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Assembly on State Issues
Children, Families and Health Committee
Annual Meeting 2000, Chicago, Illinois
Child Care Financing: Making the Most of Funding Opportunities
A joint session with the AFI Human Services Committee
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Presiding: |
Representative Brian Mattiello, Connecticut
Co-Chair, AFI Human Services Committee |
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Speakers: |
Charlotte Brantley, U.S. Child Care Bureau, Washington, D.C.
Bill Gormley, Georgetown Public Policy Institute, Washington, D.C.
Senator Susan Longley, Maine
Representative Beth Coulson, Illinois |
Background
Policies to finance child care and early education services support both the current and future workforce. With more parents entering the workforce, coupled with the work requirements states must meet under welfare reform, state lawmakers are examining a wide range of funding sources to assure quality, affordable out-of-home child care services. Some of these funds are innovative, extending beyond the traditional sources. Moreover, the federal government has provided states with flexibility on how to spend its welfare dollars from the Temporary Assistance for Needy Families (TANF) block grant. State lawmakers are also considering key research findings that show that financing quality child care and preschool services can provide children with improved educational, employment and social skills later in life.
A National Perspective
State decision makers are paying attention to the importance of quality early childhood programs by spending more federal funds on services than is required and in some cases doubling it. Charlotte Brantley highlighted key requirements of the federal Child Care and Development Fund (CCDF), including parental choice, earmarks for resource and referral services and consumer education. These and welfare dollars can be used for various quality improvements, including provider training, education and salary incentives. States around the country are also combining Head Start funds with child care funds to maximize resources and allow for full-day services. Brantley discussed key tracking needs of directly spending TANF dollars on child care and she noted that states transferred $2 billion in TANF to the CCDF in FY 1999. Federal goals include:
- Technical assistance work with states on child care subsidy policies;
- Increased child care collaboration with early education, special education, health, and mental health systems;
- An increase of $817 million for the CCDF to provide child care services to 150,000 to 200,000 more children; and
- Quality improvements, including community early learning programs.
State Approaches.
State legislative trends in child care financing include improving affordability for low-income families, expanding availability of services and improving program quality.
One approach is to pay a higher reimbursement rate to providers based on criteria, such as national accreditation, that is known to inspire quality care. Georgetown professor Bill Gormley indicated that this approach has resulted in increased accreditation in some states. A review of 18 states with tiered reimbursement rates found that states with a larger rate difference were more likely to have an impact on quality. Gormley's research also showed that centers with quality components benefit more from greater reimbursement than those with poor quality.
Many states have partnered with businesses to help expand child care availability. Senator Susan Longley described legislation in Maine to involve business in child care by offering tax credits, a revolving loan program and a business commission. Senator Longley addressed the importance of linking the importance of quality child care with the critical business concerns of economic development and a stable, educated workforce in both the short and long term.
State policymakers are also focusing on affordable child care services for low-income families through a range of strategies. In the wake of federal welfare reform four years ago, Illinois lawmakers increased state child care appropriations to provide child care for any family earning below 50 percent of the State Median Income, which is just under $22,000 per year for a family of three. Illinois Representative Beth Coulson discussed this policy, which offers programs to eligible families regardless of their welfare status. She talked about how the state has drawn on federal child care and welfare funds for low-income child care services. A more recent Illinois law promotes quality care by providing wage supplements to child care workers for educational achievement and for remaining at their job for at least six months. She also mentioned that Chicago businesses were involved in passing this bill.
Handouts from the session are available upon request.
Child Care Financing, NCSL (Groginsky, Poppe and Davis), June 2000
Child Care Newsletter, NCSL, 2nd edition, June 2000
Differential Reimbursement and Child Care Accreditation, Gormley, June 2000
New Laws for Quality Early Care and Education (Maine's Start ME Right Initiatives), July 2000
NCSL Contacts: Scott Groginsky and Julie Poppe in the Denver office.
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