[Congressional Record Volume 145, Number 114 (Thursday, August 5, 1999)]
[Senate]
[Pages S10460-S10461]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DODD (for himself and Mr. DeWine):
  S. 1539. A bill to provide for the acquisition, construction, and 
improvement of child care facilities or equipment, and for other 
purposes; to the Committee on Health, Education, Labor, and Pensions.

[[Page S10461]]

                  CHILD CARE FACILITIES FINANCING ACT

 Mr. DODD. Mr. President, I am pleased to join Senator DeWine 
in introducing the Child Care Facilities Financing Act. This bill would 
help ease a significant crisis in this country--the shortage of 
adequate child care, particularly in low-income communities.

  The demand for child care is not being met by the current supply, 
especially for low-income children. Approximately 50% of children from 
families with household incomes of $10,000 or less are enrolled in 
child care or early education programs, whereas over 75% of children 
from families with household incomes over $75,000 are enrolled in such 
programs.
  According to the GAO, the child care supply shortage will worsen as 
work participation rates required under welfare reform increase over 
the next few years. The situation is particularly troublesome for 
infant and school-aged care. For example, in Chicago, the percentage of 
the demand that can be met by the known supply of child care providers 
will be only 12% for infants and 17% for school-aged children in the 
year 2002 if a greater supply is not created. The situation is even 
more dire in poor neighborhoods.
  One factor contributing to the child care shortage is the difficulty 
that would-be providers face in financing child care facility 
development. Child care providers are often viewed by financial 
institutions as risky for loans. Child care equipment and facility 
needs are unique, making for poor collateral. In low-income 
neighborhoods, child care providers face severely restricted revenues 
and low real estate values. In urban areas, would-be child care 
providers must contend with buildings in poor physical condition and 
high property costs. In all areas, reimbursement rates for child care 
subsidies are generally too low to cover the recovery cost of 
purchasing or developing facilities, especially after allowing for the 
cost of running the program. In addition, new providers often have no 
business training, and may need to learn how to manage their finances 
and business.
  The Child Care Facilities Financing Act would provide grants to 
intermediary organizations, enabling them to provide financial and 
technical assistance to existing or new child care providers --
including both center-based and home-based child care. The financial 
assistance may be in the form of loans, grants, investments, or other 
assistance, allowing for flexibility depending on the situation of the 
child care provider. The assistance may be used for acquisition, 
construction, or renovation of child care facilities or equipment. It 
may also be used for improving child care management and business 
practices. Additionally, intermediary organizations are required to 
match grant dollars with significant private sector investments, 
leveraging federal funding and creating valuable public/private 
partnerships.
  The added benefit in providing this kind of assistance is that it 
will spur further community and economic development. When parents can 
work with the knowledge that their children are adequately cared for, 
they become more reliable and productive workers. When the economic 
situation of families improve, distressed communities become 
revitalized.
  Let me provide you with an example from my state of how financial 
assistance for child care development has helped alleviate dire 
situations. In one low-income neighborhood in New Haven, CT, there are 
2500 children under the age of 5, but only 200 spaces in licensed child 
care facilities. For more than a decade, the LULAC Head Start program 
served this community by operating a part-day early childhood program 
in a poorly lit church basement. There has been a waiting list of over 
100 children for this program. Recently, however, this basement program 
closed, and the 54 children it served were moved to an already 
overcrowded location.
  Fortunately for LULAC, Connecticut has a new child care financing 
program. The Child Care Facilities Loan Fund Program is a public-
private partnership that provides financial assistance for child care 
facilities development, targeting school readiness programs in 
underserved areas. LULAC has finally received desperately needed 
financial assistance to develop the Hill Parent Child Center. A new 
facility is being constructed, specially adapted for child care use. 
The center will now be able to provide multicultural child care, school 
readiness, and Head Start services for 172 low-income children in New 
Haven.
  Although this story had a happy ending, many more children in New 
Haven and other places in Connecticut still need child care. And most 
states do not have a child care financing system in place.
  Working parents and their children need adequate child care. 
Increasing the supply of child care will create a better economy as 
more parents move from welfare to work, and it will create more choices 
for parents to gain control over their families' lives. I hope that you 
will join Senator DeWine and me in taking an important step toward 
lifting our nation out of its current child care crisis.
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