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Families Worse Off Under Child Care Assistance Policies in 27 States, New National Women's Law Center Report Finds

States continue to fail to meet minimum standards in five critical areas

October 11, 2012

(Washington, D.C.)  Families in 27 states are worse off under one or more key child care policies in 2012 than in 2011, according to a report released today by the National Women’s Law Center (NWLC). Families in just 17 states are better off under one or more key child care policies in 2012 than in 2011.

This was the second year in a row in which the situation worsened for families in more states than it improved. Families were worse off in 2011 than in 2010 under child care assistance policies in 37 states, and better off in just 11 states.   Families are also worse off than they were a decade ago. The negative trends of the last two years are likely due, in part, to states’ exhausting the $2 billion allocated in child care funds through the American Recovery and Reinvestment Act.

“Lack of child care assistance is jeopardizing parents’ ability to get and keep a job and their children’s learning opportunities during the critical early years,” said NWLC Co-President Nancy Duff Campbell. “So many families are trying to gain a more stable financial footing, but they cannot do it without safe, reliable, and affordable child care.  Child care assistance is a lifeline for low-income working families.”
NWLC’s state-by-state report, Downward Slide: State Child Care Assistance Policies 2012 (http://www.nwlc.org/resource/downward-slide-state-child-care-assistance-...), examines the impact of five critical factors that determine the affordability, accessibility, and quality of assistance in each state: income eligibility, waiting lists for assistance, copayments required of parents receiving assistance, reimbursement rates for child care providers, and eligibility for parents searching for a job. The report, which examines the impact of policies in all 50 states and the District of Columbia, compares data for February 2012 to data for February 2011 and 2001. 

Income Eligibility:   

A family’s ability to obtain child care assistance depends primarily on a state’s criteria for income eligibility.  The report reviews states’ income eligibility limits, including whether they have been properly adjusted for inflation.  A family whose income level has simply kept pace with inflation could lose eligibility if limits are not adjusted.

•    Seven states decreased their income eligibility limits as a dollar amount between 2011 and 2012.
•    Thirty states increased their income limits to adjust for one year or multiple years of inflation and 14 states kept their income eligibility limits the same as a dollar amount between 2011 and 2012.
•    In 23 states, the income limits in 2012 were lower as a percentage of the federal poverty level than in 2001.
•    A family with an income above 150 percent of poverty ($28,635 a year for a family of three in 2012) would not qualify for child care assistance in 14 states.  A family with an income above 200 percent of poverty ($38,180 a year for a family of three in 2012) would not qualify for assistance in 37 states.

Waiting Lists:  

Even when families are eligible for assistance, they may not receive it.  Some families are placed on waiting lists before receiving assistance, some remain on the list indefinitely, and some never receive financial help.

•    Twenty-three states had waiting lists or turned away eligible families without adding their names to a waiting list in 2012, compared with 22 states in 2011. 
•    Of the 17 states with available comparable data, eight states had longer waiting lists in 2012 than in 2011, eight states had shorter waiting lists, and one state had the same number of children on the waiting list in both years. 

Copayments:

Copayment levels determine whether low-income families receiving child care assistance face significant out-of-pocket costs for care.  Most states require families to contribute to their child care costs based on a sliding scale, which is designed to charge progressively higher copayments from families at higher income levels. 

•    In nine states, the copayment for a family of three at 100 percent of poverty increased as a percentage of income between 2011 and 2012.  In 40 states, the copayment remained the same as a percentage of income.  In just two states, the copayment decreased as a percentage of income.
•    In 28 states, the copayment for a family of three at 150 percent of the poverty level in 2012 was above 7.8 percent of income, the nationwide average amount that families paying for child care spent on child care.  In an additional eight states, a family at this income level was not eligible for child care assistance.
•    In 18 states, the copayment for a family of three at 100 percent of the poverty level in 2012 was above 7.8 percent of income.

Reimbursement Rates:   

States determine reimbursement rates for providers who serve families receiving child care assistance.  The rates can vary by region, the child’s age, type of care and other factors.  Low rates undermine providers’ ability to maintain their business, attract and retain qualified staff, and provide the equipment and materials that children need. When reimbursement rates fall short, providers operate without the necessary resources to offer high-quality care, and some providers may decide to stop serving families receiving assistance.

•    Only one state set its reimbursement rates for child care providers at the federally recommended level in 2012, compared to three states in 2011 and 22 in 2001.
•    Fewer than one-fifth of the states updated their reimbursement rates in the past two years.
•    Approximately three-fifths of the states had higher reimbursement rates for higher-quality providers in 2012, but in approximately four-fifths of these states, even the higher rates were below the federally recommended level.

“Increasing payments to providers should be a top priority,” said Helen Blank, NWLC Director of Child Care and Early Learning. “States need to ensure that programs have the resources to hire well-qualified staff, purchase books and toys, and do everything else necessary to build a high-quality program and offer our most vulnerable children the early learning opportunities they need to succeed.”

Eligibility for Families with Parents Searching for a Job:  

Child care assistance given to parents searching for work allows them to hold onto child care until they secure a job, eases the demands and stress of the job search, and increases the likelihood of a smooth transition for both the parent and child once the parent starts a job.     

•    Forty-six states allowed families receiving child care assistance to continue receiving it while a parent searched for a job in 2012, the same as in 2011. 
•    Sixteen states allowed families to qualify for and begin receiving child care assistance while a parent searched for a job in 2012, fewer than the 17 states in 2011.
•    Among states setting a limit by the number of days, weeks, or months that parents could receive child care assistance while searching for a job, the coverage ranged from two to 13 weeks in 2012.
“Child care assistance helps our economy by giving parents the peace of mind to be productive at work and providing children a head start on education,” said Campbell. “It’s essential that states and the federal government protect and strengthen this fundamental support.”

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