Copyright 1999 Federal Document Clearing House, Inc.
Federal Document Clearing House Congressional Testimony
March 16, 1999
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 4600 words
HEADLINE:
TESTIMONY March 16, 1999 OLIVIA A. GOLDEN ASSISTANT SECRETARY
HOUSE WAYS AND MEANS HUMAN RESOURCES FEDERAL RESOURCES FOR
CHILD CARE
BODY:
Statement of the Honorable Olivia
A. Golden Assistant Secretary for Children and Families Administration for
Children and Families U.S. Department of Health and Human Services Testimony
Before the House Committee on Ways and Means Subcommittee on Human Resources
Hearing on Child Care Financing March 16, 1999 Madam Chairman and members of the
Subcommittee, I am pleased to appear before you today to talk about one of the
Administration's highest priorities, child care. Child care is extremely
important to the wellbeing of our Nation's children and to their parents'
ability to work and maintain employment. For this reason, I welcome the
opportunity to outline President Clinton's historic child care initiative.
First, I would like to express my gratitude for your leadership on this issue --
demonstrated both by the hearing today and by the important legislation
introduced by Chairman Johnson in the last Congress, as well as bills that have
been sponsored by Mr. Cardin, Mrs. Tauscher and others this year. I am convinced
that with our mutual commitment to this issue, we can make a difference to the
millions of working families who are struggling to find and pay for decent care
for their children. The Clinton Administration is dedicated to providing support
and resources to ensure healthy, safe, affordable child care settings that are
so desperately needed to help families work and help children grow strong and
become ready for school. In particular, we believe it is time to focus on the
child care needs of low-income working families who are struggling to hold onto
their jobs and care for their children. We need to focus on their struggles to
find safe and affordable care for three reasons: for the sake of our economy,
our parents, and our children. Employers tell us over and over that the struggle
to find affordable child care is a major obstacle to recruiting and retaining a
stable workforce. Parents tell us, in the words of one working mother from Rhode
Island: "It is becoming almost impossible for me to hold down a full-time job
and pay my child care on my small salary, but I don't want to stop working. I
need to take care of my family and show my children the importance of work." And
from the perspective of children, as President Clinton said in his State of the
Union address last year, "Not a single American family should ever have to
choose between the job they need, and the child they love." The President's
child care initiative makes a commitment to America's families that they do not
have to make this choice. It helps working families pay for child care that they
trust -- whether with a neighbor, in a family child care home, or in a child
care center -- by providing subsidies to low-income families and by expanding
the Child and Dependent Care Tax Credit to help families with
moderate incomes afford the high cost of safe and healthy care. It improves the
safety and quality of care and promotes early learning by enabling States and
communities to invest in staff training and recruitment and improves linkages to
health care, enforcement of standards, and other proven approaches to make sure
that our youngest and most vulnerable children are in homes and centers that are
healthy and safe, and offer them the opportunity to learn and develop. It
expands after-school programs, so that over one million children can be safe and
supervised after school hours and their parents can have peace of mind on the
job. And, because the President believes that parents should be supported in
whatever choice they make for care of their children, it also provides new tax
relief for parents who stay home with children under age one. In the past
several years, we have worked with Congress in a bipartisan manner to build a
solid foundation for child care. In enacting welfare reform, Congress and the
Administration made a commitment to help families on welfare move to work by
increasing the resources for child care subsidies so parents on welfare and
leaving welfare could find, afford, and keep child care. It is now time to
provide the same commitment to working families who are struggling to hold onto
their jobs and afford child care. Last year, the Administration and the Congress
made a modest down-payment on this commitment, including an investment in
research and evaluation and increased funding for child care quality activities.
This year, it is time to build on that down-payment to enact the President's
initiative, so that millions of low and moderate income working families can
find child care, afford child care, and trust child care, without going on
welfare to get the help they need. In the remainder of my testimony, I would
like to address the huge need for affordable care for working families; the
importance of care that is healthy, safe, and of high quality; and the way the
President's initiative responds to these critical needs. Affordable Child Care
for Working Families: The Critical Need An enormous and growing number of
children spend time every day in child care -- whether with a neighbor, in a
family child care home, in a child care center, or in an after-school program.
Since the cost of child care, particularly care of a quality parents can trust,
is so high, parents who work for modest wages face unacceptable choices -
sometimes having to choose between makeshift arrangements for their children at
the cost of their own peace of mind or to stop working. According to the
National Center for Education Statistics (NCES), in 1995 more than half of the
approximately 21 million infants, toddlers and preschool children under the age
of six in the U.S., or 12.9 million children, were in care. Forty-five percent
of infants under age one were in child care on a regular basis. And according to
a recent report on the National Institute of Child Health and Human Development
(NICHD) study of child care, only about 14 percent of children were home
full-time with their mothers throughout their first three years. These very
young children are the most vulnerable to care that is not high quality, yet
high quality care for them can be especially costly, creating difficult dilemmas
for parents with modest incomes. Second, these statistics are not surprising
when you consider the high, and growing, labor force participation of parents.
In 1996, 96 percent of fathers and 63 percent of mothers with children under the
age of six worked. And during this same time, nearly 74 percent of mothers with
children between the ages of six and 17 were in the paid labor force. Mother's
participation in the work force has increased dramatically in recent years. For
single mothers with incomes under 200 percent of poverty, the percent employed
as of the Census Bureau's March current population survey rose from 44 percent
in 1992 to 54 percent in 1997, driven by the culture change of welfare reform,
and the consistently strong and growing economy. Looking ahead, the continued
strength of the economy, along with the continued effectiveness of welfare
reform and the increases in work participation required under the welfare reform
legislation, suggests continued increases in parents' work participation and the
need for child care. To take just one example, Michigan has identified the
growth in the need for child care as the principal issue it expects to face in
the near future. The increased number of TANF families who are working and the
increased hours of work have resulted in a much greater demand for child care
services. At the same time, the availability of child care for working families
is critical to allowing them to retain their jobs and avoid having to seek cash
assistance. Third, for many of these working families, the cost of child care is
an enormous burden. A family earning less than $14,000 a year, and paying for
the care of a child under age five, without State or Federal assistance,
typically spends 25 percent of its income on child care. But even families
earning twice the minimum wage, with modest wages of $20,000 to $30,000 a year,
face incredible challenges in paying for care, particularly if they have more
than one child. In California, the average cost of full-time care for a child
under two years in a licensed center is $7,020 -- 68 percent of minimum wage
earnings, and almost one quarter of the annual gross income for a family earning
$30,000 a year. In Boston, the average annual child care costs for one 4- year
old is $7,900 and in Seattle $6,140. The National Women's Law Center reports
that the cost of child care can range from $4,000 to $10,000 annually.
Disproportionately high child care costs can force families to make difficult
choices ? essentially, whether to put together makeshift child care arrangements
that risk compromising the quality and safety of their children's care, to skimp
on fundamental living expenses such as food, clothing, shelter and
health insurance, or to stop working entirely. At the White
House Conference on Child Care in October 1997, a child care provider spoke
eloquently about a mother who made the first choice: she was leaving her
6-year-old alone on the school playground after school because she was afraid
that she would lose her new job if she asked her employer for a more flexible
schedule and her earnings left her unable to come up with an alternative. When
the school principal realized what was happening and told her he would have to
report her for child neglect if she did not come up with an alternative, she was
referred to a child care provider who was eventually able to come up with an
emergency scholarship slot for her -- but who said emphatically that not every
story has such a happy ending. The second and third choices, to skimp on basic
necessities like food or clothing or to leave work entirely, also are made far
too frequently, as the mother from Rhode Island I quoted earlier said so
eloquently. Employers as well as parents report on the unacceptable choices
facing families. At a recent child care resource and referral leadership forum,
a Massachusetts employer told the story of a single mother employed by her
medical clinic, who came to her when her family day care provider gave two weeks
notice that she could no longer care for the woman's child. The woman needed
affordable child care in order to work and would have to quit her job if care
could not be found. The employer's Work and Family office worked in partnership
with her and frantically searched for another provider but on the last day of
the first provider's notice, had come up with no prospects. A recent GAO study
demonstrates the pervasiveness of these issues by analyzing the trade-offs
low-income mothers face when they want to work, but face high child care costs.
According to the study, child care subsidies are often a strong factor in a
parent's ability to work, and reducing child care costs of a family increases
the likelihood that poor and near-poor mothers would be able to work. GAO
observed that affordable child care is a decisive factor that encourages
low-income mothers to seek and maintain employment. What Help Is Out There for
Working Families: Far Too Little Today, the primary source of help for
low-income families who cannot afford child care is the Child Care and
Development Block Grant (CCDBG). CCDBG funds flow to the states, who provide
help for parents by subsidizing care of the parent's choice -- with a family
member, neighbor, family child care home, child care center, or after-school
program. The key strength of CCDBG is that the flexibility of providing
subsidies directly to parents supports parents' ability to choose the care that
is best for their child. However, while CCDBG is a flexible and effective way of
getting critically needed help to parents, it is reaching far too few families.
Nationally, there are approximately 10 million children who are income eligible
for assistance under the Child Care and Development Block Grant. Even with
increased funding provided for child care program under the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996, our data show
that only about 1.25 million of these children received help from the Block
Grant's fund in 1997. In reaching only a little over 10 percent of the eligible
families, the Child Care and Development Block Grant offers many low-income
families scant hope of access to good, affordable child care arrangements.
Low-income working families miss out on CCDBG assistance for two main reasons.
First, forced into a trade-off between scarce dollars and enormous need for
child care, many states have made policy and eligibility choices that focus
assistance on families on welfare, families leaving welfare, and families at the
very lowest income levels -- leaving out parents who are struggling to hold onto
a modest job without turning to welfare for help. While the CCDBG Act allows
States to serve families with incomes up to 85 percent of the State median, only
nine States actually set their eligibility levels that high. Due to the high
demand for child care assistance and limited funding, State child care plans
currently show that in 12 States, a family of three with an income of just
$20,000 a year is not eligible for any help with child care. Only one-third (16)
of the States can afford to assist the child care needs of working families
earning 200 percent of the poverty level -- that's only $27,300 for a family of
three. In Maryland CCDBG eligibility is limited to families making less than
$22,440. Further, a report issued by the Department's Office of the Inspector
General found that in order to maximize dollars, States often set high family
co-payment rates, which limit parental choice of type of child care. Second, in
practice, states are unable to meet the enormous demand for child care even
given the low eligibility levels that they have adopted. As a result, states
across the country report extensive waiting lists and unmet need. Iowa has
subsidized child care slots for almost 75,000 children from birth to age 5 --
less than half of the reported need. In California, waiting lists are estimated
to total between 100,000 and 200,000 slots. And in Florida, there were 25,000
children on waiting lists in September 1997 and the State froze intake except
for families on welfare or for children at risk of abuse or neglect. Similarly,
in December 1997, Massachusetts reported 12,500 children -- including 600 in the
child protective system -- on waiting lists. A recent article in a Texas
newspaper reported that "on an average day, the Texas Workforce Commission,
using federal and State funds, pays for about 81,000 day-care slots for
low-income families and will have up to 40,000 names on a waiting list for such
help." The article goes on to report that program officials say this is only the
tip of the iceberg of unmet need among low-income families. Finally, even though
states have access to several funding sources to meet child care needs, there is
no way for them to meet these demands without a major Federal investment. This
investment must be large enough to make a dent in meeting the needs of working
families by being dedicated to child care and reliably available over time so
that families can depend on receiving the modest assistance they need to get and
keep steady work. Currently, the states have obligated 100 percent of the funds
available to them through the Child Care and Development Block Grant, including
the matching funds which require them to appropriate their own money to draw
them down. To draw down the full amount of funds in FY 98, states appropriated
$1.6 billion in maintenance of effort and matching funds, and a number of states
report additional appropriations of state resources. While States have the
authority to transfer Temporary Assistance for Needy Families' funds to CCDBG as
well, and about 28 states did so in 1998, states are not in a position to solve
the huge unmet child care needs of the working poor by trading off dollars that
may well be critical to meeting the intensive needs of the families who still
remain on welfare caseloads as they continue to make their transition to work.
In fact, 17 states have already committed every penny of their TANF dollars for
FY97 and FY98 and have no additional resources available for transfers to child
care. States are making the understandable choice of reserving some of their
TANF resources for - rainy day funds -- which show up in the expenditure data as
if they were uncommitted -- thus using the option that Congress provided for
states to protect themselves from possible future economic downturns. Given how
important stable child care arrangements are to working families who are seeking
to maintain their employment, it doesn't make sense to ask States to use a
potentially unstable source of funds to expand the available child care for
these families. By, for example, risking rainy day funds for child care, States
risk a major upset in the lives of families if economic difficulties down the
road were to force dollars to be shifted back from child care to cash
assistance. Besides the Child Care and Development Block Grant, the other major
source of help for families in paying for child care costs is the Child and
Dependent Care Tax Credit. Unfortunately, many low and moderate
working families fall into a gap, with incomes not low enough to be eligible for
a subsidy, yet too low to get an appreciable amount of help from the tax
credit. As I indicated earlier, due to the pressing need for child care
assistance, only nine States provide child care assistance at the maximum income
level set by Congress in the CCDBG Act, so that families with incomes as low as
$20,000 or $25,000 are not eligible for assistance in many states ? and in many
other states, they may be eligible but at the end of a long list of families
waiting for help. At these income levels, families are often caught in a gap,
with no help from the subsidy and little or no help from the tax
credit. Such working families, that cannot benefit from subsidies or
tax credits, have needs that are not being addressed under
current law. The Administration's proposal addresses these needs through an
expanded subsidy and a strengthened tax credit. But before I go
on to discuss the proposal in detail, I would like to address the other critical
aspect of child care need: the importance of care that is safe, healthy, and of
high quality. Quality We know that quality matters to children's healthy and
safe development and that the lack of affordable child care options for many
families greatly reduces their ability to find quality care they can trust.
There are serious concerns, supported by an extensive body of research, about
the quality of care many children receive. Recently, even the basic health and
safety of children in child care has become a national concern. Fortunately, as
I will discuss later, we also know what to do to improve quality so that
children can grow, thrive and enter school ready to learn. We are concerned that
far too many children receive care that is unsafe, unhealthy, and potentially
damaging to their development. For example, a four-State study by the University
of Colorado found that only one in seven centers was rated as good quality. The
Families and Work Institute also reported that 13 percent of regulated and 50
percent of unregulated family care providers offer care that is inadequate. Just
as the national school lunch and child health programs were enacted to help
develop strong bodies for low-income children, recent advances in knowledge
about brain development in very young children argue for improving our country's
ability to build strong minds. With more and more very young children in child
care regularly at an early age -- often for long hours, child care is a crucial
linkage for comprehensive, healthy child development to prepare children to be
successful in school. Research shows that when children are in quality child
care programs, they develop stronger language, pre-mathematics, and social
skills. Quality child care also promotes school readiness by enhancing nurturing
relationships between children and their care givers, thus strengthening the
child's self-esteem. The NICHD recently reported that higher caliber child care
for young children was consistently related to high levels of cognitive and
language development. Such programs ensure that children are safer, healthier,
and intellectually stimulated. Quality programs provide responsive care by
consistent, knowledgeable, and experienced care givers. I'd like to now turn to
our initiative and explain how we believe it provides the best solution to these
issues. Our Solution -- The President's Historic Initiative The President's
initiative responds to these issues by helping people pay for care in two ways:
subsidies for the lower income working families through the CCDBG and
tax credits for families at a moderate income level. The time
is ripe for using dedicated child care funds to improve both the quality and
availability of care for young children through age 5 and the affordability of
child care for all eligible children. Support for Working Families As I've
already stated today, the financial impact that child care costs have on
low-income working families is great and we believe that additional subsidy
funds are needed. Our proposal includes an expansion of the Child Care and
Development Block Grant of $7.5 billion over five years for increased support
for working families. This support, when combined with funds provided in PRWORA
will enable the program to make child care more affordable for an additional
1.15 million children by 2004, for a total of 2.4 million children in low-income
working families. These 1.15 million children and their families deserve a
chance to have the means to purchase care without sacrificing life's other basic
needs. This funding will make a significant difference to the hundreds of
thousands of families currently on waiting lists. In addition to the new CCDBG
funds, the President has proposed a tax initiative that will help bolster both
the affordability and availability of care. The proposal would increase the
Child and Dependent Care Tax Credit for families earning under
$59,000, providing an additional average tax cut of $345 for these families. The
President's budget includes $5 billion over five years to expand this
tax credit for 3.3 million working families paying for child
care. Early Learning Fund Because child care is becoming routine for so many
very young children, we must ensure that the quality and educational nature of
that early care is such that parents are comfortable with their choice and that
the care enables children to be ready to learn when they arrive at school. To
this end, we are also proposing to expand the CCDBG by $3 billion over five
years to support an Early Learning Fund. The Early Learning Fund will, for the
first time, specifically devote funding to communities to enhance the quality of
care, with a focus on promoting school readiness for children through age five.
Services under the Fund will be delivered at the community level to enable
communities and parents to take action based on their assessment of what's
needed and what will work best. Importantly, the proposal would require that a
significant part of the funds be used to serve low-income communities, where the
need for, and the impact of, improvements would be greatest. In addition, the
proposal requires that performance measures be established to assess progress
towards meeting goals established by the community. The Early Learning Fund
would directly support activities to improve quality outcomes. For example,
provider training, licensing/accreditation assistance and salary/benefit
enhancements allowed under the Fund would increase the number of qualified and
experienced staff caring for our children. Standards enforcement and the linking
of providers to health professionals and services would lead to safe, clean and
stimulating child care environments. The Early Learning Fund would also be used
to improve staff ratios and reduce group size -- long recognized as important
indicators of quality and enhancements to a learning environment. The end result
of this investment will be young children who are healthy, safe and eager to
learn, and arrive at school better prepared for the challenges ahead. Support
for Parents at Home, Employers, and After School Care In addition to assisting
working families, we recognize that parents should be supported in whatever
choice they make for care of their children. Thus, the President's initiative
also provides tax relief for with children under the age of one. Under the
initiative, parents who choose to stay at home with their infants would be
eligible, for the first time to the Child and Dependent Care Tax
Credit. The President's proposal will benefit 1.7 million families and
will provide an average tax credit of $178 at a cost of $1.3
billion over five years. Second, the initiative also includes a new tax
credit for businesses that provide child care services for their
employees by building or expanding child care facilities, operating existing
facilities, training child care workers, or providing child care resource and
referral services. The President's budget includes approximately $500 million
over five years for these tax credits that will be of much help
in expanding the availability of quality care. Finally, we also propose to
expand after-school opportunities for over one million children. Experts agree
that school-age children who are left unsupervised at home after school are far
more likely to use alcohol, drugs, and tobacco; commit crimes; receive poor
grades; and, drop out of school than those who are involved in supervised,
constructive activities. That is why President Clinton is committed to tripling
funding for the 21st Century Community Learning Centers Program, which supports
the creation and expansion of after-school and summer school programs throughout
the country. The program increases the supply of after-school care in a cost
effective manner, primarily by funding programs that use public school
facilities and existing resources. The program will target funds toward school
districts that have programs in place to end social promotion. The President's
budget includes $600 million in FY 2000 to help roughly 1.1 million children
each year participate in after-school and summer school programs. Conclusion As
we move into the 21st century with our new knowledge about active brain
development in very young children, and as our economy moves deeper into the
technology age, we cannot ignore child care as both a support to the current
workforce and a crucial component in the development of a school- ready,
work-ready new generation. The Early Learning Fund will support quality at the
community level in a way that ensures accountability for good performance.
Expanding the Child Care and Development Block Grant by adding to the dedicated
child care funds is a good investment for the future -- an investment which
supports the economy, families, and, most importantly, our children. The
additional matching funds will allow States to help many more working families.
We look forward to working with you to enact legislation to make quality child
care more affordable and available for working families. Thank you. I would be
happy to answer your questions.
LOAD-DATE: April 13,
1999 
