Earlier this year, NCECF published a short analysis of two proposals – by Republican US Senator Richard Burr and by President Trump – to use federal tax policy to make child care more affordable for some families. Last week, top Democrats in the US House and Senate jointly released their own plan to reduce the cost and improve the quality of child care.
The Child Care for Working Families Act would make changes to the Child Care and Development Block Grant (CCDBG), which is the primary vehicle for federal funding for child care for low-income families. Changes are aimed at increasing affordability, improving program quality, and supporting and strengthening the early educator workforce.
Eligibility. The Act would significantly expand eligibility for child care assistance for low- and middle-income families in North Carolina. Current CCDBG rules require that families making less than 85 percent of state median income be considered eligible for child care subsidies. The Child Care for Working Families Act would raise that eligibility floor to 150 percent of state median income (SMI). NCECF calculated what this would mean for North Carolinians.
North Carolina has set eligibility for subsidies at 200 percent of the federal poverty level (FPL) for children from birth through age five and at 133 percent of FPL for school-age children. That is more generous that the current CCDBG requirements, but less generous than the proposed new requirements. Under the proposed Act, NC families making up to $70,300 per year would be eligible for assistance, while under current policy, only NC families making less than $51,000 (for a family of three) qualify for subsidy.
The chart below outlines the current levels and proposed change.
|Current NC Policy||Proposed CCDBG Policy|
|Who is/would be eligible?||Families making less than 85% of SMI||Families making less than 200% of FPL||Families making less than 150% of SMI|
|So families are/would be eligible if making less than:||$39,800||
Affordability. The Act would specifically focus on making infant and toddler care more affordable for families, not only through increased eligibility, but also through reduced fees. Under the Act, no family earning less than 150 percent of the state median income would spend more than 7 percent of their income on child care. This would meet the definition for affordability put forward by the US Department of Health and Human Services.i Fees would be charged on a sliding scale to families making from 75 percent to 150 percent of the state median income, while families under 75 percent of the state median income and those eligible for Head Start would pay no fees.
North Carolina’s median household income is $46,868,ii and the average cost of child care is around $15,745.iii That means child care for just one child in North Carolina currently takes up a third (34 percent) of an average family’s income, assuming they are not receiving a subsidy. For families who receive child care subsidies, fees are currently capped at 10 percent of the family’s income. Under the new rules, no eligible family would pay more than 7 percent of income for child care—so up to about $4,900 per year for a family at the top end of the eligibility spectrum.
Program Quality. In addition, the Act aims to improve the quality of child care available to families. It would increase federal investment in quality improvement, aim to increase the supply and quality of care for underserved populations (children in underserved areas, infants and toddlers, children with disabilities, and children in care during non-traditional hours), and require that states establish a tiered system for measuring the quality of child care providers, including for family, friend and neighbor care, with standards that are tied to child outcomes. States would be required to use quality improvement funds to incentivize participation and improvement in the tiered quality system; expand high quality care for infants and toddlers, homeless children and children with disabilities; and support staff training and professional development.
North Carolina already has in place a tiered system for measuring child care setting quality. The star rating system, however, is focused mainly on teacher qualifications, ratios, classroom materials and health and safety standards, rather than being tied to children’s outcomes. North Carolina has no system in place to provide standards to family, friend and neighbor care.
Workforce Support and Quality. The new Act would also make changes aimed at strengthening the early childhood workforce, with the goal of improving the quality of child care. The Act would require states to base payment rates on the tiered quality system and include variations based on the cost of care by geographic area, type of provider, age of child, ability level of child, etc. Rates would be delinked from children’s attendance patterns. Payment rates would also need to support wages for early educators that are comparable to wages of elementary (K-5) educators in the state and that provide a living wage.
North Carolina already ties reimbursement rates to the age of the child, quality of the program (star level), type of provider (center, family child care home) and county. Reimbursement rates do not currently take into account the ability level of the child. Rates are based on a market rate study that is conducted every three years.iv
Subsidy payment is currently linked to attendance in North Carolina. Wages for early educators in North Carolina are not linked to or comparable with wages of elementary school teachers. A 2016 U.S. Department of Education report found that the median salary for child care workers in North Carolina was $19,500, and for Head Start and NC PreK teachers it was about $26,000.v More than half of North Carolina’s early education workforce (56 percent) qualify for federal benefits, based on their wages.[vi In comparison, for North Carolina kindergarten teachers, the median salary was $40,000 and for elementary school teachers overall, it was just over $42,000.vii
Other Provisions. Other provisions of the Act would prioritize investment in care for underserved populations, prohibit payments to providers who use suspension and expulsion, extend Head Start to a full school day and full school year of services, and increase preschool funding for three- and four-year-olds.
Funding. The Act would match state spending on child care for children other than infants and toddlers at the Medicaid match rate (FMAP). For infants and toddlers, the federal government would cover 90 percent of costs and states would contribute 10 percent. It is not clear where the funds for the Act would come from, since no pay-for is mentioned.
i National Conference of State Legislators blog (2016). “How Much Does Child Care Cost?” Available online at: http://www.ncsl.org/blog/2017/01/03/how-much-does-child-care-cost.aspx
ii US Census Quickfacts – North Carolina. Available online at: https://www.census.gov/quickfacts/NC
iii New America, The Care Report – Interactive Map. Available online at: https://www.newamerica.org/in-depth/care-report/explore-care-index/
iv North Carolina Early Education Coalition
v U.S. Department of Education. (2016). High-Quality Early Learning Settings Depend on a High-Quality Workforce: Low Compensation Undermines Quality. Available online at: https://www2.ed.gov/about/inits/ed/earlylearning/files/ece-low-compensation-undermines-quality-report-2016.pdf
vi Child Care Services Association, Working in Early Education in North Carolina: 2015 Workforce Study. Available online at: http://www.childcareservices.org/wp-content/uploads/2016/01/2015-Workforce-Report-FNL.pdf
vii U.S. Department of Education. (2016). Op cit.