Excerpted from publications by
Helen Blank, Gina Adams, Nancy Ebb, Karen Schulman
March 23, 1998

The vast majority of young American children spend at least some time in child care before they enter school; an estimated 13 million children younger that six are cared for in child care each day. For many older children, after-school programs keep them safe and help them succeed in school. Access to quality child care is critical if parents are to be able to work and support their families, young children are able to enter school ready to learn and succeed, and older children are to have places to go that keep them out of trouble while helping them to do well in school. Yet, many low- and moderate-income families are unable to access good quality child care or after-school programs.

Even prior to the 1996 welfare law, states had a significant level of responsibility for child care and early education. However, states varied widely in their commitment. For example, in 1994, the ten states with the highest commitment to child care and early education invested four-and-a-half times as much per child as did the ten states with the least commitment.

The 1996 welfare law further expanded the state role in child care and early education, in part due to state policy makers’ arguments that they could better serve families and children if they were given more responsibility and flexibility. In addition, the law increased federal funding by $600 million in FY 1997.

Some states are taking bold strides forward; others are slipping backwards. In light of the favorable conditions of the past year, one would have expected to see most states moving ahead. In 1997, states experienced strong economies, shrinking welfare caseloads, low work requirements for TANF (Temporary Assistance to Needy Families) families, and increased federal child care funding. [States received a total of approximately $600 million in new federal child care money (if they provided matching funds), and states were able to use a portion of their new federal welfare grants under the new welfare program (TANF) for child care.] Given these conditions, 1997 is exactly the year when every state should have been showing strong signs of progress in improving their policies and investments in child care. It is of great concern that a number of states actually took steps backwards during this period.

Guarantees of Child Care Assistance

Prior to the 1996 welfare law, states were required by federal law to "guarantee" child care assistance to families working to get off of welfare and families who had recently left welfare. This meant that any eligible family who needed child care assistance would receive it, and that the funding would be automatically available to cover that assistance. However, the 1996 welfare law eliminated this guarantee. Consequently, it is now up to states to decide which families receive child care assistance and whether to "guarantee" assistance to any categories of families.

States have responded in various ways. Half the states say they have maintained what they call a "guarantee" for at least those families who are on welfare while 27 maintain a guarantee for those who just left welfare -- though it is not completely clear that all of these states are providing a true guarantee of assistance (which is when they ensure that funds are automatically available to serve all eligible families that apply). Other states that do not have a true guarantee report that they have enough funds to provide child care assistance to at least those families who are on TANF or who are making the transition off -- some of these states call this a "guarantee subject to appropriations" (which, again, is not a true guarantee as defined here). And still other states have eliminated all guarantees of child care assistance -- even to families on or leaving welfare. 

Some states have recognized the importance of providing child care assistance to low-income families, regardless of whether they receive TANF. These states have not legally "entitled" all families below a certain income level to child care assistance, but they believe they have enough funding available to provide help to all families below a certain income level who they think need and will use child care assistance, or to serve all families on their current waiting list. As noted above, however, these states are not providing a true "entitlement," because the availability of child care assistance will depend on the future availability of funds.

States have taken a variety of approaches to fund their expansions of child care assistance, including appropriating new state funds (such as Illinois), transferring TANF dollars to their CCDBG (Child Care and Development Block Grant) (such as Washington state and Wisconsin), and combining new federal funds with existing dollars. It is important to note that although more families are now being helped, some of these states have other policies that undercut the value of the child care assistance to families. For example, Washington state is paying rates far below the 75th percentile for all but infant care, which means that parents’ choice of providers is severely limited. And families in states such as Wisconsin are encouraged to use informal, less expensive -- and sometimes less safe -- care because the state requires lower copayments for such care.

Even with the new funds that were available in 1997, a 1998 Children’s Defense Fund survey of state child care administrators from all 50 states (and the District of Columbia) underscores the urgent need for additional investments in child care 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, nonwelfare workers have the child care assistance they need to stay employed and off welfare and to help their children thrive. Nine out of ten children who are eligible for child care assistance do not receive help:

• 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 four states disqualify families for help before they reach this federally authorized 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 Iowa and South Carolina cut 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 the 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. As of January 1998, about half the states had to turn away eligible low-income working families or put them on waiting lists for help. Waiting lists stretch out across the country. In California, over 200,000 families—mostly nonwelfare, low-income workers—are on the child care subsidy waiting list. In Florida, 25,000 children were on the waiting list as of September 1997, and Texas had 30,000 families waiting for child care assistance as of January 1998. These waiting list numbers often underrepresent the real need: administrators told us that many families do not put themselves on the list because they feel, in many cases correctly, that it is futile.

• The waiting list numbers are only one measure of the inability of the current system to serve eligible families. Forty-three states told CDF that they were not confident that they could serve even those eligible families who met their current low income eligibility guidelines if these families knew they were eligible. One administrator, when asked if his/her state could serve all eligible families if they knew they were eligible, replied bluntly, "God, no." 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. Two out of three state administrators were not confident that all eligible families in their state knew they were eligible for help. States such as Texas and Virginia, with long waiting lists, explained that they could not possibly conduct an outreach campaign to tell more families about the program when they cannot even serve all the eligible families already asking for help. Wisconsin goes a step further. Wisconsin’s caseworker manual for W-2 (the state’s welfare program) gives confusing instructions that could result in TANF families not knowing that they are even eligible for child care help unless they ask for assistance. The manual states that "the new system should provide only as much service as an eligible individual asks for or needs. Many individuals will do much better with just a light touch." These principles may confuse caseworkers even though they are also told that child care assistance is available for all families.

Low Rates

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 may be driven to choose the lowest-cost, often lower-quality, care, since that is what the state subsidy rate will pay for. Or parents may 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. 

• Only a minority of states set rates that are sufficient (under criteria in proposed federal regulations) to ensure parental choice. 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. The gaps are often disturbingly wide between what states will pay and what care really costs. Delaware, for example, pays a maximum subsidy rate for a four-year-old in center-based care that is over $200 a month lower than the rate that would allow parents access to three-quarters of local providers. Similarly, Missouri pays a maximum rate that is $170 a month lower than the rate needed to allow parents this range of choices; and Arizona pays a maximum that is $108 lower than needed. Massachusetts pays a maximum that is more than $140 a month less than what parents would have needed to access 75 percent of the providers in 1994, which means it is even less adequate. Such low rates make a real difference in the quality of care parents can purchase with subsidies and the range of choices they have. Many get subsidies, but then are faced with the difficult choice of losing their jobs or putting their children in substandard care.

• Many states pay rates that are too low, or that are based on such outdated information about the real cost of care that the rates are inadequate. Sixteen states based their subsidy amounts on market rate surveys that were more than two years out of date. Indeed, three of these states—Connecticut, Maine, and Rhode Island—used surveys that were five to seven years old. These states had not increased their rates to reflect the fact that their information was outdated. Another nine states paid rates based on recent market rate surveys, but set maximums that would not enable parents to afford the costs charged by three-quarters of local providers. Nebraska’s experience underscores how far subsidy rates lag behind the real cost of care if the state relies on old market data: last year the state increased rates to pay the 75th percentile of the 1995 market rate survey. This enabled the state to pay the current rates charged by 60 out of 100 local providers—so that 40 out of 100 local providers would not accept the fee level paid by the state subsidy program.

High Parent Cost-Sharing

Child care subsidy programs also close doors to families when they ask parents to pay such high parent fees that child care remains unaffordable. States generally require working families who are receiving child care assistance to pay "parent fees" or "family copayments." These payments are established using a sliding scale, with families earning higher incomes required to pay higher fees. Experts recommend that low-income families should not have to pay more than 10 percent of their income for child care, with the poorest families paying nothing or only small fees. Yet in a number of states, working low-income families who do manage to get subsidies are facing such high copayment levels that their child care costs remain prohibitive—despite the appearance that states are subsidizing the costs of their care.

For example, although experts recommend that low-income families above poverty pay no more than 10 percent of 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 percent 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.

The effect of such high parent fee requirements is that low-income working parents who are approved for subsidy payments are often left to pay nearly as much in fees as they would if they were paying for child care on their own. In South Dakota, the parent fee of $500 per month is more than most parents with one child are likely to have to pay for child care based on the local cost of care. South Dakota parents with one child in care will effectively have to pay the entire cost of care even though they qualify for a subsidy. And such high fees probably help account for Oregon’s observation that many families stop participating in the child care assistance program as their incomes rise, even though they are still eligible for assistance.

Similarly, although experts recommend that families earning below poverty should pay nominal fees, or no fees at all, 21 states require three-person families at the federal poverty line to pay 5 percent or more of their income in parent fees. Families at the poverty level have no money to spare, and need all their funds for clothes, food, rent and transportation. There is little left over for child care. Yet in some states the cost-sharing requirements for families at or below poverty are staggering: 

• Some states require families earning less than $13,330 for a family of three (the poverty level) to pay as much as $1 out of every $10 earned for child care. Colorado and Oregon require parents at the poverty level to contribute 11 percent of their income for one child—about $120 for child care out of a gross monthly income of $1110 for a family of three; Virginia requires 10 percent; and North Carolina and Texas require 9 percent (Texas is proposing to allow localities to charge parent fees of up to 20 percent of income for families earning as little as $10,000).
• Four out of five states require three-person families earning only about $10,000 a year (75 percent of poverty) to pay parent fees. North Dakota requires a parent fee of up to 13 percent—$105 per month out of a monthly income of $833, while Colorado, North Carolina, and Texas require such families to pay up to nine percent of income in parent fees for one child.

Other Access and Supply Issues

Just getting to work and child care is an enormous challenge for low-income families. Child care rates are generally based on a 10-hour day. However, given the lack of transportation and access to job sites, many mothers trying to leave welfare find themselves with very long commutes and dependent on inadequate public transportation in urban areas or friends with cars in rural areas. Some are paying burdensome additional charges to child care providers who are keeping children for 12 to 14 hours a day.

Mothers working to get off AFDC or TANF who are able to find work are also likely to face jobs that require evening and weekend hours. Nearly one in five full-time workers (14.3 million) worked nonstandard hours in 1991. More than one in three (five million) of them were women. One-third of working-poor mothers with incomes below poverty and more than one-fourth of working-class mothers (those with incomes above the poverty line but below $25,000 a year) worked weekends. The demand for non-traditional hours outstrips the supply. In Chicago, for example, CCR&R staff estimate that about 30 percent of the requests that they receive are for evening or weekend care. Based on a survey of providers, they found that only 8 percent of providers will consider evening care and only 3 percent weekend care.

The instability of parents’ work schedules also presents a challenge for families trying to find child care. One study found that almost half of low-income working parents worked on a rotating or changing schedule, compared with one-quarter of working- and middle-class mothers and one-third of working- and middle-class fathers. This presents a greater obstacle to finding child care than either a regular weekend or evening schedule.

Other Shortcomings

These state developments must also be viewed in the context of a child care system already plagued with serious shortcomings: 

• National studies continue to reveal alarming deficiencies in the quality of care in many communities. According to a 1995 study, Cost, Quality, and Child Outcomes in Child Care Centers, six out of seven child care centers provide care that is mediocre to poor. One in eight might actually be jeopardizing children’s safety and development. Equally disturbing patterns were found in a study by the Families and Work Institute of home-based care: one in three settings provided care that could conceivably hinder a child’s development.

• Low wages continue to be the norm for child care providers. Child care teachers and providers today earn less per year than the average bus driver ($20,150) or garbage collector ($18,100). Staff employed in child care centers typically earn about $12,000 per year (only slightly above minimum wage) and receive no benefits or paid leave. As a result, turnover among child care providers is high, shattering the stable relationship that infants and children need to have with their caregivers to feel safe and secure.

• There are major flaws in the basic health and safety standards for child care in many states. Staff education and training are among the most critical elements in improving children’s experiences in child care. Yet 39 states and the District of Columbia do not require providers who look after children in their homes to have any prior training, and 33 states require no training for teachers before they go to work in child care centers. In contrast, becoming a licensed hair styler or manicurist requires approximately 1,500 hours of training at an accredited school. 

• Even the standards that are in place are often inadequately enforced because of a growing number of child care facilities coupled with insufficient licensing and monitoring staff. A 1994 Inspector General’s report on licensed child care centers in five states found a significant number of unsafe and unsanitary conditions. Furthermore, relatively few child care centers meet the higher standards required for accreditation. In 1997, for example, only 6 percent of all child care centers were accredited by the National Association for the Education of Young Children.

• Families with babies younger than three continue to face especially daunting challenges in finding safe and supportive child care. This situation is particularly troubling in light of the much publicized research on brain development in the first three years of life. Both the supply and the quality of care have been found wanting. In one national poll, three out of four parents of young children said there was an insufficient supply of infant care in their communities. The Cost, Quality, and Child Outcomes study found that half of the rooms serving infants and toddlers in child care centers provided such poor care as to jeopardize children’s health, safety, and development.

• The considerable need for before- and after-school care has barely been addressed. Nearly 5 million children are left unsupervised by an adult after school each week. The consequences are grim. Juvenile crime peaks between 3:00 and 7:00 PM- the after-school hours when many children are on their own. A 1990 study found that eighth-graders who were left home alone after school reported greater use of cigarettes, alcohol, and marijuana than those who were in adult-supervised settings. The dearth of good after-school options is especially acute in low-income neighborhoods . In 1993, only one-third of schools in such neighborhoods offered before- and after-school programs.

• Finally, many low-income working families have scarce resources to pay for child care and little hope of receiving help. According to the Census Bureau, poor families earning less than $14,400 per year spend 25 percent of their incomes on child care. New Jersey reports that as many as 15,000 children are on waiting lists for child care subsidies, and Texas has a waiting list of 37,000 families. New York State can provide child care subsidies to only one in ten eligible children.

Children and families pay a heavy price for these gaps. According to a recent report by the Carnegie Corporation, America’s child care and early education services "have so long been neglected that they now constitute some of the worst services for children in Western society." This report observed that the care that most children are in can not only "threaten their immediate health and safety, but also can compromise their long-term development." Kindergarten teachers estimate that one in three children enters the classroom unprepared to meet the challenges of school.

Future years will bring more challenges, as the demand for child care assistance is likely to expand significantly due to sharply increasing work requirements for TANF families. This means that in coming years all states will face an increased need for child care—even assuming that state economies remain strong. If state economies should turn sour, the needs will be even greater. As a result, larger investments in child care will be necessary if states are to establish policies that promote children’s safety and development and make it possible for parents to obtain and keep jobs. Yet federal funds for child care are only slated for minimal increases over the next four years.

For more information , contact the Child Care and Development Division of the Children’s Defense Fund at (202) 662-3544. Or order State Developments in Child Care and Early Education or Locked Doors, Child Care Publications, from the CDF Publications Office --

address: 25 E Street, NW, Washington, DC 20001

phone: 202-662-3652 website address: www.childrensdefense.org