Do Federal Funding Mechanisms Lead to Disparate Access to Childcare?

With all of the program proposals and national policy conversations about improving children’s access to opportunity, it feels particularly frustrating when data illuminate a persistent lack of access to early education programs. The Center for Law and Social Policy (CLASP) released a report last week with troubling numbers: less than half of eligible preschoolers participate in Head Start, less than one in six eligible children receive child care subsidies through the Child Care and Development Block Grant (CCDBG), and fewer than five percent of eligible infants and toddlers participate in Early Head Start. These three federal programs have the potential to improve school preparedness among vulnerable children and increase access to opportunities that many eligible children currently lack.

Not only does CLASP report that these programs have low participation rates in general, but there is also evidence that certain groups of children experience particularly disparate access to these important services. Most striking is that eligible Hispanic or Latino children have sharply lower rates of participation (8%) in the CCDBG than do eligible Black children (21%) or all eligible children (13%). Poor infants and toddlers of any race are also at an extreme disadvantage as they only have a 6% participation rate in Early Head Start. The difficulty in accessing support services only exacerbates the disadvantage that these vulnerable children face.

These low participation rates are not the result of federal disinvestment in the programs, which the data might suggest. While it is true that pre-K initiatives could benefit from greater attention, Head Start and CCDBG are actually quite prominent programs in the United States. In fact, President Obama’s recently released FY2017 budget proposal pledges to expand Head Start programs by an additional $434 million from FY2016, for a total of $9.6 billion. CCDBG receives both federal mandatory and discretionary funds, which totalled 5.3 billion federal dollars in 2016. These are large federal programs with national attention. So why are there such low levels of participation, and why are there disparities even within the groups that do participate?

Head Start and Early Head Start programs are administered at local centers throughout the country, with federal funds going directly to local agencies based on need. The theoretical benefit to this system is that local governments benefit from having flexibility when facilitating these programs. In practice, though, the local management of Head Start programs creates inconsistencies and variations in access across the country. Federal funding and budget constraints have often neglected to increase funding or provide grants for Head Start and Early Head Start programs in areas with growing low-income populations. This adversely impacts the distribution of funds across states, ultimately leaving some local agencies without resources to support their needy population.

For example, CLASP’s report highlights that the rate of eligible Black preschoolers who participate in Head Start programs across the country ranges from 28% in Arizona to 108% in Mississippi (Mississippi’s rate is greater than 100% because it accounts for children who are categorically eligible despite having family incomes above the poverty measure). This geographic variation certainly contributes to some groups’ disparate access to early education programs.

On a similar note, the low rates of eligible participants receiving child care subsidies is an indication of the broader failures that come from using federal block grants to fund social insurance programs. Block grants are federal funds provided to the states for spending within federal parameters. States must also contribute matching and maintenance-of-effort (MOE) funds in order to receive the full federal funding. The common justification for block grants is that they provide states and locales with greater flexibility so that funds can be targeted to specific areas of need.

Unfortunately, block grant programs such as Temporary Assistance for Needy Families (TANF) show that states can supplant block grant funds by using the federal dollars to pay for state initiatives that are already in place. This frees up the funds previously used to pay for the state program, which can instead be used for purposes unrelated to the block grant’s goals.

CCDBG differs from TANF, though, because it is funded by both mandatory and discretionary funds. This means that about half of CCDBG’s total funds are an entitlement that the states receive regardless of appropriation changes or economic situations. However, the discretionary portion of the funds account for the other half of the grant’s total funding (discretionary funding was $2.435 billion in 2015), which still leaves open significant room for variation across state programs. The 2015 Consolidated and Further Continuing Appropriations Act requires that the entirety of CCDBG be used “to supplement, not supplant, State general revenue funds for child careassistance for low-income families.” But even with the language explicitly barring supplantation, the states have broad discretion over the use of federal CCDBG funds; each state is able to decide program funding levels, policy choices, and what standards the child care providers must meet.

This broad discretion allows states to decide who is eligible to participate in CCDBG and what benefits they receive. This leads to quite different participation rates across the country by race; eligible Black children have the lowest participation rates in Maine (3%) and the highest participation rates in Pennsylvania (42%). Another prominent indication of state discretion comes from CLASP’s report that the federal income eligibility for CCDBG is set at 85% of State Median Income (SMI), but states can set their respective income eligibility at any level below this federal guideline. So in practice, the average income eligibility across states is actually 175% of the federal poverty measure. For comparison, depending on the state, 85% SMI is roughly equivalent to 273%, of the federal poverty threshold for a family of four. The consequence– far fewer families are eligible for the subsidies under state standards than would be eligible under the federal guideline.

Ultimately important here is that CCDBG participation data is relativelyreflective of state spending priorities and policy decisions across the country. Specifically worrisome is the focus on block grants. While entitlement programs, like SNAP, are mandatory expenditures that respond to people’s need (for example, SNAP participation increased during the recent recession because more people faced lower incomes), discretionary funding under block grants does not necessarily increase with need. This adversely impacts families seeking child care and early education services across the country because funding doesn’t always match geographic need.

The low rates of participation and varied benefits lead to the possible conclusion that federal funds are not successfully targeting early care and education programs in the states. This conclusion is tentative, and CLASP’s report highlights the need for additional analysis of the data to understand specific causes for the disparities. In the meantime, better efforts to track spending on Head StartEarly Head Start, and CCDBG could mitigate some of the substandard participation rates of eligible children across the country.

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