Reducing Child Care Assistance – The Impact on West Virginia’s Low-Income Working Families
Every day in West Virginia, thousands of low-income families rely on public child care assistance. In 2011, the West Virginia Child Care Program – which is funded primarily through the federal Child Care and Development Fund (CCDF), Temporary Assistance for Needy Families (TANF), and state matching funds – provided financial assistance to more than 24,000 children whose parents were working or going to school. Read full report
Access to affordable child care is an integral part of helping low-income parents keep the jobs they need to support their families while also providing a safe and reliable environment that prepares children for school. Without this support, many low-income families would be unable to be gainfully employed and could end up stuck in poverty. The West Virginia Child Care Program also plays a critical role in supporting the state’s economy by creating thousands of jobs.
Over the last several years, West Virginia increased funding to the program from additional federal appropriations (the American Recovery and Reinvestment Act) and TANF. On June 21, 2012, the West Virginia Department of Health & Human Resources (DHHR) announced substantial cuts to the program because these additional funds were no longer available. These cuts included freezing enrollment in the program to mostly TANF eligible families, increasing daily copayments paid by parents, and scaling back eligibility of those enrolled in the program.
While Governor Tomblin lifted the enrollment freeze in the program in July of 2012, he did not stop the other cuts to the program. On August 1, 2012, the copayments for families receiving child care assistance grew dramatically.
For example, a single mother with one child living at 100 percent of poverty (approximately $15,130 yearly income) saw her monthly copayments grow from roughly two percent of monthly income ($29) to more than nine percent ($115). The changes in co-payments will reduce child care assistance by an estimated $3 million annually, or by an annual average of approximately $250 per enrolled child.
Beginning January 1, 2013, families earning between 150 and 185 percent of the federal poverty level will no longer receive childcare assistance. According to DHHR, the changes in eligibility will remove over 800 families with 1,400 children from the program and reduce funding by $4.5 million per year once fully implemented.
In addition, there will likely be layoffs of child care workers. These changes in copays and eligibility could leave many low-income families without the child care support they need to keep their job or go to school. If costs become too prohibitive, some parents will likely have to stop working in order to stay home and care for their children. Children could also be adversely affected, as some families may have to leave children home alone or in other unsafe situations because they cannot afford the higher price of child care.
The purpose of this brief is to examine how these changes will impact low-income working families enrolled in the WV Child Care Program. It will also explore the relevant research on the importance of child care assistance, how the program is structured and funded, the importance of the child care industry to the state, and offer several recommendations for how policymakers can help low-income families with child care assistance.
Key Findings about Child Care Assistance in West Virginia
• Low-income parents – those with incomes below 150 percent of poverty – can enroll children ages 0 to 12 (up to age 18 in some circumstances) if they are working or going to school.
• West Virginia’s income eligibility limit is lower than all but 15 states.
• Enrollment in the program is at its lowest point in four years (13, 449 in 2012), and there are 7,500 fewer children enrolled compared to 2001.
• Single mothers with one child at 100 percent of poverty now pay on average 9.1 percent of their monthly income for child care compared to 2.3 percent at the beginning of 2012.
• Approximately 90 percent of child care assistance funding ($68.1 million) is from two federal block grants (Child Care Development Fund and Temporary Assistance for Needy Families), while nine percent or $6.2 million came from state general revenue funds in 2011.
• In 2008, West Virginia spent $18.9 million in TANF funds on child care assistance compared to $29.4 million in 2011. These additional TANF funds came from carryover reserve funds.
Solutions to Improve Child Care Assistance
• With $898 million in Rainy Day Funds, the state can prevent child care cuts. Lawmakers could also explore raising the tobacco tax or other sources of revenue to stop cuts in child care assistance. West Virginia would not be alone in appropriating additional money for child care assistance. In 2010, nine other states spent $82 million on child care assistance programs beyond what they needed to match federal funds.
• A close examination of the TANF budget should be made. From 1997 to 2008, West Virginia did not spend TANF funds under the category of “Authorized Under Prior Law.” However, between 2009 and 2011 the state spent about $85 million under AUPL, and a good portion of these funds went toward “foster care services” even though these services do not meet one of the four stated purposes of TANF. West Virginia also spends an above average amount of funds on administration and systems, 12.1 percent compared to the national average of 6.9 percent in 2011.
• The state should explore the creation of a refundable child care tax credit.
• Over the long-run, West Virginia should examine best practices in child care assistance policies in other states that could be used to strengthen the WV Child Care Program. Read PDF of full report
West Virginia Department of Health and Human Services, “DHHR curtails child care services, cuts grants,” (Press release), June 21, 2012. Retrieved from http://www.wvdhhr.org/communications/news_releases/DHHRcurtailsChildCareServicesCutsGrants.pdf.
Lori Kersey, “Hundreds of W.Va. families to lose child-care subsidies,” Charleston Gazette, June 21, 2012. Retrieved from http://www.wvgazette.com/News/politics/201206210079.