Child Care
Multiple Factors Could Have Contributed to the Recent Decline in the Number of Children Whose Families Receive Subsidies Gao ID: GAO-10-344 May 5, 2010As Congress considers reauthorization of the laws which provide funding for the Child Care and Development Fund (CCDF), there is interest in understanding what accounts for recent trends in child care subsidy receipt among eligible families and what research says about subsidies' effects on parents' ability to obtain and maintain employment. The U.S. Department of Health and Human Services (HHS) administers CCDF, but states have flexibility in its implementation. As requested, GAO examined: (1) trends in federal estimates of the number and proportion of eligible children and families who receive child care subsidies, (2) factors that may affect trends in estimates of the number of children served, and (3) what is known about the extent to which access to subsidies supports low-income parents' employment. To address these issues, GAO reviewed recent federal estimates of the number and proportion of eligible children and families served; conducted a survey of state child care administrators in 50 states and the District of Columbia; interviewed HHS officials, state officials in four selected states, and researchers and experts in child care subsidies; and reviewed research on the relationship between subsidy receipt and employment outcomes. GAO is not making recommendations in this report. HHS generally agreed with the report and provided technical comments, which GAO incorporated as appropriate.
From 2006 to 2008, the estimated average monthly number of children served by CCDF declined by about 170,000 (10 percent), after remaining relatively stable for a number of years. However, state data vary, as 34 states reported decreases in the number served during this period, while 17 states reported increases. Along with a decline in the number served by CCDF, an estimate for a key performance measure also shows a decline in the proportion of eligible children whose families received subsidies funded by key federal programs from 2006 to 2007. Overall, estimates indicate that annually about one-third or fewer of eligible children received subsidies funded by CCDF and other federal programs between 2004 and 2007. Estimates occur at this level partly because many states cannot serve all eligible families with available resources and partly because eligible families do not always seek subsidies. HHS, state officials, and experts cited multiple factors that could have influenced the recent overall decline in children served by CCDF. These include state decisions about resource allocation, such as increasing provider payments, as reported in GAO's survey, or decreasing Temporary Assistance for Needy Families funds transferred to CCDF, as shown by expenditure data. Also, changes in state-level requirements and the recession may have affected the availability of providers. Finally, economic factors can affect the demand for subsidies, and the recession may have affected parents' child care choices or their ability to meet work-related requirements. However, since 2006, some states took actions that could increase access to subsidies, such as increasing income eligibility limits or extending eligibility to unemployed parents. Research has linked access to child care subsidies to increases in the likelihood of low-income mothers' employment. Study results have varied in the extent to which subsidies affect employment, in part due to differences in data, scope, and methodology. Some research reviewed and experts interviewed indicated that the size of the effect on employment outcomes may vary based on other factors, such as child care options and employment flexibilities available to families. Experts also suggested that when child care prices increase, mothers may change their work hours or shift to lower-cost providers, for example, rather than exiting the labor force altogether.
GAO-10-344, Child Care: Multiple Factors Could Have Contributed to the Recent Decline in the Number of Children Whose Families Receive Subsidies
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Report to Congressional Requesters:
United States Government Accountability Office:
GAO:
May 2010:
Child Care:
Multiple Factors Could Have Contributed to the Recent Decline in the
Number of Children Whose Families Receive Subsidies:
GAO-10-344:
GAO Highlights:
Highlights of GAO-10-344, a report to congressional requesters.
Why GAO Did This Study:
As Congress considers reauthorization of the laws which provide
funding for the Child Care and Development Fund (CCDF), there is
interest in understanding what accounts for recent trends in child
care subsidy receipt among eligible families and what research says
about subsidies‘ effects on parents‘ ability to obtain and maintain
employment. The U.S. Department of Health and Human Services (HHS)
administers CCDF, but states have flexibility in its implementation.
As requested, GAO examined: (1) trends in federal estimates of the
number and proportion of eligible children and families who receive
child care subsidies, (2) factors that may affect trends in estimates
of the number of children served, and (3) what is known about the
extent to which access to subsidies supports low-income parents‘
employment.
To address these issues, GAO reviewed recent federal estimates of the
number and proportion of eligible children and families served;
conducted a survey of state child care administrators in 50 states and
the District of Columbia; interviewed HHS officials, state officials
in four selected states, and researchers and experts in child care
subsidies; and reviewed research on the relationship between subsidy
receipt and employment outcomes. GAO is not making recommendations in
this report.
HHS generally agreed with the report and provided technical comments,
which GAO incorporated as appropriate.
What GAO Found:
From 2006 to 2008, the estimated average monthly number of children
served by CCDF declined by about 170,000 (10 percent), after remaining
relatively stable for a number of years. However, state data vary, as
34 states reported decreases in the number served during this period,
while 17 states reported increases. Along with a decline in the number
served by CCDF, an estimate for a key performance measure also shows a
decline in the proportion of eligible children whose families received
subsidies funded by key federal programs from 2006 to 2007. Overall,
estimates indicate that annually about one-third or fewer of eligible
children received subsidies funded by CCDF and other federal programs
between 2004 and 2007. Estimates occur at this level partly because
many states cannot serve all eligible families with available
resources and partly because eligible families do not always seek
subsidies.
Figure: Average Monthly Number of Children and Families Served by CCDF
in Fiscal Years 2002-2008:
[Refer to PDF for image: multiple line graph]
Federal Fiscal year: 2002;
Families: 1.03 million;
Children: 1.74 million.
Federal Fiscal year: 2003;
Families: 1.02 million;
Children: 1.75 million.
Federal Fiscal year: 2004;
Families: 1.00 million;
Children: 1.74 million.
Federal Fiscal year: 2005;
Families: 1.00 million;
Children: 1.75 million.
Federal Fiscal year: 2006;
Families: 1.03 million;
Children: 1.77 million.
Federal Fiscal year: 2007;
Families: 0.99 million;
Children: 1.71 million.
Federal Fiscal year: 2008;
Families: 0.93 million;
Children: 1.60 million.
Source: GAO analysis of HHS data.
[End of figure]
HHS, state officials, and experts cited multiple factors that could
have influenced the recent overall decline in children served by CCDF.
These include state decisions about resource allocation, such as
increasing provider payments, as reported in GAO‘s survey, or
decreasing Temporary Assistance for Needy Families funds transferred
to CCDF, as shown by expenditure data. Also, changes in state-level
requirements and the recession may have affected the availability of
providers. Finally, economic factors can affect the demand for
subsidies, and the recession may have affected parents‘ child care
choices or their ability to meet work-related requirements. However,
since 2006, some states took actions that could increase access to
subsidies, such as increasing income eligibility limits or extending
eligibility to unemployed parents.
Research has linked access to child care subsidies to increases in the
likelihood of low-income mothers‘ employment. Study results have
varied in the extent to which subsidies affect employment, in part due
to differences in data, scope, and methodology. Some research reviewed
and experts interviewed indicated that the size of the effect on
employment outcomes may vary based on other factors, such as child
care options and employment flexibilities available to families.
Experts also suggested that when child care prices increase, mothers
may change their work hours or shift to lower-cost providers, for
example, rather than exiting the labor force altogether.
View [hyperlink, http://www.gao.gov/products/GAO-10-344] or key
components. For more information, contact Kay E. Brown at (202) 512-
7215 or BrownKE@gao.gov.
[End of section]
Contents:
Letter:
Background:
The Estimated Number of Children Whose Families Receive Child Care
Subsidies Has Declined in Recent Years:
Multiple Factors Could Have Contributed to the Recent Decline in the
Number of Children Served by State Child Care Subsidy Programs, but
Some States Have Taken Steps to Expand Access:
Research Indicates That Child Care Subsidies Increase the Likelihood
of Low-Income Mothers' Employment, but Studies Have Found Variation in
the Size of the Effects:
Concluding Observations:
Agency Comments and Our Evaluation:
Appendix I: Objectives, Scope and Methodology:
Appendix II: Data Reliability Assessment for CCDF Administrative Data
and Child Care Subsidy Coverage Rates:
Appendix III: Studies Examining the Effect of Child Care Subsidies on
Employment Outcomes:
Appendix IV: Comments from the U.S. Department of Health and Human
Services:
Appendix V: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: Child Care Subsidy Coverage Rate Estimates Published by HHS:
Table 2: Summary of Data and Methodology from 31 Selected Peer-
Reviewed Studies:
Figures:
Figure 1: Federal and State Child Care Expenditures from CCDF, TANF,
and Related State Funds:
Figure 2: Many State Policies May Affect the Allocation of Resources
for Child Care Subsidies:
Figure 3: Average Monthly Adjusted Number of Children and Families
Served by CCDF in Fiscal Years 1998-2008:
Figure 4: Percentage Change by State in the Estimated Average Monthly
Number of Children Served by CCDF from Fiscal Years 2006 to 2008:
Figure 5: Number of States That Reported Use of Funding from Sources
Other Than CCDF for Their Child Care Assistance Programs:
Figure 6: State Policy Changes in Payment Amounts for Child Care
Providers since 2006:
Figure 7: States That Reported That They Serve All Eligible Applicants:
Figure 8: State-reported Changes in the Number of Regulated Child Care
Providers since 2006:
Figure 9: Direction of State Policy Changes since 2006 That Could
Affect Access to Child Care Subsidies:
Figure 10: Direction of State Policy Changes to Income Eligibility
Requirements since 2006:
Figure 11: State Maximum Income Eligibility Criteria as a Percentage
of the 2009 Federal Poverty Level:
Figure 12: Direction of State Policy Changes to Other Eligibility
Criteria That Affect Access:
Figure 13: Direction of State Policy Changes to Co-payments Paid by
Families to Child Care Providers:
Figure 14: CCDF State Reporting Requirements:
Abbreviations:
ASPA: After-School Programs and Activities Survey:
ASPE: Office of the Assistant Secretary for Planning and Evaluation:
CCDBG Act: Child Care and Development Block Grant Act of 1990:
CCDF: Child Care and Development Fund:
DRA: Deficit Reduction Act of 2005:
ECPP: Early Childhood Program Participation Survey:
Education: U.S. Department of Education:
HHS: U.S. Department of Health and Human Services:
MOE: maintenance of effort:
NHES: National Household Education Surveys Program:
Recovery Act: American Recovery and Reinvestment Act of 2009:
SSBG: Social Services Block Grant:
SIPP: Survey of Income and Program Participation:
TANF: Temporary Assistance for Needy Families:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
May 5, 2010:
Congressional Requesters:
Survey data from the U.S. Census Bureau indicate that for families
with working mothers living below the federal poverty line, child care
costs on average comprised nearly 30 percent of their monthly income
in 2005.[Footnote 1] Child care subsidies can help such low-income
families pay for the care their children need while allowing parents
to work or participate in education or training programs. The federal
government provides funding to states through the Child Care and
Development Fund (CCDF) for improving the affordability, availability,
and quality of child care. States also have the option of using some
part of their Temporary Assistance for Needy Families (TANF) funds for
child care, either by providing subsidies directly to eligible
participants or providers or by transferring a portion of these funds
to CCDF. Both CCDF and TANF are block grant programs that allow states
substantial flexibility in setting eligibility criteria. In fiscal
year 2008, federal expenditures for child care subsidies funded by the
CCDF and TANF programs totaled $8.45 billion, comprised of $6.83
billion in CCDF expenditures, including TANF transfers to CCDF, and
$1.62 billion in direct TANF expenditures for child care.
States have the flexibility to adjust their policies for providing
child care subsidies to respond to external circumstances and to
achieve specific policy goals. When using CCDF funds, states can set a
range of child care assistance policies, such as eligibility criteria
and child care provider reimbursement rates, or payment amounts, which
can affect families' access to subsidies and the subsidy amount they
receive. Since 2001, many states have made changes to their child care
assistance policies, and we previously reported on those changes which
occurred through March 2005.[Footnote 2] However, since then, changes
in the law and economic circumstances have occurred that may have
affected state policies and the demand for child care subsidies. For
example, the Deficit Reduction Act of 2005 (DRA)[Footnote 3]
effectively increased the work participation rates that states must
achieve in their TANF programs and also increased mandatory funding
for the CCDF program. Furthermore, the American Recovery and
Reinvestment Act of 2009 (Recovery Act),[Footnote 4] which became law
on February 17, 2009, made available $2 billion in additional
discretionary funds for child care assistance. States can use this
funding to support subsidies for low-income families and activities to
improve child care quality. The Recovery Act also provided $5 billion
to a temporary emergency contingency fund for TANF to assist states in
fiscal years 2009 and 2010, which states can use for specified
activities, which may include child care. Finally, the economic
downturn that began in December 2007 has been accompanied by increased
unemployment levels, potentially affecting overall demand for child
care.
As Congress considers reauthorization of the laws which provide
funding for the CCDF, there is interest in understanding what accounts
for recent trends in child care subsidy receipt and what research says
about subsidies' effects on parents' ability to obtain and maintain
employment. At your request, we examined (1) trends in federal
estimates of the number and proportion of eligible children and
families who receive child care subsidies, (2) factors that may affect
trends in estimates of the number of children served, and (3) what is
known about the extent to which access to child care subsidies
supports low-income parents' employment.
To learn about HHS's estimates of the number and proportion of
eligible children who receive child care subsidies, we interviewed
officials from the U.S. Department of Health and Human Services (HHS),
and we reviewed CCDF administrative data and related documentation on
the proportion of eligible children whose families receive subsidies,
known as a coverage rate. We also reviewed related survey findings
from the U.S. Department of Education (Education), as well as relevant
federal laws and regulations. See appendix II for our assessment of
the reliability of CCDF administrative data and coverage rate
estimates. To identify factors that may affect current trends in
estimates of the number of children served, we conducted a Web-based
survey of state child care administrators in all 50 states and the
District of Columbia.[Footnote 5] We received a 100 percent response
rate. We analyzed the survey to determine recent state policy changes
and their impact on access to and the amount of child care subsidies.
We also interviewed HHS officials and three experts in the area of
child care subsidies for low-income families. In addition, we
interviewed state child care and TANF program administrators in
Colorado, Florida, Illinois, and New York, which were selected for
geographic diversity, administrative organization, and the amount of
Recovery Act funds allocated and drawn down. We also reviewed
administrative and expenditure data for the key federal programs that
fund child care subsidies. Our interviews with agency officials and
experts, review of agency data, related literature, and state child
care policies allowed us to reasonably conclude that the identified
factors could have had the described effects. However, we did not
design our review to definitively distinguish between these factors
and other explanations or to systematically assess their relative
contribution. To determine what is known about the impact of child
care subsidies on low-income parents' employment, we conducted a
literature search and identified and reviewed 31 studies that appeared
in peer-reviewed journals between 1995 and 2009 (see appendix III). In
addition, we interviewed four of the studies' authors.
We conducted this performance audit from May 2009 to May 2010 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives. Appendix I
provides further information on our scope and methodology.
Background:
The CCDF is the key mechanism through which the federal government
provides funding for child care subsidies to support work among low-
income families, and is administered by the Administration for
Children and Families within HHS. The component funds of the CCDF were
identified under the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996:[Footnote 6] (1) mandatory funding for
child care subsidies under section 418 of the Social Security Act;
[Footnote 7] (2) matching funds under section 418 of the Social
Security Act, which a state receives if it has met certain maintenance
of effort and matching requirements;[Footnote 8] and (3) discretionary
funding under the Child Care and Development Block Grant Act of 1990
(CCDBG Act), as amended.[Footnote 9] Each state must expend its own
funds each year at the level it was doing so under former child care
programs in fiscal year 1994 or 1995, whichever is greater, which is
referred to as CCDF maintenance of effort (MOE).
Each state's annual federal CCDF allocation consists of separate
mandatory, matching, and discretionary funds. A state does not have to
obligate or spend any state funds to receive the discretionary and
mandatory funds. However, for a state to receive its federal matching
funds, a state must meet its MOE requirements, and provide state
matching funds at the state's federal Medicaid matching rate. Despite
increases in CCDF mandatory funding under the DRA, CCDF funding
overall, when including the three major funding streams, has remained
relatively stable from fiscal years 2002 to 2008. In fiscal year 2009,
the combined budget for CCDF was $7 billion, which included
supplemental discretionary funding provided under the Recovery
Act.[Footnote 10] Federal funding for child care subsidies also comes
from the TANF program,[Footnote 11] and to a lesser extent, the Social
Services Block Grant (SSBG) program. States can spend TANF directly on
child care, and may transfer up to 30 percent of their TANF block
grant funds to CCDF. TANF funds transferred to CCDF are subject to the
requirements of the CCDBG Act, as amended, but states have discretion
with regard to whether or not they apply CCDBG rules to TANF funds
spent directly on child care. The Recovery Act also provided
additional funding for the TANF program.[Footnote 12] Child care
expenditures as reported by HHS since fiscal year 1998 are shown in
figure 1.
Figure 1: Federal and State Child Care Expenditures from CCDF, TANF,
and Related State Funds:
[Refer to PDF for image: stacked vertical bar graph]
Billions of inflation-adjusted 2008 dollars:
Federal fiscal year: 1998;
Federal CCDF: $4.61;
Federal TANF: $0.49;
State match and CCDF MOE: $2.09;
Total: $7.2.
Federal fiscal year: 1999;
Federal CCDF: $5.97;
Federal TANF: $0.78;
State match and CCDF MOE: $2.06;
Total: $8.8.
Federal fiscal year: 2000;
Federal CCDF: $6.33;
Federal TANF: $1.94;
State match and CCDF MOE: $2.34;
Total: $10.6.
Federal fiscal year: 2001;
Federal CCDF: $7.19;
Federal TANF: $2;
State match and CCDF MOE: $2.48;
Total: $11.7.
Federal fiscal year: 2002;
Federal CCDF: $7.64;
Federal TANF: $1.88;
State match and CCDF MOE: $2.64;
Total: $12.2.
Federal fiscal year: 2003;
Federal CCDF: $8.48;
Federal TANF: $1.99;
State match and CCDF MOE: $2.6;
Total: $13.1.
Federal fiscal year: 2004;
Federal CCDF: $7.82;
Federal TANF: $1.63;
State match and CCDF MOE: $2.87;
Total: $12.3.
Federal fiscal year: 2005;
Federal CCDF: $7.74;
Federal TANF: $1.41;
State match and CCDF MOE: $2.6;
Total: $11.8.
Federal fiscal year: 2006;
Federal CCDF: $7.31;
Federal TANF: $1.32;
State match and CCDF MOE: $2.65;
Total: $11.3.
Federal fiscal year: 2007;
Federal CCDF: $7.23;
Federal TANF: $1.21;
State match and CCDF MOE: $3.32;
Total: $11.8.
Federal fiscal year: 2008;
Federal CCDF: $6.83;
Federal TANF: $1.62;
State match and CCDF MOE: $2.41;
Total: $10.9.
Source: GAO analysis of HHS data.
Note: The Federal CCDF category includes CCDF and TANF transfers to
CCDF, while the Federal TANF category includes TANF-direct
expenditures. In addition, states' expenditure of CCDF funds can also
count toward TANF MOE, so to avoid duplication, "State match and CCDF
MOE" excludes TANF MOE. Furthermore, according to HHS, some states may
have reported state expenditures on child care that exceed CCDF MOE
and match requirements. In addition, HHS officials noted that from
fiscal years 2007 to 2008, the decrease in CCDF MOE and state match
occurred primarily because California discontinued reporting excess
state matching funds on its financial report to HHS for fiscal year
2008. Figure 1 also excludes any TANF funds directed to refundable
child care tax credits. HHS publishes information on TANF expenditures
for refundable tax credits, but these can include other kinds of tax
credits beyond those specifically for child care.
[End of figure]
To manage their programs, federal agencies can develop coverage rates
to estimate the proportion of the potentially eligible population
participating in a particular program, as HHS does for federal
programs that fund child care assistance. As we reported in 2005,
coverage rates can be valuable management tools in monitoring access
to federally funded assistance.[Footnote 13] Once a baseline trend is
established for a coverage rate, movement up or down may alert federal
program managers to changes in demand for assistance, access to this
assistance, or interaction with other programs and allow for
appropriate adjustments.[Footnote 14]
Federal law[Footnote 15] and CCDF regulations[Footnote 16] require
that states collect data on services provided under CCDF, including
TANF funds transferred to CCDF, and mandatory, matching, and
discretionary funds. States must submit these data to HHS through
quarterly reports--although some submit these data monthly--as well as
annual reports. HHS uses these data to estimate the average monthly
number of children served and the annual number of children served.
However, HHS does not collect data on the number of working families
receiving child care assistance directly funded by TANF, an issue we
previously reported and raised as a matter for congressional
consideration,[Footnote 17] nor does it collect these data for the
SSBG program.
Federal law provides in general that to be eligible for CCDF funds
children must be younger than 13 years old and living with parents who
are working, enrolled in school or training, or searching for a job.
Once these requirements are satisfied, states consider a variety of
factors in establishing eligibility for child care assistance. States
have many policies that can affect the allocation of resources for
child care subsidies, including prioritizing different types of
recipients, such as families currently receiving TANF cash assistance,
families transitioning from TANF or with a recent TANF history, and
other low-income working families (see figure 2). For child care
subsidies funded by CCDF, states may set any maximum family income
eligibility requirement at or below 85 percent of the state median
income for families of the same size. States may also have policies
prescribing other criteria that affect access to child care subsidies,
such as the amount of time families can spend searching for employment
and restrictions on the number of total or new enrollees.
In addition, states have flexibility in determining the amount of
subsidies families receive through the child care assistance programs
funded by CCDF. Provider payments are based on the combined state
subsidy and required family co-payment. States have discretion in
setting provider payment amounts, which must be sufficient to ensure
equal access to child care services for eligible families comparable
to those for families not receiving subsidies.[Footnote 18] States
show that the provider payment amounts are adequate to ensure equal
access by, among other things, conducting a market rate survey every 2
years.[Footnote 19] States must permit families to purchase care from
any legally operating child care provider, which may include child
care centers, family members, neighbors, and after-school programs.
While states generally require families to make a co-payment, some
states exempt families from making co-payments if they are at or below
100 percent of the poverty level. Since co-payments are a portion of
the providers' payment amounts, larger co-payments can result in
smaller subsidies to families, and smaller co-payments can increase
the effective subsidy amount. In 2002, we found great variation in
child care subsidy and co-payment amounts and made similar
observations in 2005.[Footnote 20]
Figure 2: Many State Policies May Affect the Allocation of Resources
for Child Care Subsidies:
[Refer to PDF for image: illustration]
Funding Sources:
State Funds;
Federal Funds: Including CCDF,TANF Transfers to CCDF, TANF Direct
Funds,and SSBG.
State Policies Controlling Allocation[A]:
Income eligibility limits;
Other eligibility criteria;
New applicant enrollment;
Reimbursement rates for providers;
Co-payment amounts for families.
Impact Of Policy Options:
Access policies: place limits on the type or number of families
eligible for subsidies;
Amount policies: alter family co-payments and/or reimbursement to
child care providers.
Types of Recipients:
TANF families;
Transitioning families[B];
Other low-income families.
Source: GAO analysis.
[A] States generally set policies aimed at controlling the allocation
of funding for child care subsidies, but some states allow local
entities to have flexibility in establishing policies related to
access to and the amount of child care subsidies.
[B] The term "transitioning families" refers to families transitioning
from receiving cash assistance through the TANF program or that have
recently received TANF cash assistance.
[End of figure]
In our 2005 report, we found that between January 2001 and March 2005,
many (19) states made eligibility and enrollment changes that may have
had an overall effect of decreasing access to child care subsidy
programs.[Footnote 21] In addition, 35 states reported that they
increased provider payment amounts during that time, but fewer states
reported increases in co-payments, which may have had an overall
effect of increasing the amount of the subsidies to families, possibly
allowing them a broader selection of providers.
To support more effective policy making on child care, according to
HHS, since fiscal year 2000, Congress has authorized HHS to spend
approximately $10 million annually from its discretionary funding
appropriation for research, demonstration, and evaluation. The Child
Care Bureau within HHS administered these research activities until
2007, when responsibility shifted to the Office of Planning, Research
and Evaluation within the Administration for Children and Families.
HHS reported that these research efforts have focused on increasing
knowledge about the efficacy of child care subsidy policies and
programs in supporting employment and self-sufficiency outcomes for
parents, and in providing positive learning and school readiness
outcomes for children.
The Estimated Number of Children Whose Families Receive Child Care
Subsidies Has Declined in Recent Years:
From fiscal years 2006 to 2008, declines have taken place in the
estimated number of children whose families receive child care
subsidies funded by CCDF--the only one of the three key federal block
grants used for this purpose for which HHS collects and publishes
participation numbers. As shown in figure 3, after an initial
increase, the average monthly number of children and families served
by CCDF has remained relatively stable over time, but these numbers
have decreased in recent years. In fiscal year 2006, nearly 1.8
million children were served by CCDF in an average month, and
preliminary data for 2008 indicates that this number has decreased to
approximately 1.6 million children--a decrease of about 170,000
children (10 percent).
Figure 3: Average Monthly Adjusted Number of Children and Families
Served by CCDF in Fiscal Years 1998-2008:
[Refer to PDF for image: multiple line graph]
Federal Fiscal year: 1998;
Families: 0.91 million;
Children: 1.51 million.
Federal Fiscal year: 1999;
Families: 0.95 million;
Children: 1.65 million.
Federal Fiscal year: 2000; California and New York change data
collection techniques;
Families: 1.04 million;
Children: 1.75 million.
Federal Fiscal year: 2001;
Families: 1.07 million;
Children: 1.81 million.
Federal Fiscal year: 2002;
Families: 1.03 million;
Children: 1.74 million.
Federal Fiscal year: 2003;
Families: 1.02 million;
Children: 1.75 million.
Federal Fiscal year: 2004;
Families: 1.00 million;
Children: 1.74 million.
Federal Fiscal year: 2005;
Families: 1.00 million;
Children: 1.75 million.
Federal Fiscal year: 2006;
Families: 1.03 million;
Children: 1.77 million.
The most recent decline begins between 2006 and 2007.
Federal Fiscal year: 2007;
Families: 0.99 million;
Children: 1.71 million.
Federal Fiscal year: 2008;
Families: 0.93 million;
Children: 1.60 million.
Source: GAO analysis of HHS data.
Note: As we previously reported, according to HHS, the decrease in
2002 can largely be explained by the change New York and California
made in their data collection techniques in fiscal year 2002. HHS
officials told us they have lower confidence in the quality of CCDF
administrative data collected prior to 2002. In addition, the data for
fiscal year 2008 are preliminary; HHS had not yet released the final
dataset in April 2010, when we completed our work.
[End of figure]
The national data mask some variations among states. In all, 34 states
reported declines in the average monthly number of children served by
CCDF from fiscal year 2006 to 2008, and the remaining states reported
increases.[Footnote 22] However, state-reported decreases in the
average monthly number served by CCDF varied, as declines ranged from
a few hundred children in some states to a decline of 70,600 children
(40 percent) in California. Nearly half of all states reported
decreases of 20 percent or less in the average monthly number of
children served during this time period, but some states reported
larger declines. For example, the average monthly number of children
served in the District of Columbia decreased by 57 percent (2,100
children), and North Carolina had a 27 percent decrease (21,900
children). At the same time, 17 states experienced increases in the
average monthly number of children served, and these data also varied
by state. Pennsylvania had the largest increase, having served 15,300
more children (18 percent) in an average month in fiscal year 2008 in
comparison to fiscal year 2006, and Ohio had the second largest
increase with 8,900 children (22 percent). As shown in figure 4,
states varied in whether they reported increases or decreases in the
number of children served from fiscal years 2006 to 2008.
Figure 4: Percentage Change by State in the Estimated Average Monthly
Number of Children Served by CCDF from Fiscal Years 2006 to 2008:
[Refer to PDF for image: map of the U.S.]
Percent change in the number served by CCDFW:
+15% to +30%:
Colorado:
Hawaii:
Louisiana:
Ohio:
Pennsylvania:
0 to +15%:
Alabama:
Indiana:
Kentucky:
Missouri:
Nevada:
North Dakota:
Oregon:
South Carolina:
South Dakota:
Tennessee:
0 to -15%:
Arizona:
Connecticut:
Florida:
Kansas:
Maryland:
Michigan:
Minnesota:
Montana:
Nebraska:
New Hampshire:
New Jersey:
New Mexico:
New York:
Oklahoma:
Rhode Island:
Texas:
Utah:
Virginia:
Washington:
West Virginia:
Wisconsin:
Wyoming:
-15 to -30%:
Alaska:
Delaware:
Georgia:
Idaho:
Illinois:
Iowa:
Massachusetts:
North Carolina:
-30% and more:
Arkansas:
California (-40.2%):
District of Columbia:
Maine:
Mississippi:
Vermont:
Sources: GAO analysis of HHS data; National Atlas of the United States
of America (map).
[End of figure]
Although states use other federal funding, such as TANF and SSBG, to
support child care subsidies, HHS does not collect case-level data on
the numbers served by these grants. As a result, the recent decline
shown in figure 3 does not fully reflect the number of children and
families receiving subsidies funded through federal resources.
However, two annual estimates help to provide some data on children
served by these non-CCDF funding streams. First, annual data reported
by states on the total number of children served, which may include
children funded by other federal programs, such as TANF and SSBG, also
indicate a less-marked decline of approximately 4 percent (159,000) in
the number of children served from 2006 to 2008.[Footnote 23] In lieu
of case-level data on the number of children served directly by TANF
and SSBG, HHS developed a second estimate for these numbers using
expenditure data from TANF and SSBG and average monthly costs under
CCDF. Current estimates also indicate a decline in the number of TANF-
and SSBG-funded children from fiscal year 2006 to 2007. For more
information about CCDF administrative data that HHS collects from
states, see appendix II.
In addition to the recent decline in the numbers served by CCDF, from
fiscal year 2006 to 2007, a key performance measure also shows a
decline in the estimated proportion of potentially eligible children
whose families receive child care subsidies funded by several federal
block grants. HHS has published several estimates of the proportion of
eligible children whose families receive child care subsidies from
these key federal programs--CCDF, TANF, and SSBG. Such coverage rate
information can help program managers more effectively address issues
related to program access. However, coverage rate estimates must be
interpreted carefully because of limitations in the data sources and
estimation methodologies used.
As shown in table 1, all of these estimates indicate that about one-
third or fewer of the potentially eligible children have received
child care subsidies funded by CCDF, TANF, and SSBG between fiscal
years 2004 and 2007.[Footnote 24] Two divisions within HHS--the Office
of the Assistant Secretary for Planning and Evaluation and the Child
Care Bureau--calculate coverage rate estimates. Both types of
estimates are based on the same core elements of administrative and
financial data,[Footnote 25] but differ in how they determine the
potentially eligible population (see appendix I for more information).
For example, because states have some flexibility in establishing
their eligibility criteria, one set of estimates is based on the
number of children potentially eligible under state requirements.
Alternatively, another set of estimates consistently applies a common
eligibility standard--the number of children in families with incomes
below 150 percent of the poverty level--to allow for more comparable
estimates across states. HHS has used this coverage rate estimate as
an annual performance measure with the target of maintaining the
proportion served by CCDF, TANF, and SSBG at 32 percent. Recently, HHS
revised this performance measure to reflect children in families with
incomes equal to or below 85 percent of state median income, the
maximum level allowed under the law.[Footnote 26]
Table 1: Child Care Subsidy Coverage Rate Estimates Published by HHS:
HHS agencies and offices: Office of the Assistant Secretary for
Planning and Evaluation;
Funding sources for children served (numerator):
* CCDF (including TANF funds transferred to CCDF);
* TANF direct and TANF state funds;
* SSBG;
Potentially eligible children (denominator): Children that meet state-
defined eligibility criteria;
Fiscal year: 2004;
Coverage rate estimate: 31 percent.
Fiscal year: 2005;
Coverage rate estimate: 29 percent.
HHS agencies and offices: Administration for Children and Families,
Child Care Bureau;
Previous performance measure:
Children in families with incomes below 150 percent of the federal
poverty level[A];
Fiscal year: 2005;
Coverage rate estimate: 33 percent.
Fiscal year: 2006;
Coverage rate estimate: 34 percent.
Fiscal year: 2007[B];
Coverage rate estimate: 30 percent.
Current performance measure:
Children in families with incomes equal to or below 85 percent of
state median income[C];
Fiscal year: 2006;
Coverage rate estimate: 17 percent.
Source: GAO analysis of HHS data.
[A] Additional criteria used to identify families with potentially
eligible children include the presence of children ages 0 through 12
(or disabled teenagers) and indications that parents or guardians are
working or in school.
[B] The fiscal year 2007 actual results for this outcome measure are
preliminary and have not yet been finalized.
[C] In calculating the denominator, HHS assumes that children are
eligible if they are under age 13 (or are ages 13 to18 and have
special needs), live in households where all residing parents work at
least 1 hour per week, and live in families with incomes under 85
percent of state median income, regardless of their poverty status.
[End of table]
Further, as seen in table 1, among those estimates that have been
compiled annually using the number of children in families below 150
percent of the poverty level as the basis, the estimated coverage rate
has declined from 34 percent in 2006 to 30 percent in 2007. HHS had
previously established a performance target of 32 percent for fiscal
years 2004 to 2010. The department's new target, based on the number
of children in families with incomes equal to or below 85 percent of
state median income, is to maintain the proportion of children served
by CCDF, directly by TANF, and by SSBG at 17 percent for fiscal years
2006 to 2010 and 18 percent for 2011. This change in the way HHS
calculates its coverage rate--switching from 150 percent of the
federal poverty level to 85 percent of state median income--increases
the estimated number of children potentially eligible for these
subsidies (i.e., the denominator), which would have the effect of
decreasing the estimated coverage rate. Accordingly, the estimated
2006 coverage rate declined from 34 percent to 17 percent when the
methodology for calculating the denominator was changed. HHS reported
having met this target for 2006--the most recent year for which it has
published this coverage rate with the new criteria for determining the
potentially eligible population of children; the 2007 and 2008
coverage rate estimates are not yet available.
In general, full coverage may not be expected or achieved for a
variety of reasons. Because federal funds for child care subsidies are
delivered to states in multipurpose block grants, the number of
children who can receive subsidies is determined, in part, by the size
of the grant and choices that states make regarding how to fund and
structure their subsidy programs. In addition, other state and federal
programs, such as Head Start and TANF, provide services or offer funds
that may substitute for child care subsidies in some circumstances and
age groups. Finally, some families potentially eligible for child care
assistance under federal and state rules, including many who pay for
child care, do not receive subsidies, may be temporarily ineligible
but difficult to exclude from estimates of potentially eligible
families, or may obtain care from providers unwilling or unable to
accept subsidies. For example, the National Household Education
Surveys Program found in 2005 that only about 50 percent of families
with incomes below roughly 150 percent of the federal poverty level
that pay for one or more regular child care arrangements reported
receiving assistance with their child care fees from any public or
private source.[Footnote 27] Although the longer-term trend in HHS's
published coverage rate has been relatively stable, the estimate used
for its previous performance measure indicates a decline in coverage
for child care subsidies from fiscal years 2006 to 2007.
Multiple Factors Could Have Contributed to the Recent Decline in the
Number of Children Served by State Child Care Subsidy Programs, but
Some States Have Taken Steps to Expand Access:
HHS, state officials, and experts we contacted cited multiple factors
as potential influences on the overall decline in the numbers served
by CCDF from fiscal years 2006 to 2008, which occurred even as some
states took steps to expand access. However, it is difficult to draw
general conclusions about the relative importance of specific factors.
A complex relationship exists among factors that affect the number of
children receiving child care subsidies, making it difficult to
determine the extent to which specific factors are individually
responsible for changes in access or numbers served. In addition,
different sets of factors may combine in individual states to either
decrease or increase the number of children served. The potential
factors fell into three groups:
* state decisions that affect resource allocation, such as
availability of TANF for child care or trends toward higher provider
payments;
* changes in provider supply and requirements; and,
* economic factors that may affect parents' ability to meet work-
related eligibility criteria for subsidies or their child care choices.
State Decisions:
Each state's decisions regarding how to use funding from flexible
sources not specifically dedicated to subsidized child care services
can affect both the number of children served and the overall
proportion of eligible children receiving subsidies. Most states
reported using additional sources of funding, beyond CCDF resources
and required state matching and MOE funding, to support child care
subsidies, such as Recovery Act, TANF, SSBG, and other state funds
(see figure 5). In general, among the additional funding sources for
child care subsidies apart from the Recovery Act, states were most
likely to report changes in TANF transfers into CCDF and in other
state funds. Many states had already added Recovery Act funds by the
time we conducted our survey. In addition to Recovery Act funds,
states more often reported adding or increasing funding from most
other sources including state funds and TANF transfers, since July
2006, compared to eliminating or decreasing such funds. However, it is
important to note that survey responses reflected relatively long-term
trends (from 2006 through the fall of 2009) and these trends may not
accurately reflect more recent or future periods.
Figure 5: Number of States That Reported Use of Funding from Sources
Other Than CCDF for Their Child Care Assistance Programs:
[Refer to PDF for image: vertical bar graph]
Recovery Act: 41;
TANF transfers to CCD: 37;
Other state funds: 31;
TANF direct funds: 27;
SSBG: 27;
Other federal funds: 10;
Other funds: 6.
Source: GAO analysis of survey results.
[End of figure]
States' decisions to use their federal TANF funds--through transfers
to CCDF and direct spending for child care--have contributed
substantial amounts to the total federal funding that supports state
child care subsidy programs over a period of general stability in
federal funding of CCDF in recent years. However, HHS officials we
interviewed attributed the recent decline in numbers served by CCDF,
in part, to state funding decisions regarding whether to transfer TANF
funds to CCDF. Such decisions can affect the numbers of children and
families that states report as being served by CCDF. Nationally, TANF
funding transferred to CCDF increased about 8 percent between fiscal
years 2006 and 2007, from about $1.9 billion to about $2 billion, but
declined sharply, by about 17 percent, or about $350 million, in
fiscal year 2008.
Although fewer funds transferred to CCDF can result in fewer children
served through that program, this change does not necessarily equate
to a commensurate decrease in total children served. States can also
use TANF and other federal and state funds to directly provide child
care subsidies to offset in whole or in part a decrease in children
served through CCDF (however, the amounts of these funds can vary from
year to year). Based on our analysis, 10 states decreased TANF
transfers and 4 eliminated them from 2006 to 2008. Twelve of these
states, including the 4 states that did not transfer TANF funds to
CCDF in fiscal year 2008 as they had in fiscal year 2006, reported a
decrease in the number of children served by CCDF during the same time
period.[Footnote 28] These states also reported a decrease in the
total number of children subsidized by a larger group of funds, which
may include TANF direct and SSBG, although the extent of the overall
decrease varied considerably by state. Conversely, 2 states that had
decreased TANF transfers recorded no or minor decreases in total
children served, which may, in part, be a consequence of spending
additional funds to support child care services.[Footnote 29]
According to an official from one large state we surveyed that did not
transfer TANF funds to CCDF in fiscal year 2008 as it had in prior
years, the number of estimated children served through CCDF dropped
between fiscal years 2006 and 2008. According to our analysis this was
about a 40 percent decrease, with this state alone accounting for over
40 percent of the national decline in children served by CCDF between
fiscal years 2006 and 2008. While withdrawal of TANF transfers was
closely linked to the sharp decrease in the number of this state's
children served through CCDF, the overall number of children the state
reported receiving subsidies from all funding sources, including
sources beyond CCDF, such as SSBG and TANF funds spent directly on
child care, also decreased--but by about 2.4 percent. The state's
increase in the use of TANF funds to directly support child care may
have helped limit the decline in the number of children receiving
subsidies. Nationally TANF funds spent to directly support child care
increased from about $1.2 billion in fiscal year 2006 to about $1.6
billion in fiscal year 2008, or over 30 percent.
For fiscal years 2009 and 2010, states have additional federal funds
available to consider when making decisions about using TANF funds for
child care. These include the Recovery Act funds for CCDF as well as a
temporary emergency contingency funding for TANF to assist states in
fiscal years 2009 and 2010 to help them meet increasing caseloads in
their TANF programs associated with the current recession. In a
related report that examined changes in TANF caseloads and spending
since the recession that began in December 2007, we found that 7 of 11
states we studied with increased spending on TANF cash assistance
either maintained or increased the amount of TANF-related spending for
family and work supports between June 2008 and June 2009 by accessing
available resources. These supports included child care subsidies,
transportation subsidies, subsidized employment, CCDF, and SSBG. The
remaining four states reduced spending for family and/or work supports
to offset the cost of increased spending on cash assistance. However,
officials in several states that had not reduced their spending on
work supports offered that they expected there would be cuts in TANF-
related spending for these services in the near future because of
state budget and resource constraints associated with their growing
caseloads, which is consistent with our observations of state
responses in prior periods of caseload increase.[Footnote 30]
In addition to effects attributable to states' use of varied sources
of funding, HHS officials also suggested that the trend toward higher
provider payment amounts might be constraining the numbers of children
states could serve, particularly if funding remains stable. According
to our survey, the majority of states reported they had increased
child care payment amounts since 2006 (see figure 6). Many of these
states reported they had increased provider payment amounts to keep
pace with market rates for child care. However, about a third of
states reported no change in provider payment amounts. This trend
toward higher payments for child care providers is longstanding,
having also been reported in our last survey,[Footnote 31] while the
decline in the number of children receiving subsidies is relatively
recent. A senior HHS official suggested states previously may have had
the resources available to accommodate these increases in provider
payment amounts without decreasing the overall number of children
receiving subsidies, but that this may no longer be true during the
recession.
Figure 6: State Policy Changes in Payment Amounts for Child Care
Providers since 2006:
[Refer to PDF for image: horizontal bar graph]
Decreased: 1 state;
Unchanged: 15 states;
Increased: 31 states;
Unknown: 4 states.
Source: GAO analysis of survey results.
Note: Four states were categorized as unknown because they did not
answer the related survey questions.
[End of figure]
Twenty-two states we surveyed in 2009 did not provide child care
assistance to all eligible families who applied (see figure 7),
compared to 20 states that reported not being able to serve all
eligible applicants in our 2005 survey, possibly as a result of state
decisions that affect resource allocation. States that reported not
providing assistance to all eligible applicants, which included many
of the most populous states, often cited limited funding. However,
some states that reported being able to serve all eligible applicants
may have set their policies in order to achieve this goal. For
example, an official from one of the four states we selected to
interview said that the state had been able to serve all eligible
applicants because the state's income eligibility limit was set at a
level that allows all families with incomes below this limit to be
served. In 2009 this income eligibility limit was about 192 percent of
the 2009 federal poverty level for a family of three.
Figure 7: States That Reported That They Serve All Eligible Applicants:
[Refer to PDF for image: map of the U.S.]
Serves all eligible families who apply:
Alaska:
Delaware:
District of Columbia:
Hawaii:
Idaho:
Illinois:
Iowa:
Kansas:
Kentucky:
Louisiana:
Maryland:
Michigan:
Mississippi:
Missouri:
Montana:
Nebraska:
New Hampshire:
New Mexico:
North Dakota:
Ohio:
Oklahoma:
Oregon:
South Dakota:
Utah:
Vermont:
Washington:
West Virginia:
Wisconsin:
Wyoming:
Does not serve all eligible families who apply:
Alabama:
Arizona:
Arkansas:
California:
Colorado:
Connecticut:
Florida:
Georgia:
Indiana:
Maine:
Massachusetts:
Minnesota:
Nevada:
New Jersey:
New York:
North Carolina:
Pennsylvania:
Rhode Island:
South Carolina:
Tennessee:
Texas:
Virginia:
Sources: GAO analysis of HHS data; National Atlas of the United States
of America (map).
[End of figure]
Provider Supply and State-level Requirements:
Forty-three percent of states we surveyed reported that the number of
regulated providers had decreased since 2006 (see figure 8). States
attributed these decreases to a number of factors, including increased
state requirements and the current economic recession, which resulted
in higher unemployment and fewer parents seeking child care.
Figure 8: State-reported Changes in the Number of Regulated Child Care
Providers since 2006:
[Refer to PDF for image: horizontal bar graph]
Decreased: 22 states;
Unchanged: 11 states;
Increased: 13 states;
Unknown: 5 states.
Source: GAO analysis of survey results.
[End of figure]
State-level requirements for child care providers, which can affect
the availability of providers eligible to receive child care
subsidies, are also cited as a potential contributor to the decline in
the number of children served by CCDF. Officials from one selected
state and at least one other state we surveyed suggested that more
rigorous state-level requirements for child care providers could have
left some families without access to child care if their provider
became ineligible for participation in the subsidy program. Officials
in one of these states attributed the decreased number of children
served in that state to two recently implemented requirements for
license-exempt child care providers who receive subsidy payments.
According to a state official, one requirement mandated that license-
exempt providers (those caring for three or fewer children) submit to
a child abuse and neglect background check and provide their social
security number. A second requirement, implemented in 2007, requires
such providers to provide a copy of their social security card and
valid photo identification. When this state initiated these
requirements to increase accountability, some providers stopped
participating in the child care program. The number of children
receiving subsidies funded by CCDF in this state declined by about 17
percent between fiscal years 2006 and 2008.
Economic Factors:
Economic factors, which can affect the demand for child care
subsidies, may be contributing to the decline in the number of
children served by CCDF. States we surveyed and experts we spoke with
identified economic factors that may affect parents' ability to meet
work-related eligibility requirements or that could affect parents'
child care choices. Some states we surveyed suggested that they saw a
decreasing demand for child care due to rising unemployment. Some also
suggested that fewer hours worked by parents seeking child care or
changed work schedules could result in fewer families being eligible
for subsidies. Even if families remain eligible, experts noted that
changed work schedules, such as a reduction in the number of hours
worked per week, can make it difficult for families to obtain child
care subsidies. We previously reported that studies on child care
identify the traditional operating hours of program offices, among
other things, as a barrier to obtaining child care subsidies for
working families, such as those who change work schedules and must
reapply for child care.[Footnote 32] In addition, research has also
found that the administrative process to apply for child care
subsidies can be difficult and time consuming, causing some families
to choose not to apply.[Footnote 33] A researcher told us this was
especially the case when work changes occur.
Some States Took Actions That Could Increase Access:
The number of children served by CCDF nationwide declined by 10
percent from 2006 to 2008. However, 17 states individually saw
increases in the number served during this same time period.[Footnote
34] We did not find a consistent relationship between the states that
reported increases to HHS in the numbers served and those that
reported changes in policies that could increase access in response to
our survey. Since 2006, some states, including some of those reporting
increases in the numbers served, have taken various actions that could
increase families' access to child care subsidies, and in some cases
for those families struggling due to the economic downturn. For
example, our survey indicates that although the majority of states did
not make changes to eligibility and enrollment policies that could
clearly have the effect of increasing access to child care subsidies,
16 states reported making policy changes that could increase access
(see figure 9). Our 2005 survey effort also used a method to measure
access and, in that year, 8 states reported they had increased access.
Figure 9: Direction of State Policy Changes since 2006 That Could
Affect Access to Child Care Subsidies:
[Refer to PDF for image: horizontal bar graph]
Decreased: 7 states;
Unchanged: 17 states;
Increased: 16 states;
Mixed changes: 3 states;
Unknown: 8 states.
Source: GAO analysis of survey results.
Note: The direction of policy changes is based on state changes in
income eligibility limits and other eligibility criteria (such as work
requirements) and enrollment changes that could affect program access.
See appendix I for additional information on how we identified changes
to eligibility and enrollment policies that could clearly have the
affect of increasing access to child care subsidies.
[End of figure]
When looking specifically at income eligibility policies, although the
majority of states did not make changes to these criteria, 18 states
reported increases to their income eligibility limits during the
period since 2006--three times as many as in our previous report on
state child care policy changes from 2001 to 2005 (see figure
10).[Footnote 35] Eight of these states reported increases in the
number of children receiving subsidies funded by CCDF between fiscal
years 2006 and 2008. States gave various reasons for the increases in
income eligibility limits, such as keeping up with changes in the
federal poverty level, which would not necessarily affect the number
of children eligible, although the number of children in poverty has
increased since 2006.[Footnote 36]
Figure 10: Direction of State Policy Changes to Income Eligibility
Requirements since 2006:
[Refer to PDF for image: horizontal bar graph]
Decreased: 2 states;
Unchanged: 27 states;
Increased: 18 states;
Not applicable: 2 states;
Unknown: 2 states.
Source: GAO analysis of survey results.
[End of figure]
Increases in income eligibility limits raised the median income
eligibility limit among states, which could represent an increase in
access to child care subsidies. In 2009, the median state income
eligibility limit was about 192 percent of the federal poverty level,
while in 2005 it was about 184 percent (see figure 11).[Footnote 37]
As shown in this figure, one state, which allows flexibility at the
local level, has an income eligibility limit set at about 295 percent
of the 2009 federal poverty level--the highest among all states. This
percentage approximates the federally prescribed maximum eligibility
limit of 85 percent of the state's median income.[Footnote 38]
Figure 11: State Maximum Income Eligibility Criteria as a Percentage
of the 2009 Federal Poverty Level:
[Refer to PDF for image: vertical bar graph]
Percentage of 2009 federal poverty level: 90-110%;
Number of states: 1.
Percentage of 2009 federal poverty level: 110-130%;
Number of states: 6.
Percentage of 2009 federal poverty level: 130-150%;
Number of states: 6.
Percentage of 2009 federal poverty level: 150-170%;
Number of states: 7.
Percentage of 2009 federal poverty level: 170-190%;
Number of states: 5.
Percentage of 2009 federal poverty level: 190-210%;
Number of states: 14.
Percentage of 2009 federal poverty level: 210-230%;
Number of states: 5.
Percentage of 2009 federal poverty level: 230-250%;
Number of states: 6.
Percentage of 2009 federal poverty level: 250-270%;
Number of states: 0.
Percentage of 2009 federal poverty level: 270-290%;
Number of states: 0.
Percentage of 2009 federal poverty level: 290-310%;
Number of states: 1.
Source: GAO analysis of survey results and 2009 federal poverty level.
Note: Dollar amounts are based on the federal poverty level for 2009
which was $18,310 for a family of three in the 48 contiguous states
and the District of Columbia. The analysis of state income eligibility
limits factored in the different poverty levels for Alaska ($22,890)
and Hawaii ($21,060). GAO did not conduct any analysis of state to
state differences in average child care costs.
[End of figure]
Over one quarter of states we surveyed reported they increased access
by changing policies related to eligibility criteria--other than
income eligibility limits--that qualify a family for child care
subsidies, such as work and educational activity requirements. These
policy changes most often benefited other low-income families that do
not currently receive or have not recently received TANF benefits.
Several states reported they did this in order to support low-income
families during the economic downturn, such as those facing
unemployment or reduced work hours (see figure 12).
Figure 12: Direction of State Policy Changes to Other Eligibility
Criteria That Affect Access:
[Refer to PDF for image: horizontal bar graph]
Decreased: 7 states;
Unchanged: 27 states;
Increased: 14 states;
Not applicable: 1 state;
Unknown: 2 states.
Source: GAO analysis of survey results.
[End of figure]
Nine states reported decreasing co-payments, which can affect the
affordability of child care (see figure 13).[Footnote 39] Two of these
states reported they did so to help families deal with impacts of the
downturn in the economy and rising prices, such as for child care as
well as for fuel for transportation. However, states were most likely
to report making no changes to the co-payments paid by families
receiving child care subsidies.
Figure 13: Direction of State Policy Changes to Co-payments Paid by
Families to Child Care Providers:
[Refer to PDF for image: horizontal bar graph]
Decreased: 9 states;
Unchanged: 22 states;
Increased: 9 states;
Mixed changes since 2006: 9 states;
Unknown: 2 states.
Source: GAO analysis of survey results.
Note: The mixed changes category includes states that reported that co-
payments are higher for some and lower for others since 2006. For
example, two states reported that because they allow flexibility for
implementing co-payment policies at a local level, their co-payments
both increased and decreased since 2006 due to regional or local
policy changes.
[End of figure]
By December 2009, most states had drawn down some Recovery Act funds,
and over half of all states reported plans to use these funds to make
changes that could increase access to subsidies for children and
families. For example, the majority of the 15 states that reported
having waiting lists reported drawing down some Recovery Act funds by
the fall of 2009, and most planned to use these funds to reduce the
number of families on these lists. In addition, some states said that
Recovery Act funds would allow them to raise their income eligibility
limits and potentially serve more families. Most states also planned
to use Recovery Act funds to provide education and training
scholarships and grants for child care providers or to upgrade their
management information systems or technology, or both.
Research Indicates That Child Care Subsidies Increase the Likelihood
of Low-Income Mothers' Employment, but Studies Have Found Variation in
the Size of the Effects:
Research we reviewed and experts we spoke to indicate that child care
subsidies increase the likelihood of low-income mothers' employment.
Consistent with our findings in 1994 that reducing child care costs
for low-income mothers increases the likelihood they will be able to
work,[Footnote 40] the studies published from 1995 to 2009 that we
examined found that receiving a child care subsidy or decreasing child
care costs had a positive effect on employment outcomes for low-income
mothers. In addition, two of these studies looked at the relationship
between federal or state funding for child care subsidies and
employment outcomes. Overall, the results of the studies we reviewed
varied in terms of the size of the effect on employment outcomes. See
table 2 for a methodological summary of the 31 peer-reviewed studies
that we identified for our literature review.
Table 2: Summary of Data and Methodology from 31 Selected Peer-
Reviewed Studies:
Main explanatory variables: Child care costs;
Methodology: Used statistical models to simulate child care subsidy
receipt in order to estimate effect of changes in child care prices on
employment outcomes;
Number of studies reviewed: 12 studies.
Main explanatory variables: Child care subsidy receipt;
Methodology: Used data on child care subsidy receipt to estimate
effect on employment outcomes;
Number of studies reviewed: 17 studies[A].
Main explanatory variables: State or federal child care funding;
Methodology: Used data on public funding for child care subsidies to
estimate effect on employment outcomes;
Number of studies reviewed: 2 studies.
Source: GAO analysis.
[A] Two studies used survey data on child care subsidy receipt and
child care prices to examine employment outcomes. In addition, another
study used public kindergarten as a proxy for child care subsidy
receipt.
[End of table]
Overall, we found that studies using these various types of data
yielded the same conclusion with regard to child care subsidies
increasing the likelihood of low-income mothers' employment. Until the
mid-1990s, when child care subsidies started becoming more widely
available, and therefore could be studied directly, most research
examined the relationship between the price charged by child care
providers and mothers' employment outcomes to infer the likely effects
of the subsidies on those outcomes. Recognizing that child care
subsidies have the effect of reducing the price of child care for
subsidy recipients, early studies statistically estimated economic
models of mothers' employment decisions at various child care prices.
For example, in our 1994 report we applied an economic model to survey
data, and this analysis predicted that providing a full subsidy to
mothers who pay for child care could increase--from 29 percent to 44
percent--the proportion of mothers at or below the federal poverty
level who work.
While studies have found similar results related to the direction of
the effect of child care subsidies or decreases in child care prices
on low-income mothers' employment, their results varied in the size of
these subsidies' effects on employment, due in part to differences in
data, scope, and methodology. For example, research and experts we
interviewed indicated that the effect of child care subsidies on
mothers' employment can vary by family characteristics, such as
marital status. Some studies estimated that child care subsidies may
have a greater likelihood of affecting single mothers' employment in
comparison to married mothers' employment. For example, one study
found that for single mothers, a 1 percent decrease in the price of
child care would result in about a 1.3 percent increase in full-time
employment, compared to a 0.75 percent increase for married mothers.
[Footnote 41] Such results indicate that the employment status of
single mothers may be more sensitive to changes in the price of child
care, in comparison to married mothers, who may be able to share child
care responsibilities and costs with their spouses.
Some aspects of study methodology have important implications for
findings. After accounting for the extent to which subsidy receipt is
contingent on employment, another study found that subsidy receipt
increased the probability of single mothers' employment by 15.3
percent.[Footnote 42] According to an HHS official, studies that do
not take this factor into account may find that subsidies have no
influence on employment because potential recipients have to be
employed in order to qualify for subsidies. The Office of Planning,
Research and Evaluation within the Administration for Children and
Families is currently conducting some work on how best to measure
employment outcomes in light of this issue.
Studies we reviewed and experts we spoke to also indicated that the
extent of these subsidies' effects on employment can vary due to
multiple factors, such as the child care options and employment
flexibilities available to families. Experts we interviewed suggested
that when child care prices increase, mothers may change their
scheduled work hours or shift to lower-quality child care, for
example, rather than simply exiting the labor force. Some mothers may
already be working, but using unpaid child care, such as care provided
at no cost by a grandmother or friend, when they become eligible for a
child care subsidy program. When these mothers receive a child care
subsidy or when the price of child care decreases, they may switch to
a paid child care arrangement without altering their employment status.
In addition to the studies that evaluated the impact of child care
subsidy receipt and changes in child care prices on the likelihood of
employment, we identified two studies that examined the impact of
aggregate public funding for child care subsidies (as opposed to
individual subsidy receipt) on mothers' employment. For example, one
study that examined public funding for child care subsidies from 1991
to 1996 found that every $1,000 allocated for Child Care and
Development Block Grant assistance per single mother with at least one
child under the age of 13 years was associated with a 26 percentage
point increase in employment for this population. This study also
found that a $1,000 increase in average state spending for all types
of child care subsidies per single female household including a child
under 13 years of age was associated with a 3.6 percentage point
increase in employment among single mothers within these households.
[Footnote 43] Similarly, another study, which looked at child care
funding in Miami-Dade County during a 24-month period from 1996 to
1998, found that funding increases for subsidized child care were
linked to increases in the likelihood of employment for current and
former welfare recipients.[Footnote 44] This study included several
variables to adjust for other factors that might have affected
employment, such as other major policy and administrative changes, as
well as controls for human capital and socio-demographic
characteristics and labor market conditions. In addition, HHS noted in
its annual report to Congress for fiscal years 2004 and 2005--the most
current report available--that its sponsored research has indicated
subsidies are associated with increased employment rates and earnings
for low-income families, reduced return to welfare programs for
assistance, reduced barriers to finding employment, and increased
likelihood of maintaining employment.[Footnote 45]
Finally, several studies we reviewed identified a relationship between
subsidy receipt and the type of child care used, as families receiving
subsidies are more likely to use center-based care, which typically
involves care provided for 12 or more children in a nonresidential
facility. One researcher we spoke to indicated that when the price of
child care is lower for families, parents tend to move their children
into center-based care, which parents may view as being of higher
quality. States typically impose staffing and training requirements on
child care centers that are generally higher than those for family
child care providers that care for just a few children.
While some research has indicated a relationship between subsidies and
the type of care selected, research we reviewed and experts we spoke
to indicated that little work has been done to document the direct
effect of subsidy receipt on the quality of care selected by working
families. Some experts said this was due to the lack of datasets that
combine subsidy receipt with reliable measures of child care quality.
A 2006 literature review funded by HHS also suggested a need for
future research studying the effect of child care subsidies while
taking into consideration how parents consider child care subsidies,
other public benefits, and the availability of quality care in their
communities when making decisions with regard to employment and child
care.[Footnote 46] HHS recently announced several new research grant
awards that focus on parental decision making related to child care
and employment through their Child Care Research Scholars and
Secondary Analyses of Data on Child Care grant programs, which have
project end dates in 2010 and 2011.
Concluding Observations:
Reliable, high-quality child care is critical to sustaining parents'
ability to work, while safeguarding their children's health and
intellectual development. In addition, given the research that links
child care subsidies to employment in low-income families, the
multiple sources of funding states can use to subsidize child care
play an important role in supporting employment for these families.
The flexibility states have in the design of their programs affects
the number and characteristics of families eligible for child care
through CCDF in each state. Moreover, the flexibility in allocating
funds from sources not explicitly dedicated to child care, such as
TANF funds, allows states to shift resources as needed to reflect
state conditions and priorities. Because states often exercise these
flexibilities concurrently, it is difficult to attribute the changes
in the number of children served--regardless of whether the number
increased or decreased--to any single factor or set of factors. It may
also be difficult to predict how these factors will affect the number
of children served in the future. For example, past trends in states'
use of the various sources of funds available for child care may not
be good predictors of these funds' future availability for this
purpose, particularly given stresses that a prolonged recession might
place both on state budgets and certain human services.
Although states' flexibility in use of federal funds helps to shift
resources to cover ongoing state needs, it, along with the lack of
data on the number children receiving child care directly funded by
TANF as we reported in the past, poses challenges in compiling
integrated information on the use of child care subsidies. Such
information can be helpful to monitor the effects of federal spending
on specific program objectives, such as improving the affordability,
availability, and quality of child care, and allowing parents to work
or participate in education or training programs. Further, this
flexibility can create uncertainty regarding the amounts available for
child care assistance from year to year, particularly when states
shift emphasis on TANF direct funding. As the nation moves toward
economic recovery and creates new jobs that provide unemployed parents
with opportunities to return to work, child care assistance may play a
key role in supporting parents' transition back to the workforce.
States will likely continue to face difficult decisions about the use
of their resources available for child care subsidies.
Agency Comments and Our Evaluation:
We provided a draft of this report to HHS for review and comment.
HHS's comments are reproduced in appendix IV. In its comments HHS
generally agreed with GAO's findings. HHS did not contest the
potential role of any factors we identified, but elaborated on
particular ones it views as important. For example, HHS commented that
it believes the decline in the number of children served by CCDF is
primarily attributable to the decline in inflation-adjusted CCDF
spending and increasing child care and subsidy costs. While our report
provides information on these factors, we believe that due to the
number of concurrent changes in policy and funding, and the manner in
which data are collected, it is difficult to determine to what extent
changes in individual factors or funding sources, such as CCDF
spending, account for changes in the number of children served. HHS
noted that it still lacks authority to require states to report the
numbers of families and children receiving child care services funded
directly by TANF. HHS commented that it is not only important to track
and measure the numbers of children receiving child care services, but
it is also important to increase child care quality and improve
information about the quality of child care services being received.
HHS noted that, in addition to its role as a work support for parents,
quality child care--which it considers a key benefit of the CCDF
program--is also important to ensuring children are safe, healthy, and
successful in school and in life. HHS also provided technical
comments, which GAO incorporated as appropriate.
We are sending copies of this report to the Honorable Kathleen
Sebelius, Secretary of HHS, and interested congressional committees.
The report also is available at no charge on the GAO Web site at
[hyperlink, http://www.gao.gov]. If you or your staff have any
questions about this report, please contact me at (202) 512-7215 or
brownke@gao.gov. Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this
report. Staff who made key contributions to this report are listed in
appendix V.
Signed by:
Kay E. Brown:
Director, Education, Workforce, and Income Security Issues:
List of Requesters:
The Honorable Max Baucus:
Chairman:
Committee on Finance:
United States Senate:
The Honorable Sander M. Levin:
Chairman:
Committee on Ways and Means:
House of Representatives:
The Honorable Blanche L. Lincoln:
Chairman:
Subcommittee on Social Security, Pensions, and Family Policy:
Committee on Finance:
United States Senate:
The Honorable Jim McDermott:
Chairman:
Subcommittee on Income Security and Family Support:
Committee on Ways and Means:
House of Representatives:
The Honorable John F. Kerry:
United States Senate:
The Honorable Charles B. Rangel:
House of Representatives:
[End of section]
Appendix I: Objectives, Scope and Methodology:
Our review focused on (1) trends in federal estimates of the number
and proportion of eligible children and families who receive child
care subsidies, (2) factors that may affect trends in estimates of the
number of children served, and (3) what is known about the extent to
which access to child care subsidies supports low-income parents'
employment.
Coverage Rate Estimates for Child Care Subsidies:
To address our first objective, we spoke with U. S. Department of
Health and Human Services (HHS) officials from the Child Care Bureau
to learn about Child Care and Development Fund (CCDF) administrative
data that the agency uses to develop coverage rate estimates. We
reviewed guidance provided by HHS to states and related reports
regarding these data. In addition, we obtained information on state
data collection efforts from our survey of state child care
administrators and interviews with state child care and Temporary
Assistance for Needy Families (TANF) program administrators in four
selected states. We selected these states--Colorado, Florida,
Illinois, and New York--to achieve variation in geographic location,
administrative organization, and the amount of American Recovery and
Reinvestment Act of 2009 (Recovery Act) funds allocated to and drawn
down by the state. In our interviews with state officials, we asked
questions about their processes for developing complete and
unduplicated counts of children receiving subsidies and their
challenges in doing so; however, we did not test the extent of actual
duplication or incompleteness. We determined that both the child care
coverage rate estimates and CCDF administrative data were sufficiently
reliable for the purposes of our report. For more detailed information
about our assessment of data reliability for these data, please see
appendix II.
We also interviewed HHS officials and reviewed relevant documents to
identify child care subsidy rate of receipt estimates, or coverage
rates, developed by federal agencies. HHS has developed two sets of
child care subsidy coverage rates that estimate the proportion of the
eligible population that actually receives subsidies. One estimate,
developed by the Office of the Assistant Secretary for Planning and
Evaluation (ASPE), uses state-defined eligibility criteria to
determine the potentially eligible population. HHS's other national
coverage rate estimate, developed by the Child Care Bureau, generally
defines families potentially eligible to receive child care subsidies
as those with income below 150 percent of the federal poverty level,
with children under the age of 13, and with parents or guardians
working or in school. In fiscal year 2010 HHS redefined those
potentially eligible to receive child care subsidies as families with
incomes equal to or below 85 percent of the state median income,
rather than those below 150 percent of the federal poverty level.
Survey of State Child Care Administrators and Interviews with HHS
Officials and Child Care Subsidy Experts:
To identify factors that may affect current trends in these estimates
we used data collected from our Web-based survey that provided
detailed information about recent state policy changes and their
impact on access to child care and child care subsidy amounts. We also
interviewed HHS officials and three experts in the area of child care
subsidies that we identified based on their research on child care for
low-income families. In addition, we analyzed administrative and
expenditure data from HHS for key federal programs that fund child
care subsidies. Our interviews with agency officials and experts, and
review of agency data, related literature, and state child care
policies allowed us to reasonably conclude that the identified factors
could have had the proposed effects. However, we did not design our
review to definitively distinguish between these factors and other
explanations or to systematically assess their relative contribution.
Our survey gathered information to identify changes in state policies
affecting access to child care subsidies for low-income families since
July 2006. The survey was directed to state child care administrators
in all 50 states and the District of Columbia. This survey collected
information on how states changed their policies for three categories
of families--TANF families, families who recently stopped receiving
TANF benefits (transitioning families), and other low-or moderate-
income families--why those changes were made, and states' plans for
Recovery Act funding. The survey was conducted between July and
November 2009.
Process for Developing and Administering the Survey Instrument:
We based our survey questions on the survey instrument used to collect
data for our prior report on child care subsidies.[Footnote 47] We
held pretests of our survey with state child care administrators from
three states to help ensure that the questions were clear, the terms
used were precise, the questions were unbiased, and the questionnaire
could be completed in a reasonable amount of time. We modified the
questionnaire to incorporate findings from each pretest.
Our survey questionnaire obtained information on state policy changes
with regard to child care subsidies since July 2006. Specifically, we
asked states to provide information about changes to policies related
to (1) income eligibility; (2) other eligibility criteria, such as
activities or conditions that qualify families for assistance; (3)
priorities for certain types of families, such as TANF families; (4)
use of waiting lists; (5) opening enrollment to new applicants; (6) co-
payments; and (7) provider payment amounts. We also included questions
on states' plans for Recovery Act funding and data collection efforts.
We conducted the survey using a Web-based, self-administered
questionnaire. In the questionnaire, we asked that state child care
administrators be the lead survey respondent and provide contact
information for state staff who could answer questions requiring more
detailed knowledge. We obtained contact information for surveyed state
administrators from HHS. We sent e-mail notifications to these
officials beginning on July 31, 2009. To encourage them to respond, we
sent two follow-up e-mails over a period of about 4 weeks. During this
time, we made phone calls to encourage those who did not respond to
complete our questionnaire. In all, we received a response rate of 100
percent.
The practical difficulties of conducting any survey may also introduce
other types of errors, commonly referred to as nonsampling errors. For
example, the type of difficulties that can introduce unwanted
variability into the survey results include the way a particular
question is interpreted, the sources of information that are available
to respondents, or the way the data are entered into the database or
were analyzed. We took steps in the development of this questionnaire,
in the data collection, and in the data analysis to minimize such
errors. Specifically, a survey specialist designed the questionnaire
in collaboration with staff with subject matter expertise. Then, as
previously mentioned, the draft questionnaire was pretested to ensure
that questions were relevant, clearly stated, and easy to comprehend.
The questionnaire was also reviewed by an additional survey
specialist. Data analysis was conducted by a data analyst working
directly with staff with subject matter expertise. When the data were
analyzed, a second independent data analyst checked all computer
programs for accuracy. Since this was a Web-based survey, respondents
entered their answers directly into the electronic questionnaires.
This eliminated the need to have the data keyed into databases, thus
removing an additional source of error.
Our data analysis included identifying changes to state child care
subsidy eligibility and enrollment policies. We based the direction of
policy changes--increasing or decreasing access, both increasing and
decreasing access, or no change--on changes states reported in
response to each of the three questions related to access. These
questions asked about changes to (1) income eligibility levels, (2)
other eligibility criteria (such as work requirements), and (3)
enrollment. In order to do this, we aggregated responses to each
question for each state and for each family type--TANF families,
transitioning families, and other low-or moderate-income families. For
example, in order to determine the direction of policy changes for our
question related to changes in income eligibility levels if a state
marked "increased" for at least one family type and "stayed the same,"
"don't know," or "not applicable" for all other family types, we
identified the state's response to the question as "increased." We
performed similar analyses for responses marked "decreased." We also
performed these types of analyses for the two questions related to
other eligibility and enrollment policies. (See figures 10 and 12.)
In order to identify the states that made consistent changes in the
direction of policies related to access to child care subsidies, such
as increases or decreases, we combined the aggregated responses to
each of the three questions related to eligibility and enrollment
policies for each state. Among the states that made consistent
changes, we identified the states which made a set of changes that
could clearly have the effect of increasing or decreasing access to
child care subsidies. For example, we identified states as "increased"
as those that identified as "increased" for at least one question and
"stayed the same," or "unchanged," for the other two questions. We
performed a similar analysis for states identified as "decreased." In
addition, we identified states that made set of changes that included
"increased" for at least one question and "decreased" for at least one
question, as "mixed." Finally, we identified states that did not
answer or responded "don't know" to at least one question as
"unknown." (See figure 9.)
Review of Literature on Child Care Subsidies:
To determine what is known about the impact of child care subsidies on
employment, we conducted a literature search for studies that analyzed
relationships between child care subsidies or changes in child care
costs and employment outcomes. To identify existing studies from peer-
reviewed journals, we conducted searches of various databases, such as
EconLit, ProQuest, PolicyFile, and Social SciSearch. We also asked all
of the external researchers that we interviewed to recommend
additional studies. From these sources, we identified 31 studies that
appeared in peer-reviewed journals between 1995 and August 2009 and
were relevant to our research objective on the effect of child care
subsidies on employment outcomes. We performed these searches and
identified articles from June 2009 to October 2009.
To assess the methodological quality of the selected studies, we
obtained information about each study being evaluated and about the
features of the evaluation methodology. We based our data collection
and assessments on generally accepted social science standards. We
conducted an extensive literature review, examined summary level
information about each piece of literature, and then from this review,
identified articles that were germane to our report. We then evaluated
the methods used in the research, eliminated some research if we felt
the methods were not appropriate or rigorous, and then summarized the
research findings. In addition, for articles directly cited in the
report, we performed an initial in-depth review of the findings and
methods, and then a GAO economist performed a secondary review and
confirmed our reported analysis of the finding. As a result, the 31
studies that we selected for our review met our criteria for
methodological quality. We supplemented our synthesis by interviewing
four of these studies' authors. We also conducted an interview with an
official at the Office of Planning, Research and Evaluation within the
Administration for Children and Families.
[End of section]
Appendix II: Data Reliability Assessment for CCDF Administrative Data
and Child Care Subsidy Coverage Rates:
This appendix describes the methodology and results of our assessment
of data reliability for administrative data on the number of children
served by CCDF and estimates of child care subsidy rates of receipt,
or coverage rates, published by federal agencies that we reviewed. In
addition, we outline limitations of these data and specific issues
related to the methods used to compile them in order to fully describe
their quality. Specifically, this appendix contains a discussion of
CCDF administrative data, and child care subsidy coverage rate
estimates published by HHS, as well as survey data on child care
assistance received by low-income families with paid arrangements
collected by the U.S. Department of Education (Education). In our
review of CCDF administrative data and child care subsidy coverage
rate estimates, we did not review any primary data or complete any
electronic testing. Instead, we relied on secondary data sources
provided by HHS and Education to assess the reliability of these data.
Based on our assessment, we determined that these data are
sufficiently reliable for the purposes of this report, which describes
the range of available federal estimates.
CCDF Administrative Data:
To assess the reliability of the data elements from CCDF
administrative data needed to answer the engagement objectives, we
interviewed HHS officials knowledgeable about CCDF administrative data
and reviewed relevant documentation. The state-provided CCDF
administrative data that HHS relies on, in part, to develop coverage
rate estimates for child care subsidies can be affected by the funding
sources used, how states administer these funds, and the methods
states use to report on numbers served. As required by federal
statute, states must report to HHS on the numbers of children and
families served by CCDF, including TANF funds transferred to CCDF.
States must provide these data to HHS on a quarterly basis (although
some states choose to provide them monthly), through the ACF-801
report, and annually, through the ACF-800 report (see figure 14).
States can combine or pool a number of funding sources to support
child care subsidies. HHS allows states to report the total number
served by all these pooled funds, such as TANF funds spent directly
and not transferred to CCDF, because states may not have the ability
to identify children served only by CCDF. In these cases, HHS must
estimate the number served by CCDF using a state-reported pooling
factor, which is the percentage of funds spent on child care subsidies
from CCDF. HHS uses the pooling factor to weight the state-reported
data in order to determine the number of children and families served
solely by CCDF. The department multiplies a state's pooling factor by
the total number served in order to develop adjusted counts of those
served by CCDF.
Figure 14: CCDF State Reporting Requirements:
[Refer to PDF for image: illustration]
Funding Sources:
CCDF: Including TANF transfers:
TANF-Direct:
Other federal and state funds:
(States may combine or ’pool“ these funds (TANF-Direct and Other
federal and state funds) with CCDF or administer separate programs
with these funds.[A]
Child care subsidies:
CCDF Reporting Requirements:
ACF-801 Report: Quarterly, case-level data:
States must include children and families served by CCDF, and may
include those served by programs funded by TANF-direct and other
sources.
ACF-800 Report: Annual aggregate data:
States must produce an annual unduplicated count of children and
families receiving child care services, and detail the extent to which
CCDF funds were combined with any non-CCDF funds.
Source: GAO analysis of CCDF regulations and guidance.
[A] If a state chooses not to combine these funds with CCDF,HHS does
not require the state to report on the children and families served by
these funding sources.
[End of figure]
State pooling factors can vary from year to year, which may impact
changes in the reported number of children and families served by
CCDF. For example, one state had a 25 percent decline in its pooling
factor from fiscal years 2006 to 2008 and reported a decrease of 21
percent in the average monthly adjusted number of children served by
CCDF during the same time period. Given the decline in the pooling
factor during this period, it is difficult to know the extent to which
this state's decline in the numbers served occurred as a result of
funding changes or other factors, such as a decreasing demand for
child care subsidies. HHS does not routinely assess the reliability of
state-reported pooling factors. However, it has taken steps in recent
years to improve their accuracy by providing states with additional
guidance and technical assistance, such as a pooling factor
spreadsheet and checklist to help states account for funding across
multiple fiscal years. In addition, if the pooling factor changes by
more than 5 percent, states must provide a written explanation for the
change before HHS releases the final dataset for a particular fiscal
year. HHS officials said that changes in the pooling factor can often
occur due to a state audit.
States also make different decisions on whether to transfer TANF funds
to CCDF, or administer a separate TANF-funded child care assistance
program altogether. For example, one state may decide to transfer its
TANF funding for child care to CCDF, while another state may decide
not to do so, and instead spends its TANF funds directly on a separate
child care assistance program. For these two states, when reviewing
their CCDF administrative data on the numbers served, it would appear
as if the second state did not serve as many children as the first
state, when actually, these two states could be serving similar
numbers. States can also vary in the amount of TANF funding
transferred to CCDF or spent directly on child care subsidies from
year to year, which may impact the administrative data on numbers
served by CCDF.
Another factor that can potentially have an effect on the number of
children and families reported as being served by CCDF is the method
states use to provide these data. When states submit their ACF-801
data, HHS allows them to provide either full population or sample data
on the numbers served by CCDF, and states must have their sampling
plan approved by the Administration for Children and Families within
HHS. In the absence of full population data, the department uses state-
reported sample data to generate estimated average monthly counts of
the numbers served. However, according to HHS officials, providing
full population data helps to improve the overall quality of CCDF
administrative data at the national level because it relies less on
estimated numbers. HHS officials said that full population data can
also benefit HHS and states because it would allow additional types of
analyses, such as longitudinal evaluations of trends over time in
patterns of subsidy receipt. HHS has been encouraging states that
submit sample data to switch to reporting full population data, and
department officials told us that in recent years the number of states
providing sample data has declined. For fiscal year 2008, nine states
provided sample data.
While HHS collects an annual count of the children and families served
by CCDF from states' ACF-800 reports, the department does not report
these data in its biennial report to Congress, nor does it use the
annual counts to develop coverage rates. Instead, the department
reports an average monthly adjusted number of the children and
families served by CCDF. The monthly data are also used by ASPE and
the Child Care Bureau to develop coverage rate estimates. HHS
officials told us they have more confidence in the data from the ACF-
801 report used to develop average monthly counts, in comparison to
the annual counts reported on the ACF-800 reports, and they feel that
an average monthly count provides a better picture of the CCDF
caseload. For example, HHS officials said families may receive
subsidies for their children for only a short period of time or for
multiple times within a year. As a result, according to HHS officials,
an average monthly count provides more realistic information on those
being served, and they had concerns it would be confusing to report
both an annual and monthly count of children and families served.
While required to report an unduplicated annual count to HHS, states
can face challenges in doing so, and the department is taking steps to
address data quality issues. Our survey found that most states (46)
reported being capable of generating a complete, unduplicated count of
the total number of families or children receiving child care
subsidies supported by CCDF and TANF funds, but several reported that
aggregating data from multiple systems or accounting for children
served by multiple providers or under protective services, for
example, can be challenging. In addition, five jurisdictions reported
being unable to generate such a count. These states reported reasons
such as a lack of unique identifiers and being unable to account for
children served by multiple funding streams and those served in
different settings, such as child care centers under contract with
state agencies. In addition, one state told us that children served by
contracted child care providers, representing 10 percent of the
state's caseload, were not currently included in their quarterly ACF-
801 reports provided to HHS, which are used by the department to
generate average monthly adjusted counts.
In general, HHS was aware of these challenges, and provides technical
assistance to states through its contractor via email and phone. HHS
also runs a number of technical assistance reports through its
information system to review the quality of the data. Other resources
provided by HHS to states include written guidance, such as technical
bulletins, and information provided at the annual state child care
administrators' meeting. In addition, HHS's contractor conducts
technical assistance site visits each year to six states. During the
26 state site visits that were conducted between fiscal years 2004 to
2009, according to HHS, the department identified several issues in
several states, such as gaps or duplication, which seemed to only have
a relatively small effect on the total numbers of families and
children served nationally.
In a written summary of recent site visits, HHS acknowledged that
almost all grantees experience some issues with their data reporting.
However, HHS noted that grantees are extremely responsive to
suggestions for improvement, especially when they have the direct
authority and resources to make these changes and improvements. HHS
reported that data issues that arose during these site visits to state
grantees involved the HHS-defined categories: data extraction,
sampling, population coverage, definitions, system ownership, and data
entry. Overall, HHS reported these issues have had little impact on
the data on the number of families and children served, or on the
characteristics or profiles of those served. While HHS acknowledged
that some of the issues could affect assessments of the
characteristics of families and children served within particular
states, officials noted they would have limited effects on national
estimates.
In terms of duplication, HHS provided us with information showing that
most states had low percentages of families with duplicate social
security numbers. For example, most states in fiscal year 2007 had an
average of less than 1 percent of their caseload reporting duplicate
social security numbers. Only six states had average monthly
percentages of duplicate social security numbers greater than 1
percent, and none were greater than 3.4 percent. Overall, HHS also
provided us with information indicating that most states had social
security numbers on file for the vast majority of families served by
the CCDF program. States have the option of using unique identifiers
in lieu of social security numbers, and one state does so exclusively
and does not collect social security numbers. Other than this one
state, in fiscal year 2007, eight states reported having social
security numbers for less than 95 percent of their caseload in an
average month. According to HHS, these states are instead reporting
state case identification numbers. In addition, HHS officials informed
us that only slightly more than 50,000 family records, or less than 1
percent, had neither a state identification number nor a social
security number.
HHS's Child Care Subsidy Coverage Rate Estimates and Education's
Survey Data:
HHS has published several types of coverage rate estimates for the
number of children whose families receive child care subsidies. These
estimates come from administrative data in the form of individual
records about participating families and children. Education has also
published other rate of receipt estimates based on surveys that ask
samples of the public whether they participate in particular
government programs. Either method can measure participation
inaccurately. For instance, data that are analyzed or entered into a
database incorrectly may have measurement error. Survey data may have
an additional amount of error due to the practical difficulties of
conducting any survey. For example, respondents may have difficulties
in interpreting a particular question, such as whether they
participate in a specific program being asked about. In addition,
different respondents may have different sources of information
available to answer the question. This variation across respondents
can make survey data inaccurate.
To assess the reliability of data used to compile child care subsidy
coverage rate estimates, we interviewed HHS officials knowledgeable
about CCDF administrative data and reviewed relevant documentation.
States can use funding from three HHS programs to support child care
subsidies--CCDF, TANF, and the Social Services Block Grant (SSBG)
programs; and HHS develops two types of coverage rates estimates that
include subsidies funded by all three of these programs. For those
estimates developed by HHS, the department uses administrative data on
CCDF, which includes funds transferred from TANF, to determine the
average monthly number of children served, and estimates the numbers
served directly by TANF and by SSBG based on expenditure data
collected for these two programs. More specifically, HHS estimates the
average monthly number of children served through these two funding
sources by dividing the total amount spent on child care services
under the two programs, by the average subsidy cost per child. For
example, for its fiscal year 2005 estimate, HHS assumed that child
care funded directly by TANF, TANF maintenance of effort, and SSBG had
the same subsidy costs per child as CCDF-funded care--about $310 per
month. In addition, the department assumed that the additional
children served by these programs have the same age and poverty
distribution as the CCDF children.[Footnote 48]
To assess the reliability of statistics published by Education's
National Household Education Surveys Program (NHES) for evaluating
access to child care subsidies, we reviewed relevant documentation
related to the department's survey methodology. The NHES is a set of
telephone surveys sponsored by the Education's National Center for
Education Statistics. For information about the percentage of students
from kindergarten through eighth grade in weekly after-school
arrangements that have a fee and whose families are receiving
assistance, we used data from the After-School Programs and Activities
Survey (ASPA), a nationally representative survey of the 2005 NHES.
NHES surveys focused on after-school arrangements of students in 2001
and 2005. This report presents data from the ASPA survey of the 2005
NHES. Data collection was conducted by Westat and took place from
January 3 through April 24, 2005. The respondent to the ASPA interview
was the parent or guardian in the household who knew the most about
the student's care and education. While parents or guardians responded
to the survey, the unit of analysis is students. Interviews were
completed with parents or guardians of 11,684 students representing a
weighted total of 36,185,760 students. This survey has a weighted unit
response rate of 84.1 percent and an overall estimated unit response
rate (the product of the screener unit response rate and the ASPA unit
response rate) of 56.3 percent. The ASPA sample is nationally
representative of all noninstitutionalized students in the 50 states
and the District of Columbia who are enrolled in kindergarten through
eighth grade with a maximum age of 15.
For information about the percentage of children from birth through
age 5 and not yet in kindergarten whose families are receiving
assistance for child care costs, we used data from the Early Childhood
Program Participation Survey (ECPP) of the 2005 NHES. For the ECPP,
early childhood program participation was defined as nonparental child
care arrangements in relative care, nonrelative care, and center-based
programs, including Head Start or Early Head Start. Data collection
was conducted by Westat and took place from January 3 through April
24, 2005. These estimates are based on 7,198 interviews representing
20,665,000 children. The respondent to the ECPP interview was the
parent or guardian in the household who knew the most about the
student's care and education. While parents or guardians responded to
the survey, the unit of analysis is students. In the 2005 survey,
screener interviews were completed with 58,140 households, with a
weighted screener unit response rate of nearly 67 percent. A screener
was used to collect information on household composition and interview
eligibility. ECPP interviews were completed for 7,209 children, for a
weighted unit response rate of 84.4 percent and an overall estimated
unit response rate (the product of the screener unit response rate and
the ECPP unit response rate) of 56.4 percent. The ECPP sample is
nationally representative of all noninstitutionalized children in the
50 states and the District of Columbia from birth through age 6 and
not yet attending kindergarten or primary school.
[End of section]
Appendix III: Studies Examining the Effect of Child Care Subsidies on
Employment Outcomes:
Averett, Susan L., H. Elizabeth Peters, and Donald M. Waldman. "Tax
Credits, Labor Supply, and Child Care." The Review of Economics and
Statistics, vol. 79, no. 1 (1997): 125-135.
Axelsen, Dan, Dan Friesner, Robert Rosenman, and Hal Snarr. "Welfare
Recipient Work Choice and In-Kind Benefits in Washington State."
Applied Economics, vol. 39 (2007): 1021-1036.
Bainbridge, Jay, Marcia K. Meyers, and Jane Waldfogel. "Child Care
Policy Reform and the Employment of Single Mothers." Social Science
Quarterly, vol. 84, no. 4 (2003): 771-791.
Barrow, Lisa. "An Analysis of Women's Return-to-Work Decisions
Following First Birth." Economic Inquiry, vol. 37, no. 3 (1999): 432-
451.
Baum II, Charles L. "A Dynamic Analysis of the Effect of Child Care
Costs on the Work Decisions of Low-Income Mothers with Infants."
Demography, vol. 39, no. 1 (2002): 139-164.
Blau, David M., and Alison P. Hagy. "The Demand for Quality in Child
Care." Journal of Political Economy, vol. 106, no. 1 (1998): 104-146.
Blau, David M., and Erdal Tekin. "The Determinants and Consequences of
Child Care Subsidies for Single Mothers in the USA." Journal of
Population Economics, vol. 20, no. 4 (2007): 719-741.
Brooks, Fred. "Impacts of Child Care Subsidies on Family and Child
Well-Being." Early Childhood Research Quarterly, vol. 17, no. 4
(2002): 498-511.
Cochi Ficano, Carlena K., Lisa A. Gennetian, and Pamela A. Morris.
"Child Care Subsidies and Employment Behavior Among Very-Low-Income
Populations in Three States." Review of Policy Research, vol. 23, no.
3 (2006): 681-698.
Connelly, Rachel, and Jean Kimmel. "The Effect of Child Care Costs on
the Employment and Welfare Recipiency of Single Mothers." Southern
Economic Journal, vol. 69, no. 3 (2003): 498-519.
Connelly, Rachel, and Jean Kimmel. "Marital Status and Full-time/Part-
time Work Status in Child Care Choices." Applied Economics, vol. 35,
no. 7 (2003): 761-777.
Crawford, April. "The Impact of Child Care Subsidies on Single
Mothers' Work Effort." Review of Policy Research, vol. 23, no. 3
(2006): 699-711.
Danziger, Sandra K., Elizabeth Oltmans Ananat, and Kimberly G.
Browning. "Childcare Subsidies and the Transition from Welfare to
Work." Family Relations, vol. 53, no. 2 (2004): 219-228.
Davis, Elizabeth E., and Marcie Jefferys. "Child Care Subsidies, Low-
Wage Work and Economic Development." International Journal of Economic
Development, vol. 9, no. 3 (2007): 122-158.
Gelbach, Jonah B. "Public Schooling for Young Children and Maternal
Labor Supply." The American Economic Review, vol. 92, no. 1 (2002):
307-322.
Gennetian, Lisa A., Danielle A. Crosby, Aletha C. Huston, and Edward
D. Lowe. "Can Child Care Assistance in Welfare and Employment Programs
Support the Employment of Low-Income Families?" Journal of Policy
Analysis and Management, vol. 23, no. 4 (2004): p. 723-743.
Gordon, Rachel A. and Carolyn J. Heinrich. "The Potential of a Couples
Approach to Employment Assistance: Results of a Nonexperimental
Evaluation." Review of Economics of the Household, vol. 7, no. 2
(2009): 133-158.
Han, Wenjui, and Jane Waldfogel. "Child Care Costs and Women's
Employment: A Comparison of Single and Married Mothers with Pre-School-
Aged Children." Social Science Quarterly, vol. 82, no. 3 (2001): 552-
568.
Hofferth, Sandra, and Nancy Collins. "Child Care and Employment
Turnover." Population Research and Policy Review, vol. 19, no. 4
(2000): 357-395.
Kimmel, Jean. "Child Care Costs as a Barrier to Employment for Single
and Married Mothers." The Review of Economics and Statistics, vol. 80,
no. 2 (1998): 287-299.
Kimmel, Jean, and Lisa M. Powell. "Nonstandard Work and Child Care
Choices of Married Mothers." Eastern Economic Journal, vol. 32, no. 3
(2006): 397-419.
Lemke, Robert J., Robert Witt, and Ann Dryden Witte. "The Transition
from Welfare to Work." Eastern Economic Journal, vol. 33, no. 3
(2007): 359-373.
Meyers, Marcia K., Theresa Heintze, and Douglas A. Wolf. "Child Care
Subsidies and the Employment of Welfare Recipients." Demography, vol.
39, no. 1 (2002): 165-179.
Michalopoulos, Charles, and Philip K. Robins. "Employment and Child-
Care Choices of Single-Parent Families in Canada and the United
States." Journal of Population Economics, vol. 15, no. 3 (2002): 465-
493.
Press, Julie E., Jay Fagan, and Lynda Laughlin. "Taking Pressure Off
Families: Child-Care Subsidies Lessen Mothers' Work-Hour Problems."
Journal of Marriage and Family, vol. 68, no. 1 (2006): 155-171.
Queralt, Magaly, Ann Dryden Witte, and Harriet Griesinger. "Changing
Policies, Changing Impacts: Employment and Earnings of Child-Care
Subsidy Recipients in the Era of Welfare Reform." The Social Service
Review, vol. 74, no. 4 (2000): 588-619.
Ribar, David C. "A Structural Model of Child Care and the Labor Supply
of Married Women." Journal of Labor Economics, vol. 13, no. 3 (1995):
558-597.
Robins, Philip K. "Welfare Reform and Child Care: Evidence From 10
Experimental Welfare-to-Work Programs." Evaluation Review, vol. 31,
no. 5 (2007): 440-468.
Tekin, Erdal. "Child Care Subsidy Receipt, Employment, and Child Care
Choices of Single Mothers." Economics Letters, vol. 89, no. 1 (2005):
1-6.
-----. "Single Mothers Working at Night: Standard Work and Child Care
Subsidies." Economic Inquiry, vol. 45, no. 2 (2007): 233-250.
-----. "Childcare Subsidies, Wages, and Employment of Single Mothers."
The Journal of Human Resources, vol. 42, no. 2 (2007): 453-487.
[End of section]
Appendix IV: Comments from the U.S. Department of Health and Human
Services:
Department Of Health & Human Services:
Office Of The Secretary:
Assistant Secretary for Legislation:
Washington, DC 20201:
April 20, 2010:
Kay Brown, Director:
Education, Workforce, and Income Security Issues:
U.S. Government Accountability Office:
441 G Street N.W.
Washington, DC 20548:
Dear Ms. Brown:
Enclosed are comments on the U.S. Government Accountability Office's
(GAO) report entitled: "Child Care: Multiple Factors Could Have
Contributed to the Recent Decline in the Number of Children Whose
Families Receive Subsidies" (GA0-10-344).
The Department appreciates the opportunity to review this report
before its publication.
Sincerely,
Signed by:
Douglas L. Steger, for:
Andrea Palm:
Acting Assistant Secretary for Legislation:
Enclosure:
[End of letter]
General Comments Of The Department Of Health And Human Services (HHS)
On The Government Accountability Office's (GAO) DRAFT REPORT ENTITLED,
"CHILD CARE: MULTIPLE FACTORS COULD HAVE CONTRIBUTED TO THE RECENT
DECLINE IN THE NUMBER OF CHILDREN WHOSE FAMILIES RECEIVE SUBSIDIES"
(GAO-10-344):
The Department appreciates the opportunity to comment on this draft
Government Accountability Office (GAO) report. The report discusses
multiple contributing factors to the decline in the number of children
whose families receive child care subsidies.
This report provides a valuable picture of the importance of access to
child care and demonstrates that child care assistance is critical to
the employment of low-income working families. ACF is concerned about
the decline in the child care subsidy caseload and the number of
potentially underserved families. While GAO discusses a number of
factors contributing to the recent Child Care and Development Fund
(CCDF) caseload decline, ACF believes this decline is primarily
attributable to a decline in inflation-adjusted CCDF spending, at the
same time that families' child care costs and the costs of subsidies
were continuing to increase. States have broad discretion in
administering the CCDF program, but only have enough funding to serve
a limited share of eligible children. When inflation-adjusted spending
declines States must respond by reducing the number of children
served, reducing the value of the subsidy, and/or reducing critical
quality expenditures. Between 2006 and 2008, the number of children
receiving CCDF-funded child care subsidies fell by 10 percent. Over
that same period. Federal expenditures and State-required CCDF
expenditures fell by four percent in inflation-adjusted terms.
Over this same period, the GAO notes that the majority of States
increased their provider payment rates. However, even with those
adjustments, State subsidy rates were typically far below the cost of
a large share of care in local markets. Only seven States reported in
their FY 2010-2011 State Plans that they have provider payment rates
at the 75th percentile of their most current market rate survey, the
recognized standard for ensuring that rates are sufficient to provide
"equal access" to the care available to families not receiving
subsidies. Average CCDF subsidy payments per child in 2008 were $4,131”
seven percent higher than just two years earlier in 2006. At the same
time, the National Association of Child Care Resource and Referral
Agencies (NACCRRA) reported that in 2008 a family with one infant
faced average prices of $4,560 to $15,895 a year for center-based
child care. Parents of a four-year-old faced average prices of $4,055
to $11,680 a year. Thus, it seems clear that a principal explanation
for the declining number of children receiving care is the combination
of a decline in inflation-adjusted expenditures along with an increase
in the cost of care.
We recognize the important role that child care plays in the lives of
children and families and the health of the overall economy. In 37
States and the District of Columbia, care for an infant in a child
care center exceeded 10 percent of the median income for a two-parent
family.[Footnote 49] A recent report from the Carsey Institute found
that working families with young children living in poverty pay 32
percent of their monthly family income on child care, nearly five
times more than families at 200 percent of poverty or higher.[Footnote
50] Significantly, Congress provided $2 billion in supplemental
funding for CCDF in the American Recovery and Reinvestment Act (ARRA).
The CCDF ARRA funding has allowed States to assist more families with
child care than would otherwise have been possible because of State
budgetary conditions and to make other important improvements. ACF has
built a strong partnership with States to support their efforts to use
ARRA funds to expand services and improve the quality of child care.
At least 20 States avoided or will avoid cuts in services to families
or reduce waiting lists; at least 14 States and Territories have
increased or plan to increase payment rates for child care providers;
and at least 13 States and Territories have increased or plan to
increase periods of eligibility for parents engaged in searching for
employment. Florida reported serving 24,144 children through its
school readiness program, Indiana added 3,000 children to its child
care voucher program, and South Dakota extended eligibility during
periods of job search to two months. States are also using ARRA funds
for quality investments, including plans for Quality Rating and
Improvement Systems (QRIS), funding for professional development, and
improving the quality of child care for infants and toddlers. In New
Mexico, the State invested ARRA funds to provide training and
scholarships to over 400 early childhood providers. In Idaho, the
State is expanding its QRIS and developing a professional development
database. The President's Fiscal Year (FY) 2011 budget request builds
on the ARRA commitment with a $1.6 billion increase for the CCDF
program, which would extend child care assistance in FY 2011 to
approximately 235,000 more children than could be served in the
absence of these funds.
The GAO report discusses ACF's estimates of the number and proportion
of eligible children who receive child care. ACF recently implemented
a change to the way we calculate the coverage rate for child care for
the purposes of program performance measures included in the
President's budget request. Prior to the FY 2011 budget request, the
CCDF coverage rate compared the number of children served through
CCDF, TANF and the Social Services Block Grant (SSBG) programs to the
number of children in eligible families below 150 percent of the
Federal Poverty Level (FPL). ACF believes that the more relevant
comparison for determining the proportion of eligible families being
served is the Federal income eligibility limit of 85 percent of State
Median Income (SMI). Use of 150 percent FPL as the comparison does not
correspond with any statutory or regulatory standard. Federal rules
allow States to set eligibility as high as 85 percent of SMI, which
corresponds to approximately 200 to 250 percent of the FPL in many
States. This modified coverage rate for the CCDF program provides a
more accurate picture of the proportion of Federally eligible children
being served. GAO discusses that the Department's performance target
for the proportion of eligible children served as 17 percent for FY
2010 and 18 percent for FY 2011. Note that HHS targets are not meant
to indicate that this level of performance is optimal, but reflects a
realistic coverage rate given available resources. The Administration
has proposed additional funding for child care to serve additional
children.
GAO notes in this report that the Department does not have the
authority to collect caseload information on families receiving child
care assistance directly funded by TANF. Federal funding for child
care provided through TANF, both through transfers and directly, is
substantial. TANF transfers become part of the CCDF block grant, thus
HHS has caseload data on those families. In contrast, we do not have
data on families provided child care assistance funded directly
through the TANF program. However, as noted, under current law, ACF
lacks authority to require States to report the numbers of families
and children receiving child care services directly-funded with TANF
dollars.
Finally, ACF believes that the GAO report does not adequately focus on
a key benefit of the CCDF program, which is the role high-quality
child care plays in ensuring children are going to be safe, healthy,
and successful at school and life. Over 11 million children under the
age of five are in child care each week. Child care should be a place
that engages children's minds, sparks their curiosity and begins to
develop their cognitive and social skills. This Administration has put
a very strong focus on improving the quality of our early childhood
and child care programs. It is not sufficient to view child care as
merely a work support for parents”investing in high-quality child care
is a key opportunity to give our most vulnerable children the support
they need to reach their full potential and lay the foundation for
future prosperity. While it is important to track and measure the
number of children receiving child care services, it is also important
to increase the quality of those services and to improve our
information about the quality of the services being received.
[End of section]
Appendix V: GAO Contact and Staff Acknowledgments:
GAO Contact:
Kay E. Brown, (202) 512-7215 or brownke@gao.gov:
Acknowledgments:
Betty Ward-Zukerman, Assistant Director, and Julianne Hartman Cutts,
Analyst-in-Charge, managed this assignment. Heddi Nieuwsma and Meghan
Squires made significant contributions to all aspects of this report.
Kate Van Gelder and James Bennett provided writing and graphics
assistance. In addition, Harold J. Brumm, Jr. made key contributions;
and Walter K. Vance, Jeff M. Tessin, and Monique B. Williams provided
design and methodological assistance. Ashley L. McCall assisted with
our literature search, and James Rebbe provided legal assistance.
[End of section]
Related GAO Products:
Temporary Assistance for Needy Families: Implications of Changes in
Participation Rates. [hyperlink,
http://www.gao.gov/products/GAO-10-495T]. Washington, D.C.: March 11,
2010.
Temporary Assistance for Needy Families: Fewer Eligible Families Have
Received Cash Assistance Since the 1990s, and the Recession's Impact
on Caseloads Varies by State. [hyperlink,
http://www.gao.gov/products/GAO-10-164]. Washington, D.C.: February
23, 2010.
Poverty in America: Consequences for Individuals and the Economy.
[hyperlink, http://www.gao.gov/products/GAO-07-343T]. Washington,
D.C.: January 24, 2007.
Welfare Reform: Better Information Needed to Understand Trends in
States' Uses of the TANF Block Grant. [hyperlink,
http://www.gao.gov/products/GAO-06-414]. Washington, D.C.: March 3,
2006.
Child Care: Additional Information Is Needed on Working Families
Receiving Subsidies. [hyperlink,
http://www.gao.gov/products/GAO-05-667]. Washington, D.C.: June 29,
2005.
Means-Tested Programs: Information on Program Access Can Be an
Important Management Tool. [hyperlink,
http://www.gao.gov/products/GAO-05-221]. Washington, D.C.: March 11,
2005.
Child Care: Recent State Policy Changes Affecting the Availability of
Assistance for Low-Income Families. [hyperlink,
http://www.gao.gov/products/GAO-03-588]. Washington, D.C.: May 5, 2003.
Child Care: States Exercise Flexibility in Setting Reimbursement Rates
and Providing Access for Low-Income Children. [hyperlink,
http://www.gao.gov/products/GAO-02-894]. Washington, D.C.: September
18, 2002.
Child Care: States Have Undertaken A Variety of Quality Improvement
Initiatives, but More Evaluations of Effectiveness Are Needed.
[hyperlink, http://www.gao.gov/products/GAO-02-897]. Washington, D.C.:
September 6, 2002.
Welfare Reform: States Provide TANF-Funded Work Support Services to
Many Low-Income Families Who Do Not Receive Cash Assistance.
[hyperlink, http://www.gao.gov/products/GAO-02-615T]. Washington,
D.C.: April 10, 2002.
Child Care: States Increased Spending on Low-Income Families.
[hyperlink, http://www.gao.gov/products/GAO-01-293]. Washington, D.C.:
February 2, 2001.
Welfare Reform: States' Efforts to Expand Child Care Programs.
[hyperlink, http://www.gao.gov/products/GAO/HEHS-98-27]. Washington,
D.C.: January 13, 1998.
Child Care: Child Care Subsidies Increase Likelihood That Low-Income
Mothers Will Work. [hyperlink,
http://www.gao.gov/products/GAO/HEHS-95-20]. Washington, D.C.:
December 30, 1994.
[End of section]
Footnotes:
[1] U.S. Census Bureau, Survey of Income and Program Participation
(SIPP), Tabulations Derived from Current Population Reports,
[hyperlink,
http://www.census.gov/population/www/socdemo/child/weeklychldcare.xls]
(accessed on Jan. 15, 2010).
[2] GAO, Child Care: Recent State Policy Changes Affecting the
Availability of Assistance for Low-Income Families, [hyperlink,
http://www.gao.gov/products/GAO-03-588] (Washington, D.C.: May 5,
2003); and Child Care: Additional Information Is Needed on Working
Families Receiving Subsidies, [hyperlink,
http://www.gao.gov/products/GAO-05-667] (Washington, D.C.: June 29,
2005).
[3] Pub. L. No. 109-171 (2006).
[4] Pub. L. No. 111-5 (2009).
[5] In this report, we will refer to the District of Columbia as a
state when we present results of our analyses.
[6] Pub. L. No. 104-193 (1996).
[7] 42 U.S.C. § 618(a)(1).
[8] 42 U.S.C. § 618(a)(2)(C).
[9] 42 U.S.C. § 9858 et seq.
[10] For fiscal year 2009, Congress provided an additional $2 billion
in CCDF discretionary funds. Pub. L. No. 111-5, Div. A, Title VIII.
[11] Funding for child care under the TANF program includes direct
TANF funding (which may also be used for tax credits for child care)
and TANF MOE funding (which are funds that states are required to
spend each year under the TANF program based upon previous state
expenditure levels).
[12] Congress provided $5 billion to create an emergency contingency
fund for state TANF programs, which is available through fiscal year
2010 to states with certain increases in caseloads and expenditures.
Pub. L. No. 111-5, Div. B, Title II § 2101. The temporary emergency
contingency fund is distinct from the existing regular TANF
contingency fund that was established in 1996.
[13] [3] GAO, Means-Tested Programs: Information on Program Access Can
Be an Important Management Tool, [hyperlink,
http://www.gao.gov/products/GAO-05-221] (Washington, D.C.: Mar. 11,
2005).
[14] In general, the calculation of these coverage rates involves
dividing the estimated number of children receiving child care
subsidies through one or more funding streams (the numerator) by an
estimate of the number of children whose families would be eligible to
receive subsidies for these programs (the denominator), which can vary
by estimation methodology.
[15] 42 U.S.C. § 9858i(a).
[16] 45 C.F.R. §§ 98.70 and 98.71.
[17] [hyperlink, http://www.gao.gov/products/GAO-05-667].
Specifically, we noted that Congress may wish to require that, for
child care subsidies directly funded by TANF, the Administration for
Children and Families find cost-effective ways to collect data on the
numbers of children and families receiving these subsidies and the
types of care they obtain.
[18] 42 U.S.C. § 9858c(c)(4)(A).
[19] Data on provider fees for care are gathered from these surveys
and then ranked from highest to lowest fee, so that state officials
can understand which provider payment amounts allow families to afford
services. The provider payment amount often is expressed as a
percentile of this ranking of provider fees, and HHS recommends that
rates be set at the 75th percentile of current market rates, but this
is not required.
[20] GAO, Child Care: States Exercise Flexibility in Setting
Reimbursement Rates and Providing Access for Low-Income Children,
[hyperlink, http://www.gao.gov/products/GAO-02-894] (Washington, D.C.:
Sept. 18, 2002); and [hyperlink,
http://www.gao.gov/products/GAO-05-667].
[21] [hyperlink, http://www.gao.gov/products/GAO-05-667].
[22] The average monthly numbers of children served by CCDF that are
reported by HHS for each state are rounded to the nearest 100. For
more information on how these average monthly numbers of children
served by CCDF are calculated, see appendix II.
[23] States may pool or combine their funding from non-CCDF sources
with their CCDF funding to support child care subsidy programs. As a
result, HHS allows states to include children funded by these non-CCDF
sources as part of their quarterly and annual reports, to the extent
that states combine their funding streams and cannot account for
children solely funded by CCDF. HHS uses a state-reported proportion
of total subsidy funds derived from CCDF, also known as a pooling
factor, to estimate those children served only by CCDF.
[24] In our prior work, we reported that in 2001 an estimated 18 to 19
percent of children who met state-defined eligibility criteria
received child care services through the CCDF program only. See GAO-05-
221.
[25] HHS approximates the numbers of children served directly by TANF
and SSBG because it does not collect this information from states. We
raised this as a matter for congressional consideration in our 2005
report. HHS estimates the number of children served through these
other funding sources by dividing the total amount spent on child care
services from each source by the average cost of serving a child under
CCDF.
[26] 42 U.S.C. § 9858n(4)(B).
[27] Results from federal surveys conducted in 2005 indicate that many
poor or near-poor families using paid weekly nonparental child care
arrangements do not receive assistance from any federal or nonfederal
source. Education conducts the National Household Education Survey,
which has estimated the proportion of children using one or more
weekly nonparental child care arrangements involving a payment whose
families receive child care assistance from any source. For children
from birth through age 5 from families with incomes below roughly 150
percent of the federal poverty level who had a weekly nonparental
child care arrangement involving a payment, 52 percent reported
receipt of child care assistance from some source. For such families
with children in kindergarten through eighth grade, the comparable
estimate was 48 percent.
[28] Based on preliminary fiscal year 2008 data reflecting the average
monthly adjusted number of children served by CCDF.
[29] Based on preliminary fiscal year 2008 data reflecting the annual
unadjusted number of children served by funding from all sources,
including sources beyond CCDF, such as SSBG and TANF funds spent
directly on child care.
[30] GAO, Temporary Assistance for Needy Families: Fewer Eligible
Families Have Received Cash Assistance Since the 1990s, and the
Recession's Impact on Caseloads Varies by State, [hyperlink,
http://www.gao.gov/products/GAO-10-164] (Washington, D.C.: Feb. 23,
2010).
[31] [hyperlink, http://www.gao.gov/products/GAO-05-667].
[32] [hyperlink, http://www.gao.gov/products/GAO-05-221].
[33] Gina Adams, Kathleen Snyder, and Patti Banghart, Designing
Subsidy Systems to Meet the Needs of Families: An Overview of Policy
Research Findings (Washington, D.C., The Urban Institute, January
2008); and Kathleen Snyder, Patti Banghart, and Gina Adams, Strategies
to Support Child Care Subsidy Access and Retention: Ideas from Seven
Midwestern States (Washington, D.C., The Urban Institute, November
2006).
[34] The Office of Planning, Research and Evaluation within the
Administration for Children and Families has funded a project to
catalog state policies. Officials expect the project to facilitate
examining associations between variations in state policy and access
to subsidies [hyperlink,
http://www.acf.hhs.gov/programs/opre/cc/ccdf_policies/index.html].
[35] [hyperlink, http://www.gao.gov/products/GAO-05-667.
[36] U.S. Census Bureau, Current Population Survey, 2007 Annual Social
and Economic Supplement, [hyperlink,
http://pubdb3.census.gov/macro/032007/pov/new01_100_01.htm] (accessed
on Feb. 23, 2010) and U.S. Census Bureau, Current Population Survey,
2009 Annual Social and Economic Supplement, [hyperlink,
http://www.census.gov/hhes/www/cpstables/032009/pov/new01_100_01.htm]
(accessed on Feb. 23, 2010). These statistics reflect an increase in
the number of children in poverty between 2006 and 2008 both for
children under age 5 and for children ages 5 to 17.
[37] We calculated states' 2005 income eligibility limits as a
percentage of the federal poverty level based on data from HHS's
summary of state fiscal year 2004-2005 CCDF plans and the federal
poverty level for 2005 for a family of three. The 2009 income
eligibility limits as a percentage of the federal poverty rate are
based on states' responses to our August 2009 survey regarding income
eligibility limits and the federal poverty level for 2009 for a family
of three.
[38] The majority of states reported that child care subsidy policies
are primarily set at the state level and are uniformly implemented
across the state--including those policies that could affect access or
subsidy amounts for families currently receiving TANF cash assistance,
families transitioning from TANF or with a recent TANF history, and
other low-income families. However, six states--Colorado, Florida,
Georgia, New York, Texas, and Virginia--reported that although
policies are primarily set at the state level, they allow flexibility
for implementing these policies at a regional or local level.
[39] Decreasing co-payments can increase the amount of subsidies
provided to families because the family pays a reduced co-payment, and
states generally make up the difference between the co-payment and the
rate paid the provider. CCDF regulations require that states set
affordable co-payments for families but do not define affordability.
The preamble to the published final CCDF regulations states that a fee
that is no more than 10 percent of family income would generally be
considered to be an affordable co-payment (63 Fed. Reg. 39936, 39961),
but states have flexibility for determining affordability for their
child care programs and do not have to use this benchmark. However,
according to HHS's report on CCDF state plans for fiscal years 2008 to
2009, nearly half of all states refer to this affordability benchmark,
and another 16 states indicate that most or all family fees are
established below 10 percent of income. The remaining 11 states report
that they base their co-payments on a sliding fee scale or system of
cost sharing based on income and family size, by setting a maximum co-
payment for program entry and another for program exit.
[40] GAO, Child Care: Child Care Subsidies Increase Likelihood That
Low-Income Mothers Will Work, [hyperlink,
http://www.gao.gov/products/GAO/HEHS-95-20] (Washington, D.C.: Dec.
30, 1994).
[41] Connelly, R., and J. Kimmel. "Marital status and full-time/part-
time work status in child care choices." Applied Economics, vol. 35,
no. 7 (2003): 761-777.
[42] Tekin, E. "Child care subsidy receipt, employment, and child care
choices of single mothers." Economics Letters, vol. 89, no. 1 (2005):
1-6.
[43] Bainbridge, J., M. Meyers, and J. Waldfogel. "Child care policy
reform and the employment of single mothers." Social Science
Quarterly, vol. 84, no. 4 (2003): 771-791. To control for local
economic conditions, this study included measures of state
unemployment rates. In addition, the study controlled for other
characteristics that might impact employment decisions, such as other
state or federal policies.
[44] Queralt, M., A. Dryden Witte, and H. Griesinger. "Changing
policies, changing impacts: Employment and earnings of child-care
subsidy recipients in the era of welfare reform." Social Service
Review, vol. 74, no. 4 (2000): 588-619.
[45] Administration for Children and Families, U.S. Department of
Health and Human Services, Child Care and Development Fund (CCDF)
Report to Congress for FY 2004 and FY 2005 (Washington, D.C., 2008).
[46] S. Schaefer, J. Lee Kreader, and A. Collins. "Parent employment
and the use of child care subsidies." Child Care & Early Education
Research Connections (New York, N.Y., 2006).
[47] GAO, Child Care: Additional Information Is Needed on Working
Families Receiving Subsidies, [hyperlink,
http://www.gao.gov/products/GAO-05-667] (Washington, D.C.: June 29,
2005).
[48] In contrast to previous years, the CCDF subsidy cost for fiscal
year 2005 and later years are based on data from states' quarterly
reports submitted to HHS regarding payments made for participating
children. For prior years, expenditure data from state financial
reports were used to estimate an average cost per child. HHS reports
that using case-level administrative data to calculate an average
subsidy per child provides a more accurate estimate of the number of
children being served by TANF and SSBG subsidy costs.
[49] Parents and the High Price of Child Care: 2009 Update," National
Association of Child Care Resource and Referral Agencies (NACCRRA).
[50] "Low Income and Impoverished Families Pay More Disproportionately
for Child Care," Carsey Institute. Policy Brief No 16; Winter 2010.
[End of section]
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