Child care.

Child care plays a central role in the success of working families across the nation. Through the federal Child Care and Development Fund, state agencies are able to provide low-income working families with subsidized child care. With limited resources however, states are challenged in providing child care that is high in quality, adequate in supply, and affordable. Yet, child care that meets these critical criteria is dually beneficial to children and working families. On one hand, it serves as an economic necessity that allows parents to secure and retain employment and reduce dependency on public assistance. At the same time, quality child care promotes healthy child development and prepares children to be successful in school and life. These benefits are well supported by the research literature. In fact, the National Center for Education Statistics finds that quality child care is particularly important for children from economically disadvantaged families and those with low maternal education, since they are at high risk of not being ready for school.

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Child Care is Vital to Working Families--High-quality child care allows working families to secure and retain employment in today's workforce. Research from the Economic Policy Institute finds that:

* Single mothers who receive child care assistance are 40 percent more likely to remain employed after two years than those who do not receive this assistance.

* Mothers with a high school degree or less were just as likely as mothers with some college education to experience increased employment tenure when receiving child-care subsidies.

* Former welfare recipients with young children are 60 percent more likely to still be employed after two years if they receive help paying for child care.

Child Care Promotes Success in School and Beyond--High-quality child care also offers a direct benefit to children, providing them with a safe, nurturing environment that promotes school readiness, high school completion, and skill-building for success in life. For infants, toddlers, and preschoolers, quality early care and education creates positive early learning experiences that promote optimal brain development, shaping the child's intellectual, linguistic, social-emotional, and physical skills. In turn, these developmental skills help children think critically, learn from teachers and peers, make friends, express thoughts and feelings, build confidence, and cope with frustration--all foundational skills needed for success in school and beyond. Quality early care and education settings help young children acquire these basic skills that then facilitate important academic skills such as reading comprehension and math.

For school-age children, quality after-school programs keep elementary and middle school students safe and healthy during the afternoon hours when juvenile crimes tend to soar. These programs keep youth constructively engaged when they might otherwise be getting into trouble on the streets, taking drugs, joining gangs, or engaging in other inappropriate behavior. Quality after-school programs also provide youth with academic supports such as homework help and tutoring to inspire learning success. In quality after-school settings, trained youth workers develop children's self-esteem, teach respect and community involvement, and impart values and habits for success in life. In turn, youth who attend these programs get better grades, have better personal conduct in school, and stay in school instead of dropping out.

A Return on Investment--The direct link between child care and our economy is clear. Well-respected studies by business leaders and economists at the Center on Economic Development calculate a high return on investment--as much as $17 for every $1 invested in high-quality programs. Not only does high-quality care play a critical role in alleviating the economic burden our country is currently facing by providing safe, affordable care so that parents can immediately secure and retain employment, it also develops human capital down the road by cultivating crucial academic and life skills that children need to succeed in school and later in life as adults.

Elements of High-quality Care--Families should have the ability to choose and access the child care setting that works best for the family. Whether parents choose center-based care, family child care, or familial kith and kin providers, parents need child care providers to supply care that is reliable and high in quality in order for them to remain in the workforce. Likewise child care should offer meaningful experiences for children to nurture their development. Quality is greatly determined by the caliber of professionals or providers who supply child care. Child care providers are best positioned to provide high-quality care when they are educated, have access to educational opportunities such as training and professional development courses, and receive adequate pay. Child care providers also need resources to obtain evidence-based curricula that embed school readiness, small groups, and high staff-to-child ratios.

Examples of other high-quality care elements include continuity of care and emphasis on health and safety. The importance of having a cadre of highly qualified, well-paid child care professionals and evidence-based curricula is underscored by the fact that children spend a significant amount of time in child care settings--often up to nine hours while parents work. Unfortunately, high quality care is too costly for many families. In fact, low-income families can spend 25 to 30 percent of their net income on child care. Also, low wages often paid to child care workers result in a workforce with minimal skills and high turnover. These workforce issues spill over into service delivery. As an example, most children in infant and toddler care attend child care centers that do not meet quality recommendations.

Potential and Challenges of CCDF--The CCDF block grant provides federal funding for child care to low-income working families. Adequately subsidized high-quality child care through CCDF could be a critical support for many more low-income families providing children with opportunities for healthy growth and development and parents with the opportunity to become self-sufficient. To be eligible for child care assistance, children must be younger than 13, and their parents must be working, receiving training, or in school.

Currently, child care polices generally focus on the work needs of parents and are less invested in the developmental needs of children or the holistic needs of the family. Confined eligibility parameters undermine continuity of care for children. Low benefit levels significantly undermine the ability of parents to choose care that meets the needs of their children. Current regulations allow families with incomes up to 85 percent of the State Median Income to be eligible for the program: however, states have flexibility in adjusting eligibility thresholds downward according to availability of funds. Between 2001 and 2004, due to budget constraints, nearly three-fifths of the states reduced their income eligibility level--decreasing the number of eligible families who were able to benefit from child care subsidies. Many others have reduced or capped payment rates at levels that severely limit access for participants to the providers who offer the most appropriate environment for children's development.

Funding Constraints and Administrative Burdens--CCDF was last reauthorized in 2002, and funding has continued since then only through short-term extensions. The Deficit Reduction Act of 2005 froze program fanning unit 2010, and other CCDF funding has remained static since FY 2002, Issues of funding are compounded by the problem that CCDF is not strategically aligned to leverage funding and collaboration from other programs designed to support children and families (e.g. Maternal and Child Health, Child and Adult Care Food Program, Head Start, and education). As an example, early education funding through federal programs such as Head Start is weighed down with administrative requirements that often make strategic coordination with CCDF and other state and local sources burdensome, if not impossible.

Federal and state governments must partner to develop a healthy, stable workforce infrastructure in child care. The federal-state partnership should aim at improving collaborations beyond early care and education federal programs to other federal agencies that also provide millions of dollars in dedicated funding streams on human development. Finally, the partnership should seek collaborative opportunities with other relevant federal agencies to align payment policies and ultimately leverage limited child care funds.

Inaccuracies of Error Rate Methodology--The Administration for Children and Families has issued the final rule for CCDF error rate reporting that required states to implement provisions of the Improper Payments Information Act of 2002 (P.L. 107-300). The rule required state child care programs to measure, calculate, and report error rates to obtain a national rate of improper authorizations for payment. However, IPIA is clearly intended to focus on the actual payment of federal funds rather than the authorization for payment utilized in the CCDF error rate methodology.

The methodology used for state child care subsidy programs is particularly

problematic since many programs often authorize estimates of maximum payment for which a client is eligible, without ever expending that actual amount. Also, many states do not necessarily "authorize" a specific child care subsidy amount at the time eligibility is determined. Actual "payment" of CCDF funds for many states does not occur until after services have been delivered and billed by a provider. There are many variables that can affect what this amount may be from month to month, particularly the actual amount of services used regardless of the amount that may have been authorized. Consequently, both result in inflated figures, whereas using actual payments would result in actual amounts.

Continuing to implement the current methodology--which relies on authorized amounts that for many states may end up being estimates rather than actual payments--will significantly undermine the accuracy of measured improper payments. States are concerned that improper payments identified may cause states to be unjustifiably penalized. Rather, shifting the focus of the CCDF error rate methodology to actual payments would be more consistent with both the intent and actual language of the IPIA, and will result in far more accurate and meaningful results regarding "actual payment" error amounts.

These considerations aside, however, the attempt to impose a national error rate on a flexible block grant program like CCDF is highly problematic, and it is questionable if the IPIA actually contemplated the inclusion of programs like this.

Policy Agenda

To alleviate these burdens and meet the demand for high-quality care, APHSA and its affiliate, the National Association of State Child Care Administrators, make the following recommendations.

Recommendations for Legislative Action

Federal CCDF funding for child care must be sufficiently expanded to:

* Increase low-income families' access to child care subsidies as a support for their employment.

* Support state capacity to improve child care quality for positive child outcomes.

* Support state efforts to address the workforce development needs of child care workers.

Recommendations for Administrative Changes

* Provide the necessary research, evaluation, and coordinated technical assistance to assure that systems and strategic plans developed by states support positive outcomes for children and families.

* Require coordination and cooperation among the Child Care Bureau, Office of Head Start, Maternal and Child Health Program, Department of Education, and other relevant federal entities so that programs rely on consistent policy guidance from ACF and its federal partners and experience reduced conflict among rules and regulations.

* Terminate the development of a national payment error rate for the Child Care program by the HHS Office of Inspector General, since efforts to establish a national payment error rate for such a flexible block grant program like CCDF with different rules in each state produce misleading results that distract attention and siphon resources from the true goals of the CCDF block grant.