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Low-Income Families Losing Ground Under Child Care Assistance Policies In 37 States, New NWLC Report Shows

Many States Failed to Maintain Steady Levels during Vulnerable Time for Families

October 11, 2011

(Washington, D.C.) Families in thirty-seven states are worse off under one or more key child care policies in 2011 than they were in 2010, according to a report released today by the National Women's Law Center. The report shows that families in only eleven states were better off under one or more child care policy areas than last year, a sharp contrast to NWLC's findings in the previous year when families in thirty-four states were better off in 2010 than they were in 2009 and worse off in only fifteen states. A year ago, states were benefiting from a $2 billion boost in child care funds through the American Recovery and Reinvestment Act but, by the end of 2010, they had spent most of the funds and were battling severe budget deficits, making it difficult to maintain their prior level of support.

"The current state of child care assistance is troubling," said NWLC Co-President Nancy Duff Campbell. "As a nation, we cannot afford to neglect the importance of high-quality child care, which provides parents the support and peace of mind they need to be productive at work and children the opportunity to grow and learn. And, by strengthening the current and future workforce, it helps our country stay competitive."

NWLC's state-by-state report, State Child Care Assistance Policies 2011: Reduced Support For Families in Challenging Times, 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 2011 to data for February 2010 and 2001. Families are not only worse off in 2011 than they were in 2010, but are also worse off than a decade ago.

Income Eligibility:

A family's ability to obtain child care assistance depends primarily on a state's criteria for income eligibility. The report reviews the effects of 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.

  • Four states decreased their income eligibility limits as a dollar amount between 2010 and 2011.
  • Less than one-fifth of the states — eight — increased their income eligibility limits as a dollar amount between 2010 and 2011. Only one of these states increased its income limit sufficiently to surpass inflation, while the remaining seven increased their income limits sufficiently to keep pace with inflation.
  • In twenty-one states, the income limits in 2011 were lower as a percentage of the federal poverty level than in 2001.
  • A family with an income above 150 percent of poverty ($27,795 a year for a family of three in 2011) would not qualify for child care assistance in thirteen states. A family with an income above 200 percent of poverty ($37,060 a year for a family of three in 2011) would not qualify for assistance in thirty-five states.

Waiting Lists:

In many states, not all families eligible for child care assistance are able to secure it. Some families are placed on a waiting list for several months before receiving assistance, while others remain on the list indefinitely and never receive financial help. Families on the waiting list are left with difficult choices. Many struggle to pay for good-quality child care on their own and others are forced to resort to low-quality care. Some families are not able to pay for any child care, making it difficult or impossible for them to find or keep a job.

  • Twenty-two states had waiting lists or turned away eligible families without adding their names to a waiting list in 2011 — compared to nineteen states in 2010.
  • Twelve states had longer waiting lists in 2011 than in 2010, and four states had shorter waiting lists.

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 secure progressively higher copayments from families at higher income levels.

  • In twenty-one states, copayments for a family of three at 100 percent of poverty increased as a percentage of income between 2010 and 2011. In twenty-seven states, copayments remained the same as a percentage of income. In three states, copayments decreased as a percentage of income.
  • In twenty-eight states, the copayment for a family of three at 150 percent of poverty in 2011 was above 7.0 percent of income, the nationwide average amount that families who pay for child care spent on child care. In an additional seven states, a family at this income level was not eligible for child care assistance.
  • In eighteen states, the copayment for a family of three at 100 percent of poverty in 2011 was above 7.0 percent of income.

Reimbursement Rates:

States determine reimbursement rates for child care providers who serve families receiving child care assistance. The rates can vary by geographic region, age of the child, 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 who receive child care assistance.

  • Three states had reimbursement rates for child care providers at the federally recommended level in 2011, compared to six states in 2010 and twenty-two in 2001.
  • Approximately three-fifths of the states had higher reimbursement rates for higher-quality providers in 2011, but in approximately four-fifths of these states, even the higher rates were below the federally recommended level.

"It's critical to improve child care reimbursement rates," said Helen Blank, NWLC Director of Leadership and Public Policy. "Low reimbursement rates make it almost impossible for child care providers to give young children the strong start they need to succeed in school and in life."

Eligibility for 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 2011 — slightly lower than the forty-seven states in 2010.
  • Seventeen states allowed families to qualify for and begin receiving child care assistance while a parent searched for a job in 2011 — lower than the twenty states in 2010.
  • 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 ranged from two weeks to 180 days.

"The deep challenges already facing families who need child care assistance will likely accelerate in the coming months as states continue to confront budget deficits," said Campbell. "This will hurt millions of parents and children at a time when they are extremely vulnerable and need this help the most. It's essential that states and the federal government protect and strengthen such a fundamental support. The future of millions of American parents and children, as well as our country, is at stake."

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Contact:
Maria Patrick (mpatrick@nwlc.org) or 202-588-5180
Andrea Maruniak (amaruniak@nwlc.org) or 202-588-5180