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Part III Supports for Working Families Part III reviews the public supports currently available in the United States to families with working parents. Chapter 8 considers the public policies, including leave policies, tax policies, and education programs, available to working families and the implications of these policies for child and adolescent well-being. Chapter 9 summarizes the committee's findings and conclusions, as well as some policy options that are warranted, in the committee's view, by these trends and research evidence.

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8 Policies to Support Working Families T his chapter reviews existing support policies available in the United States to families with working parents. The primary focus is on public policies--specifically leave policies, tax poli- cies, education programs, and programs to assist families in paying for child care. For each major policy area, the support provided and the families who benefit from it are described. We conclude by briefly consid- ering the implications of the current patterns of support for child and adolescent development and public policy. There is some evidence that family support policies have also been integrated into employment policies of private-sector companies (Galinsky et al., 1992; Galinsky and Friedmand, 1993). Only limited data are available on these employer policies and how well they meet the needs of children in working families. The data that do exist suggest that access to corporate policies and benefits is uneven, with lower-income workers less likely to have coverage (see Table 8-1). How- ever, overall, the data are limited and do not provide a comprehensive understanding of who these policies affect and the extent to which they support the well-being of children in working families. The material pre- sented here and the committee's findings and conclusions are therefore focused on public policies. LEAVE POLICIES Leave policies give working parents the right to take time off from work without the risk of losing their jobs. Evidence presented in Chapter 4 229

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230 WORKING FAMILIES AND GROWING KIDS Six /A Daily Flextime (%) 26 20 31 N/A N/A N N/A 18 children 19 44 13 22 47 Age with Under fathers older. /A Traditional Flextime (%) 44 39 48 N/A N/A N N/A 42 and and 35 61 31 41 62 18 Children mothers ages Leave Sick Policy with Paid for Children (%) 49 N/A N/A 34 51 37 51 37 48 61 36 48 66 the women to employed and Access men Employees Paid Holidays (%) 84 80 88 63 87 71 86 67 includes 87 93 74 85 93 by with sample employed Policies Employees Paid Vacation Days (%) 85 78 89 57 89 58 89 69 This 88 91 78 86 88 3,552 of of values. Place sample Percentage Family Health Insurance (%) Work 86 78 89 57 89 73 86 66 87 95 69 86 93 specific on national data * 69-72 77-79 Corporate Sample Size 513-536 228-231 303-306 450-462 443-456 115-122 247-254 124-126 109-116 280-293 106-120 selected (2000). missing to to Bond due randomly a available. and Access children year vary not $71,500 with $19.25 per from 8-1 Group six to sizes six Galinsky Status Earnings to age Status Income age indicates parents Mothers Fathers Part-time Full-time Single Married/partnered $7.70 $7.71 $19.25 <$28,000 $28,000 $71,600 *Sample N/A TABLE Employee All under Gender Work Marital Hourly Family under SOURCE:

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POLICIES TO SUPPORT WORKING FAMILIES 231 shows that very young children may be particularly affected by maternal employment, and, for newborns, outcomes for mothers and children are better when mothers are able to take more than 12 weeks of leave. Out- comes for children may be better when mothers are able to return to work part time or to delay returning to work full time until after the first year. There are many types of leave--vacation leave, personal leave, sick leave, leave for jury service, leave for bereavement, and so on. Here we consider family leave and medical leave--the major types of leave that working parents may need to take to care for their children and adolescents. Family Leave Family leave includes several types of leave that families use to care for children and adolescents, including most commonly maternity leave but also paternity leave, leave to care for a sick child or adolescent, or leave to arrange care for a child. In the area of family leave, as with other types of leave, the United States historically has not had many public policies; rather, leave policies have mainly been left to the discretion of employers. The United States had no national maternity leave legislation until the passage of the Family and Medical Leave Act (FMLA) in 1993. Prior to 1993, the United States did have some state family leave laws, which provided the right to a job-protected leave for maternity and pater- nity to some mothers and fathers in some states. These state laws vary by their effective date, the type and size of firms covered, the number of weeks of leave provided, and the job tenure and working hours requirements that employees must satisfy in order to be eligible for coverage (Han and Waldfogel, 2002). There is also a handful of states that have temporary disability insur- ance laws providing the right to a paid temporary leave for disability, including disability associated with maternity. In these states, employers are reimbursed for a share of the costs of providing a paid leave for mater- nity during the period of medically certified disability (usually 6 weeks, 8 weeks if delivery was by Caesarean section). Since 1978, with the passage of the Pregnancy Disability Act, the federal government has mandated that disability programs such as these must cover maternity like any other form of disability, but the act does not require firms or states to have disability programs in the first place. Prior to the passage of the FMLA, as a result of the limited number and scope of state laws, many employed women had no right to job-protected maternity leave, and coverage levels were particularly low among part-time employees and those working for small firms (see Table 8-2). The share of men with paternity leave coverage was even lower, and it was lowest among those working part time or in small firms.

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232 WORKING FAMILIES AND GROWING KIDS TABLE 8-2 Percentage of Private-Sector Employees with Family Leave Coverage, 1991 to 1997 1991 1993 1995 1997 A. Full-time employees, medium-sized and large establishments Maternity leave coverage: Percentage with unpaid leave 37 60 84 93 Percentage with paid leave 02 03 02 02 Total percentage with any leave 39 63 86 95 Paternity leave coverage: Percentage with unpaid leave 26 53 84 93 Percentage with paid leave 01 01 02 02 Total percentage with any leave 27 54 86 95 B. Part-time employees, medium-sized and large establishments Maternity leave coverage: Percentage with unpaid leave 19 36 42 54 Percentage with paid leave 01 01 00 00 Total percentage with any leave 20 37 42 54 Paternity leave coverage: Percentage with unpaid leave 14 32 42 54 Percentage with paid leave 00 01 00 00 Total percentage with any leave 14 33 42 54 C. Full-time employees, small establishments Maternity leave coverage: Percentage with unpaid leave 17 18 47 48 Percentage with paid leave 02 02 02 02 Percentage with any leave 19 20 49 50 Paternity leave coverage: Percentage with unpaid leave 08 08 47 48 Percentage with paid leave 00 01 02 02 Percentage with any leave 08 09 49 50 SOURCE: Bureau of Labor Statistics Employee Benefits Surveys (now called the National Compensation Surveys), various years, available from http://www.bls.gov/ebs/. The surveys define medium-sized and large establishments as those with 100 or more employees and small firms as those with fewer than 100 employees. Starting in 1994, figures are for family leave coverage rather than maternity or paternity leave. The passage of the FMLA in 1993 led to dramatic increases in both maternity and paternity leave coverage (see Tables 8-2 and 8-3). By 1997, nearly all full-time employees in medium and large firms had the right to a job-protected family leave, that is, leave for maternity, paternity, or to care for a newborn or newly adopted or placed child. However, because the FMLA covers only those who work in firms with 50 or more employees and who have worked 1,250 hours or more in the past 12 months, coverage rates among part-time employees and employees in small firms are much lower.

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POLICIES TO SUPPORT WORKING FAMILIES 233 TABLE 8-3 Percentage of Public-Sector Employees with Family Leave Coverage, 1990 to 1998 1990 1992 1994 1998 A. Full-time employees Maternity leave coverage: Percentage with unpaid leave 51 59 93 95 Percentage with paid leave 01 01 04 04 Total percentage with any leave 52 60 97 99 Paternity leave coverage: Percentage with unpaid leave 33 44 93 95 Percentage with paid leave 01 01 04 04 Total percentage with any leave 34 45 97 99 B. Part-time employees Maternity leave coverage: Percentage with unpaid leave 28 32 62 56 Percentage with paid leave 01 01 01 01 Total percentage with any leave 29 33 63 57 Paternity leave coverage: Percentage with unpaid leave 18 24 62 56 Percentage with paid leave 01 01 01 01 Total percentage with any leave 19 25 63 57 SOURCE: Bureau of Labor Statistics Employee Benefits Surveys (now called the National Compensation Surveys), various years, available from http://www.bls.gov/ebs/. Starting in 1994, figures are for family leave coverage rather than maternity or paternity leave. Data for 1996 not available. Overall, the FMLA covers only about 60 percent of private-sector em- ployees, and only about 45 percent are both covered and eligible; about a quarter of those covered are not eligible due to short working hours or short job tenures (Commission on Family and Medical Leave, 1996; Cantor et al., 2001). Among all employees (public sector and private sector com- bined), the law covers about 75 percent, and just over 60 percent are both covered and eligible (Cantor et al., 2001). Coverage and eligibility rates vary a good deal by demographic characteristics, as shown in Table 8-4. Employees who are young (ages 18-24), have less than a high school educa- tion, or have low annual family income (less than $20,000) are much less likely to be covered and eligible than other employees. In addition to not providing universal coverage, the FMLA is limited in that it provides for only 12 weeks of leave, which is unpaid. In contrast, other countries provide longer periods of coverage and generally provide at least some wage replacement during the leave (see Table 8-5). Studies have found that women who have leave coverage are more likely to take a leave, and take longer leaves, but are also more likely to

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234 WORKING FAMILIES AND GROWING KIDS TABLE 8-4 Family and Medical Leave Act Coverage by Demographic Characteristics, 2000 Percentage of Employees in Each Demographic Category Who Are: Covered and Covered Eligiblea Noncovered Gender* Male 74.9 62.3 25.1 Female 78.5 61.2 21.5 Age**++ 18-24 83.3 43.8 16.7 25-34 77.3 63.0 22.7 35-49 76.7 66.8 23.3 50-64 74.0 66.7 26.0 65 and over 58.7 42.8 41.3 Race/ethnicity**+ White non-Hispanic 73.5 59.7 26.5 Black non-Hispanic 93.3 71.8 06.7 Hispanic 80.2 66.2 19.8 Asian 92.0 73.4 -- All others 79.8 60.3 20.2 Marital status**++ Married/living with partner 74.3 63.8 25.7 Separated/divorced/widowed 79.3 64.3 20.7 Never married 82.6 54.1 17.4 Children under 18 in household None 78.2 60.9 21.8 One or more 74.8 63.2 25.2 Education**++ Less than high school 63.8 44.2 36.2 High school graduate 72.1 57.1 27.9 Some college 79.4 62.2 20.6 College graduate 77.1 65.3 22.9 Graduate school 88.0 73.8 12.0 Annual family income++ Less than $20,000 71.8 38.6 28.2 $20,000 to less than $30,000 78.8 64.5 21.2 $30,000 to less than $50,000 77.9 63.9 22.1 $50,000 to less than $75,000 79.7 70.2 20.3 $75,000 to less than $100,000 81.1 70.9 18.9 $100,000 or more 81.4 74.0 18.6

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POLICIES TO SUPPORT WORKING FAMILIES 235 TABLE 8-4 Continued Percentage of Employees in Each Demographic Category Who Are: Covered and Covered Eligiblea Noncovered Compensation type**++ Salaried 78.7 70.8 21.3 Hourly 80.6 60.5 19.4 Other 52.1 37.7 47.9 aThe "Covered and Eligible" column is a subset of the "Covered" column. *Difference between covered and noncovered employees is statistically significant at p < 0.10. **Difference between covered and noncovered employees is statistically significant at p < 0.05. + Difference between covered and eligible employees and all other employees is statistically significant at p < 0.10. ++Difference between covered and eligible employees and all other employees is statistically significant at p < 0.05. Column percentages may not total to 100% due to rounding. SOURCE: Cantor et al. (2001:Table A2-3.4). return to work for their prebirth employer, than women who lack coverage (Glass and Riley, 1998; Han and Waldfogel, 2002; Hofferth, 1996; Joesch, 1997; Klerman et al., 1998a, 1998b; Ondrich et al., 1996, 1998; Ross, 1998; Waldfogel, 1999b). Studies have also found that the lack of paid leave is a barrier to women's taking leave, or taking as much leave as they feel they need (Cantor et al., 2001; Waldfogel, 2001c). Given that leave coverage is limited, unpaid, and of short duration, it is perhaps not surprising that mothers in America return to work much more quickly after birth than mothers in other comparable countries. A third of new mothers in the United States return to work within 3 months of giving birth, compared with only about 5 percent in Britain, Germany, and Swe- den; half of new mothers in the United States are back at work within 4 to 6 months, compared with 15 months in Sweden, over 24 months in Ger- many, and over 36 months in Britain (Gustafsson et al., 1996; Klerman et al., 1990, 1994, 1999; Smith and Bachu, 1999;). Data from the National Longitudinal Survey of Youth indicate that maternity leave coverage and usage vary somewhat by demographic char- acteristics of the family (Berger and Waldfogel, in press). Women with less than a high school education, for instance, are less likely than other new mothers to have the right to a job-protected maternity leave, less likely to

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236 WORKING FAMILIES AND GROWING KIDS history; work sufficient if unpaid 3 weeks rate, 12 flat Countries for unpaid 6 rate (income-tested) rate months 3 rate flat wks benefit unpaid 18 pay, flat 3rd pay Comparable weeks, for 6 earnings 80% unemployment, child; earnings earnings earnings 55% earnings rate earnings earnings earnings @ @ 1 rate, 10 earnings earnings for @ prior flat for flat prior prior prior prior pay prior unemployment prior prior and rate of rate prior prior wks not, months months years Payment Unpaid 15 55% 90% if Unpaid 60% 90% 70% 70% Flat 80% Flat 12 100% 18 100% Unpaid 100% 2 80% 30% States United Months 2002. the in Total 2.8 12.0* 7.2 18.5 36.0 36.0 18.0 27.7 36.0 39.2 11.0 in months 3 12 Policies is to 3 is child leave Leave leave leave leave leave leave leave leave leave leave leave leave leave leave until child leave leave leave leave leave leave until leave parental family maternity parental maternity parental maternity maternity parental parental maternity maternity maternity maternity parental Leave parental childrearing parental leave parental childbirth-related of of weeks weeks weeks weeks weeks weeks weeks weeks weeks months weeks weeks weeks year years years years months months Type 12 17 35 18 13 28 1 18 26 Childrearing 52 2 18 16 2 16 Parental 14 3 5 6 period its (2001b). Childbirth-Related 8-5 extended Waldfogel States Kingdom try *Canada TABLE Coun United Canada United Denmark Finland Norway Sweden Austria France Germany Italy SOURCE:

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POLICIES TO SUPPORT WORKING FAMILIES 237 A 29-year-old mother of two children describes the type of flexibility that would be needed to deal with family health problems (Harris and Lengyel, 2002:24): Holding a job was very hard for two reasons. It was my weight and the other was my son's disability. I would often need days off for my son's doctor's appointments or even weeks if he was hospitalized. I knew there wasn't an employer on earth that would be that flexible or understanding. So needless to say, I lost a lot of jobs. take any paid maternity leave, and more likely to return to work in the first six weeks after the birth. Never-married mothers, too, are more likely than other mothers to return in the first six weeks following birth. Surveys conducted post-FMLA have found that not all new parents who are covered by the FMLA take the 12 weeks to which they are entitled, while others take more than 12 weeks (presumably because their employer offers a more generous policy). The 2000 Westat Survey of Employees found that among those who took a maternity leave, the largest group (40 percent) took a leave that lasted between 6 and 12 weeks, but with substan- tial numbers taking a leave of less than 6 weeks (31 percent) or more than 12 weeks (29 percent) (Cantor et al., 2001). Medical Leave The FMLA also provides medical leave--leave that an employee can take because of her or his own serious illness or because of the serious illness of a family member, including a child. Coverage is limited to those meeting qualifying conditions, the leave is limited to only 12 weeks per year, and it is unpaid. Thus, although the FMLA has extended medical leave coverage to some workers who previously lacked coverage, it has not provided universal coverage, nor has it provided paid coverage. As of 1999, 47 percent of employees in the private sector did not have paid sick leave, and the rate of noncoverage was strongly associated with job charac- teristics, with 62 percent of blue-collar and service employees and 41 per- cent of clerical and sales employees lacking paid sick leave in contrast with only 19 percent of professional, technical, and related employees (Bureau of Labor Statistics, 2001). Previous research has found that parents who lack paid sick leave are less likely to stay home with a sick child than parents who have paid sick leave (Heymann, 2000).

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POLICIES TO SUPPORT WORKING FAMILIES 249 minimum health and safety requirements as defined by the state. Relative providers may be exempted from some of the minimum regulations. As mentioned earlier, each state sets eligibility guidelines, including the income cutoff for families. Nationwide, most states have set income eligi- bility levels below the maximum level allowed under the CCDF (85 percent of the state median income). According to states' plans for FY 2002 and 2003, eight states established eligibility at the maximum level; the remain- der set their cutoffs at a lower level (Gish and Harper, 2002). Eligibility does not guarantee that a family is served. Despite having flexibility in defining eligibility, no state serves all its low-income children. According to a study by the U.S. Department of Health and Human Ser- vices (DHHS), only 10 to 15 percent of eligible families received any form of child care subsidy through the CCDF in 1999 (Administration for Chil- dren and Families, 1999, 2000), and the percentage varies considerably from state to state. About one-fifth of states are serving less than 10 percent of the children eligible for CCDF subsidies as defined by state eligibility criteria. Three-fifths are serving between 10 and 25 percent; and one-fifth are serving 25 percent or more (Administration for Children and Families, 1999).5 More recent studies have found similarly low percent- ages of children served (see, for instance, Collins et al., 2000, who found that states could serve 15 to 20 percent of eligible families, and Mezey et al., 2002, who estimated using DHHS data that states are serving 14 percent of eligible children.) There are various reasons why such a small share of eligible families is receiving child care subsidies through the CCDF. Lack of funding for eligible families is a fundamental issue. In some states, there are waiting lists for subsidies. In other states, however, there are either no waiting lists, or program officials report that they have sufficient funding to serve all the eligible families who have applied (U.S. General Accounting Office, 2001). This could be the result of a small applicant pool if states set eligibility levels very low. Or it may be that some families do not know that they are eligible, or they do not believe that the type of child care they would like to use would be covered. Many families report that they find the system of child care subsidies complex and difficult to navigate (Adams et al., 2002b). Lack of outreach and administrative barriers have also been noted (Adams et al., 2002b; Schumacher and Greenberg, 1999). Most importantly, the ability of a state to serve all eligible families who apply does not necessarily mean that all eligible families who want services are getting them, since 5A small number of states (for example, Illinois) have made a commitment to serve all eligible families; however, they accomplish this by limiting eligibility to only very low-income families (Waldfogel et al., 2001).

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250 WORKING FAMILIES AND GROWING KIDS there is evidence that when new funds become available, more families apply (Adams and Rohacek, 2002). States set the copayment rates (the amount that parents will pay), on a sliding scale basis, which must take into account income and family size and may consider other factors as well. This fee can be waived for families below the federal poverty line and for children in protective services cases. CCDF regulations require that copayments must be affordable so that par- ents have access to a broad array of providers. In the past, DHHS has suggested that copayments should not exceed 10 percent of family income (Schumacher et al., 2001b); however, copayments differ widely around the country, and not all states have met this recommended level. States also have considerable flexibility in setting reimbursement rates, the amount that providers will be reimbursed for services. Under the CCDF, parents are to be given a full range of choices of care that is in accordance with state regulations, although state regulations (and prac- tices) vary considerably. As mentioned earlier, subsidized care can be provided by formal providers or by relatives and friends--that is, "informal care." If reimbursement rates are set too low, some providers will not accept subsidized children. So states must provide some evidence that their reimbursement rates meet the intent of federal law to provide choice to subsidized families and to provide equal access to care. States must conduct a market rate survey not more than two years prior to the effective date of the state plan and must establish payment rates for providers. DHHS guidance instructs states that a market rate set at the 75th percentile of the price distribution for care in that state will be considered adequate to meet the equal access requirement; however, many states do not meet that level. For instance, in a recent review of state plans, only 25 percent of the 56 states and territories included in the sample set their payment rates at or above the 75th percentile (Gish and Harper, 2002). Some areas set state- wide rates, but payment rates can vary by location, type of care, and age of children. The rate at which states set the rate ceiling affects how much of the provider's costs are covered by the state, which in turn affects how much subsidized child care is available to families (Adams and Snyder, 2003). Usage data on the CCDF is sparse and inconsistent from state to state. According to Administration for Children and Families 1999 data, the reason for care for almost 85 percent of children served was parent's em- ployment or a combination of employment and training or education. A small percentage of children received care either because their parent was in training or education (10 percent), in protective services (3 percent), or for some other reason (4 percent). By law, states are required to spend 70 percent of their mandated funds on families receiving, transitioning from, or at risk of becoming eligible for TANF assistance. According to CCDF plans for FY 2000 and 2001, more than half the states list TANF and

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POLICIES TO SUPPORT WORKING FAMILIES 251 TANF-transitional families either first or second on their priority list of families who are eligible for receiving child care subsidies. Notwithstand- ing these priorities, a recent DHHS study that examined child care for low- income families in 25 communities nationwide found that, while states' funding policies favor TANF families over non-TANF families for receiving child care subsidies, children of non-TANF families represented the largest percentage of children receiving child care subsidies in most of the states that were examined (Abt Associates, 2000). The larger number of non- TANF families may reflect the fact that, as welfare caseloads have declined (due to both increased exits from welfare and decreased entries into wel- fare), child care subsidies have increasingly been taken up by families who are not on welfare. In FY 2000, approximately 1.7 million children were served by the CCDF (Child Care Bureau, 2000). Of these, just under a third (27 percent) were infants and toddlers, a quarter (26 percent) were older preschoolers, and over a third (36 percent) were school age. Most children were in state licensed or regulated care (74 percent), and the rest were in legally operat- ing but unregulated care (a little more than half of this latter group consists of relatives). Most CCDF-funded children are in centers (58 percent), and another 30 percent served in family child care. As discussed in Chapter 3, there is also some information on families receiving subsidies in the Survey of Income and Program Participation (SIPP). According to the latest published report on the SIPP data from the U.S. Census Bureau (2002), reporting data for 1997, only a small share of all families using child care receive subsidies or other government help toward the costs of the child care. Little is known at this point about the effects of child care subsidies on children and families. A small number of studies was conducted prior to welfare reform (see, for instance, Berger and Black, 1992; Meyers et al., 2002a; reviews by Blau, 2000, 2001). However, given the dramatic change in child care policies enacted under PRWORA, research that predates welfare reform is of limited use in understanding the likely effects of today's subsidy regime. Blau and Tekin (2001) provide some early evidence on the effects of child care subsidies post-PRWORA, finding that child care subsidies are associated with higher levels of employ- ment and school enrollment. Bainbridge et al. (in press) also provide some early evidence, examining the period 1991 to 1996, finding that subsidies directed at low-income working families had a substantial positive effect on boosting single mothers' employment over that period. As discussed in Chapter 3, an important characteristic of child care is its quality. Although the CCDF does not specify or control the quality of care that children receive, three of its provisions can affect the quality of services purchased with CCDF funds: health and safety protections, the quality set-aside, and the payment rates.

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252 WORKING FAMILIES AND GROWING KIDS First, with regard to health and safety, states must document that they have established health and safety requirements that providers serving CCDF-funded children must meet (although most relatives would be ex- empt from these). At a minimum, these health and safety requirements must address the prevention and control of infectious diseases, immuniza- tions, building safety, and training for providers in the area of health and safety. Second, according to the federal law, 4 percent of CCDF funds must be set aside for quality improvements. According to a U.S. General Ac- counting Office (2002) study (based on case studies of 5 states plus a survey of states to which 42 states replied), the majority of states reported spend- ing more than the minimally required 4 percent. Of the funds that states spent on quality improvements, most (61 percent) came from CCDF and TANF, with about a third (29 percent) coming from state funds. In the 34 states that tracked the type of providers receiving the quality improvement funding, two-thirds of the expenditures went to child care centers, and less than a third to family child care or after-school programs. States spent their quality funds on a variety of improvements, including child care resource and referral services (20 percent of states), enhanced licensing inspections (14 percent), meeting state standards (13 percent), caregiver compensation (12 percent), off-site caregiver training (11 percent), incentives for accredi- tation (8 percent), on-site caregiver training (2 percent), and other activities (12 percent) (states could report spending in more than one area).6 Third, as discussed above, CCDF gives states a great deal of latitude to set payment rates. To the extent that higher quality care is more costly to provide, states can, through their payment rates for providers, affect the quality mix that is purchased with their CCDF funds. At the same time, to the extent that high copayments would discourage families from participat- ing in the program or from using more expensive forms of care that might be of higher quality, states can also affect the quality mix through the rules they set for copayments. (Copayments may be set as a percentage of family income, in which case high copayments may discourage families from par- ticipating; copayments may also be set as a percentage of the cost of care, in which case high copayments may also discourage parents from using higher priced care). 6 The extent to which these quality improvements are improving child outcomes is unclear. While many of the state initiatives are targeting reforms that have been found in other re- search to be associated with better child outcomes, the GAO study concluded that few of the state studies had sufficient evidence to draw conclusions about child outcomes. Therefore, the study recommended that DHHS include selected state quality improvement initiatives as part of a larger impact evaluation of state child care subsidy approaches (U.S. General Ac- counting Office, 2002).

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POLICIES TO SUPPORT WORKING FAMILIES 253 Social Services Block Grant Child Care Starting with Title XX in 1974 and continuing as the Social Services Block Grant of 1981 (SSBG), states have received federal funds to assist them in delivering social services for adults and children. States have discretion in how they use these funds within a broad set of guidelines, and many states have used a substantial portion to fund child care for low- income families. In 1999, the total SSBG block grant was about $3 billion, of which at least $400 million (13 percent) was spent on child care services. The $3 billion total includes a TANF transfer of $1.17 billion (discussed below). Whether the SSBG should be considered a growing or diminishing source of child care funding is unclear. Data from 23 states in 1990 indicated that they spent 16 percent of their SSBG funds on child care (U.S. House of Representatives, Committee on Ways and Means, 1994). At the time, child care advocates raised concerns that states significantly reduced their SSBG funds for child care when federal funds under the Family Support Act and the Child Care and Development Block Grant began flowing. Certainly, current child care spending under the SSBG is not nearly as high as it was during the mid- to late 1970s, when over $700 million was spent annually on child care (U.S. Department of Health, Education, and Welfare, 1978). However, recent SSBG reports indicate that child care spending may be on the rise again since at least 1998, thanks largely to TANF transfers (U.S. Department of Health and Human Services, Administration for Children and Families, 1999, 2000a, 2001a). Data on SSBG usage has always been sparse. No data are available on who uses services--their income, work status, race/ethnicity, or education. Neither is there research on the impact of SSBG expenditures on children and families. TANF Child Care and Transfers TANF has grown to become a significant source of child care funding. In 1999, $604 million of TANF money was spent directly on child care for families receiving welfare payments. These funds were subjected to all the TANF restrictions. Under law, portions of TANF money can also be transferred to the CCDF or the SSBG, transfers that then have to be spent under CCDF or SSBG rules. In 1999, $2.43 billion was transferred from TANF to the CCDF, and $1.17 billion was transferred from TANF to the SSBG. In 2001, $1.88 billion was transferred to the CCDF, making TANF a very large source of child care funding. TANF transfers accounted for 27 percent of all CCDF child care subsidies in 1999. For the SSBG funds, it is not clear

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254 WORKING FAMILIES AND GROWING KIDS what percentage of the transfer went to child care services, but dollars transferred from TANF accounted for 38 percent of overall expenditures under SSBG in 1999. TANF funding of child care is important (and perhaps a concern) for those who receive services in several important ways. First, if the child care is provided directly under TANF, the CCDF rules for regulation and quality do not necessarily apply. Second, even for transfers to the CCDF or the SSBG, availability of care may be jeopardized down the road as demands on TANF funding grow. Furthermore, uncertainty about future federal TANF funding levels can make it difficult to conduct long-run state child care policy planning (Schumacher et al., 2001a). Child and Adult Care Food Program The Child and Adult Care Food Program (CACFP) is an open-ended, federal subsidy for meals, snacks, and nutrition education in licensed child care centers (including Head Start), family and group day care homes. The program resembles the school meals program in being administered by the U.S. Department of Agriculture (USDA) and reimbursing meals according to a flat fee. In 1999, the program served about 2 million children at a cost of $1.4 billion (U.S. Department of Agriculture, 2002a). The primary target of the program is children whose income falls below 185 percent of the federal poverty level. However, subsidies for meals served in qualifying family home day care settings are not conditioned by the income levels of the children's families. In contrast, full subsides are paid in child care centers only for meals served to children from families with incomes 130 percent or less of the poverty level, at reduced prices for those at 130-185 percent of the poverty level, and with the smallest subsi- dies paid for meals served to children whose families earn over 185 percent of the federal poverty line. Comprehensive information about CACFP comes from a national sample survey conducted in 1995 (Glantz et al., 1997). Of the average daily 2.3 million children served meals in FY 1995, two-fifths were in family home day care, and the remainder were enrolled in Head Start or day care centers. Summer Food Service Program The Summer Food Service Program (SFSP) was created to ensure that children in lower-income areas could continue to receive nutritious meals when they do not have access to the National School Lunch or School Breakfast program. About 2 million children receive the free meals pro- vided during the summer months, at a cost of $238 million in 1999. Ap-

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POLICIES TO SUPPORT WORKING FAMILIES 255 proximately 14 percent of the children who receive reduced-price or free school lunches participate in the SFSP (U.S. Department of Agriculture, 2002b). Program sponsors receive payments for serving meals and snacks to children and teenagers, 18 years and younger, at approved sites in low- income areas. Schools, public agencies, and private nonprofit organiza- tions may apply to sponsor the program. Potential sponsors must demon- strate that meal sites will meet either geographic or enrollment criteria. A site is geographically eligible if it is located in an area in which 50 percent of the children qualify for a free or reduced-price school meal. A site is enrollment eligible if 50 percent of the children enrolled can be documented to qualify for a free or reduced-price school meal (family income up to 185 percent of poverty). In addition, anyone attending a school program for people with disabilities, regardless of age, may also participate. Meals are served free to anyone at a site. State Funding for Child Care Programs As noted above, the various federal child care programs give states a great deal of latitude on how they spend federal child care funds. An- other important source of variation across states is state funding for child care programs. States choose not only how to spend federal dol- lars but also how much to invest in state dollars. The 1990s saw an expansion of state funding initiatives in this area (Meyers et al., 2002a; Adams and Rohacek, 2002). However, with contracting state budgets, these expansions may not continue. Indeed, several states are currently projecting that they will cut back their funding in this area (see, for example, Goodnough, 2003). STATE CHILD CARE REGULATIONS AND MONITORING Another important aspect of child care policy involves child care regu- latory and monitoring activity by the states. States play a potentially im- portant role in the child care arena by establishing regulations for child care settings and by monitoring the extent to which child care providers comply with those regulations. States vary a good deal in which settings are subject to state regulation and in the tightness of those regulations; states also vary a good deal in the intensity with which they monitor providers' compliance with those regulations (for useful discussions, see Blau, 2001; Gormley, 1999). It is also important to note that the goal of state licensing is to ensure basic health and safety protections, not to ensure quality. States vary in the level of these protections. For example, only two states regulate

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256 WORKING FAMILIES AND GROWING KIDS all the provider types, and many states monitor programs once a year or less (U.S. General Accounting Office, 2000a). It is not clear how much impact this state regulatory and monitoring activity has on the child care market. There is some evidence that regula- tions do have an effect on the type and quality of child care that is offered. For instance, a recent study by the Early Child Care Research Network of the National Institute of Child Health and Human Development (2002c) found that regulations regarding staff training and staff-child ratios affect process quality in child care settings and ultimately child outcomes. How- ever, there is also evidence that, in many settings, child care regulations are not binding (Blau, 2001). There is also widespread agreement that any consideration of the role of regulations must take monitoring activity into account, since regulations that are on the books but not enforced will have little impact (Gormley, 1995). Recently, there has been increased interest in more nuanced monitor- ing systems that would allow states to differentiate between providers that just meet minimal standards and those that meet higher quality stan- dards (Blau, 2001; Gormley, 2000). At the same time, however, concerns have been raised that tighter regulations will raise costs at the same time as quality and thus may price lower income families out of the child care market (see, for instance, Currie and Hotz, 2001) unless additional funds are forthcoming. MILITARY CHILD CARE In 1989 the Military Child Care Act was passed to address issues of quality, program oversight, affordability, and availability of child care for families in the military. The act increased the amount of appropriated funds and increased inspections, regulations, training, and pay for child care staff. In the ensuing decade, the U.S. Department of Defense put energy, skill, and resources into creating a high-quality employer-supported child care system. A comprehensive system of child care options was established, with key components to ensure accountability and oversight and mandates for accreditation, training and professional development, wage enhancements for staff, and parent involvement. The Department of Defense is recognized today as a model for the nation in terms of its high-quality child care system. It has established over 800 child development centers for military personnel in over 300 locations worldwide, and 98 percent of these programs are accredited. Each day, the Department of Defense cares for over 200,000 children in centers, family child care homes, and school-age programs.

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POLICIES TO SUPPORT WORKING FAMILIES 257 EUROPEAN POLICIES TO SUPPORT WORKING FAMILIES While the policies from other countries may not be fully replicable in the United States, Europe's family and work policies provide a useful com- parison of the extent to which working families are supported. Public policies in the United States provide less public support for the care of children than in other countries, relying more heavily on family members, nonpublic child care centers, and employers and less heavily on direct public provision. In the area of family leave, for instance, the United States mandates that certain employers provide leave, rather than publicly fund- ing leave, as is the case in most European countries. In the area of child care policy, the United States supports child care mainly through subsidies to parents or private market providers, rather than through public or publicly subsidized child care programs. A second point of difference is that programs in the United States tend to be more narrowly targeted to low-income families, rather than provided universally to all families with children. In the area of child care policy, for instance, the United States mainly targets assistance to the very lowest income families, but it does not reach all such families with its programs. Relying on family members, private child care providers, and employers may have advantages, particularly with regard to parental choice and flex- ibility, but it also creates challenges in terms of ensuring equality of access and the quality of supports provided. Targeting resources to the lowest income families also has advantages in terms of efficiency, but it creates challenges in terms of ensuring the quality of programs in which children are placed and ensuring equal access to high-quality care. These challenges are particularly acute in the areas of family leave and child care. In the area of family leave, because small firms are generally exempted from leave legislation and because the laws typically provide only unpaid leave, the United States has a system in which some new mothers lack the right to a job-protected maternity leave, and many face the loss of a substantial portion of their income if they take a leave. Those who lack leave tend to be the most disadvantaged; less educated and low- income workers are significantly less likely to be covered by the FMLA than other workers (see Table 8-4). Perhaps as a result of the limited leaves available, new mothers in the United States return to work much more quickly than do new mothers in other countries. Such early returns may pose risks for child health and development, particularly if the mother works full time (Ruhm, 2000a; Waldfogel et al., 2002). Accordingly, many analysts in the United States have called for expanding maternity (and paternity) leave coverage, extending the duration of leave allowed, and making some provision for income replacement during leave (see, for

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258 WORKING FAMILIES AND GROWING KIDS TABLE 8-6 Share of Children in Publicly Supported Child Care, Selected Peer Countries Share of Children in Publicly Share of Costs Covered Supported Care by Government Children Ages Children Ages Children Ages Children Ages Country 0-2 3-6 0-2 3-6 United States 05 54 25-30 25-30 CaN/Ada 05 53 N/A N/A Denmark 48 82 70-80 70-80 Finland 21 53 85 85 Norway 20 63 68 68 Sweden 33 72 82-87 82-87 Austria 03 80 N/A N/A France 23 99 72-77 100 Germany 02 78 N/A N/A Italy 06 91 N/A N/A United Kingdom 02 60 N/A N/A N/A= not available. SOURCE: Waldfogel (2001a). example, Kamerman, 2000; Waldfogel, 2001b). Analysts have also called for expanded family and medical leave (see, for instance, Asher and Lenhoff, 2001; Heymann, 2000) and for more opportunities for mothers of young children to return to work part time (National Research Council and Institute of Medicine, 2000; Brooks-Gunn, Han, and Waldfogel, 2002). In the area of child care, the United States has a system in which parents must pay directly for most types of care and in which low-income families are not guaranteed assistance with the cost of care. Many European coun- tries, in contrast, guarantee a public or publicly subsidized child care place for any child whose parent wishes one from the age of 3, and several countries are now lowering the age at which child care is guaranteed to 1 or 2. Table 8-6 presents rates of enrollment in publicly supported child care in various countries. Even in Britain, which has had a strong tradition of exclusive maternal care until school entry at age 5, public opinion has shifted in favor of preschool experience beginning at age 3, and the govern- ment has made a commitment to guarantee at least a part-time child care place to each 3- and 4-year-old whose parent wishes them to have one (Hills and Waldfogel, 2002). It is likely that these European countries provide more equitable care than the United States, where affluent families can purchase high-quality care for their children, some low-income families may be fortunate enough to gain a subsidized place in high-quality care, but

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POLICIES TO SUPPORT WORKING FAMILIES 259 children from other low-income and middle-income families tend to experi- ence lower quality care (Phillips et al., 1994). SUMMARY The public sector has responded to the challenges faced by working families in caring for their children by providing greater resources for them. Many important new public programs for children and adolescents have developed in the past 25 to 30 years in response to the increasing movement of mothers into the labor force. There has also been an expansion of social welfare programs to cover such services as early childhood education and medical care for low-income children. There is a growing recognition in the United States that early childhood care and education can confer advantages in terms of children's school readiness. Several groups have recently called for a move to universal prekindergarten (see, for instance, Committee on Economic Development, 2002). However, many of these programs are still not specifically designed to enhance the cognitive, social, and behavioral development of children. Those that do are not available to all children and adolescents. Furthermore, only 45 percent of parents working in the private sector have guaranteed unpaid parental leave through the FMLA. Less than 5 percent have access to paid parental leave. Many parents do not have the right to the more than 12 weeks of leave mandated by the FMLA. Fundamentally, policies and programs for working families and their children often focus on only one half of this equation--the employment of the parent or the well being of the child--without taking into consideration the simultaneous and interactive needs of both. There is a need for both policies and research that consider the needs of both parents and the chil- dren and adolescents in working families. Our review of the evidence on the role of public policies suggests two other priorities in the area of child care policy. One is the importance of guaranteeing funding for subsidies for low-income families with employed parents. The other is the need for efforts to raise the quality of child care that children in the United States experience, although analysts continue to debate the most effective means of doing so. In terms of research priorities, it is striking that for the majority of policies discussed in this chapter, very limited data are available on the effects on children. While this lack of data is being addressed in some areas with new evaluations under way, there clearly is a need for further data that would allow researchers to learn how the U.S. choice of public policies to support working families is affecting outcomes for their children.