Welfare to Work: Child Care Assistance Limited; Welfare Reform May Expand
Needs (Letter Report, 09/21/95, GAO/HEHS-95-220).

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-95-220
     TITLE:  Welfare to Work: Child Care Assistance Limited; Welfare 
             Reform May Expand Needs
      DATE:  09/21/95
   SUBJECT:  Aid to families with dependent children
             Employment or training programs
             Welfare recipients
             Disadvantaged persons
             Child care programs
             Subsidies
             State-administered programs
             Eligibility criteria
             Federal/state relations
IDENTIFIER:  JOBS Program
             Job Opportunities and Basic Skills Training Program
             AFDC
             AFDC Transitional Child Care Program
             Child Care and Development Block Grant
             Florida
             Michigan
             Minnesota
             Nevada
             Ohio
             Texas
             Washington
             
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Cover
================================================================ COVER


Report to the Congress

September 1995

WELFARE TO WORK - CHILD CARE
ASSISTANCE LIMITED; WELFARE REFORM
MAY EXPAND NEEDS

GAO/HEHS-95-220

JOBS Child Care

(105593)


Abbreviations
=============================================================== ABBREV

  AFDC - Aid to Families With Dependent Children program
  CCDBG - Child Care and Development Block Grant
  FSA - Family Support Act of 1988
  FY - fiscal year
  HHS - Department of Health and Human Services
  JOBS - Job Opportunities and Basic Skills Training program
  TCC - Transitional Child Care program

Letter
=============================================================== LETTER


B-258798

September 21, 1995

The President of the Senate and the
Speaker of the House of Representatives

From 1991 through 1993, federal and state spending on child care
subsidies to help current and former welfare recipients work or go to
school grew from just over $600 million to over $1 billion.  As the
Congress and the states consider and test various approaches to
restricting the length of time that mothers stay on welfare and to
begin working more quickly, questions have arisen about child care
needs created by more welfare mothers participating in training
activities, part-time work, and, finally, full-time work.  In
particular, concerns have been expressed about the capacity of the
states' child care resources to handle the increase in the number of
children needing care under such proposals. 

Given rising interest in this issue, we examined (1) the extent to
which child care needs of welfare recipients in an education and
training program (the Job Opportunities and Basic Skills Training
(JOBS) program) are currently being met, (2) whether any barriers
exist to meeting the child care needs of JOBS participants, (3) the
effects of child care subsidies on former welfare recipients' move
toward self-sufficiency, and (4) the potential implications of
welfare reform for child care availability and continuity. 

To accomplish our work, we conducted a nationally representative,
computer-assisted telephone survey of approximately 400 local JOBS
programs.  The child care-related questions on this survey provided
general information about child care services available to JOBS
participants.  We also visited 12 counties in 7 states\1 to obtain
in-depth information on how the JOBS child care program was
implemented#- -#, governmental child care expenditures, participants'
ability to identify and secure child care while they go to work or
school, the effects of child care subsidies on former welfare
recipients' move toward self-sufficiency, and implications of welfare
reform on child care.  We conducted our work between June 1994 and
August 1995 in accordance with generally accepted government auditing
standards.  (See app.  I for a detailed description of our
objectives, scope, and methodology.)


--------------------
\1 We visited counties in Florida, Michigan, Minnesota, Nevada, Ohio,
Texas, and Washington. 


   BACKGROUND
------------------------------------------------------------ Letter :1

In 1988, the Congress enacted sweeping changes to the nation's
welfare system by passing the Family Support Act (FSA).  A central
purpose of FSA was to transform Aid to Families With Dependent
Children (AFDC) into a transitional program by strengthening existing
work requirements and guaranteeing child care subsidies to welfare
recipients while they participate in education and training
activities.  To accomplish this, FSA created the JOBS program, which
was designed to help AFDC families to obtain the education, training,
and work experience to become independent from welfare.  Under the
JOBS program, states may make available to participants a broad range
of services and activities.  States are required to provide certain
components, including high school or equivalent education, basic and
remedial education, education for those with limited English
proficiency, job skills training, job readiness training, and job
development and placement.  States must also offer two of the
following four optional components:  job search, on-the-job training,
community work experience, and work supplementation.\2 FSA also
required states to guarantee child care for JOBS participants and
employed AFDC recipients. 

Under FSA, states are accorded substantial flexibility in the design
and implementation of their JOBS programs.  Although about $1 billion
in federal funds has been made available for JOBS each year, states
must commit their own resources by providing matching funds to
acquire the federal dollars allocated to them.  Recognizing the state
financial role in JOBS, FSA generally allows states to operate their
programs to the extent that "State resources .  .  .  permit."
Moreover, although #- -#FSA mandates participation in JOBS for AFDC
recipients between 16 and 59 years of age, it allows exemptions for
certain individuals, such as those caring for children under age 3. 
FSA also allows states to limit participation by those with child
care needs by deferring participation, granting "good cause,"\3
creating waiting lists, reassigning priorities, and taking other
measures.  Finally, FSA defines minimum participation standards for
states to meet.  To meet these requirements, states only have to
serve a portion of their nonexempt AFDC recipients. 

As welfare recipients move into the workforce, they often must pay
for the child care that enables them to work, and the cost of child
care remains an employment barrier to many of them.  Recognizing the
importance of child care to helping welfare recipients obtain
training and employment, leave welfare, and stay employed, the
Congress has created four child care programs since 1988: 

  Guaranteed child care\4 for employed recipients of AFDC, JOBS
     participants (discussed above), and recipients in other approved
     education activities;

  Guaranteed child care for 1 year after leaving the welfare rolls
     for employment (known as Transitional Child Care);

  Child care subsidies for working poor families who are not
     currently receiving AFDC but who would be at risk of becoming
     eligible for AFDC without such subsidies (known as at-risk child
     care); and

  Monetary support, provided under the Child Care and Development
     Block Grant, to working, low-income families with incomes up to
     75 percent of a state's median income. 

The first three of these programs require states to commit their own
resources to obtain the federal dollars allocated to them; the fourth
requires no state matching funds.  In fiscal year 1994, federal and
state governments spent over $2.5 billion on these four programs. 
Taken together, these subsidy programs have made an important
contribution to states' efforts to move some mothers off welfare to
have them begin work, as well as to keep some working poor families
off welfare. 


--------------------
\2 This is a form of subsidized employment also known as grant
diversion, in which the AFDC grants are used to pay for a portion of
the training and supervision provided to the participant by the
employer. 

\3 FSA regulations allow states to find "good cause" for failure to
participate in JOBS if, among other things, necessary child care is
not available and the state fails to provide such care. 

\4 States may use a variety of methods to guarantee the availability
of child care, such as arranging the care through providers using
vouchers, providing cash or vouchers to caretaker relatives, and
arranging with other agencies for nonreimbursed care. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

Although 73 percent of the state JOBS programs in our nationwide
survey reported providing child care subsidies or help arranging
child care\5 to all or almost all participants who needed assistance,
their ability to do so stemmed from two key FSA provisions that serve
to limit the number of AFDC recipients who participate.  JOBS serves
only a small portion of adult welfare recipients--approximately 13
percent in any given month--in part because many meet the statutory
exemption provisions.  In addition, because states implement JOBS and
its child care provision to the extent that their resources permit,
the amount of funds that states provide for child care for the JOBS
program as a match for federal dollars also limits the number of
welfare recipients with child care needs who can participate.  When
child care funding is unavailable, states either exempt welfare
recipients or limit participation to those with school-aged children
or those who can find free child care.  Five of the seven states we
visited reported insufficient funds for child care. 

Regardless of their ability to provide child care assistance,\6 state
and county officials told us a number of difficulties hinder finding
child care for the small number of recipients who participate in
JOBS.  Shortages of certain kinds of child care common to the
population in general--such as infant, special-needs, and sick child
care; before- and after-school care; and part-time and nonstandard
hours\7 care--as well as a lack of reliable transportation, can delay
when some JOBS participants begin training or work and affect their
continued participation.  In fact, every state we visited reported a
shortage of care for infants and during nonstandard hours, and six
states reported a shortage of care for special-needs and sick
children.  In our nationwide survey, 77 percent of the JOBS programs
unable to provide child care assistance to all participants cited
transportation difficulties as a problem in getting child care. 

Once a welfare recipient secures work, her ability to continue
working and become self-sufficient enough to support her family can
be impaired if her child care subsidy is cut off because of
insufficient state resources.  Some states attempt to provide JOBS
participants with continued child care help--beyond that guaranteed
in the JOBS program--through several federal/state child care
programs.  These states give former JOBS participants priority for
continuing child care funds set aside to help the working poor. 
However, some states have long waiting lists of eligible working poor
families--with as many as 36,000 families in one state--for which no
child care funds exist.  As a result, clients may quit working when
their child care subsidies end. 

Providing funding and finding care for additional children as more
mothers are required to work or limit their stay on AFDC under
welfare reform may be difficult.  JOBS-related child care funding and
the supply of certain kinds of child care are already inadequate in
some states.  Different approaches currently under discussion by the
Congress and being tested in many states are intended to increase the
number of welfare recipients in job skills training and employment,
thus increasing the need for child care for AFDC recipients with
young children.  Even if changes are not made to AFDC at the national
level, these difficulties could affect reform measures that continue
to be implemented in the states.  As states move to expand work
requirements, they may have to reconsider funding priorities and push
to develop new sources of child care to meet the needs of welfare
recipients and the working poor alike. 


--------------------
\5 The JOBS child care guarantee requires states to provide or pay
for needed services, not simply help in finding services. 

\6 We visited counties that had a wide range of abilities to provide
child care assistance to JOBS participants.  See appendix I for more
information on our methodology. 

\7 Nonstandard hours include early mornings, evenings, nights, and
weekends, as well as all shifts longer than 8 hours. 


   MOST JOBS PROGRAMS REPORT
   PROVIDING CHILD CARE
   ASSISTANCE, BUT PARTICIPATION
   IS LIMITED
------------------------------------------------------------ Letter :3

Most state JOBS programs in our nationwide survey reported providing
child care subsidies or help arranging child care to all or almost
all participants who needed assistance (see table 1).\8 However, to a
great degree, their ability to do so stemmed from two key FSA
provisions that serve to limit participation in JOBS by AFDC
recipients who might need child care. 



                                Table 1
                
                    Proportion of Jobs Participants
                 Receiving Needed Child Care Assistance
                            During May 1994

                                                                Percen
JOBS programs' response                                           tage
--------------------------------------------------------------  ------
All or almost all                                                   73
Most                                                                13
About half                                                           5
Some                                                                 4
Few or none                                                          2
No participants needed child care
                                                                     4
----------------------------------------------------------------------
Note:  Numbers do not add to 100 because of rounding.  See table
II.11 in appendix II for sampling errors. 

One provision exempts large numbers of AFDC recipients, many of whom
would potentially need child care assistance if they took part in
JOBS.  These FSA exemptions provide one way of managing the influx of
clients who may need child care to participate.  The most recent
Department of Health and Human Services (HHS) data show, for example,
that nationally in 1993 75 percent of the female AFDC recipients
exempted from participation in JOBS were exempt because they were
caring for children under the age of 3.  A state may also limit JOBS
participation on a case-by-case basis if child care is not available. 
Our analysis of HHS data showed that 50 percent of nonparticipants
have a child under age 3, while only 20 percent of participants have
a child under age 3.\9

To determine what portion of adult AFDC recipients JOBS is serving,
we obtained the most recent HHS average monthly data available.\10
These data showed that the seven states we visited were serving
169,891 welfare recipients in their JOBS programs, only 15 percent of
their total adult AFDC caseload.  Table 2 shows JOBS participants as
a percentage of the total AFDC population for each of these states. 
Nationwide, HHS data showed that 541,995 welfare recipients were
participating in JOBS programs, about 13 percent of total adult AFDC
recipients in any given month. 



                          Table 2
          
          AFDC Population Participating in JOBS in
                   Seven States, FY 1993

                                                      JOBS
                                              participants
                                                      as a
                                             percentage of
                  Adult AFDC    Active JOBS   state's AFDC
States            recipients   participants     population
-------------  -------------  -------------  -------------
Florida              224,657         19,082              9
Michigan             237,387         47,460             20
Minnesota             65,510          5,418              8
Nevada                11,101            928              8
Ohio                 247,310         54,037             22
Texas                236,627         23,953             10
Washington           102,366         19,013             19
==========================================================
Total              1,124,958        169,891             15
----------------------------------------------------------
The number of AFDC recipients who participate in JOBS is also
constrained by state funding.  Although spending for child care
assistance has been growing and states must guarantee child care for
participants, FSA allows states to operate the JOBS program as state
resources permit.  The amount of funding that states provide for
child care to match federal funding competes with other state budget
requirements, such as providing funds for building highways and
prisons.  Providing fewer state matching dollars limits the total
dollars available for child care services, which in turn, limits the
number of JOBS participants who can be given child care subsidies. 
Five of the seven states we visited reported insufficient funds for
child care.  Some officials explained that because of the level of
matching funds, they must limit those who can participate in their
JOBS programs to women with minimal child care needs or those who
have made child care arrangements that are free.  In Florida, JOBS
participants have third priority for child care funds, after children
at risk of abuse or neglect and children of parents who have left the
welfare rolls for employment or who still receive AFDC because of low
earnings.  Florida, therefore, simply exempts AFDC recipients with
child care needs from participating in JOBS when funding is not
available.  Texas officials stated they have very meager funds for
child care and therefore attempt to enroll participants who can find
free child care or who have school-aged children and can participate
during school hours. 

Five of the seven states we visited were able to provide information
on the number of JOBS participants' children currently receiving
child care.  For fiscal year 1994, these five states reported
providing child care to 207,104 children of JOBS participants.\11
These children, however, represent only a small portion of the
states' total number of children on AFDC.  For example, during April,
May, and June of fiscal year 1994, Michigan provided child care to an
average of 13,999 children of JOBS participants each month.\12 During
this same quarter, Michigan had an average of 323,823 children under
age 13 on its AFDC rolls.\13 (See app.  III for additional data on
the number of children served and the associated cost.)


--------------------
\8 We reported at length on the survey results in their entirety in
Welfare to Work:  Participants' Characteristics and Services Provided
in JOBS (GAO/HEHS-95-93, May 2, 1995).  See appendix II for detailed
results from the survey's child care-related questions. 

\9 We used the National Integrated Quality Control System data for
1993.  (See app.  I for more information.)

\10 Information Memorandum, "Final Tables Based on Form ACF-108 Data
for Fiscal Year 1993" HHS, JOBS-ACF-IM-94-8 (Washington, D.C.:  Sept. 
29, 1994). 

\11 Except for Washington and Minnesota, states could not provide
unduplicated numbers of children served (that is, states could not
tell us when a child's care was being funded by two programs). 
Because of this, the number of children reported served is most
likely overstated. 

\12 For the reason noted above, the number served during this quarter
may also be overstated. 

\13 If necessary for JOBS participation, child care is guaranteed for
dependent children who are under 13 years old and for those children
who are physically or mentally incapable of caring for themselves or
under court supervision. 


   CHILD CARE-RELATED BARRIERS CAN
   DELAY WELFARE-TO-WORK EFFORTS
------------------------------------------------------------ Letter :4

Although FSA guarantees child care to welfare recipients while they
are participating in JOBS, and our survey showed that most JOBS
programs are providing some child care assistance to current
participants, a number of barriers hinder finding child care for
participants.  Some of these barriers are common to the general
population of individuals searching for appropriate child care, while
others are related to how the JOBS program may be structured in a
state.  These barriers can delay AFDC recipients' participation in
the JOBS program. 


      SOME JOBS PARTICIPANTS FACE
      CHILD CARE BARRIERS COMMON
      TO GENERAL POPULATION
---------------------------------------------------------- Letter :4.1

Nationally, we found in our survey that, irrespective of funding
issues, a general lack of child care in the community--as well as a
lack of child care that is affordable for participants--contributes
to some JOBS programs' inability to provide child care assistance. 
Like the general population, JOBS participants seek child care from a
variety of sources, such as centers, family child care homes, and
relatives, and encounter similar problems in finding appropriate
child care.  In our visits, we found that some JOBS participants have
difficulty finding care for infants, special-needs children,\14
children before and after school, and sick children.  In addition,
some JOBS participants have difficulty finding child care that is
accessible, given a lack of reliable public or private
transportation, and available during nonstandard hours of work.  (See
app.  IV for additional information on barriers.)

Officials in every state we visited reported a shortage of care for
infants, six states reported a shortage of care for special-needs
children, and three states reported a shortage of before- and
after-school care.  In Texas, where a shortage of infant care already
exists, officials believe recent quality improvements to state
licensing regulations will cause some providers to discontinue their
infant programs rather than comply with the new regulations. 
Michigan officials said the state has a shortage of infant and
special needs-related child care in the inner cities and a shortage
of all types of child care in rural areas.  Moreover, a suburban
county child care specialist in Michigan said the current supply of
child care providers cannot handle the expected influx of the 3,000
new clients in that county required to participate in the state's
welfare reform program begun in October 1994.  The specialist stated
the supply shortage may push participants to use care not regulated
by the state.\15 In addition, caseworkers told us that an urban
school district in Michigan has only one location that offers before-
and after-school care.  Even when before- and after-school care is
available, county officials told us that children may not have
transportation between their homes and the care facility during these
nonschool hours. 

Washington State officials noted that some children of JOBS
participants have multiple special needs, which increase providers'
reluctance to care for them.  Minnesota officials stated they find it
hard to locate providers who are qualified to provide care to
special-needs children or those who will provide care on days that
children are sick.  One JOBS participant we spoke with noted that
some JOBS training classes have strict attendance requirements and
having a provider who will care for a sick child can make the
difference between passing and failing such a class. 

One of the most pressing problems limiting access to child care was
transportation difficulties.  In our nationwide survey, 77 percent of
those JOBS programs unable to provide subsidies or help arranging
child care to all participants who needed assistance indicated that
participants had problems getting to their child care provider. 
Officials in the seven states we visited also said transportation was
a problem in accessing child care.  We were told that many JOBS
participants do not have reliable private transportation to get their
children to child care providers and then to get themselves to work
or school.  Moreover, some communities lack the necessary public
transportation to get participants where they need to go.  A child
care specialist in a rural Ohio county noted that participants in
rural areas are "all going in different directions" to find work. 
When participants do not all commute in the same direction,
carpooling and drop-offs at child care centers are very difficult to
arrange. 

Officials of all seven states we visited indicated that finding care
during nonstandard hours of work, such as on nights and weekends, is
a problem for participants.  Many participants find jobs in the
service industry, working at hotels, restaurants, hospitals, and
discount department stores where nonstandard hours are common.  In
fact, service occupations with a high proportion of shift workers are
projected to produce more new jobs than any other sector over the
next decade, and the trend of service businesses operating during
nonstandard hours is expected to continue, according to a recent
Department of Labor report.\16 However, few child care providers
operate during nonstandard hours, according to a nationally
representative sample of child care centers and regulated family
child care homes.\17

When welfare recipients encounter these types of difficulties in
finding child care to participate in the JOBS program, caseworkers
told us they exempt them or assign them a "not job-ready" status. 
Their participation in the JOBS program is then delayed until they
can--sometimes with the help of caseworkers--make suitable child care
arrangements. 


--------------------
\14 Examples of children with special needs include those with
physical, emotional, or mental handicaps; those born with acquired
immunodeficiency syndrome; and those with chronic asthma. 

\15 Nonregulated providers may be those providers caring for fewer
children than their states require for regulation as well as
providers illegally caring for children. 

\16 The report also estimates that 60 percent of women with children
under age 6 are in the workforce and that, in 1991, 5 million of the
full-time workers with nonstandard hours--more than one in
three--were women.  Care Around the Clock:  Developing Child Care
Resources Before 9 and After 5, U.S.  Department of Labor, Women's
Bureau (Washington, D.C.:  Apr.  1995). 

\17 The Demand and Supply of Child Care in 1990, National Association
for the Education of Young Children (Washington, D.C.:  1991). 


      JOBS PROGRAM-RELATED
      BARRIERS TO CHILD CARE
---------------------------------------------------------- Letter :4.2

In addition to the barriers to finding child care faced by the
general population, JOBS participants may encounter other
difficulties.  The JOBS program in their states may not have enough
child care program staff to help them locate care.  And child care
providers in their communities may not offer care that is flexible
enough to meet JOBS participants' part-time program hours. 

In Washington State, for example, caseworkers said their high
caseloads prevent them from taking the time to discuss child care
in-depth.  Similarly, Nevada does not serve all mandatory JOBS
participants because of limited staffing.  At one point, Michigan
stopped serving the child care needs of JOBS participants in school
because the volume of cases was too high for the available staff to
handle. 

Participants have difficulty finding care flexible enough to support
their part-time JOBS participation hours and have problems
coordinating school hours, study hours, and provider availability
hours, officials in four states told us.  HHS fiscal year 1993 data
show that most JOBS participants are in education/training or work
activities for 20 hours or less per week and thus need only part-time
child care.  Yet state officials told us many child care centers
require clients to pay for full-time care regardless of the number of
hours the child is present.  And in other cases, providers are less
willing to accept part-time clients when they can get full-time
clients.  In an urban Washington State county, for instance, more and
more providers are willing to take only full-time clients,
caseworkers said. 


   INADEQUATE POSTWELFARE CHILD
   CARE SUBSIDIES CHALLENGE JOBS
   PARTICIPANTS' SELF-SUFFICIENCY
------------------------------------------------------------ Letter :5

Insufficient child care subsidies for the working poor affects JOBS
participants' and other welfare recipients' ability to achieve
self-sufficiency.  We reported in December 1994 that our analysis
predicts that child care subsidies will make a substantial difference
in the probability of poor and near-poor mothers working.\18

Officials in five of the seven states we visited also said they
believe that clients have quit working because they could not afford
child care (once subsidies terminated) and that child care plays a
major role in clients' returning to welfare rather than moving toward
self-sufficiency.\19 Moreover, a recent study by the Greater
Minneapolis Day Care Association found that almost one-quarter of the
families waiting for child care subsidies left jobs or job-related
training and turned to AFDC for economic survival.\20 A recent report
by the National Research Council also noted that a lack of subsidies
may create major barriers to families' work efforts.\21

After welfare recipients enter the workforce, Transitional Child Care
(TCC) is guaranteed for a maximum of 12 months after AFDC payments
end.  If a state does not have other funds to continue the subsidies
beyond the 12-month period, the former welfare recipients must bear
the full costs of child care even if their earnings have not
increased during the 12 months.  A few states we visited give TCC
clients priority placement on their waiting lists for direct
income-based subsidies for the working poor provided by the Child
Care and Development Block Grant (block grant), so that when the 12
months of TCC terminate, the children's subsidy can be replaced
smoothly by block grant funding.  For example, Ohio officials stated
they provide continuous child care services by automatically moving
JOBS participants from TCC benefits to subsidies for the working
poor.  Similarly, Florida gives transitional clients priority for
block grant child care funds for the working poor in an effort keep
these clients from returning to welfare.  In one state, however,
officials said they were concerned that favoring former welfare
clients over other working poor families that have never been on the
welfare rolls sends the wrong message about the need to cycle through
the welfare system to obtain child care subsidies. 

Because block grant child care funds for the working poor are capped
and require no state matching dollars, only a limited number of
applicants can be served unless the state provides additional funds. 
Five of the states we visited maintain long waiting lists of eligible
working poor families for which they have no child care funding. 
Florida has 19,000 people on its working poor waiting list;
Washington, 3,000; Minnesota, 7,000; Texas, 36,000; and Nevada,
7,000.  Texas officials in one regional office said that their
waiting list would be much longer if they did not regularly purge
names from it.  Clients must call every 60 days to renew their
position on the list.  Michigan and Ohio do not keep waiting lists in
part because of the difficulty of locating the families should
funding become available. 


--------------------
\18 Child Care:  Child Care Subsidies Increase Likelihood That
Low-Income Mothers Will Work (GAO/HEHS-95-20, Dec.  30, 1994). 

\19 We reported at length on child care subsidy gaps and their link
to becoming self-sufficient in Child Care:  Working Poor and Welfare
Recipients Face Service Gaps (GAO/HEHS-94-87, May 13, 1994). 

\20 Valuing Families:  The High Cost of Waiting for Child Care
Sliding Fee Assistance, The Greater Minneapolis Day Care Association
(Minneapolis:  1995). 

\21 Child Care for Low-Income Families:  Summary of Two Workshops,
National Research Council, Board on Children and Families
(Washington, D.C.:  1995.)


   IMPLICATIONS OF CHILD CARE FOR
   WELFARE REFORM
------------------------------------------------------------ Letter :6

The child care needs of AFDC recipients--whether or not they are
participating in a JOBS-like program--and of newly working former
welfare recipients are expected to grow, given welfare reform
proposals and state initiatives that increase work requirements for
more mothers of children receiving AFDC and that limit the length of
time families can remain on AFDC.  If the Congress or states expand
their welfare-to-work requirements and also reduce or eliminate the
allowable exemptions from working, more AFDC recipients will have to
find child care to work or enroll in school, training, or work
programs.  Meeting greater demand for child care may be difficult for
states across the nation, especially since JOBS-related child care
funding and the supply of certain kinds of child care are already
limited in some states.  Infant care, part-time care, and care during
nonstandard work hours will be particularly needed if a large influx
of welfare recipients must move quickly from the welfare rolls into
the workforce. 

Finally, locating appropriate child care at a price former welfare
recipients may be able to afford will continue to be a problem once
they enter the workforce.  Although postwelfare subsidies can play a
critical role in keeping former recipients from returning to welfare,
the subsidies for child care are either time-limited or unavailable
to many because of the long waiting lists for receiving assistance. 
Even if changes are not made to AFDC at the national level, these
difficulties could affect the reform initiatives that continue to be
implemented in the states.  As states move to expand work
requirements, they may have to reconsider funding priorities and push
to develop new sources of child care to meet the needs of welfare
recipients and the working poor alike. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :7

In commenting on a draft of this report, HHS stated that our survey
results showing that 73 percent of state JOBS programs are providing
all or almost all participants with child care assistance should be
viewed in the context of the programs' ability to limit how many
participants with child care needs they will accept.  HHS also
commented that because participant pools are partly determined on the
basis of child care availability, it may not be appropriate to look
at the experience of JOBS programs to draw conclusions about the
child care needs of recipients who are not JOBS participants.  We
agree with HHS that the child care needs of current JOBS participants
may not be representative of welfare recipients not participating. 
Our work shows that the success of JOBS programs in providing child
care assistance to current participants stems from the states'
ability to limit participation to a small portion of welfare
recipients and their ability to determine the amount of funding they
will provide for child care. 

HHS raised other points that they believed should be clarified (see
app.  V) and provided technical comments that we addressed in the
report as appropriate. 


---------------------------------------------------------- Letter :7.1

We are sending copies of this report interested Members of Congress
and to the Secretary of Health and Human Services.  Copies will be
available to others on request.  If you have any questions concerning
this report or need additional information, please call me on (202)
512-7215.  Other GAO contacts and contributors to this report are
listed in appendix VI. 

Jane L.  Ross
Director, Income Security Issues


OBJECTIVES, SCOPE, AND METHODOLOGY
=========================================================== Appendix I

To assist the Congress in its deliberations on welfare reform and
child care, we examined (1) the extent to which child care needs of
welfare recipients in JOBS are are currently being met, (2) whether
any barriers exist to meeting the child care needs of JOBS
participants, (3) the effect of child care subsidies on former
welfare recipients' move toward self-sufficiency, and (4) the
potential implications of welfare reform for child care availability
and continuity. 


   DATA ANALYZED ON JOBS
   PARTICIPANTS
--------------------------------------------------------- Appendix I:1

To find out how the ages of JOBS participants' children differ from
nonparticipants' children, we analyzed HHS' 1993 National Integrated
Quality Control system data.  These data include participants in the
JOBS program as well as participants in the Food Stamp Employment and
Training Program.  We based our analysis on 1993 data because they
were the most current available when we did our analysis.  We limited
our analysis to female parents or stepparents who receive AFDC.  In
1993, these cases accounted for about 80 percent of all AFDC cases. 


   NATIONWIDE SURVEY ON CHILD CARE
   SERVICES FOR JOBS PARTICIPANTS
--------------------------------------------------------- Appendix I:2


      SAMPLE SELECTION AND SURVEY
      RESPONSE
------------------------------------------------------- Appendix I:2.1

To determine the extent to which JOBS programs were able to provide
child care assistance to current participants, we asked a number of
child care-related questions as part of a nationally representative
computer-assisted telephone survey of over 400 local JOBS program
officials conducted between June and August 1994.  We reported
complete survey results on the characteristics of JOBS participants
in May 1995.\22

Because most JOBS services are provided at the county level, we
selected a random sample of counties for our survey.  We derived a
nationwide listing of counties from 1990 Census data and selected an
overall sample of about 450 counties.  Before selecting this sample,
we stratified the counties into the following four groups: 

  Large urban--Counties comprising the 10 cities with the largest
     populations of children in welfare households.\23

  Metropolitan with central city--Counties containing the central
     city for a metropolitan statistical area. 

  Metropolitan--no central city--Counties in metropolitan statistical
     areas that do not contain a central city. 

  Nonmetropolitan (rural)--Counties that are not part of a
     metropolitan statistical area. 

We selected all the counties from the large urban category and random
samples of counties from each of the other three groups.  Table I.1
shows the total number of counties and the number sampled in each
stratum.  After selecting the sample, we used the Public Welfare
Directory\24 to determine the name, address, and telephone number of
the JOBS program administrators responsible for programs in sampled
counties.  While preparing and conducting our interviews, we found
that 36 rural counties and 1 nonrural county in our sample did not
offer JOBS programs.\25 Therefore, we adjusted our initial sample to
exclude these counties.\26 We obtained responses from nearly all of
the program administrators for the counties in our adjusted sample
(411 of 416).  We used these responses to produce national estimates
for the JOBS program. 



                         Table I.1
          
            Universe, Sample Size, and Response
                           Rates

                                          Number
                Number  Counti                of  Response
                    in      es  Adjust  counties      rate
                univer  sample      ed  respondi  (percent
Type of county      se       d  sample        ng         )
--------------  ------  ------  ------  --------  --------
Large urban         18      18      18        18       100
Metropolitan       422     134     134       131        98
 with central
 cities
Metropolitan-      311     120     119       118        99
 -no central
 city
Nonmetropolita   2,390     181     145       144        99
 n
==========================================================
Total            3,141     453     416       411        99
----------------------------------------------------------

--------------------
\22 Welfare to Work:  Participants' Characteristics and Services
Provided in JOBS (GAO/HEHS-95-93, May 2, 1995). 

\23 These cities were included in the sample:  Baltimore, Chicago
(Cook and DuPage counties), Cleveland, Detroit, Houston (Fort Bend,
Harris, and Montgomery counties), Los Angeles, Milwaukee (Milwaukee
and Washington counties), New York (the boroughs of Brooklyn, Kings,
New York, Queens, and Richmond), Philadelphia, and San Diego. 

\24 American Public Welfare Association (Washington, D.C.:  1993). 

\25 HHS regulations do not require states to offer JOBS programs in
every locality.  Instead, states must offer minimal or complete
programs that reach most of the state's adult welfare recipients. 
Minimal JOBS programs include high school or equivalent education,
one optional component (that is, job search, on-the-job-training,
community work experience, or work supplementation), and information
and referral to other available non-JOBS employment services.  See 45
C.F.R.  section 250.11 (Oct.  1, 1994). 

\26 Although these 37 counties offered neither complete nor minimal
JOBS programs, some offered supportive services (principally, child
care) to welfare recipients who were already attending an institution
of higher education at the time they would otherwise commence
participation in the JOBS program. 


      SAMPLING ERRORS FOR
      ESTIMATES
------------------------------------------------------- Appendix I:2.2

Because the estimates from this survey are based on a sample, each is
subject to sampling error.  Table II.11 in appendix II shows the
maximum sampling error for estimates presented in each question.  We
computed the sampling errors at the 95-percent confidence level. 
Therefore, the chances are 95 out of 100 that the actual percentage
being estimated falls within the range defined by the estimate, plus
or minus the sampling error. 


   VISITS TO STATES ON UTILIZATION
   OF CHILD CARE BY JOBS
   PARTICIPANTS
--------------------------------------------------------- Appendix I:3

To obtain detailed information on (1) how the JOBS child care program
was implemented, (2) whether any barriers exist to meeting the child
care needs of JOBS participants, (3) the effects of child care
subsidies on former welfare recipients' move toward self-sufficiency,
and (4) the potential impact that welfare reform proposals might have
on child care availability and continuity, we visited 12 counties in
7 states.\27

We selected these counties using the following criteria: 

  Response to key survey question--Within the seven states, we chose
     some counties that answered "all or almost all," some counties
     that answered "about half," and some that answered "few or none"
     to the question, "Of all your JOBS participants who needed child
     care assistance in May 1994, what proportion were receiving
     it?"\28 We defined assistance as providing child care funding or
     help with arranging child care.  In this way we were able to
     ensure that the counties visited would encompass a wide range of
     abilities to provide child care assistance to JOBS participants. 

  County type--We chose some urban, some suburban, and some rural
     locations. 

  Geographic distribution of states--We chose counties in states from
     several areas of the United States. 

During our visits, we interviewed officials responsible for the
states' child care programs, child care licensing, JOBS program, and
financial reporting.  At the county level, we also interviewed
officials responsible for implementing child care programs, child
care licensing, and the JOBS program.  In addition, we interviewed
representatives of child care resource and referral agencies as well
as JOBS participants. 


--------------------
\27 We visited Gadsen and Martin counties in Florida; Pike County,
Ohio; Ingham and Washtenaw counties in Michigan; Douglas and
Washington counties in Minnesota; Carson City County in Nevada;
Harris and Hardin counties in Texas; and Spokane and Pierce counties
in Washington. 

\28 Available responses included "all or almost all,""most,""about
half,""some,""few or none,""don't know," and "no participants."


CHILD CARE-RELATED NATIONWIDE
SURVEY RESULTS
========================================================== Appendix II

Tables II.1 through II.10 show our results from the child
care-related data collected from our nationwide survey of over 400
county JOBS programs (see GAO/HEHS-95-93 for results of the full
survey).  These tables provide data on how child care services have
been implemented and the extent child care is utilized under the JOBS
program.  The numbers in each table represent the GAO estimate of the
percentage of all jurisdictions operating JOBS programs nationwide
that would have given the designated response for that question. 
Table II.1 provides a snapshot of child care use during the month of
May 1994.  That is, for the question involved the survey focused only
on child care services provided to current JOBS participants during
the month of May 1994.  Child care use can vary throughout the year. 
For example, care for school-aged children may increase during the
summer months when school is not in session. 

Finally, table II.11 shows the maximum sampling errors at the
95-percent confidence level for the results shown in tables II.1
through II.10. 



                         Table II.1
          
                         Question 1

Of all your JOBS participants who needed
child care assistance, what proportion       Percentage of
were receiving it?                           JOBS programs
------------------------------------------  --------------
All or almost all                                       73
Most                                                    13
About half                                               5
Some                                                     4
Few or none                                              2
No participants needed child care                        4
----------------------------------------------------------
Note:  Numbers may not add to 100 because of rounding. 



                               Table II.2
                
                               Question 2

For those JOBS participants not receiving child care
assistance, was it because . . .                           Yes      No
------------------------------------------------------  ------  ------
Lack of child care in community                             52      48
Transportation problems                                     77      23
Child care not affordable                                   47      53
Need more JOBS staff                                        49      51
Program lacked funds                                        50      50
Other reasons                                               30      70
Could serve all with more money                             68      32
----------------------------------------------------------------------
Note:  This question was asked only of JOBS programs (about 23
percent) who answered other than "all or almost all" to question 1. 



                         Table II.3
          
                         Question 3

Are clients with LESS NEED for child care
served before others with more child care    Percentage of
needs?                                       JOBS programs
------------------------------------------  --------------
Yes                                                      8
No                                                      89
Sometimes                                                3
----------------------------------------------------------


                         Table II.4
          
                         Question 4

Of all your JOBS         All
participants that are     or
currently assisted      almo        Abou         Few  None
with child care, about    st           t          or  need
how many . . .           all  Most  half  Some  none    ed
----------------------  ----  ----  ----  ----  ----  ----
Receive financial help    85     9     2     1     2     1
 to pay for it?
Do you assist with        45    12    12    14    16     1
 making child care
 arrangements?
----------------------------------------------------------


                         Table II.5
          
                         Question 5

Does your program ever use a JOBS or non-
JOBS caseworker as a child care specialist   Percentage of
in arranging child care for participants?    JOBS programs
------------------------------------------  --------------
Yes                                                     43
No                                                      57
----------------------------------------------------------


                         Table II.6
          
                         Question 6

Is this specialist a JOBS caseworker or      Percentage of
from another program?                        JOBS programs
------------------------------------------  --------------
JOBS caseworker                                         27
From another program                                    65
Both                                                     8
----------------------------------------------------------
Notes:  This question was asked only of JOBS programs (about 43
percent) who answered "yes" to question 5.

Numbers may not add to 100 because of rounding. 



                               Table II.7
                
                               Question 7

Does your program . . .                                    Yes      No
------------------------------------------------------  ------  ------
Have special sessions focusing only on child care           44      56
 needs or other child care information for either
 individual JOBS participants or groups of
 participants?
Refer JOBS participants to a resource and referral          63      37
 agency?
Serve as the designated resource and referral agency        45      55
 for the county or local area?
Pay for JOBS participants to use legally exempt child       75      25
 care, other than relatives?\a
----------------------------------------------------------------------
\a States often exempt from their licensing systems certain child
care settings, such as family child care providers serving small
numbers of children, care provided in the child's home, and care
provided by relatives. 



                         Table II.8
          
                         Question 8

What proportion of JOBS participants enter   Percentage of
with child care arrangements already made?   JOBS programs
------------------------------------------  --------------
All or almost all                                        8
Most                                                     9
About half                                              23
Some                                                    30
Few or none                                             31
----------------------------------------------------------
Note:  Numbers may not add to 100 because of rounding. 



                               Table II.9
                
                               Question 9

Child care available includes . . .                        Yes      No
------------------------------------------------------  ------  ------
Head Start                                                  93       7
State and local centers . . .                               70      30
Private centers or preschools                               91       9
Family day care                                             96       4
Relatives                                                   99       1
----------------------------------------------------------------------


                        Table II.10
          
                        Question 10

Type of child care used by your JOBS                  Most
participants . . .                              frequently
------------------------------------------  --------------
Head Start                                               1
State centers                                            8
Other centers                                           27
Family child care                                       31
Relatives                                               25
Other                                                    7
----------------------------------------------------------
Note:  Numbers may not add to 100 because of rounding. 



                        Table II.11
          
            Maximum Sampling Errors for Data in
                 Tables II.1 Through II.10

                                                   Maximum
                                            sampling error
                                               (percentage
                                                   points)
------------------------------------------  --------------
Question 1                                               5
Question 2
 Lack of child care in the community                    12
 Transportation problems                                10
 Child care not affordable                              12
 Need more JOBS staff                                   12
 Program lacked funds                                   12
 Other reasons                                          11
 Could serve all with more money                        12
Question 3                                               4
Question 4
 Financial help                                          4
 Help with child care arrangements                       6
Question 5                                               6
Question 6                                               9
Question 7
 Special sessions                                        5
 Refer to resource and referral agency                   5
 Serve as resource and referral agency                   6
 Pay for legally exempt care                             5
Question 8                                               6
Question 9
 Head Start                                              4
 State and local centers                                 6
 Private centers and preschools                          4
 Family day care                                         3
 Relatives                                               1
Question 10                                              6
----------------------------------------------------------
Note:  Sampling errors were computed at the 95-percent confidence
level. 


CHILD CARE EXPENDITURES FOR 1994
AND THE NUMBER OF CHILDREN SERVED
========================================================= Appendix III


                  Amount          Amount          Amount          Amount
                  (milli  Number  (milli  Number  (milli  Number  (milli  Number
State               ons)  served    ons)  served    ons)  served    ons)  served
----------------  ------  ------  ------  ------  ------  ------  ------  ------
Florida            $17.8      UA   $26.1      UA  $60.5\      UA   $35.0      UA
                                                       a
Michigan            21.5  145,90     4.7  19,900  48.2\b  214,39      \b      \b
                               7                             7\b
Minnesota\c         16.6   7,834     7.6   3,280  26.3\b  12,612      \b      \b
                                                              \b
Nevada\             0.98   8,002    0.91   6,112   2.3\d  26,652    UA\e  2,163\
                                                              \d               d
Ohio                58.3      UA    0.13      UA     9.3      UA    20.7      UA
Texas\f           40.1\g  13,203    24.6   9,626    18.2   7,540    55.6  22,730
Washington\         26.9  32,158     9.8  11,290    11.1   7,486     9.9  33,493
--------------------------------------------------------------------------------
Legend:

UA = Unavailable

Note:  Expenditure data include federal and state money, provided by
the federal fiscal year.  Except for Washington, data may include
duplicate counts. 

\a Includes some Child Care and Development Block Grant (CCDBG) and
Social Services Block Grant funds. 

\b Data are for the CCDBG and at-risk categories combined. 

\c Minnesota provided data by state fiscal year, which runs from July
1993 through June 1994. 

\d This figure covers the period of October 1993 through August 1994. 

\e During the period this assignment was conducted, fiscal year 1994
cost figures had not been compiled. 

\f The number of children served in each category represents the
minimum number served in fiscal year 1994. 

\g Includes some CCDBG funds. 


CHILD CARE-RELATED BARRIERS
ENCOUNTERED BY SOME JOBS
PARTICIPANTS
========================================================== Appendix IV



   (See figure in printed
   edition.)

Note:  This chart is based on interviews with state and county
officials in the locations we visited and responses by the same
counties to our nationwide survey of JOBS programs. 


Appendix V COMMENTS FROM THE
DEPARTMENT OF HEALTH AND HUMAN
SERVICES
========================================================== Appendix IV




GAO CONTACTS AND STAFF
ACKNOWLEDGMENTS
========================================================== Appendix VI

GAO CONTACTS

Diana Pietrowiak, Evaluator-in-Charge, (202) 512-6239
Lynne Fender, Assistant Director, (202) 512-7229

ACKNOWLEDGMENTS

In addition to those named above, the following individuals made
important contributions to this report:  James Wright provided design
support; Shellee Soliday, Alexandra Martin-Arseneau, and Janet Mascia
conducted interviews and provided support in data analysis and in
writing the report; Nancy Crothers assisted in report design; Robert
DeRoy conducted the computer programming and provided statistical
advice on the survey analysis. 


RELATED GAO PRODUCTS
============================================================ Chapter 0

Welfare to Work:  Participants' Characteristics and Services Provided
in JOBS (GAO/HEHS-95-93, May 2, 1995). 

Welfare to Work:  Measuring Outcomes for JOBS Participation
(GAO/HEHS-95-86, Apr.  17, 1995). 

Child Care:  Recipients Face Service Gaps and Supply Shortages
(GAO/T-HEHS-95-96, Mar.  1, 1995). 

Child Care:  Narrow Subsidy Programs Create Problems for Mothers
Trying to Work (GAO/T-HEHS-95-69, Jan.  31, 1995). 

Low-Income Families:  Comparison of Incomes of AFDC and Working Poor
Families (GAO/T-HEHS-95-63, Jan.  25, 1995). 

Welfare to Work:  AFDC Training Program Spends Billions, but Not Well
Focused on Employment (GAO/T-HEHS-95-51, Jan.  10, 1995). 

Child Care:  Child Care Subsidies Increase Likelihood That Low-Income
Mothers Will Work (GAO/HEHS-95-20, Dec.  30, 1994). 

Welfare to Work:  Current AFDC Program Not Sufficiently Focused on
Employment (GAO/HEHS-95-28, Dec.  19, 1994). 

Family Child Care:  Innovative Programs Promote Quality
(GAO/T-HEHS-95-43, Dec.  9, 1994). 

Child Care:  Promoting Quality in Family Child Care (GAO/HEHS-95-36,
Dec.  7, 1994). 

Child Care:  Working Poor and Welfare Recipients Face Service Gaps
(GAO/HEHS-94-87, May 13, 1994). 

Child Care Quality:  States' Difficulties Enforcing Standards
Confront Welfare Reform Plans (GAO/T-HEHS-94-99, Feb.  11, 1994). 

Self-Sufficiency:  Opportunities and Disincentives on the Road to
Economic Independence (GAO/HRD-93-23, Aug.  6, 1993). 

Mother-Only Families:  Low Earnings Will Keep Many Children in
Poverty (GAO/HRD-91-62, Apr.  2, 1991). 

