oversight

Child Care: Recent State Policy Changes Affecting the Availability of Assistance for Low-Income Families

Published by the Government Accountability Office on 2003-05-05.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

             United States General Accounting Office

GAO          Report to the Ranking Minority
             Member, Subcommittee on Human
             Resources, Committee on Ways and
             Means, House of Representatives

May 2003
             CHILD CARE

             Recent State Policy
             Changes Affecting the
             Availability of
             Assistance for Low-
             Income Families




GAO-03-588
Contents


Letter                                                                                                            1


Appendix I             Briefing Slides                                                                            5



Related GAO Products                                                                                             43




                       Abbreviations

                       CCDF              Child Care and Development Fund
                       TANF              Temporary Assistance for Needy Families




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                       Page i                                                            GAO-03-588 Child Care
United States General Accounting Office
Washington, DC 20548




                                   May 5, 2003

                                   The Honorable Benjamin L. Cardin
                                   Ranking Minority Member
                                   Subcommittee on Human Resources
                                   Committee on Ways and Means
                                   House of Representatives

                                   Dear Mr. Cardin:

                                   With the Temporary Assistance for Needy Families (TANF) program
                                   taking effect in 1997, child care assistance became a significant strategy
                                   for helping welfare recipients move into the workforce and for helping
                                   other low-income families stay off welfare. Since 1997, states have used
                                   federal funds from the Child Care and Development Fund (CCDF) and
                                   TANF along with state funds to expand child care assistance programs.
                                   However, given the current budget problems in most states and the
                                   competing demands for TANF and state funds, it is possible that states
                                   have changed their child care policies and the availability of child care
                                   assistance to low-income families.

                                   As Congress considers reauthorizing CCDF and TANF, you asked us to
                                   answer these questions:

                                   1. What choices have states made for providing child care assistance to
                                      three groups of low-income families: (a) TANF families, (b) families
                                      transitioning off TANF, and (c) other low-income working families?

                                   2. Since January 2001, to what extent have states made key changes that
                                      affect child care availability and have those changes increased or
                                      decreased the overall availability of child care assistance in the nation?

                                   3. What changes to child care assistance programs are governors
                                      proposing for the next fiscal year?

                                   To answer your questions, we surveyed the child care administrators of
                                   the 50 states and the District of Columbia regarding their states’ child care
                                   assistance policies and current governors’ proposals affecting child care




                                   Page 1                                                  GAO-03-588 Child Care
assistance.1 The survey asked whether, since January 2001, states had
made changes to key policies affecting the availability of child care
assistance.2 We received responses from all 50 states and the District of
Columbia. In analyzing survey responses, we classified each specific
policy change that a state identified as either increasing or decreasing the
availability of child care assistance. Policy changes that allow more
families to enter and remain in a state’s child care assistance programs
were classified as increasing availability, while policy changes that limit
entry or length of stay in the programs were classified as decreasing
availability. We conducted our review from January through April 2003 in
accordance with generally accepted government auditing standards.

On April 24, 2003, we briefed your staff on the results of our survey. This
report formally conveys the information provided during that briefing.
(See app. I.) In summary, we found:

A vast majority of states have made all three groups of families—TANF
families, families transitioning off TANF, and other low-income working
families—eligible for child care assistance. However, half of the states do
not provide child care assistance to all the families who apply and are
eligible for such assistance under the states’ eligibility policies. States
often give TANF and transitioning families higher priority than other low-
income working families when program resources are insufficient to cover
all who apply.

Since January 2001, two-thirds of the states made key changes that affect
the availability of child care assistance while the other one-third
maintained their policies. Of the 35 states that made key changes:3

•   23 made changes tending to decrease the availability of assistance,
•   9 made changes tending to increase the availability of assistance, and
•   3 made a mix of changes.




1
 In reporting our survey results, we refer to the District of Columbia as a state.
2
 We chose January 2001 as our comparison point because state fiscal conditions began to
deteriorate at about this time.
3
 We grouped states simply on the basis of the type of changes made, that is, on whether the
state made changes that likely increased, decreased, or had a mix of effects on the
availability of child care assistance. We did not assess the relative impact on availability of
the various policy changes that states made.




Page 2                                                                GAO-03-588 Child Care
While these changes would appear to have decreased the availability of
child care assistance overall compared with 2001, we could not determine
the actual outcomes in numbers of children served and their welfare status
because data on these outcomes are not readily available.4

Governors’ budget proposals for fiscal year 2004 present a mixed picture
for child care assistance funding. Child care officials in 29 states identified
governors’ budget proposals that contained measures that would either
maintain (11 states), decrease (11 states) or increase (7 states) funding for
child care assistance, if adopted. The child care officials in the remaining
states either reported that the state did not have a governor’s budget
proposal currently addressing child care assistance (17 states) or did not
provide information on the proposals (5 states).

We provided a draft of our findings to officials at the U.S. Department of
Health and Human Services’ Administration for Children and Families,
which oversees state CCDF programs; however, they were not able to
provide comments on the draft within the short timeframe allowed.


We are sending copies of this report to relevant congressional committees
and other interested parties and will make copies available to others upon
request. The report will also be available on GAO’s Web site at
http://www.gao.gov. If you or your staff have any questions about this




4
  In assessing whether the policy changes likely increased or decreased the overall
availability of child care assistance in the nation, we related each group of states to its
share of the nation’s population of children in poverty. According to 2001 Census Bureau
data on children under 125 percent of the poverty level, the percentage for each group is:
(1) states that made no policy changes affecting availability—36.5 percent; (2) states that
made changes decreasing availability—41.5 percent; (3) states that made changes
increasing availability—16 percent; and (4) states that made a mix of changes—6 percent.




Page 3                                                             GAO-03-588 Child Care
report, please contact me or Gale Harris at (202) 512-7215. Kathleen
Peyman, Deborah A. Signer, and Luann Moy also made key contributions
to this report.

Sincerely yours,




Marnie S. Shaul
Director, Education, Workforce, and
 Income Security Issues




Page 4                                             GAO-03-588 Child Care
               Appendix I: Briefing Slides
Appendix I: Briefing Slides




          Recent State Policy Changes
           Affecting the Availability of
             Child Care Assistance

                    Briefing for Staff of
                   Rep. Benjamin Cardin
                 Ranking Minority Member
             Subcommittee on Human Resources
               Committee on Ways and Means
                 House of Representatives
                       April 24, 2003




                                                               1




               Page 5                          GAO-03-588 Child Care
                        Appendix I: Briefing Slides




Introduction

With passage of welfare reform in 1996, child care assistance has become a
significant strategy for helping recipients of Temporary Assistance for Needy
Families (TANF) move into the workforce and for helping other families stay
off welfare.
The Congress provided states with more child care funding and with flexibility
to allocate child care monies among three groups at risk: (1) TANF families
participating in work-related activities, (2) families that recently transitioned off
TANF (transitioning families), and (3) other low-income working families.
Since 1996, many states have expanded their programs of child care
assistance with funds from the federal Child Care and Development Fund
(CCDF) and TANF; however, their policies may have changed somewhat in
recent years, given state budget shortfalls and other factors.
In view of the pending reauthorization of welfare and child care legislation,
you asked us to provide information about states’ child care assistance
programs for low-income families.
                                                                                        2




                        Page 6                                          GAO-03-588 Child Care
                      Appendix I: Briefing Slides




Key Questions

1. What choices have states made for providing child care assistance to
   three groups of low-income families:
     • families using TANF,
     • families transitioning from TANF (transitioning families), and
     • other low-income working families?
2. Since January 2001, to what extent have states made key changes that
   affect child care availability and have these changes increased or
   decreased the overall availability of child care assistance in the nation?
3. What changes to child care assistance programs are governors proposing
   for the next fiscal year?




                                                                                       3




                      Page 7                                            GAO-03-588 Child Care
                       Appendix I: Briefing Slides




Scope and Methodology

Surveyed child care administrators in 50 states and the District of Columbia
(D.C.).
   • All states and D.C. responded. (In this briefing, we will refer to D.C. as a
     state when we present response totals.)
   • Some states did not answer all survey questions.
   • States responded between March 17 and April 11, 2003.
Review was conducted from January through April 2003 in accordance with
generally accepted government auditing standards.




                                                                                     4




                       Page 8                                        GAO-03-588 Child Care
                                     Appendix I: Briefing Slides




Scope and Methodology (continued)

Survey addressed
• key policies that control the availability of child care assistance to families
  (Policy changes that tend to increase availability allow more families to enter into
  a state’s subsidy system, while policy changes that tend to decrease availability
  limit entry into or length of stay in the system);
• other policies on reimbursement rates and quality initiatives;
• how current policies differ from policies in effect in Jan. 20011 (Policies
  scheduled to take effect in the next several months were also included);
• whether policy changes affected any of three groups of families: (1) families
  currently receiving TANF, (2) transitioning families, and (3) other low-income
  working families;
• governors’ budget proposals for child care assistance for states’ fiscal year
  2004. (We did not independently verify budget information provided.)
1We  chose Jan. 2001 because state fiscal conditions began to deteriorate at about this time. However, we did not determine the causes
of any child care policy changes reported by states; changes may be due to a variety of reasons, including adjusting program size to
match available resources or shifting policy direction.


                                                                                                                                         5




                                     Page 9                                                                         GAO-03-588 Child Care
                         Appendix I: Briefing Slides




Scope and Methodology (continued)

Classification of state survey responses:
• Each specific policy change identified by a state was classified as either increasing or
  decreasing the availability of child care assistance for any of the three groups of
  families. We focused on changes in
   • income eligibility thresholds and other eligibility factors;
   • use of waiting lists and enrollment policies; and
   • copayments (the amount a family has to pay for care)—We classified rising
     copayments as making child care assistance less available.
• For any policy set at the local level rather than the state level, the child care
  administrator responsible for the entire state’s child care assistance program was to
  respond about what was typically occurring at the local level. This occurred in three
  states for which respondents said policies were established at the local level and in
  some other instances where respondents provided information about policy variation
  among localities.
• Technical changes, such as inflation adjustments in copayments and policy changes
  that were unlikely to increase or decrease the availability of child care, were not
  included in our results.

                                                                                             6




                         Page 10                                             GAO-03-588 Child Care
                          Appendix I: Briefing Slides




Scope and Methodology (continued)

Limitations of survey results:
• States may have made policy changes since January 2001 but may not have
  identified the changes on the survey.
• The survey results address key policy changes that affect the availability of child care
  assistance. More comprehensive data, including the number of children served and
  which groups of families they are from, are needed to fully assess the effect of these
  policy changes. However, these data are not routinely available.
• The survey focuses on key policies that are established at the state level for the entire
  state (except in three states); it does not include local policies or factors that may also
  affect child care assistance programs.




                                                                                                7




                          Page 11                                              GAO-03-588 Child Care
                       Appendix I: Briefing Slides




Summary of Results

• A vast majority of states have made all three groups of families eligible for
  child care assistance. In half of the states, however, not all eligible families
  who apply for assistance receive it. States often give TANF and
  transitioning families higher priority than other low-income working families
  when program resources are insufficient to cover all who apply.
• Since January 2001, two-thirds of the states made key changes that affect
  the availability of child care assistance while the other one-third maintained
  their policies. Of the 35 states that made key changes,
    • 23 made changes tending to decrease the availability of assistance,
    • 9 states made changes tending to increase availability of assistance,
    • 3 states made a mix of changes.
   While these changes would appear to have decreased the availability of
   child care assistance overall compared with 2001, the actual outcomes in
   numbers of children served and their welfare status is not known.

                                                                                       8




                       Page 12                                         GAO-03-588 Child Care
                       Appendix I: Briefing Slides




Summary of Results (continued)

•   Governors’ budget proposals for fiscal year 2004 present a mixed picture.
    Child care officials identified 29 state governors’ budget proposals that
    contained measures that would either maintain (11 states), decrease (11
    states), or increase (7 states) funding for child care assistance, if adopted.
    The child care officials in the remaining states either reported that the state
    did not have a governor’s budget proposal currently addressing child care
    assistance (17 states) or did not provide information on the proposals (5
    states).




                                                                                      9




                       Page 13                                        GAO-03-588 Child Care
                                       Appendix I: Briefing Slides




Background

CCDF and TANF Are Key Federal Funding Sources for
Child Care

To support the work-focused goals of welfare reform, the 1996 legislation:
• Gave states, through the CCDF, flexibility to provide child care subsidies to
  families with up to 85 percent of state median income, if they are working or
  involved in education and training.1 Federal CCDF funds available in fiscal
  year 2002 totaled $4.8 billion.
• Gave states flexibility to transfer up to 30 percent of TANF funds to the
  CCDF or spend TANF funds, directly, for child care assistance.
• Encouraged states to spend their own funds for child care through matching
  and maintenance-of-effort requirements.


1While    states are allowed to set income eligibility thresholds up to 85 percent of state median income, most states set thresholds at lower
levels. In this report, we use the term “low-income” to refer to all families who are eligible for child care assistance in a state. However,
some families who are eligible for child care assistance could be referred to as moderate-income families, especially in states with income
eligibility thresholds as high as 85 percent of state median income.


                                                                                                                                                 10




                                       Page 14                                                                           GAO-03-588 Child Care
                                      Appendix I: Briefing Slides




Background

Federal and State Child Care Spending
Grew through Fiscal Years 1997 - 2000

         Billions of current dollars
          10
           9
           8
           7
           6
           5
           4
           3
           2
           1
           0
               '97                               '98                                  '99                                 '00
                       Federal CCDF and TANF                     State match and maintenance of effort

Sources: Congressional Research Service analysis of CCDF and TANF expenditure data from the Administration for Children and Families,
Department of Health and Human Services. While more recent data are available (through 2001 for CCDF and 2002 for TANF), they have not
yet been analyzed to ensure comparability with data for previous years. However, preliminary analysis through fiscal year 2001 continues to
show an upward trend.


                                                                                                                                        11




                                      Page 15                                                                       GAO-03-588 Child Care
                      Appendix I: Briefing Slides




Background

States Have Flexibility to Determine Which Families
Are Served

Under federal guidelines, states
 • have flexibility to set child care policies and
 • are not required to guarantee child care assistance to any family.
States can adjust their policies based on numbers of families applying and the
funding available.
 • For example, states may change their income eligibility thresholds in order
   to match the number of families covered with funds available for child care
   assistance.
These adjustments can determine
 • which groups of families will be eligible and
 • which eligible families will be served.



                                                                                 12




                      Page 16                                     GAO-03-588 Child Care
                        Appendix I: Briefing Slides




Background

Availability for Non-TANF Families Increased after
1996

While there are not sufficient data to draw a national picture, some studies show that
after 1996 many states used CCDF and TANF funds to increase the availability of child
care subsidies to transitioning families and other low-income families. For example:
 • A study of 17 state child care programs showed that the number of children
    receiving subsidies had increased greatly from 1997 to 1999, with much of the
    growth resulting from the use of TANF funds. As TANF caseloads were declining,
    states were expanding child care aid to help transitioning and low-income working
    families. See National Study of Child Care for Low-Income Families: State and
    Community Substudy Interim Report, Ann M. Collins et al., Abt Associates,
    Cambridge, MA (Nov. 2000).
 • GAO research also found that states have reached beyond their welfare caseload to
    provide child care. In December 2001, 23 states were serving non-TANF families in
    numbers anywhere between 10 and 160 percent of the number of TANF families on
    cash assistance. See U.S. General Accounting Office, Welfare Reform: States
    Provide TANF-Funded Work Support Services to Many Low-Income Families Who
    Do Not Receive Cash Assistance, GAO-02-615T, (Washington, D.C.: Apr. 10,
    2002).


                                                                                       13




                        Page 17                                          GAO-03-588 Child Care
                      Appendix I: Briefing Slides




Background

Changing Economic and Fiscal Conditions Can Affect
States’ Policy Choices

During the first 4 years (1997-2000) following implementation of TANF and
CCDF,
 • most states were experiencing healthy fiscal periods.
 • TANF cash assistance caseloads declined sharply.
 • states chose to use some of their TANF funds to increase the availability of
   supports, including child care assistance, for low-income working families.
Since January 2001,
 • state fiscal conditions have deteriorated and most states have faced
   growing budget problems.
 • TANF cash assistance caseloads have grown in many states, and
   nationally, the decline in TANF caseloads slowed.
 • states have faced choices about how best to use federal TANF funds and
   their own state funds to support program needs and goals.

                                                                                  14




                      Page 18                                      GAO-03-588 Child Care
                                           Appendix I: Briefing Slides




Question #1

States Are Evenly Split on Whether They Serve All
Eligible Families Who Apply

• 25 states reported they currently
  serve all families who apply and                       Wash.
  are eligible under the states’                                                                                                                                                                  Maine
                                                                                  Mont.
  eligibility criteria.                                                                             N.Dak.
                                                    Ore.                                                             Minn.                                                                  Vt.
                                                                                                                                                                                                             N.H.
• 26 states reported they currently                                   Idaho
                                                                                                                                     Wisc.                                           N.Y.                    Mass.
  do not serve all families who                                                                     S.Dak.
                                                                                                                                                                                                             R.I.
                                                                                    Wyo.                                                          Mich.
  apply and are eligible under the                                                                                                                                                                           Conn.
                                                                                                                        Iowa                                                  Pa.
  states’ eligibility                                      Nev.                                      Nebr.
                                                                                                                                                                                                             N.J.
                                                                                                                                                                                                             Md.
  criteria.                                                                Utah                                                          Ill.   Ind.
                                                                                                                                                              Ohio
                                                                                                                                                                                                             Del.
                                                                                                                                                                     W.Va.
                                                                                          Colo.
                                                Calif.                                                                                                                         Va.
                                                                                                        Kans.                Mo.                                                                          D.C.
                                                                                                                                                        Ky.

                                                                                                                                                                             N.C.
                                                                                                                                                Tenn.
                                                                                                             Okla.
                                                                       Ariz.                                                 Ark.                                       S.C.
                                                                                     N.Mex.

                                  Alaska                                                                                                                        Ga.
                                                                                                                                                 Ala.
                                                                                                                                       Miss.

                                                                                                      Tex.                     La.


                                                                                                                                                                        Fla.


                                                                  Hawaii



                        Serves all eligible families who apply                                Does not serve all eligible families who apply


Source: State child care officials' responses to GAO survey.


                                                                                                                                                                                                                 15




                                           Page 19                                                                                                                       GAO-03-588 Child Care
                      Appendix I: Briefing Slides




Question #1

States Generally Make All Groups Eligible, but
Low-Income Families Often Receive Lower Priority

Of the 49 states that responded to our survey question
 • 48 said all three groups of families are eligible--TANF families,
   transitioning families, and other low-income working families
 • Tennessee responded that only TANF families and transitioning families
   (for 18 months after leaving TANF) are eligible.
However, other factors also affect whether eligible families who apply for child
care assistance actually get served.




                                                                                      16




                      Page 20                                          GAO-03-588 Child Care
                       Appendix I: Briefing Slides




Question #1

TANF and Transitioning Families Generally Have
Higher Priority in States Not Serving All

Of the 26 states that do not serve all eligible families who apply:
• Fourteen states gave TANF families higher priority than the other two
  groups:
   • Ten states reported three priority levels—TANF families first, transitioning
     families second, and other low-income families third.
   • Four states reported that TANF families receive highest priority and
     transitioning and other low-income families receive lower priority.
• Nine states reported giving TANF and transitioning families highest priority
  and other low-income families second priority.
• Three states did not provide complete information.




                                                                                     17




                       Page 21                                        GAO-03-588 Child Care
                      Appendix I: Briefing Slides




Question #1

With Some Exceptions, Low-Income Working Families
Have Lowest Priority

In the 26 states not serving all eligible families, other low-income working
families (those not on TANF or transitioning off TANF) are generally the
lowest priority.
 • However, some families in this group do have high priority. For example,
    • New York guarantees child care assistance to families in this group who
      could be eligible to receive TANF cash assistance but who have chosen
      not to receive it.
    • Massachusetts gives immediate access to low-income military families
      who are deployed overseas.




                                                                                   18




                      Page 22                                       GAO-03-588 Child Care
                       Appendix I: Briefing Slides




Question #1

Potential Outcomes for Lower Priority Families


When insufficient funds are available to serve all eligible families who apply
for assistance, lower-priority families are most likely to
 • be put on a waiting list,
 • be subject to freezes on enrollment of new families, or
 • lose benefits while still eligible.
A change in priority can result in families losing benefits. For example,
 • leaving TANF can result in losing child care assistance in two states
   (Montana and Indiana), and
 • coming to the end of a state’s transition period
    • can result in losing child care assistance while still eligible in four states:
      Arkansas, Indiana, Nevada, S. Carolina
    • can result in no longer being eligible in three states: Nebraska, New
      Mexico, Tennessee.

                                                                                      19




                       Page 23                                         GAO-03-588 Child Care
                      Appendix I: Briefing Slides




Question #2

Since 2001, 35 States Have Made Key Policy Changes
While the Remaining 16 Maintained Their Policies

Thirty-five states made key changes affecting availability while the other 16
did not. Of the states that made key changes:
  • Twenty-three states made changes tending to decrease the availability of
    child care assistance.
 • Nine states made changes tending to increase the availability of
   assistance.
 • Three states made a mix of changes.




                                                                                 20




                      Page 24                                     GAO-03-588 Child Care
                                        Appendix I: Briefing Slides




Question #2

These Changes Would Likely, on Balance, Have
Decreased Overall Availability of Aid Since 2001

Because more states made changes that tended to decrease availability of
assistance than to increase it, the overall availability of child care assistance
has likely decreased compared with its availability in January 2001.
                       Number of states
                       25          23

                       20
                                                               16
                       15
                                                                               9
                       10
                        5                                             3

                        0
                                 Made changes              Made no key        Made changes
                                  decreasing             changes (16) or a     increasing
                                  availability           mix of changes (3)    availability


Source: State child care officials' responses to GAO survey.


                                                                                                             21




                                        Page 25                                               GAO-03-588 Child Care
                                       Appendix I: Briefing Slides




Question #2

Policy Changes Have Been Common, with Decreases
in Availability Predominating

Number of States that Changed Certain Policies Affecting the Availability of
Child Care Assistance Since January 2001

                                                                                       Decreases          Increases
Policy changes                                                                         availability       availability
     Changed income eligibility thresholds to
                narrow or expand coverage                       14                                                       4

Changed other eligibility criteria to narrow or                                   5                                          5
                             expand coverage

               Started or eliminated waiting lists                         9                                    2

  Stopped or resumed enrolling new families                                9                                1

              Increased or reduced copayments                        10                                                      5

                                                               15     10           5                  0                      5
                                                                     Number of states making each change


Source: State child care officials' responses to GAO survey.


                                                                                                                                 22




                                       Page 26                                                        GAO-03-588 Child Care
                                                 Appendix I: Briefing Slides




Question #2

Twenty-three States Made Changes that Decrease
Availability of Child Care Subsidies

                                                                                               Type of change

                       Changed income eligibility thresholds to   Changed other eligibility                                     Stopped enrollment of new   Increased
State                  narrow coverage                            factors to narrow coverage             Started waiting list   families                    copayments
Arizona                                                                                                                ●                      ●
Connecticut                                 ●                                                                          ●                      ●
Colorado                                    ●                                       ●                                  ●
District of Columbia                                                                                                   ●                      ●
Idaho                                                                                                                                                             ●
Indiana                                     ●
Kansas                                      ●
Kentucky                                    ●                                       ●                                  ●                      ●                   ●
Missouri                                    ●
Montana                                                                                                                ●                                          ●
Nebraska                                    ●                                       ●                                                                             ●
New Jersey                                                                                                                                    ●
New Mexico                                  ●
Nevada                                                                                                                 ●                      ●
North Carolina                                                                                                                                                    ●
North Dakota                                ●
Ohioa                                       ●                                                                                                                     ●
Oregon                                      ●                                       ●                                                                             ●
Pennsylvania                                                                                                           ●
Tennessee                                                                                                                                     ●
Texas                                       ●                                       ●                                                                             ●
Washington                                  ●                                                                                                                     ●
West Virginia                               ●                                                                                                                     ●

Source: State child care officials' responses to GAO survey.
aOhio is scheduled to implement these changes later in 2003.



                                                                                                                                                                         23




                                                 Page 27                                                                                          GAO-03-588 Child Care
                                             Appendix I: Briefing Slides




Question #2

Nine States Made Changes that Increase Availability
of Child Care Subsidies

                                                                                         Type of change

                 Changed income eligibility thresholds to   Changed other eligibility                                   Resumed enrollment of new   Reduced
State            expand coverage                            factors to expand coverage        Eliminated waiting list   families                    copayments
Alaska                                                                                                        ●
Georgia                                                                     ●
Iowa                                                                                                          ●
Massachusetts                                                                                                                                             ●
New York                                                                    ●
Oklahoma                             ●                                      ●
South Carolina                                                                                                                        ●
South Dakota                         ●                                                                                                                    ●

Wyoming                              ●                                      ●                                                                             ●




Source: State child care officials' responses to GAO survey.


                                                                                                                                                                 24




                                             Page 28                                                                                      GAO-03-588 Child Care
                          Appendix I: Briefing Slides




Question #2

Three States Had a Mix of Changes


Alabama
• Increased availability by reducing the number of hours families are required to work in order
  to qualify for subsidies and by reducing the copayments of families with more than one child
  receiving assistance.
• Decreased availability in October 2002 by stopping enrolling new low-income working
  families in the child care assistance program.
Louisiana
• In January 2001, changed its income eligibility threshold to make fewer families eligible,
  and in July 2002 changed it back to its prior level.
• In 2001, started and then stopped a waiting list for other low-income working families and
  lowered copayments.
Maryland
• In January 2002, expanded availability by changing its income eligibility threshold from 45
  percent to 50 percent of state median income.
• In January 2003, stopped enrolling new families, except TANF families and those who
  received TANF within 2 months of applying for child care subsidies.

                                                                                                25




                          Page 29                                                GAO-03-588 Child Care
                     Appendix I: Briefing Slides




Question #2

Of the 18 States that Changed Income Thresholds,
Most Reduced Coverage

While most states maintained the same income eligibility thresholds that they
had in January 2001, 14 states decreased them, reducing availability for
higher income families. For example, the thresholds
 • Decreased for certain types of families—In July 2002, Nebraska
   decreased its maximum threshold for other low-income working families
   from 185 percent to 120 percent of the federal poverty level, while the
   threshold remains at 185 percent for transitioning families.
 • Decreased for new applicants—In August 2001, New Mexico decreased
   its maximum threshold from 200 percent to 100 percent of the federal
   poverty level for all new applicants. In May 2003, New Mexico will change
   this threshold to 130 percent of the federal poverty level.
 • Decreased due to inaction—Two states reported that their maximum
   income eligibility levels had declined in real terms because the state had
   chosen not to adjust income eligibility levels to account for inflationary
   increases. (Mo., N. Dak.)


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                     Page 30                                     GAO-03-588 Child Care
                      Appendix I: Briefing Slides




Question #2

A Few States Changed Income Thresholds to Increase
Coverage

Four states increased maximum income eligibility thresholds to increase
availability for higher-income families. For example,
 • South Dakota increased its threshold for all families from 150 percent to
   200 percent of the federal poverty level in March 2002, and
 • Wyoming, which has a threshold for initially qualifying for assistance and a
   threshold for continuing to receive assistance, raised both thresholds. It
   raised the first threshold from 150 percent to 185 percent and the second
   threshold from 185 percent to 200 percent of the federal poverty level.




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                      Page 31                                      GAO-03-588 Child Care
                       Appendix I: Briefing Slides




Question #2

Some States Changed Other Eligibility
Factors Affecting Availability

Potential decreases:
 Five states changed eligibility factors other than income levels that could
 decrease the number of families eligible to receive child care assistance.
 For example,
  • Kentucky is adding a 20-hour work requirement for families receiving
    child care assistance. This change will affect transitioning families and
    other low-income working families.
  • In Colorado, some counties have eliminated education as an activity that
    qualifies for child care assistance. This change can affect TANF,
    transitioning, and other low-Income working families.




                                                                                  28




                       Page 32                                     GAO-03-588 Child Care
                       Appendix I: Briefing Slides




Question #2

Some States Changed Other Eligibility Factors
Affecting Availability (continued)

Potential increases:
 Five states changed eligibility factors other than income levels that could
 increase the number of families eligible to receive child care assistance. For
 example,
  • New York gave its counties the option of making 4-year college education
    an activity eligible for child care assistance coverage. This change
    affects TANF, transitioning, and other low-income working families.
  • Oklahoma allowed 30 days of child care subsidy to families who had
    been receiving assistance while working but had become unemployed
    and were searching for a job. This change affects transitioning families
    and other low-Income working families.




                                                                                 29




                       Page 33                                    GAO-03-588 Child Care
                       Appendix I: Briefing Slides




Question #2

Waiting Lists Are Somewhat More Common than
Before

Since January 2001,
• Nine states started using waiting lists.
   • In three of these states, transitioning families as well as other low-income
     working families could be put on the waiting list (D.C., Colo., Md.).
   • In six other states, waiting lists were started for other low-income working
     families (Ariz., Conn., Ky., Mont., Nev., Pa.).
• Two states eliminated their waiting lists for other low-income working
  families by providing child care assistance to families on the lists (Alaska,
  Iowa).




                                                                                    30




                       Page 34                                       GAO-03-588 Child Care
                      Appendix I: Briefing Slides




Question #2

Several States Have Stopped Adding New Families to
Child Care Assistance Programs

Since January 2001,
• Nine states stopped providing subsidies to new families applying for child
  care assistance.
  • In two states, the change affected transitioning families as well as other
    low-income working families (D.C., Md.).
  • In seven states, the change affected only other low-income working
    families (Ala., Ariz., Ky., Conn., Nev., N.J., Tenn.).
• One state resumed enrollment of new applicants into the assistance
  program--specifically other low-income working families (S.C.).




                                                                                  31




                      Page 35                                      GAO-03-588 Child Care
                       Appendix I: Briefing Slides




Question #2

Of 15 States that Changed Copayments, More
Increased than Decreased What Families Must Pay

Copayments are the amounts of their own funds that states require families
receiving child care assistance to pay to their child care providers. In many states,
TANF families are exempted from paying copayments.
Since January 2001,
 • Ten states increased copayments
    • Five states increased copayments for all types of families, including TANF
      (Idaho, Mont., N.C., Wash., W.Va.).
    • Four additional states increased copayments for transitioning and other low-
      income working families (Ky., Nebr., Oreg., Tex.).
    • Ohio has scheduled to increase copayments later this year.
 • Five states reduced copayments
    • Three states reduced copayments for all types of families, including TANF
      families (Ala., Mass., Wyo.).
    • Two additional states reduced copayments for transitioning and other low-
      income working families (La., S.Dak.).

                                                                                      32




                       Page 36                                         GAO-03-588 Child Care
                     Appendix I: Briefing Slides




Question #2

A Few States Made Other Copayment Changes that
Have a Mixed Effect

Three states reported other changes in copayments that could result in both
increases and decreases.
 • Connecticut increased copayments for some families but also created
   income disregards that would decrease copayments for some families.
 • Alaska changed its basis for determining copayments from a percentage of
   cost of care to a percentage of gross income.
 • Maryland, which bases copayments on a percentage of cost of care, raised
   copayments but placed a cap on these increases and reduced the highest
   percentage of cost of care that a family must pay.




                                                                                33




                     Page 37                                     GAO-03-588 Child Care
                         Appendix I: Briefing Slides




Question #2

Other Policy Changes—More than Half the States
Increased Reimbursement Rates for Providers

Reimbursement rates are the amounts a state pays to a child care provider to
subsidize the care provided to children in families receiving assistance. The
rate amount can affect whether families are able to find child care providers
who will accept subsidies.
Since January 2001,
28 states increased reimbursement rates,
nearly all in response to market rate surveys          4 states decreased rates
Alaska, Ala., Ariz., Calif., Conn., Fla., Ga.,         Idaho, Mich., Nev., W.Va.
Hawaii, Kans., Ky., Maine, Md., Minn., Nebr.,
N.J., N.M., N.Y., N.C., Okla., Pa., R.I., S.C.,
S.Dak., Tenn., Va., Wash., Wis., Wyo.




                                                                                 34




                         Page 38                                  GAO-03-588 Child Care
                           Appendix I: Briefing Slides




Question #2

Other Policy Changes—Twice as Many States
Increased as Decreased Spending on Quality Initiatives

Since January 2001,
22 states reported increased spending on                 10 states reported
quality initiatives designed to promote                  decreased spending on
quality child care                                       quality initiatives
Ark., Calif., Fla., Ga., Hawaii, Ill., Iowa, Ky., La.,   Conn., Ind., Kans., Md.,
Nebr., N.J., N.M., N.Y., Okla., Pa., R.I., S.C.,         Minn., N.C., N.Dak., Tex.,
Utah, Vt., Va., Wis., Wyo.                               Wash., W.Va.




                                                                                   35




                           Page 39                                  GAO-03-588 Child Care
                        Appendix I: Briefing Slides




Question #3

Governors’ Budget Proposals Present a Mixed Picture
for Fiscal Year 2004

Fiscal 2004
In 29 states, child care officials reported whether their governors’ budget
proposals for the upcoming fiscal year would change the level of funding for
child care subsidies.
                                  11 propose to keep
                                  funding about the same
11 propose decreases              as last year                 7 propose increases
Alaska, Ala., Conn., D.C.,        Calif., Colo., Ga., Mass.,   Ariz., Fla., Iowa, Kans.,
Md., Minn., Mont., N.C.,          Miss., Mo., N.Dak., Nebr.,   N.Mex., N.Y., Pa.
N.H., Tenn., Wash.                Ohio, Ore., S.Dak.

In 17 states, child care officials reported that their governors did not currently
have budget proposals addressing child care assistance, and in the 5
remaining states, the child care officials did not provide information.


                                                                                           36




                        Page 40                                            GAO-03-588 Child Care
                       Appendix I: Briefing Slides




Question #3

Substantial Structural Change Proposed in California


• California's governor's budget proposes moving the funding and policy-
  setting for child care assistance programs from the state-level to the county-
  level.
• If adopted, the proposal will likely result in changes to key policies
  addressed by our survey.




                                                                                     37




                       Page 41                                        GAO-03-588 Child Care
                      Appendix I: Briefing Slides




Observations


• Our survey results show that a significant number of states have changed
  their child care policies in ways that tend to decrease availability. At the
  same time, it is noteworthy that one-third of the states did not make key
  changes and several took steps to increase availability. Even so, the net
  effect would appear to be that states have decreased the availability of child
  care assistance overall compared with 2001—that is, these findings indicate
  that entry into and remaining in the child care assistance system may be
  less possible for families, particularly for families not associated with the
  welfare system.
• To provide a more definitive assessment of changes in the availability of
  child care subsidies, additional data are needed, including more recent data
  on the number of children receiving subsidies, the welfare status of families
  receiving subsidies, and trends in spending levels. As a result, we consider
  these results suggestive rather than definitive until more is known about
  actual outcomes of changes in states’ child care assistance programs.


                                                                                   38




                      Page 42                                       GAO-03-588 Child Care
             Related GAO Products
Related GAO Products


             Child Care: States Exercise Flexibility in Setting Reimbursement Rates
             and Providing Access for Low-Income Children. 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. GAO-02-
             897. Washington, D.C.: September 6, 2002.

             Early Childhood Programs: The Use of Impact Evaluations to Assess
             Program Effects. GAO-01-542. Washington, D.C.: April 16, 2001.

             Welfare Reform: States Provide TANF-Funded Work Support Services to
             Many Low-Income Families Who Do Not Receive Cash Assistance. GAO-
             02-615T, Washington, D.C.: April 10, 2002.

             Child Care: States Increased Spending on Low-Income Families. GAO-
             01-293. Washington, D.C.: February 2, 2001.

             Child Care: How Do Military and Civilian Center Costs Compare?
             GAO/HEHS-00-7. Washington, D.C.: October 14, 1999.

             Child Care: Use of Standards to Ensure High Quality Care. GAO/HEHS-
             98-223R. Washington, D.C.: July 31, 1998.

             Welfare Reform: States’ Efforts to Expand Child Care Programs.
             GAO/HEHS-98-27. Washington, D.C.: January 13, 1998.

             Welfare Reform: Implications of Increased Work Participation for Child
             Care. GAO/HEHS-97-75. Washington, D.C.: May 29, 1997.




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             Page 43                                             GAO-03-588 Child Care
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