Child Care Subsidies Are Getting a Second Look

Thanks to a change in federal law, states are moving away from stringent reporting requirements that can keep low-wage parents from working.

Four years ago, if you were a working parent in Idaho applying for a state subsidy to help with child care costs, you had to fill out a form with a day-by-day account of a typical workweek. You also had to submit a pay stub to corroborate what you said on the application. And if your hours changed from one week to the next, then you had to report it to the state’s child care division.
Anti-poverty advocates say these types of requirements punish low-wage workers, who are more likely to have volatile work schedules and multiple jobs. It can become burdensome to inform the state each time a schedule changes. Based on research about other kinds of public assistance programs, this kind of tedious and ongoing reporting can lead people to leave the program. But because low-wage workers haven’t moved up the economic ladder, they’re no better off financially and eventually reapply for help. Economists call this cycle “churn.”

Churn wastes time for the parents who have to reapply and prove eligibility again, and for the government workers who have to reverify that the parents are eligible. So administrators in Idaho’s child care division wanted to do away with bureaucratic measures that were causing churn. They convinced the state legislature in 2011 to approve rules that relaxed the program’s reporting requirements for working parents. Now parents in Idaho only have to provide proof of employment and say how many total hours they’re working in a week. A state calculation based on whether the parent is working part-time or full-time helps determine the amount of the subsidy. (See Idaho’s simplified application here.) The old system of reporting “was very cumbersome for staff,” said Ericka Rupp, who manages Idaho’s child care assistance program. Families would have to write out the work schedules for every member of the household and then staff would have to manually calculate the hours. Parents’ schedules were complicated and ever-changing. “People don’t work eight-to-five, Monday through Friday,” Rupp said. “It’s just not our country anymore.”

Many states still ask for detailed seven-day job schedules in applications for child care assistance. But because of a change in federal law last year, states — like Idaho — are moving away from such stringent reporting requirements that can keep parents from working, searching for work or attending school.

The federal Child Care Development Block Grant Reauthorization works to ensure families’ continued access to child care subsidies. It was changed last year so that families now keep eligibility for a 12-month period, even when a parent’s work or education status changes. (The one major exception is if the family’s income increases above 85 percent of the state’s median income.) Another added provision calls for states to account for irregular fluctuations in income, so that a working parent doesn’t have to submit new paperwork if, say, she picks up extra shifts in a given week.

While the law doesn’t mandate that states stop asking for the minutia of parents’ work schedules, it’s a likely consequence, said Hannah Matthews, director of child care and early education at the Center on Law and Social Policy. “That whole idea of having more continuous eligibility, we hope, results in less reporting. If fewer changes affect a parent’s eligibility, there’s no more reason why states need to collect the detailed information they were collecting from families before.”

States have until October to comply with the new law. But at least three states — Michigan, Oregon and Washington — have already enacted laws in 2015 that support more continuous access to child care assistance.

While the Center on Law and Social Policy and other advocacy groups promote the argument that continuous access to child care is better for the children, others argue that it is simply a more efficient use of taxpayer dollars.

“Every time a family has to show another piece of paper and documentation of a change,” Matthews said, “[that’s] time and money for a government worker that has to process that change.”

In contrast to debates over other welfare programs, the easing of administrative barriers to assistance gets support from both conservatives and liberals. That’s because the federal grant program, at its core, supports work as a solution to family poverty. The fact that reducing reporting requirements can reduce churn and make a program more efficient also bolsters its case politically.

The Child Care Development Block Grant program, sometimes referred to as the Child Care Development Fund, is one of the nation’s smaller public assistance programs. The grants subsidize child care for about 1.4 million children from more than 850,000 families. By comparison, more than 45 million people in more than 22 million households participate in the Supplemental Nutrition Assistance Program, better known as food stamps.

Like other antipoverty programs, eligibility largely depends on income, and the thresholds go up with the size of the household. Because child care assistance is a block grant program, states have broad discretion in how they implement it. In some places, families receive subsidies in the form of a check or a voucher, which they then use to pay child care providers. In Idaho, the benefits go directly to providers. Parents pay a share of the child care costs, which for a three-person household in Idaho ranges from $20 to $150, depending on whether the care is part- or full-time.

It’s still too early to know the full impact of Idaho’s eligibility and reporting changes. However, the number of children served by Idaho’s child care program has increased each year, marking a 10.6 percent growth between 2011 and 2014. Easier access may explain the rise, though a weak economic recovery is surely another factor. At the very least, Rupp said state workers are spending less time and money reviewing minor updates to parents’ education and work status.