Both the Senate and House Budget proposals leave much to be desired when it comes to ensuring that young children’s needs are supported and that they are in safe, enriching learning environments. Both proposals require cuts to four of North Carolina’s 16 child development agencies and fail to make up for lost ground in funding pre-K slots. While both the House and Senate Budget proposals add $5 million for additional pre-k slots, the funding is one time money meaning the slots expire after one year. It’s important to remember as well, that it doesn’t make up for the 2,400 slots that were lost in the budget passed last year.
In each proposal, troubling changes are also recommended to the income eligibility for the state’s child care subsidy program, which means about 12,000 children served last year would no longer be eligible according to legislative fiscal staff. The Child Care Subsidy program serves a two-fold purpose by both acting as a work support so parents can maintain employment and provide for their family, and to help families afford access to high quality child care so their children receive the early education they need to succeed in life.
The high cost of child care makes it difficult for many parents who work to obtain good quality care. In fact, child care is often the highest monthly expense for a family, with an average annual cost of full-time center care for one child at about $8,500 a year. Currently, the child care subsidy program provides families who earn less than 75% of the state median income (SMI; $42,201 for a family of three) the opportunity to ensure a safe, quality child care setting for their children while they work. Given the high cost of care, the federal government allows for states to qualify families up to 85% of the SMI, although most states, including North Carolina fall below this benchmark.
Instead of maintaining eligibility levels, and even increasing them as the federal directive allows, both the Senate and House budget proposals go in the opposite direction by reducing eligibility to 200% of the Federal Poverty Level (FPL; $39,060 for a family of three) for children 0-5 years old. Both proposals reduce eligibility even further for children 6-13 years old to 133% of FPL ($25,975 for a family of three). This means that to qualify to receive subsidies you have to earn less, even though families who earn up to 75% of the SMI still often can’t afford child care. As a result, fewer families will be able to access this critical support to help parents maintain work and help children be safe and successful in school. The impact on school age children is particularly damaging where the most drastic eligibility reduction is implemented. School age children with working parents still need before and after school care, as well as care during summer to ensure their safety and provide enrichment. When families can’t afford this care they are faced with leaving children home alone or in unsafe settings, missing work and potentially losing a job.
Both the Senate and House proposals claim to make a reduction of the child care waiting list by 3,200 and 2,250 slots, respectively. Because the funding has been inadequate over the years, nearly 16,000 eligible North Carolina families are on a waiting list to receive subsidies as of March 2014. While the reduction in the size of the waiting list is an important goal, it should not be done by cutting other families who are struggling to afford care off the program.
Another element of the subsidy program that is addressed in the House but not the Senate Budget proposal is the rate of reimbursement to child care providers who accept child care subsidies. While this is a somewhat complicated and little known element of the subsidy program, the rates that providers are given to give care to children whose families use subsidies is a critical element of ensuring that this program works for families. For example, currently child care providers are being reimbursed using out-of-date costs for child care. The House proposal provides funding to increase the rates effective January 1, 2015 to bring them more in line with current market rates. One reason this is such an important affordability concern for families is because many child care providers charge families the difference between the subsidy reimbursement rate and the real market rate cost of child care. In 2012-2013, about one quarter of child care centers charged families receiving subsidies the difference, and over one third of the highest quality five star centers charged families the difference. For low to moderate income families already paying a co-payment of 10% of their income, this additional cost could mean the difference to obtaining a safe, high-quality setting and losing their job or being forced to choose unsafe care situations.
Both the Senate and House proposals also decrease state dollars by relying on more federal dollars available through block grants. It’s unclear what the associated impact will be to other block grant-funded programs. Further, due to policy makers decision last year to implement a costly tax cut plan, our ability to invest in the future success of North Carolina children and the stability of our families is severely hampered. A better way forward would be to reverse the tax changes made last year, or at the very least stop further implementation of cuts in 2015, to help ensure that all North Carolina families who can’t afford care receive help to support their ability to work and their children’s ability to learn in a safe environment.