Executive Summary of Building Blocks: A Legislators' Guide to Child Care Policy

Building Blocks: A Legislators' Guide to Child Care Policy--December 1997

Executive Summary

Written by:
Mary Culkin
Scott Groginsky
Steve Christian

Because of significant economic and social changes during the past 20 years, child care and early education issues have become a high priority in state legislatures nationwide. As more parents enter the work force--including more women and two-parent families of all income levels--state decision makers are helping them secure child care that is both affordable and supportive of their child's development. Recent scientific evidence about the brain confirms that learning begins at birth and that very young children benefit from stimulating attention with responsive caregivers, including parents and others outside the home. In the context of an increased number of working families, this research underscores the important role of a child care provider. Other studies have found that quality early care and education services have a dramatic long-term effect on a child's ability to succeed in school, achieve economically and avoid the criminal justice system. Therefore, child care and early childhood education must meet children's cognitive and emotional needs, as well as protect their physical well-being. Because several studies indicate a lack of good child care, state legislators are examining policies that can increase the availability of affordable, quality services.

Reliable, affordable care for working families clearly benefits the current work force as well, affecting economic initiatives, productivity of workers and the success of state welfare-to-work initiatives. In the wake of the federal enactment of welfare reform, most states are still in the early stages of developing systems that help families that are dependent on welfare locate stable jobs and eventually reach self-sufficiency. Child care is a crucial ingredient of these efforts.

Child care no longer is considered separate from learning. Instead, care and education are simultaneous - children learn in all settings. These include:

Child care for infants, toddlers, preschool-age, and school-age children in centers, in family child care homes, and by relatives.
Head Start early childhood education programs for low-income 3-, 4- and 5-year-olds.
Prekindergarten programs, which can be school-based or community-based.
Out-of-school time activities, including tutoring or recreation.

Recognizing the important economic and social implications of early care and education, more state legislators are adopting innovative policies that support working families' access to good care that both promotes work place effectiveness and healthy development of young children. During the last 13 years, the legislation addressing early childhood issues has grown from 28 laws in 1984 to 130 in the 1997 legislative session. A growing number of these initiatives address multiple issues that affect many components of an effective early care and education system. These comprehensive policies often connect various programs, agencies and funding sources. Increasingly, state legislatures are focusing on substantial investments in these services. In 1994, the states and the District of Columbia appropriated more than $2.4 billion for early childhood programs.

This guide closely examines the issues and tradeoffs in key child care policy decisions that face state legislators. It provides a discussion of state efforts to build supply, improve quality and develop effective subsidy systems for low-income families. By presenting research findings and policy options about supply, quality and funding for low-income child care, as well as demographic trends, this guide offers a context within which state lawmakers can have a successful, lasting effect on current and future generations.

Long-Term Effects of Early Childhood Care and Education

Good early care and education programs can provide children with a solid foundation for later success at school and at work by acting as a buffer between children and a variety of developmental risk factors. Several outcome studies have found that quality early childhood programs significantly enhance a child's educational attainment, level of socialization and long-term earning potential. These benefits translate into reduced state spending on social services and special education, increased tax revenues, a better-prepared work force and reduced crime rates. The best-known outcome study of the benefits of quality early childhood education is the High/Scope Perry Preschool Project. This study's most recent evaluation of 27-year-olds born in poverty who attended a quality preschool program at ages 3 and 4 found that participants had higher earnings, better educational achievement and fewer arrests. Other studies support these and related findings.

The first three years of life are a critical period during which the brain is creating the neural connections that support reasoning, emotion, language, motor skills, perception, values and other capacities. A child who lacks appropriate relationships and stimulation during these years will be less able to learn, cope with stress, handle emotions and form relationships. These new findings have recently been in the national spotlight. They have been covered in a prime-time network television show and at a 1997 White House conference, and have been the focus of resources from a plethora of national foundations, businesses and organizations.

It is estimated that by 2000, 70 percent of women with preschool age children will be employed and in need of child care. Many working men and women with children under age 12 experience child care breakdowns, which are linked to higher absenteeism and tardiness. Nationwide, businesses lose $3 billion annually because of child care-related absenteeism, turnover and lost productivity. Many studies have shown that reliable, high-quality care can make a decisive difference in helping families work. For low-income families that have fewer available resources, child care assistance can make the difference by allowing a parent to retain a job or leave welfare, leading to longer term benefits for a state's economy. A recent North Carolina study found that a child care subsidy that allows a parent to earn at least $15,000 per year will generate tax revenue in excess of the subsidy.

Expanding the Supply of Child Care

State legislators can increase the supply of child care by helping providers overcome the financial, legal and regulatory obstacles to starting or expanding a child care business. Some of the many supply-building options include assisting with facility development, recruiting caregivers, expanding school-age child care, establishing public and private partnerships, and changing child care liability insurance laws and local zoning ordinances. To help develop more child care facilities, at least 13 state legislatures have enacted laws that offer low-interest loans for construction or renovation of child care centers. Some states also have established loan guarantee initiatives to help child care programs afford debt. Another approach used in several states is to issue bonds and to use the proceeds to pay for early childhood facilities. At least 10 states have provided grants to child care programs to expand facilities.

Other than facility development, state policy makers often direct child care supply-building strategies to resource and referral services, which recruit providers, offer outreach to local businesses about work and family options, and educate parents about child care options. Several state and local governments also are forging partnerships with private businesses to bolster a system of resources and options for dependent care assistance for employees. Many states have adopted a range of policies to increase out-of-school time activities for school-age children. Research suggests that these programs help children increase their social skills and academic outcomes and avoid problem behaviors.

Improving the Quality of Child Care

Two national studies of child care have recently found that the majority of settings offer poor to mediocre services. The Cost, Quality and Child Outcomes Study of Child Care Centers revealed that 86 percent of centers studied provided mediocre to poor services and 40 percent of the infant-toddler rooms were observed to endanger children's health and safety. The Study of Children in Family Child Care and Relative Care found that only 9 percent of the family child care settings studied were of good quality, while 35 percent of the settings studied were so poor that they could inhibit children's development.

Across the nation, state legislators are addressing this concern through a variety of policies. One approach is to strengthen regulatory standards for child care providers. Some states encourage providers to meet additional standards such as accreditation. Licensing or regulatory standards typically address issues that have been correlated with better quality care, including child-to-staff ratios, group sizes, and training and education of caregivers and administrators. Other key regulatory issues include inspections, background checks of providers, curricula, and health and safety standards.

Another way to enhance child development is to maintain caregiver continuity for children. A key challenge for state policy makers is to reduce child care turnover rates, which are much higher than average (ranging from 35 to 41 percent). In addition, child care providers earn as much as $5000 less per year than they could earn in other jobs for which they are qualified. Several state legislatures have addressed this concern by connecting provider training and education to professional advancement or to better wages and benefits. To help facilitate a career development system, all states direct funding to resource and referral programs, which can assist providers with regulatory requirements, offer training to providers at all levels and connect providers to educational resources.

Most states operate a part-day preschool program, many of which offer quality services. At least 13 states and the District of Columbia supplement the federal Head Start program for preschoolers, which includes specific quality components. States are linking their child care subsidy systems with part-day preschool programs not only to infuse quality features into the system, but also to meet the full-day needs of working parents. To promote such coordination, several states have integrated all their early childhood services into one agency or department. Similarly, a few state legislatures have restructured their committee organization to cover critical early care and education issues more comprehensively. Several states have incorporated an array of services into their child care programs that supports parents and other family members. These family support services often include health, social services, counseling, job placement services, housing, transportation, parent education or home visitation for parents with newborns. Family support programs differ in setting, format and emphasis. Some focus on a single outcome and others have broadly defined goals. They are usually in a central location, such as a public school or community agency. In addition to adding comprehensive services to an early care and education system, family support services can address multiple needs in a single place.

Child Care Funding for Children from Low-Income Families

With the federal enactment of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, states were given flexibility to design child care systems for welfare recipients, former welfare recipients in jobs, training or education and other low-income or moderate-income working families. In establishing the child care system under the federal law, states are addressing three fundamental policies: who is eligible, how much those parents will pay and what the state will reimburse providers of subsidized care. The federal law requires states to place 30 percent of its welfare recipients into job activities in fiscal year 1998 and 50 percent by 2002. Under the act, families on welfare must participate in a work-related activity within two years or less of receiving welfare. These requirements increase the pressure on states to develop a child care system that not only helps move welfare recipients into work, but that also provides child care assistance to working poor families who may need it to continue working and stay off welfare.

State decision makers are taking various approaches when choosing who should receive child care subsidies. One strategy that several states are using takes advantage of the flexibility of the new welfare law by not considering welfare status as a condition of eligibility for certain funds. Instead, these states direct available funds to any family that is below a specified income level, whether or not the family is on welfare. By guaranteeing child care services to certain families, these states effectively eliminate a waiting list. Other states maintain a child care priority for families that receive welfare or families that have recently left welfare. Another approach that some states are taking is to provide child care to families based on income categories and to make assistance available to families in a higher income category if funds are available. Under the federal law, states may exempt families with a child under age 1 from work participation requirements. In addition, states are prohibited from sanctioning nonworking welfare recipients with a child under age 6 if parents cannot locate child care that is reasonably close, affordable, suitable and appropriate. States can define these terms broadly, potentially reducing the burden on child care supply.

States have some flexibility in designing a parent fee structure, including which families pay how much of a copayment and the methods used to determine the copayment. During the past year, states developed their fee scales and legislators and administrators decided whether to exempt welfare recipients and other poor families from a copayment. Most states base the parent sliding fee scale on income levels and family size, but some states also factor the cost of care into the parent fee. This strategy may discourage eligible families with limited resources from choosing higher-cost care, which often includes higher-quality care, so this policy may have long-term effects on child development.

Another factor states are considering when examining funding issues is the level of reimbursement they pay to child care providers. Adequate reimbursement rates are critical to the effort to maintain a child care strategy that achieves both work force and child development goals, since providers are less able to afford to serve subsidized children if the reimbursement rates are too low. Some states have established differential rates that pay more to providers that meet higher regulatory standards, achieve national accreditation or serve children during nontraditional hours. These state incentives are intended to encourage better quality care and harder to find care. States also set policies regarding how subsidized care is paid for, including contracts, vouchers, cash to parents or welfare grant increases for working welfare recipients.

This guide highlights recent state legislative efforts to expand early care and education, improve the quality of services to promote healthy child development and establish effective policies to assist low-income families reach self-sufficiency. The guide includes profiles of states that have established comprehensive child care and early education policies that are often coordinated to benefit the entire family. State early childhood initiatives have a significant effect both on today's work force and on the ability of the next generation to succeed.

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