low income families (not just those receiving
welfare), the importance of quality care for our nation's
children, and the international context in which this country
makes decisions about our commitment to our children.
Based on this survey of available data, we urge Congress to
take the following urgently needed actions to support children
and their families:
Increase funding for the Child Care and
Development Block Grant (``CCDBG'') to a level that will enable
states to meet the child care needs of all families with
incomes below 85% of the State Median Income.
Require states to provide child care subsidies for
all low income families who meet the federal CCDBG income
standards.
Require states to provide women required to work
under the Personal Responsibility and Work Reconciliation Act
(``PRA'') with information on child care subsidies, available
child care options and her right not to be sanctioned for
failing to meet work requirements if the reason is the lack of
appropriate child care for her child.
Limit the co-payments that can be charged low
income working families to a set percentage of income and
prohibit co-payments for Temporary Aid for Needy Families
(``TANF'') recipients.
Increase funding under the CCDBG to improve the
quality of child care. Additional funding can be used to train
providers, enforce quality and health and safety standards and
provide comprehensive services such as parent education and
health and nutrition programs to children and families in child
care programs.
Require states to perform market surveys annually
and provide at least 75% of the cost of child care for eligible
children.
Increase funding to expand and improve Head Start.
II. Historic Federal Commitment to Child Care
Congress has long recognized the importance of quality
early education and child care programs for low income
families. During the New Deal of the 1930's, the federal
government first entered the child care business by
establishing federally funded nursery schools for poor
children. Although the schools were primarily established to
create jobs for unemployed teachers, nurses and others (as
opposed to child care for working parents), when large numbers
of mothers began to enter the labor force during World War II,
many of these nursery schools were expanded to provide child
care services. In fact, under the Latham Act, the federal
government financed child care programs for approximately
550,000-600,000 children during the war years.\2\
Although financing for these programs ended in 1946, the
need for child care and early education programs continued. In
1965, the federal government again responded to this need by
making a major commitment to the early education of low income
children with the establishment of the Head Start program, 42
U.S.C. Sec. 9801. This important program, which has served over
15 million children since 1965, provides comprehensive services
including quality early childhood education, nutrition, health
and social services, along with a strong parent involvement
focus, to low income children nationwide.\3\
In 1988, Congress enacted legislation providing child care
for families receiving Aid to Families with Dependent Children
(``AFDC''), families that formerly received AFDC, and low
income working parents at risk of becoming dependent on AFDC.
Two years later in 1990, Congress created the CCDBG, 42 U.S.C.
Sec. 9858, to provide child care assistance for low income
families as well as funds to improve the quality and
accessibility of child care overall. In 1996, under the PRA,
Congress eliminated the AFDC linked-child care entitlement
programs and shifted the funding for these programs into the
CCDBG.\4\
Although Head Start and the CCDBG block grant contribute to
providing our nation's families with the child care and early
education they need, they are far from adequate. Head Start
only serves two out five eligible children,\5\ and many
children of working parents who could benefit from its services
cannot take advantage of them because most Head Start programs
do not offer full-day or year-round programs. Likewise, the
CCDBG currently serves only 1 out of 10 eligible children.\6\
This leaves so many children and families without decent care
that it is not an overstatement to say that there is currently
a national crisis in affordable, quality child care, especially
for low income families. Clearly, the federal government can do
much more to make affordable quality child care a reality by
making major funding increases in these programs.
III. The Need for Federal Commitment to Child Care
The need for child care is clear. Since World War II, the
number of women entering the paid labor force has increased
dramatically. Three-quarters of women with children between the
ages of 6 and 7 work outside the home.\7\ Women with pre-school
children have also entered the workforce in significant
numbers. In 1947 only 12% of women with pre-school children
worked. By 1996, 62% of working women had young children--a
rate five times higher than in 1947.\8\ Yet in 1996, while
there were an estimated 13 million children with working
mothers, there were only 93,000 licensed child care facilities
throughout the United States.\9\
As clear as the need for more quality child care is the
fact that most working parents cannot afford that care without
help. Full-day child care costs between $4,000 and $10,000 per
year.\10\ At the same time, half of America's families with
young children earn less than $35,000 per year.\11\ A family
with two parents working full-time at minimum wage jobs earns
only $21,400 per year. In short, quality child care is out of
the reach of most low income American families unless there is
governmental support.
A. Welfare-to-Work Issues
Passage of the PRA has increased the need for federal child
care support.\12\ Under the PRA, Congress for the first time
required states to impose work requirements on single parent
families with pre-school age children who receive cash
assistance through the TANF block grant.\13\ The PRA ended 60
years of federal commitment to support poor single parents so
that they could care for their children in their own homes.
Instead, the federal policy now mandates work for all poor
single parents in need of public assistance. Yet the children
in these poor families still need care, and unfortunately, when
Congress enacted the PRA, it also repealed provisions which
guaranteed child care to low income families.\14\
Although funding was increased for child care subsidies in
1996 under the CCDBG, experts acknowledged that the increase
was not sufficient to provide quality child care for all poor
families that need it. According to the estimates by the
Congressional Budget Office at the time of enactment of the
PRA, if states put single parents on welfare to work at the
rates required by the new law, there would be a $1.8 billion
shortfall in what would be needed to supply child care for
children of those parents by the year 2002.\15\ Indeed, a
recent study of welfare recipients found that 60 percent
reported that unavailability of child care kept them from
participating in work programs.\16\ In New York City, where
there is a strong initiative to put all mothers on the welfare
rolls to work, the city's own figures show that there is
insufficient child care available. In December 1998, there were
57,000 children on welfare who were under the age of 3. At the
same time, there were only 7,842 spaces for children in the
city's subsidized family day care system, 1,120 spaces in the
city's day care centers and 850 spaces in other centers that
took subsidized children. In short, child care spaces were only
available for one out of ten children in the city of New
York.\17\ Similarly, a report on California's AFDC population
estimated that there would need to be a 1,800% increase in
child care funding to provide subsidized child care to all
children receiving welfare.\18\
In a nation with limited affordable child care, requiring
poor parents to work outside the home for subsistence benefits
without guaranteeing them child care creates both a moral and a
real-life crisis while undermining the work goals of the PRA.
Yet, to this day, Congress has failed to assure that care will
be available for the children of poor parents forced to work
outside the home when their low wages or a welfare check cannot
possibly buy quality child care. Many states faced with moving
significant numbers of poor women with children into the
workforce, but without sufficient funds to ensure that all
children can be placed in high quality subsidized care have
responded in ways that are (1) harmful to both women and
children, (2) counter-productive to the goal of making work
possible for single mothers with children, and (3) contrary to
federal law.
(1) Need for Better Notice to Recipients of Their Rights To
Subsidies and Their Right Not to be Sanctioned.--Congress
provided certain child care protections in TANF and the CCDBG.
Under the CCDBG, states have an obligation to inform parents
about the availability of subsidies and their child care
options.\19\ Under TANF, states are prohibited from sanctioning
women who cannot meet work requirements because they do not
have appropriate care for their pre-school child.\20\
Unfortunately, these protections are insufficient to protect
poor families. Many states are not letting women know that
child care subsidies are available. Few states are telling
mothers that they cannot be sanctioned if they cannot meet work
requirements due to the lack of child care for their pre-school
age child. In fact, as of this date no state has defined the
term ``appropriate care'' for purposes of determining whether a
woman with a pre-school child can perform work outside her
home. The result is that many mothers are using any care they
can for their children or suffering loss of benefits in order
to remain at home caring for their children. At one end of the
spectrum are the horror stories of deaths of young children
placed in the care of young siblings, abusive boyfriends or
incompetent or neglectful caregivers:
In Wisconsin, a 13 year old child with severe
mental and physical handicaps, DeAndre Reeves, died while left
without adequate supervision while his mother had to meet work
requirements. His death followed months of pleading by his
mother with caseworkers, social workers and her state
representative that her son needed her personal care. She was
not offered appropriate care for her son nor was she told
anything but that she had to work to get her welfare check. A
welfare rights group in Wisconsin places the death toll at 7 of
children killed in inappropriate informal care situations while
their mothers complied with work requirements.\21\
In New York, a mother required to start a workfare
job left her children with her boyfriend because she had no
other care; when her 3-year old daughter cried too much, he
beat her to death; the woman's other children were subsequently
placed in foster care.\22\
In Washington, a woman told she would lose her
welfare benefits if she did not attend an orientation program
for workfare and that she could not bring her 4-month old to
the orientation left the child with an 11-year old who did not
know what to do when the child vomited, left the baby on his
back and returned to find that the baby had died by aspirating
on his vomit.\23\
For most mothers told they have no choice but to leave
their children with anyone they can find, there is a constant
fear that their children will become another victim of
inadequate or abusive care.
Failure to inform women of their options with respect to
child care is nothing new. Studies of low income women entitled
to child care subsidies under prior law show that most of the
population eligible for subsidies did not know about them and
consequently did not use them.\24\ Estimates are that fewer
than 20% of welfare or former welfare recipients in employment
programs in California in 1995 knew about child care subsidies
potentially available to them; similarly, in Georgia, less than
half of those leaving welfare for work were aware of the
potential availability of Transitional Child Care assistance
and only about 35% of those eligible for the program received
assistance. In New York, a study by the Public Advocate for New
York City found that welfare families were consistently
misinformed by welfare program staff about available child care
subsidies, with almost half never informed that subsidies were
available and the same proportion believing they would lose
their grant if they did not find child care. Half of the women
given referrals by the Office of Employment Services, the
agency responsible for workfare placements, were not able to
find child care from the referrals either because the programs
were already full or were not accessible to the family.\25\
(2) Need for child care subsidies for all low-income
families.--There is not enough money for child care in any
state to ensure that all low-income families can provide good
quality care for their children. Although the welfare rolls
have dropped dramatically in the last five years, the majority
of those leaving welfare move into low paying jobs that do not
provide enough income to lift a family of three out of poverty,
even when child care costs are not considered. By March 1998,
only 8% of the previous year's recipients had jobs paying
weekly wages above the poverty line--barely up from 6% in March
1990. At the same time, the proportion of workers with weekly
wages below three-quarters of the poverty line surged from 6%
to 14.5%.\26\ As women move off the welfare rolls and into
employment, they earn wages that are often little better than
what their welfare benefits were--and out of those low wages,
they must pay for child care. Given the average cost of child
care in the United States, it is clearly impossible for low-
income women to provide quality child care for their children
without outside help. And, in many cases, paying for child care
may make it impossible to provide for the other basic needs of
the family.
Provision of child care support for all low-income mothers
with children is therefore critical to allowing women to remain
in the workforce when they leave welfare and enabling working
single parent families to maintain a standard of living that
meets their basic needs. In theory, the child care block grant,
the CCDBG, permits states to make their child care systems a
``seamless web'' in which welfare recipients, those
transitioning off of welfare and other low income women workers
are all eligible for child care subsidies as long as they earn
less than 85% of the State Median Income. However, this theory
has not become a reality.\27\ While some states have increased
funding for child care for working poor families (e.g,.
California by 12%; Texas, Pennsylvania by 24%; Florida by 70%),
many states have decreased their child care subsidy funding for
low-income working families (Minnesota by 24%; Ohio by 11%; New
York by 5%). According to the Department of Health and Human
Services (``HHS''), no state provides child care subsidies for
all families who would be eligible under the CCDBG block grant
standards.\28\
Some states that claim to provide subsidies for the working
poor require co-payments even of very low-income families. For
example, eight states require co-payment fees for all families
regardless of income ranging from 10% to 30% of the family's
income.\29\ At least seventeen states charge co-payments to
TANF families.\30\
In addition, some states that provide subsidies to low-
income families as well as welfare reliant families do not
provide subsidies that are high enough to purchase quality
care. Under the terms of the CCDBG, states must ensure that
their subsidies are high enough to purchase child care. Almost
all states do this by means of a market rate survey and a
provision of subsidy at a certain percentage of the market rate
needed to purchase care. However, according to HHS, in 1998,
only 12 states reported having conducted a survey in 1997 and
many had not done so in three or four years.\31\
B. Quality of Care
In addition to being crucial to parents' abilities to work,
affordable, quality child care and early education programs are
essential to children's development. The early years of a
child's life are critical to intellectual development and later
academic success. The first three years of life are
particularly important to children's early learning and
development.\32\ A recent Carnegie study pointed out that ``the
quality of young children's environment and social experience
has a decisive, long-lasting impact on their well-being and
ability to learn.'' \33\
Low income children in particular have a great need for
quality care and education. Low income children are 30% more
likely to suffer from delays in growth or development, a
significant emotional or behavioral problem or a learning
disability.\34\ Children on welfare are three times more likely
to be in poor health than non-poor children.\35\ As more poor
single parent families move into the workforce, and, as noted
above, are not earning wages that lift their families above
poverty, the need to support their children with good quality
child care grows. In a nation where one in four children grow
up in poverty, and 45% of all children under age six live in
poverty,\36\ a national commitment to provide quality child
care for these children whose parents are working would seem
consistent with fairness, equality of opportunity and the long-
term goal of assuring that all Americans can contribute to the
development of society. However, a large number of families,
particularly low income families, do not have access to quality
care due to unavailability or high costs of such care. As a
result, many children miss out on an important opportunity for
early learning, which in the long run can jeopardize their
ability to succeed in school and their ability to succeed in
life.
The magnitude of this problem is significant considering
the number of American children in child care. Each day, an
estimated 13 million pre-school children--including six million
infants and toddlers--spend some or all of their day being
cared for by someone other than their parents.\37\
Unfortunately, the quality of care received by many children is
low.
A study of the quality of child care centers found that 7
in 10 child care centers in the United States provided mediocre
care, and 1 in 8 had care that was so inadequate that it
threatened the health and safety of children.\38\ Indeed, 40%
of infant and toddler rooms in centers were found to endanger
children's health and safety.\39\
While poor quality care affects families at all income
levels, low income families are more likely to be cared for in
settings that do not meet quality standards (such as
unregulated family child care and profit making centers). A
national study of child care in family-based settings found
that low income and minority children were more likely to be in
lower quality programs than other children.\40\
IV. The International Context
A national commitment to child care and early education is
not unprecedented. Indeed, during the national crises created
by the Depression and World War II, the United States showed
that the federal government would devote federal resources to
child care when necessary. Now should be no different. In fact,
since this country is in the midst of a child care crisis,
federal action is needed more than ever.
In making child care a national priority, the United States
must follow the lead of 191 countries worldwide that consider
child care a basic human right. These 191 countries have all
ratified the Convention on the Rights of the Child which
provides that parties ``shall take all appropriate measures to
ensure that children of working parents have the right to
benefit from child-care services and facilities for which they
are eligible.'' \41\ Although the United States has signed this
important international treaty (which in and of itself
obligates it to accept the Convention's norms), it and Somalia
are the only two countries that have failed to ratify it.\42\
In contrast, many European countries take their commitment
under the Convention seriously and have made access to child
and early education programs national priorities. For instance,
France has one of the most ambitious and comprehensive systems
of free public pre-school in the world,\43\ and in 1995 Sweden
amended its Social Services Act to require municipalities to
provide child care for children between the ages of 1 and 12
whose parents need it.\44\ The United States should not lag
behind other industrialized nations in its commitment to
children and parents. Rather, if the United States is to remain
a world leader, it must follow the lead of other nations and
make child care and early education a national priority.
V. Federal Support for Child Care is Crucial
Despite the challenge of welfare reform, despite the
infusion of additional funds to the states for child care,
despite the availability of TANF surplus money in some states,
the states are not meeting the child care needs of low income
families. There are simply too many children in low income
families who need child care, and because quality child care is
so expensive, the states cannot provide it without a commitment
from the federal government to make quality and affordable
child care and early education programs a national priority.
With respect to TANF surpluses, this Committee should be
aware that not all states have such surpluses.\45\ Nineteen
states, including California, have no TANF surpluses. Children
in those states as in other states need good quality child
care. To refuse to provide additional federal money for child
care because some states have TANF surpluses will penalize
those states and the children in those states for the state's
appropriate expenditure of federal TANF money on the needs of
the TANF population. Furthermore, that some states have
surpluses in their budgets from TANF or from other sources does
not mean that they will choose to spend that money on child
care. In any event, the availability of quality child care for
any American child should not depend on which state he or she
happens to live.
Whatever states are doing with their TANF money, they are
all spending 100% of the money appropriated under CCDBG. But
they know it is not enough. In a recent survey done by the
Children's Defense Fund, most states admitted that those
entitled to subsidies did not know about them and conceded that
if all who were eligible did apply, the needs of those families
could not be met.\46\ A floodgates fear is one of the things
that keeps the states from making a commitment to child care
for all of their children. Good quality child care will only be
available to all children in all low income families across the
country if there is comprehensive federal legislation that
makes a major federal investment in improving the availability,
affordability and quality of child care and early education
programs. The states cannot do it alone.
Again, we ask Congress to:
Increase funding for the CCDBG to a level that
will enable states to meet the child care needs of all families
with incomes below 85% of the State Median Income.
Require states to provide child care subsidies for
all low income families who meet the federal CCDBG income
standards.
Require states to provide women required to work
under the PRA with information on child care subsidies,
available child care options and her right not to be sanctioned
for failing to meet work requirements if the reason is the lack
of appropriate child care for her child.
Limit the co-payments that can be charged low
income working families to a set percentage of income and
prohibit co-payments for TANF recipients.
Increase funding under the CCDBG to improve the
quality of child care. Additional funding can be used to train
providers, enforce quality and health and safety standards and
provide comprehensive services such as parent education and
health and nutrition programs to children and families in child
care programs.
Require states to perform market surveys annually
and provide at least 75% of the cost of child care for eligible
children.
Increase funding to expand and improve Head Start.
References
\1\ Only 10% disagree with this statement and 5% don't know. Survey
is posted at www.wkkf.org/programminginterests/devolution/survey/
default
\2\ Committee on Ways and Means, U.S. House of Representatives,
1998 Green Book Background Material and Data on Programs within the
Jurisdiction of the Committee on Ways and Means, 105th Congress, 2d.
Sess., at 676 (May 19, 1998) (hereinafter, ``Committee on Ways and
Means'').
\3\ Administration for Children and Families, Fact Sheet: Head
Start (visited March 4, 1999) http://www.acf.dhhs.gov/programs/hsb/
hsgen.html.
\4\ Committee on Ways and Means, supra note 2, at 676-677.
\5\ Children's Defense Fund, The State of America's Children
Yearbook 1999, (forthcoming 1999)(manuscript at 3, on file at NOW Legal
Defense and Education Fund).
\6\ Gina Adams et al., Locked Doors: States Struggling to Meet the
Child Care Needs of Low-Income Working Women, Children's Defense Fund,
1 (March 1998).
\7\ Committee on Ways and Means, supra note 2, at 660.
\8\ Id.
\9\ Gina Adams & Nicole Poersch, Key Facts About Child Care and
Early Childhood Education: A Briefing Book, E-1. (Children's Defense
Fund, Washington, D.C. 1996). Although there were also about 271,000
family child care homes throughout the country, such homes typically
serve a small number of children, the quality of such homes is erratic,
and clearly even with these added spaces, there is insufficient supply
to meet the demand. See also State Estimates of Organized Child Care
Facilities, U.S. Census Bureau, (March, 1998).
\10\ Adams, et al., supra note 6, at 1.
\11\ Money and Income in the United States: 1996, 60-197 Current
Population Reports U.S. Census Bureau, (1997).
\12\ Pub.L. 104-193, 110 Stat. 2105.
\13\ 42 U.S.C.Sec. 607(a).
\14\ Pub. L. No. 104-193, Title VI, 110 Stat. 2105.
\15\ David A. Super, et al., Center on Budget and Policy
Priorities, The New Welfare Law (1996).
\16\ Ellen L. Bassuk, et al., Single Mothers and Welfare,
Scientific American 60 (1996).
\17\ Human Resources Administration Data Sheet, (Dec.
1998.)(unpublished on file with NOW LDEF)
\18\ Lapkoff & Gobalet Demographic Research Inc., California's
Child Care Gap (Aug. 31, 1995).
\19\ 45 C.F.R. Sec. 98.33(a).
\20\ 42 U.S.C. Sec. Sec. 607(e)(2), 609(a)(11).
\21\ Welfare Law Center listserv from Welfare Warriors of
Wisconsin, October 28, 1998.
\22\ Man is Accused of Killing Girl He Was Baby-sitting, N.Y.
Times, July 7, 1998, at B2.
\23\ Welfare Law Center listserv from Fair Budget Coalition of
Washington Nov. 2, 1998.
\24\ Marcia Meyers & Theresa Heintze, Subsidy Shortfall: Are Child
Care Subsidies Working for Those Working Their Way Off Welfare,
University of California at Berkeley (1997) Laurie Miller & Kitty
Barnes, Parents Need Transitional Child Care, Child Care Action News,
at 1 (Nov./Dec., 1997).
\25\ Mark Green, Public Advocate for the City of New York, Welfare
and Child Care: What About the Children? (1997).
\26\ Children's Defense Fund & National Coalition for the Homeless,
Welfare to What? (November 1998), Appendix B based on U.S. Census
Bureau's March Current Population Survey.
\27\ Sharon K. Long, et al., The Urban Institute, Child Care
Assistance Under Welfare Reform: Early Responses by the States, (Sept.
1998).
\28\ Child Care Bureau, Report of State Plans (March 1998). Twelve
states have state plans that call for providing subsidies for families
up to 75% of the State Median Income but of those states only North
Carolina actually provides a subsidy for those whose income is as high
as 75% of the SMI.
\29\ Adams, et al; supra note 6, at 24 -27. DC, Florida, Illinois,
New Jersey, South Carolina, Washington, Wisconsin and Wyoming all
charge high fees to low income users of child care subsidies.
\30\ Helen Blank & Gina Adams (Children's Defense Fund, December
1997) State Developments in Child Care and Early Education 1997, at 29.
\31\ Child Care Bureau, Child Care and Development Block Grant:
Report of State Plans, at 61 (March, 1998).
\32\ Families and Work Institute, Rethinking the Brain--New
Insights into Earl Development: Conference Report (June, 1996).
\33\ Carnegie Corporation of New York, Starting Points: Meeting the
Needs of Our Youngest Children, at 4 (Aug. 1994).
\34\ Kristen Moore, et al., The Life Circumstances and Development
of Children in Welfare Families: A Profile Based on National Survey
Data, Child Trends, Inc. (1991).
\35\ Id.
\36\ National Center for Children in Poverty, One in Four, at 15
(1996).
\37\ Carnegie Corporation of New York, Years of Promise: A
Comprehensive Learning Strategy for America's Children, at 53
(September 1996).
\38\ Suzanne Helburn, et al., Cost, Quality and Child Outcomes in
Child Care Centers, Department of Economics, University of Colorado at
Denver, at 1 (1995).
\39\ Id.
\40\ Ellen Galinsky, et al., Families and Work Institute, The Study
of Children in Family Care and Relative Care: Highlights of Findings,
at 4 (1994).
\41\ Convention on the Rights of the Child, opened for signature
Nov. 20, 1989 (entry into force Sept. 2, 1990), Art. 18, Sect. 3.
\42\ Child Welfare League of America, FAQ: United Nations
Convention on the Rights of the Child (visited February 12, 1999)
http://www.wla.org/cwla/publicpolicy/unconvention.html. One clear
violation of the Convention's principles is the United States' failure
to ensure that welfare recipients and other low income parents can
exercise their rights under existing child care laws.
\43\ Ian McMahan, Public Preschool From the Age of Two: The Ecole
Maternelle in France, Young Children, at 22 (July 1992).
\44\ A Report from the Children's Ombudsman in Sweden to the
Committee on the Rights of the Child Regarding the Second Periodic
Report of Sweden June 1998 (visited on January 8, 1999) http://
www.bo.se.barnombudsmannen/eng/bo-report-1998.html.
\45\ Department of Health and Human Services, TANF Federal Awards,
Transfers & Expenditures Through 4th Quarter, FY-1998 (data as of 2/5/
99) (visited on March 11, 1999), http://www.acf.dhhs.gov/news/welfare/
stats/q4tnfa1.htm.
\46\ Adams, et al., supra note 6 at 4-6; Charts A-2, A-3.
Statement of Mathew E. Melmed, ZERO TO THREE: National Center for
Infants, Toddlers, and Families
Ms. Chairman and Members of the Committee, I am delighted
to have the opportunity to appear before you today on behalf of
ZERO TO THREE: National Center for Infants, Toddlers and
Families to discuss the special needs of infants and toddlers
in child care. I am Matthew Melmed, Executive Director of ZERO
TO THREE, a national non-profit organization that has worked to
advance the healthy development of America's babies and young
children for over 20 years. I would like to start by commending
Congresswoman Johnson's role in championing the Family and
Medical Leave Act for more than a decade--your efforts have
made a profound positive contribution to the healthy growth and
development of our youngest children.
You have no doubt been hearing a great deal about the
critical brain development that occurs in the first three years
of life and its impact on all that follows. How, and how well,
we think, learn, control our emotions and relate to others for
the rest of our lives--in short what makes us human--depends on
the nature of the interactions and attachments we have as very
young children with our parents and caregivers.
In 1990, nearly half of all children under the age of three
were being cared for by someone other than their parents.\1\ As
welfare-to-work requirements affect families with very young
children, the demand for out-of-home care for infants and
toddlers is rising. At the same time, concern about the quality
of infant/toddler child care is growing. Although detailed
information about child care arrangements for very young
children is sparse, the research that has been done raises
serious questions about the quality of many child care settings
that serve children under three.
---------------------------------------------------------------------------
\1\ Endnotes follow Statement.
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As more and more infants and toddlers are moving into child
care, for longer and longer periods of time, it is important
that we understand how early caregiving experiences profoundly
influence cognitive, social, and emotional development. Recent
neuroscientific research has provided us with this greater
understanding.
Brain Development: The Lasting Effects of Early Relationships
Until recently, neuroscientists didn't know that infants'
brains were so active and complex. They had always assumed that
brain structure was genetically determined by the time babies
are born. Now, we know differently. New imaging techniques
provide non-invasive ways to study the brains of living people,
and allow scientists to see a baby's brain developing--not just
growing bigger, but forming microscopic connections responsible
for such things as feeling, learning, and memory.
While genes give you certain predispositions, for example,
to have a certain type of temperament, these predispositions
are vitally influenced by a wide range of experiences as you
grow. The old debate over ``nature vs. nurture'' is dead. We
now know that they work hand in hand to guide future
development.
At birth, the brain is in a highly unfinished state. During
the first 3 years, it forms most of the synaptic connections,
the basic wiring of the brain, that it will keep for life. PET
scans show us that by 12 months, a baby's brain qualitatively
resembles an adult's in terms of basic architecture. The brain
of a two-year-old is as active as an adult's. This is visual
proof that very young children are primed for learning.
All learning takes place in the context of important
relationships. During the earliest days, months, and years,
children learn about the world through their own actions, and
their caregiver's reactions. They are learning about who they
are, how to feel about themselves and what they can expect from
those who care for them. Such basic human capacities as the
ability to feel trust, to experience intimacy with, and
cooperate with others, develop from the earliest moments of
life. Early experiences--positive and negative--have a decisive
impact on who we become as adults.
Research has found that a strong secure attachment to a
nurturing caregiver has a protective biological function,
helping the child learn to cope with stress and control
emotions. What research also tells us is that day-to-day
interaction between babies, their parents, and other caregivers
are learning partnerships with very high stakes. That's because
babies and young children experience their environment almost
completely through their relationships with their primary
caregivers. They need us to survive and thrive.
When a toddler plays with, talks to and listens to his
parents or child care provider, he learns to focus and
concentrate, to recognize the familiar and explore the
unfamiliar, to communicate, to take pleasure in learning. These
same processes allow a first grader to focus on a book, quiet
down, filter out noise in a classroom, feel motivated to try a
new challenge, and feel good about learning to read.
Loving a baby is important, but parents and caregivers must
also be able to read a child's individual signals and respond
appropriately. Every baby is unique. By nature babies vary
greatly in how they react to sensations. Some are more
sensitive to sound ... others to touch. These variations in how
they learn affect how they understand their world.
Babies also have different temperaments and different ways
of showing their needs, moods, and preferences. The key to
successful development lies in how well caregivers--parents and
child care providers--respond to a baby's signals, and how well
they nurture them and mediate their environment, in order to
mesh with the child's own physical characteristics,
sensitivities, abilities, temperament, and mood.
Any policy decisions about infants and toddlers in child
care must be premised upon and support the central fact that it
is through continuous, day-to-day relationships with parents,
child care providers, and other caregivers that children
develop intellectually, socially, and emotionally.
The key to quality child care is the quality of
relationships--relationships between the infant and her family,
between child and caregiver, between caregiver and family, and
among adults in the child care setting. Child care quality
depends on caregivers who are knowledgeable and skilled, and
committed to creating and sustaining these relationships.
Quality Matters
Over the past 15 years a number of studies have examined
the effects of varying levels of quality on children's behavior
and development. Each reached the same conclusion: A
significant correlation exists between program quality and
outcomes for children.\2\ In longitudinal research currently
underway, The NICHD Study of Early Child Care has found that
among children under three, in a range of child care settings
chosen by their families, higher quality care is related to
better mother-child relationships, higher cognitive
performance, higher language ability, a higher level of school
readiness, and fewer problem behaviors reported by
caregivers.\3\
Inadequate care poses serious and potentially fatal risks
to the current well-being and future development of infants,
toddlers and their families. Recent empirical research suggests
that unfortunately, inadequate care is a widespread phenomenon.
The national Cost, Quality and Outcome study of center-based
infant/toddler care showed that ``child care at most centers in
the United States is poor to mediocre, with almost half of the
infants and toddlers in rooms having less than minimal
quality.'' It found that fully 40 percent of the rooms serving
infants in centers provided care that was of such poor quality
as to jeopardize children's health, safety, or development.\4\
A study of family and relative care in three communities
revealed similar patterns in family child care programs and
home-based care. Using the Family Day Care Rating Scale
(FDCRS), this study rated only 9 percent of the homes as good
quality (meaning growth-enhancing) while 56 percent of homes
were rated as adequate/custodial (neither growth-enhancing nor
growth-harming), and 35 percent were rated as inadequate
(growth-harming).\5\
The National Center for Early Development & Learning,
supported by the Institute on Early Childhood Development and
Education, Office of Educational Research and Improvement, US
Department of Education, recently reviewed six studies that had
each rated the quality of a sample of programs for young
children using either the Early Childhood Environment Rating
Scale or the Infant-Toddler Environment Rating Scale. All
studies reported average quality ratings below the minimum
rating for reasonable quality, and infant programs were always
rated lower than preschool programs.\6\
What is Quality Care?
Parents, providers, and child development experts may use
different words to describe elements of quality, but they tend
to agree about what is essential:
health and safety;
small groups for infants and toddlers, with
caregivers responsible for no more than three young or mobile
infants and no more than four children 18 months-3 years old;
primary caregiver assignments;
continuity of care;
responsive caregiving and planning;
cultural and linguistic continuity;
meeting the needs of the individual within the
group context; and
the physical environment.\7\
At the National Leadership Forum on Quality Care for
Infants and Toddlers, sponsored by the Child Care Bureau and
Head Start Bureau last year,\8\ J. Ronald Lally, a pioneer in
the field of infant/toddler child care and a founding member of
ZERO TO THREE, observed that good child care for infants and
toddlers is a blend of science and art. The science of child
care, he explained, encompasses knowledge of health and safety,
developmental stages in the first years of life, and
temperament and other individual differences. The art of child
care is the ability to respond to the child--and to a group of
children--in the moment, in a way that will support development
and learning.
Lally has identified seven ``gifts'' that a good child care
program offers babies and very young children--nurturance,
support, security, predictability, focus, encouragement, and
expansion. He groups these gifts in two clusters, each
providing a distinct set of benefits for very young children's
development. Predictability appears in both clusters, serving
as a bridge on which the young child can travel from the
comfort of the familiar to the adventure of discovery. Before
young children can explore their environment purposefully and
develop their intellectual potential fully, they must feel
safe. Once they find security, they can seek challenges.
In Lally's conception, the gifts of nurturance, support,
security, and predictability let children know that they can
count on being loved and cared for in the child care setting.
Predictability, focus, encouragement, and expansion facilitate
the young child's intellectual development. But the ability to
offer children these gifts rests on the structural elements of
quality--small groups, appropriate staff-to-child ratios,
primary caregiving, and continuity of care from responsive,
knowledgeable adults who are well trained and feel supported by
their colleagues and work environments.
Using Standards, Licensing and Regulation, and Accreditation to Achieve
Quality in Infant/Toddler Child Care
In a July, 1998 analysis of using standards to ensure high-
quality child care, The United States General Accounting Office
distinguished two major dimensions of quality--structural and
interactive.\9\ Structural dimensions include measurable
aspects of the child care setting, including caregiver
education and training, child-to-staff ratios, group sizes, and
safety and health standards. Interactive dimensions focus on
the child's experiences during the day. These experiences
largely reflect the quality of interaction among all the
children and adults who are part of the child care environment.
The GAO found that staff turnover (that is, how many staff left
a setting during a year) and compensation of caregivers were
identified by the literature and experts to be critical
determinants of the quality of child care, since these issues
affect interactions between the child and caregiver.
State licensing standards for infant/toddler care tend to
focus almost exclusively on structural dimensions of quality.
Using the database of the National Resource Center for Health
and Safety in Child Care (NRC) at the University of Colorado,
which contains child care standards for 50 states and the
District of Columbia, the GAO report found that the extent to
which state standards reflect the standards set by the National
Association for the Education of Young Children and the
National Health and Safety Performance Standards developed by
the Maternal and Child Health Bureau vary. Maryland requires a
1:3 ratio for infants 0-18 months, a 1:6 ratio for toddlers 18-
24 months, and a 1:10 ratio for 3 and 4 year olds. Child care
standards in over half the states stipulated staff/child ratios
that were the same as the NAEYC standard for younger children
(6 weeks through 18 months). Fewer states incorporated these
standards for older children. Not all states have standards for
group size. Thirty-two states have state standards stipulating
group size for children ages 6 weeks through 18 months.
According to the Center for Career Development in Early Care
and Education, as of 1995, 35 states had no preservice training
requirement for center-based child care providers; 46 states
had no preservice training requirement for family child care
providers.\10\
Systems of accreditation for center-based and family home
child care generally examine a range of quality indicators
including: relationships among adults, as well as those between
adults and children; the physical environment of the child care
setting; developmental learning goals, curriculum and
activities; safety and health; staff qualifications and
professional development; and administrative and business
practices. The process of accreditation tends to involve a
number of steps, including self-assessment; parent surveys;
systematic efforts, as needed, to improve program quality; on-
site evaluation by an accreditation team; review; and ongoing
monitoring and renewal of accreditation to ensure maintenance
of quality. There are 6 national systems that accredit child
care programs and providers. In addition, some states are
establishing accreditation systems as a way to improve the
quality of child care. A number of local, state, and national
initiatives are underway to encourage individuals and child
care programs to go through the accreditation process.
The Revised Head Start Program Performance Standards, which
govern the operation of all Early Head Start and Head Start
grantees and delegate agencies, address both structural and
interactive dimensions of infant and toddler care. Performance
standards describing the Head Start Program's child development
and education approach for infants and toddlers, staff
qualifications, staff-child ratios, and group size provide the
rationale for each standard, guidance, and related information.
As the Early Head Start Program expands and efforts are made to
place infants and toddlers of participating families in
community-based child care settings, relevant performance
standards will be applicable to community-based settings, as
well as to child care provided directly by Early Head Start
grantees.
Several sections of the Revised Head Start Program
Performance Standards and guidance specifically address the
care of infants and toddlers in groups.
Infant and toddler staff qualifications: Early
Head Start and Head Start staff working with infants and
toddlers must have obtained a Child Development Associate (CDA)
credential for Infant and Toddler Caregivers or an equivalent
credential that addresses comparable competencies by January 1,
1999 or within one year of hire as a teacher of infants and
toddlers. Staff training must develop knowledge of infant and
toddler development, safety issues in infant and toddler care,
and methods for communicating effectively with infants and
toddlers, their parents, and other staff members. When a
majority of children speak the same language, at least one
classroom staff member interacting regularly with the children
must speak their language.
Staff-child ratios and group sizes: Each teacher
working exclusively with infants and toddlers must have
responsibility for no more than 4 infants and toddlers. No more
than eight infants and toddlers may be placed in any one group.
If State, Tribal or local regulations specify staff-child
ratios and group sizes more stringent than this requirement,
the State Tribal, or local regulations must apply.
Child development and education approach:
Standards require grantee and delegate agencies to:
encourage the development of secure
relationships in out-of-home care settings for infants and
toddlers by having a limited number of consistent teachers over
an extended period of time. Teachers must demonstrate an
understanding of the child's family culture and, whenever
possible, speak the child's language.
encourage trust and emotional security so that
each child can explore the environment according to his or her
developmental level.
encourage opportunities for each child to
explore a variety of sensory and motor experiences with support
and stimulation from teachers and family members.
Promote an environment that encourages the
development of self-awareness, autonomy, and self-expression.
support the emerging communication skills of
infants and toddlers by providing daily opportunities for each
child to interact with others and to express himself or herself
freely.
Support the development of infants' and toddlers
gross motor skills and create opportunities for fine motor
development.
Public Investments for Quality
Neuroscientific and child development research that
highlights the importance of sensitive, responsive care during
the earliest years, combined with evidence documenting the
dearth of such care in many infant/toddler child care settings,
has led to important initial public investments from all levels
of government and the private sector. Unfortunately, the
disparity between the demand for quality infant/toddler child
care, and the capacity to meet those needs given resource
limitations, continues to increase.
In order to meet the increasing need for quality infant and
toddler child care we must:
1. Examine licensing and regulatory standards to promote
child development and ensure health and safety for all children
by reducing group size and ensuring appropriate staff/child
ratios for infants and toddlers and staff qualifications.
2. Raise the level of training expected of all infant/
toddler caregivers; expand and improve training opportunities.
3. Increase compensation and benefits to infant/toddler
child care providers, linking increases in compensation to
completion of training, demonstrated competence, and commitment
to the field.
4. Create child care environments that are models of
comprehensive services, based on child-centered, family-focused
efforts that make multiple services families may need easily
accessible and linked through the child care setting.
5. Promote linkages within the child care and Head Start
communities and forge new partnerships with groups and
organizations typically seen as ``outside'' the child care
community to improve the quality of infant/toddler care.
6. Involve parents, employers, legislators, and other
stakeholders and decisionmakers in public awareness and
engagement campaigns designed to create and sustain societal
commitment and investment in quality care for infants and
toddlers.
7. Use all currently available funding streams and allocate
new financial resources to supplement and maximize efforts that
support quality infant/toddler child care.
Experts in the field agree that structural elements of
child care--group size, staff/child ratios, and staff
training--are essential to support quality. Adequate
compensation and benefits for workers is essential to minimize
turnover and ensure the professional development of staff over
time. Until salaries and benefits are high enough to attract
and keep competent staff in the field, training becomes an
endless cycle of basic courses for beginning workers. More
importantly, from the perspective of children's development,
the turnover in staff that inadequate compensation makes
inevitable destroys the secure, intimate, growth-promoting
relationships in the child care setting that are the goal of
all quality improvement efforts.
Child care for infants and toddlers can serve as a central
element in an array of community-based health, parenting
education and social supports that all families with very young
children require.
The connection between public engagement and imaginative
financing has become increasingly clear. We must build public
support for the idea that protecting and promoting the healthy
development of all very young children is the responsibility of
communities as well as families. Increased public awareness of
the importance of the earliest years can lead to the
mobilization of public and private resources for the
significant, sustained community investment required to finance
the true cost of quality care.
Promising Approaches
Many states and counties are blending federal, local,
state, and private funds and are forming creative partnerships
that are allowing them to maximize the impact of each dollar
they spend to improve the quality of infant and toddler child
care.
They have recognized that responsive care for infants and
toddlers requires trained caregivers who stay on the job. So
they look for ways to make training affordable and financially
rewarding to individual caregivers, as well as reimbursement
mechanisms that will increase the resources of centers and
family child care homes that recruit and retain well-trained
staff.
California
In California for example, federal funds are being used to
enhance more than a decade of investment in increasing the
number of slots and improving the quality of care. In 1986, the
California Department of Education (CDE) and WestEd (formerly
Far West Laboratory) created a partnership, the Program for
Infant/Toddler Caregivers (PITC) and created a comprehensive,
high quality, multi-media training system for center-based and
family child care providers.
With CDE and private funds, trainer-of-trainer institutes
were created. Participants could become certified by completing
a training plan. At that time, however, participants were
required to pay the full cost of the institutes.
When Child Care and Development Block Grant quality
improvement funds became available in 1991, the CDE designated
funds to provide institute participants with scholarships to
cover the cost of the training, plus lodging and meals. In
return, participants are expected to fulfill certification
requirements and to provide 25 hours of training to other
providers in their county during the two years after completion
of the training.
The goal is to have a cadre of certified graduates in each
county to provide training on an ongoing basis at the local
level to program directors and caregivers and to provide
critical information to local policymakers about the components
of quality infant/toddler services.
The Federal Infant Capacity Building funds made available
to the states in FY 1998 provided the additional funding
required to, among other things, coordinate and expand training
efforts at the regional and local level and provide grants for
start-up costs for new infant/toddler programs that meet PITC
program standards (such as small groups and continuity of
care).
Michigan
In Michigan more than half of the families leaving the
welfare rolls are placing their infants and toddlers in
informal care, either in the homes of relatives or with aides,
who provide care in the family's home. To qualify as a provider
of state-subsidized care, an aide or relative must only fill
out a simple form and be checked against a child abuse/neglect
protective services data base.
Concerned by the growing number of providers with little
knowledge about child development, and little incentive to stay
in the field (aides coming into the home earn $1.35-$1.60 per
hour/per child) if other opportunities arise, Michigan's 4-C
resource and referrals agency approached the state legislature
about the need for better outreach to aide and relative care
providers. Beginning this year, free training will be opened to
aides and relatives. Aides and relatives who complete 15 hours
of free training and provide child care for 3 months to
Michigan Family Independence Agency-funded children will
receive a one-time bonus of $150.
Many aides and relatives who have completed this training
are choosing to pursue a CDA credential and have become either
a licensed family child care provider or a center-based
employee. Of these providers many have chosen to pursue further
training, with some working to open their own family child care
homes.
Oklahoma
With significant savings from reduced welfare rolls, the
Oklahoma First Start initiative was requested by the Oklahoma
Legislature and approved by the Commission on Human Services.
Administered by the Oklahoma Department of Commerce, funds are
used to provide full day/full year services for 191 infants and
toddlers, 0-3 years of age, to families who are employed or are
moving from welfare to work.
A competitive bidding process made funds available
statewide to public and private child care programs that are
able to blend funds from different sources. The seven grantees
utilized funding sources that included the state child care
subsidy system, the Child Care Food Program, foundations and
corporations. First Start grantees must commit to meeting the
Early Head Start Performance Standards--which govern the
operation of all Early Head Start programs and address both
structural and interactive dimensions of infant and toddler
care--and to receiving national accreditation within 24 months.
The largest Grantee is the Tulsa Children's Coalition,
which administers the grant and contracts with non-profit and
for-profit child-care providers to serve 92 children. The
Coalition, an organization that includes Tulsa's Chamber of
Commerce, Tulsa Public Schools, United Way, Community Service
Council and the Head Start Agency, has been very successful in
finding creative ways to access new resources and build child
care capacity. For example, the Coalition joined with Tulsa's
anti-poverty agency, the Community Action Project (CAP), to
establish two family child care homes in resource-poor
neighborhoods. Through CAP's family home ownership program,
women who had experience in child care were provided assistance
in purchasing homes in public housing developments. Another
example is two new centers in Tulsa Housing Authority (THA)
communities where THA provided space and other resources. The
United Ways and a private foundation provided funding for
necessary renovations and supplies for these new centers.
The three states that I've highlighted represent just some
of the many bold and creative initiatives that states have
undertaken to improve the quality of infant and toddler child
care. Unfortunately, these initiatives are enhancing the lives
of only a small fraction of our youngest children. The
disparity between the demand for quality child care, and the
capacity to meet those needs given resource limitations,
continues to increase.
Conclusion
New developments in brain and child development research
shows us what infants and toddlers need. Our challenge is to
ensure that every child receives it. It is for this reason that
I am here today, to ask you on behalf of America's babies and
families to commit to allocating the additional resources, and
to forming the new partnerships at all levels of government,
with child development experts and the private sector that will
nurture the healthy growth and development of our country's
youngest citizens. Thank you.
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\2\ Frede, E. (1995). The role of program quality in producing
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\3\ Peth-Pierce, R. (April, 1998). The NICHD Study of Early Child
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