Joint Letter Re: Non Supplantation-Joint with APHSA & NCSL

NCSL Letter Gets Non Supplantation Clause Pulled from Child Care Bill

April 2, 2003

The Honorable Judd Gregg
United States Senate
Washington, DC 20510

Dear Senator Gregg:

As strong and consistent supporters of the Child Care and Development Block Grant (CCDBG) from its inception in 1990, the American Public Human Services Association (APHSA) and the National Conference of State Legislatures (NCSL) urge you to reauthorize the CCDBG and continue the successful state/federal partnership to provide child care. However, we ask that you consider the grave concerns we have regarding a proposed amendment which requires the Secretary to reduce a state's CCDBG allotment by an amount corresponding to any decrease in federal, state and local funds expended by states to support child care services and related programs. While well intentioned, this amendment, if enacted, would jeopardize entire child care programs in most states.

For over a decade, states have made historic investments in child care. States expended $5.8 billion on child care in Fiscal Year 2001, including CCDBG expenditures and TANF transferred to the CCDBG. States spent an additional $1.7 billion in TANF directly on child care in that year. All states have consistently reported spending state funds at the required maintenance of effort (MOE) levels, even during the current budget crisis afflicting almost every state.

It is crucial that every effort be made to maintain the benefits we have reaped from our investment in child care over the past dozen years. At the same time, we must recognize that states cannot sustain such levels of support during the current budget crisis. According to a recent survey by the National Conference of State Legislatures (NCSL), 39 states responded that they are facing budget gaps totaling at least $68 billion for Fiscal Year 2004. This is on top of cumulative budget gaps of $37.8 billion in 2002 and $75 billion in 2003. The budget gap is likely to rise and could be much higher when all states are accounted for. Given this new budget reality, many states have had to decrease their investment in child care. These have not been easy choices and funding for many programs has been or will be reduced.

Unfortunately, the proposed amendment will penalize the children and their families that need these services a second time because any cut in state funds would be exacerbated by the loss of by federal funding. For example, one state had to endure a cut of $27 million in child care services in the past year. If the state had made such cuts under the non-supplantation amendment, the state would lose a staggering $54 million in child care. Clearly, for a child care program already reduced by $27 million, an additional cut of $27 million would gut child care services and compromise children's safety. Cuts of this magnitude impact all aspects of child care programs, from quality to access.

The non-supplantation amendment not only harms states that need federal funding the most, it penalizes those states that have made the most generous investments in child care programming. Some states have gone beyond any federal requirement in making state investments. For example, State A invests $1 million more in child care each year compared to State B. Suppose that State A is facing a multi-billion dollar gap and must reduce its investment in child care by $1 million. Under the non-supplantation amendment, State A, would lose an additional $1 million in federal CCDBG funding. State B wouldn't lose a penny. The outcome is twofold. State A, needs federal funding more than ever to help maintain the investments it made in child care when the state could afford them. State B is provided with absolutely no incentive to increase its investment in child care because if it did so and could not sustain the investment in perpetuity, the state would be penalized. The message to states under this amendment is clear - don't bother investing in child care.

Budget deficits are not the only reason child care programs are threatened by this amendment. Congress recently cut federal funding for child care by decreasing discretionary funding by .65%. Under the non-supplantationamendment, a state would lose even more CCDBG funding if it could not replace these discretionary funds. It would be nothing less than hypocrisy for Congress to penalize a state a second time if a state could not absorb this loss in federal funding in its entirety.

Currently, Congress is also considering proposals as part of welfare reform reauthorization that could cause states to redirect the TANF funds that have been invested inchild care. States may have no choice given proposals to increase federal work requirements but to expend TANF to support these increased work requirements. Some states have seen increased TANF caseloads which may also cause states to reallocate funds for child care to cash assistance. Once again, states would be penalized for the good faith investments that they made in spending TANF dollars on child care. Under the non-supplantationamendment, any reallocation of TANF from child care to expenditures on work and cash assistance would lead to reductions in CCDBG funds. States would never risk making such investments again.

The amendment not only punishes states for the fiscal decisions that they make, but also reduces federal child care funding to states based upon decisions made by counties and municipalities. The language in this amendment is quite clear - if local funds expended in support of the child care program are reduced, then the state (not the local agency) loses federal CCDBG funding. States cannot be held accountable for decisions made at the local level regarding the use of local fiscal resources. There is simply no such authority. Furthermore, such a provision violates both the agreement entered into by states with the federal government upon the creation of the block grant and the reaffirmation of the state/federal relationship and responsibilities in assisting our country's neediest children and supporting working families forged by the 1996 welfare reform law.

Finally, the amendment uses vague language and terms. By referencing "child care services and related programs", the amendment opens up the possibility of states losing even billions of more dollars depending upon how both "child care services" and "related programs" are defined. More and more programs are being considered child care, including pre-K programs and early learning. Related programs could be just about anything. The term "supplant" is also not defined. . States would also be penalized should there ever be an increase in eligibility and parent co-payments. Some states have has to increase child care co-payments to cover the largest number of working families possible with meager child care dollars and to avoid terminating subsidies to some families.

Unfortunately, because this amendment threatens state child care investments in their entirety, APHSA and NCSL would have no choice but to oppose any legislation that reaches the floor containing this amendment.

We thank you for your consideration of our concerns and hope you will join us in the fight to maintain both state and federal investments in child care. If you have any questions, please feel free to contact Elaine Ryan, Director of Government Affairs or Shari Gruber, Senior Policy Associate for Child Care at American Public Human Services Association at (202) 682-0100. At the National Conference of State Legislatures, please contact Sheri Steisel, Federal Affairs Counsel and Senior Human Services Committee Director or Lee Posey, Senior Policy Specialist at (202) 624-5400.

Sincerely,

Jerry W. Friedman
Executive Director, APHSA

William Pound
Executive Director, NCSL