    Child Care: Additional Information Is Needed on Working Families
    Receiving Subsidies (29-JUN-05, GAO-05-667).

    Since the Congress enacted welfare reform legislation in 1996,
    child care assistance has served as a key support for work
    efforts among low-income families. Researchers have found that
    reliable, high-quality child care is critical to sustaining
    parents' ability to work, while safeguarding their children's
    health and intellectual development. States have flexibility in
    determining which low-income families are provided child care
    subsidies funded by the Child Care and Development Fund (CCDF),
    Temporary Assistance for Needy Families (TANF), and related state
    resources. States must balance the funds available for subsidies
    with the number of families who want subsidized child care. In
    doing so, states may find it necessary to change child care
    policies that affect program access or the amount of subsidy that
    eligible families receive. As Congress considers reauthorizing
    CCDF and TANF, we updated our previous report "Child Care: Recent
    State Policy Changes Affecting the Availability of Assistance for
    Low-Income Families" by providing current information on (1) the
    choices states have made for providing child care assistance to
    (a) TANF families, (b) families transitioning off TANF, and (c)
    other lowincome families; (2) the extent to which states have
    changed policies since 2001 that could affect access to child
    care assistance programs and the amounts of subsidies provided to
    families; and (3) the number of children and families receiving
    child care assistance from CCDF and TANF funds.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-05-667
        ACCNO:   A28377
      TITLE:     Child Care: Additional Information Is Needed on Working
    Families Receiving Subsidies
         DATE:   06/29/2005
      SUBJECT:   Child care programs
    	     Disadvantaged persons
    	     Eligibility criteria
    	     Families
    	     Federal/state relations
    	     Policy evaluation
    	     Public assistance programs
    	     State-administered programs
    	     Subsidies
    	     HHS Child Care and Development Fund
    	     HHS Temporary Assistance for Needy
    	     Families Block Grant

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    GAO-05-667

    United States Government Accountability Office

     GAO	Report to the Ranking Minority Member, Subcommittee on Education and Early
    Childhood Development, Committee on Health, Education, Labor, and Pensions, U.S.
                                         Senate

    June 2005

    CHILD CARE

        Additional Information Is Needed on Working Families Receiving Subsidies

    GAO-05-667

    Contents

                                        Letter 1

    Appendix I Briefing Slides

      Appendix II	Comments from the Department of Health and Human Services

    Abbreviations

    CCDF Child Care and Development Fund
    HHS Department of Health and Human Services
    MOE maintenance-of-effort
    SMI state median income
    TANF Temporary Assistance for Needy Families

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    separately.

    United States Government Accountability Office Washington, DC 20548

    June 29, 2005

    The Honorable Christopher J. Dodd
    Ranking Minority Member
    Subcommittee on Education and Early Childhood Development
    Committee on Health, Education, Labor, and Pensions
    United States Senate

    Dear Senator Dodd:

    Since the Congress enacted welfare reform legislation in 1996, child care
    assistance has served as a key support for work efforts among low-income
    families.1 Researchers have found that reliable, high-quality child care
    is
    critical to sustaining parents' ability to work, while safeguarding their
    children's health and intellectual development. States have flexibility in
    determining which low-income families are provided child care subsidies
    funded by the Child Care and Development Fund (CCDF), Temporary
    Assistance for Needy Families (TANF), and related state resources. States
    must balance the funds available for subsidies with the number of families
    who want subsidized child care. In doing so, states may find it necessary
    to change child care policies that affect program access or the amount of
    subsidy that eligible families receive.

    As Congress considers reauthorizing CCDF and TANF, we updated our
    previous report "Child Care: Recent State Policy Changes Affecting the
    Availability of Assistance for Low-Income Families"2 by providing
    current information on

    o  	the choices states have made for providing child care assistance to
    (1) TANF families, (2) families transitioning off TANF, and (3) other
    lowincome families;

    1We use the terms "assistance" and "subsidies" interchangeably, although
    HHS in the context of child care subsidies limits the term "assistance" to
    TANF benefits provided to nonworking families.

    2GAO, Child Care: Recent State Policy Changes Affecting the Availability
    of Assistance for Low-Income Families, GAO-03-588 (Washington: D.C.: May
    5, 2003).

    o  	the extent to which states have changed policies since 2001 that could
    affect access to child care assistance programs and the amounts of
    subsidies provided to families; and

    o  	the number of children and families receiving child care assistance
    from CCDF and TANF funds.

    To address our first and second objectives, we surveyed child care
    administrators in 50 states and the District of Columbia on their
    respective state's child care assistance policies. The survey asked them
    whether their states had made changes to key policies that could affect
    access to child care assistance programs and subsidy amounts since March
    2003. All 50 states and the District of Columbia responded to our survey
    between March 11 and March 31, 2005. We compared these responses with
    responses to a previous survey we conducted in March and April 2003
    covering policies and practices from 2001 through 2003. We combined the
    results from the two surveys to provide a 4-year assessment of changes
    between January 2001 and March 2005. Our analyses of state policy changes
    are limited to the information that states reported in our surveys about
    the direction of change (e.g., increasing or decreasing income eligibility
    and co-payments), if any. To gather information on the number of children
    and families receiving child care assistance from CCDF and TANF funds, we
    reviewed the Department of Health and Human Services' (HHS) data on number
    of children served through CCDF and held discussions with HHS officials
    about the availability of data on the number of children and families
    served through TANF. In addition, we held discussions with HHS officials
    on the collection and maintenance of available data and determined they
    were sufficiently reliable for the purposes of this report. Furthermore,
    we interviewed officials in five states-Kentucky, Maryland, Massachusetts,
    Oregon and Wyoming-to gain a more in-depth perspective on child care
    policy changes in their states. We conducted this review from February
    2005 through May 2005 in accordance with generally accepted government
    auditing standards.

    On May 25, 2005, we briefed your staff on the results of our review. This
    report formally conveys the information provided during that briefing.
    (See app. I for the briefing slides.) In summary, we found the following:

    All states make TANF, transitioning families, and other low-income
    families eligible for assistance. However, some states set additional
    criteria that may limit the extent of service to transitional and,
    especially, to other low-income families. Thirty-one states-an increase of
    six states since our previous report-reported that, using their state's
    eligibility

    criteria, they were able to provide child care assistance to all the
    families who apply and are deemed eligible for such assistance. Most
    states reported that they give higher priority to TANF families than
    transitional and other low-income working families when program resources
    are insufficient to serve all who apply.

    Since 2001, many states have made changes in eligibility and enrollment
    policies that could decrease program access while at the same time may
    provide larger subsidies to families receiving assistance. Thirty-five
    states made the following eligibility and enrollment changes that affect
    program access since 2001:

    o  19 made changes tending to decrease access to assistance.

    o  8 made changes tending to increase access to assistance.

    o  8 made a mix of changes.

    In addition, many states have made co-payment and provider reimbursement
    rate changes, but of those that made changes, more states increased
    provider rates than increased co-payments, which could result in families
    receiving larger subsidies. States may be providing larger subsidies in an
    effort to keep pace with increasing child care fees or to provide families
    with a broader array of options among providers.

    According to HHS data, the number of children and families receiving child
    care assistance under CCDF has remained relatively constant since 2001,
    but little is known about those subsidized with TANF direct funds.
    According to HHS, approximately 1.75 million children and over 1 million
    families have been served through CCDF (including TANF dollars transferred
    to CCDF) on an average monthly basis since fiscal year 2001. However, HHS
    officials did not have information on working families receiving child
    care assistance directly through TANF funds, although most ($1.4 billion
    of $1.7 billion) of the federal TANF funds directly spent on child care is
    directed to these families.

    Because we believe that additional information on working families
    assisted directly through TANF would be valuable to policy makers and
    program managers in ensuring the efficiency, effective and accountability
    of federal supports for child care, in our May 25, 2005, briefing, we
    recommended that the Assistant Secretary for Children and Families find
    cost-effective ways to collect this information. We provided a draft copy
    of this report, including the briefing slides, to officials in the U.S.
    Department of Health and Human Services' Administration for Children and
    Families, which oversees state CCDF and TANF programs. In its

    comments on the draft, ACF disagreed with our recommendation (see app.
    II). ACF mentioned that states are required to report such disaggregated
    case record information only for families receiving "assistance" under the
    TANF program. ACF explained that during its rule-making process, a wide
    range of organizations providing comments raised concerns about the
    relationship between certain services, such as child care, and
    "assistance" under the TANF program. Consequently, ACF does not plan to
    collect this information on working families without new legislation.
    Therefore, we are suggesting that Congress may wish to require that, for
    child care subsidies directly funded by TANF, ACF find cost-effective ways
    to collect data on the numbers of children and families receiving these
    subsidies and the types of care they obtain, without regard to whether the
    subsidies are defined as "assistance" under TANF regulations. We have
    changed the briefing slides to reflect this matter for congressional
    consideration.

    As agreed with your office, unless you publicly announce its contents
    earlier, we plan no further distribution of this report until 30 days
    after its
    issue date. At that time, we will send copies 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 report, please contact me at (202) 512-7215. Betty
    Ward-Zukerman-Assistant Director, Danielle Giese-Analyst-In-Charge,
    Sonya Harmeyer, Luann Moy, Cathy Hurley and James Rebbe also made
    key contributions to this report.

    Sincerely yours,

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

    Enclosure

    Appendix II: Comments from the Department of Health and Human Services

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