Child Care

For many parents in low-income families, access to quality, affordable child care is essential in order for them to work, and for families leaving welfare, child care is pivotal to a parent’s smooth transition to work. For child care arrangements to support working families, they must be affordable, available, reliable, and of good quality. However, low-income parents have difficulty finding child care settings that are affordable and flexible enough to accommodate their work schedules while also meeting their child’s developmental needs.

The 1996 welfare reform law consolidated several different sources of federal funding for child care into the Child Care and Development Block Grant (CCDBG), which assists low-income working families to become and remain independent. This grant funds quality child care for low-income families, families receiving public assistance, and those enrolled in training/school, or who are working and transitioning from public assistance. Right now, federal child care assistance only reaches one out of every seven eligible children. RESULTS supports annual funding increases for Head Start and the Child Care Development Block Grant (CCDBG) so that both programs are able to serve a greater number of children. In FY2015, RESULTS and our allies call on Congress to increase funding for the Child Care and Development Block Grant by $807 million. This funding would sustain effective, high-quality services for at-risk, low-income children and their families across the nation. You can take action by sending e-mails to Congress using our Head Start and child care funding action alert.

A December 2009 report from the National Center for Education Statistics offers proof that early care and education experiences are a critical part of future school success::

  • Children who participated in regular early care and education arrangements the year prior to kindergarten scored higher on the reading and mathematics assessments than children who had no regular experience in early care and education the year prior to entering kindergarten.
  • Children who participated in regular early care and education arrangements the year prior to kindergarten scored higher on the fine motor skill assessments than children who had no regular early care and education the year prior to entering kindergarten.
  • About four out of five (83.2 percent) participated in a regular non-parental early care and education arrangement the year before kindergarten.

Child Care at Risk in Budget Negotiations 

The proposal that President Trump put forward regarding child care tax would do the least for the families that need the most. While low-income families would continue to struggle to pay for child care, higher-earning families would be given unnecessary financial support. Briefly, the Child Care Plan is composed of three tax benefits:

  1. Dependent Care Savings Accounts (DCSAs): contributions to the account would be tax deductible and used to pay for current or future child care expenses. The government would match up to 50% for up to $1,000 in contributions each year for low-income families.
  2. Tax Deductions: Based on the average cost of child care in their state, parents would be able to deduct child care costs for up to 4 children under 13 years of age. All married couples that make $500,000 or less and all single parents that make $250,000 or less would qualify. 
  3. Earned Income Tax Credit (EITC) Child Care Spending Rebate: Some families would qualify for a partially refundable tax credit for child care expenses. The credit would be worth 7.65% of those expenses and cannot exceed half of the amount paid in payroll taxes. This rebate would be available to couples making $62,400 or less and single parents making $31,200 or less. 

It is crucial that the struggle to pay for child care is at the forefront because low-income families will not benefit equitably from these options. In particular, since low-families do not have federal income tax liability, they would not be able to benefit from the child care spending rebate. Funding based on taxes is inherently more valuable the higher the family’s income. 70% of the funds are predicted to benefit families that make $100,000 or more a year. The plan does not address the struggle to pay for child care at its core. Rather, it makes these "benefits" inaccessible to low-income families who are paying for child care month to month and cannot readily put money aside into a DCSA.

In order to improve the quality of child care services, the child care workforce needs to be better compensated and services must be more easily accessible in lor-income and rural areas. However, the proposal does not take any steps to do so, therefore continuing to make child care inaccessible to many families that need it. 

Cost of Child Care Increasingly Strains Household Budgets

For low-income and other families, child care is often the highest or second highest cost in family budgets. More parents now spend large portions of their income on child care; some are forced to quit their jobs and turn to welfare when child care assistance is not available. Despite the importance of high-quality child care to school readiness and later success, only about one in six children eligible for federal child care assistance receives help, and this unmet need continues to grow as the eligible population has increased and the number of children receiving assistance has declined.  A report released by Child Care Aware of America (formerly the National Association of Child Care Resource and Referral Agencies), Parents and the High Cost of Child Care - 2013, reveals that child care costs are one of the largest budget items for families and are continuing to rise, despite the nation's economic downturn. Child Care Aware found that between 2011 and 2012, the cost of child care has increased at nearly eight times the rate of increases in family income.  In 2012, the cost of care for an infant in a child care center is more than 25% of median family income for single parents in every state and more than the cost of one year of public college tuition in 31 states and the District of Columbia. Also in 2012, child care fees for two children (an infant and a 4 year old) in a child care center exceeded annual median rent in every state and exceeded mortgage payments in 19 states and the District of Columbia. As child care costs rise, parents shift their children from licensed programs to informal care that potentially compromises their safety, health, and school readiness.

As the National Women’s Law Center reports, many states are starting to cut back their state childcare assistance programs. As the additional funding from the American Recovery and Reinvestment Act (ARRA) runs out, states are forced to scale back their services. These cuts have large impacts on low-income parents as they force them to find a way to pay for child care while struggling to pay other bills or prevent them from getting the child care they need to work. The cuts cause children to lose access to the stable, good-quality child care that encourages their learning and development and prepares them for school success.

Reauthorization Long Overdue

Program rules for operating CCDBG have not been reauthorized since 1996, and has been operating under a series of extensions. Reauthorization would be an opportunity to improve the program.

The National Women's Law Center spearheaded efforts to map out a bigger picture child care agenda. Developing America's Potential: An Agenda for Affordable, High-Quality Child Care provides federal and state policymakers with a detailed road map for much needed systemic reforms in child care,  the product of a collaboration among national and state organizations.

Child Care Aware of America recommends congressional hearings on CCDBG to examine quality and affordability issues. NACCRRA points out that the military child care system was revamped in a way that assures high quality, affordability and accountability. The Military Child Care Act of 1989 strengthened the system. CCDBG should be reformed on this model. See Child Care Aware of America's policy agenda. NACCRRA also released a 12-point plan to create a national community-based training system for the child care workforce. Recommendations include:

  • requiring all paid providers to have a minimum of 40 hours of training in child development and guidance, first aid, health and safety practices, etc. prior to working with children

  • expanding training options in languages other than English and in distance education through means such as on-line training

  • developing wage incentive, bonus, and recognition models that reward higher levels of training and competency

  • developing training evaluation models and assessment measures to evaluate the effectiveness of training in improving individual child care provider competency

Child care is not effective if the quality is poor. Therefore, it is essential for child care providers to receive proper training so that they are prepared to handle different challenges and are able to provide important services to children and their families.

In March 2014, the Senate passed a bill to reauthorize CCDBG in a bipartisan 96-2 vote. The bill contains provisions that would improve the quality of child care and expand access to affordable care. However, the House of Reprsentatives has yet to consider CCDBG reauthorization legislation.

Child and Dependent Care Tax Credit

The Child and Dependent Care Tax Credit (CDCTC) is a tax credit that helps working families with the costs of child care. It allows taxpayers earning up to $15,000 to claim a 35 percent credit of up to $3,000 in child care expenses for one dependent and up to $6,000 for more than one dependent. The credit percentage is gradually reduced at incomes between $15,000 and $43,000 down to a minimum of 20 percent. Currently, the maximum credit is $1,050 for one dependent and $2,100 for two or more dependents. However, unlike the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC), the CDCTC is not refundable. This means that low-income families, who often have no tax liability, are not able to benefit from the credit. There are several proposals to make the credit refundable and to make other improvements so that low-income families who most need the assistance can access it. Senator Jeanne Shaheen (D-NH) introduced the Helping Working Families Afford Child Care Act (S. 2565), which would make the credit refundable, increase the amount of eligible child care expenses that can be claimed, and index these amounts to inflation. Senator Barbara Boxer (D-CA) introduced the Right Start Child Care and Education Act of 2013, which would also make the credit refundable, as well as increasing the credit percentage to 50 percent, increasing the income threshold for receiving the maximum credit from $15,000 to $30,000, and increase the amount of eligible child care expenses. Representative Ruppersberger (D-MD) introduced legislation in the House that is almost identical to Senator Boxer's bill, but which would only increase the income threshold for the maximum credit to $20,000.  

Making the CDCTC refundable would ensure that low-income families with children are able to work and to afford high-quality child care.

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