Congress needs better child care policy for low income Americans

For millions of low income working families, child care costs can be the biggest financial challenge they face, accounting for up to 35 percent of the monthly budget of poor families with young children. The federal Child Care Development Block Grant aims to help these families afford child care by giving states money to operate subsidy programs. A literature review for the Department of Health and Human Services demonstrates that government child care assistance such as this grant increases employment for low income families. However, access to these subsidies is limited, with only 25 percent of eligible children receiving a child care subsidy back in 2015, according to federal data.

The Child Care Development Block Grant only serves as many children as its funds allow, which is one reason why Congress added $2.4 billion to the program in the Consolidated Appropriations Act. However, recent reports suggest that states have prioritized the use of additional funds to meet federal quality standards, such as inspection visits and provider training, required as part of reauthorization in 2014, with less attention to serving more children. Before Congress appropriates the next round of funds for child care, lawmakers should revisit the current direction of the program and consider alternative ways, such as refundable tax credits, to serve the child care needs of more low income children.

Congress originally designed the child care subsidy program to help low income parents remain in the workforce by making child care more affordable. After years of concerns about the quality of subsidized child care, changes to the program in 2014 focused on supporting higher quality child care for low income children. While this is a noble goal, questions remain about whether such quality regulations, like additional inspections and trainings, actually lead to higher quality child care. More regulations drive up costs though, and stretch the already limited program funding, resulting in fewer overall children served.

The changes to the Child Care Development Block Grant also have the unintended consequence of reducing subsidized child care supply, especially among family and informal child care providers who might struggle to meet the new requirements. Experts believe the changes have already pushed some of these providers out of the child care subsidy system. This harms working parents living in rural areas, those with nonstandard work schedules, and parents of infants and children with special needs who will face more challenges finding a child care provider even when they have access to a child care subsidy.

Two recent reports suggest that the additional Child Care Development Block Grant funding authorized last year is being used in ways that will exacerbate these concerns. A federal survey found that 44 states planned to use the extra money to increase provider pay rates, while 38 states planned to spend it on the implementation of the 2014 reauthorization requirements. Only 16 states reported their intention to use the increased funds to serve children on waiting lists. A similar survey by Child Trends found that 30 states planned to use the additional funding to help more children, but that was still a lower priority than implementing the 2014 reauthorization requirements and increasing provider pay rates.

While everyone supports higher quality child care, Congress needs to recognize the need to support employment for low income parents with increased access to flexible and subsidized child care. A subsidy system that only provides a small number of children with child care at centers meeting federal standards risks becoming irrelevant as a work support program. Congress should still authorize program  funding to match appropriations from the Consolidated Appropriations Act for the coming year, if only to equip states with a way to fully implement the updated requirements. But Congress must also recognize that access to subsidized child care remains a problem in many parts of the country and that more money for the program cannot be the only practical solution.

An expanded child and dependent care tax credit would give working families more access to resources with the flexibility to choose a child care provider that meets their needs. Making the tax credit refundable, meaning that it is provided in the form of cash payments to families even when they have no federal income tax liability, and providing it at least quarterly would increase the affordability of child care for more families and help them work toward a more economically stable future.

Angela Rachidi is a research fellow in poverty studies at American Enterprise Institute. You can follow her on Twitter @AngelaRachidi.