States work to improve child care assistance so parents can go from welfare to work. (On First Reading).

To work and get off welfare, parents need help with child care. Two recent publications highlight the importance of child care assistance decisions facing state policymakers.

The Center for Law and Social Policy (CLASP) and the Children's Defense Fund have published studies that report on state actions and underscore how important the 2002 congressional reauthorization of assistance block grants is to child care assistance programs.

Since passage of the 1996 welfare reform law, states have used Temporary Assistance for Needy Families (TANF) block grants to help pay for child care. In fact, states redirected $3.9 billion in grant money, according to the CLASP study, which actually is more than the $3.5 billion available to them in federal Child Care and Development Block Grant dollars in FY 2000.

Using welfare money for child care has become a key option for states now that caseloads have declined more than 50 percent since 1996. States transferred $2.4 billion to child care and TANF development grants in FY 2000 and directly spent $1.5 billion of their TANF money to help take care of children. All but two states reported using some TANF for child care (at varying levels) the same year, redirecting an average of 25 percent of their money. State child care administrators say the grant money has funded many positive expansions and initiatives.

Examples include:

* Increasing the number of children served.

* Expanding income eligibility.

* Lowering co-payment fees.

* Increasing reimbursement rates for child care providers.

* Expanding quality child care.

* Increasing collaboration with pre-kindergarten or Head Start programs.

Some administrators, however, according to the CLASP study, worry about the stability of child care systems because lawmakers may decide to spend welfare money on services besides child care as states face economic downturns or cases increase. Welfare caseloads increased in two-thirds of the states between March and September 2001,

The Children's Defense Fund's new report, "A Fragile Foundation: State Child Care Assistance Policies," says states must build on the progress they have made so far in helping families pay for child care. Limited resources continue to compel states to make difficult choices--between expanding the number of families served and the level of benefits or between serving families trying to move off welfare and those trying to stay off welfare. The report found that in two-fifths of the states, a family of three earning $25,000 per year cannot qualify for help.

But there are effective approaches out there when resources are available.

* Rhode Island statutorily requires that eligible families receive sufficient child care assistance. Several other states, including Illinois, Oregon, Vermont and Wisconsin, have committed to serving all eligible families who apply for help.

* More than half the states set reimbursement rates at the 75th percentile of current market rates--the amount that allows families to use 75 percent of the providers in their community. Many states set higher reimbursement rates for care that is more expensive or difficult to find.

* Some states' policies keep parent co-payments affordable. Several states exempt from co-payments families with very low incomes or other special circumstances, charge reduced fees or no fees for each additional child a family has in care, or set a ceiling on the percentage of income a family must pay.

For copies of the reports call Anya Arax at CLASP, [phone] or Karen Schulman at the defense fund, [phone].