How to Spend $2.37 Billion

At the dawn of the single largest funding increase in the history of the Child Care and Development Block Grant (CCDBG), here are five ways states can spend the funds to further the dual purposes of child care as both a work support and a child development support.

With the 2014 reauthorization of CCDBG, Congress codified child development as one of the purposes of the funds.  The law also mandated 12-month eligibility, a policy that reflects the science showing children’s brains develop best in stable, nurturing relationships.   This recognition of child care as child development is the single biggest shift in child care policy in the past 20 years, with significant implications for how we deliver care and what it costs.  If we believe the brain science, if we want to break the cycle of intergenerational poverty, then we have to focus on making sure child care is child development, and not just a safe place for children to go while their parents work.

1. Invest in a qualified, compensated workforce.  A qualified workforce is the core of child care as child development.  Laying a strong foundation for how children learn and develop has implications for the qualifications and salaries of those who take care of the children. Yet, in the most states, training requirements for child care staff are minimal—typically requiring less than a week’s worth of training before providers can begin caring for children in a licensed program.  Most providers are small businesses operating on razor thin profit margins and cannot afford decent wages for staff.  Staff receive median hourly wages of $11 an hour or $23,000 a year,[i] so many staff qualify for public benefits themselves.  If we want the child care industry to support child development, states should use the new funds to support the professional development of the early childhood workforce, both in access to education AND compensation.[ii] 

2. Raise child care reimbursement rates to reflect the cost of supporting child development.  CCDBG recommends states reimburse child care providers at the 75th percentile of the market rate, or the rate that allows families to access 75 percent of the providers in their community. Unfortunately, only 2 states (South Dakota and West Virginia) meet this standard; and market rates do not reflect the cost of providing child development. The market encourages price competition, which lowers parent fees, but prevents providers from paying a workforce with the credentials and compensation to provide child development.   Some states are using alternate methods that quantify the cost to providers for meeting higher levels of quality.  States should stop using market rates and use the new funds to set base payment rates and rate differentials at levels that reflect the costs to providers for meeting higher quality standards.

3. Make work supports work. Moving families to self-sufficiency means paying attention to how income supports interact and affect the bottom line of family budgets.[iii]  If a small increase in income bumps a family off of the child care assistance program, it causes a dramatic decline in net income, and does not incentivize work. States can use the new funds to increase both initial and exit eligibility limits so that families can qualify for and retain child care assistance up to higher income limits, allowing them more time to gain financial security before losing their child care assistance—or their opportunity to apply for it in the first place.

4. Incentivize a child care market that is compatible with the low-wage job market.  Many low-wage jobs have erratic schedules from week to week, as well as non-standard hours such as evenings and weekends.  Most child care operates during the traditional work week, and these small businesses expect to be paid for a regular, full-time slot, regardless of when the child attends.  The market does not offer parents in low-wage jobs a work support, let alone child development.[iv]  States can use the new funds to help these families by revising provider payment policies so that families can retain a full-time slot in a child care program, even if their work hours vary and do not match that schedule each day, and by providing incentives to encourage more providers to offer care during nontraditional hours.

5. Prioritize infant care.  Infant care is labor-intensive, with recommended ratios of one adult for every 3 infants.  Making a profit on this type of care is difficult, especially when relying on child care assistance payments.  The first years of life are critical for brain development, and many of our youngest children are not able to access high-quality programs due to high costs or long waiting lists. States can use the new funds to expand the supply of high-quality infant care by increasing payment rates for infant care,[v] providing grants for infant care in low-income neighborhoods, or funding infant care specialists to help train and mentor providers caring for very young children.

Our single biggest challenge is incentivizing the child care industry to be both a work support and a support to child development during the years when brains grow most rapidly.  At the Alliance for Early Success, we do believe the brain research, and we do acknowledge that parents need child care to work, so we are committed to working with states to craft policies and prioritize funding to support both work and child development.

- Helene Stebbins, Deputy Director of the Alliance for Early Success (March, 2018)

This blog is an excerpt from testimony delivered to the U.S. House of Representatives, Subcommittee for Early Childhood, Elementary, and Secondary Education on March 6, 2018.

Endnotes: 

[i] “39-9011 Childcare Workers.” U.S. Bureau of Labor Statistics, U.S. Bureau of Labor Statistics, www.bls.gov/oes/current/oes399011.htm.

[ii] North Carolina’s TEACH and WAGES programs, and Louisiana School Readiness Tax Credits are examples of how states are trying to do this. 

[iii] The National Center for Children in Poverty’s Making Work Supports Work project has more information on this topic.  See http://nccp.org/projects/mwsw.html

[iv] For more information, see “Nearly One in Five Working Mothers of Very Young Children Work in Low-Wage Jobs.” National Women’s Law Center, https://nwlc-ciw49tixgw5lbab.stackpathdns.com/wp-content/uploads/2014/04/Nearly-One-in-Five-Working-Mothers-of-Very-Young-Children-Work-in-Low-Wage-Jobs-2017.pdf

[v] All states do provide higher reimbursement rates for infant care, but most states still set their payment rates for infant care below recommended levels. See “Shortchanging our Youngest Children: State Payment Rates for Infant Care”  National Women’s Law Center, https://nwlc-ciw49tixgw5lbab.stackpathdns.com/wp-content/uploads/2018/02/NWLC-Infant-Care-Payment-Rates-2017-final.pdf (Table 1, page 15).