Today’s enhanced monthly Child Tax Credit payment could be the last that families receive unless Congress acts to extend this successful policy

Today marks the sixth round of Child Tax Credit (CTC) payments going out to an estimated 1.2 million families in North Carolina, supporting the well-being of nearly two million children in the state. The temporary improvements to the CTC under the American Rescue Plan increased funding available to families, expanded eligibility by making the credit fully refundable, and changed the schedule for distributing funds so that half of the credit is distributed through monthly payments that began on July 15. But unless Congress acts to pass the Build Back Better legislation before the end of the year, December 15 marks the final day that families will receive monthly payments, and the gains that families have seen from the new CTC will be lost.  

Recent research from the Center on Poverty & Social Policy at Columbia University estimates that the October CTC payment kept 3.6 million children across the country from poverty that month. These reductions in poverty translate to long-term benefits in kid’s educational attainment, health as adults, and future earnings. All children, white, Black, and Brown see big benefits from the credit, and the improved CTC is also helping to narrow racial inequities in child poverty. Lower child poverty means real improvements in children’s well-being, like living in safe and stable housing and having enough food to eat. The most common use of the CTC for North Carolina families is to purchase food, and this summer’s payments drove down food insecurity among families that received them. Monthly payments of the CTC are especially important for smoothing family incomes and allowing them to meet monthly expenses. 

Source: Center on Budget and Policy Priorities

Recent analysis from the Center on Budget and Policy Priorities lifts up the state-level gains that will be lost if Congress does not extend the enhanced CTC. 

In North Carolina: 

  • 90% of children experienced an increase in benefits.  
  • Among families with low incomes under $35,000: 
    • 87% spent CTC payments on basic needs, including housing costs, food, utility bills, and clothing. 
    • 93% spent CTC payments on basic needs and/or education costs like school supplies, tuition, or tutoring. 
  • 306,000 children were lifted out of deep poverty or above the poverty line.  

Now is the time to keep making progress towards giving every child the opportunity to thrive in North Carolina and across the country. Poverty is a policy choice and the expanded CTC has shown that our legislators can make the choice to tackle child poverty head on. Now they must pass the Build Back Better bill and extend this successful policy.    

Logan Rockefeller Harris is a Senior Policy Analyst at the N.C. Budget & Tax Center.

Expanded Child Tax Credit has caused big reductions in childhood poverty, but more action is needed

Last week on Sept. 15, the third round of payments for the newly expanded federal Child Tax Credit (CTC) went out to millions of families with children across the country. The CTC is one of the nation’s key anti-poverty programs, and the American Rescue Plan Act made some important — but temporary — changes to the policy. It increased the amount of funding available to families, expanded eligibility by making the credit fully refundable, and changed the schedule for distributing the funds. Half of the funds are now distributed through monthly payments that began on July 15, rather than all payments being distributed in a lump sum when families file their taxes.

The expanded CTC is already leading to dramatic reductions in childhood poverty: Payments in July kept about 3 million children across the country out of poverty that month. To maximize the CTC’s impact in North Carolina, our state leaders must ensure that every eligible family receives the credit, while Congress needs to make these improvements to the CTC permanent.

Recent analysis from the Social Policy Institute explores how families in each state used Child Tax Credit payments. Families earning under $150,000 per year are eligible for monthly payments of $300 for each child under age 6 and $250 for children between the ages of 6 and 17. The Institute’s researchers found that the most common use for North Carolina families was buying food, followed by paying essential bills. Half of families reported using the funds to buy food, and nearly two out of five families said they paid bills. It’s not surprising then that families eligible for the CTC saw a decrease in severe food insecurity after monthly payments began. The share of families experiencing severe food insecurity dropped from 11 percent before payments went out down to 7 percent in the weeks after payments began.

Read more

NC needs to invest in child care assistance if we want to get people back to work

The COVID-19 pandemic has put child care access and affordability front and center. Working parents and early childhood educators have always known how important child care is, but now the need to shore up and transform our early childhood education system is front page news. On Mother’s Day weekend, an op-ed in Raleigh’s News & Observer argued persuasively that if our state really wants to recognize and support North Carolina moms, we need to expand access to child care subsidies.

A look at the data shows just how far North Carolina has to go in order to support eligible families with young children. The average annual cost of care for an infant attending a child care center in the state is $9,650, over $600 more than the current in-state tuition at the University of North Carolina. That’s more than one-third of the state median income for a single mother.

The state’s child care subsidy program uses state and federal funds to cover most of these costs for eligible families, and is a lifeline for working parents who are lucky enough to receive it. But low levels of investment in the subsidy program mean the vast majority of eligible families don’t get access. Generally, children under six are eligible for assistance if their parents are working and their family’s annual income is under 200 percent of the federal poverty level ($53,000 for a family of four). An estimated 226,000 of North Carolina’s children under six are eligible, but the most recent data show only about 38,000 — or 17 percent — received assistance in February 2021. (Another 22,000 school-age children, who are subject to different eligibility rules, also received assistance.)

As the map below shows, the number of eligible children under 6 served varies widely by county. It ranges from just 2% of about 100 eligible children in Hyde County to 37% in Washington County.

Read more

House Bill 574 essential to building strong, equitable childcare system in NC

Next week, the state House Committee on Families, Children, and Aging Policy will consider a bill that would provide a significant boost to the state’s early childhood education system.

House Bill 574 would revise the reimbursement rates paid to those who care for children who receive childcare assistance. Increasing these rates is an important step to fully investing in North Carolina’s youngest children and the skilled educators who care for them. This bill would help build the strong and stable childcare system that our state needs to recover from COVID-19. 

Parents who are returning to work need accessible and affordable high quality educational opportunities for their children. This is especially true for working mothers who have been far more likely than men to leave the workforce during the pandemic because they’re caring for children. 

The Budget and Tax Center has just released Equitably Financing Child Care for North Carolina Families, a newly revised version of our 2020 report on implementing a statewide floor for childcare subsidy reimbursements. HB 574 would put this statewide minimum reimbursement rate in place, driving investment to childcare providers and creating greater equity across counties. Federal and state dollars are available to make this investment; it is not only possible but essential to our recovery.

North Carolina’s childcare subsidy program serves over 100,000 children in low-income families each year; childcare providers are reimbursed each month by the N.C. Division of Child Development and Early Education (DCDEE) for delivering this care. These reimbursement rates are based on a market rate survey of private fees and are different for each of the state’s 100 counties. Current rates use data collected in 2015, and they can differ by hundreds of dollars from county to county. 

Higher subsidy reimbursement rates are associated with higher-quality care in both childcare centers and family childcare home settings. But in many counties — especially in rural areas — the current rates do not meet the true costs of providing high-quality care. Childcare providers are small businesses that are anchors in their communities, but they frequently operate on razor-thin margins because the price of high-quality care is so far out of reach for many parents. Reimbursement rates that don’t reflect the cost of delivering high-quality early education replicate the problems with the private-pay model, leaving providers with little financial cushion and unable to hire and retain skilled educators.

Currently, huge differences in reimbursement rates among the counties exceed differences in the cost of living. This leads to major geographic inequities and financially strains providers in rural areas where access to child care is already a major problem. The graph below shows current reimbursement rates for five-star centers caring for infants in three neighboring counties, and the increased rate they would see under HB 574. 

Our analysis found that 98 counties would see a boost in investment, and the greatest increase in reimbursement rates would go to economically distressed, rural counties where the gap between current market rates and the state floor is the largest.

Many childcare providers remained open throughout the pandemic, and most of those that temporarily closed have re-opened. Yet many providers are still facing low enrollment, and the families they serve are struggling to make monthly payments. Higher and more equitable subsidy rates will not only stabilize bottom lines so that providers can remain in operation, but they also will help providers pay educators more competitive wages, support facility improvements, and encourage more providers to serve children who participate in the subsidy program, expanding families’ access to care. 

In the long term, North Carolina needs to develop a better method for calculating subsidy rates so that providers receive payments that reflect the true cost of delivering quality care. The Division for Child Development and Early Education should move quickly to pursue a new method, but the early education system needs action now. Too many providers are teetering on the edge and facing increased costs due to COVID-19. HB 574 is an interim step that will provide a key support that these small businesses need to stay open and serving North Carolina’s families and children. 

New survey: North Carolina voters want more public investments in child care

The importance of early childhood education has never been clearer than during the COVID-19 pandemic. High-quality child care and early childhood education are critical for children’s development, for supporting working parents, and for thriving communities. The lasting, transformative benefits of early childhood investments require sustained commitment from North Carolina leaders, and voters want to see more public investment that makes early childhood education accessible and affordable for more families.

According to a survey conducted by Data for Progress in January, 73% of voters support more public funding to expand access to child-care assistance and early childhood education in the state, including 68% of rural voters and an overwhelming 82% of urban voters. A bigger, bolder public commitment can break through the constraints of the current private pay model for child care, which burdens families with high costs and hampers progress toward quality care for all. Our collective dollars can fortify a system that prepares the youngest children for future learning regardless of their family’s income or which community a child happens to live in.

The low compensation of early childhood educators makes clear the limitations of our current private model for early childhood education. These educators are “the workforce behind the workforce,” and have literally risked their lives during the pandemic to make it possible for other essential worker parents to keep North Carolina running. Yet their pay remains far below what it takes it to make ends meet. Educators on average earn $12 per hour, and fewer than half of child-care centers provide their staff with health insurance. These realities make it a huge challenge to retain high-quality educators.

Before COVID-19 hit, too many families couldn’t afford high-quality early childhood education. Today, thousands of eligible families are on the waitlist for child-care subsidies, and many more don’t even bother to get on the wait list. The need has only increased during the economic downturn.

While the early childhood system has received some crucial relief funds during the pandemic, North Carolina needs a permanent commitment of public funds to build a system that will help all our communities thrive — and voters agree.  That means not just deploying federal dollars available now but committing state dollars to this investment in our state’s future.

Not only can North Carolina currently afford to direct state dollars to early childhood education, but a clear majority of North Carolina voters also support progressive tax policies that can help raise additional revenue to make these investments. In particular, voters support increasing taxes on high-income households. Seventy percent of voters support raising income taxes on households making over $400,000 a year in the state, while 60% support higher tax rates on corporations. This includes support from over half of rural, suburban, and urban voters for both policies.

State policies that prioritize equity are also popular: 61 percent — including a majority of voters in rural and suburban locations — agree that investments should prioritize low-income communities and communities of color.

It is critical to focus on equity when it comes to rebuilding an early childhood education system that works for every community in our state. The majority of early childhood educators in North Carolina are women of color, and across the country Black and Latinx educators are paid less than their white peers, even at the same levels of education. Black and Latinx working parents also pay a higher percentage of their income on child care, and occupational segregation means they are less likely to work in jobs that allow them to work from home, elevating the importance of affordable child care. Decades of research shows that high-quality early education benefits all children, but especially low-income children. Substantial public commitment to this system can bolster low-income communities across the state and support the well-being of all families and educators — Black, brown, and white.

We know the benefits of investments in early childhood education, and these findings show that these policies are popular with voters as well. Ensuring that higher-income earners and corporations pay their fair share of taxes can provide a valuable revenue source to fund popular public investments that prioritize low-income communities and communities of color. It’s time for North Carolina leaders to make the equitable investments in our state’s future that voters overwhelmingly support.

More about this voter modeling

The NC Budget & Tax Center partnered with Data for Progress to conduct this survey. Data for Progress uses state-of-the-art data science to understand voters’ policy priorities. From January 5 to January 15, 2021, Data for Progress surveyed 1,968 likely voters in North Carolina using SMS and web panel respondents. The sample was weighted to be representative of likely voters by age, gender, education, race, and voting history. The survey was conducted in English. The margin of error is ±2.2 percentage points.

Logan Rockefeller Harris is a Senior Policy Analyst with the Budget & Tax Center, a project of the NC Justice Center.