"Welfare Options, Set #5 (Child Care)"
Welfare Options, Set #5, CHILD CARE
ISSUE 1: How can the Legislature provide care to TANF recipients when
they need it and also serve children from working poor families.? 4
Options.
OPTION:
Option A: Provide an entitlement to child care for eligible TANF
recipients.
BACKGROUND: [Same for each of the four options of this issue.]
Currently, subsidized child care programs are administered through
the Department of Education and the Department of Social Services.
In the current year, DSS administers $213 million in child care funds
for the GAIN program, Transitional Child Care, Cal-Learn, and child
care disregard. Under GAIN, counties receive a child care budget.
Once that child care budget is committed, parents needing child care
services are not enrolled until the next fiscal year unless they
secure SDE-subsidized care or arranged free care.
The Department of Education contracts with Alternative Payment
(voucher) contractors to administer about $223 million of state and
federal funds; some county welfare departments are AP contractors
with SDE. Usually, when funds are available to serve a new family,
the family on the waiting list with the lowest income by family size
is enrolled. These are often AFDC families, but not necessarily.
(The SDE also contracts with non-profit organizations, school
districts, and other local governments to provide subsidized child
care to eligible families. About $365 million in state and federal
funds go to these programs for direct services.)
California is receiving about $50 million in new federal child care
funds for the current year. In the budget year that increases by
another $30 million. These new funds will provide services for about
20,000 children for a full year. If TANF families become a priority
for subsidized care, ahead of other low-income working families who
have not been on aid, with TANF become the only avenue to obtaining
subsidized care?
COMMENTS:
Option A is implicit in the CSAC/CWDA plan, introduced in SB 933
(Thompson). Depending on the number of TANF families entering the
workforce and the number of hours they work, this option would entail
a growth over the next few years of about ten times the number of
children currently served by GAIN child care. GAIN child care is
estimated at $83 million this year to serve 24,500 children, many of
them part time. To add 250,000 more children would add at least
$830,000,000 to the current cost of child care subsidies, and if the
parents work more hours, the new cost exceeds $1 billion. The county
proposal (CSAC/CWDA) goes further and proposes that all working
families (and families in GAIN) be entitled to subsidized care (on a
sliding fee schedule) up to 200 or 250 percent of poverty.
COST:
By providing an entitlement, Option A may necessitate a deficit
appropriation when the May Revise is issued in May, 1998, depending
on how many TANF recipients need care.
CHILD CARE AND WELFARE
ISSUE: How can the Legislature provide care to TANF recipients when
they need it and also serve children from working poor families?
OPTION:
Option B: Give TANF recipients referred by county welfare departments
a priority for any new child care dollars. This can be done in
several ways: county welfare departments administer these funds;
child care and development agencies with Alternative Payment and
Resource and Referral contracts coordinate with county GAIN/TANF
registration offices to assist parents quickly when the county refers
them (one version is called "FAST CARE," SB 831 (Karnette) and is
proposed statewide in SB 530 (Alpert); or county eligibility workers
use phone, FAX and e-mail to connect TANF families to child care
voucher contractors.
BACKGROUND:
See background on Option A.
COMMENT:
Option B: Some counties already have co-location of the child care
"infrastructure" at GAIN/TANF offices; others have made the
electronic connection via phone, FAX, and e-mail, so that parents are
connected to the child care service sector from their first day in
GAIN. The Legislature could direct counties, either via mandate or
financial incentives, to adopt such cooperative and collaborative
arrangements, thus taking advantage of the multi-million dollar child
care infrastructure already in place in every county via SDE's
Alternative Payment and resource and referral service contracts.
There is a potential problem: the SDE recently received approval for
a Section 28 plan to send the bulk of the state's new federal child
care money out the door to Alternative Payment agencies without any
priority for TANF families referred by county welfare departments.
Those funds are now or soon will be serving families taken from the
AP waiting lists -- all of them poor.
By itself, this option does not ensure balance of TANF and working
poor families in care. Combined with Option C, it would.
CHILD CARE AND WELFARE
ISSUE: How can the Legislature provide care to TANF recipients when
they need it and also serve children from working poor families.?
OPTION:
Option C: Enact a "rolling priority" by setting aside funds each
month for new families. First take TANF families who are referred by
county welfare departments; at the end of the month, if some funds
are still available, enroll working poor families from the waiting
list. Do the same in subsequent months.
BACKGROUND:
See BACKGROUND on Option A.
COMMENT:
Option C does ensure immediate access to child care for TANF
recipients throughout the year. And it does provide a way for funds
to reach working poor families in counties where fewer TANF
recipients are entering the workforce. It has the disadvantage of
being somewhat complicated to explain.
COST:
Any provision, such as Option C, that reserves funds for new
enrollees over the course of the year (e.g., TANF recipients who find
a job in March and need access to child care then) requires a larger
appropriation the following year: the family entering child care in
March requires only four months of services in the year of
enrollment, but in all likelihood will require 12 months of services
the following year.
CHILD CARE AND WELFARE
ISSUE: How can the Legislature provide care to TANF recipients when
they need it and also serve children from working poor families.?
OPTION:
Option D: Maintain current system: some child care funds go to
county welfare departments via DSS, and expansion funds from SDE go
to Alternative Payment programs to serve families on the waiting
lists, lowest income first. When counties run out of funds for TANF
families, they are referred to those and other waiting lists for
subsidized care.
BACKGROUND:
See BACKGROUND on Option A.
COMMENTS:
This is, in essence, the governor's proposal and the way the SDE has
allocated the new federal expansion money. It takes a "wait and see"
approach to anticipating the need for child care as TANF recipients
respond to time limits and work requirements.
COST:
Option D does not add a new appropriation to the 1997-98 budget
CHILD CARE AND WELFARE (2)
ISSUE: How can the Legislature ensure child care for a person leaving
TANF for low-wage employment? 3 Options
OPTION:
Option A: Current law (more or less): Provide Transitional Child Care
(TCC) for 24 months to families leaving aid due to increased income
from employment, and for 12 months for families who become ineligible
due to increased income for other reasons. Limited to those who
retain eligibility for subsidized care (low-income, working).
BACKGROUND: [Same for each of the three option for this issue.]
Under current law, the transitional child care program provides 24
months of subsidized child care assistance to low-income families who
have left AFDC for employment. It was an entitlement under federal
law, and is administered at the state level by the Department of
Social Services and at the local level by county welfare departments.
Families are reimbursed for child care costs or receive vouchers to
pay for child care services from a provider of their choice.
Even though the TCC program was an entitlement until the new federal
welfare law took effect, it has a very low utilization rate for three
reasons: some persons leaving AFDC do not want to maintain a
relationship with their county welfare department; others do not
learn about TCC; others find TCC frustrating because payments are
often made several months after the service was provided or the
parent is reimbursed several months after paying for child care out
of pocket. Currently, TCC serves about 3,200 children at a cost of
$18 million. (This is up from an estimated $13 million in TCC costs
in 1995-96.)
COMMENTS: Continued access to child care benefits is generally
accepted as important to assisting persons to remain in the workforce
and remain off aid.
Option A continues an ineffective support service at an admittedly
low price (because so few use it).
COST:
The current TCC program (maintained under Options A and B) grew from
$12 million in 1994-95 to $13 million in 1995-96 to $18 million in
the current year. It would probably continue to grow slowly.
WELFARE REFORM SPECIAL COMMITTEE
ISSUE: How can the Legislature ensure child care for a person leaving
TANF for low-wage employment?
OPTION:
Option B: When parents comes to the end of their TCC period, if they
remain low-income, give them priority for a space in an State
Department of Education-subsided program (SDE).
BACKGROUND: [Same for each option for this issue.]
Under current law, the transitional child care program provides 24
months of subsidized child care assistance to low-income families who
have left AFDC for employment. It was an entitlement under federal
law, and is administered at the state level by the Department of
Social Services and at the local level by county welfare departments.
Families are reimbursed for child care costs or receive vouchers to
pay for child care services from a provider of their choice.
Even though the TCC program was an entitlement until the new federal
welfare law took effect, it has a very low utilization rate for three
reasons: some persons leaving AFDC do not want to maintain a
relationship with their county welfare department; many do not learn
about TCC; others find TCC frustrating because payments are often
made several months after the service was provided or the parent is
reimbursed several months after paying for child care out of pocket.
Currently, TCC serves about 3,200 children at a cost of $18 million.
(This is up from an estimated $13 million in TCC costs in 1995-96.)
COMMENTS: Continued access to child care benefits is generally
accepted as important to assisting persons to remain in the workforce
and remain off aid.
Option B takes care of one problem facing families that have left aid
for employment, if they are among the relative few who use current
TCC benefits.
COST:
Like Option A, this option maintains TCC as is. The budget for this
program is slowly-growing. Option B's giving TCC families a priority
for SDE subsidies does not increase current expenditures.
WELFARE REFORM SPECIAL COMMITTEE
ISSUE: How can the Legislature ensure child care for a person leaving
TANF for low-wage employment?
OPTION:
Option C: Once a TANF recipient begins to receive child care
services, transfer the management of their child care payment from
the county welfare department to the local Alternative Payment
program. The family receives care (on the sliding fee scale) for as
long as they meet SDE eligibility requirements. This eliminates need
for a TCC program of any kind.
BACKGROUND: [Same for each option -- see BACKGROUND for Option A or
B.]
COMMENTS: Continued access to child care benefits is generally
accepted as important to assisting persons to remain in the workforce
and remain off aid.
Option C: We know that at least 80,000 households left aid annually
(before the Personal Responsibility Act passed) due to increased
income; we know that GAIN placed 114,000 recipients in jobs in 1994-
95; and we know that GAIN child care services reach 25,000 children
annually. Eliminating the flawed TCC program and substituting Option
C will both increase the number of children receiving care, add more
costs to this aspect of child care services, and decrease the number
of families who either make do with inadequate child care
arrangements or who lose jobs or quit jobs because the child care
arrangements are intolerable. Adopting Option C ensures that a large
number of working poor families would continue to receive child care.
COST:
To adopt Option C does not immediately cost more money, but would
probably mean that current county welfare department child care
dollars and current SDE child care subsidies would follow 12,000 to
15,000 current GAIN child care recipients and about 25,000 children
currently receiving subsidies through the disregard system, as their
parents moved off aid due to earnings. In the long run, this would
add to the total child care budget but reduce the number of families
that may lose employment due to inadequate care arrangements.
One side benefit of Option C: as time limits take effect, families
eligible for small welfare grants might elect to leave aid if they
knew that they maintained their child care benefits. Uncoupling
child care benefits from aid status and eliminating the lag time for
a TCC payment makes this option more attractive to working parents on
TANF.
CHILD CARE AND WELFARE (3)
ISSUE:
Who should be exempt from work requirements?
How do time limits and exemptions overlap? 4 Options
OPTION:
Option A: Exempt from work activities only those parents with a child
younger than 13 weeks of age, and parents of children up to six years
of age when care is not available. The time limit clock continues to
tick with no state-only grant if their time limit expires. This is
the governor's proposal.
BACKGROUND: [Same for all four options for this issue.]
AFDC is gone. Cash aid is no longer an entitlement. The federal
government no longer matches state expenditures on aid for families.
And, there is now a 60-month time limit on a family's receipt of
federal funds.
Federal law also allows states to exempt families from workforce
participation and still receive federal funds if they have a child
younger than 12 months of age, but this time counts toward the
federal 60-month limit. In addition, states can be penalized by the
federal government if they sanction a family for not working if that
family has a child under six years of age and child care is
unavailable.
According to the latest AFDC characteristics study released by DSS, 6
percent of AFDC households had a child under one year of age -- about
30,000 single parents on TANF in today's caseload. Another 8 percent
have a child between 12 and 24 months of age.
COMMENTS:
The Legislative Analyst continually reminds people that the federal
law is not a prescription ("it's not a program"), it's a funding
source. States can design the program they wish to operate -- to
promote child and family well being, to promote personal
responsibility, to provide work opportunities, and so forth -- and
federal funds will be available to support part of that program.
Option A: This option puts as much pressure as possible on recipients
to enter the work force and assumes that the longer a parent is
exempt from work requirements the more likely that she will reach the
60-month time limit for federal assistance. Child care providers
point out that there are severe limits on the amount of infant care
available, there is evidence that some of this infant care is of poor
quality, and that infant care costs anywhere from 10 percent to 40
percent more than care for children older than two or three years of
age.
COSTS:
The cost in Option A is in child care. In Los Angeles, the average
cost of care for a child under two years of age is $95 per week for
family day care and $127 per week in centers. In Orange County,
family day care for an infant is $108 per week, on average. In San
Diego County, it's $94 per week; in Alameda County, $106, and in San
Francisco, $126.
CHILD CARE AND WELFARE
ISSUE:
Who should be exempt from work requirements?
How do time limits and exemptions overlap?
OPTION:
Option B: Exempt from work activities any parent with a child younger
than 12 months of age. Do not count this against time limits --
which means that when a parent's 60-month federal time period ends,
they would be eligible for a state only grant.
BACKGROUND: [Same for all options for this issue.]
AFDC is gone. Cash aid is no longer an entitlement. The federal
government no longer matches state expenditures on aid for families.
And, there is now a 60-month time limit on a family's receipt of
federal funds.
Federal law also allows states to exempt families from workforce
participation and still receive federal funds if they have a child
younger than 12 months of age, but this time counts toward the
federal 60-month limit. In addition, states can be penalized by the
federal government if they sanction a family for not working if that
family has a child under six years of age and child care is
unavailable.
According to the latest AFDC characteristics study released by DSS, 6
percent of AFDC households had a child under one year of age -- about
30,000 single parents on TANF in today's caseload. Another 8 percent
have a child between 12 and 24 months of age.
COMMENTS:
The Legislative Analyst continually reminds people that the federal
law is not a prescription ("it's not a program"), it's a funding
source. States can design the program they wish to operate -- to
promote child and family well being, to promote personal
responsibility, to provide work opportunities, and so forth -- and
federal funds will be available to support part of that program.
Option B: This option, supported by CSAC and CWDA, had extensive
support during the Support Services work group discussion.
However, with both Options B and C, there may be some payoff for the
state in making a concerted effort to provide TANF parents with
parenting education, information about community resources for
families and for improving parenting skills, home visitation by a
public health aide, or a statewide newsletter about infant and
toddler development.
COSTS:
With Option B and Option C, there may be a slightly greater
likelihood that the 30,000 exempted parents (Option B) and the
additional 40,000 exempted parents (Option C) would come to the end
of 60 months on aid without a job paying more than poverty wages.
These options save on the cost of child care.
CHILD CARE AND WELFARE
ISSUE:
Who should be exempt from work requirements?
How do time limits and exemptions overlap?
OPTION:
Option C: The same as B, except allow parents with children up to 24
months of age to be exempt from work requirements.
BACKGROUND: [Same for all options for this issue.]
AFDC is gone. Cash aid is no longer an entitlement. The federal
government no longer matches state expenditures on aid for families.
And, there is now a 60-month time limit on a family's receipt of
federal funds.
Federal law also allows states to exempt families from workforce
participation and still receive federal funds if they have a child
younger than 12 months of age, but this time counts toward the
federal 60-month limit. In addition, states can be penalized by the
federal government if they sanction a family for not working if that
family has a child under six years of age and child care is
unavailable.
According to the latest AFDC characteristics study released by DSS, 6
percent of AFDC households had a child under one year of age -- about
30,000 single parents on TANF in today's caseload. Another 8 percent
have a child between 12 and 24 months of age.
COMMENTS:
The Legislative Analyst continually reminds people that the federal
law is not a prescription ("it's not a program"), it's a funding
source. States can design the program they wish to operate -- to
promote child and family well being, to promote personal
responsibility, to provide work opportunities, and so forth -- and
federal funds will be available to support part of that program.
Option C: This option takes into account the reports from child care
providers of the dearth of infant and toddler care, its extra
expense, and its comparative lower quality.
However, with both Options B and C, there may be some payoff for the
state in making a concerted effort to provide TANF parents with
parenting education, information about community resources for
families and for improving parenting skills, home visitation by a
public health aide, or a statewide newsletter about infant and
toddler development.
COSTS:
With Option B and Option C, there may be a slightly greater
likelihood that the 30,000 exempted parents (Option B) and the
additional 40,000 exempted parents (Option C) would come to the end
of 60 months on aid without a job paying more than poverty wages.
These options save on the cost of child care.
CHILD CARE AND WELFARE
ISSUE:
Who should be exempt from work requirements?
How do time limits and exemptions overlap?
OPTION:
Option D: A single parent with a child under 13 years of age when
child care is unavailable.
BACKGROUND: [Same for all options for this issue.]
AFDC is gone. Cash aid is no longer an entitlement. The federal
government no longer matches state expenditures on aid for families.
And, there is now a 60-month time limit on a family's receipt of
federal funds.
Federal law also allows states to exempt families from workforce
participation and still receive federal funds if they have a child
younger than 12 months of age, but this time counts toward the
federal 60-month limit. In addition, states can be penalized by the
federal government if they sanction a family for not working if that
family has a child under six years of age and child care is
unavailable.
According to the latest AFDC characteristics study released by DSS, 6
percent of AFDC households had a child under one year of age -- about
30,000 single parents on TANF in today's caseload. Another 8 percent
have a child between 12 and 24 months of age.
COMMENTS:
The Legislative Analyst continually reminds people that the federal
law is not a prescription ("it's not a program"), it's a funding
source. States can design the program they wish to operate -- to
promote child and family well being, to promote personal
responsibility, to provide work opportunities, and so forth -- and
federal funds will be available to support part of that program.
Option D, allowing mothers to be at home raising their children when
child care is unavailable, recognizes the many dangers that await
unsupervised, latchkey children.
COSTS:
With Option D, there is an assumption that some families will qualify
for a state-only grant after 60 months on aid. That grant is
partially offset by savings on child care costs.
CHILD CARE AND WELFARE (4)
ISSUE: CHILD CARE DISREGARD
OPTION TITLE: Eliminate Child Care Disregard Payment and Replace With
Direct Payment
OPTION DESCRIPTION:
Option 1: Eliminate the disregard, substituting a direct
payment, retaining current level of AFDC/TANF funding, and funding
growth out the new child care and development block grant dollars.
Option 2: Retain Current Law.
BACKGROUND:
Existing law provides for a child care disregard, through which a
"child care subsidy" is provided to certain welfare recipients in the
form of a slightly larger AFDC/TANF grant. Child care costs are
offset up to $200 per month for infant care and $175 per month for
older children.
The qualifying AFDC/TANF recipients are those that work but still
qualify for AFDC/TANF benefits because their income from employment
is below the eligibility standard for welfare assistance. The State
Department of Social Services is responsible for administering the
program, and it served 56,100 children, as of December, 1996.
COMMENTS: Providers and recipients feel that the disregard is not a
successful reimbursement strategy for child care because many public
assistance recipients find that having to pay several hundred dollars
out of pocket in order to commence work is an insurmountable barrier
to employment.
Elimination of the disregard and replacement with a provision to
directly pay providers seems to be a consensus item -- proposed by
the counties, the Department of Social Services, providers,
children's advocates, and not opposed by the State Department of
Education.
Those that argue for the TANF Block Grant to be the funding source,
note that child care disregard funds are provided under the current
welfare system out of AFDC funds. They are concerned that shifting
the provision of the current child care disregard responsibility to
the child care block grant would diminish the capacity of the child
care block grant funds to provide sufficient care to all TANF
recipients in need of child care, simultaneous with retaining
services to the working poor who are currently served from it as
well. Others argue that it is too soon in the welfare reform process
to rule out any funding source.
CHILD CARE AND WELFARE (5)
ISSUE
How should reimbursement rates for child care providers be set? 3
Options
OPTION:
Option A: Use the market based approach: the state pays the same rate
to a provider that the family day care provider or the child care
center charges any other parent.
BACKGROUND: [Same for each of the three options for this issue.]
California uses three different approaches for historical reasons.
The voucher payment programs administered by the State Department of
Education (Alternative Payment programs) were developed under a
market approach to child care. The ceiling on reimbursements for
child care under GAIN accepted this market approach but added a cap
to discourage a parent from choosing a program that was widely at
variance with other local child care prices. The ceiling used by
several now-defunct federal child care programs was set by a Congress
that wanted to cut costs in 1989-90.
COMMENT:
This method has been used by Alternative Payment programs since 1980.
It requires the AP contractor (as one of the contract conditions) to
make sure that each center and family day care home that parents
choose does not charge the state more than other parents are charged.
By paying a provider's going rate, this option gives enables parents
to chose care within the marketplace, making whatever co-payment the
fee schedule assigns.
COST:
If this option were adopted for all TANF-related child care, during
the budget year this would account for about it $11 million of the
$450 million in vouchers for child care (processed by county welfare
departments and by SDE's Alternative Payment programs).
CHILD CARE AND WELFARE
ISSUE
How should reimbursement rates for child care providers be set?
OPTION:
Option B: Pay the lesser of these amounts: the fee a provider or
center charges all other families, or, reimburse child care costs up
to 1.5 standard deviations above the county's mean cost of care. This
method has been used by GAIN since 1985.
BACKGROUND: [Same for each option for this issue.]
California uses three different approaches for historical reasons.
The voucher payment programs administered by the State Department of
Education (Alternative Payment programs) were developed under a
market approach to child care. The ceiling on reimbursements for
child care under GAIN accepted this market approach but added a cap
to discourage a parent from choosing a program that was widely at
variance with other local child care prices. The ceiling used by
several now-defunct federal child care programs was set by a Congress
that wanted to cut costs in 1989-90.
COMMENTS:
Because child care costs are market driven, they are similar within
neighborhoods, regions, towns, and cities. This means that in many
counties there are no providers or centers charging more than 1.5
standard deviations above the mean. This method of capping child
care reimbursements was put forward by the Deukmejian administration
when GAIN was enacted.
For this option (and Option C), parents would pay any difference if
they chose more expensive care (in addition to their fee assessment
via the family fee schedule).
COST:
The costs of Options A and B are virtually the same.
This option (and Option C) requires an annual or biennial survey of
child care costs in order to determine what the reimbursement cap is.
The most recent statewide survey cost $335,000.
CHILD CARE AND WELFARE
ISSUE
How should reimbursement rates for child care providers be set?
OPTION:
Option C: Pay the lesser of these amounts: the fee charged to all
other families in care, or the rate charged by the center of family
day care provider determined to be at the 75 percentile of child care
fees charged within a county. (In other words, 25 percent of the
providers charge more than this center or home.) Federally-funded
IV-A child care has use this method since 1989-90.
BACKGROUND: [Same for each option for this issue.]
California uses three different approaches for historical reasons.
The voucher payment programs administered by the State Department of
Education (Alternative Payment programs) were developed under a
market approach to child care. The ceiling on reimbursements for
child care under GAIN accepted this market approach but added a cap
to discourage a parent from choosing a program that was widely at
variance with other local child care prices. The ceiling used by
several now-defunct federal child care programs was set by a Congress
that wanted to cut costs in 1989-90.
COMMENTS:
This option sometimes confuses people. It does not require parents
to pay for 25 percent of their child care costs. It requires parents
to pay any cost above the amount charged by 75 percent of all
providers in a given region. It only applies if the parent chooses a
provider whose rates are among the 25 percent highest cost in the
region.
For this option (and Option B), parents pay the difference if they
chose more expensive care in addition to their fee assessment via the
family fee schedule. So, if this option is adopted, it may have
implications for the family fee schedule option chosen.
Option C is problematic because the 25 percent of centers and homes
charging the highest rates are usually bunched geographically within
a county. For example, in El Dorado County, all of the care in the
South Lake Tahoe area is in the highest-cost 25 percent.
COST:
Option 3 would save the state about $11 million per year that would
come from increased parent fees and from parents looking for less
expensive arrangements.
This option requires an annual or biennial survey of child care costs
in order to determine what the reimbursement cap is. This has cost
about $335,000 per statewide survey.
CHILD CARE AND WELFARE (6)
ISSUE
How much should parents pay for child care?
Should the current family fee schedule be changed? If so, what
should it look like?
5 Options
OPTION
Option A: Keep current family fee schedule and make sure it is
extended to families receiving care provided by county welfare
departments.
BACKGROUND [This is the same for each of the five options for this
issue.]
Since 1970, with annual updates for inflation, the State Department
of Education has used a sliding fee schedule derived from the federal
Title XX guidelines. This fee schedule is marked by the following
structure:
it determines a family fee, not a per-child fee
parents pay no fee until their income reaches 50 percent of the
state's median income (which is approximately 140 percent of
federal poverty level) by family size
it is progressive: as parents' incomes rise, the percentage of
their income that they pay for child care increases: from no
payment to 3 percent of gross income, to 5.2 percent of gross
income, to 9.3 percent of gross income.
SDE child care and development contractors, except State Preschool,
migrant child care centers, and centers for teen parents, use the fee
schedule. Most child care administered through DSS and county welfare
departments (GAIN, Cal-Learn, NET, and Supplemental Child Care) does
not.
Each SDE contractor is responsible for collecting these fees from
parents. Fees comprise, on average, 3.5 percent of a contractor's
revenue. Statewide, this amounted to $17.3 million in 1995-96 and is
projected to be $20.8 million in 1996-97.
Fees collected are used to serve additional children. In 1995-96,
fees collected from parents meant that approximately 4,000 additional
children received services.
COMMENTS
There's little evidence that the current fee schedule is problematic.
However, some states report collecting higher fees from families than
California charges.
Having one fee schedule across all subsidized child care makes sense,
particularly if the goal is to disrupt parents as little as possible
as they move off aid into paid employment.
COST:
See REVENUE SUMMARY at the conclusion of all options.
CHILD CARE AND WELFARE
ISSUE
How much should parents pay for child care?
Should the current family fee schedule be changed? If so, what
should it look like?
OPTION
Option B: Have all parents pay something.
BACKGROUND: [See BACKGROUND for Option A.]
COMMENTS:
More than half of the families in SDE-subsidized care have incomes
below 50 percent of the state median and thus pay nothing. If all of
these families were charged $1 per day for care, parent fees charged
would double (from the current $20 million annually to $40 million).
If all families in DSS-subsidized care also paid $1/day (excluding
Cal-Learn), an additional $11 million would be charged.
Some believe that when everyone pay a fee, there is some "ownership"
of the program by parents. Others believe it is wrong to charge
families who live below the poverty level and are in training, looking
for work, or working at minimum wage. Child care administrators
caution against "symbolic" fees for the poorest families because
collection costs can exceed the fee collected.
COST:
See REVENUE SUMMARY at the conclusion of all options.
CHILD CARE AND WELFARE
ISSUE
How much should parents pay for child care?
Should the current family fee schedule be changed? If so, what
should it look like?
OPTION:
Option C: Change from a family fee to a per-child fee schedule.
BACKGROUND: [See BACKGROUND for Option A.]
COMMENTS:
Families with more than one child in the same center or family day
care home pay the same fee as do families with one child in care.
About 75 percent of the families enrolled have one child in care.
Adding a 60 percent surcharge, for example, to the fees of a family
with two children in care would increase parent fees by about
$3,000,000 statewide, using the current daily amounts. This equals a
15 percent increase in the total of parent fees collected.
COST:
See REVENUE SUMMARY at the conclusion of all options.
CHILD CARE AND WELFARE
ISSUE
How much should parents pay for child care?
Should the current family fee schedule be changed? If so, what
should it look like?
OPTION
Option D: Maintain a sliding fee schedule, but raise the rates
charged to parents by raising the percentage of parents' income
expected to go for child care costs.
BACKGROUND: [See BACKGROUND for Option A.]
COMMENTS
Families between 50 and 60 percent of the state median income
currently pay fees equal to 3 percent of their gross income. Families
between 60 and 75 percent of the state median income pay 5.2 percent
of their gross income in fees. Families above 75 percent of the state
median pay 9.3 percent.
If these were raised to 5 percent, 8 percent, and 10 percent
respectively, and all families remained in care, this would generate
from $10 million to $14 million more in fees.
Currently, a family of 3 persons earning 50 percent of the state's
median income pays approximately $43 per month for care, equal to 3
percent of their gross. Raising it to 5 percent of their gross
income would raise the fee to about $72 per month. Three-person
families earning 60 percent of the state median income currently pay
about $74 per month for care, equal to 5.2 percent of their gross.
Raising it to 8 percent would increase their monthly fee to $113.
Three-person families at 75 percent of the state's median income (and
few families in subsidized care earn this much) pay about $200 per
month, or 9.3 percent of their gross. Raising their fee to 10
percent of their gross would peg it at $212.
COST:
See REVENUE SUMMARY at the conclusion of all options.
CHILD CARE AND WELFARE
ISSUE
How much should parents pay for child care?
Should the current family fee schedule be changed? If so, what
should it look like?
OPTION
Option E: Change the current sliding fee schedule so parents pay a
percentage of their providers' rates.
BACKGROUND: [See BACKGROUND for Option A.]
COMMENT
This option is designed to encourage families to find the least
expensive care they can. If the state's goal is to spread child care
dollars as widely as possible, this is one way to take steps toward
that goal.
If the state's goal is to have parents in the workforce, having
parents chose reliable care is in the state's interest -- the cheapest
care is the least reliable.
If the state's goal is also to have an impact on children's well being
and to break cycles of poor educational outcomes and lack of readiness
to learn when children reach school, encouraging parents to find the
cheapest care may not be in the state's interest.
COST:
This option would generate approximately $8 million for each one
percent of provider costs which are billed to parents: in other
words, if parents have to pay 5 percent of a provider's costs, this
would generate about $40 million annually in fees.
===========================
REVENUE SUMMARY
If all families pay something (Option B), including those covered by
DSS-subsidized care (Option A), if the current SDE fee schedule became
a per-child schedule (Option C), and if the rates of the current SDE
fee schedule (Option D), then, the overall fees generated would be
about $70,000,000, an increase of $50,000,000 over current fees. For
example:
Option B Option A Option D Option C
@ $1/day @$1/day Raise rates Per child
$20+ million $11+ million $11+ million $9 million
Note: The amount estimated here for Option C assumes that Options A,
B, and D are also adopted. Amounts estimated for Options B and D are
independent of other possible actions.
Note: Options A and B require about 121,000 additional monthly
billings to generate $21+ million. The current $20,000,000 is
collected from 30,000 to 40,000 families billed monthly.
CHILD CARE AND WELFARE (7)
ISSUE:
Is child care work a viable "work activity" for TANF recipients? 1
Option
OPTION:
Encourage programs to provide training to persons on TANF who
volunteer to become child care center aides or family day care
providers.
BACKGROUND:
Federal law allows states to count as work activity any child care
that a TANF recipient provides to another TANF recipient that allows
that individual to work or participate in GAIN activities.
Also, for many years, various special projects in California and
other states have recruited and trained AFDC recipients to become
child care center aides and as family day care providers. The
results of these programs are mixed: there is some success training
child care center aides, using ROP/ROC, adult education, and
community colleges. There is less success training persons to become
family day care providers. One Lowell, Massachusetts program did so
and found that it cost about $15,000 for every person recruited and
trained who remained a family day care provider for more than 12
months.
COMMENT:
The State Department of Education provides some funding to two family
day care recruitment and training programs that could be encouraged
to focus recruitment efforts on TANF recipients. State Preschool and
Head Start programs are also ideally situated to recruit and train
persons from their parent communities to become providers during the
hours that the Head Start or State Preschool program is not open.
These persons would have the support, assistance, guidance, and
training from the preschool program.
CHILD CARE AND WELFARE (8)
ISSUE:
What actions can the Legislature take to increase the amount of
licensed, high-quality care, especially during weekends and evenings
and for infants and toddlers? 3 Options
OPTION:
Option A: Give the marketplace time to respond. Watch this issue
carefully and defer until future years any special efforts to expand
capacity.
BACKGROUND: [Same for each of three options for this issue.]
Most licensed child care (centers and family day care homes) operates
during the traditional work day -- open at 6 or 7 AM, closing at 6
PM, Monday through Friday. About 10,000 family day care homes (29
percent of the total) provide evening, overnight, or weekend care;
fewer than 200 centers statewide do so.
It is a common assumption that many entry level jobs (as retail
clerks, janitors, health aides, food preparation, and restaurant
workers) will entail evening work, weekends, or rotating schedules.
Also, care for infants and toddlers is at a premium: about 400 of the
state's 9,000 centers offer care for children under the age of 2
years; while many of the state's 30,000 licensed family day care
homes accept children under 24 months of age, licensing capacities
limit these numbers (to two such young children per home unless the
provider exclusively cares for infants, in which case four young
children can be enrolled).
COMMENTS:
Reportedly, in areas such as South Lake Tahoe, where many parents
work evenings, nights, and weekends at Nevada casinos, licensed
programs have responded with evening and weekend care.
COSTS:
This care does cost more, anywhere from 10 percent to 25 percent
more.
CHILD CARE AND WELFARE
ISSUE:
What actions can the Legislature take to increase the amount of
licensed, high-quality care, especially during weekends and evenings
and for infants and toddlers?
OPTION:
Option B: Direct the State Department of Education (SDE) to conduct
special projects such as:
Expanding funding to recruit and train family day care providers
(SDE has two such contracts now, recently augmenting one of them
by $500,000);
In areas with high concentration of TANF recipients, identify
contractors that will operate centers or family day care satellite
networks to serve special populations or to be open non-
traditional hours
Work with Head Start and State Preschool programs (usually half-
day, school year) to identify parents who could provide family day
care to other parents' children during the hours and days that the
Head Start or Preschool program doesn't operate. These providers
would be employees of the centers, receiving help with
bookkeeping, recruitment, training, substitutes, and so forth.
BACKGROUND: [Same for each option for this issue.]
Most licensed child care (centers and family day care homes) operates
during the traditional work day -- open at 6 or 7 AM, closing at 6
PM, Monday through Friday. About 10,000 family day care homes (29
percent of the total) provide evening, overnight, or weekend care;
fewer than 200 centers statewide do so.
It is a common assumption that many entry level jobs (as retail
clerks, janitors, health aides, food preparation, and restaurant
workers) will entail evening work, weekends, or rotating schedules.
Also, care for infants and toddlers is at a premium: about 400 of the
state's 9,000 centers offer care for children under the age of 2
years; while many of the state's 30,000 licensed family day care
homes accept children under 24 months of age, licensing capacities
limit these numbers (to two such young children per home unless the
provider exclusively cares for infants, in which case four young
children can be enrolled).
COMMENTS:
Options B and C are not mutually exclusive. The SDE has authority
now to implement option B.
COSTS:
Federal law requires that some of our federal child care money be set
aside for activities called "quality improvements." These can and do
include the recruitment and training activities of Option B.
CHILD CARE AND WELFARE
ISSUE:
What actions can the Legislature take to increase the amount of
licensed, high-quality care, especially during weekends and evenings
and for infants and toddlers?
OPTION:
Option C: Provide expansion funds for facilities. Two bills are in
front of the Legislature to do this: one through state-backed
cooperative lending with major banks, and one through a bond act (SB
158, Rainey, and SB 278, Watson).
Securing adequate facilities has always been a challenge for child
care programs. The recent class-size reduction in primary grades has
meant that many classrooms formerly used for child care are now
housing K-3 students, thus displacing some child care programs.
BACKGROUND: [Same for each option for this question.]
Most licensed child care (centers and family day care homes) operates
during the traditional work day -- open at 6 or 7 AM, closing at 6
PM, Monday through Friday. About 10,000 family day care homes (29
percent of the total) provide evening, overnight, or weekend care;
fewer than 200 centers statewide do so.
It is a common assumption that many entry level jobs (as retail
clerks, janitors, health aides, food preparation, and restaurant
workers) will entail evening work, weekends, or rotating schedules.
Also, care for infants and toddlers is at a premium: about 400 of the
state's 9,000 centers offer care for children under the age of 2
years; while many of the state's 30,000 licensed family day care
homes accept children under 24 months of age, licensing capacities
limit these numbers (to two such young children per home unless the
provider exclusively cares for infants, in which case four young
children can be enrolled).
COMMENTS:
Options B and C are not mutually exclusive.
COSTS:
Under SB 158, the state would be the guarantor of certain loans made
by commercial banks for child care center construction or renovation.
SB 278 would place on the ballot a $50,000,000 general obligation
bond act.
CHILD CARE AND WELFARE (9)
ISSUE: How can high quality child care programs be available to
children? 3 Options.
OPTION
Option A: Keep current practice with an emphasis on increasing
consumer education and consumer awareness so that parents will look
for and demand high quality care.
BACKGROUND [Same for each of three options for this issue.]
About half of the state's child care dollars go to child care centers
(and a few networks of family day care providers) that meet strict
state regulations for adult-child ratios and teacher qualifications.
The State Department of Education (SDE) evaluates these programs
using quality standards that reflect research on child development
including longitudinal studies of the effects of high-quality care.
About half of the state's child care dollars are in the form of
vouchers which parents can take to any licensed child care program or
use to hire a person exempt from licensure who cares only for that
parent's children. When these programs are licensed, they are
subject to health and safety regulations enforced by the Department
of Social Services. Providers exempt from licensure are subject to a
criminal records clearance and child abuse registry check that takes
months to complete.
In addition, the state appropriates about $14 million annually to
local resource and referral service providers. They assist any
parent who calls wanting referrals to licensed care, and they have
materials on questions parents can ask to help make more informed
choices. Also, the voucher payment programs, "Alternative Payment,"
keep 25 percent ($56 million) of their funds for administration and
support services to families.
In the aggregate, research find that professional caregivers do a
better job promoting children's learning and development than do
friends, neighbors, and relatives. Additional research in California
confirms that quality improves further under the more stringent Title
5 (SDE) regulations.
COMMENT
Most welfare-linked child care is provided through a voucher in which
parents choose their child care arrangement and there is no
additional monitoring for quality. Parents have several resources
for consumer education about choosing child care, including
information from their local child care resource and referral
services provider.
Some people believe that consumer awareness is overrated as a way to
improve quality. They emphasize the higher quality found in programs
that meet stricter regulations and that have more highly-trained
staff.
COST
This option requires no additional appropriation or shift of funds in
the budget year
CHILD CARE AND WELFARE
ISSUE: How can high quality child care programs be available to
children?
OPTION
Option B: Provide additional voluntary training opportunities for
all providers -- those with licenses and those exempt from licensure.
BACKGROUND [Same for each option.]
About half of the state's child care dollars go to child care centers
(and a few networks of family day care providers) that meet strict
state regulations for adult-child ratios and teacher qualifications.
The State Department of Education (SDE) evaluates these programs
using quality standards that reflect research on child development
including longitudinal studies of the effects of high-quality care.
About half of the state's child care dollars are in the form of
vouchers which parents can take to any licensed child care program or
use to hire a person exempt from licensure who cares only for that
parent's children. When these programs are licensed, they are
subject to health and safety regulations enforced by the Department
of Social Services. Providers exempt from licensure are subject to a
criminal records clearance and child abuse registry check that takes
months to complete.
In addition, the state appropriates about $14 million annually to
local resource and referral service providers. They assist any
parent who calls wanting referrals to licensed care, and they have
materials on questions parents can ask to help make more informed
choices. Also, the voucher payment programs, called Alternative
Payment, keep 25 percent of their contract dollars for administration
and support services to families. In the budget year, that 25
percent will amount to $56 million.
In the aggregate, research find that professional caregivers do a
better job promoting children's learning and development than do
friends, neighbors, and relatives. Additional research in California
confirms that quality improves further under the more stringent Title
5 (SDE) regulations.
COMMENT
The federal child care and development block grant requires that 4
percent of funds be set aside for "quality improvement activities,"
which can include training. The SDE is currently seeking public
comment on a draft state plan that includes some expansion of funding
for training activities.
COST:
In previous years, the SDE has provided about $3 million annually to
help defray the community college fees charged to child care staff
taking courses in child development.
CHILD CARE AND WELFARE
ISSUE: How can high quality child care programs be available to
children?
OPTION
Option C: Require some training for exempt providers, e.g., SB 309
(Watson) and/or require a course on child development for all
licensed family day care providers.
BACKGROUND [Same for each option.]
About half of the state's child care dollars go to child care centers
(and a few networks of family day care providers) that meet strict
state regulations for adult-child ratios and teacher qualifications.
The State Department of Education (SDE) evaluates these programs
using quality standards that reflect research on child development
including longitudinal studies of the effects of high-quality care.
About half of the state's child care dollars are in the form of
vouchers which parents can take to any licensed child care program or
use to hire a person exempt from licensure who cares only for that
parent's children. When these programs are licensed, they are
subject to health and safety regulations enforced by the Department
of Social Services. Providers exempt from licensure are subject to a
criminal records clearance and child abuse registry check that takes
months to complete.
In addition, the state appropriates about $14 million annually to
local resource and referral service providers. They assist any
parent who calls wanting referrals to licensed care, and they have
materials on questions parents can ask to help make more informed
choices. Also,voucher payment programs, "Alternative Payment," keep
25 percent ($56 million) of their contract dollars for administration
and support services to families.
In the aggregate, research find that professional caregivers do a
better job promoting children's learning and development than do
friends, neighbors, and relatives. Additional research in California
confirms that quality improves further under the more stringent Title
5 (SDE) regulations.
COMMENT
Senator Watson's bill would require all license-exempt providers paid
by the state to care for a state-subsidized child to take a basic
course in child development.
Licensed family day care providers (of which there are about 30,000)
must attend an orientation held by DSS but are otherwise not required
to have any coursework on child development.
COST
Courses are available through adult education, ROP/ROC programs, and
community colleges. These programs receive ADA from the state when
students enroll. Community Colleges also charge a small per-unit
fee.
CHILD CARE AND WELFARE (10)
ISSUE: How can state/local child care collaboration be fostered?
What is the best governance arrangement for child care. 3 Options.
OPTION:
Option A: Keep current law: some child care funds go to county
welfare departments from DSS; some child are funds go to local
contractors, including county welfare departments from SDE. Local
child care planning councils communicate local priorities for the
expansion of child care services to the SDE.
BACKGROUND: [Same for each of three options for this issue.]
Existing law creates a limited local government role in child care.
In 1991, local planning councils were established in state law to
assess local child care and development needs and develop funding
priorities for what was then the new federal Child Care and
Development Block Grant.
SDE, has historically been the single-state agency for the provision
of child care, except that child care through the disregard mechanism
has always been paid through AFDC grants and therefore through DSS,
and, starting with GAIN and then with the federal JOBS program, child
care attached to these welfare-to-work programs has been administered
by county welfare departments under the direction of DSS.
COMMENTS:
This option is implicit in the governor's budget. In some counties
there is extensive collaboration between county welfare departments
and SDE-funded programs, particularly the Alternative Payment
contractor and the resource and referral service providers. In other
counties, collaboration is minimal. In those counties, for parents
who leave AFDC for work, the transition from GAIN child care or care
through the disregard to SDE-subsidized care is haphazard;
Transitional Child Care has had only limited use for a variety of
reasons; and, there are anecdotal reports of parents quitting jobs or
getting fired when their child care arrangements fall through.
COST:
This option is possible within current budget proposals -- as are the
other two for this issue.
CHILD CARE AND WELFARE
ISSUE: How can state/local child care collaboration be fostered?
What is the best governance arrangement for child care.
OPTION:
Option B: Transfer all DSS-administered child care funds to the State
Department of Education (SDE), which in turn would contract with
county welfare departments, other local government agencies, and non-
profit organizations. Local planning councils continue their
priority-setting activities.
BACKGROUND: [Same for each of three options.]
Existing law creates a limited local government role in child care.
In 1991, local planning councils were established in state law to
assess local child care and development needs and develop funding
priorities for what was then the new federal Child Care and
Development Block Grant.
SDE, has historically been the single-state agency for the provision
of child care, except that child care through the disregard mechanism
has always been paid through AFDC grants and therefore through DSS,
and, starting with GAIN and then with the federal JOBS program, child
care attached to these welfare-to-work programs has been administered
by county welfare departments under the direction of DSS.
COMMENTS:
Option B: This option is proposed in SB 530 (Alpert). In those
counties where collaboration between welfare departments and the
"child care infrastructure" is limited, county welfare departments
may fear that TANF recipients will not be served under this option.
To address those concerns, this option should probably be combined
with an option that ensures TANF recipients' access to child care
services. This option eliminates the transitional child care
problem: once a family begins to receive care, there's no distinction
made between welfare-related care and care for low-wage families.
COST:
This option does not add costs to the 1997-98 budget as proposed.
CHILD CARE AND WELFARE
ISSUE: How can state/local child care collaboration be fostered?
What is the best governance arrangement for child care.
OPTION:
Option C: Transfer all DSS-administered child care funds to SDE,
eliminate the current contracting process, and direct SDE to have one
contract with a single agency in each county -- an agency selected
and overseen by a commission established by a joint powers authority
entered into by the board of supervisors and the county
superintendent of schools. Local planning councils are subsumed into
the new commission.
BACKGROUND: [Same for each of three options.]
Existing law creates a limited local government role in child care.
In 1991, local planning councils were established in state law to
assess local child care and development needs and develop funding
priorities for what was then the new federal Child Care and
Development Block Grant.
SDE, has historically been the single-state agency for the provision
of child care, except that child care through the disregard mechanism
has always been paid through AFDC grants and therefore through DSS,
and, starting with GAIN and then with the federal JOBS program, child
care attached to these welfare-to-work programs has been administered
by county welfare departments under the direction of DSS.
COMMENTS:
Option C: This option is proposed by CSAC and CWDA, and it is similar
to one made by PACE in its final report on streamlining the child
care system. Because it eliminates all current SDE contracts, it
makes those contractors nervous. It would shift program
administration costs from SDE and local contractors to the new
county-wide child care agency that would do all resource and
referral, eligibility, maintenance of the waiting list, parent fee
billing and collection, training, and oversight of sub-contractors
providing direct services. It is not immediately clear what problems
it eliminates.
COST:
This option does not add costs to the 1997-98 budget as proposed,
except that there would be new local administration costs associated
with rebidding all current contracts. Overall administrative rates
(combing state and local costs) might go up.
39