Child Care: Recent State Policy Changes Affecting the		 
Availability of Assistance for Low-Income Families (05-MAY-03,	 
GAO-03-588).							 
                                                                 
With the Temporary Assistance for Needy Families (TANF) program  
taking effect in 1997, child care assistance became a significant
strategy for helping welfare recipients move into the workforce  
and for helping other low-income families stay off welfare. Since
1997, states have used federal funds from the Child Care and	 
Development Fund (CCDF) and TANF along with state funds to expand
child care assistance programs. However, given the current budget
problems in most states and the competing demands for TANF and	 
state funds, it is possible that states have changed their child 
care policies and the availability of child care assistance to	 
low-income families.						 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-03-588 					        
    ACCNO:   A06779						        
  TITLE:     Child Care: Recent State Policy Changes Affecting the    
Availability of Assistance for Low-Income Families		 
     DATE:   05/05/2003 
  SUBJECT:   Child care programs				 
	     Strategic planning 				 
	     Welfare benefits					 
	     Welfare recipients 				 
	     Disadvantaged persons				 
	     Workfare						 
	     HHS Child Care and Development Fund		 
	     Temporary Assistance for Needy Families		 
	     Program						 
                                                                 

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GAO-03-588

Report to the Ranking Minority Member, Subcommittee on Human Resources,
Committee on Ways and Means, House of Representatives

United States General Accounting Office

GAO

May 2003 CHILD CARE Recent State Policy Changes Affecting the Availability
of Assistance for LowIncome Families

GAO- 03- 588

Page i GAO- 03- 588 Child Care Letter 1 Appendix I Briefing Slides 5

Related GAO Products 43

Abbreviations

CCDF Child Care and Development Fund TANF Temporary Assistance for Needy
Families Contents

This is a work of the U. S. Government and is not subject to copyright
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materials separately from GAO*s product.

Page 1 GAO- 03- 588 Child Care

May 5, 2003 The Honorable Benjamin L. Cardin Ranking Minority Member
Subcommittee on Human Resources Committee on Ways and Means House of
Representatives

Dear Mr. Cardin: With the Temporary Assistance for Needy Families (TANF)
program taking effect in 1997, child care assistance became a significant
strategy for helping welfare recipients move into the workforce and for
helping other low- income families stay off welfare. Since 1997, states
have used federal funds from the Child Care and Development Fund (CCDF)
and

TANF along with state funds to expand child care assistance programs.
However, given the current budget problems in most states and the
competing demands for TANF and state funds, it is possible that states
have changed their child care policies and the availability of child care
assistance to low- income families.

As Congress considers reauthorizing CCDF and TANF, you asked us to answer
these questions: 1. What choices have states made for providing child care
assistance to

three groups of low- income families: (a) TANF families, (b) families
transitioning off TANF, and (c) other low- income working families?

2. Since January 2001, to what extent have states made key changes that
affect child care availability and have those changes increased or
decreased the overall availability of child care assistance in the nation?

3. What changes to child care assistance programs are governors proposing
for the next fiscal year?

To answer your questions, we surveyed the child care administrators of the
50 states and the District of Columbia regarding their states* child care
assistance policies and current governors* proposals affecting child care

United States General Accounting Office Washington, DC 20548

Page 2 GAO- 03- 588 Child Care

assistance. 1 The survey asked whether, since January 2001, states had
made changes to key policies affecting the availability of child care
assistance. 2 We received responses from all 50 states and the District of
Columbia. In analyzing survey responses, we classified each specific
policy change that a state identified as either increasing or decreasing
the availability of child care assistance. Policy changes that allow more
families to enter and remain in a state*s child care assistance programs
were classified as increasing availability, while policy changes that
limit entry or length of stay in the programs were classified as
decreasing availability. We conducted our review from January through
April 2003 in accordance with generally accepted government auditing
standards.

On April 24, 2003, we briefed your staff on the results of our survey.
This report formally conveys the information provided during that
briefing. (See app. I.) In summary, we found:

A vast majority of states have made all three groups of families* TANF
families, families transitioning off TANF, and other low- income working
families* eligible for child care assistance. However, half of the states
do not provide child care assistance to all the families who apply and are
eligible for such assistance under the states* eligibility policies.
States often give TANF and transitioning families higher priority than
other lowincome working families when program resources are insufficient
to cover all who apply.

Since January 2001, two- thirds of the states made key changes that affect
the availability of child care assistance while the other one- third
maintained their policies. Of the 35 states that made key changes: 3  23
made changes tending to decrease the availability of assistance,

 9 made changes tending to increase the availability of assistance, and 
3 made a mix of changes.

1 In reporting our survey results, we refer to the District of Columbia as
a state. 2 We chose January 2001 as our comparison point because state
fiscal conditions began to deteriorate at about this time. 3 We grouped
states simply on the basis of the type of changes made, that is, on
whether the state made changes that likely increased, decreased, or had a
mix of effects on the availability of child care assistance. We did not
assess the relative impact on availability of the various policy changes
that states made.

Page 3 GAO- 03- 588 Child Care

While these changes would appear to have decreased the availability of
child care assistance overall compared with 2001, we could not determine
the actual outcomes in numbers of children served and their welfare status
because data on these outcomes are not readily available. 4 Governors*
budget proposals for fiscal year 2004 present a mixed picture

for child care assistance funding. Child care officials in 29 states
identified governors* budget proposals that contained measures that would
either maintain (11 states), decrease (11 states) or increase (7 states)
funding for child care assistance, if adopted. The child care officials in
the remaining states either reported that the state did not have a
governor*s budget proposal currently addressing child care assistance (17
states) or did not provide information on the proposals (5 states).

We provided a draft of our findings to officials at the U. S. Department
of Health and Human Services* Administration for Children and Families,
which oversees state CCDF programs; however, they were not able to provide
comments on the draft within the short timeframe allowed.

We are sending copies of this report to relevant congressional committees
and other interested parties and will make copies available to others upon
request. The report will also be available on GAO*s Web site at http://
www. gao. gov. If you or your staff have any questions about this

4 In assessing whether the policy changes likely increased or decreased
the overall availability of child care assistance in the nation, we
related each group of states to its share of the nation*s population of
children in poverty. According to 2001 Census Bureau data on children
under 125 percent of the poverty level, the percentage for each group is:

(1) states that made no policy changes affecting availability* 36.5
percent; (2) states that made changes decreasing availability* 41.5
percent; (3) states that made changes increasing availability* 16 percent;
and (4) states that made a mix of changes* 6 percent.

Page 4 GAO- 03- 588 Child Care

report, please contact me or Gale Harris at (202) 512- 7215. Kathleen
Peyman, Deborah A. Signer, and Luann Moy also made key contributions to
this report.

Sincerely yours, Marnie S. Shaul Director, Education, Workforce, and
Income Security Issues

Appendix I: Briefing Slides Page 5 GAO- 03- 588 Child Care

Appendix I: Briefing Slides

1

Recent State Policy Changes Affecting the Availability of

Child Care Assistance

Briefing for Staff of Rep. Benjamin Cardin Ranking Minority Member
Subcommittee on Human Resources

Committee on Ways and Means House of Representatives

April 24, 2003

Appendix I: Briefing Slides Page 6 GAO- 03- 588 Child Care

2 With passage of welfare reform in 1996, child care assistance has become
a

significant strategy for helping recipients of Temporary Assistance for
Needy Families (TANF) move into the workforce and for helping other
families stay off welfare.

The Congress provided states with more child care funding and with
flexibility to allocate child care monies among three groups at risk: (1)
TANF families participating in work- related activities, (2) families that
recently transitioned off TANF (transitioning families), and (3) other
low- income working families.

Since 1996, many states have expanded their programs of child care
assistance with funds from the federal Child Care and Development Fund
(CCDF) and TANF; however, their policies may have changed somewhat in
recent years, given state budget shortfalls and other factors.

In view of the pending reauthorization of welfare and child care
legislation, you asked us to provide information about states* child care
assistance programs for low- income families.

Introduction

Appendix I: Briefing Slides Page 7 GAO- 03- 588 Child Care

3

Key Questions

1. What choices have states made for providing child care assistance to
three groups of low- income families:  families using TANF,  families
transitioning from TANF (transitioning families), and  other low- income
working families? 2. Since January 2001, to what extent have states made
key changes that affect child care availability and have these changes
increased or decreased the overall availability of child care assistance
in the nation?

3. What changes to child care assistance programs are governors proposing
for the next fiscal year?

Appendix I: Briefing Slides Page 8 GAO- 03- 588 Child Care

4

Scope and Methodology

Surveyed child care administrators in 50 states and the District of
Columbia (D. C.).

 All states and D. C. responded. (In this briefing, we will refer to D.
C. as a state when we present response totals.)

 Some states did not answer all survey questions.  States responded
between March 17 and April 11, 2003. Review was conducted from January
through April 2003 in accordance with generally accepted government
auditing standards.

Appendix I: Briefing Slides Page 9 GAO- 03- 588 Child Care

5

Scope and Methodology (continued)

Survey addressed  key policies that control the availability of child
care assistance to families

(Policy changes that tend to increase availability allow more families to
enter into a state*s subsidy system, while policy changes that tend to
decrease availability limit entry into or length of stay in the system); 
other policies on reimbursement rates and quality initiatives;  how
current policies differ from policies in effect in Jan. 2001 1 (Policies
scheduled to take effect in the next several months were also included);

 whether policy changes affected any of three groups of families: (1)
families currently receiving TANF, (2) transitioning families, and (3)
other low- income working families;

 governors* budget proposals for child care assistance for states* fiscal
year 2004. (We did not independently verify budget information provided.)
1 We chose Jan. 2001 because state fiscal conditions began to deteriorate
at about this time. However, we did not determine the causes of any child
care policy changes reported by states; changes may be due to a variety of
reasons, including adjusting program size to match available resources or
shifting policy direction.

Appendix I: Briefing Slides Page 10 GAO- 03- 588 Child Care

6

Scope and Methodology (continued)

Classification of state survey responses:  Each specific policy change
identified by a state was classified as either increasing or decreasing
the availability of child care assistance for any of the three groups of

families. We focused on changes in  income eligibility thresholds and
other eligibility factors;  use of waiting lists and enrollment policies;
and  copayments (the amount a family has to pay for care)* We classified
rising copayments as making child care assistance less available.

 For any policy set at the local level rather than the state level, the
child care administrator responsible for the entire state*s child care
assistance program was to respond about what was typically occurring at
the local level. This occurred in three states for which respondents said
policies were established at the local level and in some other instances
where respondents provided information about policy variation among
localities.  Technical changes, such as inflation adjustments in
copayments and policy changes that were unlikely to increase or decrease
the availability of child care, were not included in our results.

Appendix I: Briefing Slides Page 11 GAO- 03- 588 Child Care

7

Scope and Methodology (continued)

Limitations of survey results:  States may have made policy changes since
January 2001 but may not have identified the changes on the survey.

 The survey results address key policy changes that affect the
availability of child care assistance. More comprehensive data, including
the number of children served and which groups of families they are from,
are needed to fully assess the effect of these policy changes. However,
these data are not routinely available.  The survey focuses on key
policies that are established at the state level for the entire state
(except in three states); it does not include local policies or factors
that may also affect child care assistance programs.

Appendix I: Briefing Slides Page 12 GAO- 03- 588 Child Care

8

Summary of Results

 A vast majority of states have made all three groups of families
eligible for child care assistance. In half of the states, however, not
all eligible families who apply for assistance receive it. States often
give TANF and transitioning families higher priority than other low-
income working families when program resources are insufficient to cover
all who apply.

 Since January 2001, two- thirds of the states made key changes that
affect the availability of child care assistance while the other one-
third maintained their policies. Of the 35 states that made key changes,

 23 made changes tending to decrease the availability of assistance,  9
states made changes tending to increase availability of assistance,  3
states made a mix of changes. While these changes would appear to have
decreased the availability of child care assistance overall compared with
2001, the actual outcomes in numbers of children served and their welfare
status is not known.

Appendix I: Briefing Slides Page 13 GAO- 03- 588 Child Care

9

Summary of Results (continued)

 Governors* budget proposals for fiscal year 2004 present a mixed
picture. Child care officials identified 29 state governors* budget
proposals that contained measures that would either maintain (11 states),
decrease (11 states), or increase (7 states) funding for child care
assistance, if adopted. The child care officials in the remaining states
either reported that the state did not have a governor*s budget proposal
currently addressing child care assistance (17 states) or did not provide
information on the proposals (5 states).

Appendix I: Briefing Slides Page 14 GAO- 03- 588 Child Care

10

Background CCDF and TANF Are Key Federal Funding Sources for Child Care

To support the work- focused goals of welfare reform, the 1996
legislation:  Gave states, through the CCDF, flexibility to provide child
care subsidies to

families with up to 85 percent of state median income, if they are working
or involved in education and training. 1 Federal CCDF funds available in
fiscal year 2002 totaled $4.8 billion.

 Gave states flexibility to transfer up to 30 percent of TANF funds to
the CCDF or spend TANF funds, directly, for child care assistance.

 Encouraged states to spend their own funds for child care through
matching and maintenance- of- effort requirements.

1 While states are allowed to set income eligibility thresholds up to 85
percent of state median income, most states set thresholds at lower
levels. In this report, we use the term *low- income* to refer to all
families who are eligible for child care assistance in a state. However,
some families who are eligible for child care assistance could be referred
to as moderate- income families, especially in states with income
eligibility thresholds as high as 85 percent of state median income.

Appendix I: Briefing Slides Page 15 GAO- 03- 588 Child Care

11

Background Federal and State Child Care Spending Grew through Fiscal Years
1997 - 2000

0 1

2 3

4 5

6 7

8 9

10 '97 '98 '99 '00 Billions of current dollars

Federal CCDF and TANF State match and maintenance of effort Sources:
Congressional Research Service analysis of CCDF and TANF expenditure data
from the Administration for Children and Families, Department of Health
and Human Services. While more recent data are available (through 2001 for
CCDF and 2002 for TANF), they have not yet been analyzed to ensure
comparability with data for previous years. However, preliminary analysis
through fiscal year 2001 continues to show an upward trend.

Appendix I: Briefing Slides Page 16 GAO- 03- 588 Child Care

12

Background States Have Flexibility to Determine Which Families Are Served

Under federal guidelines, states  have flexibility to set child care
policies and  are not required to guarantee child care assistance to any
family. States can adjust their policies based on numbers of families
applying and the funding available.

 For example, states may change their income eligibility thresholds in
order to match the number of families covered with funds available for
child care assistance.

These adjustments can determine  which groups of families will be
eligible and  which eligible families will be served.

Appendix I: Briefing Slides Page 17 GAO- 03- 588 Child Care

13

Background Availability for Non- TANF Families Increased after 1996

While there are not sufficient data to draw a national picture, some
studies show that after 1996 many states used CCDF and TANF funds to
increase the availability of child care subsidies to transitioning
families and other low- income families. For example:

 A study of 17 state child care programs showed that the number of
children receiving subsidies had increased greatly from 1997 to 1999, with
much of the growth resulting from the use of TANF funds. As TANF caseloads
were declining,

states were expanding child care aid to help transitioning and low- income
working families. See National Study of Child Care for Low- Income
Families: State and Community Substudy Interim Report, Ann M. Collins et
al., Abt Associates, Cambridge, MA (Nov. 2000).

 GAO research also found that states have reached beyond their welfare
caseload to provide child care. In December 2001, 23 states were serving
non- TANF families in numbers anywhere between 10 and 160 percent of the
number of TANF families on cash assistance. See U. S. General Accounting
Office, Welfare Reform: States Provide TANF- Funded Work Support Services
to Many Low- Income Families Who Do Not Receive Cash Assistance, GAO- 02-
615T, (Washington, D. C.: Apr. 10, 2002).

Appendix I: Briefing Slides Page 18 GAO- 03- 588 Child Care

14

Background Changing Economic and Fiscal Conditions Can Affect States*
Policy Choices

During the first 4 years (1997- 2000) following implementation of TANF and
CCDF,

 most states were experiencing healthy fiscal periods.  TANF cash
assistance caseloads declined sharply.  states chose to use some of their
TANF funds to increase the availability of

supports, including child care assistance, for low- income working
families. Since January 2001,  state fiscal conditions have deteriorated
and most states have faced

growing budget problems.  TANF cash assistance caseloads have grown in
many states, and

nationally, the decline in TANF caseloads slowed.  states have faced
choices about how best to use federal TANF funds and

their own state funds to support program needs and goals.

Appendix I: Briefing Slides Page 19 GAO- 03- 588 Child Care

15

Question #1 States Are Evenly Split on Whether They Serve All Eligible
Families Who Apply

 25 states reported they currently serve all families who apply and are
eligible under the states* eligibility criteria.  26 states reported they
currently do not serve all families who

apply and are eligible under the states* eligibility criteria.

Wash. Ore.

Calif. Idaho

Nev. Mont.

Wyo. Utah

Colo. N. Mex. Ariz.

Tex. Hawaii Alaska

La. Okla.

Ark. Kans. Mo.

Miss. Ala. Ga. Fla. S. C.

N. C. Tenn.

Ky. Va. Nebr.

S. Dak. N. Dak.

Minn. Iowa

Wisc. Ill.

Mich. Ind. Ohio

W. Va. Pa.

N. Y. Vt.

N. H. Maine

Mass. R. I. Conn.

N. J. Del. Md.

D. C. Serves all eligible families who apply Does not serve all eligible
families who apply Source: State child care officials' responses to GAO
survey.

Appendix I: Briefing Slides Page 20 GAO- 03- 588 Child Care

16

Question #1 States Generally Make All Groups Eligible, but Low- Income
Families Often Receive Lower Priority

Of the 49 states that responded to our survey question  48 said all three
groups of families are eligible-- TANF families,

transitioning families, and other low- income working families  Tennessee
responded that only TANF families and transitioning families

(for 18 months after leaving TANF) are eligible. However, other factors
also affect whether eligible families who apply for child care assistance
actually get served.

Appendix I: Briefing Slides Page 21 GAO- 03- 588 Child Care

17

Question #1 TANF and Transitioning Families Generally Have Higher Priority
in States Not Serving All

Of the 26 states that do not serve all eligible families who apply: 
Fourteen states gave TANF families higher priority than the other two

groups:  Ten states reported three priority levels* TANF families first,
transitioning

families second, and other low- income families third.  Four states
reported that TANF families receive highest priority and

transitioning and other low- income families receive lower priority. 
Nine states reported giving TANF and transitioning families highest
priority

and other low- income families second priority.  Three states did not
provide complete information.

Appendix I: Briefing Slides Page 22 GAO- 03- 588 Child Care

18

Question #1 With Some Exceptions, Low- Income Working Families Have Lowest
Priority

In the 26 states not serving all eligible families, other low- income
working families (those not on TANF or transitioning off TANF) are
generally the lowest priority.

 However, some families in this group do have high priority. For example,
 New York guarantees child care assistance to families in this group who

could be eligible to receive TANF cash assistance but who have chosen not
to receive it.

 Massachusetts gives immediate access to low- income military families
who are deployed overseas.

Appendix I: Briefing Slides Page 23 GAO- 03- 588 Child Care

19

Question #1 Potential Outcomes for Lower Priority Families

When insufficient funds are available to serve all eligible families who
apply for assistance, lower- priority families are most likely to

 be put on a waiting list,  be subject to freezes on enrollment of new
families, or  lose benefits while still eligible. A change in priority
can result in families losing benefits. For example,  leaving TANF can
result in losing child care assistance in two states

(Montana and Indiana), and  coming to the end of a state*s transition
period

 can result in losing child care assistance while still eligible in four
states: Arkansas, Indiana, Nevada, S. Carolina

 can result in no longer being eligible in three states: Nebraska, New
Mexico, Tennessee.

Appendix I: Briefing Slides Page 24 GAO- 03- 588 Child Care

20

Question #2 Since 2001, 35 States Have Made Key Policy Changes While the
Remaining 16 Maintained Their Policies

Thirty- five states made key changes affecting availability while the
other 16 did not. Of the states that made key changes:

 Twenty- three states made changes tending to decrease the availability
of child care assistance.

 Nine states made changes tending to increase the availability of
assistance.

 Three states made a mix of changes.

Appendix I: Briefing Slides Page 25 GAO- 03- 588 Child Care

21

Question #2 These Changes Would Likely, on Balance, Have Decreased Overall
Availability of Aid Since 2001

Because more states made changes that tended to decrease availability of
assistance than to increase it, the overall availability of child care
assistance has likely decreased compared with its availability in January
2001.

23 16

9 3

0 5

10 15

20 25

Number of states Made changes

decreasing availability

Made no key changes (16) or a mix of changes (3)

Made changes increasing availability

Source: State child care officials' responses to GAO survey.

Appendix I: Briefing Slides Page 26 GAO- 03- 588 Child Care

22

Question #2 Policy Changes Have Been Common, with Decreases in
Availability Predominating

15 10 5 0 5 Changed income eligibility thresholds to narrow or expand
coverage

Changed other eligibility criteria to narrow or expand coverage Started or
eliminated waiting lists Stopped or resumed enrolling new families

Increased or reduced copayments

14 5 9 9 10

Decreases availability Increases

availability

Source: State child care officials' responses to GAO survey.

Number of states making each change Policy changes

Number of States that Changed Certain Policies Affecting the Availability
of Child Care Assistance Since January 2001

4 5 2 1

5

Appendix I: Briefing Slides Page 27 GAO- 03- 588 Child Care

23 Source: State child care officials' responses to GAO survey.

a Ohio is scheduled to implement these changes later in 2003.

Question #2 Twenty- three States Made Changes that Decrease Availability
of Child Care Subsidies

Pennsylvania

Ohio a

West Virginia

Washington

Texas

Tennessee

Oregon

North Dakota

North Carolina

Nevada

New Mexico

New Jersey

Nebraska

Montana

Missouri

Kentucky

Kansas

Indiana

Idaho

District of Columbia

Colorado

Connecticut

Arizona

Increased copayments Stopped enrollment of new families Started waiting
list Changed other eligibility factors to narrow coverage Changed income
eligibility thresholds to narrow coverage State

Type of change

Appendix I: Briefing Slides Page 28 GAO- 03- 588 Child Care

24

Question #2 Nine States Made Changes that Increase Availability of Child
Care Subsidies

Wyoming

South Dakota

South Carolina

Oklahoma

New York

Massachusetts

Iowa

Georgia

Alaska

Reduced copayments Resumed enrollment of new families Eliminated waiting
list Changed other eligibility factors to expand coverage Changed income
eligibility thresholds to expand coverage State

Type of change

Source: State child care officials' responses to GAO survey.

Appendix I: Briefing Slides Page 29 GAO- 03- 588 Child Care

25

Question #2 Three States Had a Mix of Changes

Alabama  Increased availability by reducing the number of hours families
are required to work in order

to qualify for subsidies and by reducing the copayments of families with
more than one child receiving assistance.  Decreased availability in
October 2002 by stopping enrolling new low- income working

families in the child care assistance program. Louisiana  In January
2001, changed its income eligibility threshold to make fewer families
eligible, and in July 2002 changed it back to its prior level.  In 2001,
started and then stopped a waiting list for other low- income working
families and

lowered copayments. Maryland  In January 2002, expanded availability by
changing its income eligibility threshold from 45

percent to 50 percent of state median income.  In January 2003, stopped
enrolling new families, except TANF families and those who received TANF
within 2 months of applying for child care subsidies.

Appendix I: Briefing Slides Page 30 GAO- 03- 588 Child Care

26

Question #2 Of the 18 States that Changed Income Thresholds, Most Reduced
Coverage

While most states maintained the same income eligibility thresholds that
they had in January 2001, 14 states decreased them, reducing availability
for higher income families. For example, the thresholds

 Decreased for certain types of families* In July 2002, Nebraska
decreased its maximum threshold for other low- income working families
from 185 percent to 120 percent of the federal poverty level, while the
threshold remains at 185 percent for transitioning families.

 Decreased for new applicants* In August 2001, New Mexico decreased its
maximum threshold from 200 percent to 100 percent of the federal poverty
level for all new applicants. In May 2003, New Mexico will change this
threshold to 130 percent of the federal poverty level.

 Decreased due to inaction* Two states reported that their maximum income
eligibility levels had declined in real terms because the state had chosen
not to adjust income eligibility levels to account for inflationary
increases. (Mo., N. Dak.)

Appendix I: Briefing Slides Page 31 GAO- 03- 588 Child Care

27

Question #2 A Few States Changed Income Thresholds to Increase Coverage
Four states increased maximum income eligibility thresholds to increase

availability for higher- income families. For example,  South Dakota
increased its threshold for all families from 150 percent to

200 percent of the federal poverty level in March 2002, and  Wyoming,
which has a threshold for initially qualifying for assistance and a

threshold for continuing to receive assistance, raised both thresholds. It
raised the first threshold from 150 percent to 185 percent and the second
threshold from 185 percent to 200 percent of the federal poverty level.

Appendix I: Briefing Slides Page 32 GAO- 03- 588 Child Care

28

Question #2 Some States Changed Other Eligibility Factors Affecting
Availability

Potential decreases: Five states changed eligibility factors other than
income levels that could decrease the number of families eligible to
receive child care assistance. For example,

 Kentucky is adding a 20- hour work requirement for families receiving
child care assistance. This change will affect transitioning families and
other low- income working families.

 In Colorado, some counties have eliminated education as an activity that
qualifies for child care assistance. This change can affect TANF,
transitioning, and other low- Income working families.

Appendix I: Briefing Slides Page 33 GAO- 03- 588 Child Care

29

Question #2 Some States Changed Other Eligibility Factors Affecting
Availability (continued)

Potential increases: Five states changed eligibility factors other than
income levels that could increase the number of families eligible to
receive child care assistance. For example,

 New York gave its counties the option of making 4- year college
education an activity eligible for child care assistance coverage. This
change affects TANF, transitioning, and other low- income working
families.

 Oklahoma allowed 30 days of child care subsidy to families who had been
receiving assistance while working but had become unemployed and were
searching for a job. This change affects transitioning families and other
low- Income working families.

Appendix I: Briefing Slides Page 34 GAO- 03- 588 Child Care

30

Question #2 Waiting Lists Are Somewhat More Common than Before

Since January 2001,  Nine states started using waiting lists.

 In three of these states, transitioning families as well as other low-
income working families could be put on the waiting list (D. C., Colo.,
Md.).

 In six other states, waiting lists were started for other low- income
working families (Ariz., Conn., Ky., Mont., Nev., Pa.).

 Two states eliminated their waiting lists for other low- income working
families by providing child care assistance to families on the lists
(Alaska, Iowa).

Appendix I: Briefing Slides Page 35 GAO- 03- 588 Child Care

31

Question #2 Several States Have Stopped Adding New Families to Child Care
Assistance Programs

Since January 2001,  Nine states stopped providing subsidies to new
families applying for child

care assistance.  In two states, the change affected transitioning
families as well as other

low- income working families (D. C., Md.).  In seven states, the change
affected only other low- income working

families (Ala., Ariz., Ky., Conn., Nev., N. J., Tenn.).  One state
resumed enrollment of new applicants into the assistance

program-- specifically other low- income working families (S. C.).

Appendix I: Briefing Slides Page 36 GAO- 03- 588 Child Care

32

Question #2 Of 15 States that Changed Copayments, More Increased than
Decreased What Families Must Pay

Copayments are the amounts of their own funds that states require families
receiving child care assistance to pay to their child care providers. In
many states, TANF families are exempted from paying copayments.

Since January 2001,  Ten states increased copayments  Five states
increased copayments for all types of families, including TANF (Idaho,
Mont., N. C., Wash., W. Va.).

 Four additional states increased copayments for transitioning and other
lowincome working families (Ky., Nebr., Oreg., Tex.).

 Ohio has scheduled to increase copayments later this year.  Five states
reduced copayments

 Three states reduced copayments for all types of families, including
TANF families (Ala., Mass., Wyo.).  Two additional states reduced
copayments for transitioning and other lowincome working families (La., S.
Dak.).

Appendix I: Briefing Slides Page 37 GAO- 03- 588 Child Care

33

Question #2 A Few States Made Other Copayment Changes that Have a Mixed
Effect

Three states reported other changes in copayments that could result in
both increases and decreases.

 Connecticut increased copayments for some families but also created
income disregards that would decrease copayments for some families.

 Alaska changed its basis for determining copayments from a percentage of
cost of care to a percentage of gross income.

 Maryland, which bases copayments on a percentage of cost of care, raised
copayments but placed a cap on these increases and reduced the highest
percentage of cost of care that a family must pay.

Appendix I: Briefing Slides Page 38 GAO- 03- 588 Child Care

34

Question #2 Other Policy Changes* More than Half the States Increased
Reimbursement Rates for Providers

Reimbursement rates are the amounts a state pays to a child care provider
to subsidize the care provided to children in families receiving
assistance. The rate amount can affect whether families are able to find
child care providers who will accept subsidies.

Since January 2001,

28 states increased reimbursement rates, nearly all in response to market
rate surveys

Alaska, Ala., Ariz., Calif., Conn., Fla., Ga., Hawaii, Kans., Ky., Maine,
Md., Minn., Nebr., N. J., N. M., N. Y., N. C., Okla., Pa., R. I., S. C.,
S. Dak., Tenn., Va., Wash., Wis., Wyo.

4 states decreased rates

Idaho, Mich., Nev., W. Va.

Appendix I: Briefing Slides Page 39 GAO- 03- 588 Child Care

35

Question #2 Other Policy Changes* Twice as Many States Increased as
Decreased Spending on Quality Initiatives

Since January 2001,

22 states reported increased spending on quality initiatives designed to
promote quality child care

Ark., Calif., Fla., Ga., Hawaii, Ill., Iowa, Ky., La., Nebr., N. J., N.
M., N. Y., Okla., Pa., R. I., S. C., Utah, Vt., Va., Wis., Wyo.

10 states reported decreased spending on quality initiatives

Conn., Ind., Kans., Md., Minn., N. C., N. Dak., Tex., Wash., W. Va.

Appendix I: Briefing Slides Page 40 GAO- 03- 588 Child Care

36

Question #3 Governors* Budget Proposals Present a Mixed Picture for Fiscal
Year 2004

Fiscal 2004 In 29 states, child care officials reported whether their
governors* budget proposals for the upcoming fiscal year would change the
level of funding for child care subsidies.

In 17 states, child care officials reported that their governors did not
currently have budget proposals addressing child care assistance, and in
the 5 remaining states, the child care officials did not provide
information.

11 propose decreases

Alaska, Ala., Conn., D. C., Md., Minn., Mont., N. C., N. H., Tenn., Wash.

7 propose increases

Ariz., Fla., Iowa, Kans., N. Mex., N. Y., Pa.

11 propose to keep funding about the same as last year

Calif., Colo., Ga., Mass., Miss., Mo., N. Dak., Nebr., Ohio, Ore., S. Dak.

Appendix I: Briefing Slides Page 41 GAO- 03- 588 Child Care

37

Question #3 Substantial Structural Change Proposed in California

 California's governor's budget proposes moving the funding and
policysetting for child care assistance programs from the state- level to
the countylevel.

 If adopted, the proposal will likely result in changes to key policies
addressed by our survey.

Appendix I: Briefing Slides Page 42 GAO- 03- 588 Child Care

38

Observations

 Our survey results show that a significant number of states have changed
their child care policies in ways that tend to decrease availability. At
the same time, it is noteworthy that one- third of the states did not make
key changes and several took steps to increase availability. Even so, the
net effect would appear to be that states have decreased the availability
of child care assistance overall compared with 2001* that is, these
findings indicate that entry into and remaining in the child care
assistance system may be less possible for families, particularly for
families not associated with the welfare system.

 To provide a more definitive assessment of changes in the availability
of child care subsidies, additional data are needed, including more recent
data on the number of children receiving subsidies, the welfare status of
families receiving subsidies, and trends in spending levels. As a result,
we consider these results suggestive rather than definitive until more is
known about

actual outcomes of changes in states* child care assistance programs.

Related GAO Products Page 43 GAO- 03- 588 Child Care

Child Care: States Exercise Flexibility in Setting Reimbursement Rates and
Providing Access for Low- Income Children. GAO- 02- 894. Washington, D.
C.: September 18, 2002.

Child Care: States Have Undertaken a Variety of Quality Improvement
Initiatives, but More Evaluations of Effectiveness Are Needed. GAO- 02-
897. Washington, D. C.: September 6, 2002.

Early Childhood Programs: The Use of Impact Evaluations to Assess Program
Effects. GAO- 01- 542. Washington, D. C.: April 16, 2001. Welfare Reform:
States Provide TANF- Funded Work Support Services to

Many Low- Income Families Who Do Not Receive Cash Assistance. GAO02- 615T,
Washington, D. C.: April 10, 2002.

Child Care: States Increased Spending on Low- Income Families. GAO01- 293.
Washington, D. C.: February 2, 2001.

Child Care: How Do Military and Civilian Center Costs Compare?

GAO/ HEHS- 00- 7. Washington, D. C.: October 14, 1999.

Child Care: Use of Standards to Ensure High Quality Care. GAO/ HEHS98-
223R. Washington, D. C.: July 31, 1998.

Welfare Reform: States* Efforts to Expand Child Care Programs.

GAO/ HEHS- 98- 27. Washington, D. C.: January 13, 1998.

Welfare Reform: Implications of Increased Work Participation for Child
Care. GAO/ HEHS- 97- 75. Washington, D. C.: May 29, 1997. Related GAO
Products

(130227)

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