Tax Reform: Access to Child Care for Working Families

Congress appears close to agreeing on a budget resolution, which will include instructions for the Senate Finance Committee and House Ways & Means Committee to approve tax reform legislation. For working families with young children, it’s important to look beyond the leadership framework announced in September and ask about the details.

Nearly 15 million children under age 6 live in families with working parents. Many of these parents struggle with child care costs.1

kids under 6 with working parents pie chart

Source: U.S. Census Bureau

The average annual cost of center-based care for an infant is $10,476; the average annual cost of center-based care for a preschool-age child is $8,469.2  The average annual cost for infants in home-based care is $7,669; the average annual cost for a preschool-age child in home-based care is $6,967.3  Historically, the tax code has helped make child care more affordable for parents. The rationale has been that working parents with young children need child care in order to obtain and retain employment and employers depend on working parents.

The current Child and Dependent Care Tax Credit (CDCTC) offers working families with child care expenses a modest credit in recognition that child care is an expense related to work. Although child care costs have increased over the past 16 years, the value of the credit has not been increased since 2001.  Among families with children who benefit from the CDCTC, taxes are reduced by an average of $551.

Another policy in the current tax code that helps families with child care costs is the provision that allows employers to offer Flexible Spending Accounts (FSAs), which enables employees to set aside up to $5,000 per year tax-free to be used for reimbursement of child care expenses. In 2014, 39 percent of civilian workers had access to a dependent care FSA.

The tax reform framework as proposed by President Trump and the Congressional leadership simplifies the tax code by lowering tax rates. It doubles the standard deduction (currently $6,350 for single individuals and $12,700 for married couples).4 However, it eliminates personal exemptions (currently $4,050 for each taxpayer, his or her spouse, and each child – currently indexed annually for inflation).5  The framework says that the Child Tax Credit (which is available for families with children under age 17)  will be “significantly increased” – but it doesn’t say by how much and it doesn’t mention any income tax breakpoints that may apply (i.e., at what income level households would receive the full significant increase (whatever amount it is) and at what income level it would be phased out).

Although the framework does not pay for itself (i.e., the expected revenue loss over 10 years is about $1.5 trillion), lower rates are achieved (at least in part) by eliminating credits and deductions not mentioned in the framework. The child care related provisions in the current tax code are not mentioned and therefore fall into the bucket of potential tax policy to be eliminated.

For working families with young children, tax policy that helps support their need for paid child care is important. Some families may not need paid child care. However, many families depend on it. For those families with child care costs, the current child care provisions in the tax code should be updated, not discarded.

As tax reform is debated, and pro-growth strategies are supported, it’s important to understand that jobs require working parents. And, many working parents of young children need paid child care. Senator King (I-ME) and Senator Burr (R-NC) introduced legislation last January (S. 208) to update both the Child and Dependent Care Tax Credit and Dependent Care Flexible Spending Plans.  It’s time to dust that bill off the shelf and recognize that updating the child care related provisions in the tax code should be part of the tax reform discussion. These provisions are specific – families must have qualifying children, must be working, and must have child care costs.

Increasing the child tax credit for families with children younger than age 17 (as the framework outlines)  is good policy.  It helps partially offset the cost of raising children. However, it is not specifically related to whether a family with young children has child care expenses.  There is a cost to raising children, all families know that. However, it is even more expensive for families who have child care costs. That’s why retaining and updating the child care provisions in the current tax code is important.

1U.S. Census Bureau, Table B23008, Age of Own Children Under 18 Years in Families and Subfamilies by Living Arrangements by Employment Status of Parents, 2016 American Community Survey 1-Year Estimates.

2Child Care Aware of America, 2017. Parents and the High Cost of Child Care: 2016 Update.

3Ibid.

4U.S. Congress Joint Committee on Taxation, The Taxation of Individuals and Families, JCX-41-17, September 12, 2017.

5Ibid.

 

2015 Year in Review

Early Childhood Program Year End Wrap Up          

As we come to a close in the calendar year, it is clear that 2015 marked enormous progress on the early learning initiative front!

Congress passed the FY2016 Consolidated Appropriations ActCartoon Capitol

The FY2016 Consolidated Appropriations Act (PL 114-113), enacted on December 18, included an increase of nearly $1 billion for programs operated through the Administration for Children and Families (ACF) — primarily for the Child Care and Development Block Grant and Head Start.

What’s in the Consolidated Appropriations Act for early childhood?

Matching Budget Information with Context:

For more information on the most recent data for CCDBG program statistics (number of children receiving assistance, settings those children are in) and for information about TANF funding used for child care by state, click here.

Early Head Start/Child Care Partnerships: The FY2016 Consolidated Young woman playing with boyAppropriations Act included $635 million for EHS/CCPs. This means that previous grants will continue to receive funding and $135 million in additional funding will be available for a new competition. Stay tuned for competition criteria and proposal deadlines in 2016. Current awards finalized in March of 2015 are here.

Preschool Expansion/Development Grants: The FY2016 Consolidated Appropriations Act included $250 million to continue another year of funding for current grantees.

Every Student Succeeds Act and Preschool Development Grants

On December 9, the President signed the Every Child Succeeds Act into Pre schoollaw (P.L. 114-95), which reauthorizes the Elementary and Secondary Education Act- also known as the No Child Left Behind (NCLB) law. The Every Child Succeeds Act includes many opportunities to better integrate early learning initiatives with K-12 education, including a new provision authorizing Preschool Development Grants. This new competitive grant program is designed to assist states to:

  • develop, update or implement a strategic plan to improve collaboration and coordination among existing early learning programs in a mixed delivery system across the state to prepare low income children to enter kindergarten ready to succeed;
  • encourage partnerships among Head Start providers, state and local governments, private entities (including faith and community based organizations), and local educational agencies, to improve coordination, program quality, and the delivery of services; and
  • to maximize parent choice among a mixed delivery system of early childhood education program providers.

The Secretary of HHS is in charge of the program to be operated jointly with the Secretary of the Department of Education. Watch for more details about the competition for funding in 2016.

Child Care and Development Block Grant Reauthorization Implementation:

November marked a year since the President signed the bipartisan CCDBG Act of 2014 into law. During that year, much progress has been made to promote more parent choice among high quality settings in every community.

CCDBG State Plan. In order for states to receive federal funds, each state must submit a state plan to HHS. The template for the state plan was published for public comment three times in 2015 (in January, in May, and in September). In December, the final state plan template was published.

Creative kids class

Many states have begun drafting their state plans, which are due on March 1, 2016. Some states have held public hearings already. HHS regularly posts updates on state plan public hearings under Key Resources Related to the Implementation of the CCDF Reauthorization Law.

CCDBG Regulations. On December 24, HHS published proposed CCDF regulations in the Federal Register. Public comments with regard to the proposed regulations are due on or before February 22, 2016. The regs play a key role in ensuring that states have a uniform interpretation of the law.

Head Start:

In June, HHS proposed the first major revision and reorganization of the preschool boy green shirtHead Start Performance Standards, which were open for public comment for several months. The proposed program performance standards will improve the quality of services, reduce bureaucratic burdens, and improve regulatory clarity and transparency. They provide a clear pathway for current and prospective grantees to provide high quality Head Start services and to strengthen outcomes for the children and families served. Read the proposed revisions and watch for final regulations in 2016.

Also Noteworthy for the Early Childhood Field: (Released in 2015)

Happy New Year! Wishing you all the best in 2016! We have come so far in 2015. 2016 will be the year to close the gap between research, policy, and practice… The opportunity is yours. Seize the day!

Reducing Poverty Requires a Two-Generational Strategy

On September 17, the U.S. Census Bureau released new poverty data for 2014.2014 Census Poverty Report

For the fourth consecutive year, the number of people in poverty was not statistically different from the previous year’s estimates. See “Income and Poverty in the United States: 2014.”  In 2014, the official poverty rate was 14.8 percent – 46.7 million people living in poverty.

Children in Poverty

The poverty rate for children under age 18 was 21.1 percent (far higher than the poverty rate for people aged 18-64 at 13.5% and the elderly (over age 64) at 10%).

For children under age 6, the poverty rate was 23.5% (5.5 million children).

  • 41.4% of African American children under age 5 live in poverty
  • 34% of Hispanic children under age 5 live in poverty
  • 19.7% of White children under age 5 live in poverty

More than half (55.1%) of children under age 6 in families led by a single mother were in poverty (while 11.6% of children under age 6 in married couple families lived in poverty).

What is the poverty threshold? For a single parent with 2 children, it’s about $19,073. To see a table of poverty thresholds by size of family, click here. To see the percentage of children under age 18 in poverty by state, click here.

Who is adult poverty highest for? Individuals without a high school diploma (where 28.9% live in poverty compared to 14.2% of those with a high school diploma, 10.2% of those with some college, and 5% for those with a college degree).

Why is that important? Because the reality today is that children from low income families are less likely to graduate high school. In fact, in some states, the gap is really quite large.

From a policy standpoint, we need better strategies to assist low income parents in getting a job and in getting a job with higher wages. The Temporary Assistance for Needy Families (TANF) program allocates funds to states to assist families, but over the past two decades, states have only spent a tiny fraction of the funds they receive to support work strategies for these parents. There is no question, TANF is in need of reform. The House Ways and Means Committee has held several hearings this year and in July released a discussion draft to revamp the program to be more effective.

Assisting parents is one strategy to reduce poverty. Another strategy is to stop the cycle of dependency by investing in children. What we know about families with young children is that they need child care in order to work. A few are lucky and may have relatives available, able, and willing to assist with child care. However, most families are not so lucky, particularly low income parents who cannot afford market costs for child care.  boy playing w blocks, verticle stock

Studies show that high quality child care makes a difference for all children, but particularly for low income children. One of the main goals of the Child Care and Development Block Grant (CCDBG) Act of 2014 is to increase the number and percentage of low income children in high quality care. The message is clear: child care is a key work support for parents, however, it is also a setting that should promote the healthy development of children. For low income children, starting school ready to succeed can lead to an increase in the high school graduation rate of low income students (which is currently 15% below their more economically well-off peers).

Unfortunately, over the last couple of years, CCDBG has served fewer and fewer children. A few months ago, the FY2014 CCDBG data was released, which showed that 1.4 million children received child care assistance each month – a reduction of 48,800 children from FY2013. And, the 1.45 million children who received assistance in FY2013 was a reduction of 47,500 children from FY2012. Therefore, in the last two years alone, nearly 100,000 fewer low income children have received child care assistance.

We know families on welfare need child care in order to work. We know low wage working families struggle with the cost of care and that child care assistance enables them to access higher quality care than they otherwise would be able to access. Does the quality of child care that low income families have access to really matter? The research demonstrates that it does. The neuroscience reveals that brain development, the wiring for social and emotional development as well as cognitive development, is formed in a child’s earliest years.  black boy w abbacus, vertical stock

When the Census Bureau released the newest poverty data, House Ways and Means Committee Chairman Paul Ryan (R-WI) said, “This data should be acceptable to no one…. Our current approach to fighting poverty, though well-intended, is failing too many Americans. Solving the poverty challenge will require us to go into poor communities, customize approaches based on people’s needs, and focus our resources on what produces results. Rather than just treating the symptoms of poverty, our goal must be to help people move from welfare into work and self-sufficiency.”

Chairman Ryan is right. Another year with no reduction in poverty is unacceptable. However, to reduce poverty, a “parent-only” strategy is only half the battle. We need to focus as well on the low income children in these families so that the path forward is not another cycle of poverty but a roadmap to complete high school college or career ready. The gateway to a new roadmap begins with high quality child care.

2014 Year in Review

Early Childhood Program Year End Wrap Up                 Young woman playing with boy

As we come to a close in the calendar year, one thing is clear: It was a banner year for quality child care and early learning!

Congress passed the FY2015 “Cromnibus”

The legislation includes 11 FY2015 appropriations bills, including the Labor, HHS and Education Appropriations bill, that fund most of the government through September 30, 2015 and a continuing resolution (CR) funding the Department of Homeland Security (DHS) through February 27, 2015. On Capitol Hill, the measure is referred to as the FY2015 “Cromnibus” – Continuing Resolution and Omnibus appropriations measure.

What’s in it for early childhood?

Miscellaneous federal budget information:

For more information on the most recent data for CCDBG program statistics (number of children receiving assistance, settings those children are in) and for information about TANF funding used for child care, click here.

Early Head Start/Child Care Partnerships: girl pigtails block table like legos

The FY2015 Cromnibus included $500 million for EHS/CCPs. This means that there will be sufficient funding for year 2 of the Early Head Start grants announced on December 10, but no funding for new applicants/new grants. To check out the list of preliminary award winners announced on December 10, click here.

Preschool Expansion/Development Grants: The FY2015 Cromnibus included $250 million for preschool development/expansion grants for year 2 of the awards announced on December 10. However, no new funds were provided for any new applicants/new grants. preschool report 2013

  • To see the score sheet (including state ranking of applications) for Preschool Expansion Grant applicants in RTT-ELCG states, click here.
  • To see the score sheet (including state ranking of applications) for Preschool Expansion Grant applicants in Non-RTT-ELCG states, click here.
  • To see the score sheet (including state ranking of applications) for Preschool Development Grant applicants, click here.
  • To see state applications, scores, and reviewer comments, click here.

 

Child Care and Development Block Grant Reauthorization (PL1113-186):

 On November 19, the President signed the Child Care and Development Block Grant (CCDBG) Act of 2014 into law (PL113-186). The bipartisan measure marks the first time in 18 years that Congress has passed legislation to strengthen the quality of child care. teacher and kids circle time

Happy Holidays. Wishing you all the best in 2015! This is the year to close the gap between research, policy, and practice… The opportunity is yours. Seize the day!

Unlicensed Child Care Puts Children At Risk

The Child Care and Development Block Grant (CCDBG) is allocated to states to both assist families in affording the cost of child care and to improve the quality of child care (such as through training or other activities). In October, new state reported child care data was released by the U.S. Department of Health and Human Services (HHS) with regard to the number of low income children in each state assisted through  CCDBG.  boy playing w blocks, verticle stock

Overall in FY2013, about 1.4 million children received assistance each month (about 47,500 fewer children in 2013 compared to 2012). The number of children receiving assistance is one part of the story. An equally important part of the story is the type of child care paid for by CCDBG.

In many cases, low income families who receive assistance are able to access quality child care that they would not otherwise be able to afford.  That’s good news for children who will be in a safe setting that promotes their healthy development. And, great news because research shows that high quality child care makes a difference for all children, but particularly for the school readiness of low income children.

What is troubling is that of the 1.4 million children receiving federal subsidies, about 15 percent (218,265) are in unlicensed care. This means that these children are in settings where little is known about the provider except that she receives a government check to care for low income children. In many states, these unlicensed providers are not required to have training, there are no minimum health and safety protections for children (or maybe there is a checklist that providers submit “self-certifying” compliance) and no inspections are required – unless there is a parent complaint.

In 11 states plus Puerto Rico, 25 percent or more of the children receiving a subsidy are in unlicensed care (Hawaii, Oregon, Alabama, Puerto Rico, Nevada, Illinois, Connecticut, Michigan, New York, Missouri, North Dakota, and Indiana).

unlicensed by percentage snapshot fy2013

In 18 states, of the children in unlicensed settings whose care is paid for through CCDBG, more than half of the children are with non-relatives.

Unlicensed NonRelative Care Declining FY2013

Why does it matter? Child care licensing serves to provide some minimum health and safety protections for children in child care. States may require minimum training for providers and an emergency plan in the case of a fire or simple things like working smoke detectors and a fire extinguisher. In the past month in Virginia, 3 babies have died in unlicensed at home child care programs where providers had no training for emergencies, no fire extinguishers, and no working smoke detectors.  For Virginia, 46 infants have died over the last few years in unlicensed care. In Missouri, more than 67 babies have died in unlicensed care.  In Indiana, 18 babies have died in unlicensed care. Maybe some of these children were on a subsidy, but we don’t know because current law does not require reporting of this type of data.

The death of any child is a tragedy. It’s an even greater tragedy when the deaths can be prevented. Licensing  serves to protect the health and safety of children. One would think that when taxpayer dollars are used to pay for the care of low income children, that the settings paid for would be safe. But, with unlicensed care, we just don’t know. What we do know is that unlicensed care poses risks to children since there are no minimum health and safety protections.

This week, the Senate will consider legislation to reauthorize (renew) the Child Care and Development Block Grant (CCDBG). The bill was approved by the House of Representatives on September 15.  If approved by the Senate this week, the measure will be forwarded to the President to be signed into law. The bill includes important new health and safety protections for children. It requires more accountability for state expenditure of federal funds.  But, most importantly, it will help strengthen the quality of child care in every state so that parents have more choices among quality settings.

Arkansas, Massachusetts, North Carolina, Oklahoma, Ohio, and Wisconsin, choose not to use subsidy dollars to pay for unlicensed care.  For the rest of the states, the bill will require a review of the policies to protect children when the states allow funding for unlicensed settings.  The bill requires:

  • a comprehensive background check (a fingerprint check against state and federal records, a check of the state child abuse registry and a check of the state sex offender registry) for all licensed or regulated care and unlicensed nonrelative care where subsidies are used;
  • States that choose to use subsidies to pay for unlicensed care to publicly explain why such care does not endanger the health, safety, or development of children;
  • At least one annual inspection of all providers receiving a subsidy, including unlicensed non-relative care;
  • Minimum training on important health and safety topics like safe sleeping practices and training related to the social, emotional, physical, and cognitive development of children; and
  • States to report deaths in child care, differentiated by type of setting and whether the setting is licensed or unlicensed.  Requiring the collection of this data is not to be morbid, but to better inform states and HHS about any trends and training that might make a difference.

The bill does not require assistance to families to be used for licensed care. However, it does require states to ensure that if they choose to use taxpayer dollars in unlicensed care, that children are safe. Children should be safe in child care – whether that care is paid for by a subsidy or not.

Working Families Near Victory on Safe, Quality Child Care

On September 12, a bicameral, bipartisan agreement was announced on legislation to reauthorize the Child Care and Development Block Grant (CCDBG), the federal law that allocates funds to the states to assist families with the cost of child care and to improve the quality of child care.  The last time that Congress reauthorized or made changes to CCDBG was in 1996 – 18 years ago. teacher and kids circle time

Much has happened since that time. Today, 74.7% of mothers with school-age children are working and 64% of mothers with children under age 6 are working. In fact, today, 57.3% of mothers with infants are working.  In today’s economy, mothers work to support their families.  Census Bureau data released on September 16 showed that the number of men and women working full-time, full year, increased by 1.8 million, suggesting a shift from part-year, part-time work status to full-time, year round work.

The fact of the matter is that mothers work. Working families, spurred by working moms, need child care in order to ensure that they can support their families.

In 1990, Congress passed the Child Care and Development Block Grant (CCDBG). The law was historic at the time because it offered modest child care subsidies to low income families to support their effort to work. The theory was that a work support was better than welfare support. In 1996, that concept was re-affirmed when CCDBG was reauthorized as part of welfare reform.

Today, 18 years after Congress last revised CCDBG, we have an advantage of better understanding the neuroscience behind child development and lessons learned from the deaths that have occurred in child care throughout the country.  Any child’s death is tragic, but it is even more tragic when it can be prevented.  And that’s the thrust behind the bicameral, bipartisan CCDBG bill. We can better protect children in child care, we can better promote their healthy development, and we can expect more accountability from states that accept federal child care funds.

The House of Representatives passed the CCDBG reauthorization bill on Monday, September 15. The Senate spent the remainder of last week attempting to get agreement to pass the measure. Despite the fact that the Senate approved similar legislation in March by a vote of 96-2, the body was not able to pass it by unanimous consent (UC) before adjourning Thursday evening, September 18.  Unanimous consent was necessary because there was not time before adjourning for lengthy floor debate. Therefore, there were about 30 bills that were approved by UC Thursday night, but not the child care bill.

Two Senators objected to passing the child care bill: Senator Coburn (R-OK) and Senator Toomey (R-PA). The CCDBG bill will be the pending business of the Senate on November 12 when the Senate reconvenes after the election. Hopefully, the measure will pass and be sent to the President for his signature into law.  While that is certainly good news, the delay is not without consequence.  On the surface, it may seem that a delay of 8 weeks is nothing after 18 years. That is true. However, at the same time, the delay pushes the bill into the next fiscal year which begins October 1.  For practical purposes, that means that states will have 3 years (instead of 2) to pass conforming measures to ensure that children are safe and that state policies are accountable as federal funds are spent.

The CCDBG bill is a bipartisan measure that will help support both the needs of working families and the needs of children.  Let’s hope that the Senate will pass this measure without delay in November.

For a summary of the bill, click here.
For a detailed comparison of current law with the provisions in the House passed bill (and pending Senate bill), click here.

Congress Reaches Bipartisan Agreement on Child Care!

On September 12, 2014, a bipartisan group of House and Senate leaders announced an agreement on legislation to reauthorize the Child Care and Development Block Grant (CCDBG), which allocates funds to states for child care – to help families afford the cost of child care and assist states in improving the quality of child care. Pre school

While Congress generally reviews laws periodically to adjust them for new research, best practices, and to address any shortcomings not foreseen when bills are drafted (a process referred to as reauthorization,  which generally occurs every 5 years on average), it has been 18 years since CCDBG was last reauthorized in 1996. Much has been learned during the intervening years from the science of brain development to the child care policies within states.  For example, national studies have shown that most state child care policies are weak and the oversight of those policies is even weaker.

Legislation to reauthorize CCDBG was approved by the Senate in March.  The House held a hearing (also in March), to hear from experts about the need for quality child care. This summer, House Republicans and Democrats negotiated a reauthorization bill starting with the measure that was approved by the Senate. With adjournment expected soon this fall, House Education and Workforce Committee members, Chairman John Kline (R-MN), Ranking Member George Miller (D-CA), Rep. Todd Rokita (R-IN) and Rep. David Loebsack (D-IA) reached an agreement and negotiated a final bill with Senate Health, Education, Labor, and Pensions (HELP) Committee members – Chairman Tom Harkin (D-IA), Ranking Member Lamar Alexander (R-TN), Senator Barbara Mikulski (D-MD) and Senator Richard Burr (R-NC).

At a time when Congress is polarized, and budget and international events, engagements, and threats are the focus of contentious debate on the House and Senate floor, it is just short of a miracle that a bipartisan, bicameral, group of leaders came together and reached an agreement on an issue that is critical for working families with children.

The fact of the matter is that working families need child care in order to get and retain a job. Children need a safe place to be and a setting that promotes their healthy development. The Child Care and Development Block Grant (CCDBG) reauthorization bill agreement, as announced yesterday, will both promote children’s safety and improve accountability for the expenditure of federal funds.  It also shows that Congress can come together in a bipartisan manner and in a manner that unites both the House and the Senate on behalf of children.  Kudos Representatives Kline, Miller, Rokita, and Loebsack and Senators Harkin, Alexander, Mikulski, and Burr!  Working families commend your initiative and dedication to push partisan politics aside and support good, common sense policy for children.

The measure is expected to be considered by the House and the Senate during the week of September 15.

Child Care and Development Block Grant Act of 2014

In Brief:  The bicameral, bipartisan, CCDBG agreement reached to reauthorize the Child Care and Development Block Grant (CCDBG) improves the quality of child care by requiring basic health and safety protections for children whose care is paid for by taxpayer dollars.  The funds set-aside for state activities to improve the quality of care will require more accountability for the use of those dollars.  In addition, more emphasis would be placed on strengthening the child care workforce, the cornerstone of quality child care.

For a detailed bill summary, click here. 

For a copy of the bicameral, bipartisan press announcement, click here.

For a copy of the bill, click here.