Child Care for Low Income Families

Chapter 5: The Structure and Consequences of Child Care Subsidies

The Issue in Brief

The current array of federal child care policies represents an accumulation of responses to the specific needs of targeted populations. Although every poor and low-income family is technically eligible for some subsidy, and the Child Care and Development Block Grant could provide subsidies across the spectrum from families on AFDC to those who live just above the poverty line and are therefore at risk of becoming poor, in practice different funding streams have been targeted on different subgroups within the low-income population. For example, among the four low-income programs, one provides subsidies to the AFDC population, another provides temporary support to working AFDC recipients who lose AFDC eligibility due to increased hours or earnings from employment, and another supports the child care costs of low-income working families to prevent AFDC dependence.

Even if the fragmentation of federal child care subsidies was addressed, as has been done in many states that have established integrated child care subsidy programs, the sheer amount of public resources dedicated to providing child care assistance to low-income families would remain a major problem. Although federal subsidies for child care have expanded greatly in recent years, they remain inadequate to serving the large number of families who are nominally eligible for support.

Only the Child Care and Development Block Grant provides support for quality initiatives and for efforts to increase the availability of early childhood development and before- and after-school care services for low-income families through a small set-aside of funds for these purposes. However, the vast majority of these funds (78 percent) goes to help low-income families pay for child care (only 9 percent was used to improve the quality of care). In 1993, about 750,000 families received subsidies through this program, two-thirds of whom were living at or below the poverty line (U.S. Department of Health and Human Services, 1995). Over 90 percent of the children served by this program needed care because their parents were working, in school, or in job training. (Table 3 summarizes basic information about these subsidies.)

The consequences of this current structure of federal support for child care for low-income families were a lively topic of discussion at the workshops. In particular, the consequences of funding scarcity and of the fragmentation that characterizes federal child care subsidies for low-income families were examined regarding: (1) access to and affordability of child care and (2) the quality and continuity of care. Among the questions that were examined were: (1) What trade-offs do state agencies face when deciding how to allocate funds across nonworking and working-poor families, and between helping families pay for care and improving the quality of care? (2) What is known about how families rearrange their child care arrangements as they move from one funding stream to another? (3) How might the current child care system at the state level be affected if the federal government consolidates the direct child care funding programs and assigns greater responsibility for allocating these funds to the states?

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