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The Southern Regional Initiative to Improve Access to Benefits for Low Income Families With Children

Chapter 4

Child Care Assistance

Working at a low wage job and being unable to pay for decent child care while at work is a heartpounding dilemma for many low wage families. They may be able to make arrangements with a relative or friend to get child care at a reduced cost, but often such arrangements don’t last. Without some financial assistance, it is often not possible for low wage families to obtain dependable, quality child care.

Affordability of quality child care is a major public policy issue that affects both low and middle income families. However, research has shown that paying the high cost of child care is especially burdensome for low income families. Families earning below the federal poverty level spend an average of 33% of their income on child care.16

The push to move families from welfare to work added an urgency to the need for community, state and federal action on behalf of families who cannot afford to pay for child care on their earnings alone. The 1996 welfare reform legislation substantially increased federal funding for child care. States must provide matching funds. States can also increase funding of child care by reallocating up to 30% from the TANF block grant to the Child Care and Development Block Grant (CCDBG).

Table 16 is an excerpt of information on child care funding decisions by southern states. The table shows that all southern states planned to make use of all available federal matching dollars. Six states (ARKANSAS, DELAWARE, GEORGIA, NORTH CAROLINA, TENNESSEE and VIRGINIA) and the DISTRICT OF COLUMBIA planned to spend beyond the federal match. Five states (MISSOURI, OKLAHOMA, TENNESSEE, TEXAS and VIRGINIA) had transferred funds from TANF to CCDBG.

TABLE 16
STATE CHILD CARE EFFORTS UNDER P.L. 104-193


State

Will state draw down
all federal money?

Will state spend beyond
federal match?
Will state transfer
funds from TANF
to CCDBG?
Alabama Yes N/I No
Arkansas Yes Yes — has recategorized
state child care funds
so they qualify as
federal match
No
Delaware Yes Yes No
District of Columbia

Yes
Yes — $12.3 million
beyond required $6 million
MOE and match
Transfer proposed
by mayor
Florida Yes N/I No
Georgia Yes Yes No
Kentucky Yes No No
Louisiana Yes No No
Maryland Yes No No
Mississippi Yes No No
Missouri Yes No Yes — has transferred $8.5 million
North Carolina Yes Yes — will obligate
additional $22 million
for early childhood
initiative
N/I — transfer $27 million
pending legislative approval
Oklahoma Yes No Yes — has transferred
$25 million
South Carolina Yes No No
Tennessee Yes Yes Yes
Texas Yes No Yes — transfer of $17 million
in FY 98, $23 million
in FY 99
Virginia Yes Yes Yes — $7 million has
been transferred
West Virginia Yes (provided state can
obligate funds in a way
that satisfies state law)
No — but some additional
state funding based on
$2 million initiative
fromo last fiscal year
No
N/I — information not included in survey response or not yet available; MOE — maintenance of effort; TANF — Temporary Assistance for Needy Families; CCDBG — Child Care and Development Block Grant.
Source: American Public Welfare Association, August 1997.

Two additional states (FLORIDA and NORTH CAROLINA) reported on the Southern Institute site visits that they planned to transfer TANF funds to child care. Since the site visits, both states have made transfers.

Prior to welfare reform, there were several funding categories for child care that provided assistance to welfare families, families transitioning from welfare and going to work and families at risk of going on welfare. Welfare reform combined these categorical child care programs into a block grant and eliminated the federal entitlement. This action basically gave states decision making authority over the administration of child care programs and the opportunity to integrate former categorical programs. To date, only a few southern states have moved to eliminate the categorical approach in favor of a simplified income based system. The major impediment to reforms appears to be insufficient funding.

Unlike Medicaid, child care is not a federal entitlement program. There is no guarantee of access to child care assistance, even if families are eligible under a state’s criteria. The number of eligible families who actually receive assistance is determined by the amount of funding made available by each state. Thus, not all income eligible families receive assistance.

Even with the additional allocation of federal child care funding as part of welfare reform, the need remains great. During the site visits, insufficient funding for child care was frequently mentioned as a major issue for states. The combination of insufficiently funded child care programs and the inability of many low income working families to pay the full cost of child care present a looming problem that can and probably will undermine state welfare reform initiatives. All states, even those that are currently able to provide assistance to all families who have applied, expressed concern about the future.

Decisions on the allocation of insufficiently funded child care assistance programs impose difficult choices for public policy makers. The result is often the establishment of policies that produce inequities among different groups of low income families.

These and other issues related to access to child care benefits were discussed at the site visit meetings. Additionally, a survey was administered to collect data on the availability of child care subsidies for welfare related and nonwelfare related families. Survey results, issues and state strategies identified during the site visits are summarized below.

Sufficiency of Child Care Funding

In October 1997, the Southern Institute surveyed the 17 southern states and the District of Columbia on child care. Qualifying groups and sufficiency of child care funding vary considerably across the southern region.

Survey results related to the sufficiency of child care funding are summarized as follows:

Table 17 displays survey results on the sufficiency of child care funding and provides state by state information on qualifying groups.

TABLE 17
SUFFICIENCY OF CHILD CARE FUNDING AND QUALIFYING GROUPS,
SOUTHERN REGION, OCTOBER 1997
State Does Your State
Have the Funding
to Provide Child
Care to All
Groups
Who Would Qualify
Under State
Eligibility
Criteria?
TANF
Applicants
Searching
for
a Job
TANF
Recipients
Former TANF
Recipients
Who Left
for
Earnings
Working
Poor
Without Welfare
Connection
Other
Alabama No X X X X X
Arkansas No X X X    
Delaware Yes X X X X X
District of Columbia No   X X X X
Florida No X X X X X
Georgia Yes X X X X  
Kentucky No   X X    
Louisiana Yes   X X    
Maryland Yes X X X X X
Mississippi No X X X X X
Missouri Yes X X X X  
North Carolina Yes X X X X X
Oklahoma Yes X X X    
South Carolina No X X X X  
Tennessee No X X X X  
Texas No X X X X  
Virginia No X X X X  
West Virginia Yes X X X X X
Note: TANF is the Temporary Assistance to Needy Families program, which is the cash assistance program that replaced Aid to Families with Dependent Children.

Source: Southern Institute on Children and Families, Southern State Survey on Child Care, October 1997.

Targeting Child Care Assistance to Welfare Related Groups

The federal Transitional Child Care program was eliminated as part of welfare reform. Previous to welfare reform, Transitional Child Care was guaranteed to families leaving welfare for reasons due to earnings. The period of eligibility was set by federal law at no longer than 12 months.

With the passage of welfare reform, states can decide how they want to provide assistance to families leaving welfare for work. Most southern states have retained many elements of the former federal Transitional Child Care program.

A major issue with a transitional child care approach is that it limits child care assistance to an arbitrary time period. Assistance is terminated at the end of a specified time period, whether or not families have increased their earnings enough to afford full payment of child care. A few states mentioned during site visit meetings that efforts are made to continue child care assistance after transitional benefits expire, if the family remains income eligible.

Table 18 provides details on Transitional Child Care in the southern region. It shows that 14 southern states have retained the Transitional Child Care program while three states (LOUISIANA, MISSOURI and NORTH CAROLINA) and the DISTRICT OF COLUMBIA have eliminated it. Of the 14 states which have retained a Transitional Child Care program, eight states limit assistance to 12 months and six states provide assistance beyond 12 months.

TABLE 18
TRANSITIONAL CHILD CARE
State Does Your State Have
a Transitional Child
Care Program?
What is the
Time Period
for Transitional
Child Care
(in Months)
Must Cash Assistance
Be Received in 3 of Previous
6 Months for Eligibility?
Alabama Yes 12 No
Arkansas Yes 36 No
Delaware Yes 24 No
District of Columbia No    
Florida Yes 24 Yes
Georgia Yes 12 No
Kentucky Yes 12 No
Louisiana No   No
Maryland Yes 12 Yes
Mississippi Yes 12 No
Missouri No   No
North Carolina No   No
Oklahoma Yes 12 No
South Carolina Yes 24 No*
Tennessee Yes 18 No
Texas Yes 12 to 18 Yes
Virginia Yes 12 No
West Virginia Yes 12 Yes
* South Carolina requires that cash assistance be received in only the previous month.

Source: Southern Institute on Children and Families, Southern State Survey on Child Care, October 1997.

As shown in Table 18, 13 southern states (ALABAMA, ARKANSAS, DELAWARE, GEORGIA, KENTUCKY, LOUISIANA, MISSISSIPPI, MISSOURI, NORTH CAROLINA, OKLAHOMA, SOUTH CAROLINA, TENNESSEE and VIRGINIA) have eliminated the previous federal requirement that families must be on welfare for three out of the previous six months in order to qualify for Transitional Child Care. SOUTH CAROLINA eliminated the rule and replaced it with a requirement that a family be on welfare the previous month to qualify for Transitional Child Care. Other states indicated that they were considering elimination of this rule. Eliminating the three out of six month rule removes the incentive to be on welfare for a short period of time in order to gain access to child care assistance.

Asset Testing

As discussed in the child health coverage chapter, testing for assets impedes access to benefits for low income working families who are eligible under a state’s income criteria. Most southern states and the District of Columbia have eliminated any form of asset testing in order for families to qualify for child care assistance. ARKANSAS is the only southern state to require an asset test for all families applying for child care assistance. TENNESSEE requires an asset test for welfare eligibility, but not for nonwelfare related child care.

Child Care Eligibility Process

Separate eligibility categories that are based on criteria in addition to income complicate the eligibility process for families seeking assistance and for administering agencies. From an eligibility standpoint, an income based system is less complicated and more efficient. The dilemma for states is that while eligibility simplification will reduce the complexity of the eligibility process and save administrative dollars, it makes child care benefits accessible to more families and thus would increase expenditures.

Child care eligibility process issues and strategies are discussed below and survey results are presented.

Eligibility Determination and Redetermination

One strategy for improving access for working families is to allow families to apply by mail or telephone without requiring a face-to-face interview. Another strategy for making benefits more accessible is to have a 12 month period of eligibility between redeterminations.

States were surveyed on the process for determining and redetermining eligibility for child care assistance. Survey results are as follows:

Table 19 provides specific information on determination and redetermination policies by state.

TABLE 19
ELIGIBILITY DETERMINATION AND REDETERMINATION POLICIES
FOR CHILD CARE
State Months Between
Eligibility
Redeterminations
Are Face-to-Face
Interviews Required
at Initial
Determination?
Are Face-to-Face
Interviews Required
at Redetermination?
Alabama 6 Yes (usually) Yes (usually)
Arkansas 6 Yes No
Delaware 6 Yes No
District of Columbia 6 Yes Yes
Florida 6 Varies by District No
Georgia 12 Yes Yes
Kentucky 12 Yes Yes
Louisiana 6 No No
Maryland
12 No No
Mississippi 6 Yes No
Missouri 12 No No
North Carolina 12 No No
Oklahoma 12 Yes No
South Carolina 12* No No
Tennessee 6 Yes Yes
Texas 6 No No
Virginia 12 No No
West Virginia 6 Yes No
* In South Carolina, the duration of eligibility between redeterminations varies by funding sources and can be less than 12 months.

Source: Southern Institute on Children and Families, Southern State Survey on Child Care, October 1997.

Verification Requirements

As mentioned in Chapter 3, verification requirements can present eligibility barriers for families seeking health care coverage for their children. The same is true for families seeking assistance with child care. Identifying areas where more discretion can be used by staff making eligibility determinations can result in improving access to child care assistance.

Table 20 displays the varying eligibility verification policies for income and age across the southern region. The table shows that in most states, eligibility workers never have discretion to allow a family to declare income. Allowing eligibility worker discretion in circumstances where a third party, e.g., an employer, is uncooperative in providing verification may remove a barrier for an income eligible family. Seeking verification through employment system records may provide another avenue for obtaining acceptable verification.

With regard to allowing self declaration for the age of children, 11 states allow eligibility worker discretion (ARKANSAS, FLORIDA, GEORGIA, LOUISIANA, MARYLAND, NORTH CAROLINA, OKLAHOMA, SOUTH CAROLINA, TEXAS, VIRGINIA and WEST VIRGINIA).

TABLE 20
VERIFICATION POLICIES ON INCOME AND AGE
State Can Income Be Declared? Can Age Be Declared?
Alabama Never Never
Arkansas Never Always
Delaware Never Never
District of Columbia Sometimes Never
Florida Never Sometimes
Georgia Never Always
Kentucky Never Never
Louisiana Never Always
Maryland Never Always
Mississippi Sometimes Never
Missouri Never Never
North Carolina Never Always
Oklahoma Sometimes Always
South Carolina Never Always
Tennessee Never Never
Texas Never Always
Virginia Never Sometimes
West Virginia Never Always
Source: Southern Institute on Children and Families, Southern State Survey on Child Care, October 1997.

Continuity of Eligibility

States were also asked to provide information on what happens when a family becomes ineligible for a particular child care program. Some states take the initiative to search for other eligibility categories to avoid the loss of child care assistance while others rely upon the family to apply for another category of assistance. The survey findings are summarized as follows:

Table 21 provides specific information on policies regarding category changes by state.

TABLE 21
WHAT HAPPENS WHEN A FAMILY BECOMES INELIGIBLE
FOR A PARTICULAR CHILD CARE PROGRAM?
State Agency
Automatically
Searches for
Another Category
Family is
Required to
Reapply
Other
Alabama Yes    
Arkansas   Yes  
Delaware     Seamless system eliminates
categories of eligibility.
District of Columbia   Yes  
Florida Yes    
Georgia Yes    
Kentucky     All child care programs within the
Cabinet are combined. Assist with
search outside of the Cabinet.
Louisiana   Yes  
Maryland Yes    
Mississippi   Yes  
Missouri Yes    
North Carolina     Funding sources are blended so that
families do not have to reapply to
move from one category to another.
Oklahoma   Yes  
South Carolina   Yes  
Tennessee   Yes  
Texas Yes    
Virginia Yes    
West Virginia     Seamless system. Families may mail in
review at time of closure of AFDC benefits
to determine continuing eligibility.
Source: Southern Institute on Children and Families, Southern State Survey on Child Care, October 1997.

Information Outreach

As reported in Chapter 2, research by the Southern Institute found that many welfare recipients and transitional Medicaid recipients did not understand how benefits are affected when a parent moves from welfare to work. Information outreach to inform families about the availability of subsidies is essential to improving access to child care assistance. Strategies to accomplish child care outreach are discussed in the Information Outreach chapter.

Information outreach targeted to welfare families is especially important. In one Southern Institute study, personal interviews with welfare recipients and transitional Medicaid recipients were conducted to gain insight on how to reduce welfare dependency.17 During the interviews, recipients were asked to choose the benefit they considered most important to their ability to accept a full time job. The five choices were: (1) Medicaid for myself; (2) Medicaid for my children; (3) Child care; (4) Food Stamps; or (5) Transportation. As shown in Table 22, almost half of the recipients stated that child care was the benefit they needed most to be able to work full time.

TABLE 22
DISTRIBUTION OF STUDY RECIPIENTS ON THE BENEFIT CONSIDERED MOST IMPORTANT TO ACCEPT A FULL-TIME JOB
Most Important Benefit Percentage of Recipients
Child Care 48%
Medicaid for Children 32%
Transportation 12%
Food Stamps 6%
Medicaid for Myself 3%
TOTAL 100%
Source: Southern Institute on Children and Families, 1994. Data collected from recipient
interviews in Charlotte, North Carolina, and Nashville, Tennessee.

State Collaboration With Head Start

Some states expressed concerns regarding their lack of success in establishing statewide collaborative arrangements with Head Start providers. Issues mentioned included the need for full day/full year child care, the need for services for younger children, parent financial participation, payer of last resort policies and differing audit requirements.

Several states mentioned that governance is an issue in achieving collaboration. Head Start remains a federal program and there appears to be no incentive for Head Start agencies to collaborate with states on child care. While states appeared willing to work collaboratively on issues and several reported some local successes, several expressed frustration with coordination efforts.

The survey asked states to provide information on collaboration strategies with Head Start. Appendix F provides contact information for state programs that reported some progress in achieving collaboration

State Strategies To Improve Access to Child Care Assistance

Several state strategies that improved access to child care assistance are presented below and contact information is provided.

North Carolina

An initiative of Governor James B. Hunt, the Smart Start program has increased the availability of child care and quality of care in North Carolina. Smart Start is a comprehensive early care and education program with the goal of preparing children to succeed in school.

Through strong leadership and advocacy, the child care income eligibility level has been raised to serve families up to 214% of the poverty level, regardless of whether or not they have a connection to welfare. All parent fees are based on a sliding fee scale depending upon the family’s income.

Approximately $6 million in TANF dollars has been transferred into child care. A request to move an additional $10 million has been made to the state legislature.

Contact:

Stephanie Fanjul
Division of Child Development
Department of Human Resources
101 Blair Drive
Raleigh, NC 27603
919-662-4543

Missouri

The Missouri child care program provides low income families assistance with child care costs in one of two ways; 1) reimbursement to parents, or 2) direct payment to eligible child care providers. Families whose income falls at or below approximately 133% of poverty are eligible for services on a sliding fee basis. Families with income below approximately 60% of poverty or with special needs children do not pay a sliding fee.

Child care assistance is provided to low income families to allow parents to work or to attend school or job training programs.

Contact:

Tom Jones
Department of Social Services
221 W. High Street
Jefferson City, MO 65101
573-526-3581
tjones@mail.state.mo.us

Florida

All state and federal funding is placed in the budget of one agency. Therefore, families are able to access child care for a number of eligibility categories at one location and can move from one category to another without disruption of eligibility.

All families using subsidized child care pay a fee in order to stretch funds to serve additional families.

Child care funding has been increased by moving $150 million in excess TANF dollars to child care. The movement of these funds ensures that all welfare clients needing child care to participate in work activities receive care.

An interdepartmental agreement between the Department of Labor, Jobs and Benefits program and the Department of Children and Families (Economic Self Sufficiency and Child Care) was established. This agreement improves access to child care by clearly identifying each step of the welfare process, child care eligibility requirements, when services are applicable and who is responsible for completing the authorization and referral.

A child care partnership matching grant program was established in which the legislature appropriated $6 million and local business agencies matched that amount to provide child care services to the working poor.

Florida created the state Work and Gain Economic Self Sufficient (WAGES) Board to oversee welfare. The WAGES Board is composed of public and private representatives, including business, and has provided leadership in improving access to child care in Florida.

Contact:

Larry Pintacuda
Florida Department of Children and Families
1317 Winewood Boulevard
Building 7, Room 228
Tallahassee, FL 32399-0700
850-488-4900

Actions That Can Improve Access to Child Care

There are a number of actions that can be taken to improve access to child care assistance for low income families. Some of these actions are described below.

  1. To assist more low income families with the high cost of child care and to discourage welfare as an entry point for child care assistance, states should identify and implement actions to achieve an income based system of child care subsidies for low income working families with no requirement that a family be on welfare for any period of time in order to obtain assistance in paying for child care.
  2. To avoid denying child care assistance to children in income eligible families who have resources that exceed state asset limits, states should exempt assets when determining eligibility for child care assistance.
  3. To assure that the application and recertification process is not burdensome for low income families seeking child care assistance, states should review eligibility policies and procedures, including recertification periods and verification
  4. In order to provide continuity of child care assistance, states should review policies regarding agency initiative in making category changes for low income families whose children remain eligible.
  5. To assure that families know about available child care assistance, states and communities should design and implement outreach strategies to communicate the availability of child care
  6. To foster cooperation with Head Start, states should identify and disseminate information on successful Head Start collaboration strategies and document issues that need to be addressed at the federal level.

____________________

16 National Child Care Survey, 1990, as quoted in Sandra Clark and Sharon Long, "Child Care Block Grants and Welfare Reform," Welfare Reform Briefs, No. 15, Urban Institute, June 1995, p. 3.

17 Shuptrine, Relationship of Health Coverage.