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Home > Research Articles > More States Cut Aid for Child Care

WashingtonPost.com

Monday, May 05, 2003

Study Shows Fiscal Problems Led to Restrictions on Low-Income Families

By Amy Goldstein

Washington Post Staff Writer

Monday, May 5, 2003; Page A02

Nearly half the states have reduced child-care subsidies for poor families during the past two years, according to a federal study to be released today, which shows that states' fiscal problems have prompted state agencies to restrict eligibility, stop accepting new families or charge them more for the care.

The analysis found that the changes have, in particular, decreased the availability of subsidized day care for low-income working families, although a few states have also tightened subsidies for families that are on welfare or have recently left it.

The trend is an example of the pressures that a weakened economy and states' strained budgets are placing on services for needy residents. The contraction in child-care aid resembles changes that most states have made recently to rein in their expenditures on Medicaid, the government health insurance program for the poor.

And, as with Medicaid, the changes in child-care policies are fueling a disagreement between the political parties over whether the federal government should help states by giving them more money.

The study, by the General Accounting Office, was requested by congressional Democrats to bolster their argument that day-care subsidies should be expanded as part of congressional action needed to renew the nation's welfare laws.

The findings are the second in recent days indicating that circumstances for low-income children in the United States have become more difficult. Last week, the Children's Defense Fund, an advocacy group, issued an analysis suggesting that the number of black children in extreme poverty is rising.

That analysis, based on Census data, shows that the number of African American children living at the official poverty line has been declining. But it also shows that poverty has been deepening, with the number of black youngsters in families whose after-tax incomes are less than half the poverty level having increased to nearly 1 million.

The availability of child care has been a contentious issue in the welfare debate. Democrats say that affordable day care is a prerequisite if mothers are to go to work, as the welfare system requires them to do. Republicans say that the government gives states ample money, because welfare caseloads have plummeted in recent years, leaving federal aid left over for other services, including day care.

The Bush administration opposes an increase in federal aid for child care. House Republicans included an extra $1 billion over the next five years -- and possibly more -- in welfare legislation the House approved last winter, while Democrats had sought $11 billion. The Senate has not yet acted on a welfare bill. Current welfare law provides states a yearly child-care grant totaling $4.8 billion.

Under the 1996 law that redefined the nation's welfare system, three types of families are eligible for child-care subsidies: families getting cash assistance through welfare, those that recently left welfare and other low-income families. The law gives states wide freedom to set their own rules for exactly who gets help and how much they receive.

The GAO findings indicate that budget difficulties have prompted states to rethink those rules. Since July, 2001, it found 23 states have made it harder to get day-care subsidies, while nine have made their programs more generous.

Fourteen states have tightened their income thresholds, the study found, especially for families not on welfare, while five states have added other eligibility requirements. Kentucky now gives help only if parents work at least 20 hours a week, while parts of Colorado no longer provide help to poor parents who are in school or job training.

In January, Maryland's Department of Human Resources stopped accepting new low-income families into its child-care program unless they have been on welfare during the past year, according to a department spokeswoman, who said that efforts to ensure the quality of day-care providers also have been reduced. The changes were the result of a $25 million reduction in state funding of the program.

And 11 months ago, the District created a waiting list, now at 1,085 children whose parents are working but poor, according to Barbara Ferguson Kamara, executive director of the D.C. Department of Human Services' Office of Early Childhood Development. Kamara said the office, which subsidizes care for 16,000 children, did not lose funding but has been unable to keep up with demand and is considering changing its eligibility rules. The D.C. auditor is scrutinizing whether the city's child-care money has been properly spent.

In Nebraska, children in nearly 1,100 families have become ineligible for subsidies as a result of a gubernatorial veto that removed $4.5 million -- about one dollar in 10 -- from child-care assistance. Indiana has not had a budget cut, but has made 7,000 of its 37,000 children in subsidized care ineligible, as rising welfare caseloads have forced the state to divert child-care aid to welfare cash benefits, said Carole Stein, former deputy director of the Indiana agency that oversees child care.

"It's a Catch-22," Stein said. "We are really not helping low-income working families too well."

Wade F. Horn, the assistant health and human services secretary who oversees welfare and help for children, said that such changes are a natural result of the flexibility the federal government has given states to define child-care policies. He said the government still gives states enough money in child-care subsidies for families that recently have left welfare. "This is a piece of federalism," Horn said. "Let the states make these decisions for themselves."

But Rep. Benjamin L. Cardin (D-Md.), who requested the GAO study, said the cutbacks undermine the ability of poor parents to remain in the workforce. The findings, Cardin said, show "the states are in trouble and programs such as day care are suffering terribly."

2003 The Washington Post Company